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TMI Blog2023 (4) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... he sick industrial company, and the entities referred to in Section 18(8) and 19(3) of SICA. In these circumstances, the Department cannot surely be head to argue that the provisions of the scheme are not binding on it. The above judgment is directly on the issue. By virtue of Section 19 (2) of SICA, the consent can be inferred. Therefore, it is not open to the ESI Corporation to revive the liability of a sick company by operation of statutory discharge. The impugned order passed by the third respondent is quashed - Petition allowed. - W.P.No.20002 of 2010 and M.P No.2 of 2010 - - - Dated:- 6-2-2023 - Honourable Mr.Justice S.S.Sundar For the Petitioner : Mr.N.Sridhar For the Respondents : Mr.S.P.Srinivasan ORDER This writ petition has been filed by a company known as M/s.Lakshmi Machine Works Limited, the petitioner herein, aggrieved by the impugned order of the third respondent vide his Letter No.56/34184-57, 56/62423-66, 56-62358-54/RRC dated 27.08.2010, initiating recovery proceedings requiring the petitioner's Bankers to pay a sum of Rs.19,03,339/- towards the ESI dues of another company M/s.Jeetstex Engineering Limited. 2. The brief facts n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net worth of JEL got eroded during the financial year 1998-1999. 12.11.1999 Board of Directors of M/s.JEL formed the opinion that M/s.JEL had become sick and reference was made to BIFR for revival of M/s.JEL and the case is taken on file as BIFR case No.378/1999. 17.02.2000 BIFR declared M/s.JEL as a sick industrial company and appointed IDBI as the Operating Agency (OA) 31.03.2005 Operating Agency prepared the details of the value of the entire assets and liabilities of M/s.JEL by taking complete inventory of all assets and liabilities of whatever nature of M/s.JEL as required under Section 21 of the SICA. As per the valuation given by the valuer the total value of the assets of M/s.JEL was Rs.25.74 crores. As per the inventory conducted by the OA the loan together with interest payable as on 31.03.2005 to IDBI, ICICI, IREDA (First charge holders amounting to Rs.3533 lakhs), SBI Vijaya Bank (second charge holders amounting to Rs.1512 lakhs) plus interest of Rs.4437 lakhs totally comes to Rs.9482 lakhs and these institutions were agitating for SARFAESI actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g) Central Excise - 0.44 lakhs h) Electricity - 1.14 lakhs i) Property Tax - 14.98 lakhs j) Pollution control board - 1.45 lakhs k) Income Tax - Principal Income Tax due +18.22 lakhs towards TDS 25.05.2006 BIFR heard the objections/suggestions to the DRS, which was circulated as contemplated under section 19(2) of SICA and approved the sanction scheme by ordering merger of M/s.JEL with M/s.Lakshmi Machine Works Ltd., As per the sanctioned scheme/ merger scheme the consideration of Rs.3500 lakhs was agreed to be set apart to discharge the dues in the following manner: 1) Secured creditors (1st charge holder) 2120 lakhs 2) Secured creditors (2nd charge holder) 430 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These departments shall waive interest, penal interest, damages, liquidated damages and penalty for late payments if any. 13.06.2006 The Registrar of Companies, Coimbatore issued a Certificate of Registration of order of amalgamation dated 25.05.2006 passed by the BIFR for the amalgamation of M/s.JEL with LMW. 24.09.2007 Appeal Nos.233/2006, 201/2007, 247/2006 and 248/2006 were filed by Vijaya Bank, ARCIL, ATE Enterprise and Income Tax before the Appellate Authority for industrial and financial reconstruction, New Delhi questioning the order sanctioning the scheme on 25.06.2007. All the appeals were dismissed. 4. On 23.03.2006, based on the rehabilitation scheme submitted by the Operating Agency, a Draft Rehabilitation Scheme (DRS) was prepared by the Board and directed the circulation of the draft rehabilitation scheme to all the stakeholders concerned for consent as required under Section 19(2) read with 19(1) of the Sick Industrial Companies (Special Provisions) Act 1985 (hereinafter referred to as SICA) and fixed the hearing for objections and suggestions to 25.05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r period, it shall be deemed that consent has been given. 7. The learned counsel for the respondents submitted that there is no provision under the Employees State Insurance Act for waiver of interest or damages, merely because there is an approved scheme only towards interest. The aforesaid submission cannot be countenanced in view of the specific provisions of the SICA, particularly Section 19-3A of the Act which is extracted hereunder: On the sanction of the scheme under subsection (3), the financial institutions and the banks required to provide financial assistance shall designate by mutual agreement a financial institution and a bank from amongst themselves which shall be responsible to disburse financial assistance by way of loans or advances or guarantees or reliefs or concessions or sacrifices agreed to be provided or granted under the scheme on behalf of all financial institutions and banks concerned. 8. The learned counsel appearing for the petitioner relied upon a judgment of a Division Bench of Delhi High Court in Director General of Income Tax Vs. BIFR dated 23.03.2011 which is held as follows: 10. In the context of the above discussion we would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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