Tag: #state

-Report by Utkarsh Kamal

In this case, according to the Supreme Court, the State Government cannot argue that Rules of Business were not followed throughout its decision-making process when the Cabinet establishes a committee and the latter’s acts are approved by the Minister and the rest of the Council. The Rajasthan Industrial Development and Investment Corporation Ltd. v. M/s Arfat Petrochemicals Pvt. Ltd. & Ors. case was decided by a bench consisting of Justice Surya Kant and Justice Vikram Nath, and they upheld the subcommittee’s decisions by ruling that the rules of business were followed because the subcommittee was only carrying out its duties on behalf of the entire Council of Ministers.

FACTS:

To J.K. Synthetics Ltd. (“JKSL”) in the Large-Scale Industrial Area of Kota (“LIA, Kota”), the State of Rajasthan granted a leasehold allocation of land (“Land”). The allocation was decided in accordance with the Rajasthan Land Revenue Act of 1956 and the State Government’s industrial policy. The Rajasthan State Industrial and Mineral Development Corporation Ltd. (“RSIMDC”) were established to carry out development projects throughout the State while the lease was still in effect. Following its division into two parts, Rajasthan State Industrial Development and Investment Corporation Ltd. (“RIICO”) took over as the immediate successor to RSIMDC. The RIICO Disposal of Land Rules, 1979 (“1979 Rules”) were established to manage RIICO’s operations with regard to areas under its ownership. In 1998, JKSL was deemed to be a sick firm, and on the directives of the Appellate Authority for Industrial and Financial Reconstruction (“AAIFR”), M/s. Arfat Petrochemicals Pvt. Ltd. (“Respondent No.1”) took over JKSL’s operations. A change was made to the lease of land originally granted to JKSL in favour of Respondent No. 1. After a while, Respondent No. 1 was unable to resuscitate JKSL’s industrial divisions. Respondent No. 1 then presented a plan to RIICO for changing the leased land’s use from industrial to commercial and for subdividing the land. In 2018, RIICO authorized the subdivision and conversion of land; nevertheless, the Model Code of Conduct went into effect the very following day in anticipation of the forthcoming Rajasthan State Assembly Elections. Following the 2018 elections in Rajasthan, which resulted in a new administration, the conversion of leased land came under examination. On January 1, 2019, the newly elected Council of Ministers established a Cabinet Committee to examine actions performed by the former ruling administration during the six-month period prior to the elections. The approvals granted to Respondent No. 1 were revoked by order of the State Government to RIICO. Which were newly won the state assembly election so respondent no.1 file the case in the High Court under article 226 of the constitution. The Cabinet Committee’s decision and RIICO’s actions to revoke the allocation to Respondent No. 1 were both overturned by the High Court. Following that, RIICO and the State Government chose to appeal to the Supreme Court.

LAW RELATED TO THE CASE:

Article 138. Enlargement of the jurisdiction of the Supreme Court

(1) The Supreme Court shall have such further jurisdiction and powers with respect to any of the matters in the Union List as Parliament may by law confer

(2) The Supreme Court shall have such further jurisdiction, and powers with respect to any matter as the Government of India and the Government of any State may by special agreement confer if Parliament by law provides for the exercise of such jurisdiction and powers by the Supreme Court

Article 226. Power of High Courts to issue certain writs

(1) Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders, or writs, including writs in the nature of habeas corpus, mandamus, prohibitions, quo warranto, and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose

LEGAL ISSUE

1) Whether the action taken by the Riico without the cabinet interference is valid or not

2) Whether the Riico has the power to allot the land to the petitioner or not 

RESPONDENT’S CONTENTION:

The first Respondent contested the appeal on the grounds that the government judgment is illegal if it does not follow the Rules of Business established under Article 166(3) of the Indian Constitution. The Industries Department is responsible for handling RIICO-related issues, and the Minister for Industries would serve as the nodal authority for making final decisions in this regard. The decision to revoke the lease and subdivide the land is invalid because the Minister for Industries was not involved in the Cabinet Committee or when the final decision was made. Riico is not allowed to allot the land to anyone, so the land allotted to the petitioner is invalid 

APPELLANT’S CONTENTION:

The lease deed was renewed by the District Collector and not by the RIICO since the State Government, which is a party to the petitioner’s proceedings, was involved. According to the notification dated 18.09.1979, the State Government transferred the industrial areas developed and maintained by the Department of Industries to RIICO. As a result, the largest industrial area in Kota, where the subject land is located, was also transferred to RIICO by the State Government via a notification dated 28.09.1979. Therefore, as it is also authorized for the lands that have already been allocated, the RIICO is qualified to provide permissions or approvals under Rule 12 of the Rules of 1959. In order to build affordable housing under the CMJAY program, the petitioner company requested permission from the District Collector. Under this particular program, the District Collector had the right to provide permission regardless of whether the land was owned by the State Government or the RIICO. The fact that the District Collector personally sought the RIICO’s advice in this matter is clear evidence that the RIICO controlled the aforementioned land.

JUDGMENT:

One cannot claim that the State Government violated the Rules of Business when the Cabinet Sub-Committee is only acting on behalf of the entire Council of Ministers. The Bench noted that the Committees had been established by the Council of Ministers to investigate various anomalies. The investigation of the actions taken by RIICO and its alleged abuse of inexistent powers in favour of Respondent No. 1 was also given to a specific committee. It was stated that governance needed to be done in a practical and effective way. The Rules of Business also advocates for collective governance by the Council of Ministers in terms of recommendations made to the Governor. As a result, the Bench determined that the Council had a collective say in the decision to form subcommittees to review decisions made by the previous administration, including those involving activities by RIICO. The Bench determined that the subcommittee was acting on behalf of the full Council of Ministers when it advised Respondent No. 1 to revoke the licenses and approvals. As a result, the Rajasthan Rules of Business were not broken. The decision of the High Court has been overturned

READ FULL JUDGMENT: https://bit.ly/3V4ags8

-Report by Sejal Jethva

In the present case MINAKSHI CHITRA MANDIR SAILU THROUGH ITS PROPRIETOR SANJAY PRABHAKAR RAJURKAR Vs THE STATE OF MAHARASHTRA THROUGH THE COLLECTOR LATUR based on that petitioner is exempt from entertainment tax but still collects it from customers. Who received the money collected—the state or the petitioner?

FACTS:

In Sailu, District Parbhani, the petitioner operates a movie theatre that is now a multiplex cinema under the name and branding Minakshi Chitra Mandir, Sailu. The theatre in question is legally operated by the petitioner. The petitioner requested for an exemption from paying the entertainment tax after renovating the entire theatre in accordance with a State Government plan.

According to the Maharashtra Entertainment Duty Act, respondent number two Divisional Commissioner Aurangabad granted the petitioner a five-year exemption from paying entertainment tax from 26.6.2014 to 15.6.2019. When the entertainment tax was exempt, the theatre was inspected, and the inspector discovered that the tickets had the caption “entertainment tax” and that money had been taken from patrons towards “entertainment tax.” As a result, the petitioner was found responsible for paying the entertainment tax. Collector, Respondent No. 3, assessed the aforementioned tax at Rs. 7,97,514/-. In addition, Respondent No. 3 imposed a penalty equal to double the amount of the responsibility and mandated payment of a total of Rs. 23,92,542.00. The

PETITIONER’S CONTENTION:

The State is not permitted to collect the exemption from the petitioner under section 3 of the Maharashtra Entertainment Duty Act once it has been granted in accordance with section 9 (1) of the aforementioned Act. The knowledgeable attorney for the petitioner contends that because the ticket roles received approval from the relevant authorities, they are prohibited from requesting the entertainment tax’s deposit. The petitioner’s main and most significant argument is that once the entertainment tax exemption has been granted, even though the tax was mentioned on the entire value of the ticket, the respondent/State is not entitled to receive the entertainment tax, and the entire amount collected as ticket price, including the amount collected under the caption “entertainment.”

RESPONDENT’S CONTENTION:

Despite the petitioner receiving an exemption from entertainment tax, respondent No. 2 – Divisional Commissioner claimed that the petitioner was still obligated to pay the entertainment tax to the State Government because the amount was displayed on the petitioner’s ticket and was money that was taken from customers. The present writ petition is brought because the aforementioned orders of respondents Nos. 2 and 3 have wronged the petitioner.

JUDGEMENT:

1. Neither the petitioner is allowed to retain the money obtained under the caption ‘entertainment tax’, nor the State is entitled to receive the amount collected under the caption ‘entertainment tax’, as there is an exemption given by the State. The amount that the petitioner placed in this Court is not one that either the State or the petitioner is entitled to receive; therefore, the question of how best to use that money arises.

2. The deposited money in this case is used to acquire the defibrillator device, which will be done by a committee of three people made up of the Registrar (Administration) of the High Court Bench in Aurangabad, the President of the Bar Association of the High Court, Aurangabad, and Dr. Sanjay Varade, Medical Officer of the High Court Medical Clinic. Upon request from the Committee, the Registry will pay for the machine. The device would be used for anyone in need of emergency medical care and would stay in possession and under the supervision of the Medical Officer connected to the High Court Medical Dispensary.

3. The Registrar (Administration) of the High Court Bench in Aurangabad and the Medical Officer of the High Court Medical Dispensary. On the Committee’s instruction, the Registry will pay for the machine. The device will continue to be held in custody and under the direction of the Medical Officer assigned to the High Court Medical Dispensary, and it will be used for anyone in need of urgent medical attention.

4. Any remaining funds, if any, will be split equally between the Government Cancer Hospital in Aurangabad and the non-profit organisation “Shantivan,” which runs an orphanage for children who have lost their parents in Arvi, Tq. Shirur Kasar, District Beed.

READ FULL JUDGMENT: https://bit.ly/3Zs4iTc

–Report by Nawvi Kamalnathan

The petition was filed under Article 136 of the Indian Constitution in the name of M/S Indian Medicines Pharmaceuticals Corporation Ltd Versus Kerala Ayurvedic Co-Operative Society Ltd. & Ors. to be heard before Judges on the matter concerning tenders as the preferable method to procure contracts with the state over other discretionary and arbitrary methods which tend to be violative of Fundamental rights guaranteed under the constitution of India.

FACTS:

The first respondent herein this case is Kerela Ayurvedic Co-operative Society Limited, which is a licensed Ayurvedic and Unani drugs Manufacturer, filed this suit to contest the judgment passed by the High court of Lucknow Bench, Allahabad judicature in favour of the Indian Medicines Pharmaceutical Corporation Limited (IMPCL) and the state.

In the year of 2014, the GOI launched NAM to promote the department of AYUSH, Ministry of Health, and Family Welfare to procure a cost-effective medical system and services. In the Operation Guidelines of the same, it is provided that 75% of the admissible assistance shall be aided by the Central Government and 25% of that remaining shall be taken care of by the respective states. The UP-stateAYUSH society initiates its purchases from a single vendor IMPCL, and the purchase order is given to them without any tendering process just based on nomination.

In a petition filed by the first respondent against the appellant, they sought a decree to procure Ayurvedic Medicines under the AYUSH program through tenders. The High court held the method of procuring medicines is illegal. Therefore, the appellant was directed to invite tenders for competitive rates thus initiating the supply of quality drugs.

PLAINTIFF’S CONTENTIONS:

Mr. Naresh Kaushik, the learned counsel appearing on behalf of the Appellants contested that IMPCL has been in the picture to cater to the needs of the Central Government to procure quality medical drugs, and thereby, the GOI holds around 98.11% of its shares. One of the prime reasons to supply drugs at an affordable price is the unique organizational setup and the prices of the drugs are vetted by the union Ministry of Finance.

IMPCL has a drug testing laboratory that is certified since it’s a government manufacturing company. Also, the Ministry of AYUSH has at various times recommended the purchase of medicines from IMPCL. Paragraph 4(vi)(b) mentions the phrase ‘at least’ that can be inferred to provide a minimum benchmark for procurement and not the upper limit.

It was further contended that the procurement of medicines may be made through tenders in cases where the property is planning to dispose of and in this case, there is no reason.IMPCL is not a private entity, so, there is no scope for monopoly, when the sale is not initiated in the open market.

DEFENDANT’S CONTENTIONS:

Whereas on the other hand, Mr. Kaleeswaram Raj, the counsel appearing on behalf of the respondents contended that Para 4(vi) provides only the establishment to procure medicines and does not address the question of whom and how. The mention of the phrase ‘or’ in para 4(vi) can be inferred to indicate that all are equally eligible to supply medicines.

UP State cannot arbitrarily fix one particular party to be eligible to procure medicines and all the entities mentioned in the para shall be recognized on an equal footing. Thus, initiating purchases in a fair process that shall enable all entities for an equal opportunity to secure orders.

There is no warrant for procurement of medicines to be obtained only from IMPCL and the prices shall be vetted by the Department of Expenditure, Ministry of Finance but it does not have the power to determine the prices of Ayurvedic medicines. So, the National Pharmaceutical Pricing Authority should be the authority for determining the prices of medicines.

JUDGEMENT:

The court observed from the precedents that the state while entering a contract shall not stand on the same foot as a private person, thus, it can’t act arbitrarily while dealing with the public be it in matters of jobs or contracts. It is also essential that the state and all its instrumentalities have to conform to COI to guarantee Fundamental Rights to its citizen.

In answering the question of whether the tender is a constitutional requirement the court has pointed out certainly more than once in many of its cases that Government contracts must be initiated transparently. The first cum first service policy is arbitrarily alienating resources and this is not a preferred method of allocation.

The court considered that tender allows negotiation with a private enterprise. The reason for the public auction being reasonable is that it allows a transparent process for the public and the procurement of any goods can be made at their best quality and price. The deviation of tender should not violate Article 14 and must be fair and reasonable.

The intervention application filed in the court has the scope only to interpret para 4(vi)(b) of the Operational Guidelines and the court finds that there were no records to show that other manufacturing entities of drug suppliers cannot supply better drugs. Therefore, the appeal stands disposed of.