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TMI Blog2014 (4) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in the amalgamation. Once this process is completed, the BIFR shall publish the scheme, which is referred to as the draft scheme , in brief, in newspapers for suggestions and objections, if any, within such period as the Board may specify . If any suggestions or objections are received, the BIFR may, under section 18(3)(b) make such modifications to the draft scheme as it considers necessary in the light of the suggestions and objections. Objections or suggestions may also be received from any company involved in the amalgamation (if any), any shareholder or any creditor or employees of the company. Section 18(4) empowers the BIFR to sanction the scheme and specify the date on which it shall come into force. These provisions do not per se contemplate any hearing, as contended on behalf of TSL; however, such a requirement is in our opinion implicit in the provisions of clause (b) of sub-section (3) of section 18 for it is difficult to see how the objections and suggestions can be taken into consideration and the draft scheme be modified in their light unless those who have raised the objections or made suggestions are heard. When there is a requirement to consider the sugge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The provisions of the SICA do not specifically provide for a situation where a particular Bench, after recording evidence or a memorandum is unable to continue with the proceedings for some reason or the other. In such a case, having regard to Regulation 12(2), the provisions of Order XVIII, Rule 15 prima facie seem to apply. In any case we are unable to demur to the proposition that the principles behind the provisions of the CPC can be properly invoked in the absence of any specific provision in the SICA to cover the situation. The argument of Mr. Rajiv Nayar, however, was that this can be permitted only in the case of death or transfer of the Members of the BIFR and not otherwise. But if it is the prerogative of the Chairman to constitute the Benches and such prerogative was not questioned by the petitioners, there is no reason why the principle behind Order XVIII, Rule 15 of the CPC should not be invoked and applied. Are the petitioners estopped from raising the objection before the AIFR or this court? - Did they acquiesce in the proceedings, thus disabling themselves from raising the objection at any time later? - HELD THAT:- In a technical sense it cannot be said that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Bank of India ( SBI ) was appointed as the Operating Agency ( OA ) under section 17(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA ) to examine the viability of the company and submit a rehabilitation scheme. There were several teething troubles in the preparation of the rehabilitation scheme, the details of which need not detain us. After several years there were three proposals submitted by the following companies for rehabilitation of the sick company : Silver Jubilee Infrastructure Ltd. (SJIL), R.R. Kabel (RRK) and Land Lease Co. Ltd. (LLC). These proposals were examined by the OA which also held discussions with the propounders. Several rounds of litigation followed thereafter. In the meantime two other companies also joined the fray and they are Pegasus Assets Reconstruction Pvt. Ltd. (PARL) and TATA Steels Ltd. (TSL). They had also submitted draft rehabilitation schemes. The matter reached the Delhi High Court and the Supreme Court which gave certain directions vide order dated 14th May, 2009. Pursuant to this order three bidders were permitted to submit the Draft Rehabilitation Scheme (DRS) and they were (1) RRK, (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he coram of the BIFR was represented by Mr K Cherian Verghese, Chairman, Mr Pawan Raina, Member and Smt Saroj Bala, Member. The parties submitted their respective written objections to the report of the OA. 6. On 20.11.2009 the OA submitted its comments to the objections raised by RRK and PARL to the BIFR in compliance with the BIFR s order dated 12.11.2009. 7. On 24.11.2009 the BIFR held a hearing in which the coram was represented by Mr K Cherian Verghese, Chairman and Mr V K Malhotra, Member. It considered the report dated 26.10.2009 of the OA, the objections of the parties to the same and sought further clarifications from the parties. The OA was directed to reconcile the figures mentioned in the report and to recast the report and submit a supplementary report. Accordingly, the matter was adjourned to 30.11.2009. 8. On 27.11.2009, the OA gave its supplementary report of the same date in which also it made clear that the scheme presented by TSL was the best on all the parameters, including the protection of the interest of the workers. 9. In the hearing which took place on 30.11.2009 before the BIFR, the coram was represented by Mr K Cherian Verghese, Chairman and Mr V K Malhot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther submitted that BIFR adopts the procedure regularly to record the gist or the summary of proceedings of each hearing in the subsequent orders. It was pointed out that in its order passed on 9.12.2009, the BIFR followed the same procedure and recorded the gist of the meetings of each and every previous proceedings relevant for the purpose of coming to the final decision. It was submitted on behalf of the TSL that effective arguments were heard by the BIFR only on 24.11.2009 and 30.11.2009 and on these two dates the Bench consisted of Mr K Cherian Verghese, Chairman and Mr V K Malhotra, Member and it was this Bench which also pronounced orders on 9.12.2009 and therefore it cannot be said that the matter was disposed of by a Bench which did not hear the proceedings. It was also pointed out that thanks to the practice of BIFR to record the gist or summary of the proceedings of each hearing in the subsequent orders, Mr V K Malhotra, the Member of the BIFR could apprise himself of the earlier submissions as the gist of the earlier proceedings was on record. It was argued that it would be absurd to contend otherwise, as it would result in absurd consequences as the proceedings have t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partially different in composition from the Bench that heard the final arguments. Therefore, we think this does not constitute any legal infirmity. In the interest of expeditious justice, we hold that the impugned order has been validly delivered by the Bench and does not suffer from any infirmity on the aforesaid account. 15. The majority also dealt with the merits of the different rehabilitation schemes and eventually upheld the decision of the BIFR that the scheme propounded by TSL was justified. 16. The minority view of the AIFR (the Chairman) on this issue was different. The relevant portion of his view is as below: - 2. But, so far as order passed in Appeal No.16/10, 37/10, 38/10 and 40/10 are concerned, with due regards to my Brother, I am unable to agree with his findings recorded in this appeal and final order passed and signed by them. Today, I am demitting my Office on completion of my tenure. As such, I am unable to write a detailed order in the matter and also it could not be possible for me to go through the full text of the order due to paucity of time. However, on seeing the findings and final opinion recorded in the order, prima facie, according to me, these appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of the comparison of the three schemes propounded by R.R.K., PARL and TSL, but were on a different issue. It is not known why Pawan Raina and Saroj Bala were not on the Bench on 09.12.2009 though they continued to be the members of the BIFR. (c) Oral arguments were concluded on 12.11.2009 and the aforesaid three propounders were to file written submissions by 16.11.2009 and the next hearing was to take place on 24.11.2009. However, on 24.11.2009 the Bench consisted of Cherian Verghese, the Chairman and V.K. Malhotra. This Bench did not have the benefit of the oral arguments on the comparison of the rival schemes which were concluded on 12.11.2009. 20. According to Mr. Nayar the procedure adopted by the BIFR was strange to say the least. He contended that in the above circumstances, it would be clear that the Bench heard the oral arguments on 12.11.2009 did not pass the final order on 09.12.2009 on the question as to which of the three schemes was best suited and thus the proceedings before the BIFR suffers from a serious vice and were in violation of the rule that the person who heard the matter, should also pass the order. In support of these submissions Mr. Nayar cited the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scheme submitted by the OA. When copious record of the proceedings is left by the Bench which heard the submissions on 12.11.2009 and that record had in fact been taken into consideration by the later Bench, though constituted by different Members, there is no violation of any principle of natural justice. (c) The petitioners have not demonstrated any prejudice. Their arguments and the written submissions have all been taken note of by the Bench of the BIFR which passed the orders on 09.12.2009. On 12.11.2009 oral objections were raised to the report of the OA dated 26.10.2009. On 24.11.2009, these objections were put in writing before the BIFR. Though on 24.11.2009 the Bench of BIFR consisted of Cherian Verghese (Chairman) and V.K. Malhotra, Member which was different from the Bench which heard the oral objections on 12.11.2009, this does not in any manner vitiate the proceedings because the Bench constituted on 24.11.2009 in fact had the written objections before them. Moreover, it was only on 24.11.2009 that oral arguments were concluded. A further opportunity was given to the parties to file written submissions on 30.11.2009. This was by the Bench consisting of Cherian Verghe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction of the Court . (ii) Order XVIII Rule 15 of the CPC also applies to the present case. This provision enables a successor-Judge to deal with any evidence or memorandum taken down or made by the predecessor- Judge as if such evidence or memorandum had been taken down by him or under his direction and he may proceed with the suit from the stage at which his predecessor had left it on account of death, transfer or other cause. This principle equally applies to the proceedings before the BIFR by virtue of the Regulation 12(2). If so, the Bench of the BIFR constituted by Cherian Verghese, the Chairman and V.K. Malhotra, Member was competent to continue the proceedings from the stage at which they were left by the predecessor-Bench and pass final orders. In any case, the successor-Bench had the benefit of the written objections filed by the parties on 12.11.2009 to the report of the OA. There was thus no violation of the rules of natural justice or the salutary principle that it is the judge, who heard the matter, who should pass the order. (iii) Section 10 of the SICA also provides that any defect in the constitution of the Board shall not invalidate any act or proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in setting the clock back by several years . 27. In W.P.(C) No.5197/2011, the learned counsel appearing for the All India Incab Industries Employee s Association put forth two points. The first was that the provisions of the Code of Civil Procedure were not fully applicable to the proceedings before the BIFR. Section 13(1) permitted the BIFR to devise its own procedure, which excludes the operation of the CPC. Moreover, under Section 13(3) of the SICA, only certain provisions of the CPC are made applicable to proceedings before the BIFR. Clause (f) of Section 13(3) has not been triggered by prescribing anything under the rules so far. In these circumstances, says the learned counsel, the argument based on Section 99 and Order XVIII, Rule 15 of the Civil Procedure Code is totally off the mark. 28. The second point put forth is that under Section 13(2) of the SICA, the workers have a right to be heard but neither on 24.11.2009 nor on 30.11.2009 were the workers heard. They were, however, heard on 12.11.2009. It was accordingly submitted that final orders were passed on 09.12.2009 by a Bench which did not have the benefit of hearing the workers. 29. Mr. B.K. Sinha appearing for the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the first time before the High Court as held by the Supreme Court in Rattan Lal Sharma vs. Managing Committee, Dr. Hari Ram (Co-Education) Higher Secondary School, (1993) 4 SCC 10. (iv) The arguments based on the provisions of the CPC are without merit. The BIFR can only prescribe in its rules as to which provision of the CPC are applicable, as permitted by Section 13(3)(f) of SICA. This cannot be done through the Regulations. Though, Section 36 of the SICA empowers the BIFR to make rules, so far no rules have been framed and there is thus no prescription as to the applicability of provisions of the CPC. Order XVIII, Rule 15 of the CPC provides for several contingencies and also an omnibus or residuary clause permitting the continuance of the proceedings for other causes , in addition to the death, retirement, etc. of the predecessor-Judge. The expression other cause cannot be so sweepingly interpreted as to include the whims and fancies of the authority competent to constitute the Benches, which in the case of BIFR, is its Chairman. The provision, even if it is held to be applicable to the proceedings before the BIFR, is confined to the recording of the evidence by the predece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners? 35. So far as the issue (a) is concerned, it cannot be and nor was it seriously disputed that the proceedings before the BIFR are quasi-judicial proceedings. The point raised by the learned senior counsel appearing for TSL however was that the impugned proceedings before the BIFR were under section 18(1) (2) which do not contemplate any hearing and therefore the complaint that the earlier Bench heard the matter and therefore the later Bench could not pass orders thereon is without any merit. Section 17(3) empowers the BIFR to appoint an operating agency to prepare a scheme providing for measures for the revival of the company which are specified in section 18, having regard to the guidelines laid down in the order appointing the agency. Section 18(1) enjoins a duty upon the OA to submit a scheme to the BIFR providing for any of the measures specified in clauses (a) to (f) of the sub-section. It is not in dispute that the proceedings concerned clause (b) which provides for the proper management of the sick industrial company by change in, or take over of, management of the sick industrial company . Section 18(2) prescribes what all can be provided for in the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s date, though the Bench was of a different composition, the written objections of the parties were already on record and were taken into consideration by the Bench. The petitioners do not deny that there was a hearing on 24.11.2009 in which they participated; even Mr. B.K. Sinha, the learned counsel appearing for the workers union, was heard on that date. Thus there is no material to hold that the hearing was complete at any date prior to 24.11.2009. What had taken place prior to that date, i.e., on 12.11.2009 was of course a hearing by the BIFR consisting of the Chairman and two Members of the BIFR but it had not concluded on that date. Oral arguments were advanced by the concerned parties (including secured creditors, Government of West Bengal and workers union) and certain directions as per paragraph 2.19 of the proceedings were issued on that date. This is the case even of Mr. Rajiv Nayyar, the learned senior counsel appearing for RRK; the respondents do not deny it. The point of difference between them is that while Mr. Nayyar contends that the hearing was concluded on 12.11.2009, and therefore the same Bench ought to have passed the orders and not a different Bench, both Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary report. These directions would demonstrate the application of mind by the Bench which heard the matter on 24.11.2009 to the issues before it. Unless this Bench had applied its mind to the material already on record, including the written objections filed on 16.11.2009 and the comments of the OA filed on 20.11.2009, it would not have been possible for that Bench to issue such directions to the parties as well as the OA. The direction to the OA to file a supplementary report, in particular, also reinforces this conclusion. 39. The further proceedings which took place on 30.11.2009 before the same Bench (the Chairman and Mr. Malhotra) also support our conclusion that there was application of mind by this Bench to the issue before them which arose under Section 18(3) of the SICA. On this date the Bench directed the parties to react to the supplementary report of the OA which had been filed on 27.11.2009 and file their clarifications, which direction was complied with on 02.12.2009. On 07.12.2009 the OA submitted its report on the submissions made by the parties on the supplementary report. All these were undoubtedly taken into consideration by the Bench composed of the Chairman and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gant to object to the constitution of the Bench. It is true that under Section 12(2) of the SICA, it is the prerogative of the Chairman to constitute the Benches. However, there would be in our view nothing improper if a request is made in a given case to the Chairman of the BIFR to continue the constitution of the earlier Bench, if the parties agree that considerable progress has been made in the case before the earlier Bench. We do not think that the Chairman of the BIFR would have been so unreasonable as to reject such a request, if jointly made by the parties. This does not in any case affect the prerogative of the Chairman to constitute the Benches. But in the present case no such request was made by the petitioners; if the matter had progressed and reached such an advanced stage that only the formality of winding-up the hearing remained, nothing prevented the petitioners from bringing this to the attention of the Chairman who, we do not doubt, would have certainly taken note of the same in the right spirit and perspective and passed appropriate orders. It is only because the proceedings had not reached the stage of final arguments and were still at the stage of exchange of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Code of Civil Procedure. (1) Failure to comply with any requirement of these regulations shall not invalidate the proceeding merely by reason of such failure, unless the Board is of the view that such failure has resulted in mis-carriage of justice. (2) Subject to the provisions of sub-section (3) of section 13, where no specific provision has been made in these regulations, the Code of Civil Procedure, 1908 (5 of 1908), to the extent as may be deemed expedient by the Board, shall apply to the proceeding. 43. It seems to us that much can be said in favour of the view that the provisions of the CPC are applicable to the proceedings before the BIFR, with the rider that those provisions will apply only where no specific provision is made in the regulations and that too only to the extent as may be deemed expedient by the Board. Order XVIII, Rule 15 of the CPC provides for the contingency where a Judge is unable to continue with the proceedings after recording evidence or a memorandum, for reasons of death, transfer or any other cause. In such a case the successor-Judge can continue the suit without having the need to record the evidence or the memorandum over again. The provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench consisting of the Chairman, and two other members. We have already attempted to show that this is not the factual position and therefore in a technical sense it cannot be said that the petitioners consciously waived their right to object to the proceedings being continued before another Bench or acquiesced in the same. The second possibility is that the petitioners themselves were aware that there was no conclusion of the hearing on 12.11.2009 and therefore there is no question of any waiver of their right to claim that the same Bench should continue the proceedings or any acquiescence. This is the correct position according to us. It is for this reason that we say that there can be no question of any waiver or acquiescence on the part of the petitioners. 45. So far as the question whether any prejudice was caused to the petitioners is concerned, we have no doubt that no such prejudice was caused. The petitioners as well as the workers unions were heard on 12.11.2009. They had put forth their arguments on the comparison of the schemes. RRK, PARL and others opposed the report of the OA dated 26.10.2009 holding that the scheme submitted by TSL was the best. These objections whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any application to the case before us. There is no divided responsibility in the present case which can be said to be destructive of the concept of judicial hearing. Herein there are no two authorities one to hear and another to decide. The authority which hears and decides is the same, namely the BIFR. The BIFR acts through its Benches and we have already seen that as per regulation 16(3), every order made or act done by a Bench in exercise of its powers shall be deemed to be the order or act as the case may be, of the Board. Regulation 3(b) defines Board to mean the BIFR and includes, where the context so requires, a Bench exercising the jurisdiction, powers and authority of the Board. Keeping these regulations in view, it is difficult to accept the proposition that the earlier Bench consisting of the Chairman and two Members and the later Bench consisting of the Chairman and V K Malhotra were different authorities entrusted with a divided responsibility which could destroy the concept of judicial hearing. It is the very same authority, namely the BIFR, which hears and decides through its Benches and such Benches could be differently constituted at different times. The position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate directions to the parties and the OA, but also applied its mind to the material so collected and also to the material already brought on record by the earlier Bench and after giving several opportunities to the parties on 30.11.2009, 2.12.2009 and 7.12.2009, proceeded to pronounce the final decision on 9.12.2009. The present case is therefore completely distinct on facts from those before the Supreme Court in the judgment cited above. Therefore, the said judgment has no application. 47. In B K Srinivasan and Ors. V. State of Karnataka and Ors., (1987) 1 SCC 658 cited by Mr. Vikas Singh, there was a provision validating certain acts and proceedings. It was provided therein that the failure to serve a notice on any person, where no substantial injustice has resulted from such failure or any omission, defect or irregularity not affecting the merits of the case would not invalidate any act done or proceeding taken under the main legislation. It was noticed by the Supreme Court that it is a relevant consideration that the appellants (writ petitioners) failed to plead want of publication of the notice or want of knowledge in the first instance and that the defect or irregularit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken at the earliest point of time before any decision is taken by the Tribunal or the body constituted for the purpose of taking a decision. One cannot be permitted to take a chance and raise the objection after he has lost. To the same effect is the judgment of the Supreme Court in Vijendra Kumar Verma V. Public Service Commission, Uttarakhand (supra). 48. We have to now deal with the decisions cited by Mr Rajiv Nayar, the learned senior counsel for the petitioners, in support of his contention that it is no argument to say that the lack of opportunity given to a person of being heard by the trial court can be cured by such opportunity being given by the appellate court. He cited the judgment of the Chancery Division (Megarry, J) in Leary V National Union of Vehicle Builders (supra). In this judgment, it has been held that where the Act and the Rules combine to give a person the right to a fair trial and then a right of appeal, he should not be told that he ought to be satisfied with an unjust trial and a fair appeal. It was held as a general rule that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body . This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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