TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether a substantial shareholder could claim to be the promoter of the sick industrial company and thereby obtain a preferential right to have its revival scheme accepted; (ii) whether the rehabilitation scheme sanctioned under the Sick Industrial Companies (Special Provisions) Act, 1985 could be invalidated for want of circulation to the CBDT and for allegedly travelling beyond the powers conferred by the Act.
Issue (i): Whether a substantial shareholder could claim to be the promoter of the sick industrial company and thereby obtain a preferential right to have its revival scheme accepted.
Analysis: The expression promoter was not treated as synonymous with a controlling shareholder or a person having dominant influence over management. The decisive consideration was whether the claimant had taken steps antecedent to incorporation or otherwise answered the legal character of a promoter. After the stage under section 17(3) was crossed, the emphasis under the Act shifted to feasibility, financial capacity, managerial competence, and the willingness of banks, financial institutions, and governmental authorities to support the proposal. A promoter did not acquire an absolute or overriding right to revival merely by asserting prior association with the company or by entering into an unconsummated share-transfer arrangement.
Conclusion: The claimed promoter status and preferential right were rejected and the contention was held against the petitioners.
Issue (ii): Whether the rehabilitation scheme sanctioned under the Sick Industrial Companies (Special Provisions) Act, 1985 could be invalidated for want of circulation to the CBDT and for allegedly travelling beyond the powers conferred by the Act.
Analysis: The scheme had been circulated to the Central Government and the tax concessions contemplated by it were later met by the concerned income-tax authority as being in order. The Court held that the Act empowered the Board to frame schemes for rehabilitation, including measures incidental and consequential to revival, but not to compel an authority to exercise a power that no statute conferred upon it. A direction extending limitation beyond what the Limitation Act permitted could not be sustained as an enforceable command. Even so, that infirmity did not vitiate the scheme as a whole, particularly where implementation difficulties could be addressed by further recourse to the Board under the Act.
Conclusion: The challenge to the scheme failed overall, though the specific direction extending limitation was found unsustainable.
Final Conclusion: The rehabilitation scheme sanctioned by the statutory authorities was upheld in substance, the petitioners' claims to promoter preference were rejected, and the writ petitions were dismissed.
Ratio Decidendi: Under the Sick Industrial Companies (Special Provisions) Act, 1985, a scheme for revival may include transfer or adjustment of shareholding and other incidental measures necessary for rehabilitation, but no direction can validly require an authority to do what no independent statutory power enables it to do.
TaxTMI 
