1982 (8) TMI 198 - HC - Companies Law

Powers of Central Government to authorise with permission of High Court to takeover management or control of industrial undertaking

Summary

Issues:
1. Preliminary objection raised against the consideration of a proposed scheme under section 391 of the Companies Act, 1956, after granting permission under section 18FA of the Industries (Development and Regulation) Act, 1951.

Analysis:
The judgment delivered by A.M. Ahmadi, J. addressed a preliminary objection raised by the senior standing counsel for the Central Government regarding the consideration of a proposed scheme under section 391 of the Companies Act, 1956, after granting permission under section 18FA of the Industries (Development and Regulation) Act, 1951. The judgment delves into the provisions of the Acts to understand the submission made at the Bar. It highlights that under section 18FA of the Industries (Development and Regulation) Act, if the Central Government seeks permission to appoint a person or body to take over the management of a sick unit, the High Court is obligated to grant such permission. The judgment references previous decisions to support the view that once permission under section 18FA is granted, the court cannot entertain or examine a scheme under section 391 of the Companies Act. The judgment emphasizes the mandatory nature of the language used in the relevant sections, indicating that the High Court must grant permission for take-over under section 18FA, leaving no room for considering alternative schemes under section 391 of the Companies Act.

In conclusion, the judgment upholds the preliminary objection raised by the Central Government, stating that once permission is granted under section 18FA of the Industries (Development and Regulation) Act, the court cannot entertain a scheme under section 391 of the Companies Act. The judgment provides a detailed analysis of the relevant provisions of the Acts and previous decisions to support the view that the High Court is bound to grant permission for take-over under section 18FA, precluding the consideration of alternative schemes under section 391.