9911796707
TMI Blog2004 (12) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... pto 30th September, 1996. The BIFR on the said reference had declared the company sick, vide orders passed on 23rd June, 2000. Respondent No. 2/State Bank of India and respondent No. 3/Punjab National Bank filed an appeal before the AAIFR and AAIFR on 17th April, 2001 set aside the order of the BIFR. Aggrieved by the said order of the AAIFR, the petitioner preferred a writ petition in this Court being Civil Writ Petition No. 1916/2002 which was decided on 4th October, 2004. In the impugned order passed by the AAIFR on the second reference of the petitioner company, reliance was placed by the AAIFR on its order dated 17th April, 2001 which was set aside in the Civil Writ Petition No. 1916/2002 by order dated 4th October, 2004, it would be relevant to refer the observation made in the said order. Para 11 of the said order dated 4th October, 2004 is as under: "11. There is no finding on the basis of the Report of the Chartered Accountants appointed by the Operative Agency that the accounts were doctored or manipulated. A statement with regard to the provisions made by the petitioner was admitted by the financial institutions which is reflected from para 13 as above. In the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons of sickness as expounded in that report. We also make it clear that any expression on the merit of the case will not come in the way of BIFR to pass any order in the facts and circumstances and in accordance with law." 3. Therefore the very basis on which the impugned order was passed, has been set aside in the Writ Petition No. 1916 of 2002. We need not go into details of said order dated 4th October, 2004 in Civil Writ Petition No. 1916/2002. Pursuant to the said order, the matter has been referred back to BIFR in terms of the directions passed in the aforesaid Writ Petition. That order has not been challenged by any of the parties and thus has become final. 4. Now two questions remain to be answered which are raised before us by the petitioner impugning the order dated 31st December, 2001. The two questions are: (1) Whether the petitioner industry had ceased to be an industrial undertaking ? and (2) Whether the second reference was barred by limitation ? 5. Mr. Arvind Nigam, learned counsel appearing for the petitioner, has vehemently contended that the finding of the AAIFR that the company is not an industrial company is based on conjunctures and surm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of the plant. In the inspection note of the Labour Inspector which was sent by the petitioner along with letter dated 30th July, 2001, it was mentioned that the labour was not allowed to go inside the plant as the plant was in possession of the Court Receiver, Bombay High Court. Labour Inspector had also verified the attendance cards and salary slips and had signed the attendance register. It would be relevant to quote two paras of the said letter written to the Labour Commissioner dated 30th July, 2001 which is at page 535 of the paper book. The relevant paras are as under : "The Labour Inspector, Pithampur under the Minimum Wages Act, 1948 visited the plant on 25-1-2000 (copy of Inspection Note enclosed) and verified 53 workers including security staff standing outside the main gate of the plant. He has further mentioned in its Inspection Note that the labourers were not allowed to go inside the plant as the plant is in the possession of Court Receiver, Bombay High Court, Bombay in terms of High Court s order. The Labour Inspector have also verified the Attendance Cards and the salary slips and have signed the Attendance Register after verification. Company have deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eiver has not handed over the factory to the petitioner till date. 10. On the basis of the aforesaid factual matrix of the matter, it was contended before us that once the Court Receiver had taken over the plant of the company, the petitioner was not allowed to run the plant nor the petitioner had any control over the plant. On the basis of the aforesaid letters, it was contended that for all intent and purposes, the petitioner was interested in running its plant but for the reasons stated above, the Court Receiver has not permitted running the plant of the petitioner. 53 workers were in employment and they were paid wages and their provident fund was also deposited by the petitioner. 11. Lastly, it was contended with regard to the second reference being time-barred that same was not so. On the first reference filed by the petitioner, the BIFR had declared the petitioner company sick by order dated 23rd June, 2000. Aggrieved by the said order, the respondent Nos. 2 and 3 filed an appeal before the AAIFR and AAIFR by order on 17th April, 2001 set aside the order of the BIFR. Against the order dated 17th April, 2001 dismissing the first reference of the petitioner, a Writ Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Development and Regulation) Act, 1951. It was contended that section 3( c ) of the Industries (Development and Regulation) Act, 1951, defines the word factory as under : "3( c ) factory means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on :- ( i )with the aid of power, provided that fifty or more workers are working or were working thereon on any day of the preceding twelve months; or ( ii )without the aid of power, provided that one hundred or more workers are working or were working thereon on any day of the preceding twelve months and provided further that in no part of such premises any manufacturing process is being carried on with the aid of power." 14. It was contended by Ms. Dhir that there should have been 50 workers working in the factory of the petitioner so as to become an industrial undertaking. She contended that the petitioner did not have 50 workers and, therefore, no fault can be found with the finding of the AAIFR that the petitioner was not an industrial undertaking. Repelling the contention of the counsel for the petitioner that more than 50 workers we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, however, made all attempts to frustrate the initiatives. The petitioner Company on one hand had expressed willingness to act as agents of Court Receiver and on the other hand it chose to approach the Supreme Court and sought stay on the appointment of Court Receiver. In this connection, the letter of the respondent to the petitioner dated 9th May, 2001 and on similar line retreating same stand on 28th January, 2002 filed along with the counter affidavit of the respondents has been relied on. 16. On the basis of the aforesaid submission, it was contended by the learned counsel for respondent No. 2 that there were no manufacturing activities in the industrial undertaking of the petitioner and the petitioner had not employed 50 workmen or more as per the requirement of a factory to attract the provision of the Sick Industrial Companies (Special Provisions) Act, 1985 and, therefore, has supported the finding of the AAIFR. 17. Mr. Rakesh Kumar Singh, counsel appearing for Punjab National Bank has adopted the arguments of the counsel for State Bank of India. In addition to the aforesaid arguments, it was contended that the letters produced by the petitioner at pages 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude an ancillary industrial and a small scale industrial undertaking. Section 3(1)( n ) of the Sick Industrial Companies (Special Provisions) Act, 1985 defines "scheduled industry". A scheduled industry means any of the industries specified for the time being in the First Schedule to the Industries (Development and Regulation) Act, 1951. Let us consider the definitions of the word factory as occurring in the Industries (Development and Regulation) Act, 1951. Section 3( c ) of the Industries (Development and Regulation) Act, 1951 defines factory which means any premises including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on. From the plain language of the definition of factory, it postulates two contingencies. A factory is a premises from where a manufacturing process is being carried on or is ordinarily so carried on. The expression of two eventualities used in the definition clause of factory postulates that manufacturing process is on in the present context or manufacturing process is being carried on. So the subsequent part of the sentence or is so ordinarily carried on used by the Legislature envi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court Receiver appointed by the Bombay High Court, then how that industrial undertaking could be having any process of manufacturing? We have been told that till date in spite of the order of stay granted by the Supreme Court against the appointment of Court Receiver, the possession of the industrial undertaking is with the Court Receiver who was appointed at the instance of respondent No. 2. In case, if a factory is running, it will be in consonance with first part of the definition where manufacturing activity is going on but if a factory is not running then to contend that the factory must have 50 persons or more working, would make the second part of the definition of factory (or is ordinarily so carried on) totally redundant. 22. Law is not something abstract. It must deal with ground realities. A case where a Court Receiver is appointed from 1997 at the instance of the respondent No. 2, the plant being in the possession of the Court Receiver, even to assume that some workers must be working and carrying on manufacturing process would be adding burden on an already sick industry. This is apart from the documents which had been filed by the petitioner before the AAIFR w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of factory postulates two contingency and confining it to one only, i.e., where manufacturing activity is carried on will be fallacious and not in consonance with the said Act. Once two eventualities were contemplated in relation to the definition of factory and relying on one of the eventualities only was totally illegal. The finding of the AAIFR that the petitioner is not an industrial company and thus its reference was not maintainable is erroneous on the face of it. The AAIFR did not consider the relevant documents and misconstrued the definition of factory under the Industries (Development Regulation) Act, 1951. The contention of the respondents that error committed by the AAIFR which is ex facie apparent cannot be corrected in the writ petition under Article 226 of the Constitution of India is also without any basis and is liable to be rejected. We set aside the finding of the AAIFR on this score. 24. Coming back to the submission of counsel appearing for Punjab National Bank/respondent No. 3 that the limitation would be applicable and the second reference was time-barred, as has been held by the AAIFR. We see no force in the argument of learned counsel appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X
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