2002 (12) TMI 540 - HC - Companies Law

Summary

Issues involved:
1. Dispute regarding dues between a factory and various parties.
2. Legal actions taken by different parties to recover outstanding amounts.
3. Priority of claims over the factory's assets in case of auction.
4. Suspension of recovery action by the Board for Industrial and Financial Reconstruction.
5. Statutory obligations under the Control Order for payment of sugarcane price.

Detailed Analysis:
1. The judgment addresses multiple writ petitions related to Siruguppa Sugars and Chemicals, Gowribidanur, involving disputes over outstanding dues. The factory sought to challenge orders from the Cane Director and the Tahsildar regarding payments due to cane growers. The Mysore Sugar Co. Ltd. filed a petition against an auction notice for recovering dues, while the Indian Bank sought to halt an auction of the factory's assets. Additionally, farmers filed a petition to contest the suspension of recovery action against the factory for unpaid sugarcane dues.

2. The court dismissed the bank's petition as injunctive relief couldn't be granted in writ jurisdiction, and directed the bank to pursue its claim through the Debt Recovery Tribunal. The Mysore Sugar Co. Ltd.'s petition was rejected as it had parallel civil proceedings for recovery. The factory's petition challenging the Cane Director's order and the Tahsildar's notice was also dismissed as the factory failed to pay the sugarcane price within the stipulated time, leading to valid recovery actions.

3. Regarding the priority of claims, the court found that the farmers had the first priority for recovering dues from the factory, followed by the Central Government for excise dues. The judgment emphasized that statutory dues take precedence over other claims, and appropriate directions would be issued accordingly.

4. The court upheld the Board for Industrial and Financial Reconstruction's decision to suspend recovery action against the factory under the Sick Industrial Companies Act. However, as the suspension order had lapsed, the court directed the Deputy Commissioner to sell the sugar under lock and seal, with proceeds to be disbursed to the farmers after paying excise dues.

5. The judgment highlighted the statutory obligation under the Control Order for timely payment of sugarcane prices to farmers. It emphasized the duty of the Cane Director to ensure payment to farmers, as established by a Supreme Court ruling. The court rejected the factory's argument that recovery could not proceed due to pending BIFR application, asserting that Control Order provisions prevail over the SICA in recovering statutory dues owed to farmers.