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TMI Blog2005 (6) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing in chemicals and chemical components and chemical products of various kinds and other allied objects. The company had its authorised share capital of Rs. 12,00,00,00,000 divided into 1,20,00,00,000 equity shares of Rs. 10 each. The aforesaid scheme has been devised by the company because according to the company, the division of petrochemical and polymer division and plastic division of the company has become unviable and uneconomical due to various extraneous factors such as the policy of the Government of India of liberalisation and globalisation which has opened up the petro-chemicals sector to worldwide giants like Shell Chemical International Patron, as, LG Petrochemicals and others. The second reason given is reduction in important tariffs/custom duties on import of the said goods which has resulted in substantial erosion in sales realisation of the finished products manufactured by the petitioner herein. It has also been conten-ded that the business of the company has substantially suffered because of substantial increase in the price of naphtha, obsolete techno-logy and sub-optima capacity of the manufacturing operations leading to the cost of production being m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sections 391 to 394 of the Act or by virtue of the overriding effect under section 32 of the SICA the provisions of sections 15 to 18 of the SICA which also provide for preparation and finalisation of the scheme or the sick industrial companies would override the provisions of sections 391 to 394 of the Act. 5. Mr. Chagla, the learned counsel for the petitioner, has contended that it is immaterial that the reference is registered under section 15 of the SICA and the court has ample jurisdiction and power to sanction the scheme under sections 391 to 394 of the Act. It has been further contended by the learned counsel Mr. Chagla that the provisions of section 22 of the SICA, which, inter alia, provide for suspension of the provisions, has no application in the present case because the present case is not a suit and, therefore, this court can proceed under sections 391 to 394 and sanction the scheme. It has also been contended that even the provisions of section 26 of the SICA would also not apply because the bar of the jurisdiction of the civil court is given in a very limited manner and only to one case where the orders are passed by the BIFR and appeal lies therefrom to the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view thereof, there is no question of the proceedings being suspended by virtue of section 22 of the SICA. Similarly, the provisions of section 26 of the SICA also have no application in the present case because the provisions of section 26 apply only when order is passed or proposal is made under the SICA which becomes appealable except as provided therein and no civil court shall have jurisdiction in respect of those matters which are to be decided by appellate authority of the Board which is empowered under the Act to determine the said issues and no injunction can be granted by any court in respect of any action taken under the provisions of the said statute. In view thereof, the provisions of section 26 also have equally no application. 7. The learned counsel Mr. Chagla, appearing for the petitioner, has also relied upon the judgment of the Karnataka High Court in the case of Kirloskar Electric Co. Ltd., In re [2003] 43 SCL 186 as well as the judgment of the Madras High Court in the case of Ponni Sugars & Chemicals Ltd., In re [CP Nos. 118 and 119 of 2000 dated 10-9-2001]. The Karnataka High Court has, while considering the scheme of amalgamation under sections 391 to 394 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976), for the time being in force or in the memorandum or articles of association of an industrial company or in another instrument having effect by virtue of any law other than this Act. (2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of section 72A of the Income-tax Act, 1961 (43 of 1961), shall, subject to the modifications that the power of the Central Government under that section may be exercised by the Board without any recommendation, by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company." If the provisions of sections 391 to 394 of the Act are inconsistent with the provisions of sections 15 to 19 of the SICA, then in that event by virtue of section 32 of the SICA the said provisions will have an overriding effect and shall prevail notwithstanding anything inconsistent under the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... morandum of the company issued after the certified copy of the order has been filed as aforesaid, or in the case of a company not having a memorandum, to every copy so issued of the instrument constituting or defining the constitution of the company. (5) If default is made in complying with sub-section (4), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees for each copy in respect of which default is made. (6) The Tribunal may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company on such terms as the Tribunal thinks fit, until the application is finally disposed of." "394. Provisions for facilitating reconstruction and amalgamation of companies.-(1) Where an application is made to the Tribunal under section 391 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal- (a )that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property shall be transferred to and vest in, and those liabilities shall be transferred to and become the liabilities of, the transferee-company; and in the case of any property, if the order so directs, free from any charge which is, by virtue of the compromise or arrangement, to cease to have effect. (3) Within thirty days after the making of an order under this section, every company in relation to which the order is made shall cause a certified copy thereof to be filed with the Registrar for registration. If default is made in complying with this sub-section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to five hundred rupees. (4) In this section- (a )'property' includes property, rights and powers of every description; and 'liabilities' includes duties of every description; and (b)'transferee-company' does not include any company other than a company within the meaning of this Act, but 'transferor-company' includes any body corporate, whether a company within the meaning of this Act or not. 8. Mr. Chagla, the learned counsel for the petitioner has contended that there is no inconsistency between the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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