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TMI Blog1982 (8) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... d Regulation) Act, 1951, for take-over of the management or control of a sick unit, it is precluded from entertaining an application under section 391 of the Companies Act, 1956, relating to that unit. In order to understand the submission made at the Bar, it is necessary to examine a few provisions of the Act, The preamble of the Act shows that it was enacted to provide for the development and regulation of certain industries. Section 15 empowers the Central Government to cause investigation to be made in respect of any scheduled industry or industrial undertaking. If, after such investigation, the Central Government is satisfied that action under section 16 is desirable, it may issue directions to the concerned industrial undertaking for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson or body of persons to take over the management of such undertaking. According to sub-section (2) of that section, when such an application is made the High Court shall make an order empowering the Central Government to authorise any person or body of persons to take over the management of the concerned industrial undertaking for a period not exceeding five years in the first instance. Section 18FC confers power on the Central Government to call for a report on the affairs and working of a managed company. Sub-section (2) of section 18FD empowers the Central Government to prepare a scheme for the reconstruction of the company owning the industrial undertaking. It will appear from the scheme of the provisions referred to above that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . So also sub-section (2) of section 18FA lays down that where an application is made under sub-section (1), "the High Court shall" make an order empowering the Central Government to authorise the authorised person to take over the management of the industrial undertaking. The words "the High Court shall " used in both the sub-sections leave no doubt that it is obligatory on the High Court to grant the permission sought once an application is made either under sub-section (1) of section 15 A or sub-section (1) of section 18FA of the Act. If the granting of the permission under section 18FA is imperative, where is the scope for entertaining a scheme of compromise or arrangement under section 391 of the Companies Act in a case where the permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the court is under an obligation to grant permission to the Central Government to take over, I do not think that it would be open to consider as to which of the alternatives out of the two, namely, one by the Central Government and another by the sponsors of the scheme...is more advantageous to the different interests of the company". This view is further strengthened by the decision of the Bombay High Court in Union of India v. Vijay Mfg. Co. (P.) Ltd. [1977] 47 Comp. Cas. 348 . I am, therefore, of the opinion that in a case where permission under section 18FA of the Act is granted, the court cannot entertain and examine a scheme brought under section 391 of the Companies Act. The preliminary objection must, therefore, be upheld. X X X X Extracts X X X X X X X X Extracts X X X X
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