N.K.Mitra, C. J. - (1.) Petitioner is a company registered under the Companies Act, 1956, with having its registered office at 37-38 Community Centre, East of Kailash, New Delhi. The present petition has been instituted under Article 226 of the Constitution for the relief of issuance of a writ, order or direction in the nature of certiorari quashing the recovery certificate dated 10.11.97, as well as the consequential letter dated 20.11.97 from the Collector, Kanpur Nagar to the Collector. New Delhi, Tees Hazari Court, requesting the latter to recover the amount detailed at the margin of the letter from the petitioner as arrears of land revenue and credit it to the treasury of his district under intimation to the former and the notice dated 8.10.98 issued from the Court of Sub-Divisional Officer of the concerned area. New Delhi to the petitioner directing the latter to deposit a sum of Rs. 2,04, 48,000 in the account of the U. P. State Industrial Development Corporation. Kanpur, by 14.10.98 annexed as Annexures-1, 2 and 3 respectively.
(2.) The minimal facts necessary to shed light on the controversy involved herein may be set out and they are that the U. P. State Industrial Development Corporation (In short the 'Corporation') having obtained a letter of intent from the Government of India to establish a plant for manufacture of 2,000 tons per annum of polyster film, decided that the aforesaid letter of intent be used and implemented in collaboration with the petitioner-company and for this purpose, the Corporation and the petitioner-company, both entered into a joint venture agreement on 27.8.1981 to promote a company with the name and style of Flowmore Polyester Ltd. Pursuant to the said agreement, the Flowmore Polyster Ltd. Company was formed and registered under and in accordance with the provisions of the Companies Act, 1956. The authorised capital of the Company was Rs. 4 crores out of which initial 10% was to be subscribed by the Corporation, 30% by the petitioner and 60% by the Public. Clause 7 (d) of the principal agreement envisaged that the petitioner would buy back a given percentage of the share-holding of the Corporation in the Flowmore Polyester Ltd. within the specified time schedule at the price to be calculated at the paid-up value of the shares plus 15% interest from the date of subscription till the date of purchase minus dividend, if any. By means of the Supplementary Agreement dated 3.8.83, the percentage of shares of the Corporation to be purchased by the petitioner was enhanced to some extent but by Supplementary Agreement No. 2 dated 19.2.87, the petitioner was required to purchase the "entire share-holding" of the Corporation in the Flowmore Polyster Ltd. either directly or through its Associates at its own responsibility. The Agreement was again altered in certain respects pursuant to the Supplementary Agreement No. 3 clause 7 (d) of the agreement as it stood amended and substituted by Supplementary Agreement No. 3 envisaged that "the petitioner would be bound to purchase, on being so required by the Corporation, the shareholding to the extent of Rs. 80 lacs of the Corporation held in Flowmore Polyester Ltd. either directly or through such of its Associates as it may nominate." The amended clause 7 (d) further visualised that the petitioner would have to submit proposal to the Corporation for buying back the share-holding to the extent as agreed by the Corporation at least 90 days prior to the expiry of five years' period from the date of commencement of the commercial production, i.e., 15.3.89. According to the time schedule mentioned in the amended clause 7 (d), the petitioner were to purchase one-third of the shareholding of the Corporation held in Flowmore Polyster Ltd. within five years from the date of commencement of the commercial production, i.e., 15.3.89 and one-third within six years from the said date and the balance within 7 years from the date of commencement of the production. It is the case of the Corporation that the petitioner failed to buy back the eight lacs equity shares of the face value of Rs. 10 each share held by the Corporation in the Flowmore Polyester Ltd. as per clause 7 (d) of the agreement and the amount of Rs. 204.48 lacs sought to be recovered from the petitioner represents the price of the eight lacs equity shares of the Corporation in Flowmore Polyester Ltd. plus interest calculated till 31.12.97 @ 15% per annum from the date of subscription which was recoverable as arrears of land revenue as per agreement between the parties. The case of the petitioner, on the other hand, is that the Flowmore Polyester Ltd. ran into financial quicksand and degenerated into a sick Company sometime in 1991 and the matter was referred to the Board of Industrial & Financial Reconstruction (In short the 'B.I.F.R.') that declared the Company sick and commenced the process of rehabilitation and ultimately sanctioned a scheme of rehabilitation by merger/amalgamation of the sick Company with M/s. S. R. P. Ltd. (in short the Transferee company) which is said to be one of the premier manufacturers of Nylon tyre cord in the country and, in the circumstances, the petitioner stood discharged of its obligation under the contract by doctrine of frustration.
(3.) We have heard Sri V.B. Upadhaya, learned Senior Advocate assisted by Sri Anurag Khanna for the petitioner and Sri K. N. Singh, learned Senior Advocate assisted by Sri S. P. Singh for the respondent-Corporation, Sri S.P. Gupta, Senior Advocate too had, at the initial stage of hearing entered appearance and advanced his submissions for the petitioner. The questions that beg consideration may, for the sake of convenience, be formulated as under : 1. Whether the Transferor Company lost its identity and corporate character after its amalgamation with the Transferee Company under the scheme sanctioned by the BIFR? 2. Whether the petitioner stood discharged of its obligation under the agreement to buy back the share-holding of the Corporation upon the Transferor Company being amalgamated with the Transferee Company? 3. Whether the arbitration clause 32 of the agreement continued to be operative even after the amalgamation of the Transferor Company with the Transferree Company?;