2006 (9) TMI 280 - SC - Companies Law

Whether premise of 1993 Act could prevail over the 1985 Act - Sick Industrial Companies (Special Provisions) Act - Held that - The 1985 Act was amended in 1994. The 1994 Amending Act was enacted after the coming into force of the 1993 Act. Both the Acts contain non obstante clauses. Ordinary rule of construction is that where there are two non obstante clauses, the latter shall prevail. But it is equally well-settled that ultimate conclusion thereupon would depend upon the limited context of the statute

Issues Involved:
1. Applicability of Sick Industrial Companies (Special Provisions) Act, 1985 (1985 Act) versus Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (1993 Act).
2. Execution of the award made by the Industry Facilitation Council.
3. Inclusion of the awarded amount in the sanctioned rehabilitation scheme.
4. Jurisdiction and overriding effect of the 1985 Act over the 1993 Act.

Detailed Analysis:

1. Applicability of the 1985 Act versus the 1993 Act:
The primary contention was whether the provisions of the 1993 Act could prevail over the 1985 Act. The High Court held that the 1993 Act, being a special Act, would prevail over the 1985 Act. However, the Supreme Court disagreed, stating that both Acts operate in different fields. The 1985 Act is a complete code by itself, dealing with the rehabilitation of sick companies, whereas the 1993 Act deals with the regulation of interest on delayed payments to small-scale industries. The Supreme Court emphasized that the 1985 Act contains special provisions for the timely detection and revival of sick companies and should not be overridden by the 1993 Act.

2. Execution of the Award by the Industry Facilitation Council:
The Council made an award in favor of the Respondent No. 2, which was executed by attaching the bank account of the Appellant. The Supreme Court noted that the execution of the award would attract the provisions of Section 22 of the 1985 Act, which mandates that no proceedings for execution against the properties of the industrial company shall lie or be proceeded with further, except with the consent of the Board. Since the awarded amount was included in the sanctioned scheme, the execution of the award was deemed to be covered under the 1985 Act.

3. Inclusion of the Awarded Amount in the Sanctioned Rehabilitation Scheme:
The Supreme Court observed that the awarded amount in favor of Respondent No. 2 was included in the sanctioned rehabilitation scheme under the category of 'Dormant Creditors.' The High Court erred in concluding that the awarded amount could not be included in the sanctioned scheme. The Supreme Court clarified that the liabilities of the Appellant vis-`a-vis Respondent No. 2 were indeed a subject matter of the sanctioned scheme, and therefore, Section 22 of the 1985 Act would apply.

4. Jurisdiction and Overriding Effect of the 1985 Act:
The Supreme Court highlighted that the 1985 Act contains a non obstante clause in Section 32, which states that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law. The Court emphasized that the 1985 Act was enacted in public interest to secure the timely detection and revival of sick companies and contains special provisions for this purpose. The Court further noted that the 1985 Act was amended in 1994, after the enactment of the 1993 Act, indicating the legislative intent to prioritize the rehabilitation of sick companies.

Conclusion:
The Supreme Court set aside the impugned judgments of the High Court, holding that the provisions of the 1985 Act would prevail over the 1993 Act in the context of the execution of the award made by the Industry Facilitation Council. The Court allowed the appeals, emphasizing that the awarded amount was included in the sanctioned rehabilitation scheme, and therefore, the execution of the award was subject to the provisions of the 1985 Act. The Court also left open the possibility for Respondent No. 2 to approach the Board if any occasion arises in the future.

← Previous Next →