Telangana High Court
Ms Rangareddy Amp Associates Hyd vs Dewan Bahadur Ramagopal Mills Ltd., And ... on 29 December, 2023
Author: T.Vinod Kumar
Bench: T.Vinod Kumar
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SRI JUSTICE T. VINOD KUMAR
WRIT APPEAL No.391 OF 2008
JUDGMENT:
(Per the Hon'ble Sri Justice T.Vinod Kumar)
This Intra-court appeal under Clause 15 of the Letters
Patent is filed challenging the order of the learned Single Judge
dated 08.04.2008 in Writ Petition No.11173 of 2007 as being
contrary to settled legal proposition that the High Court in writ
jurisdiction under Article 226 of the Constitution of India
should confine itself to the question of legality and cannot sit as
a Court of Appeal by deciding issues involving disputed
questions of facts.
2. The appellant herein is respondent No.4 in the Writ
Petition being W.P. No.11173 of 2007.
3. The facts matrix of the case has been set out in detail in
the order under challenge. Thus, shorn of unnecessary details it
is sufficient to state that the respondent No. 1 herein (company)
had filed the underlying petition aggrieved by the order dated
03.05.2007 passed by the Board for Industrial and Financial
Reconstruction (for short 'BIFR'). The order passed by BIFR was
challenged on the ground that the Draft Rehabilitation Scheme
(DRS) submitted by the appellant was sanctioned on 28.05.1997
with some modifications, without notice to the petitioner; that
the DRS was not circulated; that equal opportunity should be
provided to the company to make OTS settlements before
seeking revival schemes from third parties; that the Appellate
Authority constituted under Section 25 of the Sick Industrial
Companies (Special Provisions) Act, 1985, (for short 'SICA') had
set aside the draft scheme submitted by the appellant and
sanctioned by the BIFR and remanded the matter back to BIFR
for fresh consideration, after hearing the company and all the
parties concerned noting therein that the consent of the
company was erroneously recorded by BIFR; and thus the
company was entitled to submit suggestions/objections in
response to DRS and was also entitled to hearing before BIFR to
protect their interest.
4. The learned Single Judge of this Court by the impugned
order had set aside the order of BIFR dated 03.05.2007 by
which the DRS submitted by the appellant was sanctioned and
remitted the matter for fresh consideration, permitting the
company to submit its suggestions/objections within 30 days
from the date of order.
5. The learned Single Judge while setting aside the order
passed by the BIFR sanctioning the DRS submitted by the
appellant had held that the Draft Rehabilitation Scheme was
not circulated to the company; that the company was not
present when orders dated 12.08.1997 and 01.06.1998 were
passed; that the company was not given opportunity to submit
its objections/suggestions under Section 18(3) of SICA; and that
since the company received the DRS only on 17.11.1998, it
cannot be deprived of its right to file objections/suggestions as
contemplated under Section 18(3)(a) and (b) of SICA.
6. The learned Single Judge further held that even at the
stage of submitting objections/suggestions if the company
brings up a better proposal and inspires the confidence of BIFR,
its employees, etc. it is open for the BIFR to a take just, fair and
reasonable decision.
7. The learned Single Judge further held that the BIFR is
entitled to review any scheme and direct the Operating Agency
(OA) to prepare fresh scheme under Section 18 of SICA; that
even the scheme sanctioned is not final; that the Board can, for
any compelling reasons, review the sanctioned scheme; and that
the appellant cannot claim a vested interest thereby depriving
the right of the company.
8. Assailing the said order of the learned single Judge, the
present appeal is filed.
9. Heard Sri P.S. Rajasekhar, learned Counsel appearing for
Mrs. Shireen Sethna Baria, learned Counsel for the appellant,
Sri. Vedula Srinivas, learned Senior Counsel appearing for Mrs.
Vedula Chitralekha, learned counsel for respondent No.1 and
Ms. Sagarika Koneru, learned Counsel for respondent No.9 and
perused the record.
10. The challenge in the present appeal to the order of the
learned Single Judge is primarily threefold.
i. Firstly, that the Writ Petition challenging the order of
BIFR ought not to have been entertained, since the
aggrieved party has an alternate remedy of Appeal under
Section 25 of SICA;
ii. Secondly, the finding of the learned Single Judge holding
that the Company was entitled to submit fresh revival
scheme as an objection/suggestion to the DRS runs
contrary to the object of Section 18 of SICA; and
iii. Lastly, the finding that the Company did not have notice
of the DRS till 17.11.1998 and thereby can be given
another opportunity to submit its objections/suggestions
is erroneous, since the approved DRS was published in
daily newspapers and also because the Company had
failed to submit its objections/suggestions even after the
matter was remanded by the appellate authority.
11. Insofar as the challenge to the impugned order on the
ground of existence of alternate remedy is concerned, it is to be
noted that before the learned Single Judge, the parties to the
Writ Petition including the appellant herein had consented for
hearing the Writ Petition on merits. The learned Single Judge
had noted the said consent of the appellant in para 15 of the
impugned order as under:
"15. The aforesaid order of the BIFR dated 03.05.2007 has
been questioned in this Writ Petition. Though an appeal lies
against the said order passed by the BIFR to the AAIFR under
Section 25 of SICA, the contesting respondent RRA
consented to hear the Writ Petition on merits instead of
relegating the petitioner to file an appeal before the
appellate authority, as it would cause further delay in
resolving the disputes among the parties. In view of the
aforesaid consent of the contesting respondent RRA, the Writ
Petition has been heard on merits."
(emphasis supplied)
12. In view of the consent given by the appellant to proceed
with the hearing of the Writ Petition, it is not open for the
appellant to now plead otherwise. Thus, the challenge in the
present appeal on this ground has to fail.
13. Turning to the other ground of challenge in permitting the
company to submit fresh revival scheme as an
objection/suggestion to the DRS, it is to be noted that the
purpose of the Act is to not just declare a company as sick
industrial company with its net worth eroded, rather it is to
promote ameliorative, remedial and other measures which need
to be taken in respect of such companies in public interest.
14. Section 18 of SICA deals with Preparation and Sanction of
Schemes. Sub-section (3) thereof mandates that the draft
scheme approved by BIFR shall be sent to the sick industrial
company and the OA. The provision further mandates that BIFR
shall publish or direct the publication of the draft scheme in
daily newspapers in order to enable the concerned parties to file
their objections and suggestions for BIFR to consider. While so,
sub-section (5) thereof, confers powers on the BIFR to review
any sanctioned scheme and make modifications as it may deem
fit, including the preparation of a fresh scheme. Thus, from a
bare reading of sub-section (5), it can be understood that a
scheme sanctioned under Section 18 of SICA is not unalterable
(See: Raheja Universal Limited Vs. NRC Limited and Ors 1).
Section 18(6) of SICA specifies that whenever such an exercise
under Section 18(5) of SICA is undertaken, the provisions of
sub-sections (3) and (4) of Section 18 shall apply in relation
thereto.
15. It is pertinent to note that the exercise under Section
18(5) of SICA may be undertaken either on the recommendation
of the OA or otherwise. The usage of the word 'otherwise'
demonstrates that BIFR has a discretionary power to direct the
preparation of a fresh scheme for any other reason it deems
necessary. At the cost of repetition, the purport of conferring
such discretionary powers on BIFR is to ensure that the
sanctioned scheme is of utmost viability. Since, the legislature
has not limited the exercise of the powers conferred under
Section 18(5) of SICA to only specific situations, this Court is of
the view that if a proposal which is best suited in a given
situation is made in the form of objection/suggestion to the
DRS, the same cannot be rejected on the ground of it being a
new proposal.
1 (2012) 4 SCC 148
16. So far as the contention of the appellant that the
company ought not be given another opportunity after failing to
submit objections/suggestions to the DRS when the matter was
remanded by the appellate authority is concerned, firstly, it is to
be seen that the appellate authority while remanding the matter
to BIFR for fresh consideration after hearing the company vide
order dated 06.01.2000 had recorded a categorical finding that
the company was absent in the hearings held on 12.08.1997
and 01.06.1998, and that their consent was erroneously
recorded by BIFR. Though the appellant herein had preferred
W.P. No.7670 of 2000 aggrieved by the said findings, the said
Writ Petition was dismissed by the learned Single Judge vide
order dated 23.02.2000. Admittedly, no further appeal was
preferred against the order dated 23.02.2000. Therefore, having
accepted the order in W.P. No.7670 of 2000 dated 23.02.2000,
the appellant herein cannot be permitted to raise the very same
plea again. Secondly, in light of the foregoing discussion on the
discretionary power of BIFR under Section 18(5) of SICA, the
company could at any point bring out a fresh proposal for
consideration of BIFR.
17. At this stage, it is relevant to note that an appeal to the
Division Bench under Clause 15 of Letters Patent from an order
of a learned Single Judge is only provided for convenience to the
parties. However, it is well settled that the powers of this Court
under Clause 15 of Letters Patent can only be exercised when
the order of the learned Single Judge is totally perverse (See: N.
Seshaiah Vs. South Central Railway and Ors 2).
18. Further, in the light of the judgment of the Hon'ble
Supreme Court in The Management of Narendra & Company
Private Limited vs. the Workmen of Narendra & Company 3,
and Shyam Sel and Power Limited and Another vs. Shyam
Steel Industries Limited 4, the impugned order passed by the
learned Single Judge does not fall under the term 'judgment' of
Clause 15 of the Letters Patent, as the said order does not give a
finality to the right of the parties. Since the impugned order
merely directs the BIFR to take a just, fair and reasonable
decision after providing the company an opportunity to submit
its suggestions/objections, this Court is of the view that no
grave prejudice is caused to the appellant for the present Writ
Appeal to be entertained by this Court.
2 2019(6) ALT 84
3 (2016) 3 SCC 340
4 (2023) 1 SCC 634
19. Resultantly, this Court is of the view that the impugned
order does not call for any interference in exercise of powers
under Clause 15 of Letters Patent. Accordingly, the instant Writ
Appeal is dismissed.
20. However, this Court is conscious of the fact that during
the pendency of the instant appeal, the BIFR was dissolved on
account of The Sick Industrial Companies (Special Provisions)
Repeal Act, 2003 (for short 'Repealing Act of 2003'), notified on
25.11.2016 vide notification No.S.O. 3568(E), & 3569(E) and
brought into force with effect from 01.12.2016. Further, since
the matter could not be pursued by the parties on account of
the operation of stay during the pendency of the instant appeal,
this Court deems it appropriate to grant liberty to the company
to take appropriate steps in accordance with the Repealing Act
of 2003, the Companies (Transfer of Pending Proceedings) Rules,
2016 passed vide G.S.R. 1119(E). dated 09.12.2016 read with
the Insolvency and Bankruptcy Code (Removal of Difficulties)
Order, 2017 passed vide S.O. 1683(E). dated 24.05.2017.
21. Miscellaneous petitions pending if any shall stand closed
in the light of this order.
_____________________
ALOK ARADHE, CJ
_____________________
T. VINOD KUMAR, J
Date: 29.12.2023
MRKR/VSV
