9911796707
TMI Blog1998 (4) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... e day and the Preamble to the Act itself records that with a view to securing the timely detection of sick and potentially sick Companies owning industrial undertakings, the speedy determination by a Board of Experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such Companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. This Act has been enacted in order to afford maximum protection of employment, optimise the use of financial resources, salvaging the assets of production, realising the amounts due to the Banks and to replace the existing time consuming and inadequate machinery by efficient machinery, for expenditure determination by a body of experts (vide Navnit R. Kamani v. R.R. Kamani, (1989) 66 Comp. Case 132. 2. As a matter of fact, the Act has been enacted to safeguard the economy of the country and protect viable sick units. Its object is to revitalise and rehabilitate sick industries (vide Testeels Ltd. v. Radhaben Ranchhodlal Charitable Trust, (1989) 66 Comp. Case555. 3. A brief reference to the provisions of the Statute unmistakably record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as may be specified by the Board: Provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate. (4) Any declaration made under subsection (3) with respect to a sick industrial Company shall have effect notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law, the memorandum and articles of association of the Company or any instrument having effect under the said Act or other law or any agreement or any decree or order of a Court, tribunal, officer or other authority or of any submission, settlement or standing order and accordingly, -- (a) any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any Court, tribunal, officer or other authority shall remain stayed or be continued subject to such declaration; and (b) on the declaration ceasing to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1995 stood at Rs.934.49 lakhs which had made its net worth negative as compared to the accumulated losses by Rs.717.60 lakhs. The draft rehabilitation Scheme prepared by the operating agency was approved for circulation and the objections and suggestions to the Scheme were considered by BIFR in the hearings held on 18-4-1995, 25-6-1995 and 20-8-1995. After incorporating me suggestions various changes were directed and the scheme has been sanctioned in February, 1996, as appears from the records produced before us during the course of hearing. 7. On the factual backdrop, it further appears that the petitioner, as per the requirement of the Company, duly supplied various items of goods and materials admittedly between 14-2-96 and 15th May, 1996, but by reason of non-payment, statutory notice was served on 20th September, 96. 8. The contextual facts, as noted above, therefore, depict that the BIFR was considering the scheme without there being any reference to the petitioner's claims. It is at this juncture that the observations of the Supreme Court in the case of Dy. Commercial Tax Officer v. Corromandal Pharmaceuticals, [1997]2SCR1026 , seem to be rather apposite. The Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner (assessee) itself could have collected sales tax for the said years only after the scheme was sanctioned. The tax so collected really belongs to the State. But, the amount is not remitted to the State. If the bar or embargo under Section 22(1) of the Act is held to cover such amounts collected by the assessee, which really belong to the State, and enables it to retain the same, till the implementation is over or the appeal under Section 25 of the Act is disposed of, it will result in a state of affairs enabling the assessee to retain the amounts due to the State for no reason and indefinitely; the Revenue will have to obtain consent of the Board or as the Appellate Authority even for realising the legitimate amounts due to it and withheld by the assessee, unreasonably. There may be similar instances where the petitioner/assessee collects amounts due to the Revenue or others and is yet enabled to keep it back with itself unreasonably for a long time if the immunity under Section 22 of the Act operates absolutely. According to the Revenue the bar under Section 22 of the Act should not lead to such an undesirable, state of affairs and so the section should be understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have due sanctity and there ought not to be any further attempt to scuttle it down. The object of the Act cannot but be attributed to be consolidated in nature and the Supreme Court while dealing with the matter and in order to give effect to the statute pleased to record that it is die scheme which is to be protected from outside interference. The Supreme Court was dealing with an exceptional situation since as the Supreme Court laid down that any other construction will be unreasonable and unfair and will lead to a state of affairs enabling the sick industrial unit to collect amounts due to the Revenue and withhold it indefinitely and unreasonably, Such a construction which is unfair, unreasonable and against spirit of the statute in a business sense, should be avoided. The Supreme Court recorded the matter to be an exceptional one. 9. The contextual facts also cannot but be ascribed to be rather exceptional. The law laid down by the Supreme Court is clear and unambiguous to the extent that the bar as envisaged in terms of Section 22 ought to be restrictive in nature so as to cover the state of affairs up to fee date of presentation of the scheme or on the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
