# SIRSILK LTD. AND ANOTHER v. TEXTILES COMMITTEE & ORS

- **Citation:** [1988] Supp. 2 S.C.R. 880
- **Court:** Supreme Court of India
- **Decided:** 1988-09-12
- **Case number:** Special AppealNo. 3 and 4/1972. A B WITH C TRANSFERRED CASE NOS. 351-52, 354-55 of 1983
- **Bench:** A.P. Sen, K.N. Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sirsilk-ltd-and-another-v-textiles-committee-ors-10047
- **Pages:** 33

## Headnote

Textile Committee Act, 1963/Textile Committee Rules 1965: Sections 2(g), 12(1) and 22/Rule 21'--Fe~lmposition of-On production of
rayon yarn and staple fibre yarn-Constitutional validity of-Words
used in statute to be interpreted in popular sense.
Statutory Construction: Provision of earlier statute can be made
use of for purpose of construing a subsequent statute in case of
ambiquity.
A number of textile mills which were engaged in the business of
D manufacture and sale of rayon yarn and staple fibre, i.e. man-made
fibre, moved the High Courts under article 226 of the Constitution
challenging the constitutional validity of the fee imposed upon them by
the Textile Committee under rule 21 of the Textile Committee Rules,
1965 made by the Central Government under s. 22 of the Textiles
Committee Act, 1963. The levy of fee was challenged on the ground that
E
the Textile Committee was not rendering any service to them by way of
inspection or examination of rayon yarn and that the element of quid
pro quo was totally absent.
The High Courts of Allahabad, Andhra Pradesh, Gujarat and
Madras upheld the validity of the levy, w bile the Kerala High Court
F
took the contrary view. The parties came up in appeal to this Court.
Four similar petitions pending in the High Court of Bombay were also
transferred to this Court.
Before the Court, it was contended on behalf of the textile mills (I)
the rayon yarn and nylon yarn manufactured by them was made wholly
G of filaments and not of fibres and therefore the same are not textiles within
the meaning of the definition of •textiles' as contained of S. 2(g) of the
Textile Committee Act, and hence not liable to payment of any fee in
accordance with rule 21 of the Textile Committee Rules; and (2) the
Textiles Committee rendered no service to the writ petitioners because
neither they needed the services of the Committee nor the Committee
H was in a position to render any service to them.
880
\
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SIRSILK LTD. v. 1EXTILES COMMITTEE
881
On behalf of the Revenue, the Additional Solicitor General contended (1) the levy under r. 21 of the Rules was not correlated to the
power. of inspection which the Textiles Committee had und·er s. 11 of the
Act, but was relatable to its power to levy fees under s. 12 for the
performance of its functions, powers and duties under s. 4 (2) the
avowed object and purpose of the Act, as was clear from s. 3, was
'quality control' of all textile and it would be idle to contend that rayon
yarn and nylon yarn which were but species of what was known as
man-made fibres, otherwise called artificial silk, and had a world
market, should be outside the purview of the Act, (3) the Act and the
words used therein had to be interpreted not on a technological or
specialised scientific plane, but in a popular sense as understood by
experts in the sphere of the textile industry and the commercial world
dealing with it; and ( 4) the definition of 'textiles' must be given a broad C
and liberal construction in furtherance of the object and purpose of the
Act.
A
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Dismissing the appeals filed by the textile mills and allowing the
appeal filed by the Textile Committee, it was
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HELD: (1) In view of the fact that in the writ petitions filed in the
High Courts the textile mills had stated that they were actually engaged
in the manufacture of rayon. yarn and nylon yarn both of which, they
a\'erred, were 'species of what was known as man-made fibres', their
contention that rayon yarn and nylon yarn manufactured by them E
were not 'yarn' and therefore did not fall within the definition of textiles
under s. 2(g) of the Act could be countenanced. [899E-F)
(2)- T!tere was no explicable reason for the Legislature to have
excluded rayon yarn and nylon yarn frof!l the purview of the definition
of textiles in s.(2)(g) of the Act. In the premise, the expression 'textiles' F
as defined in s.2(g) of the Act has to be given a broad and liberal
construction, in furtherance of the purpose and object of the Act. [901

## Text

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SIRSILK LTD. AND ANOTHER
v.
TEXTILES COMMITTEE & ORS.
SEPTEMBER 12, 1988
[A.P. SEN AND K.N. SINGH, JJ.]
Textile Committee Act, 1963/Textile Committee Rules 1965: Sections 2(g), 12(1) and 22/Rule 21'--Fe~lmposition of-On production of
rayon yarn and staple fibre yarn-Constitutional validity of-Words
used in statute to be interpreted in popular sense.
Statutory Construction: Provision of earlier statute can be made
use of for purpose of construing a subsequent statute in case of
ambiquity.
A number of textile mills which were engaged in the business of
D manufacture and sale of rayon yarn and staple fibre, i.e. man-made
fibre, moved the High Courts under article 226 of the Constitution
challenging the constitutional validity of the fee imposed upon them by
the Textile Committee under rule 21 of the Textile Committee Rules,
1965 made by the Central Government under s. 22 of the Textiles
Committee Act, 1963. The levy of fee was challenged on the ground that
E
the Textile Committee was not rendering any service to them by way of
inspection or examination of rayon yarn and that the element of quid
pro quo was totally absent.
The High Courts of Allahabad, Andhra Pradesh, Gujarat and
Madras upheld the validity of the levy, w bile the Kerala High Court
F
took the contrary view. The parties came up in appeal to this Court.
Four similar petitions pending in the High Court of Bombay were also
transferred to this Court.
Before the Court, it was contended on behalf of the textile mills (I)
the rayon yarn and nylon yarn manufactured by them was made wholly
G of filaments and not of fibres and therefore the same are not textiles within
the meaning of the definition of •textiles' as contained of S. 2(g) of the
Textile Committee Act, and hence not liable to payment of any fee in
accordance with rule 21 of the Textile Committee Rules; and (2) the
Textiles Committee rendered no service to the writ petitioners because
neither they needed the services of the Committee nor the Committee
H was in a position to render any service to them.
880
\
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SIRSILK LTD. v. 1EXTILES COMMITTEE
881
On behalf of the Revenue, the Additional Solicitor General contended (1) the levy under r. 21 of the Rules was not correlated to the
power. of inspection which the Textiles Committee had und·er s. 11 of the
Act, but was relatable to its power to levy fees under s. 12 for the
performance of its functions, powers and duties under s. 4 (2) the
avowed object and purpose of the Act, as was clear from s. 3, was
'quality control' of all textile and it would be idle to contend that rayon
yarn and nylon yarn which were but species of what was known as
man-made fibres, otherwise called artificial silk, and had a world
market, should be outside the purview of the Act, (3) the Act and the
words used therein had to be interpreted not on a technological or
specialised scientific plane, but in a popular sense as understood by
experts in the sphere of the textile industry and the commercial world
dealing with it; and ( 4) the definition of 'textiles' must be given a broad C
and liberal construction in furtherance of the object and purpose of the
Act.
A
B
Dismissing the appeals filed by the textile mills and allowing the
appeal filed by the Textile Committee, it was
D
HELD: (1) In view of the fact that in the writ petitions filed in the
High Courts the textile mills had stated that they were actually engaged
in the manufacture of rayon. yarn and nylon yarn both of which, they
a\'erred, were 'species of what was known as man-made fibres', their
contention that rayon yarn and nylon yarn manufactured by them E
were not 'yarn' and therefore did not fall within the definition of textiles
under s. 2(g) of the Act could be countenanced. [899E-F)
(2)- T!tere was no explicable reason for the Legislature to have
excluded rayon yarn and nylon yarn frof!l the purview of the definition
of textiles in s.(2)(g) of the Act. In the premise, the expression 'textiles' F
as defined in s.2(g) of the Act has to be given a broad and liberal
construction, in furtherance of the purpose and object of the Act. [901A-B)
(3) The Act and the words used therein have to be interpreted not
on a technological or specialised scientific plane but in the popular sense
as understood by experts in the 5phere of the textile industry and the G
commercial world dealing with it. ·[90ID-E)
( 4) The Industries (Development and Regulation) Act, 1951 treats
rayon as well as nylon as textiles made of artificial (man-made) fibres.
The Industries (Development and Regulation) Act, 1951 and the.Textiles Committee Act may properly be considered to be statutes in pari
H
materia. [9058]
882
SUPREME COURT REPORTS
[1988] Supp. 2 S.C.R.
( 5) The Industries (Development and Regulation) Act is an Act
A earlier in point of time, and there is no reason why if a subsequent
statute by the same Legislature can be pressed in aid for the purpose <>f interpreting, in the event of any doubt, the provisions of
an earlier statute, the earlier statute cannot be made use of for
the purpose of construing, in the event of ambiguity, the provisions
S
of a later statute. [905E]
(6) Rayon and nylon yarn are not only made of 'other fibre'
but are also yarn of 'artificial silk' within the meaning of s. 2(g) of
the Act. [904D]
(7) The contention that rayon yarn and nylon yarn manufactured
by the mills are made wholly of filaments and not of fibres and therefore
did not come within the purview of textiles as defined in s. 2(g) of the
Act prior to .its amendment and therefore were not liable for payment of
the fee levied under r. 21 of the Rules, cannot prevail. [90SF]
D
(8) The grievance of the textile mills that there is no inspection of
the rayon yarn and nylon yarn manufactured by them at the stage of
production is belied by the fact that there is pre-shipment inspection of
the fabrics manufactured from such fibres for export. [910B-C]
(9) When the entire proceeds of the fee are utilised in financing
E
the various projects undertaken by the Textiles C-Ommittee, as also the
inspection of all textiles including man-made fibres and textile machinery, the appellants cannot be heard to say that there is no reasonable
and sufficient correlation between the levy of the fee and the services
rendered. [907C]
p
(10) When the levy of the fee is for the benefit of the entire textile
industry, there is sufficient quid pro quo between the levy recovered
and.the services rendered to the industry as a whole. [910D]
(II) The conclusion is inevitable that the levy of the ·fee under r. 21
of the Textiles Committee Rules, 1965 by the Textiles Committee under
G
sub-s. (I) of s. 12 of the Textiles Committee Act, 1963 is valid and
constitutionally permissible. [912B-C]
Mis Juggilal Kamalapat Cotton Spinning & Weavin,ir Mills Co.
Ltd. v. The Textiles Committee, Bombay, [1972] Tax L.R. 2104; The
Travancore Rayons Ltd. v. The Textiles Committee, !LR (1972) Ker.
H
437; Sreeniwasa General Traders & Ors. v. State of Andhra Pradesh,
SIRSILK LTD. v. TEXTILES COMMITTEE [SEN, J.}
883
[1983)-3 SCR 843 referred to. The Gwalior Rayon Silk Manufacturing
(Wvg.) Co. Ltd., Birlagram Ujjain v. The Textiles Committee,
Bombay, AIR 1980 MP 69, overruled.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 869/
73, 863-64/77, 1460/80, 1281/73, and 1133-34/79.
From the Judgments and Orders dated 22.1.1973, 18.11.1976
10.4.1980, 30.10. 72 and 24.10.1978 of the Hyderabad, Ahmedabad,
Allahabad, Kerala, Allahabad High Courts in Writ Appeal No. 154/
72, Special ·civil Application No. 597/69, 598/69 F.A.F.O. No. 235/
1972, S.C.A. No. 13707/1972 & Special AppealNo. 3 and 4/1972.
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TRANSFERRED CASE NOS. 351-52, 354-55 of 1983.
Transfer Petition Nos. 21, 22, 24 to 26 of 1981 from Bombay High
Court.
V.C.Mahajan, G.L. Sanghi, N.R. Khaitan, Alok Sharma,
D
Krishan Kumar, Mrs. P. Shroff, Mrs. A.K. Verma, Joel Peres and
S. K. Jain for the Appellants in all the appeals.
;-
V.A. Bobde, B.R. Agarwala, Ms. S. Manchanda, Dr. D.
,
•
'
Chandrachud and P.H. Parekh for the Petitioners in Transferred
Cases.
G. Ramaswamy, Additional Solicitor General, V.C. Mahajan,
Harish Salve, D.N. Misra, Mrs. A.K. Verma, T.C. Sharma and C.V.
Subba Rao for the Respondents in all the appeals.
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G.Ramaswamy, Additional Solicitor General, V.C. Mahajan,
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S.S. Shroff, P. Shroff, R. Sasiprabhu, T.C. Sharma, C.V. Subba Rao,
V.B. Desai, Bharat Sangal and Ms. Madhuri Gupta for the Respondents in all the Transfer Cases.
P.H. Parekh and P. Narasimhan for the Intervener.
G
The Judgment of the Court was delivered by
SEN, J. In all these appeals except the one by special leave, and
the connected transferred cases brought by the. appellants, each of
which is a company incorporated under· the Compa,nies Act, 1956
e9gaged in.the business of manufacture and sale on a very large scale of
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884
SUPREME COURT REPORTS
[1988) Supp. 2 S.C.R.
A textiles generally and also of rayon yalJi and staple fibre, both of which
form species of what is known as man-made fibre i.e. artificial silk,
there is a common question as to the constitutional validity of a fee
imposed under r. 21 of the Texti)es .Committee Rules, 1965 made by
the Central Government under (;. 22 of the Textiles Committee Act,
B
c
1963, by the Textiles Committee constituted under s. 3 of the Act, on
the production of rayon yarn and staple fibre i.e. man-made fibres
manufactured by them. These appeals are against the various judgments and orders of the High Courts of Allahabad, Andhra Pradesh,
Gujarat and Madras upholding the validity of the levy. The remaining
appeal i.e. Civil Appeal No. 1281 of 1973 is preferred by the Textiles
Committee against the judgment and order of the Kerala High Court
taking the view to the contrary.
The facts in all these cases are more or less similar. It would
suffice for our purposes to notice the salient features thereof. To illustrate, the appellant company in Civil Appeal·No. 869 of 1973, Messrs
Sirsilk Ltd., Hyderabad is a manufacturer of rayon yarn and staple
D fibre and has established its factory at Sirpur Kagaznagar in the State of
Andhra Pradesh for the manufacture of the aforesaid man-made
fibres. The Chief Inspecting Officer, Textiles Committee by his letter
dated May 19, 1965 directed all the textile mills in India including the
appellant to send immediately, the monthwise statements of production for March and April 1965 and a cheque in payment of the fees due
E
thereon. However, the Association of Man-made Fibre Industry,
Bombay of which the appellant is a member by its letter dated May 25,
1985 advised the textile mills to keep the payment of fees in abeyance,
as it had made a representation dated May 26, 1965 on behalf of its
members to the Ministry of Commerce, Government of India and to
the Textiles Commissioner. Along with its letter, the Assocaition
F
forwarded to all its members a copy of the said representation. By a
further letter dated May 29, 1965, the Association advised all the
textile mills including the appellant to send a reply to the letter addressed by the Textiles Committee demanding payment of fees to the
effect that the Association had already made a represention to the
Ministry of Commerce and to the Textiles Commissioner and as soon as
G
a reply was received by them, they would revert to the subject and take
such action as might be necessary in the circumstances. In the meanwhile, the Textiles Committee by its letter dated August 10, 1965 made
a demand for payment of the fees for the months of March to July
1965. The appellant in its reply expressed its inability to pay the fees in
view of the pending representation made by the Association on their
H behalf and more so because the Association had advised the members
SIRSILK LTD. v. 1EXTILES COMMIT1EE [SEN, J.J
885
that the fee would become payable by the textile mills only in connection with the inspection and examination and must b.e commensurate
with the exact quantum of services rendered by the Committee. The
appellant were however informed that one of its members had already
remitted the fees. Consequently, !he appellant paid a sum of
Rs.40, 186.37 p. towards the fee for the period from March 1, 1965 to
February 28, 1966. It however adopted to the stand that the payment
of the fee was under a mistake and under misconception as to its legal
rights. It accor<jingly called upon the Association to take up the matter
with the Ministry of Commerce and the Textiles Commissioner and to
lodge a strong protest against the illegal exaction of the fee by the
Textiles Committee from its members when, ;tt fact, no services of any
kind were being rendered.
Thereafter, the Accounts Officer, Textiles Committee by letter
dated February 26, 1969 called upon the appellant to remit a sum of
Rs.33,343.62 p. towards the fee in respect of production of rayon or
staple fibre for the period from March 1, 1966 to March 31, 1967. It
was also advised to pay the. fee upto April 1968. In response thereto,
the appellant by its letter dated February 27, 1969 stated that the
Association had on behalf of its members addressed a letter to the
Secretary, Textiles Committee for certain clarifications and on receipt
of the reply, the Association would advise its members as to the course
of action. Eventually,. the Secretary, Textiles Committee by a letter
dated March 11, 1970, called upon the appellant that it should remit an
amount of Rs.35, 138.63 p. being the amount of fee outstanding within
ten days failing which the said amount would be recovered as arrears
of land revenue under s. 12(2) of the Act. Aggrieved, the appellant
moved-the High Court of Andhra Pradesh under Art. 226 of the Constitution challenging the validity of the fee and the threatened action
for recovery. A learned Single Judge (Parthasarthi, J.) by his judgment dated January 28, 1972 dismissed the writ petition upholding the
validity of the levy of the fee. On appeal being preferred by the appellant the judgment of the learned Single Judge was upheld by a Division
Bench (Gopuirao Ekbote, CJ and Chennakesava Reddy, J.) by its
judgment dated January 22, 1973. The High Court of Andhra Pradesh
preferred to follow the view expressed by B .N. Lokur, J. of the
Allahabad High Court in Mis. Juggilal Kamalapat Cotton Spinning &
Weaving Mills Co. Ltd. v. The Textiles Committee, Bombay, [1972]
Tax. LR 2104, and dissented from the view taken ·by Issac, J. in The
Trav·ancore Rayons Ltd. v. The Textile Committee, !LR 1972 Ker. 437
holding that the Textiles Committee was not entitled to levy any fee
under r. 4 of the Rules so long as it was not rendering any service by
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886
SUPREME COURT REPORTS
[1988] Supp. 2 S.C.R.
way of inspection or examination of rayon yarn.
Briefly stated, the facts in transferred cases nos. 351-352 of 1983
are these. The petitioner in the first case the Century Spg. & Mfg. Co.
Ltd., Bombay carry on the busines~ of manufacture of rayon yarn and
tyre-cord yarn, both of which form species of what is popularly known
as 'men-made rayon', while the petitioners in the second Messrs
Century Enka Limited, Bombay carry on the business of manufacture
of nylon filament yarn. By letter dated May 25, 1968 the Accounts
Officer, Textiles Committee, Bombay called upon the petitioner the
Century Spg. & Mfg. Co. Ltd. to remit a sum of Rs.5,89,187.46 p. as
fees in respect of production of 29,459,373.21 kgs. of rayon yarn for
the period from March 1, 1966 to April, 30, 1968. The petitioners were
also called upon to pay the fees for April 1968. In reply, the petitioners
by their letter dated June 18, 1968 stated that the Association of Manmade Fibre Industry, Bombay had addressed a letter to the Secretary,
Textiles Committee for certain clarifications in the matter and on
receipt of the reply the Association would be advising its members
further. Thereupon, further correspondence ensued between the Textiles Committee on the one hand and the Association on the other.
Thereafter, by letter dated February 20, 1969 the Secretary, Textiles
Committee intimated the petitioner that it was proposed to initiate
immediate action to recover the outstanding fees from the petitioner
as arrears of land revenue as contemplated under s. 12(2) of the Act. It
was further stated that in order to avoid coercive proceedings the
petitioner should pay up the arrears at least upto March 31, 1967
amounting to Rs.3,19,977.11 p.; in any case before March 1, 1969
failing which the Textiles Committee would be constrained to advise
the concerned Collector to enforce recovery of the outstanding fees as
arrears of land revenue. The petitioner accordingly moved a petition
under Art. 226 of the Constitution before the High Court of Bombay
for quashing the impugned notice of demand dated February 20, 1969
complaining that they bad at no time made any application for inspection and/or examination of the yarn they manufacture nor did they
ever approach the said Committee to inspect and/or examine yarn
manufactured by them. They averred that neither the said Committee
G nor any one on its behalf had rendered any service whatsoever to. them
either at their instance or otherwise. Similarly, the petitioner Century
Enka Limited moved a petition under Art. 226 of the Constitution
before the High Court of Bombay contending that the Textiles Committee was not entitled to demand or recover a sum of Rs.78,553.15 p.
or any other sum by way of fees on the nylon yarn manufactured by
H them, on the ground that the element of quid pro quo was totally
SIRSILK LTD. v. TEXTILES COMMITTEE {SEN, J.J
887
absent inasmuch as no services at all were rendered by the Coinmittee
to them. These two writ petitions were ordered to be transferred to
this Court under Art. 139 of the Constitution and numbered as transferred cases nos. 351-352 of 1983..
Similar are the facts in other cases. In transferred case no.354/83
Messrs Nirlon Synthetic Fibres & Chemicals Limited, Bombay carry
on the ·business of manufacture ·of nylon yarn and apparently paid
Rs.8,820.40 p. by way of fees on the nylon yarn manufactured by them in
compliance with the notice of demand issued by the Accounts Officer,
Textiles Committee dated February 20, 1969. The petitioner in the
other case transferred case no. 355/83 Messrs Garwara Nylons
Limited, Bombay also carry on the business of manufacture or nylon
yarn and paid Rs.51,738.89 p. by way of fee in compliance with the
circular issued by the Chief Inspecting Officer, Textiles Committee,
Bombay dated May 19, 1965 and assert that the payment of the said
amount was under a mistake. Both these petitioners moved the High
Court under Art. 226 of the Constitution challenging the validity of the
levy of the fee and prayed for the issue of a writ in the nature of
mandamu,s directing the Textiles Committee to refund the amounts
recovered from them. Both these writ petitions were also transferred
to this Court under Art. 139 and are numbered as transferred cases
nos. 354-355/83.
In Civil Appeals Nos. 863-864/77, the appellant Baroda Rayon
Corporation Limited, Gujarat are engaged in the business of
manufacture of rayon yarn and paid Rs.55, 100 towards the fee in
compliance with the notice of de\lland issued by the Accounts Officer,
Textiles Committee dated Marc:h 9, 1966 for the period from March 1,
1965 to February 28, 1966. They were further caf]ed upon by the
Secretary, Textiles Committee to remit a sum of Rs.39,211.26 p.
towards the arrears upto March 31, 1967. The appellant challenged the
recovery of the said amoul)t of Rs.55,100 as well as the threatened
demand of a further sum ofRs.39,211.26 p. by the Textiles Committee
as being ultra vires ·by petitions under Art. 226 of the Constitution
before the High Court of Gujarat. A Division Bench (S. Obul Reddy,
CJ & N .H. Bhatt, J.) by its judgment dated November 18, 1976 upheld
the Validity of the fee and accordi:n~cy dismissed the writ petitions.
The appellant in Civil Appeal No. 1460/80 Messrs Modipon
Limited, Meerut are manufacturers of nylon yarn. The Accounts
Officer, Textiles Committee by his letter dated June 11, 1960 required
the company to pay the arrears of fees for the period from March 1965
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A to May 1968. The company brought a suit being Original Suit No.
86/70 in the Court of the II Civil Judge, Meerut for a declaration and
perpetual injunction. In the suit it applied for grant of a temporary
injunction under Order XXXIX, r. 1 of the Code of Civil Procedure,
19.08 restraining the Textiles Committee from recovering the fees on
the ground that the nylon yarn manufactured by them did not fall
B within the definition of 'textiles' under s. 2(g) of the Act. The learned
Civil Judge by his order dated May 12, 1972 granted ad-interim
temporary injunction but fater vacated the same. The appellant
accordingly went up in appeal to the High Court. A Division Bench
(M.N. Shukla & N.N. Mithal, JJ) by its order dated April 10, 1980
substantially disallowed the application for temporary injunction while
C making a direction requiring the learned Civir Judge to examine
whether the appellant had commenced production since March 1968
and therefore the demand for fee for the period anterior to the commencement of the production could not possibly be sustained.
Appellants in Civil Appeals Nos. 1133-34/79 Messrs. J .K. Cotton
0 Spg. & Wvg. Mills Co. Ltd., Kanpur carry on the business of
manufacture of rayon yarn under the name and style of J .K. Rayon,
and of nylon yarn under the name and style of J.K. Synthetics Limited.
For the period from March 1965 to February 1966 they paid
Rs.49,372.65 p. Thereafter, they fell into arrears. The two companies
filed petitions under Art. 226 of the Constitution before the High
E Court of Allahabad contending inter alia that the said payments were
made under mistake without realising the implications of the Textiles
Committee Act or the Rules, and prayed for the issue of a writ in the
nature of mandamus directing the Textiles Committee to refund the
amount in question. As already stated, B.N. Lokur; J. in Juggilal's
case by his judgment dated November 6, 1971 upheld the validity ofF
the levy of the fee and dismissed the writ petitions. On appeal, a
Division Bench (Satish Chandra, CJ and Yashoda Nandan, J.) by its
judgment dated October 24, 1978 dismissed the appeal.
In Civil Appeal No. 1281 of 1973 the Textiles Committee has
come up in appeal against the judgment of a learned Single Judge of
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the High Court of Kerala (Isaac, J.) who by his judgment dated March
3, 1972 in Travancore Rayons Ltd. held that the levy of the fee by the
Committee was without the authority of law and so long as the Committee was not rendering any service by way of inspection and examination of rayon yarn manufactured by Messrs Travancore Rayon
Limited, it was not entitled to recover the same.
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SIRSILK LTD. v. TEXTILES COMMITTEE !SEN, J.!
889
In order to appreciate the rival contentions, it is necessary to set A
out the background in which the Textiles Committee was constituted,
the object and purpose of the Textiles Committee Act as also the
relevant provisions of the said Act and the Rules made thereunder.
The history of the legislation has been set out in the counter-affidavit
filed on behalf of the Textiles Committee and is as follows.
The Second world war gave a completely sheltered market for
Indian Textiles and created an unprecedented boom for their products. They were, however, for a variety of reasons, unable to withstand the severe international competition they had to face in foreign
markets with the return of normal conditions after the war. Alive to
the various problems faced by the Textile Industry in general and the
Cotton Textile Industry in particular, the Government of India took
timely steps to arrest the crisis by adopting various measures to
safeguard production and export of cotton textiles and to assure the
efficiency of the Cotton Textile Industry. It was in this context that the
'Cotton Textiles Fund Ordinance, 1944' was promulgated, establishing
a 'Fund' for supervising the exports of cloth and yarn and for development of technical education, research and other matters in relation to
the Cotton Textile Industry. The Cotton Textiles Fund Committee
which was appointed as the body to perform the various functions
imposed under the Ordinance did very useful work during the perioa
from 1945 to 1964 for the improvement of the said industry and so as to
enable it to meet the competition of foreign textiles in international
market. The Ordinance, promulgated in 1944 establishing the Cotton
Textiles Fund Committee, had provisions to safeguard exports of Cotton Textiles only. As more and more items of textiles such as wool,.
silk, art silk and other man-made fibre fabrics and yarn started finding
their way into the international market in increasing quantities, it
became necessary for the Government of India to create a homogenous entity to look after and promote the improvement and safeguard for all such textile items. It was also necessary to take such steps
in the case of these schemes of the Textile Industry both for improving
standards in such industry and because the same were in many ways
connected and inter-related with the Textile Industry. Such action and
inter-relation arose because of the nature of the commodities and
because in many cases composite fibres and textiles were produced and
many units engaged in production of such synthetics and other materials were also engaged in the Cotton Textile Industry.
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Parliament accordingly enacted the Textiles Committee Act
(~ereinafter referred to as 'the Act') which received the assent of the
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President on December 3, 1963. It was meant to re-enact the· provisions of the aforesaid Ordinance and to make the same applicable to
all textiles including all synthetic fibres i.e. rayon yarn, staple fibre,
nylon yarn, man-made fibre commonly known as artificial silk.
The avowed object and purpose of the Act, as reflected in the
long title, is to provide for the establishment of a Committee for ensuring the quality of textiles and textile machinery and for matters connected therewith. S. 2(f) of the Act defines 'textile machinery' to mean
the equipment employed directly or indirectly for the processing of
textile fibre into yarn and for the manufacture of fabric therefrom by
weaving or knitting and to include equipment used either wholly or
partly for the finishing, folding or packing of textiles. S. 2(g) defines
'textiles'. This definition as originally enacted read as follows:
"2(g). 'Textiles' means any fabric or cloth or yarn made
wholly or in part of cotton, or wool or silk or artificial silk
or other fibre."
By Act _No. 51 of 1973, a new definition of 'textiles' was substituted
w.e.f. January 1, 1975 and it reads:
"2(g). 'textiles' means any fabric or cloth or yarn or
gannent'or and other article made wholly or in part of-
(i) cotton; or
(ii) wool; or
(iii) silk; or
(iv) artificial silk or other fibre, and includes fibre.
S. 3 of the Act provides for establishment of the Textiles Committee
by the Central Government. S. 4 deals with the functions of the Committee. The functions of the Committee as stated in s. 4 generally are
to ensure by such measures as it thinks fit, standard qualities of
textiles both for mternal marketing and export purposes and the
manufacture and use of standard type of textile machinery. It reads
follows:
"4. Functions of the Committee-(1). Subject to the provisions of this Act, the functions of the Committee shall
SIRSILK LTD. v. TEXTILES COMMITIEE (SEN, J.]
891
generally be to ensure by such measures, as it thinks fit,
standard qualities of textiles both for internal marketing
and export purposes and the manufacture and use of
standard type of textile machinery.
(2) without prejudice to the generality of the provisions of
sub-section ( 1), the Committee may-
(a) undertake, assist and encourage, scientific, technological and economic research in textilefodustry and textile
machinery,
(b) promote export of textiles and textile machinery and
carry on propaganda for that purpose;
( c) establish or adopt or recognise standard specifications
for-
(i) textiles, an.d
(ii) packing materials used in the packing of textiles or
textile machinery, for the purposes of export and for internal consumption and affix suitable marks on such·
standardised varieties of textiles and packing materials;
(d) specify the type of quality control or inspection which
will be applied to textiles ortextile machinery;
(da) provide for training in the techniques of quality control to be applied to textiles or textile machinery;
( e) provide for the inspection and examination of~
(i) textiles;
(ii) textile machinery at any stage of marnffacture and also
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while it is in use at mill-heads;
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(iii) packing materials used in the packing of textiles or
textile machinery;
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(f) establish laboratories and test houses for the testing of
textiles;
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(g) provide for testing textiles and textile machinery in
laboratories and test houses other than those established
under clause (f);
(h) collect statistic for any of the above mentioned
purposes from-
(i) manufacturers of, and dealers in, textiles;
(ii) manufacturers of textile machinery; and
(iii) such other persons as may be prescribed;
(i) advice on all matters relating to the development of
textile industry and the production of textile machinery;
(j) provide for such other matters as may be prescribed.
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(3) In the discharge of its functions, the Committee shall
be bound by such directions as the Central Government.
may, for reasons to be stated in writing, give to it from time
to time."
S. 7 of the Act provides for constitution of a Fund called the Textiles
~ Fund. Fees recovered under the Act form part of this Fund. The
moneys in the Fund are applied for meeting the pay and allowances of
the officers and other employees of the Committee and other
administrative expenses of the Committee and for carrying out the
purposes of the Act. S. 11 confers on the Committee the power of
inspection and provides:
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"(11) Inspection-(1) The Committee may, on application
made to it or otherwise, direct an officer specially
authorised in that behalf to examine the quality of textiles
or the suitability of textile machinery for use at the time of
manufacture or while in use in a textile mill and submit a
report to the Committee.
(2) Subject to any rules made under this Act, such an
officer shall have power to-
(a) inspect any operation carried on in connection with the
manufacture of textiles or textile machinery in r~tion io
SIRSILK LTD. v. TEXTILES COMMITIEE [SEN, J.J
893
which construction particulars, marks or inspection
standards have been specified,
(b) the samples of any article or of any material or substance used in any article or process in relation to which
construction particulars, marks or inspection standards
have been specified;
(c) exercise such other powers as may be prescribed.
(3) On receipt of the report referred to in sub-section (1),
the Committee may tender such advice, as it may deem fit
to the manufacturer of textiles the manufacturer of textile
machinery and the applicant."
S. 12 provides for levy of fees for inspection and examination and
reads as follows:
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"U. (1). The Committee may levy such fees as may be
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prescribed-
(a) for inspection and examination of textiles,
(b) for inspection and examination of textile machinery,
( c) for any other services which the Committee may
render to the manufacturers of textile and textile
machinery:
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Provided that the Central Government may by notification in the Official Gazette, exempt from the payment of
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fees, generally or in any particular case.
(2). Any sum payable to the Committee under sub-s. (1)
may be recovered as an arrear of land revenue."
(The section quoted here is as it stood before its amendG
mentby Act51of 1973).
S. 22(1) confers on the Central Government power to make rules for
carrying out the purposes of the Act. In particular, s, 22(2)( e) empowers the Central Government to make rules providing "the scale of
fees that may be levied for inspection ·and examination under s. 12".
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In exercise ot the powers conferred by s. 22, the Central
Government made the Textiles Committee Rules, 1965. A levy of fee
was introduced for the first time w.e.f. March 1, 1965 by virtue of r. 21
of the Rules. The Table forming part of r . .21 under which the fee was
levied was in these terms:
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"21. Fee for inspection, examination and other services
rendered by the Committee-
( 1) The Committee may with effect from 1st March, 1965
levy and collect for inspection and examination of textiles
and textile machinery specified in col. 2 of the Table below,
the fee specified in the corresponding entry in col. 3 of that
Table:
TABLE
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SI. Description of textiles
No. and textile machinery
Fee
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2
1.
Cotton cloth where the average
count of yarn used in the cloth
is less than 355.
2.
Cotton cloth where the average
count of yarn used in the cloth
is less than 355. or finer
3.
Woollen yarn
4.
Man-made Cellulosic or
non-cellulosic filament yarn
5. Man-made cellulosic fibre cut
to staple length
6.
Textile machinery
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6 paise for every 100 square
metres manufactured.
10 paise for every 100
square metres manufactured
2 paise per kg. manufactured
2 paise per kg. manufactured
2 paise per kg. manufactured.
8 paise per Rs._ 100 ad valorem
on the ex-factory price of
the machinery manufactured.
"(2) The Committee_ may levy and collect, for any other
service rendered bv it to the manufacturers of textiles and
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SIRSILK LTD. v. TEXTILES COMMITTEE [SEN, J.]
895
textile machinery such fee as it may fix with the approval of
the Central Government."
With effect from the 11th June, 1966, the Table of Fee~.as revised to
reads as under:
TABLE
SI. Description of textiles
Fee
No. and textile machinery
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'2
3
I.
Cotton cloth where the average
6 paise for every 100 square
count of yarn used in the cloth
metres manufactured,
is less than 35 s.
2.
Cotton cloth where the average
10 paise for every 100
count of yarn used in the cloth
square metres manufactured
is 35 s or finer.
3.
(a) WQOllen yarn
2 paise per kg. manufactured
(excluding shoddy and carpet yarn)
(b) Shoody and carpet yarn
1 paise pe kg. manufactured.
4.
(a) Man-made cellulosic or
2 paise per kg. manufactured.
non-cellulosic filament yarn
(other than nylon filament yarn)
(b) Nylon filament yarn
6 paise per kg. manufactured.
5. (a) Man-made cellulosic fibre cut 1 paise per kg. manufactured.
to staple length
(b) Man-made non-cellulosic fibre 2 paise per kg. manufactured.
cut to staple length.
6.
Textile machinery
8 paise per Rs.JOO ad valorem
(assembled)
on the ex-factory price of
the machinery manufactured.
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7.
Cotton yam for export
8.
Natural silk yarn or fabric
for export
2 paise per kg. inspected.
50 paise per Rs.100 f.o.b.
price of the goods
inspected.
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It must be stated here that Act No. 51/73 introduced a new
provision S. 5A as a result of which a cess has been imposed in place of
a fee. Sub-s. (1) provides that there shall be levied and collected as a
cess for the purposes of this Act a duty of excise on all textiles and on
all textile machinery manufactured in India at such rate, not exceeding
1 % ad valorem as the Central Government may, by notification in the
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Official Gazette, fix. Proviso thereto interdicts that no such cr<s shall
be levied on textiles manufactured from out of handloom or powerloom industry. Sub-s. (2) of s. 5A directs that the duty of excise levied
under sub-s. ( 1) shall be in addition to any cess or duty leviable on
textiles or textile machinery under any other law for the time being in
force. Another change brought about was to delete cl. (b) of s. 12, and
I) cl. (c) relettered as cl. (b) and a proviso were inserted, with the word'
special' inserted in place of the word 'other'. The new cl. (b) so
inserted is in these terms:
''(b) for any special service which the Committee may
render to the manufacturers or exporters of .textiles and
textile machinery;
Provided that no fees shall be levied in respect of
inspection and examination of textiles on which a duty of
excise is leviable under this Act;"
All these cases pertain to the period prior to January 1, 1975 i.e. prior
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to the enactment of Act 51/73. We are here concerned with the validity
of the fee as levied under r. 21 of the Rules and the question is whether
the imposition can be justified as a fee.
We have had the benefit of hearing Shri V.M. Tarkunde, learned
counsel appearing for the appellant J.K. Cotton Spg. & Wvg. Mills
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Co. Ltd., Shri G.L. Sanghi, learned counsel appearing for the appellant Baroda Rayon Corporation Limited, Shri Vinod Bobde, learned
counsel appearing, on behalf of Century Spg. & Mfg. Co. Ltd. and
Century Enka Limited, Shri N.K. Khaitan, learned counsel appearing
for Sirsilk Limited, Dr. Dhananjaya Chandrachud, learned counsel
appearing for Nirlon Synthetics Fibres and Chemicals Ltd. and
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Garware Nylons Ltd. and Shri Krishna Kumar, learned counsel for
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SIRSILK LID. v. TEXTILES COMMITTEE [SEN, J.I
897
Modipon Limited.' The learned counsel presented their respective
points of view with much resource and learning.
On behalf of the appellants and the petitioners, the learned
counsel put forth in substance two main contentions, namely: (1) That
rayon yarn and nylon yarn manufactured by the writ petitioners bef<)>re
the High Court i.e. appellants and the petitioners before us, are made
wholly of filaments and not at all of fibres and therefore are not textiles within the meaning of the definition of 'textiles' as contained ins.
2(g) of the Act accordingly are outside the purview of the Act and not
liable to payment of any fee in accordance with r. 21 of the Rules as
originally framed or as it existed after its amendment w .e.f. June 11,
1966. And (2) That the Textiles Committee rendered no service to the
writ petitioners in respect of their production- of rayon ya_rn and nylon
yarn and hence it was not within its competence to levy any fee on
them under r. 21 of the Rules. According to the writ petitioners, in fact
they do not need the services of the Committee and 'the Committee is
also not in a position to render any service to the!Il, not having even
laid down standard specifications for the manufacture of rayon yarn or
nylon yarn. It was submitted that there was no correiation between t.he
fee charged and the service rendered by the Committee and there is
complete absence of the element of quid pro quo, legally essential for
levying a fee.
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Shri G. Ramaswamy, learned Additional Solicitor General, on
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the other hand, during his lucid and forceful submissions repelled the
arguments. He submitted that the levy under r. 21 of the Rules was not
correlated to the power of inspection which th~ Textiles Committee
had under s. 11 of the Act, but was relatable to its power to levy fees
under s. 12 for the performance of its functions, .powers and duties
under s. 4. He contended that the avowed object and purpose of the
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Act as is clear from s. 3 was 'quality control' of all textiles, and it would
be idle to contend that rayon yarn and nylon yarn which are but species
of what is known as man-made fibres, otherwise called artificial silk
and has a world market, should be outside the purview of the Act. He
cautioned that we have to bear in mind that the Act is not a scientific
treatise on organic and inorganic chemistry but is an Act by Parliament
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for the benefit of the indigenous textile industry so that it may be able
to hold its own in a fiercely competitive international market.