AI Structured Summary
Not yet generated for this judgment
Judgment
Upendralal Waghray, J.—The petitioner is a Registered Trade Union of the workers in the 3rd respondent-Company. It seeks the following relief:
"(a) issue a writ preferably one in the nature of Certiorari quashing Sectior 16 of the Andhra Pradesh (Telangana Area) Money Lenders (Amendment) Act, 1981 as unconstitutional;
(b) declare that the notification issued in G.O.Ms.No. 432 Food and Agriculture (F.P.III) 19th October, 1981 unenforceable:
(c) declare that IFC respondent No. 3 herein is not entitled to rely on the provisions of the A.P. (Telanagana Area) Money Lenders (Amendment) Act, 1981 without possessing any licence whatsoever under the said Act which came into force on 15th October, 1981 for a tripartite entered into on 20th August, 1981;
(d) and be pleased to issue any other appropriate writ, direction or order as the Hon''ble Court may deem fit and proper."
The 1st respondent is the Government of Andhra Pradesh. 2nd respondent is the International Finance Corporation, having its office in United States of America. 3rd respondent is the NSL Limited Company, the workers of which are the members of the petitioner-Trade Union 4th respondent is the Nagarjuna Coated Tubes Limited, Hyderabad, which is said to be a sister concern of the 3rd respondent. Some of the relevant facts have not been stated in the affidavit or additional affidavit filed on behalf of the petitioner, but during the course of hearing have been stated by the counsel for the petitioner at the Bar. These are: The agreement under which the loan was advanced by the 2nd respondent was executed at Bombay, where it is having ah agent. The place of execution of agreement is not stated in the affidavit and in para 6 of the additional affidavit filed during hearing it is merely stated that it was in India. There is no allegation or material about the plan of disbursement of the loan. A suit for recovery of the amount due under the said agreement has been filed by the 2nd respondent at Bombay. A copy of the agreement dated 20-8-1981 under which the 2nd respondent has agreed to advance a loan of Rs. one million and five hundred thousand dollars to the 4th respondent and for which the 3rd respondent is a guarantor has been also filed during the hearing.
It is not disputed that the 2nd respondent is an International Finance Corporation which has been established by an International agreement to which India is a signatory. In accordance with the said International agreement, Parliament has passed Act 42 of 1958 called the International Finance Corporation (Status, Immunities and Privileges) Act, 1958. Section 3 of the said Act, which confers status, immunities and privileges on the Corporation reads as follows:
"3. Conferment of status and certain immunities and privileges on the Corporation and conferment of certain immunities and privileges on its officers and employees:- (1) Notwithstanding anything to the contrary contained in any other law, the provisions of the Agreement set out in the Schedule shall have the force of law in India:
Provided that nothing in Section 9 of Article VI of the Agreement shall be construed as-
(a) entitling the Corporation to import into India goods free of any duty of customs without any restriction on their subsequent sale therein; or
(b) conferring on the Corporation any exemption from duties or taxes which form part of the price of goods sold; or
(c) conferring on the Corporation any exemption from duties or taxes which are in fact no more than charges for services rendered.
(2) xxxxxxx"
By the relevant provisions of the Schedule the 2nd respondent is given a status of ''Corporation'' and a juridical personality and also given several immunities and privileges mentioned therein. Article VI in the Schedule to Section 3 reads as follows:
"Article VI
Status, Immunities and Privileges
Section 1:- Purposes of Article:
xxxx
Section 2:- Status of the Corporation
xxxx
Section 3:- Position of the Corporation with regard to judicial process. Actions may be brought against the Corporation only in a court of competent jurisdiction in the territories of a member in which the Corporation has an office has appointed an agent for the purpose of accepting service or notice of process, or has issued or guaranteed securities. No actions shall, however, be brought by members or persons acting for or deriving claims from members. The property and assets of the Corporation shall, where so ever located and by whomsoever held, become from all forms of seizure, attachment or execution before the delivery of final judgment against the Corporation,
xxxx"
The agreement referred to earlier contains several detailed provisions and Sections 10.05 and 10.08 read as follows:
"Section 10.05. At the election of IFC, this agreement may be enforced in the courts of India or in any other courts having jurisdiction." "Section 10.08. It is a condition precedent to the coming into effect of this Agreement that the Andhra Pradesh (Telangana Area) Money-Lenders Act, 1349 F of India and (if and to the extent that the same is applicable to the transactions contemplated herein) the Andhra Pradesh (Andhra Region-Scheduled Areas) Money-Lenders Regulation, 1960 of India shall have been amended in such manner that the provisions thereof shall not apply to or in any way affect the Loan or any of the terms and conditions of this Agreement or affect the recovery of the Loan by IFC or any suit or other legal proceeding in connection therewith."
The loan was advanced in dollars and it can be taken judicial notice of that it was after approval of Reserve Bank of India and various Ministries as contemplated by Foreign Exchange Regulations Act and Industries Development Regulations Act etc. The rate of interest is 14% p.a., with quarterly rests and usual penalty clause. The letters dated 11-1-1991 and 18-1-1991 from the 2nd respondent addressed to the 3rd respondent show that the entire principal amount of one million and five thousand is not repaid and is due in addition to other financial charges and a demand was made for repayment. It also appears that the principal borrower viz., 4th respondent had become a sick industry and after enquiry the BIFR recommended its winding up. The letter of the 3rd respondent-company dated 22-1-1991 discloses that it is not disputing the legality of the agreement but is only requesting for waiver of penal interest and reduction in the claim of interest.
Probably, at the insistence by the 2nd respondent-vide Section 10.08 of the agreement-exemption from the Hyderabad Money Lenders Act was made a condition before the agreement became effective. This appears to be a matter of abundant precaution. By an Ordinance, Section 16 was introduced in the Andhra Pradesh (Telangana Area) Money Lenders Act, 1349 Fasli with effect from 15-10-1981. The said Ordinance was replaced by Act 31 of 1981 which has been given retrospective effect from the date of commencement of the Ordinance Thus, with effect from 15-10-1981 the following Section has been introduced:
"16. Power to exempt:- The Government may by notification published in Andhra Pradesh Gazette and for reasons to be recorded therein, exempt my person or class of persons or any financial or banking institution or agency or any class of financial or banking institution or agencies from all or any of the provisions of this Act or the rules made thereunder, subject to such conditions as the Government may deem fit to impose and they may likewise, vary or cancel such exemption."
In exercise of the power conferred by the said Section the Government of Andhra Pradesh issued G.O.Ms. No. 432 Food and Agriculture dated 19-10-1981 of which paragraphs 5 and 6 are relevant:
"5. And whereas the Government of A.P. consider that it will be in the public interest to apply the provisions of the said Act and the rules made thereunder in respect of the loans to be ad vanced by the said International Finance Corporation, Washington (United States of America) to the aforesaid companies for the purpose of the projects to be implemented within said district in the State-
Now, therefore, in exercise of the powers conferred by Section 16 of the Andhra Pradesh (Telangana Area) Money-Lenders Act, 1349 Fasli as amended by Andhra Pradesh Ordinance No. 33 of 1981 the Governor Andhra Pradesh hereby exempts, the International Finance Corporation Wasington (United States of America) from all the provisions of the and the rule made thereunder so as to facilitate the advance of loans the said corporation to the following Companies, namely:-
1) Nagarjuna Steels Limited, Hyderabad.
2) Nagarjuna Signode Limited, Hyderabad.
3) Nagarjuna Coated Tubes Limited, Hyderabad.
4) Coramandal Fertilisers Limited, Secunderabad. for the purpose of implementing the projects in the districts of Medak and Cuddapah of this State."
The Government Pleader has also produced copies of G.O.Ms.No. 582 F & A dated 9-12-1985 and G.O.Ms.No. 279 F & A dated 23-4-1990 granting similar exemptions for the loans obtained from respondent No. 2 and the Asian Development Bank respectively.
The Andhra Pradesh (Telangana Area) Money Lenders Act, 1349 F (hereinafter referred to as the Act) only applies to the Telangana Area of the Andhra Pradesh State. It was enacted in 1930 during the Nizam''s Government for regulating money lending in that State. It provides for maximum rate of interest and prohibits Money Lenders from charging compound interest. The Money Lenders are required to take out a licence and maintain accounts. The violation of statutory requirements is visited by penal consequences including prosecution and dismissal of the suit based on a loan transaction by a Money Lender in violating the Act. It must, however, be kept in mind that the said Act which is in operation in a part of the State is obviously meant for persons carrying on money lending in the area covered by the Act. According to Section 2(4) ''loan'' means "a loan secured or unsecured, advanced on interest in cash or in kind, and shall include every transaction which is in substance a loan, but shall not include the following:-
(a) xxxxx
(b) xxxxx
(c) xxxxx
(d) a loan advanced by a bank, a co-operative society or a company;
(e) xxxxx"
According to Section 2(7) ''Money lender'' means "a person including a pawnbroker, who, within the meaning of this Act, only advances loan in the ordinary course of his business or does so along with other business...."
The 2nd respondent neither has an office in Hyderabad nor is carrying on any money lending activity in Hyderabad. Further, in view of the exception to the definition of ''loan'' mentioned above, a loan of this nature will not be covered by the Act. Apparently, anticipating the objections of the type which are now raised in the writ petition, it was provided in the agreement for advancing of loan that it will not become operative till an exemption is obtained from the Act. To my mind, the Act does not apply to the instant transaction when neither the agreement was signed nor is there any material that the loan amount was disbursed at Hyderabad. A suit is already pending in Bombay and the parties the agreement have not challenged its validity.
As lengthy and persistent submissions have been made by the senior counsel for about five hours, spread over more than two days at the stage of admission, I am dealing with them. It is contended by the counsel for the petitioner that workmen have an interest in maintaining a writ petition of this nature, as their livelihood will be affected if the 3rd respondent is made liable to pay the loan amount. The decision of the Supreme Court reported in National Textile Workers'' Union and Others Vs. P.R. Ramakrishnan and Others, has been relied upon for this purpose. It may be noticed that no date as to the financial status of the 3rd respondent and 4th respondent and the reasons for non-payment of any instalments of the principal loan due to the International organisation since last ten years are forthcoming. It may be that in a winding up proceedings where the interest of the workers are likely to be affected, they have a right to be heard. But, in this case, they are seeking a declaratory relief regarding validity of an agreement entered into 11 years ago by the employer''s sister concern in which the employer is a guarantor with an International Organization for the grant of foreign exchange loan. There is no case of fraud or collusion in the instant agreement. The petitioner does not have a right to seek such a declaratory relief. The said decision of the Supreme Court does not have any application to the facts of this case. Apart from this, according to the Schedule extracted above under the law made by Parliament immunity from judicial process is conferred on the 2nd respondent. A suit had already been filed and is pending in Bombay where the agreement was entered into. I do not think that in such circumstances it is proper for this court to entertain the writ petition by a person not party to the contract, which will have the effect of deciding about the validity of the agreement on which the suit is based.
Lengthy arguments were addressed on the validity of Section 16 of the Act conferring power of exemption. It was contended that it violates Article 14 of the Constitution of India and confers arbitrary power on the Government. It was also contended that it is inconsistent with the spirit of the Act. In support of this contention, the following decisions of the Supreme Court are cited and referred to and read at length viz., Rustom Cavasjee Cooper Vs. Union of India (UOI), ; Vice-Chancellor O. U. v. Chancellor, AIR 1967 SC 1305 (para 26); Mrs. Maneka Gandhi Vs. Union of India (UOI) and Another, ; Central Inland Water Transport Corporation Limited and Another Vs. Brojo Nath Ganguly and Another, ; Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress and Others, and Navnit R. Kamani and Others Vs. R.R. Kamani, (para 11). It was contended that Section 16 of the Act has been introduced only at the instance of 2nd respondent and is therefore a colourable exercise of legislative power. It is also contended that the agreement was entered into earlier than introduction of the Section, which does not have retrospective effect prior to the date of Ordinance. It was further contended that the G.O. issued in exercise of the power also does not give any relevant reason as contemplated by the Section. To my mind, these arguments are to be stated to be rejected in the facts of this case. Several Acts contain a provision for exemption. The general complaint that the provision regarding exemption will confer power which may be against the spirit of the Act will be applicable to all such cases. By Section 16 of the Act exemption is to be granted only for reasons to be recorded in writing. In a given case the exemption granted may be open to challenge. But, I do not consider that the Section itself can be said to be invalid for the reasons canvassed by the counsel for the petitioner. No decision in which a provision conferring power to exempt has been held to be invalid has been cited. In this case, the agreement itself stipulated that it will come into effect only after exemption being granted. It is a matter which can be taken judicial notice of that the foreign exchange loan by an Organization like 2nd respondent will be granted only after it has been scrutinised by the Reserve Bank of India and the concerned Ministries of the Government of India like Finance and Industry as well as by the State Government. The loan was for establishing an Industry which would also provide employment. It was at the request of the company that the application was processed and approved by the various authorities and the loan was sanctioned and agreement entered into. It cannot be said that the grant of an exemption in this case (which to my mind was unnecessary) amounts to any arbitrary action. The terms of the agreement indicate that the rate of interest was 14% with quarterly rests which is a normal rate and condition imposed by the Nationalised Banks also. If the borrower has not paid anything towards the principal amount over ten years and the liability has increased or the rupee value has depreciated, the agreement cannot be said to be invalid. Probably, it will be for the Company to request the lender for any relief. The contentions raised by the petitioner do not call for interference by this court and any interference would encourage indiscipline and discourage any international Financing Agency, particularly when 2nd respondent has been established under an International Agreement.
It was also contended that the 2nd respondent having chosen to file a suit in Bombay has waived its immunity and, therefore, this writ petition should be entertained. I am not able to agree. The relevant article in the Schedule itself provides that the option is given to the 2nd respondent to institute a suit in Indian Court where its agent is located. This has been done. It does not mean that it has waived the immunity for any action by third parties like the petitioner. I do not find any substance in any of the contentions raised and the writ petition is dismissed.