TMI Blog1993 (11) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... ly those factories can be registered in which the number of workers are 10 or more. It is alleged in paragraph 4 of the writ petition that when the number of workers in the petitioner's unit exceeded 10, the petitioner applied for registration under the Factories Act on November 24, 1988 and the said registration was granted with effect from the said date. Since the petitioner's unit was a new unit it applied for exemption under section 4-A of the U.P. Sales Tax Act. The respondent No. 1 granted the eligibility certificate, a true copy of which is annexure 1 to the writ petition. However, while the eligibility certificate has been granted for seven years from the date of first sale, i.e., December 3, 1986 up to December 2, 1993, the effective exemption from sales tax has been granted from November 24, 1988, i.e., the date of registration under the Factories Act. Accordingly, assessment order under the Sales Tax Act for the assessment years 1986-87 and 1987-88 have been passed against the petitioner. Aggrieved the petitioner has filed this petition in this Court. A counter-affidavit has been filed but there is no serious denial of the factual allegations in the writ petition. Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution of India. Prima facie, it seems to us that there is a discrimination between those persons to whom registration under the Factories Act is granted quickly and those to whom it is granted with considerable delay. While the former will enjoy the full period of exemption, the effective period of exemption for the latter will be considerably curtailed for no fault of theirs. However, it is not necessary for us to declare clause (c) of sub-section (5) as ultra vires as in our opinion the said clause (c) is only directory and not mandatory. In Kuchchal Industries v. Divisional Level Committee 1990 UPTC 481 the facts of the case were that though the unit started production in October, 1984, the registration under the Factories Act was granted only in September, 1987. The court held that the exemption under section 4-A should be granted from 1984 (i.e., when the production started) and not from 1987. Against the aforesaid decision a special leave petition was filed in the Supreme Court being S.L.P. (Civil) No. 117 of 1991 which was dismissed on January 16, 1991. Subsequently Act No. 28 of 1991 retrospectively amended section 4-A and introduced a new Explanation in the Act d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in a statute is directory or mandatory has been considered in several decisions which we may now deal. In Rubber House v. Excellsior Needle Industries Pvt. Ltd. AIR 1989 SC 1160, the Supreme Court quoted with approval the following well-known observation of Lord Cambell: "No universal rule can be laid down for the construction of statutes as to whether mandatory enactment shall be considered directory only or obligatory with an implied nullification for disobedience. It is the duty of Courts of Justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed." The Supreme Court also quoted with approval the following observation of Lord Penzance: "I believe, as far as any rule is concerned, you cannot safely go further than that in each case you must look to the subject-matter; consider the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act; and upon a review of the case in that aspect decide whether the matter is what is called imperative or only directory." In the aforesaid decision the Supreme Court obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f complying with the provisions in question is avoided, the circumstance, namely that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered." The above observation of the Supreme Court in the aforesaid case makes it clear that in deciding whether a provision is mandatory or directory one of the important questions which has to be considered is whether the object of the legislation will be defeated or furthered in holding the provision to be mandatory or directory. We have also to see the consequences which would follow from construing the provisions one way or the other. In the present case if we hold clause (c) of sub-section (5) of section 4-A to be mandatory it will go against the object of the provision, viz., to encourage the setting up of new industries in the State. It is well-known that there is often bureaucratic delay in disposing of the application for registration under the Factories Act, and hence to treat the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the general object of section 4-A is to encourage industrialisation in the State, we have to construe sub-section (5)(c) of the Act to be directory otherwise it will come in the way of the aforesaid object. In Kuchchal Industries case 1990 UPTC 481, it was held by a Division Bench of this Court that the requirement of registration under the Factories Act cannot always be complied with because a new unit which has less than 10 employees does not come within the definition of "factory" in section 2(m) of the Factories Act and hence to insist upon such registration would deprive such small-units of the benefit of exemption under section 4-A. The special leave petition against the said decision was dismissed by the Supreme Court. The ratio of the said decision is obviously that the requirement of registration under the Factories Act is only directory and not mandatory. The purpose of requirement of registration is only to ensure that there is a genuine new unit and hence this condition need not be insisted upon when by other materials it can be demonstrated that a genuine new unit has been set up. The requirement of registration under the Factories Act has, hence, to be treate ..... 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