TaxTMI 
TaxTMI 
1998 (7) TMI 559
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.... company made a reference to the Board for Industrial and Financial Reconstruction (hereinafter to be referred as the BIFR) under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985. Thereafter, the BIFR made the necessary inquiry into the working of the sick "principal company". But the BIFR could not work out any scheme to see that the "principal company" could overcome losses and financial difficulties. Consequently the BIFR submitted its report dated November 30, 1995, to the company court that there is no possibility to sustain and survive and hence the principal company should be wound up. On the strength of the said report of the BIFR the winding proceedings are going on before the company court in Company Petition No. 157 of 1995. The petitioner has averred that the Calico Polyester Fibre Division one of the units/undertakings of the principal company was always viable and profit-making. It is further claimed that respondent No. 2 is interested in taking over the said Calico Polyester Fibre Division of the principal company. The petitioner therefore, made a representation to the Central Government, respondent No. 1 to take necessary steps under sec....
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.... to safeguard the economy of the nation and to protect viable sick units. It is aimed at reviving and rehabilitating sick industrial companies. The object of the Act of 1951 is to bring under the Central control the development and regulation of the important industries mentioned in the Schedule to the said Act. The said control is provided as the activities of those industries affect the country as a whole and the development of which must be governed by the economical factors of all India import. The Act of 1985 is aimed at providing protection to sick industrial companies whereas the Act of 1951 is aimed at protecting an industrial undertaking or unit in the larger economic interest of the country. Therefore, the abovestated aims and objects of the two enactments, must be borne in mind while considering and deciding the representation of the petitioner. It is vehemently urged by Mr. B.C. Jani, the learned advocate for respondent No. 1, that once an action is taken under the SICA 1985, there is no question of considering the action under the Industries (Development and Regulation) Act, 1951. In order to consider the said contention let me consider the provisions of section 15A....
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....aking or exercise functions of control in relation to the whole or any part of the industrial undertaking (hereinafter referred to as the 'concerned part') for a period not exceeding five years : Provided that if the Central Government is of opinion that it is expedient in the interests of the general public that the authorised person should continue to manage the industrial undertaking, or continue to exercise functions of control in relation to the concerned part, as the case may be, after the expiry of the period of five years aforesaid, it may make an application to the High Court for the continuance of such management or functions of control, for such period, not exceeding two years at a time, as may be specified in the application and thereupon the High Court may make an order permitting the authorised person to continue to manage the industrial undertaking or to exercise functions of control in relation to the concerned part : Provided further that the total period of such continuance (after the expiry of the initial period of five years) shall not, in any case, be permitted to exceed (twelve years). (3) Where an order has been made by the High Court under sub-secti....
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....nning the industrial undertaking, or exercising functions of control in relation to the concerned part, the authorised person may employ such of the former employees of the industrial undertaking whose services became discharged by reason of the winding up of the company owning such undertaking and every such person employed by the authorised person shall be deemed to have entered into a fresh contract of service with the company. (10) The proceedings in the winding up of the company, in so far as they relate to- (a)the industrial undertaking, the management of which has been taken over by the authorised person under this section, or (b)the concerned part in relation to which any function of control is exercised by the authorised person under this section, shall, during the period of such management or control, remain stayed, and, in computing the period of limitation for the enforcement of any right, privilege, obligation or liability in relation to such undertaking or the concerned part, the period during which such proceedings remained stayed shall be excluded." If the above provisions of section 15A are considered then it would be quite clear that if the Central ....
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....e specific authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company." If the above provisions of the section are considered then it will be quite clear that if any action or a scheme under the SICA is pending or in force then it will have overriding effect on all actions under any other Acts except the Acts saved by the said section. But as stated earlier once the BIFR submits its report to the High Court to wind up the sick company on account of its inability to enforce any scheme with respect to the sick company the action under the SICA comes to an end. Consequently, section 32 of the SICA will not apply. It is clearly averred by the petitioner that the Calico Fibre unit/under-taking was always a profit-making unit. The said unit is situated at Vadodara (Baroda). The other units of the principal company are situated at Ahmedabad and Bombay and they were textile producing and textile printing units. The principal company is having large parcel of land in Bombay as well as Ahmedabad. The Calico Fibre unit is employing around 600 workmen. The C....