# M/S H.I.F.P.Ltd v. A.D.G. of Factories Ordinance Equipment Factory & ors

- **Citation:** (1999) 2 ILRA 56
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 1999
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-h-i-f-p-ltd-v-a-d-g-of-factories-ordinance-equipment-factory-ors-39223
- **Pages:** 5

## Text

THE INDIAN LAW REPORTS [1999
56
private negotiation. we are not in agreement with the submission of
the learned counsel for the petitioner. This is not a case of private
negotiation at all, rather the authorities have acted openly and in the
knowledge of all the parties. It would have been another mater if the
authorities had entered into secret negotiation with respondent nos.5
and 6 after the initial tender,but there was no such secret negotiation
in this case. In this case the authority acted fairly and not arbitrarily.
The petitioner was granted time again and again to lower its tender
but it refused to do so. The authority acted openly and fairly by again
inviting offers from all the parties including the petitioner to lower
their tender rate and after opening the tenders the authority did not
accept the petitioner's offer as it did not lower its tender. Thus, the
authority has acted in a fair manner and there is no merit in this
petition. Petition is dismissed.

Petition Dismissed.
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BY THE COURT

1. Heard learned counsel for the parties.

1998
------
December, 10
1998
------
M/S H.I.F.P.Ltd.
 Vs.
A.D.G. of
Factories
Ordinance
Equipment
Factory & ors.
.------
M. Katju,J.
S.L.Saraf,J.
2 All.] ALLAHABAD SERIES
57
2. This is an application praying for refund of a certain amount
being the amount of purchase tax deposited by the petitioner under
protest for the period 1986-87 to 1992-93. This petition had earlier
been heard and decided by a Division Bench of this court consisting
of Hon'ble Om Prakash J.and Hon'ble S.L.Saraf ,JJ, Since then
Hon'ble Om Prakash J. has been transferred as Chief Justice if
Kerala, hence this application has been transferred to this court on
nomination by Hon'ble Chief Justice.

3. The decision of the Division Bench is reported in 1997 U.P.T.C.
624 Vam Organic Chemicals Ltd. & another vs.State of U.P. &
others . the controversy is regarding paragraph 18 of the aforesaid
judgement which reads:

"So far as the refund of the amount of Rs.1,02,34,845.52 paise is
concerned the petitioner company may make a proper application for
the refund thereof to respondent No.2 who will consider the same in
the light of the observations made hereinabove."

4. The petitioner made an application for refund in the light of the
above observation of the Division Bench and the said application has
been rejected by order dated 5.3.1998,hence this application.
The short question in this case is whether the principle of unjust
enrichment laid down by the Supreme Court in Mafatlal Industries
ltd. Etc. Etc. vs. Union of India Etc. Etc. (1996 (11) Judgement
Today (S.C.)283, can be commodity but a different commodity for
which the original commodity is used as raw materials. In the present
case the petitioner has alleged, and it is not disputed, that the
petitioner
captively
consumed
the
industrial
alcohol

for
manufacturing certain chemicals and hence what was sold by the
petitioner was not alcohol but chemicals, which is a totally different
commodity. The question , therefore, is whether the petitioner is
entitled to refund?

5. Learned Additional Advocate - General has relied upon a
Division Bench decision of the Court in the case of Somaiya
Organics (India) Ltd. And another vs. The State of U.P. & another
(Writ Petition No.487 of 1997 decided on 24th August , 1990).

6. He has laid emphasis on the following observation:

"Be that as it may, even if we assume, for the sake of argument that
the said distillery is owned by the Somaiya Organics and that
1998
------
V.O.C..Ltd
 & another..
 Vs.
State of U.P.
& others
.------
M. Katju,J.
S.L.Saraf,J.
THE INDIAN LAW REPORTS [1999
58
,therefore, no sale can be envisaged between two factories owned by
the same legal person, even so we are not inclined to direct refund of
the purchase tax collected from the petitioner in exercise of our
discretionary jurisdiction under Article 226 of the Constitution, in as
much as we presume that the burden of the tax has been passed by
the petitioner to the consumers. No statement is made petitioner to
the petitioner that the amount of purchase tax was not included in the
sale price of the product of the petitioner or that it was not collected
from purchasers/consumers."

7. This observation does go to support the contention of the learned
Additional Advocate General that the applicant must make a
categorical assertion that the amount of purchase tax is not included
in the price of goods sold by the petitioner.

8. Learned Additional Advocate -General also relied on an the
observation of the Supreme Court in the case of Mafatlala Industries
Ltd. (Supra) in paragraph 110 (iii).

9. However, learned counsel for the applicant has relied on
paragraph 9 of the decision of the Supreme Court in the case of
Bhadrachalam Paperboards Ltd. & another vs. The Government of
Andhra Pradesh & others Judgement Today 1998(5) S.C.314. in that
decision the Supreme Court observed:

"We find that the High Court was not right in so presuming in
the light of the case put forward by the Government pleader as
Extracted above. The appellants have reimbursed as tax liability
which was on the Forest Department and the appellants have
consumed the goods for manufacturing paperboards, etc. Therefore,
the question fo appellants passing on the liability to the consumer on
the facts of this case would not arise. Consequently, the appellants
are entitled for refund of the tax collected from them, not for the
entire period but for the period commencing three years prior to the
date of filing of the writ petitions."

10. In our opinion, in view of the clear observation of the Supreme
Court in paragraph 9 of thedicision of Bhadrachalam Paperboards
Ltd. And another (Supra) we are of the opinion that the observation
to the contrary in the decision of the Allahabad High Court in
Somaiya Organics (India) & another is not a good law.

11. In our opinion, paragraph 9 of the decision of the Supreme Court
(quoted above) really clinches the case. The whole controversy is
1998
------
V.O.C..Ltd
 & another..
 Vs.
State of U.P.
& others
.------
M. Katju,J.
S.L.Saraf,J.
2 All.] ALLAHABAD SERIES
59
whether it what is sold is not the original goods but some other goods
which was manufactured from the original goods, then whether the
principle of unjust enrichment is applicable. In other words whether
the principal of unjust enrichment can be extended to a case where
what is sold is not the original goods but some other goods
manufatured is from the original goods. Learned Additional
Advocate - General conteended that paragraph 9 is to be read with
paragraph 5 and hence the contention of the learned counself of the
applicant is not correct. We are not in agreement with the contention
of the learned Additional Advocate-General. In bhadrasholam case
(sapra) the original goods were bamboo and hardwood, which were
consumed by the appellant for manufacturing paperboards. In the
context the Supreme Court observed that there is no question of
appellant passing on the tax liability to the consumer. This gos to
indicate that the Supreme Court was of the view that the principle of
unjust enrichment is not applicable to a case where the goods have
not been sold as such and are instead captively consumed for
manufacturing some other goods, and what is sold is the new
products. This is precisely the intiation here and hence the decisions
in Bhadra Chalam's case (Supra) squarely applies to the present case.

12. In the circumstances this application is allowed. The refund as
prayed for shall be granted and the respondents are directed to refund
the amount to the applicant within three months from the date of
production of a cerfified copy of this order before the authority
concerned.

13. Learned Addl. Advocate General has prayed for leave to
approach the Supreme court. In our opinion this is not a fit case
where leave should be granted because the point has already been
decided by the supreme Court in the case of Bhadrachalam
paperboards. (supra). The prayer for leave is therefore rejected.

Application Allowed.

1998
------
V.O.C..Ltd
 & another..
 Vs.
State of U.P.
& others
.------
M. Katju,J.
S.L.Saraf,J.
THE INDIAN LAW REPORTS [1999
60
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BY THE COURT

1. Heard Sri P.N. Tripathi, Learned counsel appearing for the
petitioner and Sri Vinay Malviya, learned Standing Counsel
representing the respondents.

2. The petitioner is a licensee under the provisions of U.P. Kerosena
Control Order, 1962. By the order dated 26th April , 1990, a copy
whereof is Annexure-I to the petition, the licence of the petitioner
has been suspended on the order of the District Magistrate dated 24th
April, 1990.

3. In paragraph 3 of the petition it is asserted that the order of the
District Magistrate dated 24th April, 1990 was never served on the
petitioner despite repeated requests made to the authorities
concerned. In paragraph 8 of the petition it is asserted that neither
any charge-sheet nor any show cause notice was served on the
petitioner before passing the order of suspension.

1998
------
December, 10