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2023 (4) TMI 909 - MADRAS HIGH COURTInitiation of recovery proceedings - recovery of amount towards the ESI dues of another company M/s.Jeetstex Engineering Limited - company declared as sick company - grievance of the petitioner is that as per the Sanctioned Scheme, the contribution towards ESI as on the date of merger got nullified and all the departments including ESI shall waive interest, penal interest, damages, liquidated damages and penalty for late payments, if any - overriding provisions of SICA - HELD THAT:- Reliance placed upon a judgment of a Division Bench of Delhi High Court in Director General of Income Tax Vs. BIFR [2011 (3) TMI 1467 - HIGH COURT OF DELHI], where it was held that a draft scheme is sanctioned under the provisions of Sub-section (4) of Section 18 of the SICA. Once a draft scheme is sanctioned it is binding on those concerned as is reflected in Sub-section (8) of Section 18 and Section 19(3) of SICA. Thus, once a sanctioned scheme or any of its provisions is made operable it binds the sick industrial company, and the entities referred to in Section 18(8) and 19(3) of SICA. In these circumstances, the Department cannot surely be head to argue that the provisions of the scheme are not binding on it. The above judgment is directly on the issue. By virtue of Section 19 (2) of SICA, the consent can be inferred. Therefore, it is not open to the ESI Corporation to revive the liability of a sick company by operation of statutory discharge. The impugned order passed by the third respondent is quashed - Petition allowed.
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