2005 (12) TMI 284 - HC - Companies Law

Issues Involved:
1. Challenge to AAIFR's order.
2. Consent requirement under Section 19(2) of SICA.
3. Parity of sacrifices between financial institutions and the State Government.
4. Deemed consent and statutory period.
5. Review and modification of AAIFR's order.
6. Jurisdiction and power of AAIFR.
7. Applicability of Government Resolutions.
8. Implementation and alteration of positions under the rehabilitation scheme.
9. Judicial review and interference by the High Court.

Issue-Wise Detailed Analysis:

1. Challenge to AAIFR's order:
The petitioner, State of Gujarat, challenged the AAIFR's order dated 21-11-2002, which sanctioned the Draft Rehabilitation Scheme for GSCL and rejected the petitioner's request for clarification of the order dated 27-5-2002. The petitioner argued that AAIFR erroneously sanctioned the scheme without the State Government's consent, which is a pre-condition under Section 19(2) of SICA.

2. Consent requirement under Section 19(2) of SICA:
Section 19(2) mandates that every scheme requiring financial assistance must be circulated for consent within 60 days. If no consent is received, it is deemed that consent has been given. The petitioner argued that AAIFR sanctioned the scheme without the State Government's explicit consent, which was necessary. However, AAIFR considered the petitioner's suggestions and deemed consent due to the absence of objections within the statutory period.

3. Parity of sacrifices between financial institutions and the State Government:
The petitioner contended that there should be parity of sacrifices between financial institutions, banks, and the State Government. The AAIFR noted that the sacrifices could be observed in terms of percentage rather than absolute amounts. The promoters agreed to mobilize additional funds, meeting the petitioner's conditions.

4. Deemed consent and statutory period:
The petitioner submitted objections beyond the 60-day period. AAIFR treated the late objections as deemed consent. The petitioner's letter dated 29-4-2002 suggested higher contributions from promoters, which was accepted and implemented by GSCL.

5. Review and modification of AAIFR's order:
The petitioner sought clarification and modification of the order dated 27-5-2002. AAIFR rejected this request, stating it had no power to review its own order. The request was deemed a review rather than a clarification, and the AAIFR's decision was upheld.

6. Jurisdiction and power of AAIFR:
The High Court emphasized its limited jurisdiction under Article 227 of the Constitution. Judicial review is confined to correcting jurisdictional errors or manifest errors on the face of the record. The High Court found no jurisdictional error or manifest error in AAIFR's order.

7. Applicability of Government Resolutions:
The petitioner argued that AAIFR should adhere to the Government Resolution, which limits concessions. The High Court held that Government Resolutions are guidelines and cannot override AAIFR's powers under SICA. AAIFR must balance various interests, including those of capital investment, industries, and state dues.

8. Implementation and alteration of positions under the rehabilitation scheme:
The rehabilitation scheme had already been implemented, and parties had altered their positions accordingly. The High Court noted the importance of supporting industrial revival for economic growth and employment. The State's major sacrifice was waiver of past interest and deferment of payment, with no direct investment in GSCL.

9. Judicial review and interference by the High Court:
The High Court reiterated that judicial review is limited to ensuring that administrative bodies function within their jurisdiction and do not cause a miscarriage of justice. The Court found no grounds for interfering with AAIFR's order, as it was not perverse and did not suffer from jurisdictional errors.

Conclusion:
The petition was rejected, and the rule was discharged with no order as to costs. The High Court upheld AAIFR's order, emphasizing the importance of industrial revival and the limited scope of judicial review.

← Previous Next →