Takeover permission overrides compromise schemes when statutory conditions are met for a sick industrial undertaking.

Once permission is granted under Section 18FA of the Industries (Development and Regulation) Act, 1951 for takeover of a sick industrial undertaking, the High Court cannot entertain or examine a competing scheme of compromise or arrangement under Section 391 of the Companies Act, 1956. The statutory scheme treats the Government's takeover power as mandatory where the conditions for permission are satisfied, and the court has no discretion to prefer an alternative arrangement. Where the undertaking is under winding up supervision, the Government must first obtain the court's permission under the relevant provisions, and that permission carries overriding effect for the proposed takeover.

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Issues: Whether, after the High Court grants permission under Section 18FA of the Industries (Development and Regulation) Act, 1951 for takeover of the management of a sick industrial undertaking, the court can still entertain an application for a scheme of compromise or arrangement under Section 391 of the Companies Act, 1956.

Analysis: The statutory scheme confers wide powers on the Central Government to investigate and take over industrial undertakings, but where the undertaking is being wound up under the supervision of the High Court, the Government must first seek the court's permission under Section 15A or Section 18FA. The language of both provisions is mandatory, and the court is bound to grant permission once the statutory conditions are satisfied. In that situation, the court has no discretion to prefer or examine an alternative scheme under the Companies Act, because the proposed takeover under Section 18FA must prevail once permission is granted.

Conclusion: The court cannot entertain or examine a scheme under Section 391 of the Companies Act, 1956 after permission under Section 18FA of the Industries (Development and Regulation) Act, 1951 has been granted.

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