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2011 (5) TMI 842 - HC - Companies LawWrit petition - BIFR - AAIFR - Whether reference was non-maintainable on the sole ground that on the date of institution of the reference it was not an industrial company within the meaning of section 3(1)(e) of the Sick Industrial Companies Held that - execution of the sale deed in favour of the auction-purchaser and transfer of the land by the Noida Authority. BIFR being cognizant of the fact that the petitioner had been dispossessed of its plant and machinery way back in March-April, 2003, i.e., even before it had registered its reference with it, rightly held that the reference of the petitioner was non-maintainable . The AAIFR, in turn, put its seal of approval on the approach adopted by the BIFR. writ petition is dismissed
Issues Involved:
1. Jurisdiction of BIFR under SICA. 2. Validity of the sale of land and building by PICUP without BIFR's permission. Detailed Analysis: Jurisdiction of BIFR under SICA: The petitioner challenged the orders of the BIFR and AAIFR, which held that the reference filed by the petitioner was non-maintainable because the petitioner was not an industrial company as defined under section 3(1)(e) of SICA at the time of filing the reference. The BIFR's reasoning was based on the fact that PICUP, a creditor, had auctioned the petitioner's plant and machinery in March-April 2003, prior to the reference filed on 17-10-2003. This auction led to the conclusion that the petitioner was not an industrial undertaking within the meaning of section 3(1)(e) of SICA. The AAIFR affirmed this view in its order dated 9-3-2011. The petitioner argued that a conjoint reading of sections 3(1)(e), 3(1)(f), 3(1)(o), and 3(2)(d) of SICA, along with section 3(c) of the IDR Act, indicated that BIFR's jurisdiction was applicable to an industrial company carrying out manufacturing processes in one or more factories. However, the petitioner did not press this ground before the court, focusing instead on the second issue. The court found no infirmity with the orders of the BIFR and AAIFR, noting that the petitioner ceased to be an industrial undertaking upon the auction and possession of its plant and machinery in March-April 2003. Therefore, the reference filed under section 15(1) of SICA was not maintainable. The court dismissed the argument that the petitioner could set up new plant and machinery, stating that if the petitioner had the financial means to do so, it would not require SICA's protective regime. Validity of the Sale of Land and Building by PICUP: The petitioner contended that the sale of land and building by PICUP in April 2004 was void ab initio because it was done without BIFR's permission under section 22(1) of SICA. The petitioner highlighted a letter from PICUP to the District Magistrate and an application filed by PICUP with BIFR seeking permission for the sale, arguing that the sale was invalid without such permission. The court noted that several subsequent events transpired following the auction, including the execution of the sale deed and transfer of land rights. The petitioner's delay in challenging these actions rendered the issue academic. The court observed that the BIFR correctly held the reference non-maintainable since the petitioner had been dispossessed of its plant and machinery before filing the reference. The AAIFR's affirmation of this approach was deemed appropriate. The court also addressed the contention that PICUP's application for permission under section 22(1) of SICA did not alter the legal position, as the reference itself was not maintainable. The court emphasized that PICUP's actions, based on their understanding of the legal position, were justified. Conclusion: The court upheld the orders of the BIFR and AAIFR, dismissing the writ petition. It noted that the petitioner retained the right to approach the BIFR with a fresh reference if the Supreme Court, in the pending special leave petition, directed the restoration of the plant, machinery, and land. The writ petition was dismissed with no grounds for interference found in the impugned orders.
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