Consent-based rehabilitation schemes cannot override statutory limits when State objections are ignored and concessions are imposed without consent.

The rehabilitation scheme was examined against the consent-based limits in the Sick Industrial Companies (Special Provisions) Act, 1985. A scheme providing financial assistance and concessions could operate only within section 19(1) read with section 19(3), and in the absence of State consent the Board was confined to the measures permitted by section 18(4). The State's objections to the proposed concessions were not considered, so the scheme was found arbitrary and beyond statutory power. Section 32's non obstante clause could not cure those limitations or validate an unsustainable exercise of authority, and the appellate order was also set aside.

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Issues: Whether the rehabilitation scheme framed by the Board of Industrial and Financial Reconstruction was ultra vires for directing financial assistance and concessions without the State's consent, and whether the order was arbitrary for ignoring the State's objections.

Analysis: The statutory scheme under the Sick Industrial Companies (Special Provisions) Act, 1985 was held to be circumscribed by its own provisions and not plenary. A scheme contemplating financial assistance fell within the consent-based framework of section 19(1) read with section 19(3), and in the absence of consent the Board could proceed only within the limits of section 18(4) and the measures contemplated by the Act. The State had opposed the proposed concessions and had raised objections, but those objections were not considered in the framing of the scheme. The non obstante clause in section 32 could not be used to override the statutory limitations or to validate an arbitrary exercise of power. The Court also held that the limitation aspect did not prevent interference where the order on merits was unsustainable.

Conclusion: The scheme and the appellate order were unsustainable and were set aside in favour of the State.

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