2000 (7) TMI 848 - HC - Companies Law

Summary

Issues Involved:
1. Competence and jurisdiction of BIFR and AAIFR to pass eviction orders and determine rent.
2. Whether the impugned order violated principles of natural justice.
3. Applicability of SICA over WB Tenancy Act.

Detailed Analysis:

1. Competence and Jurisdiction of BIFR and AAIFR:

The primary question was whether BIFR and AAIFR had the authority to pass orders for eviction and determine rent for a residential flat owned by a Sick Industrial Company. The court examined the scope of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), which was enacted under entries 44 and 54 of the Union List. SICA is a comprehensive code aimed at the timely detection and rehabilitation of sick companies. It defines a Sick Industrial Company and outlines the powers of BIFR and AAIFR, including the preparation and sanction of rehabilitation schemes.

The court found that SICA deals with the process of manufacture or production and does not extend to adjudicating tenancy rights. The sanctioned scheme under SICA did not include the flat in question, and it was not part of the rehabilitation scheme. The court concluded that BIFR and AAIFR exceeded their jurisdiction by ordering the eviction and determining the rent for the flat, which was outside the purview of SICA.

2. Violation of Principles of Natural Justice:

The petitioner argued that no notice was given before the BIFR's order to increase the rent and vacate the flat. The court noted that the petitioner company was not a party to the rehabilitation scheme and was not given an opportunity to be heard. The court emphasized that proper notice and a fair hearing are essential components of natural justice. The absence of notice and hearing rendered the proceedings void. The court held that the order was bad in law due to the violation of natural justice principles.

3. Applicability of SICA Over WB Tenancy Act:

The AAIFR had erroneously concluded that SICA had an overriding effect on the WB Tenancy Act due to the non-obstante clause in Section 32(1) of SICA. The court clarified that Article 254 of the Constitution, which deals with repugnancy between central and state laws, applies only if both laws fall under the Concurrent List. Since SICA and the WB Tenancy Act operate in different fields-industrial rehabilitation and tenancy rights, respectively-there was no repugnancy. The court held that SICA does not override the WB Tenancy Act, and BIFR and AAIFR did not have the jurisdiction to adjudicate tenancy matters.

Conclusion:

The court allowed the petition, setting aside the impugned orders of BIFR and AAIFR. It held that neither BIFR nor AAIFR had the authority to pass orders for eviction or determine rent for the tenanted premises. The court also found that the order was bad in law due to the violation of natural justice principles. The parties were directed to bear their own costs.