2003 (9) TMI 559 - HC - Companies Law

Issues Involved:
1. Maintainability of the writ petition.
2. Jurisdictional aspects regarding the sale of machinery.
3. Factual correctness and suppression of facts in the writ petition.
4. Humanitarian considerations for workers.
5. Ownership and rights under hire purchase agreements.
6. Applicability of section 22 of SICA and BIFR jurisdiction.

Issue-wise Detailed Analysis:

1. Maintainability of the writ petition:
The appellant argued that the writ petition was not maintainable and was based on incorrect facts. The learned Single Judge entertained the writ petition, leading to the confirmation of interim stay orders. However, the appellate court found that the writ petition itself was based on a misleading statement and incorrect factual basis, thus questioning its maintainability.

2. Jurisdictional aspects regarding the sale of machinery:
The appellant contended that the machinery sale notice was issued pursuant to orders from the Original Side of the High Court, not the BIFR. The court agreed, stating that the BIFR had no jurisdiction over the machinery owned by the appellant under hire purchase agreements, as these did not belong to the sick mill. The court emphasized that the BIFR's order did not authorize the sale of the machinery.

3. Factual correctness and suppression of facts in the writ petition:
The appellant pointed out that the writ petition contained misleading statements, suggesting that the sale notice was issued under BIFR's orders, which was not the case. The court agreed, noting that the writ petition was based on incorrect facts and that the petitioner Union had suppressed material facts, thereby misleading the court.

4. Humanitarian considerations for workers:
The learned Single Judge had considered the potential impact on the livelihood of about one thousand workers if the machinery was sold, leading to the confirmation of the stay. However, the appellate court held that while humanitarian concerns were genuine, they could not override the legal rights of the appellant to recover its property under the hire purchase agreements.

5. Ownership and rights under hire purchase agreements:
The appellant argued that under the hire purchase agreements, the ownership of the machinery remained with the appellant until all installments were paid. The court agreed, stating that the machinery did not belong to the sick mill and thus was outside the jurisdiction of the BIFR and the mischief of section 22 of SICA. The court emphasized that the ownership of the machinery was a crucial factor in determining the rights of the parties.

6. Applicability of section 22 of SICA and BIFR jurisdiction:
The court held that section 22 of SICA pertained only to the property belonging to the sick mill. Since the machinery in question was owned by the appellant under hire purchase agreements, it was outside the jurisdiction of the BIFR. The court referred to the Division Bench judgment in Shri Ananta Udyog P. Ltd. v. Cholamandalam Investment & Finance Co. Ltd., which supported this view.

Conclusion:
The appellate court set aside the order of the learned Single Judge, dismissed the stay petition, and allowed the vacate-stay petition. The court concluded that the writ petition was based on incorrect facts and that the sale notice was issued pursuant to orders from the High Court, not the BIFR. The court also emphasized that humanitarian concerns, while genuine, could not override the legal rights of the appellant under the hire purchase agreements.

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