2004 (7) TMI 377 - HC - Companies Law

Court rules SICA inapplicable to land acquisition under Land Acquisition Act

Hindustan Antibiotics Ltd. Versus Special Land Acquisition Officer

Hindustan Antibiotics Ltd. Versus Special Land Acquisition Officer - [2005] 59 SCL 560 (BOM.) Issues Involved:1. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) to land acquisition proceedings.2. Whether the acquisition proceedings under the Land Acquisition Act, 1894 are void ab initio for want of consent from the Board for Industrial & Financial Reconstruction (BIFR).Detailed Analysis:1. Applicability of Section 22 of SICA to Land Acquisition Proceedings:The petitioner, a Government of India undertaking declared as a sick industrial unit under SICA, challenged the land acquisition proceedings initiated by the Special Land Acquisition Officer (SLAO) under the Land Acquisition Act, 1894. The petitioner contended that the acquisition proceedings were void ab initio as they were initiated without obtaining prior consent from the BIFR as mandated by Section 22 of SICA.The court analyzed the scope and intent of SICA, highlighting its objective to address the ill effects of industrial sickness, such as loss of production, employment, and revenue, and to facilitate the revival and rehabilitation of sick industrial companies. The court noted that Section 22 of SICA provides for the suspension of legal proceedings, contracts, etc., against a sick industrial company without the consent of the BIFR or the Appellate Authority.The court examined the types of proceedings covered under Section 22, which include:- Proceedings for winding up of the industrial company.- Proceedings for execution, distress, or the like against any of the properties of the company.- Proceedings for the appointment of a receiver in respect of the properties of the company.- Proceedings for recovery of money or enforcement of any security against the industrial company.- Proceedings for recovery of any loans or advances given to the company.- Proceedings for recovery or encashing of any guarantee given by the company in respect of loans or advances made to the company.The court concluded that the proceedings contemplated by Section 22 are those connected with the financial existence and proprietary rights of the company and must be legal proceedings before a judicial or quasi-judicial authority. The court opined that land acquisition proceedings under the Land Acquisition Act do not fall within the scope of legal proceedings contemplated by Section 22 of SICA, as they are not connected with the financial restructuring or rehabilitation of the company.2. Whether the Acquisition Proceedings are Void Ab Initio:The petitioner argued that the land acquisition proceedings initiated without the prior consent of the BIFR were void ab initio. The court considered whether such consent was necessary for land acquisition proceedings under the Land Acquisition Act.The court noted that the petitioner was declared a sick industrial unit when the Section 6 notification for land acquisition was issued. However, the court emphasized that the acquisition of land for purposes such as road widening, as stated in the Section 6 notification, does not relate to the sickness, restructuring, or financing of the industrial company. The court further observed that the land acquisition proceedings were not analogous to the types of proceedings enumerated in Section 22 of SICA.The court also referred to the Supreme Court's judgment in Maharashtra Tubes Ltd. v. State Industrial & Investment Corporation of Maharashtra Ltd., which emphasized the broad interpretation of 'proceedings' under Section 22 to include those affecting the revival or rehabilitation of the sick industrial undertaking. However, the court distinguished the present case, stating that land acquisition proceedings are not connected with the financial restructuring or rehabilitation of the petitioner company.The court concluded that the land acquisition proceedings under the Land Acquisition Act do not require prior consent from the BIFR and are not void ab initio. The petition was dismissed, and the acquisition proceedings were upheld as legal and valid.Conclusion:The court held that Section 22 of SICA does not apply to land acquisition proceedings under the Land Acquisition Act, 1894, and such proceedings do not require prior consent from the BIFR. The petition challenging the land acquisition proceedings was dismissed, and the acquisition was deemed legal and valid.