Rajasthan High Court - Jaipur
Jaipur Metals And Electricals Anr vs State Of Raj And Ors on 26 July, 2011
Author: Ajay Rastogi
Bench: Ajay Rastogi
In the High Court of Judicature for Rajasthan
Jaipur Bench
**
Civil Writ Petition No.3857/2010
Jaipur Metals & Electrical Employees
Co-operative Credit & Thrift Society Ltd &
Metals & Electrical Mazdoor Sangh, Jaipur
Versus State, JMEL, BIFR & Anr
Date of Order ::: 26/07/2011
Hon'ble Mr. Justice Ajay Rastogi
Mr. Ashok Gaur Sr. Adv., with Mr. AK Jaiman, for petitioner
Mr. Shashi Kant Saini for Mr. RP Singh AAG for respdt.-1-State Mr. Sudhir Gupta, Sr. Adv.,with Mr. Abhishek Pareek, for respdt-4.
Mr. PK Sharma, for applicant JME Employees Organisations Instant petition filed by petitioners claiming themselves as share holders of M/s Jaipur Metals & Electrical Ltd ("Co.-JMEL") is directed against recommendations made by Board for Industrial & Financial Reconstruction ("BIFR") dt.26/09/2002 (Ann.1) in exercise of its powers U/s 20(1) of The Sick Industrial Companies (Special Provisions) Act, 1985 ("Act, 1985").
As alleged, Co.-JMEL was referred to BIFR on 18/12/1998 U/s 15(1) of Act, 1985 and after conducting inquiry U/s 16(1) and affording opportunity of hearing to all the concerned parties including the petitioners, the BIFR declared Co.JMEL as a sick industrial company U/s 3(1)(o) of Act, 1985 and after appointing IDBI as Operating Agency U/s 17(3), finally after consideration of all relevant facts and with unanimous consent on the winding up of the Co.JMEL, the BIFR confirmed its opinion that the sick industrial company (JMEL) was not likely to make its net worth exceed the accumulated losses in future; and considered it appropriate that it will be just equitable and in public interest that the Co.JMEL should be wound up U/s 20(1) of Act, 1985 vide order dt.26/09/2002 and forwarded to the High Court for taking further appropriate action, obvious under the provisions of Indian Companies Act.
It is certainly a matter of concern that recommendations made by BIFR vide order dt.26/09/2002 were sent to the High Court with forwarding letter dt.24/01/2009 (Ann.4) and Co. Petition-19/2009 was registered and is pending consideration for admission.
At this stage, it is relevant to record that JMEL Mazdoor Sangh claiming themselves as share holders of Co.JMEL has filed Application (3628/dt.25/02/2010) seeking their impleadment in Co.Petition-19/2009 for permission to address at the stage of admission, as well. Taking note of their submissions, the Company Court allowed their application and granted permission to JMEL Mazdoor Sangh (petitioner-2) and impleaded them as party respondent vide order dt.29/04/2010.
It is further relevant to record that two employees (Abdul Qayum & Asta Ali) of Co.JMEL in their individual capacity also filed application on 26/03/2010 and sought permission for their impleadment as party respondent claiming their preferential claim based on the Industrial Award, for being heard in Co. Petition-19/2009. They too were permitted to participate in the proceedings vide order dt. 29/04/2010.
At the same time, Application (6780/ dt.15/03/2010) in Co.Petition No.19/2009 was filed by M/s Genus Power Infrastructure Ltd claiming as successful bidder & M/s Umang Board (P) Ltd, seeking permission for being heard at admission stage but both the applications were rejected vide reasoned order dt.13/12/2010 while holding that U/s 439(4) of the Co.Act, the Company, creditors/ contributories can only have a right of hearing at admission stage and merely because some payments were made of dues of the workmen or sovereign dues of State Government will not make the successful bidders (M/s Genus Power Infr. Ltd as a creditor of the Company) entitled for right of hearing at the admission stage.
It is also relevant to record that present petitioners have also filed Co.Appl.-153/2010 U/s 391 read with S.393 of Co. Act for revival of Co.-JMEL.; alongwith which, proposal of revival has been filed which is pending consideration.
Shri Ashok Gaur, learned Senior Counsel appearing for petitioners vehemently contends that after recommendations made by BIFR being received by the High Court and before Co. Petition-19/2009 could be registered, in the intervening period, Mahavir Kr.Godha alongwith co-workers separately filed CWP-7761/2003 & cognate cases claiming their dues of salary from August, 1999; and certain developments have taken place for revival of Co.JMEL and the State Government also intervened in the matter and private promoters were invited to bid for Co.JMEL and pursuant to which M/s Genus Power Infrastructure Ltd tendered its bid, which was declared successful bidder - pursuant to which Memorandum of Understanding ("MOU") was entered into between successful bidder ("Genus"), State Government & petitioners herein (JMEL Employees Society & Mazdoor Sangh) on 07/11/2008 pursuant to which successful bidder undertook to make payment towards dues of the workers & staff and sovereign dues of the government, and proposed to settle claims of creditors, as well and that being a major change having taken place after recommendations made by BIFR dt.26/09/2002, matter requires a fresh look by BIFR.
Based on MOU (supra), Counsel for petitioners submits that recommendations made by BIFR impugned herein may be quashed and the mater be remitted back to the BIFR, once again to give a fresh look to the entire matter in the light of MOU having been executed between the State Government & successful bidder & so also present petitioners, who are major share holders of Co.JMEL and it will not be either in the interest of share holders/creditors or in public interest to go ahead with winding up petition merely on the basis of recommendations made by BIFR on 26/09/2002. In support Counsel placed reliance upon decisions of Apex Court in Crescent Iron & Steel Corp. Ltd Vs. Union of India (1992(4) SCC 680), and other High Courts in BIFR Vs. Gwalior Synthetics (P) Ltd (1998 (Vol.91) Co.Cases 514-Madhya Pradesh) & Cawnpore Chemical Works (P) Ltd Vs. Appellate Authority for Indl. & Fin. Reconstruction & Ors (2002(3) AWC p.2012 (Allahabad).
Respondent-1 (State) in its reply inter -alia averred that in proceedings initiated in CWP-7761/2003 (Mahavir Kr.Godha Vs. State) and during intervention by the High Court, the matter was examined and proposals were invited for revival of Co.JMEL, pursuant to which the Genus Power Infrastructure Ltd given its offer for revival vide letter dt. 08/10/2008 (Ann.2) followed by three MOUs being signed (Ann.3) and based thereon, prayed that recommendations made by BIFR may be re-visited in larger interest of the workers & their families and the revival proposal in the form of MOU has an absolute and unreserved consent of the State.
Reply to writ petition filed by respondent-2 is not more than a fact finding report furnished in the form of reply; and it has been inter-alia averred that the BIFR while recommending winding up of JMEL did not have knowledge of subsequent developments and steps taken by Government of Rajasthan pursuant to the orders of the High Court for inviting bids and signing MOU for revival & rehabilitation of JMEL; and efforts are made to revive JMEL, and that would require a fresh look by competent authority.
Respondent-4 (M/s Alchemist Asset Co.) in its reply inter-alia avered that vide assignment deed dt.11/10/2007, respondent-4 on having acquired debts of IDBI, had stepped into shoes of IDBI and based on the assignment deed, application was filed by respondent-4 which was allowed by this Court permitting its impleadment as party respondent to instant petition. It has further been averred that the bidding process having been initiated by State Govt., where M/s Genus Power Infrastructure Ltd claimed to be successful bidder is under challenge in CWP-12826/2008, besides in CWP-3643/2007, CWP-1965/2008 & CWP-13608/2008.
Shri Sudhir Gupta, Senior Counsel for respondent-4 raised preliminary objection that recommendations made by BIFR impugned herein are appealable U/s 25 of Act, 1985 before the Appellate Authority for which limitation of 45 days has been provided from the date of copy of the order being issued; however, the appeal could be entertained by authority after 45 days but not later than 60 days provided the authority is satisfied that the appellant was prevented by sufficient cause from filing appeal in time U/s 25 of Act, 1985. Counsel submits that fact finding inquiry undertaken by BIFR is subject to re-appreciation of the record by appellate authority U/s 25 of Act, 1985; and the authority may confirm, modify or set aside the order impugned in appeal or remand the matter to BIFR for consideration afresh. But the present petitioners having participated in proceedings before BIFR has failed to question the recommendations of BIFR, if aggrieved, by filing appeal U/s 25(2) of Act, 1985, that in itself, dis-entitles them to avail of extra ordinary jurisdiction of this Court U/Art.226 of the Constitution. Apart from statutory remedy of appeal available to the petitioners, writ petition could not have been entertained at such a belated stage after eight years in absence of any sufficient cause being explained for the delay in filing writ petition, they are not entitled to claim any equity; and as such writ petition is not maintainable and deserves to be dismissed.
That apart, Counsel for respondent further submits that present petitioners are participating in the proceedings of Co. Petition-19/2009 where BIFR recommendations impugned herein are yet to be examined and the Company Court has to take its decision as to whether winding up petition deserves admission and matter is pending consideration at admission stage; that apart, revival proposals for which the petitioners have come forward by way of filing separate Co.Appl.-153/2010 U/s 391 & 393 of the Co. Act, that too has yet to be examined by Co. Court.
Based on these facts & circumstances, Counsel for respondents submits that instant petition is nothing but a proxy litigation at the behest of M/s Genus Power Infrastructure Ltd who claimed to be successful bidder and based on MOUs having been executed with present petitioners on 07/11/2008 and only to support its (Genus) interest, instant petition has been filed and who has prepared alleged scheme of revival based upon transfer of shares & assets of Co.-JMEL to Co.-Genus incomplete disregard of dues of secured creditors and against tenets of the revival which is to be based on consensus of concerned parties and not against the wishes of the secured creditors.
Counsel further submits that the respondent-4 being largest shares holder & secured creditors besides exclusive first charge holder is opposing the revival scheme, itself and the mere MOU being entered between the parties will not be of any significance and instant writ petition in the light of pending company petition is not maintainable.
It has further been contended that instant petition has been filed only to delay the matters so that company petition pending before Company Court to examine the recommendation of the BIFR could be deferred for one reason or the other and unless the revival scheme comes forward satisfying creditors/contributories and other liabilities of Co.-JMEL, merely making payment of some dues of workers and the sovereign dues of the State will not give any substantial change in the circumstances after recommendations being made, which needs a fresh look to the scheme as desired and that apart, the matter is still pending consideration before Company Court to examine recommendations of BIFR in Co.Pet.-19/2009, all such latter developments if having taken place can be examined and the petitioners being party impleaded in Co. Petition-19/2009, if at all having any material for being placed on record can be looked into by Co.Court while taking its decision; and change in circumstances as alleged particularly on the basis of MOU, can not be reviewed within limited scope of judicial review U/Art.226 of the Constitution to interfere with BIFR recommendations made U/s 20(1) of Act, 1985, impugned in instant writ petition.
Shri Prem Krishan Sharma, Counsel for applicant (JME Employees Organisation) who are claiming themselves as share holders of Co.-JMEL and was allowed to intervene vide order dt.14/07/2011, submits that the BIFR has made its recommendations after having considered and assigning extensive reasons and sent the same vide forwarding letter dt.26/09/2002 to High Court for further action/orders; and decision is yet to be taken in the company petition and later MOU having been entered into on 07/11/2008 are only an eye wash and the so called successful bidder is also not interested to acquire debts of Co.-JMEL and the present petitioners have come forward at the behest of successful bidder (Genus) as proxy litigation.
Counsel further submits that once recommendations have been made by BIFR and sent to the High Court for further consideration, no purpose is going to be served in remitting the matter to the BIFR as prayed for by writ petitioner and what has been prayed for if accepted by this Court it will seriously jeopardies rights of the workers who are share holders of Co.JMEL.
This Court has considered rival contentions of the parties and with their assistance, examined material on record. Recommendations made by BIFR vide Order dt. 26/09/2002, allegedly forwarded to the High Court vide letter dt.04/02/2009 is indisputably an appealable order U/s 25 of Act, 1985; and the petitioners have participated in the proceedings and their presence was recorded by BIFR in para 4 of its order impugned herein and knowing it fully well about recommendations made for Co.-JMEL being wound up U/s 20(1) of Act, 1985, no appeal was preferred by them U/s 25 of Act, 1985. That apart, even the delay of about eight years having caused in filing instant petition has not been satisfactorily explained by petitioners.
However this Court finds substance in the submission made by Counsel for respondents that in the absence of statutory remedy of appeal being availed of, and the delay being satisfactorily explained, the writ Court should not ordinarily exercise its equitable jurisdiction U/Art.226 of the Constitution of India.
It is true that availability of alternative remedy will not operate as absolute & constitutional bar to entertain writ petition but is a self-imposed restriction; and the Court has imposed upon itself certain restrictions, one of which is that if an effective & efficacious remedy is available, the writ Court would not normally exercise its jurisdiction U/Art.226 of the Constitution. The Apex Court in Whirlpool Corpn. Vs. Registrar of Trade Marks (1998 (1) SCC p.1) while examining jurisdiction of High Court in entertaining writ petition U/Art.226 of Constitution, in spite of of statutory remedy available, has observed that the alternative remedy would not operate as a bar in atleast three contingencies:
(i) whether the writ petition seeks enforcement of any of the fundamental rights;
(ii) where there is violation of principles of natural justice; or
(iii) where the order or the proceedings are wholly without jurisdiction or the vires of an Act is challenged.
It has been consistently followed by Apex Court in all its subsequent decisions and further affirmed in latest judgment in Union Bank of India Vs. Satyawati Tandon (2010(8) SCC 110).
It has come on record that Appeal-365/2002 U/S 25 of the Act was preferred by M/s Co-ordination Committee of Workers Union against order dt.26/09/2002 which came to be dismissed by appellate authority for Industrial & Finance Reconstruction N.Delhi vide order dt. 11/05/2005 (Ann.R/3) on the premise that appellant has no locus standi to challenge the recommendations of BIFR.
In the instant case, it is not the case set up by petitioner that alternative remedy available U/s 25 of Act, 1985 was either not efficacious or one of the contingencies referred to by Apex Court in Whirlpool Corpn. Vs. Registrar of Trade Marks (supra) is meted out being an exception so as to entertain writ petition U/Art.226 of the Constitution of India. In absence of such a case being made out on record, instant writ petition on preliminary objection alone raised by respondents deserves rejection.
Even that apart, main thrust made by Counsel for petitioners is that upon MOU having been entered into between successful bidder (Co.-Genus) with State Government & Two Employees Union of JMEL (petitioners herein) on 07/11/2008 and pursuant to which, some dues of workers and sovereign dues of the State Government have been paid by successful bidder (Co.-Genus), what will be the effect of MOU later on being entered into by successful bidder (Co.-Genus) with share holders of Co.-JMEL between the parties, the matter came up in CWP-7761/2003 (Mahaver Godha Vs. State), learned Advocate General was called upon on 06/03/2009 to hold a meeting on 21/03/2009 and submit its report in Court - pursuant to which, the Advocate General cal meting and submitted his report on 02/04/2009 - extract whereof reads ad infra:
"In the circumstances, I am of the view that since the parties to the dispute are not in agreement to affect a compromise, the sentiments expressed by this Hon'ble Court cannot be operationalized. The only course of action now open and to which most of the parties to the dispute, including the State Government seems to be acquiesced is that the matter be referred to the Hon'ble Company Court for further adjudication. "
Having examined material on record, it would not be appropriate for writ Court to record any opinion herein since recommendations made U/s 20(1) of Act, 1985 by BIFR vide order dt.26/09/2002 impugned herein and assailed at the behest of petitioners in instant writ petition are subject matter of consideration in Co.Petition-19/2009 before Company Court where the subsequent events are open for examination and expressing any opinion by writ Court in regard to alleged MOU may adversely affect the rights of either of parties and it will be relevant to record that present petitioners are also participating in Company petition, as well; inasmuch as the petitioners herein have also filed Co.Appl.-153/2010 U/s 391 & 393 of Co. Act wherein proposal for revival of Co.-JMEL is yet to be examined by the Company Court and in these facts & circumstances, this Court considers it appropriate to refrain from expressing any opinion and grant liberty to the parties to address in the pending Co.Petition No.19/2009.
Consequently, writ petition fails and is hereby dismissed. However, it is made clear that the observations made if any (supra) may not come in way adversely affecting rights of the parties while proceedings arising out of BIFR recommendations being examined by Company Court in Co.Petition/Application. No costs.
(Ajay Rastogi), J.
K.Khatri/p15/ 3857CW2010July26RsrCompany.doc