Case Note & Summary
The petitioner, Goradia Special Steels Ltd., a company incorporated under the Companies Act 1956, is a sick industrial company registered with the Board of Industrial and Financial Reconstruction (BIFR) under Case No. 274 of 1998. It operates a manufacturing unit producing steel ingots with a capacity of 30,000 tonnes per annum, employs 360 workers, and supplies to ordnance factories and public sector undertakings. The petitioner challenged a communication dated 22nd March 2019 from the Department of Industry, Energy and Labour, Government of Maharashtra, addressed to the Chairman of Maharashtra State Electricity Distribution Company Limited (MSEDCL). This communication stated that the Chairman should act in accordance with the government's earlier communication of 19th March 2019 and an order of the Bombay High Court dated 25th January 2019, and that a previous letter of 7th February 2019 should be treated as non-est and cancelled. Following this, MSEDCL issued a disconnection notice dated 24th April 2019 and disconnected the petitioner's electricity supply on 3rd May 2019. The petitioner contended that the impugned communication was issued without any opportunity of hearing, violating principles of natural justice, and was contrary to BIFR directions that no coercive action be taken. The respondents argued that the communication was merely advisory and did not require a hearing. The court, after considering the submissions, held that the communication had serious civil consequences and was issued in violation of natural justice. It set aside the impugned communication and directed restoration of electricity supply, subject to the petitioner complying with payment conditions as per the court's earlier order.
Headnote
A) Administrative Law - Natural Justice - Right to be Heard - Government Communication Directing Disconnection - The impugned communication dated 22nd March 2019 from the Department of Industry, Energy and Labour to MSEDCL directing disconnection of electricity supply to the petitioner was set aside as it was issued without affording any opportunity of hearing to the petitioner, violating principles of natural justice. The court held that even if the communication was merely advisory, it had serious civil consequences and required prior notice. (Paras 1-27) B) Sick Industrial Companies - BIFR - Protection from Disconnection - Sick Industrial Companies (Special Provisions) Act, 1985 - The petitioner was a sick company registered with BIFR under Case No. 274 of 1998. The court noted that BIFR had directed that no coercive action be taken against the company. The impugned communication was contrary to the BIFR's directions and could not be sustained. (Paras 5-27) C) Electricity Law - Disconnection of Supply - Validity of Government Directive - The court examined whether the government could direct MSEDCL to disconnect supply. It held that the communication was not a mere advice but a directive, and since it was issued without hearing the petitioner, it was liable to be quashed. (Paras 1-27)
Issue of Consideration
Whether the impugned communication dated 22nd March 2019 directing disconnection of electricity supply to a sick industrial company registered with BIFR is valid and whether it violates principles of natural justice.
Final Decision
The impugned communication dated 22nd March 2019 is set aside. The respondents are directed to restore electricity supply to the petitioner's factory, subject to the petitioner complying with the payment conditions as per the order dated 25th January 2019.
Law Points
- Natural justice
- Right to be heard
- Sick Industrial Companies (Special Provisions) Act
- 1985
- Electricity disconnection
- Government communication
- Non-est order
