Calcutta High Court (Appellete Side)
Uniglobal Papers Pvt. Ltd vs Appellate Authority For Industrial And ... on 23 September, 2013
Author: Debasish Kar Gupta
Bench: Debasish Kar Gupta
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
Present:
The Hon'ble Justice Debasish Kar Gupta
W. P. No.1191 (W) of 2010
Uniglobal Papers Pvt. Ltd.
Versus
Appellate Authority for Industrial and Financial Reconstruction & Ors.
With
W.P. No.3085 (W) of 2010
Universal Paper Mills Ltd.
Versus
Appellate Authority for Industrial and Financial Reconstruction & Ors.
For the petitioner in W.P. No.1191 (W) of : Mr. S. N. Mitra, Sr. Adv.
2010 Mr. A. Mukherjee.
For the petitioner in W.P. No.3085 (W) of : Mr. S.K. Kapur, Sr. Adv.
2010 Mr. D. Basak,
Mr. D. Jain,
Mr. R. Kapur
For P.F. Authority : Mr. S.C. Prasad
For the respondent Nos.3 & 4 in W.P. : Mrs. M. Agarwal,
No.1191 (W) of 2010 Mr. S. Sharma,
Mr. D. Jain
For the respondent Nos. 3 & 4 in W.P. : Mr. R. Banerji,
No.3085 (W) of 2010 Mr. S. Sharma
Judgment on : 23-09-2013.
The subject-matter of challenge in both the aforesaid writ
applications is an order dated January 14, 2010 passed by the Appellate Authority for Industrial and Financial Reconstruction Corporation, New Delhi in the matter of M/s. Universal Paper Mills Ltd. (Godha Group) (in re:
Appeal No.190/2008).
By virtue of the impugned order dated January 14, 2010, the Appellate Authority for Industrial and Financial Reconstruction (hereinafter referred to as the AAIFR) set aside the order dated September 5, 2008 passed by the Board for Industrial and Financial Reconstruction (hereinafter referred to as the BIFR) in the matter of M/s. Universal Paper Mills Ltd. (Godha Group) (in re: Case No.122/1989) and remanded the case to the BIFR to consider the formulation of a fresh or modified Draft Rehabilitation Scheme within a period of three months from the date of communication of that order as also thereafter to proceed further to finalize the Draft Rehabilitation Scheme in accordance with the law.
The first writ application is filed by the Uniglobal Papers Pvt. Ltd. (Godha Group) assailing the impugned order dated January 14, 2010. The writ petitioner of the second writ application is the respondent No.2 in the above writ application, amongst other respondents.
The second writ application is filed by the Universal Paper Mills Ltd. assailing the above impugned order dated January 14, 2010. The writ petitioner of the first writ application is the respondent No.2 in the above writ application, amongst other respondents.
Since the one and same order dated January 14, 2010 passed by the Appellate Authority for Industrial and Financial Reconstruction in Appeal No.190/2008 is under challenge in both the aforesaid writ applications, the aforesaid writ applications are taken up for analogous hearing.
The relevant facts and circumstances under which the AAIFR passed the impugned order are as follows in a nutshell:
In the year 1974, a manufacturing unit of M/s. Universal Paper Mills Ltd. was promoted by Khemka-Kanoria Group. The above group ran the above company till 1988. In the year 1988-89 Godha Group took over the management of the above company from the original promoters. The above transfer and took over of management was approved by the Industrial Development Bank of India upon furnishing of undertakings for non- disposal of shareholdings by the above transferee group.
In the same year, i.e., in 1989, the above company was referred to the BIFR under the provisions of Sub-section (1) of Section 15 of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the SICA, 1985) and a Case No.122/1989 was registered.
On February 9, 1990, the above company was declared sick. By an order dated October 1, 1990, an on-going moderation-cum-rehabilitation scheme undertaken by the company was noted by BIFR under the provisions of Sub-section (2) of Section 17 of SICA, 1985.
However, consequent upon failure of the above scheme, the BIFR appointed Industrial Development Bank of India (hereinafter referred to as IDBI) as operating agency under the provisions of Sub-section (3) of Section 17 of the SICA, 1985, on March 15, 1994 with a direction upon the IDBI to prepare a revival scheme for the aforesaid sick industrial company under the provisions of Section 18 of the SICA, 1985.
On November 10, 1994, a scheme based on one time settlement of the dues of financial institutions and banks was submitted by the IDBI and the BIFR imposed a condition of depositing an amount of Rs.50 lac in a non-lien account with the IDBI, the aforesaid operating agency by November 30, 1994. In compliance of the above direction, the Godha Group deposited the aforesaid sum of Rs.50 lacs with the operating agency by a cheque dated November 30, 1994.
On January 8, 1996, after considering the above scheme, the BIFR prepared a Draft Rehabilitation Scheme in accordance with the provisions of regulation 28 of the Board for Industrial and Financial Rehabilitation Regulations, 1987 (hereinafter referred to as the BIFR Regulations, 1987). A copy of the above Draft Rehabilitation Scheme was forwarded to the Sick Industrial Company in question as also the operating agency for their consent within sixty days from the date of publication of the Draft Rehabilitation Scheme. Short particulars of that Draft Rehabilitation Scheme was also published in Newspapers by way of notification at the instance of the BIFR in accordance with the provisions of regulation 29 of BIFR Regulations, 1987 inviting suggestions and objections in respect of the same from the shareholders, creditors and employees of the sick industrial company in question. On May 7, 1996, objections to the aforesaid Draft Rehabilitation Scheme were considered by the BIFR and after some modifications to the same it was kept reserved. On November 6, 1996, though the BIFR directed the operating agency once again to recast the projections and to submit a report. The BIFR did not finalize the above Draft Rehabilitation Scheme after hearing of objections on the same.
By an order dated March 8, 2007, the BIFR directed the sick industrial company in question to submit the status of M/s. Uniglobal Papers Pvt. Ltd. - whether it had become a shareholder or a secured creditor of the above company and the position of net worth as per the latest balance sheet of the above company within two weeks to the BIFR serving a copy to the IDBI, the operating agency. Further direction was given to the effect that in case the net worth of the company had not turned positive to submit fully tied up Draft Rehabilitation Scheme under Section 17(2) of the SICA, 1985 to the BIFR within four weeks. The BIFR further imposed a restriction invoking the provisions of Section 22A of the SICA, 1985 upon the sick industrial company not to dispose of any fixed or current assets without the consent of the secured creditors and the BIFR. Further direction was given to the above sick industrial company in question that in case it was running, the current assets could be drawn down to the extent required for day-to-day operations, proper accounts of which would be maintained.
On June 19, 2008, it was submitted before the BIFR on behalf of the Universal Paper Mills (P) Ltd. that on an application filed by the respondent No.4, the BIFR had directed the Oriental Insurance Company Ltd. by an order dated January 21, 2008 to deposit the insurance amount of Rs.3.12 crore and interest in a non-lien account with the IDBI as and when the same was due and payable to the company but the respondent No.4 did not even furnish a copy of application to the company. It was further submitted that the Universal Paper Mills (P) Ltd. had cleared the outstanding of secured creditor amounting to Rs.751.51 lac through the IDBI by executing a tripartite deed of assignment dated December 8, 2006 by which the assets of the company were sold to Uniglobal Papers (P) Ltd. It was also submitted that since the assets of the company had already been sold and all the available resources had been utilized, the company did not have any more resources to pay and clear the other creditors of the sick company and that after disposing of the factory of the company as the company had ceased to be an industrial undertaking.
An objection was raised on behalf of the respondent No.4 (Shri Dharam Godha) to the effect that he represented 77% shares in the company. He had filed the reference with the BIFR and represented the company in a number of hearing. Subsequently, he had resigned from the company but rest of the Board members continued to be in the Board. According to the respondent No.4 Shri Ashok Kala Group had forcefully taken possession of the factory in the year 2004 and fraudulently transferred the shares in the name of that group. According to the respondent No.4, an FIR in this regard had been filed and a case in this regard was pending before the Company Law Board. It was also submitted on behalf of the respondent No.4 that Shri Ashok Kala Group sold the factory of the company without the approval of the BIFR in terms of the provisions of Section 22A of the SICA, 1985 and such sale was illegal.
After observing that the company had sold its industrial unit,BIFR reserved its orders on the above date.
Finally, by an order dated September 5, 2008, the BIFR discharged the sick industrial company in question from the purview of the SICA, 1985 on the ground that the aforesaid company had sold its assets, including its factory, prior to the order dated March 8, 2007 passed by the BIFR invoking the provisions of Section 22A of the above Act restraining the above company from disposing of its assets without consent of the secured creditors and the BIFR.
M/s. Universal Paper Mills Ltd. represented by Godha Group filed an appeal before the Appellate Authority for Industrial and Financial Reconstruction, New Delhi (hereinafter referred to as the AAIFR) bearing Appeal No.190/2008 assailing the aforesaid order dated September 5, 2008 passed by the BIFR in Case No.122/1989. By the impugned order dated January 14, 2010, the AAIFR set aside the order dated September 5, 2008 passed by the BIFR and remanded the matter to the BIFR to consider the formation of a fresh or modified Draft Rehabilitation Scheme within a period of three months from the date of communication of that order and, thereafter, to proceed further to finalize the Draft Rehabilitation Scheme in accordance with law.
By virtue of the Impugned order, the AAIFR held that the dismissal of reference by the Board of Industrial and Financial Reconstruction was not proper after declaration of the company as a sick industrial company in terms of Clause (o) of Sub-section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 observing that the change of management from Godha Group to Ashok Kala Group and subsequently to M/s. Uniglobal Papers Pvt. Ltd. without the permission of the Board of Industrial and Financial Reconstruction could not be recognized and was not binding on the board and as a consequence thereof the board could only recognize the management of Godha Group, which was in existence at the time of filing of the reference and formation of the Draft Rehabilitation Scheme before the change of management of Universal Paper Mills Ltd. to Ashok Kala Group. After observing further that the question of transfer of shares was pending before the Company Law Board and subsequent transfer of property in favour of M/s. Uniglobal Papers Pvt. Ltd. after change of management was also not binding upon the board, the AAIFR held that the management and possession of assets of Universal Paper Mills Ltd should be restored to Godha Group and the amount of Rs.50 lac deposited by the Godha Group in non-lien account with IDBI was to be utilized for revival of the company and if not, the same should be refunded to them.
The impugned order was passed by the AAIFR on the basis of the following observations:
(i) Admittedly a reference was filed by Godha Group under the provisions of Sub-section (1) of Section 15 of the SICA, 1985 before the BIFR. During the course of the proceeding, the BIFR had not passed any order regarding change of management at any stage. BIFR passed an order dated January 8, 1996 in connection with the above reference publishing and circulating a draft scheme formulated by IDBI, the operating agency. The objections on the above Draft Rehabilitation Scheme were heard and orders were reserved.
Even thereafter by an order dated November 6, 1996 the BIFR directed IDBI, the operating agency, to recast the projections as also to submit a fresh report;
(ii) When a Draft Rehabilitation Scheme was pending for consideration, there could not be any change of management by the company without the permission of the BIFR. The provisions of Sub-section (1) of Section 18 of SICA, 1985, which provided for preparation and sanction of scheme, laid down that where an order was made under Sub-section (3) of Section 17 in relation to any sick industrial company, the operating agency specified in the order was competent to prepare a scheme only in respect of such company providing for financial reconstruction of sick company and/or the proper management of sick industrial company by changing or taking over of management of the sick industry;
(iii) During the formulation of a Rehabilitation Scheme by BIFR, the stage of taking initiative by the sick industrial company to decide what measures would be taken to make the net worth of the company positive was over in view of the admitted fact that the BIFR had passed an order under Sub-section (3) of Section 17 of SICA, 1985 on the ground that the sick company had not been in a position to make its net worth exceed its accumulated losses on its own under the provisions of Sub- section (2) of Section 17 of SICA, 1985;
(iv) Since the change of management of the sick industrial company in question from Godha Group to Ashok Kala Group took place without the permission of the BIFR, such a change of management should not have been recognized by BIFR or in other words, the BIFR was under no obligation to recognize the above change in the light of the decision dated March 11, 2008 of the Delhi High Court in the matter of M/s. Arrow Syntex (P) Ltd & Ors. Vs. AAIFR and Ors.;
(v) The validity of the deed of assignment executed on December 8, 2006 between IDBI ( the operating agency), Ashok Kala Group and Uniglobal Papers Pvt. Ltd.(registered on October 12, 2007) had been assailed by the appellant before a court of competent jurisdiction and the same is still pending;
(vi) IDBI (operative agency) was aware of the fact that an amount of Rs.50 lac had been deposited by Godha Group in a non-lien account with IDBI under the directions of the BIFR. So, the IDBI was under obligation to obtain permission from BIFR for adjustment or appropriation of the above amount of Rs.50 lac prior to executing the above deed of assignment dated December 8, 2006;
(vii) No power was conferred upon the BIFR under the provisions of SICA, 1985, to review its own order. Therefore, it had no power to review its own order that the company in question was a sick industrial company;
(viii) There was violation of principles of natural justice in failing to consider and decide various applications filed by IDBI, the operating agency, and UCO Bank, Godha Group before passing the order dated September 5, 2008.
It is submitted by Mr. S.K. Kapur, learned Senior Advocate appearing on behalf of the petitioner in the second writ application bearing W.P. No. 3085 (W) of 2010, that the appeal was preferred before the AAIFR by a stranger and as a result the same was not maintainable. Without prejudice to the above submission, it is submitted by him that the AAIFR was in error in travelling beyond the issue involved in the reference. According to him, the point for consideration before the AAIFR was deregistration but the AAIFR proceeded to determine an issue relating to finding of the management of the company. It is also submitted by him that the Company Law Board was in seisin of the issue of validity of transfer of shares upon which the determination of the management of the company was dependent. It is further submitted by Mr. Kapur that consequent upon the execution of a tripartite deed of assignment dated December 8, 2006, the assets of the company were sold to Uniglobal (P) Ltd. and as such it was no more a sick industry. According to him, there was no bar and/or impediment to execute the tripartite deed of assignment under reference. According to Mr. Kapur, no Draft Rehabilitation Scheme was pending consideration of the BIFR and restriction under the provisions of Section 22A of SICA, 1985 was imposed subsequently on March 8, 2007.
Reliance is placed upon the decision of U.P. State Sugar Corpn. Ltd. Vs. U.P. State Sugar Corpn. Karamchari Association & Ors., reported in (1995) 4 SCC 276 in support of his submission.
It is submitted by Mr. S.N. Mitra, learned Senior Advocate appearing on behalf of the petitioner in W.P. No.1191 (W) of 2010, that the AAIFR decided an issue relating to a civil dispute instead of restricting its zone of consideration in respect of deregistration of the reference by the BIFR. The submission of Mr. Kapur are also adopted by Mr. Mitra.
It is submitted by Mr. R. Banerji, learned Advocate appearing on behalf of the respondent Nos.3 & 4 in W.P. No. 3085 (W) of 2010, that the AAIFR considered the validity of the order dated September 5, 2008 of the BIFR in recognizing the execution of the purported tripartite deed of assignment for transfer of the assets of the company in the light of the provisions of SICA, 1985. According to him, a scheme for financial reconstruction and/or proper management of the sick industrial company under reference was under consideration of the operating agency at the time of execution of the tripartite deed of assignment. According to Mr. Banerji, obtaining of prior permission from BIFR was a condition precedent for recognition of execution of the tripartite deed of assignment under reference. It is further submitted by him that once a reference was made under the provisions of Sub-section (1) of Section 15 of SICA, 1985, there was no scope to get rid of such reference by way of transferring the assets of the sick company to third parties behind the back of the BIFR and depriving the creditors of that sick company. According to Mr. Banerji, the provisions of Section 22A of the SICA, 1985 is a provision vesting power in BIFR over and above the wide powers vested by different provisions of the above act to prevent the disposal of the assets of the company during the period of preparation, consideration or implementation of a scheme of BIFR under various provisions of SICA, 1985. He further submits that the order dated September 5, 2008 discharging the sick industrial company in question was passed by the BIFR in ignorance of the above powers.
Reliance is placed upon the decision of Raheja Universal Ltd. vs. NRC Ltd. & Ors., reported in (2012) 4 SCC 148 and NGEF Ltd. Vs. Chandra Developers (P) Ltd.,reported in (2005) 8 SCC 219 by Mr. Banerji in support of his above submissions.
It is submitted By Mrs. M. Agarwal that the provisions of Clause (a) of Sub-section (2) of Section 18 of the SICA, 1985 empowers the operating agency to prescribe the method of sale of assets of industrial undertaking of sick industrial company for obtaining prior permission of the BIFR to execute the same. According to Mrs. Agarwal, the above method was not followed in executing the tripartite deed of assignment. Mrs. Agarwal finally submits that the above deed should not have been recognized by the BIFR for the purpose of passing the order dated September 5, 2008 for the reason indicated hereinabove.
It is submitted by Mr. S.C. Prosad, learned Advocate appearing on behalf of the Regional Provident Fund Commissioner, that the company has no liability at present towards the provident fund accounts.
I have heard the learned Counsel appearing for the respective parties at length and have given my thoughtful consideration to the facts and circumstances of this case.
At the very outset, it is necessary to point out that the issue relating to change of management of the company under reference from Godha Group to Ashok Kala Group is dependent upon the validity of transfer of shares and that issue is pending before the Company Law Board. The above issue is not under consideration in these writ applications. The propriety of the impugned order dated January 14, 2010 is under consideration in these writ applications.
The submissions of Mr. Kapur with regard to preferring the appeal by a stranger before the AAIFR cannot be accepted in view of the composition of Board of Directors of Godha Group in Universal Paper Mills Ltd. as appears from the minutes of the Annual General Meeting of the company held on September 27, 2002 even after resignation of four directors out of seven on October 21, 2002 so long as a proceeding with regard to the validity of transfer of shares is pending before the Company Law Board.
The impugned order of setting aside the deregistration of the company by an order passed by the BIFR is under consideration in these writ applications. Therefore, the scope of passing the order of deregistration by the BIFR in the light of the provisions of SICA, 1985 depends upon a thumbnail sketch of the sequence of the facts involved in these cases.
Admittedly, the company was referred to the BIFR under the provisions of Sub-section (1) of section 15 of SICA, 1985. It is not in dispute that consequent upon the failure of an ongoing moderation-cum- rehabilitation scheme undertaken by the company, IDBI was appointed operating agency of the aforesaid sick industrial company by an order dated March 15, 1994 passed by the BIFR in exercise of powers conferred by Sub-section (3) of Section 17 of SICA, 1985. By virtue of the above order, BIFR directed IDBI to prepare a revival scheme under the provisions of Scheme 18 of SICA, 1985. It is also not in dispute that on November 10,1994, a scheme based on one time settlement of dues of financial institutions and banks was submitted by IDBI and BIFR imposed a condition of depositing an amount of Rs.50 lac in a non-lien account with IDBI by November 30, 1994. Admittedly, Godha Group deposited aforesaid amount of Rs. 50 lac in a non-lien account with IDBI by a cheque on November 30, 1994 in compliance of the above direction. A Draft Rehabilitation Scheme prepared by BIFR was also forwarded to the sick industrial company in question on January 8, 1996 publishing short particulars of the above scheme in newspapers by way of notification at the instance of the BIFR inviting suggestions and objections in respect of the same from the shareholders, creditors and employees of the sick industrial company in question. Admittedly, on May 7, 1996, the above Draft Rehabilitation Scheme was kept reserved after consideration of objections as also after some modification on the same. It is not in dispute that on November 6, 1996, did not finalize the above scheme after hearing objection on the same.
At the aforesaid stage, the execution of tripartite deed of assignment took place on December 8, 2006. IDBI, Universal Paper Mills Ltd. and Uniglobal Paper (P) Ltd. were the parties to the above deed. It is not in dispute that the aforesaid tripartite deed of assignment was not executed with prior information and/or sanction of BIFR. The order dated September 5, 2008 was passed by the BIFR discharging the company in question from the purview of SICA, 1985 taking into consideration of the fact of execution of above tripartite deed of assignment. According to the impugned order passed by the AAIFR, the execution of the aforesaid tripartite deed of assignment should not have been recognized by BIFR in view of the provisions of SICA, 1985.
The execution of the tripartite deed of assignment took place during the period in which IDBI was appointed as the operating agency in accordance with the provisions of Sub-section (3) of Section 17 of SICA, 1985. There was a direction for preparation of a revival scheme for aforesaid sick industrial company under the provisions of Section 18 of SICA, 1985. A scheme prepared by IDBI was also under consideration of BIFR. From order January 8, 1986 passed by the BIFR it is evident that BIFR exercised the power conferred on it by regulations 28 and 29 of the BIFR regulations, 1987.
For ascertaining the above consequence in the light of the provisions of SICA, 1985, the provisions of Sub-section (3) of Section 18 of SICA, 1985 are set out below:
(3) 18-(a) The scheme prepared by the operating -
agency shall be examined by the Board and a copy of the scheme with modification , if any, made by the Board shall be sent, in draft, to the sick industrial company and the operating agency and in the case of amalgamation, also to any other company concerned, and the Board shall publish or cause to be published the draft scheme in brief in such daily newspapers as the Board may consider necessary, for suggestions and objections, if any, within such period as the Board may specify.
(b) The Board may make such modifications, if any, in the draft scheme as it may consider necessary in the light of the suggestions and objections received from the sick industrial company and the operating agency and also from the (transfer company) and (any other company) concerned in the amalgamation and from any shareholder or any creditors or employees of (such companies).
In view of the above provisions of SICA, 1985, the above scheme was under consideration of the BIFR at the time of execution of the tripartite deed of assignment with direction upon the IDBI to recast the projection and to submit a report The above observations lend supports from the admitted fact of the directions of the BIFR dated November 6, 1996 upon the IDBI to recast the projections and to submit a report instead of finalizing the Draft Rehabilitation Scheme after hearing of objections on the same.
It is the settled proposition of law that all the aforesaid provisions of SICA, 1985 which fall under Chapter III of SICA, 1985 have to be read conjointly along with other relevant provisions. So long as the scheme is under consideration before BIFR, it is the legislative intent that such scheme should not be frustrated by the impediments created by third parties and even by management of sick industrial company, in relation to the assets of the company. Reference may be made to the decisions of Raheja Universal Ltd. (supra) and the relevant portion of the above decision are set out below:
48. All these provisions which all under Chapter III of SICA 1985 have to be read conjointly and that too, along with other relevant provisions and the scheme of SICA 1985. It is a settled canon of interpretation of statutes that the statute should not (sic) be construed in its entirety and a sub-section or a section therein should not be read and construed in isolation. Chapter III, in fact, is the soul and essence of SICA 1985 and it provides for the methodology that is to be adopted for the purposes of detecting, reviving or even winding up a sick industrial company. Provisions under SICA 1985 also provide for an appeal against the orders of BIFR before another specialized body i.e. AAIFR. To put it simply, this is a self-contained code and because of the non obstante provisions, contained therein, it has an overriding effect over the other laws. As per Section 32 of SICA 1985, the Act is required to be enforced with all its vigour and in precedence to other laws.
49. BIFR has been vested with wide powers and, being an expert body, is required to perform duties and functions of wide-ranged nature. If one looks into the legislative intent in relation to a sick industrial company, it is obvious that BIFR has to first make an effort to provide an opportunity to the sick industrial company to make its net worth exceed the accumulated losses within a reasonable time, failing which BIFR has to formulate a scheme for revival of the company, even by providing financial assistance in cases wherein BIFR in its wisdom deems it necessary and finally only when both these options fail and the public interest so requires, BIFR may recommend winding up of the sick industrial company.
So long as the scheme is under consideration before BIFR or it is being implemented after being sanctioned and is made operational from a given date, it is the legislative intent that such scheme should not be interjected by any other judicial process or frustrated by the impediments created by third parties and even by the management of the sick industrial company, in relation to the assets of the company.
(emphasis supplied) The submission made on behalf of the petitioners that no Draft Rehabilitation Deed was pending for consideration before the BIFR and that the BIFR only directed the IDBI to recast the projection and to submit a report at the time of execution of the tripartite deed of assignment in question , does not help them at all . It is the settled proposition of law that till the company remains a sick company having regard to the provisions of sub - section (4) of Section 20 , BIFR alone shall have jurisdiction as regards sale of its assets till an order of winding up is passed by a Company Court . Reference may be made to the decision of NGEF Ltd. (Supra) and the relevant portion of the above decision are quoted bellow :
"41. It is difficult to accept the submissions of the learned Counsel appearing on behalf of the respondent that both Company Court and BFIR exercise concurrent jurisdiction. If such a conclusion is upheld, there shall be chaos and confusion. A Company declared to be sick in terms of the provisions of SICA, 1985, continues to be sick unless it is to be wound up. Till the Company remains a sick Company having regard to the provisions of sub -section (4) of Section 20 , BIFR alone shall have jurisdiction as regards sale of its assets till an order of winding up is passed by a Company Court.
(Emphasis supplied) Applying the above settled principles of law on the admitted facts and circumstances of these cases, I find that there is no error in the impugned order passed by the AAIFR . Though , the BIFR imposed a restriction upon disposal of any fixed or current assets of the above company invoking the provisions of Section 22A of the SICA , 1985 subsequently on March 8, 2007, the AAIFR was correct in observing that it should not have been ignored by the BIFR that the Draft Rehabilitation Scheme was kept reserved by an order passed by the BIFR on May 7, 1996 pending finalization of the same after hearing of objections on it and a sum of Rs.50 lacs deposited with IDBI in a non-lien account by Godha Group had not been refunded.
The decision of U.P. State Sugar Corpn. Ltd. (supra) does not help the petitioners in view of the interpretation of the provisions contained in Chapter III of SICA, 1985 by a bench consisting of three Hon'ble Judges of the Supreme Court subsequently as also in view of the distinguishable fact of that case. The decision of Arrow Syntex Pvt. Ltd. does not help the petitioners in view of the distinguishable facts and circumstances of that case so far as the parties to these cases are concerned.
In view of the discussions and observations made hereinabove, these writ applications are dismissed.
There will be, however, no order as to costs.
Urgent Photostat certified copy of this judgment, if applied for, be given to the parties, as expeditiously as possible, upon compliance with the necessary formalities in this regard.
( Debasish Kar Gupta, J. ) Later (23.09.2013) It is submitted by Mr. S.N. Mitra, learned Senior Advocate appearing on behalf of the petitioner in first writ application bearing W.P. No.1191(W) of 2010, that by virtue of an interim order passed in these writ applications, the operation of the order impugned in these writ applications was stayed. According to him, the petitioners of these writ applications are in possession of the company in question. He prays for continuation of the above interim order.
There is no scope for continuation of the interim order passed in these writ applications since those are dismissed.
Therefore, the above prayer is rejected.
( Debasish Kar Gupta, J. )