Statutory duty to approach BIFR prevails over earlier undertaking where no fraud or material suppression is shown

A prior statement not to approach BIFR did not override the statutory duty to make a reference once the company became a sick industrial company after its accounts were finalised. The Gujarat High Court held that Section 15 of the Sick Industrial Companies (Special Provisions) Act required compliance with the reference procedure, and that Sections 33 and 34 governed consequences of non-compliance. The Court also found no material suppression or fraudulent conduct in the non-disclosure of the pending BRU request, accepting the explanation offered. Relief to withdraw from the earlier statement was therefore justified.

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Issues: Whether the applicant was entitled to withdraw from its statement that it would not approach the BIFR till the hearing and final disposal of the connected appeals, and whether the alleged non-disclosure of the BRU notification request justified ing that relief.

Analysis: Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 obliges the board of directors of a sick industrial company to make a reference to BIFR within the prescribed time after finalisation of audited accounts. Sections 33 and 34 of the same Act provide consequences for non-compliance. On the facts, the applicant's accounts were finalised and approved after the statement was made, and once the company became a sick industrial company, the statutory obligation to refer the matter to BIFR arose. The Court also held that the earlier statement could not bar compliance with the statute. As to the complaint of suppression, the Court found the explanation for non-disclosure of the pending BRU request sufficient and held that no fraudulent conduct or sharp practice was established.

Conclusion: The applicant was justified in seeking withdrawal from the earlier statement, and the objection based on alleged suppression was rejected.

Final Conclusion: The applications were allowed and the applicant was permitted to withdraw from the undertaking not to approach BIFR, the statutory obligation under the sick industrial companies law prevailing over the prior statement.

Ratio Decidendi: A prior statement or undertaking given before the Court cannot foreclose a company's statutory duty to make a reference to BIFR once it becomes a sick industrial company, and relief may be granted to withdraw such a statement where no material suppression or fraud is proved.

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