Deemed consent and surplus assets in sick-company revival do not sustain rehabilitation without real funding or feasible viability.

A rehabilitation scheme for a sick company cannot rely on deemed consent where the State has consistently to finance revival and the scheme itself depends on such funding. Alleged surplus assets justify revival only if they are genuinely available, unencumbered, and sufficient to restore viability; encumbered or uncertain assets do not support feasibility. Procedural omissions such as non-publication of a draft scheme or absence of a separate early order on practicability do not vitiate the winding-up opinion where no workable, funded scheme emerges. Workmen's dues remain protected claims and may be directed to be paid with statutory priority during winding up.

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Issues: (i) Whether the deeming consent under the rehabilitation provisions could be invoked despite the State Government's consistent stand against funding the scheme. (ii) Whether alleged surplus assets required a different conclusion on the feasibility of revival. (iii) Whether non-publication of the operating agency's scheme and absence of a separate order on practicability vitiated the Board's winding-up opinion. (iv) Whether the workmen were entitled to mandamus for payment of dues pending winding up.

Issue (i): Whether the deeming consent under the rehabilitation provisions could be invoked despite the State Government's consistent stand against funding the scheme.

Analysis: The deeming clause in the rehabilitation provision was held to operate in context and not as an irrebuttable fiction detached from surrounding facts. The record showed repeated expressions by the State Government that it would not infuse funds for revival, while the proposed schemes themselves depended materially on such contribution. In those circumstances, the legal fiction could not override the clear factual position that consent to financial assistance was never forthcoming.

Conclusion: The deemed consent argument failed and was rejected.

Issue (ii): Whether alleged surplus assets required a different conclusion on the feasibility of revival.

Analysis: "Surplus assets" were understood as assets genuinely available for disposal without impairing the company's functioning. The materials showed that the assets relied on were either encumbered, mortgaged, or otherwise not free for straightforward liquidation, and the valuation figures put forward by different sides were inconsistent and insufficient to meet the scale of accumulated losses and rehabilitation cost. The Court therefore found no reliable basis to conclude that sale of such assets alone could restore viability.

Conclusion: The surplus-assets contention was rejected.

Issue (iii): Whether non-publication of the operating agency's scheme and absence of a separate order on practicability vitiated the Board's winding-up opinion.

Analysis: The statutory scheme required the Board to consider whether revival was practicable, to direct preparation of a scheme, and to move toward publication and objections only in the appropriate stage of a workable draft scheme. On the facts, the Board had repeatedly explored rehabilitation, invited alternatives, and given opportunities to the company, workmen, and State Government. Since no viable, fully funded scheme emerged, the omission to publish the draft or pass a separate formal order at an earlier stage did not prejudice the parties or undermine the ultimate conclusion that revival was not feasible.

Conclusion: No illegality was found in the Board's process sufficient to invalidate the winding-up recommendation.

Issue (iv): Whether the workmen were entitled to mandamus for payment of dues pending winding up.

Analysis: The workmen's dues were treated as protected claims, and the Court accepted that they should not be left unpaid while the company's affairs were being wound up. The relief was limited to directing payment of dues, with priority consistent with the statutory protective regime for workmen.

Conclusion: The workmen's claim for payment of dues was allowed.

Final Conclusion: The challenge to the winding-up recommendation and the appellate order failed, but the Court granted limited relief protecting the workmen's unpaid dues and directing priority payment in accordance with the statutory scheme.

Ratio Decidendi: A rehabilitation scheme under the sick-company cannot be sustained on a deemed-consent fiction where the party required to finance revival has clearly and consistently ed funding, and alleged surplus assets do not justify revival unless they are available, unencumbered, and sufficient to restore viability within a reasonable time.

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