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TMI Blog2012 (10) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... of three writ petitions being W.P. No. 12377 (w) of 2010, W.P. No. 12406 (w) of 2010 and W.P. No. 12412 (w) of 2010. By the impugned judgment and order the learned Single Judge decided only one legal issue namely whether Board of Industrial and Financial Reconstruction (for short BIFR) has jurisdiction to entertain any application for reference made by the Baranagar Jute Factory Plc. which is described to be a foreign company or not. It is held by the learned Trial Judge that the above appellant being a company incorporated and further registered in England cannot maintain any application for reference before the BIFR under the provision of Sick Industrial Companies (Special Provision) Act (hereinafter referred to as 'SICA'). The short background fact leading to filing the above writ petition consequently preferring appeal is required to be recorded as follows:- The above company was incorporated in England in or about 1867. The prices of all shareholding is in pound sterling not in Indian Rupees. Admittedly, the aforesaid company incorporated for manufacturing of jute and jute textile products and as such it has got only factory and/or manufacturing unit in India na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged the resignation unsuccessfully before the Appropriate Court in London. On 17th November, 2009 BIFR sanctioned the scheme of revival of the BJF. In December 2009 on M/s. Sohanlal Chandanmul and company filed a writ petition No. 1166 [later renumbered as W.P.5535 (w) of 2010] challenging the authority of BIFR to entertain the reference in proceeding No. 209/2004. However the said writ petition was withdrawn. Thereafter the above writ petition being W.P.12377(w) of 2010 instituted by Yashdeep Trexim Pvt. Ltd. Writ petitions being W.P.12377 (w) of 2010, instituted by Yashdeep Trexim Pvt. Ltd. W.P. No. 12406 (w) of 2010 was instituted by Baranagar Jute Company Private Limited Workers' and Employees' Union, W.P. No. 12412 (w) of 2010 was instituted by Daksh Vyapar Pvt. Ltd. In all the aforesaid writ petitions the common and cardinal ground was taken that the BIFR has no jurisdiction to entertain the application for reference under SICA made by and on behalf of the said BJF which is a foreign company. The learned Trial Judge allowed two of three writ petitions and one being W.P.12412 (W) of 2010 was dismissed. 2. Mr. Hirak Mitra, learned Senior Counsel appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e India. Having regard to the purpose of SICA definition of term 'company' in section 3(d) of the Companies Act cannot be restricted to exclude company incorporated outside India, but registered in India. This would deprive its Indian shareholders, creditors and workers from the protection of SICA, offers, SICA has to be interpreted to extend the foreign company having regard to the public interest it proposes to serve to revive the company in the interest of its workers and creditors. The company was initially wound up by order dated 28th October, 1987 thereafter by an order dated 16.6.1989 winding up order was stayed approving the scheme to run the company. Thereafter the Appeal Court by judgment and order dated 18th November 2004 upset the judgment and order of the learned Single Judge dated 19th December, 2002 by which direction was given to the official liquidator to take up the winding up proceeding and also take over possession and control of the affairs of the company and to represent the company. The said Division Bench also stayed the winding up. The said Division Bench judgment dated 24th May 2006 was affirmed by Hon'ble Supreme Court holding that winding up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecomes negative. BJF has only one unit, and all its shareholders and directors are in India. The entire net worth of BJF is fully eroded. Section 25 of the SICA provides that any person aggrieved by an order of BIFR may within 45 days prefer appeal to the Appellate Authority. 3. Learned counsel appearing for Namakar Vinimay Pvt. Ltd. in its own appeal as well being the respondent No. 21 in F.M.A. 170 of 2012 while supporting the argument of Mr. Hirak Mitra contends additionally that in a proceeding concerning BJF instituted by Chaitan Chowdhury against Bhattar and others English Court by a judgment reported in (2010) 10 AER 1031 held that dispute concerning BJF is to resolve by Indian Court for the sake of convenience. Moreover, section 32 of SICA provides that provisions of the SICA and/or any rules and schemes made therein shall have effect notwithstanding anything contained in any other law. In support of his submission he has relied on the decision reported in case of Navnit R. Kamani vs. R.R. Kamani reported in (1989) 66 CS 132 and Testeels Limited vs. Radhaben Ranchhodlal Charitable Trust reported in (1989) 66 CS 555. He contends that learned Trial Judge has totally ignore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e did not pass any order in its favour rather the alleged claim of this writ petitioner was relegated to the suit. It is further submitted that no suit has yet been filed as such Daksh has no locus to challenge the order of BIFR, Daksh however filed an appeal against said order dated 5th August 2008 which was dismissed for default. Hence this writ petitioner/appellant is not a person aggrieved in as much as its alleged right has been protected by granting liberty to file suit. In connection with his submission a decision of the Supreme Court reported in AIR 1971 SC 385 had been cited. BIFR passed an order on 4th November, 2009. Daksh was a party before the BIFR and also filed an affidavit before it on 15th February, 2009. Daksh did not prefer any appeal against the order of BIFR. The appeal having become time barred. Daksh could not be permitted to save the period of limitation by filing writ petition against the order of BIFR. Hence the impugned judgment and order must be set aside. 5. Learned counsel for the BJF Workers' Union (UTUC) submits that STCA being a social and beneficial piece of legislation and the same has to be interpreted in the light of Article 39 of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kmen of a sick industrial unit and its creditor particularly the unsecured creditors. The provisions of SICA has to be read in harmony with the provisions of Article 39(b) and 39(c) of the Constitution of India. From such context, SICA must be interpreted to include an industrial undertaking belonging to a body corporate incorporated outside India and owning an industrial undertaking in India. According to him on conjoint reading of sections 2, 3(1), 11, 35, 36, 37, 38, 59(1), 592 and 593 to 609 of the Companies Act 1956 that company registered under section 592 would also be deemed to be company under section 3(1) of the Act. Having regard to the purpose of SICA definition of the term 'company' in section 3(d) therein cannot be restricted to exclude a company incorporated outside India, but registered in India. This would deprive its Indian shareholders, creditors and workers from the protection of SICA offers. He further contends that having regard to the date of filing of the winding up petition amended provision of section 31 of the SICA has no manner of application on fact as no Receiver nor any Official Liquidator was appointed in any proceeding immediately before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught within its fold that is the golden rule of literal interpretation and the mischief rule and/or purposive construction rule cannot be applied. Under the literal rule word of a statute must prima facie be given their ordinary meaning, whereas for application of purposive construction/ mischief rule the precondition are - (i) when plain words of statute are ambiguous; (ii) leads to no intelligible results and (iii) if read literally, would nullify the very object of the statute. In support of his aforesaid submission relating to the rule of interpretation he has referred to the following decisions of the Supreme Court (2009) 3 SCC 709 (paragraph 22), AIR 2010 SC 671 (paragraph 6), 2010 AIR SCW 3167 = (2010) 324 ITR 170 (SC), (2001) 4 SCC 534 (paragraph 26), (2003) 1 SCC 730 (paragraph 5), (2003) 2 SCC 593 (paragraph 37) and (2012) 2 SCC 489 (paragraph 31). He submits that aforesaid legal propositions can be applied in the instant case in reading provision of the Companies Act and the SICA. Note of caution is given by the Supreme Court that while applying the rule of purposive construction of a statute, the Court cannot supply the words, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. The statute should not be given liberal interpretation as it is clear that company is defined under section 3 of the Companies Act, 1956 which has been adopted by and under section 3(1)(d) of SICA 1985, relates to companies formed and registered in India and does not include companies formed and registered in foreign countries. There have been two amendment in SICA whereby all those companies which were included earlier have been included in SICA. 11. Mr. Debasish Kundu, learned Advocate appearing on behalf of the Baranagar Mazdoor Sangha, respondent No. 1 in F.M.A.172 of 2012 and the respondent No. 17 in F.M.A. 170 of 2012 supports the argument of Mr. P.C. Sen and also Mr. Kalyan Bandyopadhyay. In addition thereto he submits what was not submitted before learned Trial Judge contends, for the first time as follows:- That SICA does not apply to a foreign company principally because the paid up capital, and free reserves, share premium account of a foreign company cannot be taken into consideration by BIFR as they are in foreign currency and not in Indian currency. It is to be noted that accounts of foreign companies like BJF filed in UK. Section 3(1)(ga) defines net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it should have declined to register reference at the very inception. Even if this Hon'ble Court had given direction in writ petition asking BIFR to consider the reference proceedings, it was incumbent upon BIFR to forthwith dismiss the reference on the ground that the same related to a foreign company. He fairly submits that the aforesaid points were not argued before the learned Trial Judge. He however says having regard to the fact that point goes to the root of the jurisdiction of BIFR over a foreign company, as such it is fundamental and well established principle that order and judgment passed by the Court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be embraced or relied upon even in the stage of execution and even in collateral proceedings. In support of his legal proposition he has placed reliance upon following Supreme Court decision: AIR 1954 SC 340, 1972 (2) SCC 46, 2005 (7) SCC 791, AIR 1969 SC 204,: (2005) 2 SCC 271, (2006) 13 SCC 574. Rest portion of his argument relate to repetition of argument advanced by other learned counsels for the respondents in relation to interpretation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit and its creditors, banks as well as unsecured creditors if necessary to revive industrial undertakings. SICA being a special Act will override the provisions of the Companies Act. Whenever there is any inconsistency between the two acts SICA will prevail under section 31 of the Act. The strict interpretation cannot be attached to the definition of the term Company in SICA. Baranagore Jute Factory PLC undisputedly registered in UK under the provisions of Companies Act of the said country but it is also not disputed that the company has it's the only business unit in India i.e. at Baranagore, Kolkata. The Company's main and only activity is in India being the Jute Mill having approximately 4000 workers. The Company pays about 100 crore every year to workers, suppliers of stores, jute growers and to the government by way of excise duties, sales tax, income tax etc. All creditors secured and unsecured are also Indian establishment or Indian firms. The 95 % shareholders of the company are Indian. The company is running and doing its business following the provisions, rules and regulations as enacted and applicable in India. 16. If we look into the provisions Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. In view of the principles laid down by the Apex Court in the case of Bharat Prosad Ors. vs. State of Bihar Ors. reported in (2009) 6 SCC 698 the provisions of socio economic legislation is to be interpreted for furtherance of purpose of enactment but not to frustrate it. The Hon'ble Apex Court while laying down the interpretation of statute has been pleased to observe as follows: **** 17. The legislative purpose in enacting the provisions of section 48-E of the said Act is to ensure that the disputes between raiyats and under-raiyats are settled as amicably as possible and for that, detailed machinery has been provided under section 48-E of the said Act. In continuation of such legislative scheme section 48-E(13) has provided as follows: 48-E (13) Save as expressly provided in this Act, no Civil or Criminal Court shall have any jurisdiction over the subject-matter of a dispute after a proceeding is initiated under sub-section (1) by the Collector' Provided that nothing in this sub-section shall be deemed to affect the power of a Criminal Court to take such action as may be necessary for preventing breach of the peace pending the final disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside the said order and directed the Joint Special Officer to continue to oversee the management and affairs of the company. The Hon'ble Division Bench also appointed the then directors of the company to function as a Committee of Management for six months. 21. The Hon'ble Apex Court in the case of Radheshyam Ajitsaria Anr. vs. Bengal Chatkal Mazdoor Union Ors. reported in (2006) 11 SCC 771, while disposing of the application observed as follows: **** **** 46. In any event since the Company is functioning as a going concern on and from the date of implementation of the scheme of arrangement as formulated and approved by the High Court as well as this Court, the question of the workers at this stage when the winding-up proceedings have been permanently stayed under section 466 of the Companies Act, 1956 to 1956 does not and cannot arise. The workers having a priority over creditors can come into play only when the winding-up process is in motion and the Official Liquidator takes steps to formalise winding up. In the instant case, after the scheme had been sanctioned, the question of winding up would arise only if the order of permanent stay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that SICA is a special Act enacted for the purpose of public interest which should be viewed as beneficial legislation and also special enactment having overriding power over the provisions of Companies Act specially in an interpretation the term Company as defined in Companies Act as well as SICA. 26. We emphasize very word in this Act unless the context otherwise requires and accept the submission of learned counsel appearing on behalf of the BJC that it is not mandatory wherever the word 'Company' occurs in SICA one should mechanically attribute to it the meaning assigned in section 3(1)(d) thereof. Ordinarily, to understand the meaning 'Company' the definition of same in the SICA ought to apply but where the context does not permit or the context otherwise requires, meaning assigned 'Company' need not be applied by way of restrictive interpretation to mean only a company as defined in section 3(1)(i) of the Companies Act. 27. We also accept the submissions made by learned counsel appearing on behalf of the BJF relying upon the decision of Hon'ble Apex Court reported in (2011) 4 SCC 266 wherein the Apex Court opined that departure can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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