TaxTMI 
TaxTMI 
2005 (11) TMI 250
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....rned by the State Financial Corporations Act, 1951 (for short "the Act")? 3. To appreciate the question, it would be necessary to state the facts giving rise to the present appeal, which are in brief, as follows: 4. The first respondent, formerly known as "The State Industrial Investment Corporation of Maharashtra Limited" (SIICOM), is a company established under the provisions of the Indian Companies Act, 1956, by the Government of Maharashtra in the year 1966, with 100 per cent shares being owned by the State Government, with an object of development of industries and financing the industrial undertakings in the State of Maharashtra. 5. The appellant-company mainly engaged in the transport business, approached the first respondent to get a loan for setting up a unit to manufacture grain based alcohol with installed capacity of 5000 Kilo Litres annually. The appellant was sanctioned a term loan of Rs. 90 lakhs in August 1994 in consortium with IREDA (Rs. 65 lakhs) and Oriental Bank of Commerce (Rs. 35 lakhs). Commercial production of the appellant's unit which was scheduled to begin in April 1995 could commence only in July 1996. On account of such delay of over one year in com....
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....t") and took the actual possession thereof on 23rd of October, 2001. 7. In order to recover the arrears, it was decided to put the mortgaged property to auction. The advertisement for sale of the property was published on 23rd of November, 2001 in response to which the only offer of Rs. 261 lakhs was received which was rejected on the ground that the offer for purchase was below the disposal value estimated by the Government Approved Valuer. Soon thereafter, the appellant approached the first respondent in January, 2002 for One Time Settlement (OTS). The proposal put forth by the appellant was accepted by the first respondent vide its letter dated 6th February, 2002 for OTS at Rs. 95 lakhs. The appellant issued a cheque of Rs. 20 lakhs towards OTS which was dishonoured on presentation. However, the said amount of Rs. 20 lakhs was subsequently paid by the appellant-company. The balance sum of Rs. 75 lakhs which was payable by the appellant on or before the 28th of February, 2002, as per the terms of the OTS, remained unpaid. To clear the balance payment, the last date for payment of the said amount of Rs. 75 lakhs was extended thrice by the first respondent, the last one being the ....
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.... seeking, inter alia, stay of the auction proceedings for sale of the unit by the first respondent. The High Court by way of interim relief, stayed the proceedings subject to the appellant's depositing a sum of Rs. 50 lakhs on or before 21st of March, 2003, failing which the stay was to stand vacated automatically without any further reference to the Court. The appellant could deposit only half of the amount ordered by the High Court and thus failed to comply with the direction. As the compliance with the order of the High Court was a condition precedent to the interim order, the stay stood vacated automatically. After filing of the writ petition, the appellant filed an additional affidavit before the High Court submitting that the provisions of section 29 of the Act were not applicable to the first respondent as it ceases to be a financial corporation after the reduction of shares of the Government of Maharashtra to 49 per cent only. 10. The High Court dismissed the writ petition holding that the first respondent was a financial corporation and it had been notified as such by the Central Government in exercise of its powers under section 46 of the Act. It was further held that re....
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....e State Government concerned. (2) Any notification issued under sub-section (1) may suspend the operation of any enactment applicable to any such institution immediately before the issue of the notification." 14. In the year 1986 a request was made to the Central Government by the Government of Maharashtra to extend the provisions of sections 27, 29, 30, 31, 32A to 32F, 41, 41A, 42 and 44 of the Act to the first respondent. The Central Government accepted the request of the Government of Maharashtra and the provisions of the afore-mentioned sections were extended to the first respondent vide notification No. F.No. 5(9)/86-IF-II dated 11th December, 1986. 15. Government of Maharashtra vide the Government Resolution bearing No. IDL/1093/(8928)/IND-8 dated 3rd October, 1994 decided: (a)to have a public participation in the capital structure of the first respondent in accordance with the new industrial policy framed by the Government of Maharashtra in the year 1983; (b)to hold only 49 per cent of the share capital by the Government; (c)to give by private placement 26 per cent of the capital to the selected financial institutions and banks; (d)to offer 2% capital out of the said ....
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....ct, has made the provisions of section 32G of the Act, applicable to the first respondent vide notification dated 16th of September, 2003. This also shows that Respondent No. 1 is being treated by the State of Maharashtra as well as Central Government as the financial Corporation within the meaning of the Act. 18. The principal contention advanced by Mr. Ashok A. Desai, the learned senior counsel appearing on behalf of the appellant, is that consequent to the reduction of stakes of the Government of Maharashtra in the first respondent and consequent to the change in its nomenclature, the first respondent had ceased to have the status of a State Financial Corporation under the Act. We are unable to accept this contention. 19. In the facts and circumstances enumerated herein-above, it is crystal clear that the first respondent was originally established as, and even as of date continues to be, a company established by the Government of Maharashtra. It may be mentioned that the State of Maharashtra being the single largest shareholder has retained the overall control over the management of the first respondent by retaining the right to nominate its Directors by virtue of the Amended....