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PETITIONER: ZIPPERS KARAMCHARI UNION

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT:       03/09/1998

BENCH: S. RAJENDRA BABU

ACT:

HEADNOTE:

JUDGMENT: Judgement Rajendra Babu J. I agree with  what  has  been  proposed  by  learned Brother  Kurdukar,  J.  in the course of his order. However. considering the nature of the arguments addressed before us, I wish to add a few words of my own. Shri Shanti Bhushan contended that  the  legislative policy  had been declared by the enactment of the Industrial Development Regulation Act; that  under  Section  29-B  (2B) thereto  reservation had been made for small-scale sector of certain industries; that reservation was with  reference  to certain  articles  such  as  ’Zip  fastener’;  that when the manufacture of ’Zip fastener’ was reserved  for  small-scale sector,  there  could  not  have  been  any dilution of such reservation or amending that notification; that carving  out an exception therato would only result in destruction of the reservation  in  favour  of  small-scale industry; that when ’Zip  fastener’  as  an  article  had  been   reserved   for manufacture  of  small-scale  industries,  the  same article could not have been allowed  to  be  manufactured  by  other industries  by  whatever  process  adopted  -  integrated or otherwise; that when there has been reservation in favour of small scale sector, the large scale  sector  industries  are allowed  to  take over any part of that activity will hamper and may ultimately even devour the  small-scale  industries; that when reservation is made to articles by the legislature the  Executive  could  not have tinkered with the expression thereto so as to create  a  loophole  by  which  large-scale industries can  anhilitate  the  small-scale industries.  On behalf of the respondents, Shri C.S.  Vaidyanathan,  learned Additional  Solicitor  General  and Shri F.S.Nairman, Senior Advocate apart from pointing out the decision of the  Bombay and  Delhi  High  Courts  submitted  that  the  Notification impugned herein was in conformity with the provisions of the Act and no interference is called for. The Central Government can exercise the powers under Section  29-B (2B) of the Act to determine the nature of any article or class  of  articles  that  may  be  reserved  for production  by any small-scale industrial undertaking and to determine the same, must constitute  an  Advisory  Committee

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consisting  of  such persons as have the necessary expertise to give advise on such matters.  In the leading judgment, my learned Brother has set out the details of the  constitution of  Advisory  Committee and the advice tendered by it to the Government before issuing Notification impugned herein.   If that  Committee was of the opinion that any article or class of articles must be taken out of the category of small-scale industrial undertakings, certainly, the same could  be  done and  such exercise of power will not be ultra vires the said provision.  However, the thrust of argument of  Shri  Shanti Bhushan  is  that such determination could be with reference to only nature  or  class  of  any  article  that  could  be reserved   for   production  of  small-scale  industry  and, therefore, there cannot be classification on  the  basis  of the  size  of the industry or the process adopted to produce such articles.  In other words, if such a course is  adopted by  taking  out any category of article or class of articles from the scope of small-scale industries, it is obvious that there cannot be a competition between  small-scale  industry and  large  scale  industry thereby the small-scale industry would be routed out of the market. In matters of trade and commerce or economic policy. the wisdom of the Government must be  respected  and  courts cannot lightly interfere with the same unless such policy is contrary to the provisions of the constitution or any law or such policy  itself  is  wholly  arbitrary.   In the present case, the two  categories  of  articles  considered  in  the Notification are ’Zip fasteners’ manufactured by small-scale industries  and  ’Zip fasteners’ manufactured by large scale industries in integrated units.  In  order  to  improve  the quality   of   ’Zip   fasteners’   must  be  allowed  to  be manufactured by integrated units which would certainly  fall within  the  category  of  large  scale  industries  as  the investment has  to  be  heavy  in  such  cases.     Articles manufactured by other industrial units.  Such categorisation of goods depending upon the process adopted is well-known in fiscal statutes  and  is  not unknown commercially.  If same principle is extended in categorisation of articles for  the purpose of production of quality goods and in quality if the two  types  of articles are different, those manufactured by adopting the integrated process and the  other  by  ordinary process,  certainly the two articles will fall into separate categories and thus, satisfy the provisions of Section  29-B (2B). Therefore, there  is  no  substance  in the argument addressed by Shri Shanti  Bhushan  that  the  classification into  ’Zip  fasteners’  manufatured  by  integrated units is violative of the provisions of the Act and  that  contention deserves  to be rejected. I rest with the expression on this aspect of the matter. New Delhi,................J September 3, 1998.(S.Rajendra Babu)