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TMI Blog2011 (3) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted to 10 per cent of the principal amount being in the category of an unsecured creditor. We may notice that it was pointed out to us that the petitioner has not paid even that amount but then learned counsel for the petitioner pointed out that the said amount had to be paid at certain stages and the instalment of the same has been brought to the Court by learned counsel for the petitioner. Appeal allowed. - WP(C) NO. 8271 OF 2010 - - - Dated:- 27-3-2011 - SANJAY KISHAN KAUL AND RAJIV SHAKDHER, JJ. Ms. Purti Marwaha, Ms. Jayashree Shukla and Ms. Varsha Banerjee for the Petitioner. Bhaskar Gupta and A.K. Roy for the Respondent. JUDGMENT Sanjay Kishan Kaul, J. The present writ petition raises the following question of law : "Whether a Public Sector Enterprise/Undertaking (for short 'PSU') having dues outstanding in respect of a commercial transaction from a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'the SICA') falls within the definition of "other authority" for purposes of section 19(1) of the SICA and is entitled to the benefit of sub-section (2) of section 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery scheme referred to in sub-section (1) shall be circulated to every person required by the scheme to provide financial assistance for his consent within a period of sixty days from the date of such circulation or within such further period, not exceeding sixty days, as may be allowed by the Board, and if no consent is received within such period or further period, it shall be deemed that consent has been given." 5. The plea of respondent No. 1 Company found favour with the AAIFR in terms of the impugned order dated 12-10-2010 on the premise that the term "other authority" used in section 19(1) of the SICA will take its colour from Article 12 of the Constitution of India. Respondent No. 1 being a PSU was, thus, covered within the meaning of "other authority" under Article 12 of the Constitution of India and consequently under section 19(1) of the SICA. 6. Another fact taken note of by the AAIFR is that a subsequent order was passed by the BIFR on 26-3-2010 in terms whereof the petitioner Company was discharged from the purview of SICA/BIFR as its net worth had become positive as on 31-3-2009 but simultaneously directions were issued by the same order that the unimplemented pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution or State level institution or any institution, or (d)Other authority. 10. Learned counsel also referred to the provisions of section 3(1)(p) of the SICA, which read as under : "3. Definitions (1) In this Act, unless the context, otherwise requires, - ** ** ** (p)"State level institution" means any of the following institutions, namely : (i)State Financial Corporations established under section 3 or section 3A and institutions notified under section 46 of the State Financial Corporations Act 1951 (63 of 1951); (ii)State Industrial Development Corporations registered under the Companies Act, 1956 (1 of 1956); (iii)such other institutions, being companies and not being public financial institutions, engaged in the development or financing of industrial undertakings, as the Central Government may, by notification, specify : Provided that no institution shall be so specified unless not less than fifty-one per cent of the paid-up share capital thereof is held by any State Government or Governments or by any institution or institutions mentioned in sub-clauses (i) and (ii) or partly by one or more public financial institutions or institutions mentioned in sub-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strative device for handling these new problems which resulted in creation of public corporations as observed in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi [1975] 1 SCC 421. Thus, it was held that neither the form of the corporation, nor its ostensible autonomy would take away from its character as 'State' and its constitutional accountability under Part III vis-a-vis the individual. In para 40 it was observed as under : "40. The picture that ultimately emerges is that the tests formulated in Ajay Hasia v. Khalid Mujib Sehravardi [1981] 1 SCC 722 are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it unless the action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is impossible to draw the line with precision and we do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances. When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder, and dons the robes of a shareholder, with all the rights available to such a shareholder. There is no reason why the State as a shareholder should be expected to state its reasons when it seeks to change the management, by a resolution of the Company like any other shareholder." [Emphasis supplied] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 of the SICA are clear in their terms reflecting the intent of the legislature and there is no need to give it an extended meaning by seeking resort to provisions of Article 12 or Article 226 of the Constitution of India. The principles of literal construction would apply in such a case. The plain, literal and grammatical meaning have to be given effect to and if that is so done it is not inconsistent with any expressed intention or declared purpose of the SICA. The species specify in one category 'a public financial institution or State level institution or any institution or other authority'. The expression 'any institution or other authority', thus, take their colour from a 'public financial institution or State level institution'. 22. We may also clarify that learned senior counsel for respondent No. 1 was right in his contention that the bracketed portion of section 19(1) of the SICA is for purposes of defining the expression 'the person' required by the scheme to provide financial assistance when used in other parts of the section so that repeatedly it is not necessary to use "any Government bank, institution or other authority required by a scheme to provide such financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion made for financial assistance by way of "loans, advances or guarantees or reliefs or concessions or sacrifices" from the relevant entities. Thus, the words "financial assistance" are qualified by such financial assistance only by way of loans, advances or guarantees or reliefs or concessions or sacrifices. The unpaid price for goods supplied certainly does not fall within the definition of a loan or an advance or a guarantee. The question arises as to whether it would fall within a relief or concession or sacrifice. In our view, the mode and manner of use of these words in the provision make it clear that the last three words take their colour from the nature of transactions reflected specifically in the first three words, i.e., they have to be read in ejusdem generis. A financial assistance by way of loans, advances or guarantees is a positive act by which some more amount is given or guarantee is given for rehabilitation of the company. On the other hand, reliefs, concessions, sacrifices are acts where something is given up, i.e., in respect of loans, advances, or guarantees by way of relief, concession or sacrifice. The entity, thus, takes a lesser amount than due towards th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be carried out by PSUs merely as a contracting party which are distinguishable from actions which have a State character or where the rights under Part III of the Constitution of India are enshrined. 28. We are, thus, of the considered view that respondent No. 1 is not entitled to be covered within the definition of "other authority" within the meaning of section 19(1) of the SICA nor can the unpaid price be categorized as financial assistance by way of loans, advances or guarantees or reliefs or concessions or sacrifices and thus is not entitled to the notice under section 19(2) of the SICA. Respondent No. 1 is, thus, liable to be treated as an 'unsecured creditor', as has been done by the BIFR, and in view of the scheme which has been duly approved in accordance with law the entitlement is restricted to 10 per cent of the principal amount being in the category of an unsecured creditor. We may notice that it was pointed out to us that the petitioner has not paid even that amount but then learned counsel for the petitioner pointed out that the said amount had to be paid at certain stages and the instalment of the same has been brought to the Court by learned counsel for the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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