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Saturday, January 10, 2015

No Suit could lie and be proceeded with out the express consent of the BIFR = CIVIL APPEAL NO.10221 OF 2014 @ (SPECIAL LEAVE PETITION (C) NO.5249 OF 2014) GHANSHYAM SARDA … APPELLANT Versus M/S SHIV SHANKAR TRADING CO. & ORS. ….RESPONDENTS


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO.10221 OF 2014 @
                (SPECIAL LEAVE PETITION (C) NO.5249 OF 2014)

GHANSHYAM SARDA                        … APPELLANT


TRADING CO. & ORS.                      ….RESPONDENTS


                       CIVIL APPEAL NO.10222 OF 2014 @
                (SPECIAL LEAVE PETITION (C) NO.5897 OF 2014)

GHANSHYAM SARDA                        … APPELLANT


TRADING CO. & ORS.                      … RESPONDENTS

                       CIVIL APPEAL NO.10223 OF 2014 @
              (SPECIAL LEAVE PETITION (CIVIL) NO.8610 OF 2014)

EKTA UNION                              … APPELLANT


TRADING CO. & ORS.                … RESPONDENTS

                   CIVIL APPEAL NOS.10224-10225 OF 2014 @
             (SPECIAL LEAVE PETITION (C) NOS.8611-8612 OF 2014)

EKTA UNION                        … APPELLANT


TRADING CO. & ORS                 … RESPONDENTS

                       CIVIL APPEAL NO.10226 OF 2014 @
              (SPECIAL LEAVE PETITION (CIVIL) NO.6412 OF 2014)

GHANSHYAM SARDA                       … APPELLANT


CO. LTD. & ANR.                         … RESPONDENTS

                     CONTEMPT PET. (C) NO.338 OF 2014 IN
              (SPECIAL LEAVE PETITION (CIVIL) NO.5249 OF 2014)

               GHANSHYAM SARDA                    …PETITIONER/




                    CONTEMPT PET. (C) NO.375 OF 2014 IN @
              (SPECIAL LEAVE PETITION (CIVIL) NO.8610 OF 2014)

EKTA UNION                                APPLICANT



                               J U D G M E N T


1.    Permission to file SLP granted in SLP(C)  Nos.8611-12/2014.  Leave  to
appeal granted in all Special Leave Petitions.

2.    All these Special Leave Petitions arise out of a common  judgment  and
order dt. 06.01.2014 passed by the High Court of Gauhati in FAO  No.  10  of
2013 and Writ Petition Nos. 4303 of 2013 and 6286  of  2013  and  are  being
disposed by this common judgment and order. These petitions raise  questions
regarding scope and ambit of Sections  22(1),  26  and  32(1)  of  the  Sick
Industrial Companies (Special Provisions) Act 1985, hereinafter referred  to
as the Act.

3.    A company named J.K. Jute Mill Company Ltd. (hereinafter  referred  to
as ‘the company’) having its registered  office  at  Kanpur,  Uttar  Pradesh
filed Reference No.  149  of  1994  before  the  Board  for  Industrial  and
Financial Reconstruction (“BIFR” for short)  under  the  provisions  of  the
Act.  Though the scheme was initially  sanctioned  for  reconstruction,  the
BIFR subsequently held the scheme to have failed and  directed  the  company
to be wound up.  These orders were stayed by  the  Appellate  Authority  for
Industrial and Financial Reconstruction  (“AAIFR”  for  short)  and  further
proceedings before the BIFR continued.   While the matter was thus  pending,
“Sarda Group” took over the Company through Rainey  Park  Suppliers  Private
Ltd. (RPSPL) in 2007.  BIFR by its  order  dated  17.12.2008  approved  such
take over of the management.   The management  of  the  company  was  handed
over to Shri Govind Sarda.  It appears  that  in  2009,  Shri  Govind  Sarda
assigned the debt held by RPSPL in favour of an entity named Libra  Retailer
Pvt. Ltd. (LRPL) and he is stated to have  handed  over  Jute  Mill  of  the
company to a third party. As he failed to revive  the  company,  show  cause
notice for winding up was issued by the BIFR.  This  action  was  challenged
by the Company by filing Appeal No. 186  of  2009  before  the  AAIFR  which
appeal is still pending.

4.    At this stage, Shri Ghanshyam Sarda, (hereinafter referred to  as  the
present appellant) filed  an  application  for  impleading  himself  in  the
proceedings which application was accepted by AAIFR.  Upon this order  being
challenged, the High Court of  Delhi  in  W.P.  No.2839  of  2010  held  the
present appellant to be entitled  to present his point of view in  the  form
of proposal/scheme, which order was confirmed by this  Court  by  dismissing
Special Leave Petition filed at the instance of the Company.   In  terms  of
the  aforesaid  orders  the  BIFR  impleaded  the  present   appellant   who
thereafter submitted a proposal for revival of the company  and  also  filed
MA No.162 of 2012 in the BIFR for restoration of shareholding  pattern.   On
18.02.2013 the BIFR issued directions to the operating  agency  to  consider
the scheme of the  present  management  and  the  scheme  submitted  by  the
present Appellant and thereafter  submit  a  fully  tied  up  Draft  Revival
Scheme (“DRS” for short).   The BIFR fixed the next date for hearing  of  MA
162 of 2012 on 04.04.2013.  In the  proceedings  dated  27.02.2013,  it  was
decided that the DRS be circulated seeking objections and  suggestions  from
all the concerned.

5.    On 03.04.2013, two applications were filed  before  the  BIFR  by  M/S
Shyam Jute Supplier, Chindwara M.P. and M/S  Shiv  Shankar  Tranding  Co.  &
Ors, Gauhati Assam (hereinafter referred to as ‘SSTC’) signed  by  the  same
person through same Counsel stating that they were unsecured  creditors  and
sought permission from the BIFR to institute  Civil  Suit  for  recovery  of
money stated to be recoverable from the company.   On  04.04.2013  the  BIFR
held a hearing to consider the change in the share holding  pattern  of  the
company without due permission from BIFR.  At that stage  Counsel  appearing
for the Company submitted that Application No. 162  of  2012  could  not  be
considered as the BIFR no longer retained  jurisdiction  over  the  Company.
It was submitted that in the Audited Balance-Sheet for the  period  of  nine
months i.e. 01.04.2012 to 31.12.2012 the net worth  of  the  Company  having
turned positive, the Company ought to be discharged from the BIFR.   Learned
counsel  appearing  for  Shyam  Jute  Supplier  and  SSTC   supported   such

6.    Paragraphs (4.1, 4.3, 4.4, 4.8, 4.12  and  4.13)  of  the  proceedings
dated 04.04.2013 are quoted here under which are self eloquent.
“4.1. Today’s hearing (04.04.2013) was fixed for  consideration  of  MA  No.
162/BC/2012 filed by Shri Ghanshyam Sarda praying as under:

Declare that the change in shareholding  pattern  to  the  extent  the  same
reduces the shareholding of RPSPL from 86.23% to 5.34% without  approval  of
BIFR as null and void;

Restore the management and the shareholding pattern of  JKJMCL  as  approved
by the learned BIFR vide its order dated 18.09.2008.
Initiate  action  under  section  33  read  with  section  34  against   the
management for  changing  the  shareholding  pattern  of  the  sick  company
without seeking permission from BIFR; and
Appoint a special director (BIFR Nominee) in the Board  of  the  Company  to
look into and monitor its affairs;
Pass such other further order(s) as this  Hon’ble  BIFR  may  deem  fit  and
proper in the facts and circumstances of the case;

4.3. Shri Sudhansu Batra, Sr. Advocate appearing on      behalf of the  Sick
Company intervened and stated the MA NO. 162/BC/2012  cannot  be  considered
today since BIFR no longer retains  jurisdiction  over  the  company.   Shri
Batra, Sr. Advocate stated that the Balance sheet as on 31.12.2012 has  been
audited which shows that the networth of the  company  has  turned  positive
and the company has to be discharged  from  BIFR.  Upon  a  query  from  the
Bench, Shri Sudhansu  Batra,  Sr.  Advocate  stated  that  the  company  has
already filed a letter dated 25.03.2013 with the  BIFR  informing  that  the
networth of the company as on 31.12.2012 has turned positive. Upon  a  query
from the Bench, Shri Sudhansu Batra, Sr. Advocate stated that the  financial
period of the company is normally for 12 months but this year  the  accounts
have been closed by auditing the balance sheet  for  9  months  period  from
01.04.2012 to 31.12.2012.  The Ld. Senior Advocate prayed that  in  view  of
the networth turning positive the company  should  be  discharged  from  the
BIFR. The Ld. Senior advocate argued that there are no provision under  SICA
for deregistration of a reference when the net worth  becomes  positive  and
the Sick Company is not required to make a formal application  to  the  BIFR
for discharge when  the  company’s  net  worth  becomes  positive.  The  Ld.
Advocate further stated that the sickness of the company is  to  be  decided
ex facie on the basis of the  audited  Balance  Sheet  and  as  the  Audited
Balance Sheet as at 31.12.2012 is showing positive Networth, BIFR ceases  to
have  any  jurisdiction.  The  Ld.  Senior  Advocate  to  support  of   this
submissions referred to and relied  upon  the  judgment  passed  by  Hon’ble
Delhi High Court in the case of: Cahtolic Syrian Bank V/s BIFR & Ors.  On  a
query from the bench that assuming the networth has turned positive  whether
BIFR would automatically lose its jurisdiction or BIFR still has the  powers
to examine  the  audited  balance  sheet  and  formally  pass  an  order  of
discharge, Shri Sudhansu Batra Sr. Advocate agreed and in fairness  conceded
that before discharging the  company,  the  BIFR  can  examine  the  audited
balance sheet as on 31.12.2012 by all means and methods and satisfy  itself.
Shri Sudhansu Batra, Sr. Advocate stated that his clients  is  not  required
to file an application seeking discharge and BIFR on  its  own  may  examine
the audited Balance Sheet and discharge the company from BIFR.

4.4.  Shri Ashish  Mohan,  Advocate  appearing  for  an  unsecured  creditor
stated that his clients have filed application seeking impleadment  as  well
as permission under section 22(1)  of  SICA  to  file  recovery  proceedings
against the management of the company; but in view of the  networth  of  the
company turning positive the company may be discharged  from  BIFR  so  that
his clients  may  file  recovery  suit  against  the  company.  The  learned
Advocate stated that since the networth  of  the  Sick  Company  has  turned
positive, he would not be pressing any of  his  application  (s)  and  would
take legal recourse against the company in court of law.

4.8  The representatives of  IDBI  (OA)  stated  that  they  are  not  in  a
position to comment upon  the  Audited  Balance  Sheet  as  on  31.12.  2012
without examining the same. The OA further stated  that  the  ASC  is  going
ahead as per its schedule and the next meeting of the ASC is on  16.04.2013.
The Bench observed that the ASC may go ahead with its schedule and that  ASC
should do nothing more at present except opening  and  evaluating  the  bids
and submit its report on such evaluation to the BIFR  and  that  BIFR  shall
take a final view upon the bids and the  sale  of  assets  at  the  time  of
approval of DRS. The bench  further  observed  that  DRS  has  already  been
circulated  on  26.02.2013  and  the  objections  &  suggestions  shall   be
considered on 20.05.2013. Till such time either the Bench considers the  DRS
or discharge the company from SICA; the Bench shall safeguard the assets  of
the company and retain its jurisdiction over the company/its assets.

4.12. The Bench stated  that  they  would  consider  the  arguments  of  the
parties including the  arguments  of  Mr.  Aggarwal  on  the  next  date  of
hearing. The Bench also observed  that  as  per  the  Company’s  ABS  as  on
31.03.2012, (12 months) the networth of the company is Rs. 5.71  crores  and
the accumulated losses are Rs. 36.23 crores and it  would  like  to  satisfy
itself about the Balance Sheet as at 31.12.2012 to which  Mr.  Batra  agreed
that the BIFR could undertake such an exercise. Since the issue of  lack  of
jurisdiction has  been  raised;  the  Bench  would  decide  the  said  issue
alongwith MA No. 162/BC/2012.

4.13.  Having considered the submissions made in the hearing,  materials  on
record, the Bench issued the following directions:
(i)The company to submit certified copy of its ABS as  on  31.12.2012  along
with all relevant papers & documents in support of its networth  within  one
week from today with copy  to  the  IDBI  (OA)  and  all  concerned  parties
alongwith documentary evidence;
(ii) The ASC would go-ahead as per its schedule and  confirmation  of  sell,
if any will take place upon approval of DRS on 20.05.2013, with the  consent
of Bench.
(iii) The Bench fixed the next date of hearing on  26.04.2013  at  11.30  AM
for considering the submission of the Company that its networth  has  turned
positive as on 31.12.2012 and also hear the MA No. 162/BC/2012 on  the  said

7.    At this stage some of the other  proceedings  need  a  mention.   J.K.
Jute Mazdoor Sabha  filed  Writ  Petition  No.  22897  of  2013  before  the
Allahabad High Court  on  25.04.2013  challenging  the  BIFR’s  order  dated
04.04.2013.  Said Writ Petition having been dismissed by a Single Judge,  in
an appeal therefrom  the  Division  Bench  in  its  order  dated  01.05.2013
observed that the BIFR would be in a  better  position  to  assess  the  net
worth position of the company.    In  the  meantime,  Shyam  Jute  Suppliers
approached the High Court of Madhya Pradesh by filing Writ Petition  No.7534
of 2013 questioning the order dated 04.04.2013 of the  BIFR.   The  petition
was dismissed by a Single  Judge  on  the  ground  of  lack  of  territorial
jurisdiction which order was approved in appeal by  the  Division  Bench  of
the High Court.

8.    On 22.04.2013, SSTC filed Title Suit No. 166 of 2013  in  Civil  Court
at Kamroop, Gauhati against the Company adding  BIFR as proforma  defendant.
 It was inter alia averred
 “…. Now it appears from the balance sheet of the  defendant  company  filed
before the proforma defendant that its net worth  had  become  positive.  In
view of the said admission on the part of the  defendant  No.  2  it  is  no
longer a sick establishment under the  Sick  Industrial  Companies  (Special
Provisions) Act, 1985 and consequently the  proforma  defendant  No.  2  has
ceased to have jurisdiction over  the  defendant  No.  1  and  as  such  the
defendant No. 1 is  no  longer  entitled  to  any  benefit  under  the  Sick
Industrial Companies (Special Provisions) Act, 1985. Thus the defendant  No.
1 under the aforesaid facts and circumstances has become liable to  be  sued
in a Civil Court of competent jurisdiction with effect  from  the  date  the
2012 balance sheet as submitted by it before the proforma  defendant  No.  2
and the proforma defendant ceased to have any jurisdiction whatsoever.”

      The plaintiff prayed for declaration, inter  alia,  that  the  company
was no longer a sick company within the meaning of  the  Act  and  that  the
BIFR ceased to have jurisdiction over the company and  all  the  proceedings
in  BIFR  after  filing  of  positive  balance-sheet  be  declared   without
jurisdiction. The Civil Court by its order dated  23.04.2014  while  issuing
notices to the defendants directed that status-quo be maintained in  respect
of the BIFR case till the next date of hearing.

9.    The company filed its written objections on  13.05.2013.   Though  the
claim of the plaintiff and its entitlement to recover the sum stated  to  be
due was denied, the company accepted that it was no longer a  sick  company.
The relevant averments were to the following effect.
“……. That the answering opposite party humbly  states  that  the  statements
made in paragraph number 1 of Misc. (J) Case No. 254/13 are  to  the  extent
that the opposite party is no longer a sick establishment is not denied.”

“ …. That  the  answering  opposite  party  admits  the  statement  made  in
paragraph number 10 and admit that on and from the financial year  2012-2013
it is no longer a sick company. The balance  sheet  is  also  admitted.  The
rest of the statements regard jurisdiction is a matter of fact and  law  and
the opposite party has no comment to offer.”

10.   The matter came up before the Civil Court  on  13.05.2013.   It  noted
the aforementioned stand and in view of such  admitted  position  held  that
the BIFR ceased to have any jurisdiction over the defendant company. It  was
“…. But a question that is still required to be answered  at  this  juncture
is as to whether this Court has the jurisdiction  to  grant  the  relief  of
temporary injunction as sought for in the instant case. Section  26  of  the
SICA, which provides inter alia that no injunction shall be granted  by  any
court or other authority in respect of any action taken or to  be  taken  in
pursuance of any power  conferred  by  or  under  this  Act,  shall  not  be
applicable to the opposite party no. 1 company any more as it is no  more  a
sick industrial company admittedly and the provisions of the  SICA  are  not
applicable to it anymore, and, therefore, the civil  court  will  definitely
have jurisdiction over it. Hence, this Court has jurisdiction to  grant  the
relief as sought for in the instant case….”

      In the premises, the Civil Court restrained the  defendants  including
the BIFR from proceeding with BIFR  case  no.  149  of  1994.   Neither  the
Plaintiff nor the Company at any stage placed on  record  before  the  Civil
Court the proceedings dated 04.04.2013 of the BIFR nor was the  Civil  Court
appraised of the fact that the Plaintiff had sought leave under  Section  22
(1) of the Act from the BIFR to file the Civil Suit.

11.   In the meantime while  dealing  with  appeals  preferred  against  the
orders of the BIFR including one dated 27.02.2013, the AAIFR  was  appraised
that the issue of Net worth was under consideration of  the  BIFR,  so  vide
its order dt.16.05.2013  it  preferred  to  await  such  decision.   In  the
subsequent proceedings of the same day i.e. 16.05.2013 the  aforesaid  order
of the Civil Court was placed before the BIFR which  observed  that  it  had
not given any permission under Section 22 (1) of the Act  to  SSTC  to  file
any recovery suit against the company and the matter was  adjourned  in  the
presence of the counsel concerned for  considering  the  submission  of  the
parties on the issue of  net  worth  as  on  31.12.2012.    It  was  further
observed that in the absence of permission under Section  22  (1)  the  suit
filed by SSTC was not competent and that, the company had not yet  been  de-
registered from BIFR and a filing of Civil Suit  without  taking  permission
was violative of the Act.  Taking note of  the  order  of  the  AAIFR  dated
16.05.2013 and the order  passed  by  the  High  Court  of  Allahabad  dated
01.05.2013, it was observed that it had to decide the issue whether the  net
worth of the company had turned positive or not.   The  BIFR  thus  directed
the parties to file their written submission on the aspect of the net  worth
of the company as on 31.12.2012.

12.    On  30.05.2013,  the  present  appellant  filed  an  application  for
impleadment as defendant in the aforesaid Suit.   Adverting  to  the  orders
passed by the BIFR and AAIFR impleading him in the  proceedings  before  the
BIFR and the subsequent orders passed by the  Division  Bench  of  the  High
Court of Delhi and this Court on his impleadment and the fact  that  he  had
submitted a proposal for revival, the present appellant prayed  that  he  be
impleaded in said suit as a defendant.   The  present  appellant  thereafter
filed FAO No.10 of 2013 before Gauhati  High  Court  challenging  the  Civil
Court’s order dated 13.05.2013.  A learned Single  Judge  after  preliminary
hearing  by his order dated 14.06.2013 admitted the appeal for  hearing  and
also passed interim order to the  effect  that  no  third  party  rights  in
respect of the property of the respondents/defendants be created during  the
pendency of the appeal.

13.         In  the  meantime,  the  matter  appeared  before  the  BIFR  on
01.07.2013.  It prima facie was of the view that the  Audited  Balance-Sheet
as on 31.12.2012 of the company did not reflect true and fair view and  that
the matter required examination as to how the net worth of the company,  all
of a sudden, turned positive.  It was observed that  SSTC  was  not  granted
any permission by the BIFR under Section 22 (1) of the Act and the  suit  of
SSTC was not competent, that SSTC had suppressed the  fact  from  the  Civil
Court  and  that  the  order  passed  by  the  Civil  Court  being   without
jurisdiction was a nullity in the eyes of  law  and  not  binding  upon  the
BIFR.  It was further observed that the BIFR had to satisfy  itself  whether
the net worth had turned positive due to some positive development  and  not
merely by manipulation of the accounts.  In the  premises  it  directed  the
State  Bank  of  India  to   appoint   independent   auditor   for   Special
Investigative Audit and to file its report about net worth position  of  the
company as on 31.12.2012.

14.    SSTC who was the original plaintiff in the aforesaid Suit filed  Writ
Petition No. 4303 of 2013 in  Gauhati  High  Court  challenging  the  orders
dated 16.05.2013 and 01.07.2013 of the BIFR.  Said  Writ  Petition  came  up
before the Single Judge who by his  order  dated  01.08.2013  impleaded  the
present appellant as Respondent No. 3  in  the  Writ  Petition  and  further
directed that till the next date of  hearing  further  proceedings  in  BIFR
case No.  149  of  2014  shall  remain  stayed.   Subsequently,  the  matter
appeared before the Single Judge again who, on 14.08.2013 directed that  the
matter be placed before Hon’ble the Chief  Justice  for  directions  whether
the Writ Petition could be heard along with FAO No.10 of 2013.

15.    On 04.09.2013, State Bank of India as directed by the BIFR  submitted
the Report of the Special Investigative Audit pointing out the  manipulation
in the balance-sheet submitted by the company and that the net worth of  the
company as on 31.12.2012 was in fact on the negative side  by  Rs.36  crores
in nine months.  In the proceedings before the BIFR  dated  05.09.2013,  the
aforesaid Report was taken on record and  comments  from  the  parties  were

16.    Immediately the company filed Writ Petition No.4286  of  2013  before
Gauhati High Court questioning the order dated 05.09.2013 of the BIFR.   The
matter came up before a Single Judge on 30.09.2013 who issued  rule  in  the
Writ Petition and by way of interim order directed that further  proceedings
in BIFR case No.194 of 1994 shall remain stayed.  This order was vacated  by
Division Bench of the High Court  in  Writ  Appeals  vide  its  order  dated
14.11.2013.  These three matters namely FAO No.10 of 2013 and Writ  Petition
Nos.4303 and 6286 of 2013 were thereafter  clubbed  and  posted  before  the
Single Judge on 21.11.2013, who adjourned  the  matters  to  04.12.2013  and
observed that since the Court was in seisin of the matter  it  was  expected
that the BIFR may not proceed further with the case till conclusion  of  the
hearing before the learned Single Judge.   In  deference  to  the  aforesaid
order dated 21.11.2013, the BIFR adjourned the case.

17.    These three  matters  then  came  up  before  the  High  Court  which
observed that FAO No.10 of 2013 was filed by the present appellant  who  was
not yet a party before the Civil Court and that said  FAO  which  was  filed
without  seeking  appropriate  leave  of  the  Appellate   Court   was   not
maintainable and as such it was not necessary to  enter  upon  deliberations
on merits of the matter.  The High Court was of  the  view  that  since  the
application for impleadment was still pending before  the  Civil  Court,  as
and when the present appellant was impleaded as defendant in  the  suit,  it
would then be open to him to file such application for variation or  setting
aside of the order of injunction.   It was held that in the absence  of  any
challenge, the order of injunction was still in  operation  and  that  until
and unless such order was  vacated  and  recalled  by  appropriate  judicial
forum, the same had to be respected and given effect  to.   The  High  Court
also  disposed  of  Writ  Petitions  on  the  ground  that  since  all   the
proceedings before BIFR stood stayed, further proceeding in  BIFR  would  be
of no legal consequence.  It was further observed that one  of  the  members
of BIFR having  recused  himself  from  hearing  the  case  on  the  earlier
occasions as noted in the order dated 31.01.2013, of the BIFR,  said  member
ought not to have participated in any further proceedings.

18.    This common order passed by the High Court  has  given  rise  to  six
Special Leave Petitions, three by present appellant  namely  SLP  No.  5249,
5897 and 6412 challenging the order of the High  Court  in  respect  of  FAO
No.10 of 2013, Writ Petition No.4303 of 2013 and Writ  Petition  No.6286  of
2013 respectively.  The other three petitions are by J.K. Jute  Mill  Mazdur
Ekta Unions being Special Leave Petition Nos. 8610, 8611 and  8612  of  2014
against the aforesaid order in respect of three proceedings as stated  above
respectively. This Court issued notice in the matter on 24.03.2014 on  which
date the company had appeared on caveat. By order dated 08.05.2014,  it  was
directed that till further orders the capital assets of  the  Company  shall
not be disposed of without taking permission of this court. Soon  thereafter
Civil Contempt Petition Nos.338 and 375 of 2014 were filed  by  the  present
appellant and J.K. Jute Mills Mazdoor Union contending inter  alia  that  in
violation of order dated 08.05.2014, the  contemnors  in  the  petition  had
caused certain properties of the Company  to  be  transferred.   During  the
pendency of these matters SSTC assigned in favour of M/s Goodlife  Merchants
Pvt. Ltd. all the rights in respect of the debt of the Company.

19. All the aforesaid matters were taken up for  hearing  together  by  this
Court.  Appearing for  the  present  appellant,  Mr.  Kapil  Sibal,  learned
Senior Counsel submitted that the Act is  a  complete  code  in  itself  and
given the true scope and purport of Sections 22 , 26 and 32 of the Act,  the
jurisdiction of the BIFR over any company in question  would  continue  till
its formal discharge by BIFR either after  the  net  worth  of  the  company
turned positive by successful implementation of the scheme or by  the  order
of winding up passed in respect of such company.  It  was further  submitted
that the BIFR alone will have  competence  and  jurisdiction  to  declare  a
company which was once a sick company, to be no longer  sick  and  discharge
it from the purview of the Act and  that  the  Civil  Court  will  not  have
jurisdiction or  competence  to  decide  these  questions.  It  was  further
submitted that the Civil Court  is  not  the  appropriate  forum  and  lacks
jurisdiction to examine the correctness of the annual accounts and  conclude
whether the company in question was no longer  amenable  to  be  dealt  with
under the Act.  In support of his submissions, reliance was  placed  on  the
decisions of this Court in Managing Director Bhoruka  Textiles  Limited  Vs.
Kashmiri Rice Industries[1] and Raheja Universal Limited Vs. NRC  Limited  &
Ors.[2]  Appearing for J.K. Jute  Mill  Mazdur  Ekta  Union,  Shri  Krishnan
Venugopal  and  Shri  R.P.  Bhatt,  learned  Senior  Counsel   adopted   the
submissions of Shri Sibal.  Shri  Venugopal,  learned  Senior  Counsel  also
invited the attention of this Court to the  report  of  the  State  Bank  of
India to show how the net worth of the company was  still  on  the  negative
side.  Shri Kapil Sibal and Shri Sanjeev Sen, learned  Senior  counsel  also
invited  the  attention  of  the  Court  and  submitted  that  the   alleged
contemnors in aforementioned  Contempt  Petitions  had  flagrantly  violated
orders of this Court.

20.         Shri Guru Krishna Kumar, learned Senior  Counsel  appearing  for
SSTC original plaintiff and the transfree M/s Goodlife Merchants  Pvt.  Ltd.
in all the matters submitted that since  the  audited  balance-sheet  as  on
31.12.2012 showed the net  worth  of  the  company  on  positive  side,  the
company was out of the purview of the provisions  of  the  Act  and  it  was
competent for the company to claim itself to be no longer  amenable  to  the
jurisdiction of the BIFR.  It was submitted that  it  was  open  to  assert,
upon the net worth being positive,  that  the  company  ipso  facto  was  no
longer amenable to the jurisdiction of the BIFR.  In support,  reliance  was
placed on the view taken by the High Courts of  Calcutta[3],  Madras[4]  and
Delhi[5].  Dr. A.M. Singhvi and Shri Harin  Rawal,  learned  Senior  Counsel
appearing for the company submitted inter alia that while the  matters  were
pending before this Court, the Trial Court by  its  order  dated  29.08.2014
had allowed the application for impleadment filed by  present  appellant  in
Title Suit No.166 of 2013 and that it was now open to the present  appellant
to go before the Trial Court and ask for variation and modification  of  the
order of injunction passed by it.  It was submitted that  BIFR  which  is  a
Tribunal with limited jurisdiction could not have  disobeyed  the  order  of
the Civil Court.   Relying  on  the  views  taken  by  the  High  Courts  of
Calcutta, Madras and Delhi in the aforestated cases it  was  submitted  that
there was no provision in the Act under  which  BIFR  could  pass  an  order
discharging a company under the Act and as such the matter could lie in  the
domain of  the  Civil  Court.   Shri  C.U.  Singh,  learned  Senior  Counsel
appearing for LRPL, one of the secured creditors,  adopted  the  submissions
and further submitted that various  proceedings  before  the  BIFR  actually
showed that the members of the BIFR were biased against the Company.

21.   Before we deal with the legal issues involved in  the  matter  certain
factual facets of the matter need clarification and assessment.  During  the
course of submissions, it was submitted that the Counsel appearing  for  the
company had never agreed before the BIFR on 04.04.2013 that the  BIFR  could
examine the audited balance sheet itself to satisfy whether  the  net  worth
of the company had turned positive or not.  In support, reliance was  placed
on letter dated 18.04.2013 stated to have been  written  on  behalf  of  the
company to the Secretary Bench 3,  BIFR,  copy  of  which  letter  was  also
placed on record.  Said letter purportedly  stated  that  the  recording  of
such submission was wrong and that the learned counsel had  never  submitted
that before discharging the company  the  BIFR  could  examine  the  audited
balance sheet and satisfy itself.  Be it  noted  that  the  letter  was  not
written by the learned counsel nor any affidavit was sworn  by  the  learned
counsel denying  such  factum.   Furthermore,  in  none  of  the  subsequent
proceedings after 04.04.2013, as per the record of the  BIFR,  any  argument
disputing or denying such submission appears  to  have  been  made,  nor  is
there any reference in  the  subsequent  proceedings  to  the  letter  dated
18.04.2013.  In the circumstances we deem it appropriate to proceed  on  the
basis that the submission was in fact made by the  learned  counsel  and  it
was so rightly recorded by the BIFR in its proceedings dated 04.04.2013.
      Secondly, it has been accepted by the company that  property  at  Saif
Ganj, Katihar belonging to the company has  in  fact  been  sold.   At  this
stage, it may be useful to quote  from  the  written  submissions  filed  on
behalf of the company and the relevant portion reads as under:
“A sale deed of the Kathihar property was executed on 2.4.2013  for  Rs.3.55
crores in favour of Thapar Herbs & spices Ltd. and  the  sale  consideration
was received on 4.4.2013.   On 16.4.2013, the  constructive  possession  was
handed  over  and  registration  fee  of  Rs.35.00  lacs  was  paid  by  the
Purchaser.  As per the Revenue Department, the stamp duty  was  higher  than
affixed and the  matter  was  pending  adjudication  and  thereafter,  final
registration was done on 16.4.2014.   Under  the  Bihar  local  stamp  laws,
since over a year  had  lapsed,  a  fresh  sale  deed  was  presented.   The
difference of registration fee was paid by the purchaser on  16.6.2014.   On
2.7.2014, the sale deed was presented which act  of  presentation  was  only

      This would mean that even before the hearing of the matter before  the
BIFR on 04.04.2013 the property was sold.   The  record  does  not  indicate
anywhere that the factum of such sale was ever brought to the notice of  the
BIFR on 04.04.2013 or thereafter nor  was  it  disclosed  that  the  Rs.3.55
crores were received by way of consideration.  Furthermore, when this  Court
issued notice on 24.03.2014 when the company  had  appeared  on  caveat  and
subsequently passed interim order on 08.05.2014, nothing  was  disclosed  to
this Court that the property had been sold.

22.   We may also at this stage deal with  submission  regarding  effect  of
order dated 29.08.2014 of the Civil Court impleading the  present  appellant
as defendant.  Confining  itself  to  the  question  of  competence  of  the
present appellant to file the appeal without  leave of the court,  the  High
Court had not dealt with legal issues, namely what shall be  the  effect  of
sections 22, 26 and 32 of the Act insofar  as  the  present  controversy  is
concerned.  It was therefore submitted on behalf of the company  that  since
the appellant now  stands  impleaded,  he  be  left  to  pursue  appropriate
remedies before the Trial Court.  We are not persuaded to  agree  with  this
submission to relegate the matter to the Trial Court and we proceed to  deal
with the legal issues involved in the matter inasmuch as the  matter  raises
basic issues  concerning  jurisdiction  of  the  Civil  Court  itself.   The
learned Counsel appearing for the Original Plaintiff as well as the  company
have also advanced submissions on  the  legal  issues  in  question  and  we
therefore deem it appropriate to deal with such issues.

23.   At this juncture the question regarding maintainability of the  appeal
before the High Court needs to be dealt with.  As the  facts  indicate,  FAO
was admitted after hearing the respondents.  Neither at that  stage  nor  at
any subsequent stage anything was filed by way of formal opposition  to  the
filing of such appeal without the leave of the Court.   Further  the  status
of the present appellant to present  his  point  of  view  in  the  form  of
proposal or scheme before the BIFR was accepted right up to this  Court  and
he had thereafter been represented before the BIFR.  The  proceedings  dated
04.04.2013 also indicate that the BIFR was in seisin of MA  NO.162  of  2012
preferred by  him.   He  was  also  impleaded  as  respondent  in  the  writ
petitions which were dealt with  along  with  the  said  FAO.   The  present
appellant was thus not a stranger to the controversy.   There is nothing  in
Order XLIII Rule 1 of the Code of Civil Procedure that leave to  appeal  has
to be applied for in any particular format.  In the circumstances, the  High
Court was not justified in dismissing the appeal on a technical  ground  and
it ought to have considered the merits of the matter.  We  hold  the  appeal
preferred by the  present  appellant  to  be  maintainable  and  proceed  to
consider the basic issues involved in the matter.

24.   Sections 22(1), 26 and 32(1) of the Act, the ambit and scope of  which
fall for our consideration are quoted hereunder:
22. Suspension of legal proceedings, contracts, etc.—
    Where in respect of an industrial company, an inquiry under  Section  16
is pending or any scheme referred to under section 17 is  under  preparation
or consideration or a sanctioned scheme is under implementation or where  an
appeal under section 25 relating to an industrial company is pending,  then,
notwithstanding anything contained in the Companies Act, 1956 (1  of  1956),
or any other law or the  memorandum  and  articles  of  association  of  the
industrial company or nay other instrument having effect under the said  Act
or other law, no proceedings for the winding up of  the  industrial  company
or for execution, distress or the like against any of the properties of  the
industrial company or for the appointment of a receiver in  respect  thereof
and no suit for the  recovery  of  money  or  for  the  enforcement  of  any
security against the industrial company or of any guarantee  in  respect  of
any loans or advance granted to the  industrial  company  shall  lie  or  be
proceeded with further, except with the consent of  the  Board  or,  as  the
case may be, the Appellate Authority.

26. Bar of Jurisdiction—No order passed or       proposal  made  under  this
Act shall be appealable except as provided therein and no civil court  shall
have jurisdiction in respect of any matter which the Appellate Authority  or
the Board  is  empowered  by,  or  under,  this  Act  to  determine  and  no
injunction shall be granted by any court or other authority  in  respect  of
any action taken or to be taken in pursuance of any power  conferred  by  or
under this Act.

32.Effect of the Act on other laws.—(1) The   provisions of this Act and  of
any rules or schemes  made  thereunder  shall  have  effect  notwithstanding
anything inconsistent therewith  contained  in  any  other  law  except  the
provisons of the Foregin Exchange Regulation Act, 1973 (46 of 1973) and  the
Urban Land (Ceiling and Regulation ) Act, 1976  (33of  1976)  for  the  time
being in force or in  the  Memorandum  or  Articles  of  Association  of  an
industrial company or in any other instrument having  effect  by  virtue  of
any law other than this Act.

25.   Chapter III of the Act details out various  stages  at  which  inquiry
into the working and status of sick industrial companies and the scheme  for
revival is undertaken.  Upon a reference to the Board  or  upon  information
received with respect to financial conditions  of  any  industrial  company,
the Board is empowered under Section 16 to conduct such inquiry  as  it  may
deem fit for determining whether such company has become a  sick  industrial
company.  After being so satisfied, the measures which could be taken up  to
enable the company to make its net worth exceed the accumulated losses  that
is to say to make it positive are postulated in Section 17.   Under  Section
17(1) the Board may by order in  writing  allow  an  industrial  company  to
revive itself, if it is practicable so to do within a reasonable  time.   If
it is not so practicable, it may direct any operating agency  to  prepare  a
scheme for the revival of such company.  In other words, once the  reference
is registered, it is the BIFR which supervises the aspects  leading  to  the
revival of such company.  Subsequent sections deal with the preparation  and
sanction of scheme for revival of such company  and  empower  the  Board  to
have dominion over such company to enable the revival of  that  Company  and
in cases where such revival is not possible, to recommend the winding up  of
such company.  It is clear that after  a  reference  is  registered  by  the
Board,   all  throughout  the  subsequent  stages,  the  BIFR  has  complete
supervisory control over the affairs of such company till it is  revived  or
the decision to wind up such company is taken.  In our view, the  ambit  and
extent of such control means and includes determination of such measures  to
achieve revival of the sick company and to check whether  by  such  measures
the revival is being achieved or not.  This must cover the power  to  decide
at any stage subsequent to the registration of reference  under  Section  16
whether such company has ceased to be sick company  or  not.   Cessation  of
the status as a sick company can be under Section 17(1) or as  a  result  of
scheme for revival being implemented and determination  of  such  issue,  in
our view, is in the exclusive domain of the BIFR.

26.         In Raheja Universal Limited Vs. NRC Limited2,  it  was  observed
in para 48 thus:
“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  purpose  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  obstnace  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.”

      The Act is a self-contained Code  and  has  conferred  upon  the  BIFR
complete supervisory control over a sick industrial company  to  adopt  such
methodology as provided in Chapter III for detecting,  reviving  or  winding
up such sick company.  The authority to determine the existence  and  extent
of sickness of such company and to adopt methodology for  its  revival  are,
in the exclusive domain of the BIFR and by virtue of Section 26 there is  an
express exclusion of the jurisdiction of the Civil Court in that behalf.

27.   As laid down by this Court the Act is a complete Code in itself.   The
Act gives complete supervisory control to the BIFR over  the  affairs  of  a
sick Industrial Company from the stage  of  registration  of  reference  and
questions  concerning  status  of  sickness  of  such  company  are  in  the
exclusive domain of  the  BIFR.   Any  submission  or  assertion  by  anyone
including the Company that by certain developments the Company  has  revived
itself and/or that its net worth since  the  stage  of  registration  having
become positive no such scheme for revival needs to be undertaken,  must  be
and can only be dealt with by the BIFR.  Any such assertion or claim has  to
be made before the BIFR and only upon the satisfaction of the  BIFR  that  a
sick company is no longer sick, that such company  could  be  said  to  have
ceased to be amenable  to  its  supervisory  control  under  the  Act.   The
aspects of revival of such company being  completely  within  its  exclusive
domain, it is the BIFR alone, which can determine  the  issue  whether  such
company now stands revived or not. The jurisdiction of the  civil  court  in
respect of these matters stands completely excluded.

28.   Unlike cases where the existence of jurisdictional fact or  facts,  on
the basis of which alone a Tribunal can invoke  and  exercise  jurisdiction,
is or are  doubted,  stand  on  a  different  footing  from  the  one  where
invocation and  exercise  of  jurisdiction  at  the  initial  stage  is  not
disputed but  what  is  projected  is  that  by  subsequent  or  supervening
circumstances the concerned Tribunal has lost jurisdiction.  In the  present
case the fact that the company was registered  as  a  sick  company  is  not
doubted nor has it been contended that the BIFR had wrongly assumed  initial
jurisdiction.  But what is projected is that the  net  worth  having  become
positive the BIFR has now lost jurisdiction over the company.  In our  view,
the BIFR having correctly assumed jurisdiction and when  all  the  financial
affairs of such company were directly under the supervisory control  of  the
BIFR, the power to decide whether it has since then  lost  the  jurisdiction
or not, is also in the exclusive domain of the BIFR.    The  BIFR  alone  is
empowered to determine whether net worth has become positive as a result  of
which it would cease to have  such  jurisdiction.   Any  inquiry  into  such
issue regarding net worth by anyone outside the Act including  civil  court,
would  be  against  the  express  intent  of  the  Act  and  would  lead  to
incongruous and undesired results.  The suit as framed  seeking  declaration
that the company was no longer a sick company  within  the  meaning  of  the
Act, was therefore not competent and maintainable.  The Civil Court was  not
right and justified in issuing  injunction  as  it  did.   The  counsel  who
represented the company before the BIFR on 04.04.2013,  correctly  submitted
that before discharging  the  company  the  BIFR  can  examine  the  audited
balance sheet and satisfy itself whether the net worth had turned  positive.

29.   Insofar  as  the  recovery  of  money  is  concerned,  the  matter  is
completely covered by Section 22(1) of the Act.  The  language  employed  in
Section 22(1) of the Act refers to the  entirety  of  the  period  beginning
from the inquiry under Section 16  till  the  implementation  of  sanctioned
scheme for revival.  Section 22(1) bars any suit for recovery  of  money  or
for the enforcement of any security against the industrial  company  without
the express consent of the Board.  Reference in  Section  22(1)  is  to  “an
Industrial Company” and not to “the sick Industrial  Company”  as  found  in
later sub-sections of the same Section.  This also  throws  light  that  the
bar is during the period contemplated in said Section  22(1).  Such  bar  is
period specific and sub-section (5) of  Section  22  entitles  exclusion  of
such period while computing limitation.  During the entirety of that  period
the Act grants protection to the company and leaves it to the discretion  of
the BIFR  whether  to  permit  filing  and  maintaining  of  suit  or  other
proceedings.   In  the  present  case  the  BIFR   was   considering   Draft
Rehabilitation  Scheme  which  is  a  stage  under  Section  18(3)  and   is
completely covered by the period under Section 22 of the Act.  The  suit  in
the instant case as framed for recovery of money filed without  the  consent
of the BIFR was not competent and maintainable.  We may at this stage  refer
to the decisions rendered by this Court with regard to Section 22(1) of  the
Act.  In Managing Director,  Bhoruka  Textiles  Limited  Vs.  Kashmiri  Rice
Industries1, after quoting sub-section (1) of Section 22 of the Act, it  was
 “A plain reading of the aforementioned provision would clearly go  to  show
that a suit is barred when an enquiry under Section 16 is  pending.   It  is
also not in dispute that prior to institution of the  suit,  the  respondent
did not obtain consent of the Board.

9.    the provision of the Act and,  in  particular,  Chapter  III  thereof,
provides for a complete code.  The Board has a wide power in  terms  of  the
provisions of the Act, although it is  not  a  court.   Sub-section  (4)  of
Section 20 as also Section 32 of the Act provides for non obstante  caluses.
 It envisages speedy disposal of the enquiry and preferably within the  time
framed provided for thereafter.  Section  17  empowers  the  court  to  make
suitable orders on the completion of enquiry.  Preparation and  sanction  of
the scheme is also contemplated under the Act.”

In para 12 of the said decision, it was further stated:
“If the civil court’s jurisdiction was ousted in terms of the provisions  of
Section 22 of the Act, any judgment  rendered  by  it  would  be  coram  non
judice.   It is a well settled principle of law that a judgment  and  decree
passed by a court or tribunal  lacking  inherent  jurisdiction  would  be  a

Similarly, in Raheja Universal Limited Vs. NRC Limited2 it was  observed  as
“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.”

The suit in the instant case,  insofar  as  it  relates  to  the  claim  for
recovery of money, could  lie  or  be  proceeded  with  only  after  express
consent of the BIFR.

30.   We now deal with the decisions of the High Courts of Calcutta,  Madras
and Delhi.   All  these  decisions  were  rendered  while  considering  writ
petitions under Article 226 of the Constitution of India.  In the  first  of
these three cases the  High Court took the view that  there  is  no  express
provision in the Act which indicates when the BIFR  loses  its  jurisdiction
with regard to a company which was once sick and proceeded  to  declare  the
company in question not amenable to the jurisdiction of the  BIFR  from  and
with effect from the date the Balance Sheet  showed  the  Net  Worth  to  be
positive.  In the second case the High Court was of the view  that  sickness
of an industrial company is to be decided  ex-facie  on  the  basis  of  the
audited balance sheet and when the  Net  Worth  becomes  positive  the  BIFR
ceases to have any jurisdiction.  The last case arose  from  the  same  BIFR
matter and Delhi High Court followed the view taken by  Madras  High  Court.
Said decisions must now be read in the light of  the  above  discussion  and
view that we have taken.

31.   In the circumstances, we allow the present appeals and set  aside  the
order dated 06.01.2014 passed by the High Court of Gauhati in FAO  No.10  of
2013 and Writ Petition Nos.4303 of 2013 and 6286 of 2013.  It is  held  that
the Title Suit No.166 of 2013 pending on  the  file  of  the  learned  Civil
Court  at  Kamroop,  Gauhati  is  not  maintainable  insofar  as  it   seeks
declaration that the company  was  no  longer  a  sick  company  within  the
meaning of the Act and that the BIFR ceased to have  jurisdiction  over  the
company and that all the  proceedings  in  the  BIFR  after  filing  of  the
positive balance-sheet were without jurisdiction.   Consequently  the  order
of injunction passed by the Civil Court is set aside.  Insofar as  the  said
Suit pertains to the claim for recovery of money from the Company, the  Suit
could lie and be proceeded with only after express consent of  the  BIFR  is
received by the plaintiff.  We direct  that  the  company  i.e.,  J.K.  Jute
Mills Company Ltd. having its registered office at Kanpur U.P. continues  to
be under the jurisdiction of the BIFR.  We leave it to the BIFR  to  satisfy
itself and determine the issues whether the net worth  of  the  company  has
turned positive or not.  If the BIFR is so satisfied, it  shall  de-register
the company and upon such  declaration  the  company  will  be  out  of  the
supervisory jurisdiction of the BIFR under the Act.  Needless  to  say  that
if the BIFR is not satisfied that the net worth of the  company  has  turned
positive, it shall go ahead and consider  the  scheme  for  revival  of  the
company.  We direct the BIFR to complete this  exercise  within  two  months
from date of receipt of this order.  We have  refrained  from  dealing  with
the matter concerning the merits or de-merits of  the  claim  that  the  net
worth has turned positive nor have we dealt with  the  report  made  by  the
State Bank of India in its Special  Investigative  Audit.   We  leave  these
issues to be considered by the BIFR at an appropriate stage.  We  have  also
not dealt with the submissions alleging bias as the matters in  that  behalf
are still pending consideration before the authorities and  we  leave  these
issues to be dealt with at an appropriate stage.

32.   Since in our view the company continues to be a sick  company  and  it
was not competent for anyone except the BIFR to determine  whether  the  net
worth of the company had turned  positive,  we  hold  the  sale  of  Katihar
property effected by the company without express leave or permission of  the
BIFR to be questionable.  However, since the transferee of that property  is
not before this Court we relegate this matter for appropriate assessment  by
the BIFR after issuing due notice to the transferee.  We also  leave  it  to
the BIFR  to  consider  and  assess  whether  there  was  any  necessity  or
expediency to sell the  property  in  question.   If  in  its  opinion  such
expediency and  necessity  are  established,  the  BIFR  may  also  consider
whether the value that the property has fetched is adequate or not.  If  the
value is adequate it may  confirm the sale  in  favour  of  the  transferee.
However, if the value in its opinion is inadequate, it shall give offer  and
adequate time to the transferee to make good the deficit.  In  any  case  if
the sale is held to be bad or if the transferee is not willing to make  good
the deficit, the entire consideration for the  transaction  be  returned  to
the transferee.  In such eventuality whatever the  transferee  has  paid  in
excess of the consideration money towards stamp duty and registration  shall
be recovered from the Directors and persons responsible for  effecting  such
sale on behalf of the company.

33.   Now we turn to the filing of the civil suit in the  instant  case  and
its conduct.  The original plaintiff had sought consent of  the  BIFR  under
Section 22(1) of the Act and was before the BIFR  on  04.04.2013.   However,
he did not disclose either the factum that he had so sought such consent  or
that the BIFR was in seisin of the matter and considering  whether  the  net
worth of the company had  turned  positive.   Non-disclosure  of  these  two
essential facts, in our view, was not accidental. We therefore impose  costs
of Rs.5 lacs on the original  plaintiff  which  shall  be  deposited  within
three months from the date of this order, failing which action  in  contempt
shall be initiated against the  original  plaintiff.   The  costs  shall  be
deposited to the account of the  Supreme  Court  Legal  Services  Authority.
Though the conduct of the company as defendant before the  Civil  Court  was
of the same order, since it is a sick company we refrain from  imposing  any
costs on the company. No other order as to costs.

34.   The appeals are allowed in the aforesaid terms.   FAO  No.10  of  2013
thus stands allowed and Writ Petition Nos.4303 of 2013 and 6286 of 2013  are
dismissed.  As regards Contempt Petition Nos.338  and  375  of  2014,  since
this Court had not issued any notice to the alleged contemnors, we have  not
dealt with said petitions.  By a separate order we issue appropriate  notice
to the alleged contemnors.

                                  (Anil R. Dave)

                                  (Uday Umesh Lalit)

New Delhi,
November 13,   2014

[1]    2009(7) SCC 521
[2]    2012 (2) SCC 148
[3]   3. Dated 08.08.1995 in Zuari Agro Chemicals Ltd. & Anr Vs. The
Industrial Credit and Investment Corporation of India & Ors. in Matter
No.362 of 1995 (OS).
[4]   4. Dated 19.12.2007 in Dunlop India Ltd. Vs. Container Corporation of
India Ltd. & Anr. in Writ Petition No.24422 of 2006.
[5]   5. Dated 21.10.2009 in Catholic Syrian Bank Vs. BIFR & Ors. in W.P.
(C) No.8361 of 2008.


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