TaxTMI 
TaxTMI 
1999 (10) TMI 660
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....e first petitioner to the extent they are contrary to or inconsistent with the scheme sanctioned by the Appellate Authority for Industrial and Financial Reconstruction appointed under the Sick Industrial Companies (Special Provisions) Act (Act 1 of 1986), and to quash the consequential G.O. Ps. No. 97, dated 25-2-1991, issued by the second respondent under section 17A of the Tamil Nadu General Sales Tax Act, 1959, as well as Order No. 73254/87/B2, dated 29-11-1990, issued by the third respondent and also the proceedings dated 1-9-1994, and 21-9-1994, issued by the CTO, Singanallur Assistant Circle, Coimbatore, pursuant to the impugned order dated 12-10-1990, and consequently to direct the first and second respondents to give full effect and implement unconditionally the said order dated 15-6-1990, passed by the Appellate Authority for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985 (Act 1 of 1986), and also by reviewing the sales tax concession granted to the petitioner under the said order dated 15-6-1990, by the AAIFR and extending the sales tax deferment benefit to the petitioners for the years 1994-95 and 1995-96, i.e.,....
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....said opinion to this court. Subsequently, the promoters of the first petitioner-company were able to bring in an industrialist, namely, one K.K. Patodia of PBM Polytext Ltd., having vast experience and expertise in the yarn and textile industry to join the first petitioner-company as a co-promoter. The promoter and co-promoter agreed to induct Rs. 50 lakhs each into the first petitioner-company and the said K.K. Patodia also agreed to take care of the first petitioner's sales without charging sales commission during the rehabilitation period resulting in a saving of Rs. 12 lakhs per annum. The workmen of the first petitioner agreed to further sacrifices to secure the reopening of the mills and running of the same as a viable unit. Therefore, the first petitioner filed an appeal before the Appellate Authority for Industrial and Financial Reconstruction (the appellate authority) under section 25 of the said Act claiming viability of the company in the changed circumstances. The said appeal was admitted by the Appellate Authority on or about 10-8-1988. The first petitioner had envisaged financial assistance from the Government, banks and financial institutions as part of any rehabilit....
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....aforesaid order sanctioning the scheme, granted the reliefs/concessions, namely, power cut exemption and deferment of sales tax for a period of three years. The said order, however provided for repayment of the sales tax dues commencing from the fourth year (i.e., 1993-94), instead of the year 2000 A.D. as provided for in the sanctioned scheme and also the following conditions which are unwarranted and in fact opposed to the sanctioned scheme, namely : (a)appointment of a nominee of the director of handlooms and textiles on the board of management of the first petitioner; (b)assignment to the said nominee of the responsibility of, inter alia, monitoring the utilisation of funds involved in the deferment of sales tax; and (c)the said nominee's heading of sub-committee of the first petitioner which should deal with the purchase and policies with power to veto any decision of the sub-committee which may be against the interest of the first petitioner's mill. 7. By its representation dated 16-11-1990, the first petitioner-company drew the attention of the Government to the sanctioned scheme and also to the fact that the IDBI was appointed as an implementing agency who would monitor....
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....conditions for granting reliefs/concessions, which are unconditionally provided for by the sanctioned scheme under the said Act, and the first respondent's subsequent refusal to delete the said conditions. 8. Per contra, in the counter-affidavit it is contended by the respondents that the AAIFR adopted a draft scheme prepared by the IDBI (operating agency) reworking the rehabilitation package for the mills by reckoning certain reliefs/concessions and the AAIFR adopted the rehabilitation scheme. During the AAIFR meeting held on 13-6-1990, the Joint Director of Handlooms and Textiles informed the stand of the State Government that the Government will consider two concessions (i) power cut exemption for a period of three years and (ii) deferment of sales tax for a period of three years. Accordingly the AAIFR approved the package in its hearing on 13-6-1990. The mill which had remained closed for eight years was taken over by one K.K. Patodia jointly with one D.D. Sanghai and the mill was started in August, 1990. About 400 workers who were displaced have been re-employed. The Government of Tamil Nadu in their Order Ms. No. 304, Handlooms, Handicrafts, Textiles and Khadi (C2) Departmen....
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....ir own whims and fancies further closures of the mills will be imminent, and in such case all steps taken by the Government for reviving the mills will be in vain. According to them this procedure is being adopted only in the interest of the institution, besides for safeguarding the Government interest. It is their case that the beneficiary cannot question the mode, time, etc., of the concession of deferral of tax which is legally due to the Government. Further according to them once the statutory notification is issued, it is binding on the dealer and if at all, they like to avail of the concession, once granted, at a later date convenient to them and then come up with a request to give effect from that date. It is their specific case that as committed before the Appellate Authority for Industrial and Financial Reconstruction, the Government sanctioned the usual two concessions. The Government have not given any concessions unconditionally. The Government have committed before the AAIFR only to grant concessions. Thus, it is their strong contention that the conditions imposed by the Government are only in the interest of the mills, workmen and for protecting the interest of the Go....
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....The petitioner mills herein was declared a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985. The Industrial Development Bank of India (IDBI) was appointed as an operating agency for preparation of the scheme providing for measures in relation to the mills. The IDBI prepared the scheme for revival of the mills and was examined by the Board for Industrial and Financial Reconstruction (BIFR). The BIFR found the scheme was unviable and formed an opinion to wind up the mills. Subsequently the promoter of the mills joined with one K.K. Patodia in the mills as co-promoter. The promoter and co-promoter agreed to induct Rs. 50 lakhs each into the mills. Then, the mills appealed before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) claiming viability of the mills in the above changed circumstances. The AAIFR adopted a draft scheme prepared by the IDBI (operating agency) reworking the rehabilitation package for the mills by reckoning certain reliefs/concessions and the AAIFR adopted the rehabilitation scheme. The said draft scheme was circulated to the first respondent for its consent under section 19(2) of the said Act an....
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.... an implementing agency which would monitor the working of the company, there is no need for the State Government to impose the impugned conditions regarding the appointment of a nominee director and his powers. 10. In this case, it is significant to note that during the AAIFR meeting held on 13-6-1990, the Joint Director of Handlooms and Textiles informed the stand of the State Government that the Government will consider two concessions (i) power cut exemption for three years and (ii) deferment of sales tax for a period of three years. Accordingly the Government of Tamil Nadu in their Order Ms. No. 304, Handlooms, Handicrafts, Textiles and Khadi Department, dated 12-10-1990, have sanctioned the said two concessions. Thus, as committed before the Appellate Authority for Industrial and Financial Reconstruction, the Government sanctioned the usual two concessions. Therefore, as rightly contended by the respondents in this case once the statutory notification is issued, it is binding on the dealer and if at all, they like to avail of the concession, once granted at a later date convenient to them it cannot be sustained. Further the Government have not given any concessions unconditi....
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....oner. Per contra, it is contended by the respondents that the appointment of a nominee on the board of the management and the assignment stipulated to the Government nominees are done by the Government usually to whoever seeks the concessions and according to them these conditions were stipulated only with a view to protect the interest of the Government funds sanctioned by way of deferment of sales tax. Assignments and powers given to the Government nominees are only in the interest of the mills. It is their categoric contention that in order to avert further loss and closure of the mills, these steps were taken by the Government. Further, according to them, if the mill is allowed to run according to their own whims and fancies further closures of the mills will be imminent and in such case, all the steps taken by the Government for reviving the mills will be in vain. These concessions are granted in the interest of the workers,who are thrown out of employment and the very purpose of the sanction of concessions will not serve any useful purpose if the mills are again closed due to mismanagement. It is significant to note that about 400 workers who were displaced have been re-emplo....