TMI Blog2008 (8) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... RAN, JJ. Bharatji Agarwal and Vivek Chaudhary for the Petitioner. S.K. Mishra, S. P. Kesarwani and Ravindra Singh for the Respondent. JUDGMENT H.L. Gokhale, C.J . Heard Shri Bharatji Agarwal, learned senior advocate and Shri Vivek Chaudhary for the petitioner. Mr. S.K. Mishra appears for respondent No. 1. Mr. S.P. Kesarwani, learned Additional Chief Standing Counsel for the State of U.P. appears for respondents Nos. 2 to 6 and Mr. Ravindra Singh, appears for the Co-operative Cane Development Union-intervener. 2. The petitioner is a limited company manufacturing sugar and is situated in district Moradabad. The petition is filed through its director Shri Gaurav Dewan. The first respondent to the petition is the Central Government through its finance secretary. Respondent No. 2 is the State of U.P. through the Chief Secretary. Respondent No. 3 is the Principal Secretary, Sugar Industry and Cane Development of the State Government. Respondent No. 4 is the Cane Commissioner of the State and respondents Nos. 5 and 6 are the District Magistrate and the Tahsildar, Moradabad. 3. The petition originally filed, seeks a writ of mandamus directing the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to be opened subject to filing of the undertaking that the amount will be paid within the stipulated time. No recovery charges or interest for the delayed payment was to be paid at this stage. This is an interim order and the special leave petition is yet to be heard. 9. As far as 2007-08 is concerned, the Lucknow Bench of the Allahabad High Court fixed the SAP at Rs. 110 per quintal and in an appeal to the apex court, the apex court directed that the rate fixed by the Lucknow Bench for 2007-08 will be applicable. This was by virtue of the Supreme Court order dated May 15, 2008, passed in Special Leave Petition No. 25361 of 2007, State of U.P. v. Basti Sugar Mills. (Now, the petition in the Lucknow Bench has been disposed of finally on July 7, 2008 and the SAP has been fixed at Rs. 125 per quintal. It is to be paid within two months from the date of the order). 10 . The case of the petitioner is that after the present petition was filed on June 10, 2008, a recovery certificate was issued on June 14, 2008, by the Cane Commissioner for recovery of an amount of about Rs. 15.68 crores and, therefore, by amendment, prayer clause ( a ) is added to quash and set aside this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been unfair and financially disastrous to ask the banks to grant fresh loans to NPA units without the guarantee of the State Government. 14. The second prayer of the petition is to set aside the order dated April 5, 2008, issued by the State Government declining to give guarantee. This is defended by the State Government through the affidavit affirmed by Shri Sanjay Gupta, District Cane Officer. The relevant letter of the State Government states that under article 293(1) of the Constitution of India, it is not possible for the State Government to give guarantees to private institutions. 15. We have noted the pleas of the petitioner and the replies of the Central Government as well as by the State Government on the first two prayers. We have heard counsel for all the parties. From the scheme of the Central Government, it is clear that the scheme is meant only for SMP and if the unit is a NAP unit, guarantee of the State Government is sought. Similarly, as far as the State Government's order dated April 5, 2008, is concerned, the State Government has relied upon article 293(1) and stated that it cannot give any guarantee from its consolidated fund for the NPA units. What the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is submitted that these coercive measures be injuncted in view of the provisions of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. 18. Mr. Agarwal, learned senior advocate, appearing for the petitioner, relied upon the judgment of the apex court in Deputy Commercial Tax Officer v. Corromandal Pharmaceuticals [1997] 89 Comp. Cas. 1 ; [1997] 10 SCC 649. That was a case where a scheme for rehabilitation of the respondent-company had been brought into force on November 19, 1990 and was modified on December 29, 1993. The appellants were pressing to recover the sales tax dues for the assessment years 1992-93 and 1993-94, and the assessment orders were passed on January 3, 1994 and in 1995 long after the scheme was sanctioned on November 19, 1990. The respondents relied upon two judgments of the apex court in Gram Pan-chayat v. Shree Vallabh Glass Works Ltd. [1990] 2 SCC 440 ; [1991] 71 Comp. Cas. 169 and Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. reported in [1993] 78 Comp. Cas. 803; [1993] 2 SCC 144. It was canvassed on behalf of the petitioner that those judgments were quite distinguishable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat case, respondent No. 2 was a small scale industry, manufacturing copper wires. It had supplied its products to the appellants during the period between December 28, 1996 and June 3, 2000. The appellant-company had become sick and reference had been made to the BIFR on April 8, 1994. The rehabilitation scheme was, however, framed but it was declared to have failed and another scheme was sanctioned on April 8, 2003. Respondent No. 2 had filed a claim before the Industrial Facilitation Council under the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993. The council had given an award and that award was sought to be executed. The apex court noted that the award made in favour of respondent No. 2 had found place in the category of "dormant creditors" in the scheme of rehabilitation. The court, therefore, held that since the award was included in the scheme, section 22 of the SICA would get attracted. 21. The apex court referred to the judgment in Corromandal Pharmaceuticals's case [1997] 89 Comp. Cas. 1 ; [1997] 10 SCC 649 and noted that it had categorically opined therein that there cannot be any impediment in the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thern Steel Ltd. v. Jindal Vijayanagar Steel Ltd. [2008] 143 Comp. Cas. 466 (SC) decided on May 8, 2008. In that matter, purchases were made by the appellants from the respondents after the appellant-company was declared sick, the cheques given had bounced and proceedings under section 138 of the Negotiable Instruments Act, 1881, were initiated. The apex court held that when purchase orders were entered into and purchases were made with full knowledge of the proceedings that the company was declared sick under the SICA, the appellants gave an impression to the respondent-company that the outstanding dues towards the purchase would be cleared. In such a situation, the apex court held that the benefit of the SICA could not be availed of. This judgment refers to and in tune with the law laid down by the apex court in BSI Ltd. v. Gift Holdings (P.) Ltd. [2000] 100 Comp. Cas. 436 ; [2000] 2 SCC 737 and Kusum Ingots and Alloys Ltd. v. Pennar Peterson Securities Ltd. [2000] 100 Comp. Cas. 755 ; [2000] 2 SCC 745, where the apex court has taken the view that the protection of section 22 of the 1985 Act is available only for suits or proceedings of the like manner and not against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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