9911796707
TMI Blog1998 (6) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... e society amounts to Rs. 26 lakhs and thrift deposit at the credit of the society is Rs. 1.33 crores, and the loan granted by the society would be Rs. 1.20 crores. As per arrangement between the employees of Dunlop India Ltd. who were also members of the fifth respondent-society, the fourth respondent agreed to deduct from the wages and salaries of its employees, who are members of the fifth respondent and pay the society its dues towards their loan amounts. This arrangement was going on without any problem, but, from 1993, the fourth respondent, even though deducted the loan amount from the wages of the employees, defaulted in paying the same to the society. Even though the society made repeated oral requests to the company to repay the same, the same was not done. It is further said that even the Deputy Registrar of Co-operative Societies wrote a letter to the fourth respondent asking the company to pay the entire amount which was deducted, failing which it was informed that recovery proceedings will be initiated. A lawyer's notice also followed thereafter. The fifth respondent thereafter, on 16-1-1998, wanted revenue recovery proceedings to be initiated against the fourth respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial Companies (Special Provisions) Act, 1985, and proceedings have been initiated by authorities under that Act and enquiries are going on. Since their name has been registered under the provisions of the said Act and enquiry is also ordered to be held under section 16(2) of the said Act, revenue recovery proceedings also cannot be initiated in view of the bar under section 22 therein. 3. In regard to the amount due to the fifth respondent-society, the same is disputed. Even in June, 1998, an amount of Rs. 10.5 lakhs was paid. It prayed for dismissal of the writ petition. 4. At the time of arguments, the learned counsel for the petitioner relied on section 48 of the Tamil Nadu Co-operative Societies Act, and brought to the notice of the court that when there is an agreement between the employee-society and the employer regarding reimbursement of the loan, and consequent to the agreement, the employer deducts from the wages towards part payment of the loan, a duty is also cast on it to pay the same to the society and in case it failed to do so, the authorities under the Co operative Societies Act are bound to resort to revenue recovery proceed ings, and the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, therefore, requested that its name be registered under the provisions of that Act. On receipt of the said request, the BIFR, on 2-2-1998, wanted some more documents and clarifications, which were also complied with. Later, on 31-3-1998, proceedings were initiated in the presence of representatives of the various creditors including the State Government, various banking institutions, etc., and the BIFR passed the following order: "Considering the facts on records and submissions made at today's hearing the Bench appointed IDBI as the operating agency under section 16(2) of the Sick Industrial Companies (Special Provisions) Act, 1985, to look into the accounts of the company and submit its status report within four weeks as from today in regard to the genuineness of the entries of Rs. 169.26 corers and contingent provisions of Rs. 55 crores as stated by UBI and whether treatment of these entries reflect a true and fair position of the accounts of the company. The company was directed to furnish all necessary data/information to the operating agency along with the audited accounts as on December 31,1997, in the operating agency. The Bench declared that on receipt of the status re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial and other interests of the company or in the pubic interest. 22. (1) Suspension of legal proceedings, contracts, etc. - Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, or proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof (and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company) shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.' It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, in our opinion, has no merit. In our view, when section 16(1) says that the BIFR can conduct the inquiry 'in such manner as it may deem fit', the said words are intended only to convey that a wide discretion is vested in the BIFR in regard to the procedure it may follow for conducting an inquiry under section 16(1) and nothing more. In fact, once the reference is registered after scrutiny, it is, in our view, mandatory for the BIFR to conduct an inquiry. If one looks at the format of the reference as prescribed in the Regulations, it will be clear that it contains more than 50 columns regarding extensive financial details of the company's assets, liabilities, etc. Indeed, it will be practically impossible for the BIFR to reject a reference outright without calling for information/ documents or without hearing the company or other parties. Further, the Act is intended to revive and rehabilitate sick industries before they can be wound up under the Companies Act, 1956. Whether the company seeks a declaration that it is sick or some other body seeks to have it declared as a sick company, it is, in our opinion, necessary that the company be heard before any final decision is taken u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays that the reference, if it is in order, will be registered. The second part says that simultaneously notice shall be issued calling for information or document from the informant. The effect of the amended regulation 19(5) is that even before any Bench of the BIFR can think of calling for information under regulation 20(1) or under regulation 21, read with section 16, it is now mandatory after the amendment that as soon as a reference is registered, information/documents shall be called for from the informant straightaway. The point is whether when such information /documents are required to be simultaneously called for at the regulation 19(5) stage, can it be said that an 'inquiry' under section 16(1) has commenced ? The above question depends upon what is meant by the word 'inquiry' used in section 16(1) of the Act. According to the New Standard Dictionary, the word 'inquiry' includes 'investigation' into facts, causes effects and relations generally; 'to inquire' according to the same dictionary, means 'to exert oneself to discover something'. Chamber's 20th Century Dictionary lays down that the meaning of the term 'to inquire' is 'to ask', 'to seek' and the meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay require any operating agency to enquire into and make a report. Even if, in law, it could be argued that there is some gap between the actual holding of the enquiry and registration, it would not be proper for this court on the facts and circumstances of this case to exercise its powers specially keeping in view the object for which the aforesaid Sick Industrial Companies (Special Provisions) Act has been enacted. The main object is to salvage a viable company by making available funds or other assistance or by making alterations, etc., as contemplated under the said Act. It is significant under section 22 of the Act. It further provides that: '... no proceedings for the winding up of the industrial company or for execution, distress or the like against any of he properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board'." (p. 417) 10. In Sponge Iron India Ltd's case ( supra ) , it was decided thus : "... Probably, the petitioners or other creditors can intervene at the stage of inquiry before determination of the question of applicability of section 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the writ petition, since the locus standi of the petitioner was also argued in detail, I am bound to answer that point also. The petitioner is a shareholder, but not a creditor, whatever amount was due to him, was paid, and he has also issued receipt evidencing the same. Merely, because he happens to be a shareholder, is he entitled to file the writ petition ? Admittedly, no amount is due to him and the creditor is the society. No allegation has been made against the society that it is incapable of resorting to legal remedy, or that it is colluding with the fourth respondent and stalling the recovery proceedings. When the fifth respondent is not debarred or disqualified from initiating any legal proceedings, I do not think that the petitioner will be entitled to seek remedy as now sought for. Apart from the same, none of the employees who also happen to be shareholders of the society have also authorised the petitioner to initiate these proceedings. The petitioner cannot claim to be a representative of the other employees to initiate these proceedings. The contention regarding locus standi of the petitioner to file the writ petition is also to be upheld. 12. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
