Adarsh Kumar Goel, J. - (1.) THIS petition has been filed by the State of Haryana to quash order passed by the Board of Industrial and Financial Reconstruction (BIFR) dated July 5, 2001, annexure P3 and order passed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) dated February 12, 2008 annexure P22.
(2.) IN the course of hearing, learned Counsel for the State, in view of objection raised on behalf of respondent No. 3 that there was no specific prayer to challenge order dated September 18, 2006, annexure P14, dismissing the appeal of the State against the order of BIFR dated July 5, 2001 and order dated December 5, 2006, annexure P15, made a prayer for setting aside the said orders also. Facts set out in the petition are that respondent No. 3 -company was declared sick under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) vide order dated June 28, 1999, which was followed by Draft Rehabilitation Scheme dated April 11, 2001. The Scheme was circulated to all concerned including the petitioner. The petitioner by letter dated June 21 2001 annexure P2 raised objections to grant of concessions. It was submitted that concessions/reliefs could be considered only if the same were consistent with the policy of the State subject to approval of the Steering Committee. The policy was annexed to the said objections. However, the BIFR vide impugned order dated July 5, 2001, annexure P3 sanctioned the Scheme under Section 18(4) of the SICA. With regard to the concessions to be granted by the petitioner -State, following provision was incorporated:
(3.) 5. State Government/other agencies (i) To declare the company as a relief undertaking and grant all reliefs and concessions applicable to a sick industrial unit. (ii) To allow the company to utilize the Sales Tax Deferment Loan Scheme to its fullest without imposing any time -limit. (iii) To exempt HTL from applicability of sales tax instead of deferment scheme from April 1, 1996 onwards when the DOT/MTNL started seeking tender based on composite price. (iv) To waive minimum demand charges and electricity duty outstanding as on cut -off dale as well as payable during the rehabilitation period (v) To exempt the unit from power cuts. 4. An appeal was filed against the said order by the petitioner, which was dismissed vide order dated September 18, 2006, annexure P14, as barred by limitation and also for non -prosecution. Application for recall of the said order was also dismissed vide order dated December 5, 2006, annexure P15. Before filing the said appeal, the petitioner -State wrote a letter to the BIFR dated October 1, 2002 raising objections to the Scheme. The BIFR, however, issued and reiterated the show -cause notice proposing to take action under Section 33 of the SICA for not implementing the Scheme. The petitioner -State vide letter dated March 31, 2003, annexure P8 stated that the matter was to be considered by the Steering Committee and the Steering Committee vide its order dated August 31, 2003, annexure P10, concluded that the relief contemplated in the Scheme was not permissible. The conclusions of the Steering Committee were as under: (a) that as per the recommendations of Excise and Taxation Department, reliefs and concession relating to sales tax benefits as envisaged in the sanctioned rehabilitation scheme are of non -implementable in nature. (b) that the company was sanctioned sales tax deferment benefit to the tune of Rs. 3,103.65 lacs for nine years with effect from May 7, 1993 to May 6, 2002. It availed tax concession by way of deferment of payment of tax to the tune of Rs. 20,75,73,628 from May 7, 1993 to September 29, 2000 under rule 28A. Thereafter, company exercised its option under rule 28C and availed Rs. 65,30,521 from September 30, 2000 to October 16, 2001 as a new unit despite the fact that company had been declared sick by BIFR on June 28, 1999 and its rehabilitation proposal was under consideration with BIFR. Committee further observed that the party has concealed the above facts and not come before the BIFR with clean hands. (c) as the sanctioned scheme only includes sales tax deferment benefit up to 2002 (annexure V of the Scheme) which was already in operation from May 7, 1993 to February 6, 2002 as a new unit for the period of nine years as such demand/direction for unlimited period is not in conformity with the scheme. As such the State Government is a secured creditor for the interest -free loan granted in lieu of sales tax deferment. Therefore, the outstanding amount of Interest Free Loan (IFL) in lieu of sales tax deferment availed by the company is Rs. 14,02,92,647. Principal as on May 31, 2003 and Rs. 6,48,94,682 interest as on March 31, 2003 is recoverable. (d) that the changes made in the Central Sales Tax Act and rate notified under the VAT Act has resorted the position regarding applicability of rate of tax on the sale (intra -State as well as inter -State) as it existed before unbundling of Department of telecommunication. Therefore, request of the company may be rejected. In view of the above facts, M/s. Haryana Telecom Limited, Village and PO Kheri Sadh, District Rohtak was not found eligible for grant of reliefs/concessions as a sick unit by the Committee and therefore, it was decided by the Committee to reject their case and the honourable BIFR may be informed accordingly again with the request to withdraw the show -cause notice under Section 33 of the SICA to Principal Secretary, Industries and also advise the company to clear their outstanding sales tax dues immediately.;