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PETITIONER: DOBURG LAGER BREWERIES PVT. LTD.

       Vs.

RESPONDENT: DHARIWAL BOTTLE TRADING CO. & ANR.

DATE OF JUDGMENT14/03/1986

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) THAKKAR, M.P. (J)

CITATION:  1986 AIR 1547            1986 SCR  (1) 841  1986 SCC  (2) 382        1986 SCALE  (1)388

ACT:      Bombay Relief  Undertakings (Special  Provisions)  Act, 1958, ss. 3 and 4 - Declaring an industrial undertaking as a "relief undertaking"  - Whether  grant of loan under the Act is a condition precedent - Whether s. 3 is controlled by the Preamble to the Act.

HEADNOTE:      The appellant,  a private  limited company, carrying on business in a backward area of the State, had employed about 200 workmen.  It had  borrowed about Rs.52.30 lakhs from the State Industrial  and Investment  Corporation of Maharashtra Limited (SICOM).  It ran  into financial  difficulties as  a result  of  which  winding  up  proceedings  were  commenced against it  by a creditor, respondent No.1 in the year 1982. Taking into  consideration the  financial  position  of  the appellant-company and  the consequences  that were likely to ensue if  the industry  was to be closed, the State issued a notification under  section 3  and sub-clause (iv) of clause (a) of  sub-section (1)  of section  4 of  the Bombay Relief Undertakings (Special  Provisions) Act, 1958 declaring it as a  relief   undertaking  and   directing  that   any  right, privilege, obligation  or liability  accrued or  incurred by the  appellant-company   (except  those   mentioned  in  the Notification) before  it was  declared a  relief undertaking and any  remedy for the enforcement thereof became suspended and all  proceedings relative  thereto  pending  before  any court, tribunal,  officer or  authority came  to  be  stayed automatically. Consequently,  the Company  Judge of the High Court stayed the proceedings in the winding up petition. The Division Bench also confirmed the order of the Company Judge in appeal.  The  State  Government  also  issued  subsequent notifications on  May 9,  1984, May 10, 1985 and November 8, 1985 for  the same purpose and pursuant to the resolution of SICOM dated  February 17,  1984 another  loan of Rs.15 lakhs was  advanced   to  the   appellant-company  by   the  State Government through SICOM. 842      Respondent No.1 then filed a writ petition in July 1984 in the  High Court  challenging the aforesaid Notifications. The learned  Single Judge  allowed  the  writ  petition  and quashed the  Notifications on  the ground  that in  order to

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invoke the  powers  under  section  3(1)  of  the  Act,  the condition precedent  was that the State Government must have provided under  the Act,  loan guarantee and other financial assistance  to  the  undertaking  as  a  measure  preventing unemployment relief as per the Preamble of the Act and since it had  not been  established that  Rs.52.30 lakhs  had been lent by  SICOM under  the Act  as a  measure  of  preventing unemployment or  employment relief,  the Notification  dated November 10,  1983 was  ultra vires  the Act  and  that  the advance of Rs.15 lakhs by the State Government before May 9, 1984 did not cure the defect. The appellant-company filed an appeal against the order of the learned Single Judge and the same was dismissed by the Division Bench in limine.      Allowing the appeal, ^      HELD: 1.  The decision  of the  High Court  that unless loan is  advanced by  the State  Government under the Act no declaration can be made under section 3 of the Act is wholly erroneous. It  is not  warranted by  the provisions  of  the statute. The  case is remanded to the High Court to consider the other contentions of the parties. [854 A; 853 H]      2. The  whole object  of the  Act is  to  subserve  the public interest and in particular to prevent unemployment or to grant  unemployment relief. Section 3 of the Act which is a self-contained  one refers  to the industrial undertakings in respect  of which  a declaration may be made under it. It is not  controlled by the Preamble to the Act. An industrial undertaking which  may be  declared as  a relief undertaking under sec.  3 may  be of  two kinds. It may be an industrial undertaking started, acquired or otherwise taken over by the State Government and carried on or proposed to be carried on by the  State Government or under its authority. It may also be an industrial undertaking to which any loan, guarantee or other financial  assistance has  been provided  by the State Government. There should be a declaration that an industrial undertaking of either kind should be conducted to serve as a measure  of   preventing  unemployment  or  an  unemployment relief. 843 Then such  an undertaking  will be  deemed to  be  a  relief undertaking for the purposes of the Act. The consequences of such declaration  are contained in section 4 of the Act, one of them  being that  the State  Government gets the power to direct  that   notwithstanding  any   law,  usage,   custom, contract,  instrument,  decree,  order,  award,  submission, settlement, standing order or other provision whatsoever any right,  privilege,   obligation  or   liability  accrued  or incurred before  the  undertaking  was  declared  as  relief undertaking and any remedy for the enforcement thereof shall be suspended  and all  proceedings relative  thereto pending before any  court, tribunal,  officer or  authority shall be stayed. A  notification  issued  under  sub-section  (1)  of section 3  is renewable  by like  notification from  time to time for  further periods  not exceeding  twelve months at a time, so  however that  all the periods the aggregate do not exceed fifteen years. [851 F-H; 852 A-D]      3. A distinction has been made in the Act between cases falling under  sub-clause (ii)  of clause (a) of sub-section (1) of  section 4  of the  Act and  cases falling under sub- clause (iv) of clause (a) of sub-section (1) of section 4 of the Act.  Sub-clause (ii)  of section  4(1)(a)  of  the  Act refers to  the  agreements,  settlements,  awards,  standing orders made  under the  several labour  laws mentioned under the Schedule  to the  Act and  states that  agreements  etc. which may  be applicable  to a  relief undertaking before it

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was acquired or taken over by the State Government or before any  loan,  guarantee  or  other  financial  assistance  was provided to  it  by  or  with  the  approval  of  the  State Government for  being run  as a  relief undertaking  may  be suspended in operation or shall, if so directed by the State Government be  applied with  such modifications  as  may  be specified in  the notification  issued for the said purpose. In this  case the  Act seems  to  resolve  a  likely  value- conflict between  loans given  for running the industry as a relief undertaking  and the  rights  of  workmen  under  the agreements,  awards  etc.  under  the  labour  laws  in  the Schedule. This  sub-clause does not have anything to do with sub-clause (iv) of section 4(1)(a) under which the case of a creditor like  respondent No.1  falls.  Another  distinction which may  be noticed is the difference between the language in sub-clause  (ii) of section 4(1)(a) and in section 3. The former contains  these words  ’before any loan, guarantee or other financial assistance was provided to it by or with the 844 approval of  the State  Government for being run as a relief undertaking’ (emphasis  added). In  section 3, the words are "or  to  which  any  loan,  guarantee,  or  other  financial assistance has  been provided  by the State Government shall with effect  from....... be  conducted to serve as a measure or of  unemployment  relief."  (emphasis  added).  The  only precondition for  the exercise  of the power under section 3 is that  loan must  have been  advanced prior to the date of notification and  it must  still be outstanding on that day. This is  what leaps  to the  eyes effortlessly  on the  mere opening of  the eyes.  On the other hand, section 3 does not say expressly  or by  implication "a  loan etc. is given for being run  as a  relief undertaking under this Act." [852 H; 853 A-G]      In the  instant case,  the  State  of  Maharashtra  had provided through  SICOM which  is virtually  an agent of the State Rs. 52.30 lakhs by way of an advance to the appellant- company before the first notification was issued, and at any rate before  the second  notification was  issued the  State Government itself  had advanced  Rs. 15 lakhs in addition to what SICOM  had advanced  earlier. Hence the industry of the appellant-company was  one to  which any  loan, guarantee or other financial  assistance had  been provided  in the State Government. There  is no provision in the Act requiring that any  such   loan  should   be  granted  under  it  before  a declaration may  be made under section 3(1) thereof. [852 E- G]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 932 of 1986.      From the  Judgment and  Order dated  21.1.1986  of  the Bombay High Court in Appeal No. 28 of 1986.      Dr. Y.S. Chitale and Mukul Mudgal for the Appellant.      K. Rajendra Choudhary for the Respondents.      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  At the  conclusion of the hearing of the above  appeal on  March 10, 1986 we passed the following order in  the above  appeal and  the connected special leave petition: 845           "Special leave  granted. We  do not agree with the           view of  the High  Court that the loan in question           should have  been advanced  under the Act in order

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         to attract  the provisions  of sections 3 and 4 of           the   Bombay    Relief    Undertakings    (Special           Provisions) Act, 1958. The judgment of the learned           Single Judge and of the Division Bench of the High           Court are  set aside  and the  case is remanded to           the  learned   Single  Judge   to   consider   the           submissions to be made on other points involved in           this case. It is open to the Union which has filed           Special Leave  Petition No.  3428 of 1986 to apply           to the High Court for being impleaded and the High           Court on such application being made will consider           it in  accordance with law. The appeal and Special           Leave Petition  No. 3428  of 1986  are disposed of           accordingly. There is no order as to costs.                Reasons follow."      We are  quite unhappy with the order of the Bombay High Court against  which this appeal is filed. The grounds urged in support of the writ petition were fallacious, the reasons given by  the learned  Single Judge  for  allowing  it  were faulty and  the order  of dismissal  of the appeal in limine passed by  the Division  Bench exhibits indifference. Courts are expected  to show  more  concern  and  to  give  greater attention before  quashing a  statutory instrument  made  or issued under  a beneficent  legislation intended  to prevent large scale  unemployment and  misery than  what is shown by the High Court in this case.      The facts  of the  case are these. The appellant herein is a  private limited  company  and  has  been  carrying  on business in  the State of Maharashtra. It ran into financial difficulties as  a result  of which  winding-up  proceedings were commenced against it. M/s. Dhariwal Bottle Trading Co., respondent No.1  herein, which  is a  partnership firm filed Company Petition  No. 119 of 1982 as a creditor for winding- up of  the appellant  company.  The  appellant  company  was carrying on  business in  a backward  area of  the State  of Maharashtra. It  had employed  about 200  workmen  who  were likely to be thrown out of employment. The appellant company had also borrowed about 846 Rs.52,30,000  from   the  State  Industrial  and  Investment Corporation  of   Maharashtra  Ltd.   (SICOM).  Taking  into consideration  the   financial  position  of  the  appellant company, and  the consequences  that were likely to ensue if the industry which was being run by it was to be closed, the Government of  Maharashtra  took  action  under  the  Bombay Relief   Undertakings   (Special   Provisions)   Act,   1958 (hereinafter referred  to as ’the Act’) by declaring it as a relief undertaking with effect from November 10, 1983 by its notification issued on November 10, 1983 under section 3 and sub-clause (iv)  of clause (a) of sub-section (1) of section 4 of the Act. The notification reads thus:                        "NOTIFICATION                     Industries,    Energy     and     Labour                     Department, Mantralaya,  Bombay  400032,                     Dated the 10th day of November, 1983.           No  BRU-1083/(9602)/IND-10.  In  exercise  of  the           powers conferred  by section 3 and sub-clause (iv)           of clause  (a) of  sub-section (1) of section 4 of           the   Bombay    Relief    Undertakings    (Special           Provisions) Act,  1958 (Bom.  XCVI of  1958),  the           Government of Maharashtra, hereby-           (a)  declares   that  the  industrial  undertaking           called "M/s.  Doburg  Lager  Breweries  (P)  Ltd.,           Bombay" (hereinafter  referred  to  as  "the  said           relief undertaking") to which State Industrial and

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         Investment  Corporation   Maharashtra  Ltd.,   has           provided a  loan of  Rs. 52.30  lakhs, shall for a           period of  6 months  commencing from  10th day  of           November, 1983  be conducted to serve as a measure           of unemployment relief; and           (b) directs  that in  relation to  the said relief           undertaking and  in respect of the said period for           which the  said relief  undertaking  continues  as           such,  any   right,   privilege,   obligation   or           liability   (excepting    the    obligations    or           liabilities incurred  in favour  of workmen of the           said  relief  undertaking  or  in  favour  of  the           industrial units which are 847           registered as  small scale  industrial units  with           the Directorate of Industries of the Government of           Maharashtra,  the  Maharashtra  State  Electricity           Board,  the   State  Industrial   and   Investment           Corporation   of    Maharashtra    Limited,    the           Maharashtra State  Financial Corporation,  Bank of           Maharashtra,   Vijaya   Bank,   Bank   of   India,           Industrial Development  Bank of  India, Industrial           Finance Corporation of India and Industrial Credit           and Investment  Corporation of  India and the dues           of the Employees’ State Insurance Corporation, and           any liability  incurred under the Bombay Sales Tax           Act, 1959 (Bom. LI of 1959), the Maharashtra State           Tax   on    Professions,   Trades,   Calling   and           Employments Act,  1975 (Mah. XVI of 1975), and the           Employees’  Provident   Fund   and   Miscellaneous           Provision Act,  1952  (19  of  1952),  accrued  or           incurred before  the 10th day of November 1983 and           any remedy  for the  enforcement thereof  shall be           suspended and  all  proceedings  relative  thereto           pending before  any Court,  tribunal,  officer  or           authority shall be stayed.      By  order   and  in   the  name   of  the  Governor  of Maharashtra.                     P.L. Sawai,  Desk  Officer,  Industries,                     Energy & Labour Department"      The above notification was to be effective for a period of six months at the first instance.      Section 3 and the relevant part of section 4 of the Act read as follows :           "3.(i) If  at any  time it  appears to  the  State           Government  necessary   to  do   so,   the   State           Government may,  by notification  in the  Official           Gazette, declare  that an  industrial  undertaking           specified in  the notification,  whether  started,           acquired or  otherwise taken  over  by  the  State           Government, and  carried  on  or  proposed  to  be           carried on by itself or under its authority, or to           which any loan, 848           guarantee or  other financial  assistance has been           provided  by  the  State  Government  shall,  with           effect from  the date specified for the purpose in           the  notification  be  conducted  to  serve  as  a           measure   of   preventing   unemployment   or   of           unemployment  relief  and  the  undertaking  shall           accordingly be  deemed to  be a relief undertaking           for the purposes of the Act.           (2) A  notification under  sub-section  (1)  shall           have effect  for such  period not exceeding twelve           months as  may be  specified in  the notification;

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         but it  shall be  renewable by  like notifications           from  time   to  time   for  further  periods  not           exceeding twelve months at a time, so however that           all the  periods in  the aggregate  do not  exceed           fifteen years.           4.(1)  Notwithstanding  any  law,  usage,  custom,           contract,  instrument,   decree,   order,   award,           submission, settlement,  standing order  or  other           provisions whatsoever,  the State  Government may,           by notification  in the  Official Gazette,  direct           that -           (a) in  relation to  any relief undertaking and in           respect  of   the  period  for  which  the  relief           undertaking continues  as such  under  sub-section           (2) of section 3 -           .............................................           (iv) any right, privilege, obligation or liability           accrued or  incurred before  the  undertaking  was           declared a  relief undertaking  and any remedy for           the enforcement thereof shall be suspended and all           proceedings relative  thereto pending  before  any           court, tribunal,  officer or  authority  shall  be           stayed;           .........................."      The effect  of the  above mentioned  notification dated November 10,  1983 was that any right, privilege, obligation or liability  accrued or  incurred by  the appellant company (except those  mentioned therein)  before it  was declared a relief  undertaking  and  any  remedy  for  the  enforcement thereof  became   suspended  and  all  proceedings  relative thereto pending before 849 any Court,  tribunal, officer or authority came to be stayed automatically. Consequently  the proceedings in the winding- up petition  (Company Petition No. 119 of 1982) filed by the Ist respondent  against  the  appellant  company  were  also stayed by  the Company  Judge of the High Court. Against his order an appeal was filed before the Division Bench and that appeal was  dismissed. The  order of stay thus became final. Having failed  in its  attempt to  get  the  order  of  stay vacated, the  respondent No. 1 apparently in order to coerce the appellant filed a writ petition, being Writ Petition No. 1552 of  1984 out of which this appeal arises on the file of the Bombay  High Court  challenging the  notification issued under  sections   3  and   4  of   the  Act  and  subsequent notifications which had been issued from time to time on May 9, 1984,  May 10,  1985 and  November 8,  1986 for  the same purpose. It  may be  stated here that even today the last of the notifications that is the one issued on November 8, 1985 under those provisions is in force. It should also be stated here that pursuant to the resolution of SICOM dated February 17, 1984,  another loan of Rs. 15,00,000 was advanced to the appellant company by the State Government through SICOM. The notification dated May 9, 1984 recites that Rs.15,00,000 had been so  advanced. It  says that  the State  Government  had provided the  said loan under a package scheme of incentives through SICOM  and the  said recital  is repeated in each of the subsequent  notifications. Everyone  of them  contains a declaration in  terms of  section 3  and a  direction  under section 4(1)(a)(iv)  of the Act as stated above. Each one of them can  stand by itself though they refer to the fact that the undertaking  is having  the protection  with effect from November 10,  1983, that  is from  the  date  of  the  first notification, as  that date becomes relevant for purposes of computing the  aggregate period  under section  3(2) of  the

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Act.      The Writ  Petition was  allowed by  the learned  Single Judge with  costs and  the notifications  were  quashed.  An appeal filed  by the  appellant company against the order of the learned Single Judge was dismissed by the Division Bench in limine. The order of the Division Bench ran as follows:           "Heard both  sides.  Stay  to  continue  for  four           weeks. Dismissed." 850      This  appeal   is  filed   under  Article  136  of  the Constitution against the order of the Division Bench.      The writ  petition was  filed in  July 1984  after  the State Government  had issued  the notification  dated May 9, 1984 containing  the statement that the State Government had advanced an additional loan of Rs.15,00,000 to the appellant company. The  contention urged  on behalf  of the respondent No.1 (the  petitioner in the writ petition) may be stated in the language of the learned Single Judge himself, thus :           "5. Shri Cooper, learned counsel appearing for the           petitioners while attacking the notification dated           November 10,  1983 being  illegal and  contrary to           section  3   of  the   Act  urged  that  the  said           Notification  does   not  fulfil   the   condition           precedent prescribed  under section  3 of  the Act           viz. ’giving a financial assistance to a sick unit           like the  respondent No.2  herein  under  the  Act           before issuing such notification. According to the           learned   counsel    before   issuance    of   the           notification under  section 3(1)  of the  Act  the           Government must  have given  under that  provision           any loan, guarantee or other financial assistance.           He further  submitted that no financial assistance           and/or loan  and/or guarantee has been provided by           the State  Government under the Act before issuing           the notification  dated November  10,  1983,  and,           therefore, the  impugned Notification  is contrary           to section 3(1) of the Act."                                       (emphasis added)      Having set  out the  contention of  the respondent No.1 the learned  Single Judge  assumed for  purposes of the case that SICOM  was ’the State’ within the meaning of Article 12 of the  Constitution. Then  he  proceeded  to  observe  that Rs.52.30 lakhs had been advanced by SICOM as loan not "under this  Act",   but  it   was  only   an  ordinary  commercial transaction. Then he held that in order to invoke the powers under section  3(1) of  the Act, the condition precedent was that the  State Government  must have provided under the Act loan,  guarantee  and  other  financial  assistance  to  the undertaking as  a measure  preventing unemployment relief as per the  Preamble of  the Act  and since  it  had  not  been established that Rs.52.30 lakhs had been 851 lent by  SICOM under  the Act  as a  measure  of  preventing unemployment or  unemployment relief, the notification dated November 10,  1983 was  ultra vires the Act. He further held that the  advance of  Rs.15,00,000 by  the State  Government before May  9, 1984  did not  cure the defect. He was of the opinion that the subsequent notifications having been issued in continuation  of  the  first  notification  were  equally ineffective. The  petition thus  came to  be allowed and the appellant company  lost the  protection granted to it by the Act. Since  the Division Bench has not given any reasons for its order we need not refer to it in greater detail.      The Act  contains just four sections in addition to its long-title and the Preamble. The Preamble reads :

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         "WHEREAS  it   is  expedient   to  make  temporary           provision  for   industrial  relations  and  other           matters to enable the State Government to conduct,           or  to   provide  loan,   guarantee  or  financial           assistance for  the conduct of, certain industrial           undertakings   as    a   measure   of   preventing           unemployment or  of  unemployment  relief;  It  is           hereby enacted  in the  Ninth Year of the Republic           of India as follows ;-"      Section 1  of the  Act sets  out the short title of the Act and  the extent of its application. Section 2 of the Act defines  ’industry’   and  ’relief   undertaking’.   ’Relief undertaking’ means  an industrial  undertaking in respect of which a  declaration under  section 3 is in force. Section 3 of the  Act and  the material part of section 4 have already been set  out above. Section 3 which is a self-contained one refers to  the industrial undertakings in respect of which a declaration may  be made  under it.  It is not controlled by the Preamble to the Act. An industrial undertaking which may be declared  as a  relief undertaking under section 3 may be of two  kinds. It  may be an industrial undertaking started, acquired or otherwise taken over by the State Government and carried on  or proposed  to  be  carried  on  by  the  State Government or  under  its  authority.  It  may  also  be  an industrial undertaking to which any loan, guarantee or other financial  assistance   has  been   provided  by  the  State Government. There should be a declaration that an industrial undertaking of either kind should be 852 conducted to  serve as  a measure of preventing unemployment or an  unemployment relief. Then such an undertaking will be deemed to  be a  relief undertaking  for the purposes of the Act. The  consequences of  such declaration are contained in section 4  of the  Act one  of them  being  that  the  State Government gets the power to direct that notwithstanding any law, usage,  custom, contract,  instrument,  decree,  order, award,  submission,  settlement,  standing  order  or  other provision whatsoever  any right,  privilege, obligation,  or liability accrued  or incurred  before the  undertaking  was declared as  relief  undertaking  and  any  remedy  for  the enforcement thereof  shall be  suspended and all proceedings relative thereto pending before any court, tribunal, officer or authority  shall be  stayed. A  notification issued under sub-section  (1)   of  section   3  is   renewable  by  like notification from  time to  time  for  further  periods  not exceeding twelve  months at  a time, so however that all the periods the  aggregate do  not exceed  fifteen years.  It is seen that  the whole  object of  the Act  is to subserve the public interest and in particular to prevent unemployment or to grant unemployment relief.      In the  instant  case  the  State  of  Maharashtra  had provided through  SICOM which  is virtually  an agent of the State Rs.52.30  lakhs by  way of an advance to the appellant company before  the first notification was issued and at any rate before  the second  notification was  issued the  State Government itself  had advanced Rs. 15,00,000 in addition to what SICOM  had advanced  earlier. Hence the industry of the appellant company  was one  to which  any loan, guarantee or other financial  assistance had  been provided  by the State Government. It  is not  clear how the High Court came to the conclusion that  such loan  should have been granted "under" the Act. There is no provision in the Act requiring that any such loan  should be  granted under  it before a declaration may be  made under section 3(1) thereof. If any such loan is granted by the State Government to an industrial undertaking

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or guarantee  or other financial assistance is given then it may be  declared as  a relief undertaking. The conclusion of the  High   Court  is   not,  therefore,  warranted  by  the provisions of the statute.      It may also be noticed that a distinction has been made in the  Act between  cases falling  under sub-clause (ii) of clause (a) of sub-section (1) of section 4 of the Act and 853 cases falling  under sub-caluse  (iv) of  clause (a) of sub- section (1)  of section  4 of  the Act.  Sub-clause (ii)  of section  4(1)(a)  of  the  Act  refers  to  the  agreements, settlements, awards,  standing orders made under the several labour laws  mentioned under  the Schedule  to the  Act  and states that  agreements etc.  which may  be applicable  to a relief undertaking  before it  was acquired or taken over by the State  Government or before any loan, guarantee or other financial assistance  was provided  to it  by  or  with  the approval of  the State  Government for being run as a relief undertaking may  be suspended  in operation  or shall, if so directed by  the  State  Government  be  applied  with  such modifications as may be specified in the notification issued for the  said purpose. In this case the Act seems to resolve a likely  value conflict between loans given for running the industry as  a relief  undertaking and the rights of workmen under the  agreements, awards  etc. under the labour laws in the Schedule.  This sub-clause  does not have anything to do with sub-clause (iv) of section 4(1)(a) under which the case of  a   creditor  like   respondent  No.1   falls.   Another distinction which  may be  noticed is the difference between the language  in sub-clause  (ii) of  section 4(1)(a) and in section 3.  The former contains these words ’before any loan guarantee or  other financial  assistance was provided to it by or  with the  approval of  the State Government for being run as  a relief undertaking’ (emphasis added). In section 3 we have  these words  "or to  which any  loan, guarantee, or other financial  assistance has  been provided  by the State Government shall  with effect  from... be conducted to serve as a  measure or  preventing unemployment or of unemployment relief." (emphasis  added). The  only precondition  for  the exercise of the power under section 3 is that loan must have been advanced  prior to the date of notification and it must still be  outstanding on that day. This is what leaps to the eyes effortlessly  on the  mere opening  of the eyes. On the other  hands   section  3  does  not  say  expressly  or  by implication ’a  loan etc. is given for being run as a relief undertaking under this Act.’      Shri Shanti Bhushan, learned counsel for the respondent No.1, very  fairly stated  that the  order of the High Court may be  set aside  and the  case may be remanded to the High Court to consider other points which had not been considered by the learned Single Judge. 854      We are  of the view that the decision of the High Court that unless  loan is  advanced by the State Government under the Act  no declaration  can be  made under section 3 of the Act is  wholly erroneous.  The judgment  of the  High  Court appears to be a very strained one and it is unfortunate that the learned Single Judge committed an error in being carried away by  (putting it  in the words of the learned Judge) the "very neat  and intelligent  question of  law" raised by the counsel for the petitioner in the writ petition. The learned Judge failed  to evince awareness of the incalculable public prejudice that  was likely to be caused by the acceptance of the said  fallacious contention  and to notice that the case called for  close and  thorough consideration.  The  summary

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dismissal of the appeal which deserved to be allowed for the mere  asking   of  it  by  the  Division  Bench  is  equally lamentable to say the least about it.      This appeal  should therefore  be allowed  and the case should be  remanded to consider the other contentions of the parties. These are the reasons for our order dated March 10, 1986. M.L.A.                                  Appeal allowed. 855