Article 226 cannot enforce loan contracts or bypass final sick-industry orders to compel rehabilitation and revival finance.

Article 226 could not be used to secure rehabilitation of a sick industrial company after final orders had been passed under the Sick Industrial Companies (Special Provisions) Act, 1985 and a winding-up reference remained pending before the Company Court. The Court held that the writ petition could not bypass the exclusive statutory mechanism or re-agitate the same relief. Alleged defaults in disbursement of term loans and asserted assurances by financial institutions were treated as contractual disputes, not as a basis for mandamus or promissory estoppel. The direction requiring banks and financial institutions to provide revival finance was unsustainable because a writ court cannot substitute its commercial judgment for that of expert bodies or compel rehabilitation without resolving disputed facts.

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Issues: (i) Whether a writ petition under Article 226 could be maintained to seek rehabilitation of a sick industrial company after the orders of the statutory authorities under the Sick Industrial Companies (Special Provisions) Act, 1985 had become final and the winding-up reference was pending before the Company Court; (ii) Whether alleged defaults in disbursement of term loans and alleged assurances by the financial institutions could be enforced by invoking promissory estoppel or writ jurisdiction; (iii) Whether the learned Single Judge was justified in directing the banks and financial institutions to provide financial assistance for revival and rehabilitation of the company.

Issue (i): Whether a writ petition under Article 226 could be maintained to seek rehabilitation of a sick industrial company after the orders of the statutory authorities under the Sick Industrial Companies (Special Provisions) Act, 1985 had become final and the winding-up reference was pending before the Company Court?

Analysis: The statutory scheme under the Act provides an exclusive mechanism for detection, inquiry, revival and rehabilitation of sick industrial companies through the BIFR and the AAIFR. The company had already invoked that mechanism, the BIFR had recorded an opinion that it should be wound up, and the appellate order had also attained finality. The relief sought in the writ petition was substantially the same as the relief earlier pursued before the statutory fora. The Court held that Article 226 could not be used to circumvent those final statutory orders or to bypass the pending proceedings before the Company Court.

Conclusion: The writ petition was not maintainable in the form in which it was filed, and the company could not seek the same rehabilitation relief independently under Article 226.

Issue (ii): Whether alleged defaults in disbursement of term loans and alleged assurances by the financial institutions could be enforced by invoking promissory estoppel or writ jurisdiction?

Analysis: The loan transactions were ordinary civil contracts and did not contain the kind of statutory or public law element that would justify a writ of mandamus for enforcement. The alleged breach, even if assumed, would at most amount to breach of contract, for which the proper remedy would lie in civil proceedings. The Court also noted that the factual controversy as to who was responsible for the company's sickness was disputed, and that the foundation necessary to attract promissory estoppel had not been clearly established.

Conclusion: Promissory estoppel was not attracted on the pleaded facts, and the alleged contractual defaults could not be enforced in writ proceedings.

Issue (iii): Whether the learned Single Judge was justified in directing the banks and financial institutions to provide financial assistance for revival and rehabilitation of the company?

Analysis: The Court held that a writ court cannot act as an appellate authority over expert bodies or substitute its own commercial judgment for that of financial institutions and statutory reconstruction authorities. The direction to extend financial assistance effectively compelled revival of a sick unit without adjudicating the disputed factual issues and without respecting the limits of judicial review under Article 226. Such a direction also ignored the balance between public funds and industrial rehabilitation that the Act requires to be maintained.

Conclusion: The direction issued by the learned Single Judge was unsustainable and had to be set aside.

Final Conclusion: The appeals succeeded, the order of the learned Single Judge was set aside, and the writ petition stood dismissed.

Ratio Decidendi: Article 226 cannot be used to enforce purely contractual loan obligations or to secure industrial rehabilitation by bypassing the final orders of the statutory sick-industry machinery under the special enactment.

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