TaxTMI 
TaxTMI 
2017 (12) TMI 1271
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....ection 20(1) of the SICA Act and has directed that aforesaid opinion of the BIFR be forwarded to this Court for further action under the law. 2. Summary of record of proceedings of the hearing took place before the BIFR with the final opinion of the BIFR is placed before this Court. As recorded in the summary of the proceedings, after considering the reference filed by the company under Section 15(1) of the SICA Act, the BIFR was satisfied that the company had become Sick Industrial Company in terms of Section 3(1)(O) of the SICA Act and declared it as Sick company and formed the opinion that company would not be able to revive on its own and that it was necessary in public interest to take measures under Section 18 of the SICA Act. Accordingly, it appointed Industrial Development Bank of India (IDBI) as an operating agency under Section 17(C) of the SICA Act, to report on the viability of the company and formulate a rehabilitation scheme based on the companies proposals for its revival if it is found viable. 3. As recorded in summary, the BIFR had rendered its confirmed opinion on 11.03.2008 for winding up of the company and to forward its opinion to this Court for necessary act....
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....requested the Bench to consider the alternative measured, including change of management at this stage, barring winding up procedure. He added that Hon'ble AAIFR vide its order dt. 31.10.2011 in appeal No. 121/2008, against BIFR order dt. 11.3.2008 in this case remanded back the case to BIFR, observing that BIFR has not explored the alternative method of COM. 2.3.1 The Bench observed that the company had been with BIFR since 2001, and several opportunities were given to the company for submitting a fully tied-up DRS. Even at this stage, there is no fully tied-up DRS for the revival of the company. 2.3.2 The Bench further observed that Show Cause Notice for winding up was also published in the newspaper inviting applications from present promoters or a registered Workers Industrial Co-operative Society (WICS) or an outsider for the revival of the company. IDBI (OA) had confirmed that it had not received any draft rehabilitation proposal (DRP) for the revival of the company from any party. The Bench further observed that all efforts for revival of the company have thus failed in spite of ample time and opportunity having been given to all concerned. The provisions of SICA canno....
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....missioner and the company is ready and willing to commit for the settlement of the dues including the dues of the secured lenders and when there is a proposal to rehabilitate / revive the company, the Court would lean in favour of such attempts on the part of the company. It is further stated that since SICA Act is repealed, the BIFR does not exist and when Government of Gujarat has introduced scheme for rehabilitation of Sick Industrial Enterprise situated within the Gujarat state under which the application made by the company is pending consideration, the Court may not entertain the present petition. 6. Learned advocate Mr.Mitul Shelat appearing for respondent No.7 - Gujarat State Financial Corporation (GIFC) submitted that the company was given sufficient opportunities to come with viable scheme, however, it did not bother to respond to the various opportunities given to it by the BIFR and the operating agency (IDBI) filed its report stating that it had not received any draft rehabilitation proposal for revival of the company from any party and since all efforts for revival of the company failed, there was no option left with the BIFR but to form opinion for winding up of the ....
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....ecured creditors. However, such would not prevent this Court from considering the proposal of the company for rehabilitation under the Government Resolution. Mr.Pahwa submitted that the Government has decided to revive and give boost to the Sick Industries as such would generate employment and enhance the economy and, therefore, till the application made by the company under the Government scheme is processed and final decision is taken, the Court may defer making of winding up order. Mr.Pahwa submitted in response to the first scheme for rehabilitation vide Government notification dated 20.07.2016, the company made application which was entertained, however, before that application could be processed, the Government introduced modified scheme under resolution dated 11.09.2017 for reliefs and concessions to the Sick Industrial Enterprises and under this modified scheme also the company has sent its proposal and the company received communication dated 15.11.2017 from the office of the Commissioner of Industries asking for various informations which shows that the proposal of the company is under active consideration. Mr.Pahwa submitted that once the proposal from the company is acc....
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....of the company and all efforts for revival of the company failed. 12. The opinion of the BIFR was rendered in the year 2013 and till the Government introduced first rehabilitation scheme in the year 2016 for reliefs to the viable Sick Industrial Enterprises, the company has not made any attempt to settle the dues with the secured creditors and even the Government dues. Thus, it leisurely passed three years time. Now it wants that the Court may not proceed to make order for winding up as it has made proposal for reliefs and concessions under the Government scheme. It could not be disputed by learned advocate Mr.Pahwa that the company was closed from the year 2003 and there has been no operation / activities in the company for last 12 years. 13. As could be seen from the Government scheme for the reliefs and concessions to the viable Sick Industrial Enterprises, a unit of enterprise registered as Sick Enterprise will be required to make payment of principal outstanding dues within the time schedule of 6 months or 24 months as per the mode of payment selected with 10% down payment. At this stage, it is required to note that the final opportunity given by the BIFR also included depos....
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....s placed reliance upon a decision of a learned Single Judge of the Karnataka High Court in Karnataka State Industrial Investment and Development Corporation Ltd. vs. M/s Intermodel Transport Technology Systems for the proposition that despite the fact BIFR retains jurisdiction to get the assets of a sick company sold in terms of sub-section (4) of Section 20 of SICA; still the leave of the Company Court, therefore would be required. The said decision, however has been reversed by the Division Bench of the Karnataka High Court in BPL Limited, Bangalore vs. Intermodal Transport Technology Systems (Karanataka) Lit. holding that the company Court has no such jurisdiction. We generally accept the views of the Division Bench. 41. It is difficult to accept the submission of the learned counsel appearing on behalf of the Respondents that both the Company Court and BIFR exercise concurrent jurisdiction. If such a construction is upheld, there shall be chaos and confusion. A company declared to be sick in terms of the provisions of SICA, continues to be sick unless it is directed to be wound up. Till the company remains a sick company having regard to the provisions of subsection (4) of S....
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....d direct the sick industrial company not to dispose of its assets except with its assent. Section 32, as noticed hereinbefore, again contains a non-obstante clause. The scheme suggests that BIFR retains control over the assets of the company and in terms of the aforementioned provisions may either prevent any sale or permit any sale of the assets of the sick industrial company. Such a power in BIFR remains till a winding up order is passed by the High Court and a stage arrives at for the High Court for issuing orders for distribution of the sale proceeds. 49. Section 32 of SICA contains a non obstante clause stating that provisions thereof shall prevail notwithstanding anything inconsistent with the provisions of the said Act and of any rules or schemes made thereunder contained in any other law for the time being in force. It would bear repetition to state that in ordinary course although the Company Judge may have the jurisdiction to pass an interim order in exercise of its inherent jurisdiction or otherwise directing execution of a deed of sale in favour of an applicant by the Company sought to be wound up; but keeping in view the express provisions contained in sub-section (....