W.P.(C)/1412/2017 of ATV PROJECTS (INDIA) LTD. Vs UNION OF INDIA & ORS

*IN THE HIGH COURT OF DELHI AT NEW DELHI

+W.P.(C) 1412/2017

versus

CORAM:HON'BLE MS. JUSTICE INDIRA BANERJEEHON'BLE MR. JUSTICE ANIL KUMAR CHAWLA

O R R%17.02.2017

CM No.6442/2017 (Exemption)

Exemption allowed, subject to just exceptions.

Application stands disposed of.

WP(C) No. 1412/2017

This writ petition is against an order dated 30[th]November, 2016passed by the BIFR (Board for Industrial and Financial Reconstruction)failing to sanction draft rehabilitation Scheme in relation to the petitioner

company, which inter-alia envisaged reverse merger of Seftech PhosphatePrivate Limited (SPPL) with the petitioner.

The petitioner was constituted as Public Limited Company under theCompanies Act, 1956 on 26[th]February, 1987 and it took over as runningconcern, the business of its predecessor in interest, which was PrivateLimited Company.

The petitioner manufactures the industrial equipment for sugar andother industries and has two manufacturing plants. It is pleaded that thepetitioner was highly profitable till the financial year 1994-95. However,later it suffered severe losses due to paucity of working capital.

The petitioner filed reference to the BIFR under Section 16 of theSick Industrial Companies (Special Provisions) Act on 21[st]April, 1999. Thepetitioner was declared sick by BIFR and IDBI was appointed as OperatingAgency for the purpose of formulating scheme. However, no scheme wasfinally sanctioned.

We need not to go into the history of the proceedings before BIFR.Suffice it to refer to two orders of this Court directing the BIFR to takeexpeditious decision.

It appears that while the proceedings before the BIFR were pending,an order dated 29[th]April, 2015 was passed by Division Bench of this Courtin WP (C) 4226/2013, CM No.9854/2013, 5227/2014 & 1457/2015,directing the BIFR to consider the Draft Rehabilitation Scheme at its earliestconvenience having regard to the fact that the matter had long been pending.The decision on the Draft Rehabilitation Scheme was directed to be renderedexpeditiously, preferably by the end of October 2015. No decision on theDraft Rehabilitation Scheme was taken within the time stipulated in the

order of the Division Bench.

Yet another writ petition being WP(C) 632/2016 was filed by thepetitioner which was disposed of by an order dated 15[th]July, 2016, extractedherein below:

1. Writ petition was filed when on account of superannuationof members of BIFR as well as AIIFR statutory for as createdunder SICA, 1985, the Bench was not available.

2. Vacancies have been filled up. Accordingly, we dispose ofthe petition directing Registrar, BIFR to place before BIFRReference No.324/1998 and along therewith miscellaneousapplication which petitioner would file positively within aweek from today concerning the issue of tax exemption to thetransferor company as sought to be enforced by the income-taxauthorities.

Thereafter,thematterwastakenupbytheBIFR.Objections/suggestions to the Draft Rehabilitation Scheme were receivedfrom the Income Tax Department, Sales Tax Department of Government ofMaharashtra and Employee State Insurance Corporation amongst others.

Mandatory hearing scheduled on 26[th]November, 2015 did not takeplace due to lack of coram. Following the reconstitution of the Bench and inview of the directions of this Court, the mandatory hearing scheduled on 26[th]November, 2015 was held on 30[th]November, 2016. The Draft RehabilitationScheme was however not sanctioned. In the meanwhile, Sick IndustrialCompanies(SpecialProvisions)RepealAct2003wasnotifiedbyNotification dated 25[th]November, 2016 and the same came into force w.e.f.25[th]November, 2016 by the repeal of the SICA. By the Repeal Act of 2003,BIFR and AAIFR stand dissolved and pending schemes abate.

In this writ petition, the petitioner has prayed for an order setting

aside the order dated 30[th]November, 2016 of the BIFR and also forappropriate order sanctioning the draft revival scheme of the petitioner interms of the provisions of Section 18 (4) read with Section 19 (3) of SICAas the aforesaid provisions stood on 30[th]November, 2016.

Mr.Sibal appearing on behalf of the petitioner submitted that thisCourt has the power under Articles 226 and 227 of Constitution of India tosanction the scheme pending before BIFR.

The petitioner has referred to judgment dated 4[th]December, 2915 ofa Division Bench of this Court in WP (C) 9320/2015 (M/s GaneshBenzoplast Ltd. v. Union of India & Ors., where the Division Bench tooknote of the fact that the BIFR was not functioning for want of coram, andaccorded formal sanction to scheme, observing that the consultant of theBIFR had approved the scheme.

Mr.Sibal also cited judgement of Comptroller and Auditor Gneral ofIndia, Gian Prakash, New Delhi and Anr. v K.S. Jagannathan and Anr.,(1986) 2 Supreme Court Cases 679. The Supreme Court held:

“There is thus no doubt that the High Courts in India exercisingtheir jurisdiction under Article 226 have the power to issue awrit of mandamus or writ in the nature of mandamus or topass order and give necessary directions where the governmentor public authority has failed to exercise or has wronglyexercised the discretion conferred upon it by statue or hasexercisedsuchdiscretionmalafideoronirrelevantconsiderations or by ignoring the relevant considerations andmaterials or in such manner as to frustrate the object ofconferring such discretion or the policy for implementing whichsuch discretion has been conferred. In all such cases and in anyother fit and proper case High Court can, in the exercise of itsjurisdiction under Article 226, issue writ of mandamus or awrit in the nature of mandamus or pass orders and give

directions to compel the performance in proper and lawfulmanner of the discretion conferred upon the government or apublic authority, and in proper case, in order to preventinjustice resulting to the concerned parties, the Court may itselfpass an order or given directions which the government or thepublic authority should have passed or given had it properlyand lawfully exercised its directions”.

Mr.Sibal argued that in view of repeated directions by this Court adecision ought to have been taken long ago. Mr.Sibal also argued that allobjections to the Draft Rehabilitation Scheme had been resolved by 30[th]November, 2016. The scheme ought to have been sanctioned on that day.

It is however, doubtful whether we can assume the jurisdiction ofBIFR after repeal of SICA and sanction scheme which has abated byoperation of law by reason of the provisions of the Sick IndustrialCompanies (Special Provisions) Repeal Act 2003. The decisions cited byMr.Sibal are distinguishable. The scheme having abated and the BIFR andthe AAIFR having been dissolved, no order as prayed in this petition can bepassed. The writ petition is therefore not entertained. Needless to mentionthat the petitioner may approach the appropriate forum, if any, available tothe petitioner in law.

INDIRA BANERJEE, J

FEBRUARY 17, 2017/vp

ANIL KUMAR CHAWLA, J