GUJARAT STATE TEXTILE CORPORATION LIMITED Vs. NEW JEHANGIR VAKIL MILLS COMPANY LIMITED BHAVNAGAR

JUDGEMENT

(1.) * * * *

(2.) . The learned Senior Standing Counsel for the Central Government raised a preliminary objection against the consideration of the proposed scheme on the ground that once the Court 6rants permission under sec. 18FA of the Industries (Development and Regulation) Act to takeovcr the management or control of the sick unit it is precluded from entertaining an application under sec. 391 of the Companies Act 1956 relating to that Unit. In order to understand the submission made at the Bar it is necessary to examine a few provisions of the Act.

(3.) . The preamble of the Act shows that it was enacted to provide for the development and regulation of certain industries. Section 15 empowers the Central Government to cause investigation to be made in respect of any scheduled industry or industrial undertaking If after such investigation the Central Government is satisfied that action under sec. 16 is desirable it may issue directions to the concerned industrial undertaking for all or any of the purposes set out in clauses (a) to (d) of sub-section (1) thereof. If the industrial undertaking fails to comply with such directions of if an undertaking respect whereof an investigation is made under sec. 15 is in the opinion of the Central Government managed in a manner highly detrimental to the scheduled industry or to public interest sec. 18-A enables the Central Government to authorise any person or body of persons to take over the management of the undertaking. Section 18-AA confers powers on the Central Government to take over an industrial undertaking without investigation under certain circumstances. These provisions relate to industrial undertakings which are not being wound up. However where a Company owning an industrial undertaking is being wound up by or under the supervision of the High Court and the business of such Company is not being continued sec. 15-A empowers the Central Government to make an application to the High Court for permission to make or cause to be made an Investigation into the possibility of running or restarting the industrial undertaking. Sub-section (2) provides that where such an application is made the High Court shall grant the permission sought. Sec. 18FA next provides that if the Central Government is of opinion that such possibility exists and that the concerned industrial undertakens should be run or restarted it may make an application to the High Court for permission to appoint any person or body of persons to take over the management of such undertaking According to sub-section (2) of that section when such an application is made the High Court shall make an order empowering the Central Government to authorise any person or body of persons to take over the management of the concerned industrial undertaking for a period not exceeding five years in the first instance. Section 18-FC confers power on the Central Government to call for report on the affairs and working of a managed company. Sub-section (2) of sec. 18FD empowers the Central Government to prepare a scheme for the reconstruction of the Company owning the industrial undertaking.