TaxTMI 
TaxTMI 
2026 (5) TMI 1105
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.... to be noticed: i. The appellant is a Public Limited Company engaged in the business of manufacture and sale of fertilizers and other related products. The net worth of the appellant company turned negative in the financial year ending on 30.09.2002. ii. The appellant filed a reference under provision of Sick Industrial Company, Special Provisions Act, 1985 (hereinafter referred to as "SICA"), which was registered as Case No. 238/2003. Appellant was declared a SIC Industrial Company by Board for Industrial and Financial Reconstruction ("BIFR") by order dated 20.07.2005. Draft Rehabilitation Scheme ("DRS") was prepared and circulated to all parties including Government of Orissa. iii. BIFR heard the objection of DRS on 15.05.2008. In the said hearing, representative of Government of Orissa submitted that there is no policy to provide any relief to SIC Industrial Company. BIFR thereafter heard the matter on 02.09.2008 and sanctioned the scheme. Paragraph 20 of the scheme which dealt with reliefs and concessions envisaged exemption from VAT/Sale Tax and Entry Tax. iv. Appellant sent a representation to the Government of Orissa for grant of exemption....
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....dicating authority heard the parties and by the impugned order dated 17.01.2023 rejected the C.P.342/2017, aggrieved by which order, this appeal has been filed. x. Adjudicating authority in the impugned order has framed 3 points for determination which are as follows: "The points for determination are: 1) Whether the petitioner is entitled for tax exemption even after the disposal of M.A.No.442 of 2011 on 16.08.2011? 2) Whether the Scheme SS-08 sanctioned by BIFR without the consents of the respondents is binding upon the respondents? 3) Whether the petitioner is entitled for tax exemption under the scheme SS-08 when it collected the Taxes? xi. On Point No. 1, adjudicating authority held that appellant has no right to prefer the petition after the disposal of MA 442/2011 on 16.08.2011. On Point No. 2 it was held that during hearing before the BIFR on 15.05.2008, the representative of the Government of Orissa submitted that Government of Orissa has no policy to provide any relief to sick companies. It was held that any scheme sanctioned without the consent of the entities will not be binding. The point was answered against the ap....
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....there must be continuing scheme is without any basis. The de-registration of the company from purview of SICA shall not result in non-implementation of the terms of the sanctioned scheme. Clause 20(i)(b) of SS-08 is clear and unequivocal. 5. Learned counsel for the State of Orissa refuting the submissions of the counsel for the appellant has referred to in his reply filed in the appeal where various objections have been raised to the company petition filed by the appellant. It is submitted that MA No. 442/2011 having been disposed of by BIFR on 16.08.2011 de-registering the appellant from SIC Industries and not granting any prayer made by the appellant for directing State Government to grant exemption, the said order has become final. No appeal was filed against the order dated 16.08.2011 by the appellant. Its right to claim any direction against the state stood closed and become final. C.P.342/2017 filed by the appellant before NCLT was not maintainable. The sanctioned scheme having lapsed since 2011, the said sanctioned scheme cannot be treated to be approved resolution plan under IBC. The company petition before the NCLT was not maintainable. The appellant by virtue of Notifi....
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.... from various other agencies concerned in addition to the above, the scheme envisages the following reliefs and concessions from various other concerned agencies i.e. Central Government and State Governments' and Statutory Authorities as given below: (ii) From the State Govt. of Orissa Sales Tax (c) To exempt the company from payment of VAT/ Sales Tax payable for a period of seven years from the cut-off date. (d) To exempt the company from payment of entry tax on company's raw material imports." 9. After approval of the scheme, the net worth of the company turned positive on 31.03.2011 and it filed MA No.442/2011 seeking de-registration from the purview of the SICA. In the MA No.442/2011, appellant has made various prayers. The prayers made by the appellant in MA NO.442/2011 has been noticed by the BIFR in its proceeding dated 16.08.2011. Copy of the proceeding dated 16.08.2011 of the BIFR is filed as Annexure A-7 to the appeal. The prayer made in MA No.442/2011 are noticed in paragraph 12 of the proceedings which are as follows: "a. Deregister the case of the applicant company. b. Issue direction to the State Govt. of Orrisa ....
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....d not file any appeal against the order dated 16.08.2011 within 180 days which is period for limitation for filing an appeal. The order dated 16.08.2011 passed by the BIFR became final against the appellant having not been appealed, BIFR itself having not granted the relief claimed by the appellant in MA No.442/2011 to issue any direction to the State of Orissa to implement unimplemented provisions of the sanctioned scheme, it was not opened for the appellant to initiate various proceedings and contend that the scheme should be implemented. In any view of the matter, the scheme was sanctioned from 2007-14. 7 years period also came to an end in 2014. Appellant also filed subsequently MA No.285/2014 before the BIFR praying for further directions which remain pending and no order has been passed. BIFR having not granted any relief to the appellant, we are of the view that the order dated 16.08.2011 became final and Question No. (I) is answered as follows: (I) The appellant was not entitled to claim tax exemption after disposal of MA 442/2011 on 16.08.2011. Question No. (II): 13. Revised DRS was circulated on 03.03.2008, which has been noticed by the BIFR in its proceedi....
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....S came for consideration before the BIFR on 15.05.2008. The proceeding that BIFR dated 15.05.2008 has been brought on the record and for objections on DRS, the hearing was fixed for 15.05.2008. In paragraph 7 of the proceeding, following has been noticed. "7. Based on the revival scheme submitted by SBI (OA), the Board prepared a Draft Rehabilitation Scheme (DRS) for the revival of the company which was circulated to all concerned for consent as required u/s. 19(2) read with Section 19(1) of SICA. As per the DRS net worth is expected to become positive by the end of FY 2008-09 and the accumulated losses would be wiped out in the FY 2015-16, denoting that the scheme is financially viable. Short particulars of the said scheme were directed to be published in two local dailies, inviting objections/suggestions with regard to the DRS and the Board fixed a hearing on 15.5.2008 to hear objections/suggestions." 15. Paragraph 8 of the proceeding dealt with the hearing on 15.05.2008. In Paragraph 8.2, the submission of the representative of the Government of Orissa has been noticed in following words: "8.2 The representative of the GOO submitted that the GOO has no polic....
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....strial Company which is noticed in paragraph 8.2 as extracted above. 15.05.2008 was the date for hearing the objection on the DRS and when the state representative placed before the BIFR that Government of Orissa has no policy to provide any relief to SIC Industrial Company, we are not persuaded to accept the submission of the appellant that the said statement cannot be treated to be denial of the consent. 20. Learned counsel for the appellant has placed much reliance on Section 19(2) of the SICA to contend that since no consent was received within a period of 60 days or further period, it shall be deemed that the consent has been given. The question of deemed consent arise when there is no communication from the state regarding consent. In the proceeding which were proceeding for hearing objection on the revised DRS on behalf of State of Orissa categorically stated that there is no policy of giving any relief to the SIC Industrial Company by the Government of Orissa. The above submission was clear denial of consent from the State of Orissa. The submission of the appellant of deemed consent as contemplated in Section 19(2) of the SICA shall not come into play in facts of the pre....
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....document or application/communication to show that it had made a request for extension of time prior to the hearing conducted by the BIFR on July 4, 2007, when the impugned order was passed. Thus, according to section 19(2) of the SICA it will be deemed that the consent had been given by the petitioner. Since section 19(2) of the SICA was a deeming provision it was immaterial for the BIFR to record any finding in the impugned order regarding "deemed consent". Certain reliefs and concessions were proposed vide clauses (ii), (iv)(v) and (vi) of paragraph 9.3 of DRS qua the petitioner and the same were deleted by the BIFR even without filing any objections/suggestions by the petitioner. Direction regarding restoration of power supply was imperative to enable rehabilitation of respondent No. 3 company. Respondent No. 3 company was bound by the sanctioned scheme with regard to the payments of dues of the petitioner and the petitioner was at liberty to bring to the notice of the BIFR any failure on the part of respondent No. 3 company in case schedule was not adhered to. In the light of the above observations AAIFR dismissed the appeal." 22. From the facts of the above case, it is cle....
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....18(8) states that the scheme sanctioned by the BIFR will be binding on the sick company, its creditors, employees, guarantors, etc. Indeed, these are the only entities which the BIFR can unilaterally bind. The scope of application of section 19, however, is different. In the words of the section, as regards "the Central Government, a State Government, any scheduled bank or other bank, a public financial institution or State level institution or any institution or other authority", the BIFR does not have the authority to bind these entities by its orders and thus modify the obligations and rights owed between the sick company and these entities. However, the scheme for rehabilitation may-in the interests of ensuring that the sick company returns to a profitable state as soon as possible- envisage "financial assistance by way of loans, advances or guarantees or relief's or concessions or sacrifices from" any of the above entities. These provisions in the DRS will not be binding on these entities, unless their consent is obtained. Thus, these entities-the Railways in this case-may determine whether the concessions envisaged in the DRS will be provided by them and either to consent....
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.....05.2023 which was challenged in the Writ Petition before the High Court dated 14.09.2014 was delivered. The above judgment also clearly noticed that DRS was circulated to the Railways which did not file any objection which has been noticed in paragraph 11 of the judgment. In the above context Delhi High Court held that under Section 19(2) scheme is binding on the Railway. The above judgment is thus also clearly distinguishable in the facts of the present case. We answer Question No. (II) in following manner: (II) Sanctioned scheme SS-08 sanctioned by BIFR on 02.09.2009 shall not be deemed to be consented under Section 19(2) of the SICA 1985. Question No. (III) 25. We having already held that to the sanctioned scheme no consent was given by State of Orissa to Clause 20 of the sanctioned scheme no grounds were made out to issue any direction to State of Orissa to grant the exemption from payment of Entry Tax till 2014. 26. Learned counsel for the appellant relying on the judgment of the Orissa High Court dated 07.12.2021 in Writ Petition No. 20338/2014 submitted that High Court has specifically directed that the dispute involved in the present case be adjudicated b....
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....e with law." 27. The above order only indicates that NCLT is to decide the application in accordance with law. High Court has not decided any issue finally in its judgment dated 07.12.2021, but after noticing the sequence of the event has directed the NCLT to decide in accordance with law, thus, submission of the appellant cannot be accepted that judgment of the High Court dated 07.12.2021 is a decision which decides any issue including the maintainability of the application before the NCLT. When the NCLT was to decide in accordance with law, it was free to take decision in accordance with law. 28. At this stage, we need to notice one more aspect of the matter as has been noticed by the adjudicating authority also in the impugned order. Reliance was placed by the appellant on Central Government Notification dated 24.05.2017, after IBC was enforced, the provisions of SICA Act, 1985 was repealed. Reliance has been placed on Notification dated 24.05.2017, by which Notification, 2 provisos were added which has been noticed in paragraph 9 of the impugned order which are as follows: "9..."Provided also that any scheme sanctioned under sub section (4) or any scheme under im....
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....he judgment passed by the appellate Tribunal on the ground that the appeal itself was not maintainable, we set aside the judgment insofar as it purports to deal with the limitation aspect of the case and the merits including the declaration of the Scheme as being illegal. 3) Insofar as Civil Appeal No. 8247 of 2018 and Civil Appeal D. No. 33241/2018 are concerned, it is clear that on the facts in these cases, originally, the appellants had approached the High Court of Delhi in writ petitions. The High Court of Delhi, by judgment dated 22.02.2018 (as modified by order dated 17.04.2018) and 14.09.2017, respectively, ordered the parties to avail of the alternative remedy of filing an appeal before the NCLAT in view of the Notification dated 24.05.2017 which was done by the appellants in these appeals. 4) As the impugned judgment dated 28.05.2018 has set aside this Notification, and which has been upheld by us, the NCLAT, in both these cases, has dismissed the two appeals so filed, following the main judgment of 28.05.2018. This being the case, we revive the two writ petitions that had been before the High Court of Delhi in both the appeals before us with liberty to t....
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....s Spartek Ceramics India Ltd. is a law declared by the Hon'ble Supreme Court, where Hon'ble Supreme Court has specifically approved the view of this Appellate Tribunal that Notification dated 24.05.2017 travels beyond the scope of removal of difficulties provisions. We have already extracted the provisions of Section 242 of the IB Code in preceding paragraphs of this judgment, where as per sub-section (1) of Section 242, Central Government is empowered to issue an order, if any difficulty arises in giving effect to provisions of this Code. The power under Section 242 is thus confine to the powers of Central Government in removing difficulties arising in giving effect to the provisions of the IB Code. The powers cannot be exercised by Central Government to remove any difficulty regarding review or monitoring of scheme sanctioned under Sick Industrial Companies (Special Provisions) Act, 1985 and the repeal of Sick Industrial Companies (Special Provisions) Act, 1985, which is the specific reason mentioned in the Notification dated 24.05.2017, noticing the difficulties, which has arisen for which the order has been issued. It is useful to note following part of the Notification, which ....