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TMI Blog2008 (8) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... been purchased after the reference has been registered since such transactions and the debts incurred thereon are outside the provisions which culminate in a scheme. Thus where a company has consciously entered into transactions, created liabilities and incurred debts whether an enquiry is pending or whether the scheme has been framed under the SICA, the bar under section 22 would not apply. There is, thus, no merit in this contention. - CIVIL PETITION NO. 323 OF 2008 - - - Dated:- 14-8-2008 - S.A. BOBDE, J. Abhiwala for the Petitioner. Anil Agarwal for the Respondent. JUDGMENT 1. Heard. 2. This is a petition for winding up of the respondent-company under sections 433 and 434 of the Companies Act, 1956. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to find out why and how and where the company has become a sick unit. If the Board is satisfied on an inquiry that the company in question had become sick then a declaration is granted and a scheme under section 18 is formulated. The scheme may further be formulated for the rehabilitation of the sick unit by getting financial assistance. There is no indication in the Act anywhere what will be the fate of such transactions or dealing which have taken place during the post declaration period. Since the scheme contemplates a revival of a sick unit by continuing production and all commercial or mercantile transactions during the period of revival or rehabilitation, whether all such transactions are protected and whether they will also attract u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly they enter into any transactions with such units, it would be a different thing. Such unfair dealings are never contemplated by the law. The law never encourages or breeds unfairness and dishonesty. The Supreme Court has in the latest judgment in the case of Deputy Commercial Tax Officer v. Corromandal Pharmaceuticals [1997] 89 Comp. Cas. 1; [1997] Bank. J. 554, protected the State revenue such as sales tax, etc., for the post declaration period. The Supreme Court has said that though the language of section 22 of the Act is wide, in the totality of the circumstances, the safeguard is only against the impediment that is likely to be caused to the implementation of the scheme." 5. The Delhi High Court has taken a similar view in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been registered since such transactions and the debts incurred thereon are outside the provisions which culminate in a scheme. 7. Mr. Agarwal, learned counsel for the company, raised another contention that the reference was registered in BIFR on December 15, 2005 and the company has been declared to be a sick company in the year 2007 as yet no scheme has been framed and, therefore, unless the scheme is framed the debt cannot be construed to be outside the scheme and therefore the proceedings for winding up would not be tenable by virtue of section 22 of the SICA. Though the argument appears attractive, it is not liable to be accepted having regard to the purpose of the law. 8. In the decisions referred to above, the Courts have o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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