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Petitioner: MESSRS SHAMEEM TEXTILE MILLS, Lahores VS Respondent: THE REPUBLIC OF PAKISTAN JUDGMENT
Court Name: Lahore High Court Judge(s): Muhammad Afzal Cheema, Karam Elahi Chauhan Title:MESSRS SHAMEEM TEXTILE MILLS, Lahores vs THE REPUBLIC OF PAKISTAN
JUDGMENT
Reported As: PLD 1972 Lahore 572 Result: Petition accepted Judgment JUDGMENT K. E. CHAUHAN, J.-Messrs Shamim Textile Mills (herein--after called the petitioners) decided to set up in 1955 a factory of 40 Rayon and Art Silk Powerlooms to be worked by 45 employees in Lahore. According to section 5-A(i) of the Factories (Punjab Amendment) Act, 1940, no factory of Rayon and Artificial Silk could be established without the permission of the Provincial Government. If on the application filed for this purpose, the rejection was not communicated to an applicant, within six months, then it was to be presumed that the permission had been granted. The petitioners duly put in the requisite application for this purpose, but no communication rejecting the same was sent to them, therefore, considering that the permission was to be deemed to have been granted, they served a notice under section 80 of the Code of Civil Procedure upon the Provincial Government for issuance of the formal permission. The notice was not heeded to and the petitioners, filed W. P. 235 of 1956 in this Court (Annex. "A"), which was decided by a Division Bench of this Court consisting of M. R. Kayani and C. M. Sharif, JJ. On 18-10-1956. A repro--duction of the order of the Division Bench is necessary for understanding the further questions which will arise in this case. The said order reads as follows:- "Messrs Shameem Textile Mills of Lahore have filed this petition for a writ against the Province of West Pakistan through the Secretary, Industries Department in the following circumstances. On the 13th June 1955, the petitioner applied to the Director of Industries for permission to instal forty rayon and silk powerlooms. The application was made in form "R" and was sent by registered post. The petitioner had not received a reply, for six months, and therefore, under the proviso to section 5-
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A(i) of the Factories (Punjab Amendment) Act, 1940 (it is contended) they should be regarded as having obtained the necessary permission. On the lapse of six months, the petitioners reminded the Director of Industries that there was a presumption in their favour that permission had been granted to them to set up a factory. On the failure of the Director to acknowledge this position the petitioner gave a notice to the Government under section 80, C. P. C. To this notice also no reply has been made. Now, since in the absence of a declaration by the Provincial Government that permission has been granted to the petitioners, the Central Government will not entertain their application for the import of machinery or raw material, the petitioners pray for a writ directing the respondent to acknowledge that position. In reply, the respondent did not say that no application had been received from the petitioners, but it was stated that although normally rejection memos are issued, in this particular case, the relevant record is not available in the office, and it cannot be said whether such a memo was issued. There was, however, a press-note of which Annexure "D" is a copy, informing the public that 'in view of the present short supply of cotton and art silk yarn, further allocation of these looms to this Province have been stopped by the Central Govern--ment,' and that 'the Provincial Government .Is, therefore, not in a position to sanction any more power-looms in the Punjab'. It was admitted that a notice under section 80, C. P. C., was received from the petitioner and it was explained that action had 'since been taken' consequent upon it. The main reply, however, was based on the fact that the development of textile industry was controlled by the Central Government under Development of Industries (Federal Control) Act, 1949, which enable the Central Government to make rules, and that under rule 4 of the Development of Industries Rules, 1950, 'any new industrial undertaking likely to employ more than fifty persons but proposing to enlarge its work, shall apply to the Director-General of Supply and Develop--ment, Karachi in accordance with the provisions of rule 5'. An affidavit was filed by Mr. M. A. Qadir, Textile Advisor to the Government, that the minimum number of workers necessary for a factory of forty rayon and silk power-looms, together with its auxiliary machinery, will be 118. Details of how these men will be employed are given in the affidavit. On the other hand, the petitioner have placed on the file copy of a letter, dated the 15th September 1956, from a Japanese firm (Nichimen Company (Pakistan) Limited, Karachi) informing the petitioners that the factory proposed by them will require forty-five persons to work it. This is also stated by another Japanese firm Toyomenka (Pakistan) in a letter of the 9th July 1956. According to this letter, a factory of forty looms will require forty-two to forty-five workers. In the application form submitted by the petitioners to the Government the number of workers proposed to be employed is shown to be 'about forty-five'. The legal position appears to us to be this. Under section 5-A of the Factories (Punjab Amendment) Act, 1940, no factory can be established for the purpose of carrying on the manufacture of rayon and artificial silk, save with the permission in writing of the Provincial Government or such person as it may direct; provided that if an application has been made by registered post and the decision of the Government or the prescribed authority has not been communicated to the applicant for six months, 'the applicant shall be regarded as having obtained that permission'. On the language of section 5-A, therefore, since a proper appli--cation was made to the Government and since no reply was made, for six months, permission should be regarded to have been given. The question whether the Government had power to give that permission if the number of workers to be employed was 'likely to exceed forty ought to have arisen within six months of the application, which clearly stated that the number will be confined to forty-five. It cannot be allowed to be raised after a legal presumption has arisen in the petitioner's favour. Whether the application of the petitioners was consigned to one of the Corporation's accom--modating dust-bins where passport applications also find asylum, we do not know. But having kept the petitioners waiting for
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one period of six months and ignored their reminder for a second period of six months, the Government cannot ask us in good faith to accept their affidavit that the petitioners are likely to employ more than fifty workers. Again the position is not different from what it would be if the Textile Advisor had certified to the Government that no more than forty-five workers are likely to be employed in this case, but it had discovered subsequently that the number of workers employed exceeded fifty. If that happens, the petitioners will be liable to the prescribed penalties. In para. 3 of the written-statement, there is also an argument based on a letter of the Central Government dated the 20th December 1954, (Copy Annex. "A") which, according to the written- statement, 'categorically stated that units containing more than twenty power-looms are required to obtain sanction from the Central Government'. This is merely an administrative instruction to flue Province which can for that reason refuse permission under section 5-A, but if permission is not refused, the proviso must operate. We, therefore, accept the petition with costs and direct the Provincial Government to grant the necessary permission to the petitioners on the assumption that they would employ about forty-five persons. (Sd.) M. R. Kayani, (Sd.) C. M. Sharif, Judges." 2. In spite of the direction of this Court to grant the necessary permission to the petitioners, the said permission was not granted for a good deal of time. According to the petitioners, they made several applications to the Director of Industries and the Secretary, Industries Department, Government of Punjab for the issuance of the formal sanction--(and also submitted an application for import license on 22-1-1957, which matter will be taken up separately in the subsequent paragraphs of this judgment). Frustrated in this way, the petitioners again had to come to this Court by filing Cr. Original No. 9 of 1957, submitting that action may be taken against the persons and officers concerned for not complying with the directions issued by this Court in W. P. No. 235 of 1956. Notice was issued in this Cr. Original on 19-3-1957. During the pendency of the aforesaid Criminal Original on 27-3-1957, necessary permission for setting up a factory was issued to the petitioners in the form of Annex. "D" which reads as follows:- "Office of the Director of Industries, West Pakistan From The Director of Industries, West Pakistan. To Messrs Shamim Textile Mills, Street No. 38, Montgomery Park, Qilla Gujar Singh, Lahore. Memorandum No. 5121. Dated Lahore, the 27th March 1957. Subject:--Grant of permission for power-looms. In accordance with the decision of the High Court of West Pakistan, dated the 18th October 1956, in Case No. 235 of 1956 sanction is hereby accorded to you under section 5-A(i) of the Factories (Punjab Amendment) Act, 1940, for the installation of 40 (Forty) Cotton and Art Silk Power-looms subject to the following conditions:-- (i) that the installation of looms should be completed within a period of six months from the date of this sanction; (ii) that the number of persons employed shall not exceed 45;
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(iii) that the sanction will not confer any entitlement to the issue of an import license for power- looms or art silk yarn; (iv) that 20% of the art silk fabrics manufactured shall be exported to countries outside Pakistan. (2) This sanction will automatically lapse in case condition No. (i) is not fulfilled and is liable to be withdrawn at any time after installation for violation of any of the other conditions (ii)-(iv) mentioned above. (Sd.) I. H. Usmani, Director of Industries, West Pakistan. 27-3-57." 3. A perusal of the above permission would show that it was hedged with various conditions, which according to the petitioners, were attached with a mala fade intention so that they may not be able to reap the fruits of the writ petition. Consequently, they took exception to the same and submitted an application (Annex. "E") (in this Court in connection with Cr. Original No. 9 of 1957) containing some fundamental and detailed objections. Facing the situation as it then was, the Department withdrew the sanction dated 27-3-1957 and issued a fresh sanction in the form of Annex. "F" on 27-4-1957. This sanction reads as follows:-- "Office of the Director of Industries, West Pakistan. To Messrs Shameem Textile Mills, Street No. 38, Montgomery Park, Qilla Gujjar Singh; Lahore. Memorandum No. IPP/867. Dated, Lahore the 27th April 1957. Subject:-Grant of permission for power-looms. In accordance with the decision of the High Court of West Pakistan, dated the 18th October 1956 in case No. 235 of 1956, sanction is hereby accorded to you under section 5-A(i) of the Factories (Punjab Amendment) Act, 1940, for the Installation of 40 power-looms for manufacturing art silk fabrics, which shall not employ more than 45 persons. This permission is subject to the conditions normally applicable in such cases. (2) The sanction previously conveyed in this Directorate's Memorandum No. 5121, dated the 27th of March 1957, may be considered as withdrawn and substituted by the sanction conveyed herewith. (Sd.) Mushtaq Ahmad, Assistant Director (Planning) for Director of Industries, West Pakistan." The case of the petitioners is that they asked the department as to what was the meaning of the following sentence occurring in Annex. "F", namely, "this permission is subject to the conditions normally applicable in such cases", but neither any reply was sent nor the conditions hereinbefore alluded to were communicated to them in spite of their repeated requests. Since, however, a formal sanction for installing a factory had been conveyed to the petitioners and the prohibitions earlier imposed in Annex. "D", in the form of various conditions had been withdrawn, the proceedings in Cr. Original were consigned to the record-room on 29-4-57 after accepting the unconditional apology of the officers concerned who showed regrets in the delay caused in implementing the High Court's orders due to office routine. This apparently closed the chapter so far as the sanction to install a factory was concerned. 4. In the narration of facts in the earlier paragraphs of this judgment, it has been mentioned that on 22-1-1957, the petitioners had also applied for grant of an import license for the import of forty Japanese Powerlooms. This matter also was not attended to, to the satisfaction of the petitioners,
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there--fore, on 14-3-1958, they had third time to come to this Court by filing Writ Petition No. 240 of 1958. Paragraph 6 of the said writ petition is worth reproduction, it reads as follows:- '6. That the aforesaid orders of the High Court and the resultant sanction of the Director of Industries to instal the machinery becomes null and ineffective if the Industries Department does not recommend the petitioners application to the Chief Controller of imports and Exports, Karachi for the simple reason that unless specified machinery is imported by tae petitioners it shall not be possible for them to fulfill the absolute condition imposed by the High Court in ins order referred to above and in said sanction given by the Director of Industries namely that 40 power-looms (which have been sanctioned) are to be manned by 45 persons. The petitioners gave that undertaking to the High Court and accepted that position on the basis and strength of the information contained in the certificates from the Japanese firms from whom the petitioners intended to purchase the said machinery for their silk textile industry. The said certificates were duly placed on record in the proceedings of W. P. 235-56 and their originals are now at Annexure J. & K. It is obvious that if the Director of Industries, by refusing to recommend the petitioners' application deprived them from the imported machinery for their factory, the conditional sanction already given comes to naught as this important condition (viz. To be manned 45 persons) cannot be fulfilled by installing any other type of machinery but the one applied for through the said application." In the aforesaid writ petition, the petitioners enclosed a copy of the application, dated 22-1-1957, for import licenses, which bows that it was supported by seven documents including form I. C./C. M. This application seems to have been forwarded by the Provincial Government, viz., Secretary to Government of West Pakistan Industries, Commerce and Labour Department, to the Director of Industries, West Pakistan, Lahore, oil 11-2-1957, intimation of which was sent to the petitioners on the same date stating:- "Further correspondence on the subject may be made with the Director of Industries, West Pakistan, direct, to whom instructions have been issued to accord sanction of the installation of forty power- looms." 5. In the written statement filed in the aforesaid writ petition by the Department, the plea taken was that the sanction to install a factory did not confer any entitlement to the issuance of an import license and was even otherwise subject to various conditions. The petitioners pointed out that various conditions which existed in Annex. "D" had been withdrawn by the Government by issuing a new sanction in the form of Annex. "F" and that the same condition or conditions was or were again being put up in the form of the written-statement hereinbefore mentioned. Anyhow, when the matter was pending in the High Court, the Industrial Department (which was the sponsoring and recommending authority in such cases), according to the petitioners, for the first time, moved the Central Government to grant import licenses to them for forty art silk Japanese power--looms. (The factum of this recommendation is admitted in para. 12 of the written statement in the present writ petition). The Department received the following letter bearing No. T-24 (23)/56, dated the 12th of January 1960 from the Deputy Secretary to the Government of Pakistan, Ministry of Industries, Karachi, addressed to the Director of Industries, Government of West Pakistan (Planning): Subject:--Sanction of 40 art silk powerlooms to Messrs Shameem Textile Mills, Lahore. I am directed to refer to your letter No. P/V/C/12 (2), dated 22nd August 1959, addressed to the erstwhile Textile Commissioner, on the above subject and to say that this Ministry agrees under the advice of the Ministry of Law to the issue of import license for the import of 40 Art Silk power-looms by the sponsors of this as a special case. Your obedient servant (Sd.) Deputy Secretary to Government of Pakistan"
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6. It is stated by the respondents that on the basis of the aforesaid letter, the Director of Industries, West Pakistan then conveyed the following sanction to the petitioners on 29th/30th of January 1960, copy whereof has been filed in the form of "Annex. H" and reads as follows:-- "No. I.P./DD/95. From The Director of Industries, (Planning and Investment Promotion Wing), West Pakistan. To M/s. Shameem Textile Mills, 73/113, Street No. 38, Montgomery Park, Qilla Gujar Singh, Lahore. Dated Lahore, the 29th/30th January 1960. Subject:-Sanction of 40 Art Silk power-looms to M/s. Shameem Textile Mills, Lahore. Dear Sirs, With regard to various representations made by you on the above subject, I am directed to inform you that the Government of Pakistan (Ministry of Industries) have finally agreed to the issue of import license for the import of 40 art silk powerlooms in your favour as a special case. You are now directed to submit necessary proposals giving details as to how you propose to move in the matter further. Yours faithfully, Mushtaq Ahmad, Deputy Director (Planning and Investment Promotion) for Director of Industries, West Pakistan." 7. Having felt that their difficulties have come to end, the petitioners withdrew W. P. No. 240 of 195 3 on 26-2-1960 and then certain letters indicating their reeds and explaining certain other relevant matters followed in the form of correspondence, copies whereof have been filed as Annexes "I", "J", "J-1", "J-2", "J-3", "J-4" and "J-5". On 2-11-1960, to the utter suprprise of the petitioners they received a letter Annex. "K" indicating that the Government of Pakistan (Ministry of Industries) regret their inability to issue import licenses or to sanction the looms. This letter reads as follows:- "Registered A. D. From The Director of Industries, (Planning and Investment Promotion Wing), West Pakistan, Lahore. To M/s. Shameem Textile Mills, Qilla Gujar Singh, Lahore. Memorandum No. IP/B/12 (2)/60. Dated Lahore, the 2-11-60. Subject:-Issue of import license for 40 art silk specially designed power-looms and preparatory machinery thereof for Rs. 2,72,594. Reference your letter No. STM/6420.60, dated the 21st July 1960, on the subject noted above. (2) I am directed to inform you that the Government of Pakistan Ministry of Industries regret their inability to issue import licenses in your favour for the import of 40 powerlooms or to sanction the looms. (Sd.) For Director Industries, W. P., Lahore." 8. Consequent thereupon, the Director of Industries recalled his earlier communication dated the 30th of January 1960, (Annex "H"). The petitioners approached the Department or Departments to find out as to why the aforesaid drastic action had been taken against them and requested for a
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review of the entire matter, but as no heed was paid to the same, they have approached this Court fourth time in the form of the present writ petition for a declaration that the refusal to issue import license and to sanction the looms is without lawful authority and have prayed for the necessary directions requiring the department to sanction forty art silk power-looms and grant a license for their import. 9. The respondents in this case are two, namely, (1) the Republic of Pakistan and (2) the Director of Industries, Government of West Pakistan, Lahore; both of whom have resisted the claims of the petitioners. So far as respondent No. 2 is concerned, even though he and as a matter of fact the Provincial Government granted sanction to the petitioners to set up a factory of forty power-looms with forty-five workers, he is trying to nullify the said sanctions by pleading that the petitioners are not eligible to set up such a factory. Again, even though he himself recommended the case of the petitioners for grant of import licenses to the Central Government, now he has pleaded that, to that also the petitioners are not entitled. Similarly, the Central Government though it takes notice of the fact of the sanction having been granted to the petitioners under section 5-A (1) of the Factories (Punjab Amendment) Act of 1940, but has now pleaded that no such sanction could be given or that its own independent sanction to cases of the present type was essential, which it was not prepared to grant with the result that the petitioners could not set up a factory of 40 Japanese art silk power-looms to be worked by 45 employees. As regards the import license, it has not been denied that the case of the petitioners was recommended by respondent No. 2 but it has been pleaded that no such import license could be granted to the petitioners on account of the very ineligibility of setting up a factory of the present kind and also because of some other reasons which we will note at their proper places. Case of sanction to set up a factory. 10. The first point argued by the learned counsel for the petitioners was that orders as contained and communicated in letter, dated 2-11-1960 (Annex "K"), brought about two results, inasmuch, as (i) they showed the inability of the Govern--ment to sanction the looms; and (li) the inability to issue import licenses for forty power-looms. So far as the question of sanctioning of the looms is concerned, (which means the very sanction to set up a factory of forty looms), learned counsel submitted that the respondents acted without lawful authority, in Indicating their disability in this respect, inasmuch as, the sanction to install a factory of forty power-looms already existed as a result of the direction of this Court issued on 18-10-1956 in W. P. No. 235 of 1956 as a natural corollary of the application of section 5-A (i) of the Factories (Punjab Amendment) Act, 1940, to the facts and circumstances of the present case and consequent compliance therewith, firstly, in the form of sanction order, dated 27-3-1957 (Annex "D") and secondly, in the form of order dated 27-4- 1957 (Annex "F"), already reproduced above. He submits that no provision of law exists, whereunder once having granted a sanction under section 5-A ibid, the authorities concerned may again say that they regret their inability to sanction that which already stands sanctioned under the law, especially, when on the earlier legally and formally communicated and ratified sanction, things had gone far ahead, the petitioners had purchased land, raised a huge building and superstructure on the spot and good deal of negotiations had been entered into for setting up a factory of forty power-looms. Another argument raised was that the impugned orders in this respect were passed at the back of his clients without hearing them and without apprising them of the reasons in that behalf. (10-A) The arguments raised appeared to be weighty and the learned counsel for the respondents were called upon to meet the same. They replied that the Central Government retained the power to refuse sanction and for this purpose they referred to the following material and advanced the following arguments:-
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(i) that in view of the press note issued in Civil and Military Gazette, dated 24-10-1953, there was shortage of cotton and art silk yarn and, therefore, further allocation of these looms to Punjab Province was stopped; (ii) that under section 4 of the Development of Industries (Federal Control) Act (XIII of 1949), the Central Government could make rules by Notification in the official Gazette "to carry the provisions of this Act into effect". The relevant rules were made on the 23rd of February 1951, and were called, "Development of Industries Rules, 1950", and are printed in PLD (1951) Central Statutes Part at `pages 183-184. It was submitted that according to Rule 4 of the aforesaid rules, permission in writing of the…
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