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TMI Blog2011 (1) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board for Industrial and Financial Reconstruction (BIFR) sanctioning a scheme for revival of Baranagore Jute Company PLC (BJC), a company incorporated in England under the laws of that country and having its registered office in London. Per contra, each of the learned counsel for those respondents who have urged the Court not to entertain the writ petitions have strongly contended that on proper interpretation of SICA, it ought to be held that the ambit and coverage of SICA extends to embrace a foreign company, a fortiorari, BJC. 2. The writ proceedings presently under consideration have been prefaced by series of litigation in this Court, starting with an application for winding up of BJC filed in October 1987. One particular order (dated 3-3-2004) passed by a Division Bench was carried in appeal to the Supreme Court. The decision dated 24-5-2006 in Radheshyam Ajitsaria v. Bengal Chatkal Mazdoor Union [2006] 11 SCC 7711 narrates the history of proceedings initiated under the Companies Act. This is one reason why I refrain from discussing the antecedent facts in substantial detail here. Suffice it to note that in pursuance of an order dated 18-11-2004 passed by a Division Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments had not been enclosed with the letter under reference, the BIFR observed that it would look into the issues stated after the relevant documents are submitted. Having considered the submissions and the materials on record, the BIFR issued several directions for compliance by all concerned. The relevant directions are quoted hereunder : "(i )The company will file its rejoinder on the written submissions filed by LPMC within 15 days to the Board and IDBI (OA). (ii )****** (iii)****** (iv)****** (v )OA (IDBI) will submit the comments to the Board on the application of LPMC and rejoinder being filed by the company on the written submissions of LPMC within further 15 days, (vi)The next hearing of the case will be on 6-4-2009." 5. The hearing, as directed earlier, was taken up on 6-4-2009. While passing several directions, 16-7-2009 was fixed as the next date of hearing. I consider it pertinent to quote below one paragraph from the order of the BIFR dated 6-4-2009. It reads : "4.17 The representative of IDBI(OA) submitted that in the last hearing, the Bench had directed that OA(IDBI) would submit its comments to the Board on the submissions of LPMC, and the rejoinder filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revival scheme cannot be considered by the Board. However, in the hearing held on 6-4-2009, the issue was considered and Board had directed that although the company was incorporated in India, with its Head Office there, but the company had been registered in India under section 591(2) of Indian Companies, Delhi............" 7. Several other directions were passed and hearing was adjourned till 4-11-2009. 8. On the adjourned date i.e., 4-11-2009, the BIFR after hearing all the parties passed an order sanctioning a scheme (SS-09) under sections 19(3) and 18(4) of SICA for immediate implementation by all concerned. As noted earlier, the order dated 4-11-2009 sanctioning SS-09 is under challenge in all these three writ petitions. 9. It is placed on record that SS-09 was earlier challenged by an unsecured creditor M/s. Sohanlal Chandanmul & Co. before this Court by filing W.P. No. 1166 of 2009 [since renumbered W.P. No. 5535(W) of 2010]. On 7-12-2009, a learned Judge of this Court was pleased to pass an interim order restraining the respondents from taking any step or further step for selling any property of BJC or creating any charge in respect of the assets thereof without obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned senior counsel assisted by Mr. Joydeep Kar, learned counsel, Mr. Surojit Nath Mitra, learned senior counsel assisted by Mr. Kishore Datta, learned counsel and Mrs. Manju Agarwal, learned counsel appearing for the respective writ petitioners contended that provisions of SICA, read literally, would admit of no doubt that its ambit and coverage do not extend to a foreign company. According to them, the language of SICA is plain, clear and unambiguous and, therefore, no external aid is required for understanding its provisions. By referring to earlier orders passed by the Company Court in proceedings initiated for winding up of BJC under the Companies Act as well as orders passed by the Supreme Court, it was contended that the reference before the BIFR was not maintainable. Common prayer was made by them to quash the proceedings before the BIFR including the order impugned passed by it. 13. Mr. P.C. Sen, learned senior counsel representing Chaitan Choudhary and Ridh Karan Rakecha, private respondents in all the three writ petitions [allegedly members of the Committee of Management as it appears from the cause title of W.P. No. 12406(W) of 2010)], echoed the submissions of lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 617 of that Act". According to him purposive construction need not be applied when a statute has been amended from time to time on the basis of fresh needs and has thus not remained static. In such a case, literal interpretation is to be applied and in support of such submission, he placed reliance on the decision in Dental Council of India v. Hari Prakash [2001] 8 SCC 61. The said decision as well as the decision in Union of India v. Rajiv Kumar [2003] 6 SCC 516 was also relied on for the proposition that intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. The latter decision was also relied on to contend that a casus omissus ought not to be created by interpretation, save in some case of strong necessity. 16. He further submitted that in view of user of the word 'means' as a suffix to the term 'company', the same indicates that the definition is exhaustive and not extensive and in this connection reliance was placed on the decision in P. Kasilingam v. P.S.G. College of Technology AIR 1995 SC 1395. 17. The decisions in Kiran Singh v. Chaman Paswan A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany incorporated outside India, which might have become sick or is potentially sick. SICA does not expressly exclude a scheduled industry owned by a foreign company. A foreign company thus cannot be excluded from the purview of SICA by reason of the interpretation clause. Having regard to the purpose of SICA, the word 'company' therein cannot be restricted to exclude a company incorporated outside India. If so interpreted, that would deprive Indian shareholders, creditors, workers, etc. the protection that SICA seeks to offer and this would militate against public interest, which is the crux of SICA. 21. He further contended that the phrase "In this Act, unless the context otherwise requires" has been judicially interpreted to mean that a definition provided thereunder would be an inclusive and not an exclusive definition. The scheme of SICA does not exclude a foreign company and, therefore, BIFR did have jurisdiction to pass the orders it did. 22. In support of his submission, Mr. Mitra relied on the decisions in Printers (Mysore) Ltd. v. Asstt. Commercial Tax Officer [1994] 2 SCC 434 (interpreting the word 'goods' in section 8(3) of the Central Sales Tax Act, 1956 thrice in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, to protect the interest of workmen employed in a sick industrial company ought not to be interpreted in a constricted manner; on the contrary, it calls for a liberal interpretation. Literal interpretation of the word 'company' in SICA would result in absurdity and, therefore, on an interpretative exercise, the word 'company' ought to be held to include a foreign company. The decisions in Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal Ltd. [1983] 1 SCC 147 and Andhra University v. Regional Provident Fund Commissioner of Andhra Pradesh AIR 1986 SC 463 were relied on by him in support of the proposition that a beneficent legislation ought to be liberally construed. The decision in Maharashtra Tubes Ltd. v. State Industrial & Investment Corpn. of Maharashtra Ltd. [1993] 2 SCC 144 was cited where the Supreme Court had the occasion to consider the term 'proceedings' in section 22(1) of SICA and had ruled, upon consideration of the State Financial Corporations Act, 1951, that if the Corporation is permitted to proceed under section 29 thereof when proceedings under sections 15 to 19 of SICA are pending, that would render the entire process nugatory. The decisions in Pali Devi v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution as well as laws validly enacted by the Parliament or the State Legislatures would apply to foreigners, unless excluded either expressly or impliedly. Companies incorporated/registered under the laws of a foreign country carrying on business in India, therefore, would be subject to all obligations and enjoy all the rights to the extent provided in laws of India. 27. Mr. Pal contended that on a plain reading of SICA, it is clear that BJC is covered. He invited the attention of the Court to section 3(1)(d) of SICA and submitted that it is only clause (i) of section 3(1) of the Companies Act that is attracted and not the other clauses/sub-sections of section 3. In view of clause (i), what is to be seen is the occurrence of formation and registration of a company under the Companies Act. The Companies Act does neither say that the persons who constitute the formation must be Indians, nor does it say that formation of the company must physically be in India. Insofar as registration is concerned, while referring to section 591(2) of the Companies Act, it was contended that the expression "as if it were a company incorporated in India" creates a legal fiction i.e., the foreign comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of Madras AIR 1958 SC 56, CIT v. National Taj Traders [1980] 1 SCC 3701, Giridhari Lal & Sons v. Balbir Nath Mathur AIR 1986 SC 1499, Hameedia Hardware Stores v. B. Mohan Lal Sowcar AIR 1988 SC 1060 and Western Bank Ltd. v. Schindler Ch. 1977-1 were relied on in this connection. A strained interpretation is also permissible in a given case, for which reference was made to the decision in High Court of Gujarat v. Gujarat Kishan Mazdoor Panchayat AIR 2003 SC 1201. For dynamic interpretation of SICA, the decisions in R v. R [1991] 4 All ER 481, State of Punjab v. Amritsar Beverages [2006] 7 SCC 607, and Anuj Garg v. Hotel Association of India [2008] 3 SCC 1 were referred to. For the proposition that Courts while construing provisions of socio-economic legislation must interpret them in a manner which furthers its purpose rather than frustrates it, he relied on the decision in Bharat Prasad v. State of Bihar [2009] 6 SCC 698. 30. Scope of the phrase " unless the context otherwise requires", which is inevitably prefaced in a definition clause, according to him, was considered in various other decisions, apart from those cited by Mr. Mitra and Mr. Bhattacharya, and those were relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discretionary jurisdiction under Article 226. Referring to paragraphs 75, 76, 78 and 87 of the writ petition, he sought to demonstrate before the Court that the statement made in paragraph 3 to the effect that the petitioner was shocked and surprised in March, 2009 that BJC had been referred to BIFR was false and misleading. A learned advocate had represented the writ petitioner and orders passed by the BIFR from time to time were within its knowledge. 33. The locus standi of the writ petitioner to maintain the petition was also questioned. Referring to an order passed by a learned Judge of the Company Court dated August 5, 2008, it was submitted that the petitioner was relegated to a civil suit for enforcing its claim. The writ petitioner being a post scheme creditor had applied for intervention in the proceedings before the BIFR which was declined. The Company Court by the said order having fixed the forum for enforcement of its claim, the writ petitioner currently has no locus standi to challenge SS-09. The writ petitioner not being covered by SS-09, it cannot be interested in either setting aside of the scheme or continuance thereof. 34. Mr. Pal lastly contended that the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eivable that Indian Parliament would introduce measures to rescue BJC under the Indian laws. Benefit of beneficial legislation to a foreign company is not the purpose or object of SICA. Section 3(i)( d) cannot thus be made elastic to include a foreign company. The proceedings of the BIFR, thus, ought to be set aside was his ultimate submission. 39. Mr. S.C. Prasad, learned counsel for the Provident Fund Commissioner argued in support of the writ petitioners while questioning the propriety of SS-09, while Mr. Tilak Kumar Basu, learned senior counsel for the Official Liquidator took a neutral stand and submitted that whatever order the Court passes would be complied with by him. 40. I have extensively heard learned counsel for the parties, perused the materials on record and considered all the authorities cited at the bar. 41. First, I propose to deal with the last contention raised by Mr. Pal, as noted above. I am of the view, on reading the orders of the BIFR quoted supra, that an objection had indeed been raised regarding jurisdiction of the BIFR to entertain the reference but such objection was not considered with proper application of mind and no order supported with reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Court, till date there has been no order in connection therewith. There is substance in the contention of Mr. Pal that the writ petitioner is not in the scheme and even if the proceedings before the BIFR are continued it is not affected at all. It is settled law that mere filing of an appeal does not operate as a stay of the order impugned. The writ petitioner must, until circumstances change, be held to be bound by such order. In order to maintain a writ petition, the party approaching the Court ought to have a judicially enforceable right as well as a legally protected right. The writ petitioner has not been denied a legal right. Till such time the Division Bench interferes with the order dated August 5, 2008, the writ petitioner has no right to seek its remedy before the Writ Court in respect of proceedings before the BIFR. I am convinced that W.P. No. 12412(W) of 2010 is not maintainable and, therefore, liable to fail. 44. I may record here that invalidity of the claim raised by the other two writ petitioners [the first petitioner in W.P. No. 12377(W) of 2010, a company registered under the Companies Act, claims to be a shareholder of BJC and the second petitioner there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard of Directors of the company, shall, within sixty days from the date of finalisation of the duly audited accounts of the company for the financial year as at the end of which the company has become a sick industrial company, make a reference to the Board for determination of the measures which shall be adopted with respect to the company: Provided that******" 46. From the above provisions it is clear that a decision on the surviving petitions would involve proper interpretation of section 3(1)(d) of SICA, seeking to define 'company'. The definition of 'company' in the Companies Act, 1956 (hereafter the Companies Act) has been incorporated in SICA by reference. Sections 2(10) and 3(1) of the Companies Act (to the extent relevant) read as under : "2. Definitions (10) 'company' means a company as defined in section 3; 3. Definitions of 'company', 'existing company', 'private company' and 'public company'.--(1) In this Act, unless the context otherwise requires, the expressions 'company', 'existing company', 'private company' and 'public company' shall, subject to the provisions of sub-section (2), have the meanings specified below- (i )'company' means a company formed and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So the task of interpreting the laws by finding out what the legislature meant is allotted to the courts. Now, if one person puts into words the thoughts of another (as the draftsman puts into words the thoughts of the legislature) and a third person (the court) is to find out what they meant, more difficulties are bound to crop up. The draftsman may not have caught the spirit of the legislation at all; the words used by him may not adequately convey what is meant to be conveyed; the words may be ambiguous: they may be words capable of being differently understood by different persons. How are the courts to set about the task of resolving difficulties of interpretation of the laws? The foremost task of a court, as we conceive it, in the interpretation of statutes, is to find out the intention of the legislature. Of course, where words are clear and unambiguous no question of construction may arise. Such words ordinarily speak for themselves. Since the words must have spoken as clearly to legislators as to judges, it may be safely presumed that the legislature intended what the words plainly say. This is the real basis of the so-called golden rule of construction that where the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court must then strive to so interpret the statute as to promote or advance the object and purpose of the enactment. For this purpose, where necessary the court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need be no meek and mute submission to the plainness of the language. To avoid patent injustice, anomaly or absurdity or to avoid invalidation of a law, the court would be well justified in departing from the so-called golden rule of construction so as to give effect to the object and purpose of the enactment by supplementing the written word if necessary." 48. Another discussion on interpretation of statutes, full of clarity and precision, and to some extent leaning in favour of interpretation of the stated words in an enactment keeping in mind what has not been stated, is found in the decision in V. Jagannadha Rao v. State of A.P. [2001] 10 SCC 401. Hon'ble Pasayat, J. speaking for the Bench observed in paragraph 18 as follows : "18. ...No provision or word in a statute has to he read in isolation. In fact, the statute has to be read as a whole. A statute is an edict of the legislature. . . . The intention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer if it were. This is where the draftsmen of Acts of Parliament have often been unfairly criticised. A Judge, believing himself to be fettered by the supposed rule that he must look to the language and nothing else, laments that the draftsmen have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the Judges trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give 'force and life' to the intention of the legislature.... A Judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A Judge must not alter the material of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above exposition of law. Therefore, it would be prudent to understand the meaning of the word 'company' in SICA in the sense it has been defined in the Companies Act [vide section 3(1)] and apply it wherever it occurs in SICA. 54. However, at this stage, the submission of Mr. Pal that without recourse to any principles of interpretation a plain reading of the provisions of SICA and the Companies Act show that BJC is squarely covered by SICA is taken up for consideration. Apart from Mr. Pal, none else have advanced this extreme argument. 55. The Companies Act does not define a foreign company, but it stands to reason that in terms thereof a company incorporated outside India is a foreign company. Provisions in the Companies Act enabling a foreign company to establish a place of business in India are found in Part XL section 591(1) of the Companies Act expressly mandates that sections 592 to 602 thereof shall be applicable to foreign companies classified therein. In terms of sub-section (2) of section 591, notwithstanding anything contained in sub-section (1) thereof, a company incorporated outside India and fulfilling the components mentioned therein is bound to comply with such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court, [1990] 3 SCC 682, while considering whether the definition of 'retrenchment' in section 2(oo) of the Industrial Disputes Act, 1947 ought to be understood in its narrow, natural and contextual meaning or in its wider literal meaning, a Constitution Bench relying on the decision in Gough v. Gough [1891] QB 665, held that : "When a statute says that a word or phrase shall 'mean' - not merely that it shall 'include' - certain things or acts, 'the definition is a hard-and-fast definition, and no other meaning can be assigned to the expression than is put down in definition.' A definition is an explicit statement of the full connotation of a term". 57. Read literally and in the sense the word 'company' is defined in section 3(1) of the Companies Act, there could be no doubt that a restrictive meaning has to be attached to the word 'company' wherever used in SICA. However, the expression "... unless, the context otherwise requires" would enable the Court, while construing provisions of SICA wherever the word 'company' is used, to ascertain the context in which it has been used and if the context does not so require, to attach a wider meaning in keeping with the legislative intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation.--For the purposes of this section, (a )'company' means any body corporate and includes a firm or other association of individuals; and (b )'director', in relation to a firm, means a partner in the firm." 60. Mr. Pal, in course of his argument, as noted above, has admitted and there can also be no dispute that the meaning of the word 'company' as explained at the foot of section 34 of SICA is wider than the meaning attributed to it by section 3(1) of the Companies Act. A 'company' is nothing but an association of individuals formed for some common object or objects. The same applies in respect of a 'foreign company' too. If indeed the beneficial effects of SICA to revive a sick industrial company were intended to include a 'foreign company', the Parliament would not have restricted the definition of 'company' in section 3(1)(d) by bodily lifting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed hereinabove that it is the duty of the Court to see what Parliament has said, instead of reading into the law what ought to have been said. Where exact and precise words are used, they clearly show the intention of the Parliament. It is not open to the Court to speculate as to what may be the supposed intention of the Parliament, because a case has arisen which is not covered by the exact and precise words used by the Parliament. The Court has to judge the intention of the legislature not by speculating as to what it had in its mind but only by its expression of that mind through the language of the enacted provisions. 65. Argument advanced by learned senior counsel on behalf of the parties seeking to sustain the BIFR's order and consequently SS-09 requires reading of words like "and includes a foreign company within the meaning of section 591(2) of the Companies Act" after the words expressed in section 3(1)(d) of SICA. The question is, whether any compulsive necessity or justification arises to depart from the rule of plain and natural construction and read additional words in section 3(1)(d) when such words do not find mention and can be presumed to have been omitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the Payment of Bonus Act, nothing therein shall apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any Department of the Central Government or State Government or Local Authority. The stoppage of payment was questioned before the High Court and the challenge succeeded. The question that arose for consideration was whether the Delhi Development Authority is a local authority or not. If it were a local authority, the Payment of Bonus Act would not apply. The Payment of Bonus Act did not define 'local authority'. Considering the provisions of section 3(31) of the General Clauses Act, 1897, it was held that the Delhi Development Authority is a 'local authority' and thus the Payment of Bonus Act did not apply to it. I find that it was in the context of 'local fund' appearing in section 3(31) of the General Clauses Act that the Court refrained from relying on its definition in the Fundamental Rules and the Treasury Code, and sounded the caution noticed above. 69. The situation is not quite the same here. There is no question of seeking the meaning of the word 'company' used in SICA in the definition clause of anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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