- (1.) AMBIT and coverage of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereafter the SICA) do not extend to a foreign company carrying on business in this country, is the point vehemently argued by learned counsel for each of the petitioners and some of the respondents herein while assailing the order passed by the Board for Industrial and Financial Reconstruction (hereafter the BIFR) sanctioning a scheme for revival of Baranagore Jute Company PLC (hereafter BJC), a company incorporated in England under the laws of that country and having its registered office in London. Per contra, each of the learned counsel for those respondents who have urged the Court not to entertain the writ petitions have strongly contended that on proper interpretation of SICA, it ought to be held that the ambit and coverage of SICA extends to embrace a foreign company, a fortiorari, BJC.
(2.) THE writ proceedings presently under consideration have been prefaced by series of litigation in this Court, starting with an application for winding up of BJC filed in October 1987. One particular order (dated March 3, 2004) passed by a Division Bench was carried in appeal to the Supreme Court. THE decision dated May 24, 2006 in Radheshyam Ajitsaria v. Bengal Chatkal Mazdoor Union reported in (2006) 11 SCC 771 narrates the history of proceedings initiated under the Companies Act. This is one reason why I refrain from discussing the antecedent facts in substantial detail here. Suffice it to note that in pursuance of an order dated November 18, 2004 passed by a Division Bench of this Court, a Committee of Management has been functioning as on date the writ petitions were presented. It is, however, noteworthy that a reference petition under Section 15 of SICA was filed allegedly by the management of BJC on the basis of its annual accounts as on October 31, 2004, which was registered as BIFR Case No. 294 of 2004 on September 16, 2004. Alleging that the BIFR was not proceeding with adjudication of the reference, a writ petition (W.P. No. 221 of 2006) was presented before this Court sometime on February 16, 2006 by one Ridh Karan Rakecha (claiming to be a Director of BJC) and BJC as joint petitioners. THE BIFR was the sole respondent in the writ petition. By an order dated February 20, 2006, a learned Judge of this Court was pleased to order as follows : "In this application the grievance of the petitioners is that they have been registered with the BIFR under Section 15 of SICA as early as on 16th September, 2004. But since then the BIFR is not proceeding with the matter. Under the circumstances, I direct the BIFR to dispose of the entire matter including framing of a scheme within a period of Eighteen Months from the date of communication of this order. All parties are to act on a signed copy of the minutes of this order on the usual undertakings." After communication of the aforesaid order, the BIFR set itself in motion and conducted regular hearing. BJC was declared a sick industrial company in terms of Section 3(1)(o) of SICA in the hearing held on June 7, 2006 and the Industrial Development Bank of India (hereafter the IDBI) was appointed as Operating Agency under Section 17(3) thereof to examine viability of formulating a rehabilitation scheme, if feasible. Based on the revival scheme submitted by the IDBI vide its letter dated June 30, 2008, the BIFR prepared a draft rehabilitation scheme (hereafter the DRS) for revival of BJC which was circulated to all concerned. Further hearing had been fixed on February 19, 2009. On that date the BIFR observed that a letter dated February 19, 2009 had been received from M/s. L.P. Manot, Advocates (hereafter LPMC) wherein the reference itself was challenged on the ground that it is the outcome of gross suppression and misrepresentation of material facts and that the entire proceedings had been initiated in wilful and gross violation of orders passed by the Hon"ble Court without having any locus standi, jurisdiction and authority. However, since the relevant documents had not been enclosed with the letter under reference, the BIFR observed that it would look into the issues stated after the relevant documents are submitted. Having considered the submissions and the materials on record, the BIFR issued several directions for compliance by all concerned.
(3.) THE relevant directions are quoted hereunder : "i) THE company will file its rejoinder on the written submissions filed by LPMC within 15 days to the Board and IDBI (OA). ii)**** iii)**** iv)**** v) OA (IDBI) will submit the comments to the Board on the application of LPMC and rejoinder being filed by the company on the written submissions of LPMC within further 15 days. vi) THE next hearing of the case will be on 6.4.2009." THE hearing, as directed earlier, was taken up on April 6, 2009. While passing several directions, July 16, 2009 was fixed as the next date of hearing. I consider it pertinent to quote below one paragraph from the order of the BIFR dated April 6, 2009. It reads : "4.17 THE representative of IDBI (OA) submitted that in the last hearing, the Bench had directed that OA (IDBI) would submit its comments to the Board on the submissions of LPMC, and the rejoinder filed by the company on the written submissions of LPMC. Continuing he submitted that the company had filed its rejoinder on the submissions of LHMC. He further submitted that it was true that the company was incorporated in England with its Head office there and its only unit in India. But the company had been registered in India u/s 591(2) of Indian Companies Act 1956 vide Registration No.F-149 issued by the Registrar of Companies, Delhi. THE company had also denied that it was in liquidation. THE winding up orders were stayed vide order dated 14.9.2004 by Hon"ble HCC. Subsequently, Division Bench of Hon"ble HCC vide order dated 18.11.2004 set-aside the winding up orders and directed company to file application for stay of the winding up proceedings to the Company Judge. THE Company Judge had granted stay on the winding up. Hon"ble Supreme Court vide order dated 24.5.2006 concluded that winding up orders had been permanently stayed. With respect to the LHMC"s objections that the company had un-secured creditors above Rs.10.00 crores and petitioner has outstanding principal dues of Rs. 155.31 lakhs, the representative of IDBI (OA) submitted that LHMC had filed its claim before the Hon"ble HCC and Company Judge vide its order dated 5.8.2008 had ordered that the claim of the petitioner was relegated to a suit and thus the petition was dismissed. At this juncture, the ld advocate appearing on behalf of the company submitted that Hon"ble SCI in case of Rishab Agro had observed that even if a company was under liquidation, the Board had jurisdiction to explore the possibility of its revival." On the next date of hearing i.e. July 16, 2009, the BIFR considered the objection contained in the letter of LPMC and this is what it observed : "5.1 In the hearing held to-day, the representative of IDBI (OA) submitted that the Board vide order dated 2.12.2008 had circulated the DRS with the direction that mandatory hearing of the case would be held on 19.2.2009. Just one day before the hearing M/s. L.P. Manot and Co. (LPMC) had stated that the reference of the company had been filed in gross suppression and mis-representation of material facts and suppression of facts of serveral orders passed by the Hon"ble Supreme Court of India and Hon"ble High Court of Kolkata since 1987. The ld. Advocate of LPMC had also stated that the company was registered in London, as such the revival scheme cannot be considered by the Board. However, in the hearing held on 6.4.2009, the issue was considered and Board had directed that although the company was incorporated in India, with its Head Office there, but the company had been registered in India u/s 591(2) of Indian Companies, Delhi" Several other directions were passed and hearing was adjourned till November 4, 2009.;