F. I. Rebello, J. - (1.)The Reference for our consideration is :-
"Whether an Industrial Company which has made a reference under Section 15 of Sick Industrial Companies Act, can during the pendency of such reference, apply to this Court for sanctioning a scheme of arrangement or compromise with its creditors and shareholders and whether this Court can take cognizance of such an application during the pendency of the reference and pass necessary orders thereon as are permissible in law.

(2.)The Company, Ashok Organic Industries Limited made a reference to the Board of Industrial Finance and Reconstruction (BIFR) under the provisions of the Sick Industrial Companies (Special Provision) Act, 1985, hereinafter referred to as "SICA". They were informed by letter dated 15th May, 2002 that the case was registered under No.195/02.
During the pendency of these proceedings before BIFR, the Company resolved on 9th December, 2005 that subject to the sanction of the appropriate Court as may be required under law and subject to such permission of such Authority as may be necessary, a scheme of arrangement between Ashok Organic Industries Ltd. and its shareholders and creditors and Mr. Pankaj Kadakia, Ashok Kadakia and Anil Kadakia in their dual capacity as promoters and guarantors be made on the broad basis as referred to in the scheme of arrangement. A petition under Section 391 and 394 of the Companies Act, 1956, hereinafter referred to as Companies Act was filed praying that the arrangement embodied in the Scheme be sanctioned with or without modification and to declare the same as binding on petitioner and its secured and unsecured creditors. The petition was presented on 9th January, 2006. On 20th October, 2005 in Company Application No.690 of 2005, directions were issued to convene a meeting of the equity shareholders, secured and unsecured creditors of the petitioner company for the purpose of considering the scheme. Pursuant to the meeting held on 12th December, 2005 the Chairman of the Committee submitted a report. The report indicated that the scheme was approved by the requisite majority in numbers of equity shareholders of the petitioner company representing more than 3/4th in value of equity shareholders present at the said meeting and voting. Similarly in so far as the secured creditors were concerned 80.05% of the total secured debtors voted in favour of the scheme of arrangement and one secured creditor voted against the scheme, who represented 19.95% of the secured debtors. The scheme, therefore, was approved by the requisite majority in number of secured creditors of the petitioner company having more than 3/4th of value of the secured debtors. Similarly, in so far as unsecured creditors are concerned 99.91% of the unsecured creditors voted in favour of the scheme of arrangement. The Regional Director filed an affidavit setting out that the Scheme is not prejudicial to the interest of the shareholders and unsecured and secured/ creditors.

Dena bank a secured creditor filed an affidavit on 24th March, 2006 opposing the scheme and at the same time raised a preliminary objection to the maintainability of the petition contending that as the company had invoked the jurisdiction of B.I.F.R. and B.I.F.R. had ordered a special investigative audit and the proceedings were pending the petition filed under Sections 391 and 394 of the Companies Act, 1956 is not maintainable.

(3.)A learned Judge heard Counsel for the parties who appeared. The attention of the learned single Judge was invited to the Judgments of co-ordinate Benches of this Court in National Organic Chemical Industries Limited and Ors. vs. N.O.C.I.L. Employees Union 2005 (126) Companies Cases 922, Sharp Industries Limited, (2006) 131 Company Cases, 535 (Bom.) and in Pharmaceutical Products of India Ltd. in re (2006) 131 Company 747 Cases 747, where co-ordinate Benches have taken a view that the provisions of SICA and the Companies Act, in the matter of sanction of a scheme for re-arrangement of the companies business by way of amalgamation, demerger or compromise were not inconsistent and consequently the Company Court inspite of proceedings pending before the B.I.F.R. under Section 22 of the S.I.C.A. and inspite of Section 32 of S.I.C.A. would have jurisdiction to grant sanction of the scheme under Sections 391 and 394 of the Companies Act, 1956. To hold that the provisions of the two Acts were not inconsistent, and the Company Court would have jurisdiction, the learned Judge noted that the provisions of Sections 15 to 19 of SICA, pursuant to which a company which has become sick can register itself with B.I.F.R., which is vested with the power under the provisions of the SICA, to make enquiry and provide for a scheme for rehabilitation of the company or make the company viable so that the business of the company can continue. The Court also noted that the provisions of Sections 391 to 394 of the Companies Act, 1956, also similarly provide for rearrangement of the company s business by way of amalgamation, demerger or compromise, which also has the very same purpose and object to revive and/or make the company more viable and efficient. The Court observed that the provisions of the Act though provide for different methods of doing so, they are not inconsistent with each other. The Court noted that the provisions of SICA operate in a slightly different sphere i.e. in a case where the net worth of the company has become negative, whereas the provisions of Sections 391 to 394 of the Companies Act have no such requirement as condition precedent and this provision can even operate in cases where the companies are doing well and seek to rearrange their business for the efficient management or better business prospects and thus seek to amalgamate or demerge business operations of the Company. This view of the learned Single Judge was followed in Sharp Industries Limited (supra) and Pharmaceutical Products of India Ltd. (supra).
The Referral Judge, in his unreported judgment in Company Petition No.108 of 2006 with Company Application No.690 of 2006 from which order this Reference arises was of the opinion that it was not possible to accept the submissions of Counsel for the company that both the Company Court and B.I.F.R. exercise concurrent jurisdiction. The Court observed that if such construction is upheld, there will 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 sub-section (4) of Section 20, BIFR alone shall have jurisdiction as regards sale of its assets till an order of winding up is passed by a Company Court and as such the provisions of SICA would prevail. The learned Judge quoted with and relied on the judgment of the Supreme Court in NGEF Ltd. vs. Chandra Developers (P) Ltd. (2005) 8 S.C.C. 219, which according to the learned Judge has taken a view that the provisions of SICA would prevail over the provisions of the Companies Act and consequently disagreed with the views taken in National Organic Chemicals Limited (supra), Sharp Industries Limited (supra) and Pharmaceutical Products of India Ltd. (supra). Consequently the learned Chief Justice was pleased to refer this matter for consideration by this Bench.