Delhi High Court
Bengal Waterproof Ltd. vs Uoi & Anr. on 18 February, 2016
Author: Pradeep Nandrajog
$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : February 18, 2016
+ W.P.(C) 1127/2016
BENGAL WATERPROOF LTD ..... Petitioner
Represented by: Mr.Arvind Kumar, Advocate with
Ms.Purti Marwaha, Advocate
versus
UOI AND ANR ..... Respondents
Represented by: Mr.Jasmeet Singh, Advocate with
Ms.Astha Sharma, Advocate for R-1
Mr.Manish Mohan, Advocate with
Ms.Manisha and Mr.Shivam
Chanana, Advocate for R-2
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MS. JUSTICE MUKTA GUPTA
PRADEEP NANDRAJOG, J. (Oral)
1. In response to the directions contained in the order dated February 10,
2016, the Registrar BIFR has produced through his counsel minutes of a
meeting dated April 28, 2009 drawn up by the Board of Industrial and
Financial Reconstruction, which read as under:-
"Minutes of the meeting of Board for Industrial &
Financial Reconstruction held on 28.3.2009
A meeting of the Board was held on the 28th of April 09 in
the room of HM (KCV) when the following were present:
i) Smt.Binoo Sen - Chairperson
ii) Sh.K.Cherian Varghese - Member
iii) Sh.Pavan Raina - Member
iv) Sh.Nirmal Singh - Member
2. It was resolved that the -
a) Listing procedure attached with the minutes be
issued, put up on BIFR Website as well as the Notice
Boards immediately.
b) The Cause List of the cases fixed for hearing should
also indicate the name of the Counsels/Consultants/CAs or
any other authorized representative appearing for the
Company.
c) The Cause List for hearing shall continue to be
drawn according to the date of their registration provided
that precedence will be given to the directions of the
superior courts, appellate authority, as well as Bench
directions, determination of sickness, mandatory hearings.
d) The cause lists both for miscellaneous
petitions/applications, interlocutory applications and other
matter, and for original cases will be drawn by the
Registrar with the approval of the concerned Bench.
e) On the 4th of March 09, a format had been
circulated for submission of applications/misc. petitions to
the Bench. This is not being used. Registrar will
henceforth in accordance with the listing procedure submit
to the Bench, in this format which is again enclosed.
f) Guidelines for Assets Sale Committee be put on the
Website.
g) Similarly, guidelines for preparation of
Rehabilitation Schemes be put on the Website. The
guidelines should also be applicable to preparation of
MDRS.
h) While registering a reference, the following will
invariably be part of the order-
"The reference as filed by the company as registered. The
company is, however, restrained from disposing of or
alienating in any manner any fixed assets of the company
without the consent of the Board."
3. Immediate compliance may be ensured of the above
procedure and brought into effect from 11th of May, 2009.
Sd/ Sd/
(Binoo Sen) (K.Cherian Varghese)
Chairperson Member
Sd/ Sd/
(Pavan Raina) (Nirmal Singh)
Member Member"
2. Learned counsel for Registrar BIFR states that reference in the
impugned communication dated January 29, 2016 by the Registrar BIFR is
the result of the aforenoted decision taken by Members of BIFR on April 28,
2009.
3. The communication dated January 29, 2016 addressed to the
petitioner by Secretary BIFR informs that reference made by the petitioner
under Section 15 of SICA, 1985 has been registered as Case No.21/2016 and
therefore the petitioner company is restrained from disposing of or
alienating the fixed assets of the petitioner without the prior consent of
BIFR.
4. Whilst it may be a starting point of a decision that a sick company in
respect whereof reference has been admitted should not dispose of its fixed
assets pending consideration whether a scheme of rehabilitation, but a
judicial decision has to be taken on that aspect of the matter in view of
Section 22A of SICA, 1985 which requires BIFR to form an opinion that in
public interest a sick industrial company should be restrained from disposing
of its fixed assets pending consideration of a scheme for revival.
5. It is settled law that where a statute vests a power and prescribes a
manner of exercise thereof, the power has to be exercised in the manner
prescribed and in no other way.
6. Section 22A of SICA reads as under:-
"22A. Direction not to dispose of assets -
The Board may, if it is of opinion that any direction is
necessary in the interest of the sick industrial company or
creditors or shareholders or in the public interest, by order
in writing direct the sick industrial company not
to dispose of, except with the consent of the Board, any of
its assets -
(a) during the period of preparation or consideration of
the scheme under Section 18; and
(b) during the period beginning with the recording of
opinion by the Board for winding up of the company under
sub-Section (1) of Section 20 and up to commencement of
the proceedings relating to the winding up before the
concerned High Court."
7. A perusal thereof shows that the Board has to form an opinion
keeping in view public interest or the interest of the sick industrial company
or its creditors or shareholders that the sick company should not dispose of
its assets without the permission of the Board. The decision being statutory
would require BIFR to consider all the relevant facts and pass an order
bringing out the public interest or the interest of the sick industrial company
or its creditors or shareholders which needs to be protected by restraining
the sick industrial company from selling its fixed assets. This decision
cannot be in the nature of a general administrative decision flowing through
a practice direction issued in a meeting of BIFR which is an administrative
meeting and not a meeting of BIFR discharging quasi judicial functions or
statutory functions of BIFR.
8. The writ petition is accordingly disposed of quashing the direction in
the letter dated January 29, 2016 addressed by Registrar BIFR to the
petitioner that it would not dispose of or alienate its fixed assets for the
reason the Registrar BIFR has communicated said facts in terms of the
administrative decision taken in the year 2009 by BIFR. The administrative
decision taken on March 28, 2009 being an administrative decision is
quashed with a direction that said decision would be removed from the
practice directions of BIFR.
9. No costs.
CM No.4943/2016
Dismissed as infructuous.
(PRADEEP NANDRAJOG)
JUDGE
(MUKTA GUPTA)
JUDGE
FEBRUARY 18, 2016
mamta
