TMI Blog2011 (1) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... al Reconstruction (BIFR) sanctioning a scheme for revival of Baranagore Jute Company PLC (BJC), a company incorporated in England under the laws of that country and having its registered office in London. Per contra, each of the learned counsel for those respondents who have urged the Court not to entertain the writ petitions have strongly contended that on proper interpretation of SICA, it ought to be held that the ambit and coverage of SICA extends to embrace a foreign company, a fortiorari , BJC. 2. The writ proceedings presently under consideration have been prefaced by series of litigation in this Court, starting with an application for winding up of BJC filed in October 1987. One particular order (dated 3-3-2004) passed by a Division Bench was carried in appeal to the Supreme Court. The decision dated 24-5-2006 in Radheshyam Ajitsaria v. Bengal Chatkal Mazdoor Union [2006] 11 SCC 771 1 narrates the history of proceedings initiated under the Companies Act. This is one reason why I refrain from discussing the antecedent facts in substantial detail here. Suffice it to note that in pursuance of an order dated 18-11-2004 passed by a Division Bench of this Court, a Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad not been enclosed with the letter under reference, the BIFR observed that it would look into the issues stated after the relevant documents are submitted. Having considered the submissions and the materials on record, the BIFR issued several directions for compliance by all concerned. The relevant directions are quoted hereunder : "( i )The company will file its rejoinder on the written submissions filed by LPMC within 15 days to the Board and IDBI (OA). ( ii )****** ( iii )****** ( iv )****** ( v )OA (IDBI) will submit the comments to the Board on the application of LPMC and rejoinder being filed by the company on the written submissions of LPMC within further 15 days, ( vi )The next hearing of the case will be on 6-4-2009." 5. The hearing, as directed earlier, was taken up on 6-4-2009. While passing several directions, 16-7-2009 was fixed as the next date of hearing. I consider it pertinent to quote below one paragraph from the order of the BIFR dated 6-4-2009. It reads : "4.17 The representative of IDBI(OA) submitted that in the last hearing, the Bench had directed that OA(IDBI) would submit its comments to the Board on the submissions of LPMC, and the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s registered in London, as such the revival scheme cannot be considered by the Board. However, in the hearing held on 6-4-2009, the issue was considered and Board had directed that although the company was incorporated in India, with its Head Office there, but the company had been registered in India under section 591(2) of Indian Companies, Delhi............" 7. Several other directions were passed and hearing was adjourned till 4-11-2009. 8. On the adjourned date i.e., 4-11-2009, the BIFR after hearing all the parties passed an order sanctioning a scheme (SS-09) under sections 19(3) and 18(4) of SICA for immediate implementation by all concerned. As noted earlier, the order dated 4-11-2009 sanctioning SS-09 is under challenge in all these three writ petitions. 9. It is placed on record that SS-09 was earlier challenged by an unsecured creditor M/s. Sohanlal Chandanmul Co. before this Court by filing W.P. No. 1166 of 2009 [since renumbered W.P. No. 5535(W) of 2010]. On 7-12-2009, a learned Judge of this Court was pleased to pass an interim order restraining the respondents from taking any step or further step for selling any property of BJC or creating any charge i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same are part of the records. 12. Mr. Bandopadhyay, learned senior counsel assisted by Mr. Joydeep Kar, learned counsel, Mr. Surojit Nath Mitra, learned senior counsel assisted by Mr. Kishore Datta, learned counsel and Mrs. Manju Agarwal, learned counsel appearing for the respective writ petitioners contended that provisions of SICA, read literally, would admit of no doubt that its ambit and coverage do not extend to a foreign company. According to them, the language of SICA is plain, clear and unambiguous and, therefore, no external aid is required for understanding its provisions. By referring to earlier orders passed by the Company Court in proceedings initiated for winding up of BJC under the Companies Act as well as orders passed by the Supreme Court, it was contended that the reference before the BIFR was not maintainable. Common prayer was made by them to quash the proceedings before the BIFR including the order impugned passed by it. 13. Mr. P.C. Sen, learned senior counsel representing Chaitan Choudhary and Ridh Karan Rakecha, private respondents in all the three writ petitions [allegedly members of the Committee of Management as it appears from the cause title of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1956 (1 of 1956), but does not include a Government Company as defined in section 617 of that Act". According to him purposive construction need not be applied when a statute has been amended from time to time on the basis of fresh needs and has thus not remained static. In such a case, literal interpretation is to be applied and in support of such submission, he placed reliance on the decision in Dental Council of India v. Hari Prakash [2001] 8 SCC 61. The said decision as well as the decision in Union of India v. Rajiv Kumar [2003] 6 SCC 516 was also relied on for the proposition that intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. The latter decision was also relied on to contend that a casus omissus ought not to be created by interpretation, save in some case of strong necessity. 16. He further submitted that in view of user of the word means as a suffix to the term company , the same indicates that the definition is exhaustive and not extensive and in this connection reliance was placed on the decision in P. Kasilingam v. P.S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution, ought to be interpreted to cover and/or include an industrial undertaking operating within India and belonging to a company incorporated outside India, which might have become sick or is potentially sick. SICA does not expressly exclude a scheduled industry owned by a foreign company. A foreign company thus cannot be excluded from the purview of SICA by reason of the interpretation clause. Having regard to the purpose of SICA, the word company therein cannot be restricted to exclude a company incorporated outside India. If so interpreted, that would deprive Indian shareholders, creditors, workers, etc. the protection that SICA seeks to offer and this would militate against public interest, which is the crux of SICA. 21. He further contended that the phrase "In this Act, unless the context otherwise requires" has been judicially interpreted to mean that a definition provided thereunder would be an inclusive and not an exclusive definition. The scheme of SICA does not exclude a foreign company and, therefore, BIFR did have jurisdiction to pass the orders it did. 22. In support of his submission, Mr. Mitra relied on the decisions in Printers (Mysore) Ltd. v. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 while praying for dismissal of the said writ petition invited my attention to section 2 of SICA. According to him, SICA being social welfare legislation enacted, inter alia, to protect the interest of workmen employed in a sick industrial company ought not to be interpreted in a constricted manner; on the contrary, it calls for a liberal interpretation. Literal interpretation of the word company in SICA would result in absurdity and, therefore, on an interpretative exercise, the word company ought to be held to include a foreign company. The decisions in Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal Ltd. [1983] 1 SCC 147 and Andhra University v. Regional Provident Fund Commissioner of Andhra Pradesh AIR 1986 SC 463 were relied on by him in support of the proposition that a beneficent legislation ought to be liberally construed. The decision in Maharashtra Tubes Ltd. v. State Industrial Investment Corpn. of Maharashtra Ltd. [1993] 2 SCC 144 was cited where the Supreme Court had the occasion to consider the term proceedings in section 22(1) of SICA and had ruled, upon consideration of the State Financial Corporations Act, 1951, that if the Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Overseas, the added respondent in W.P. No. 12412(W) of 2010, argued that the contention of the petitioners that SICA has no application to a foreign company like BJC is thoroughly misconceived. According to him, the Constitution as well as laws validly enacted by the Parliament or the State Legislatures would apply to foreigners, unless excluded either expressly or impliedly. Companies incorporated/registered under the laws of a foreign country carrying on business in India, therefore, would be subject to all obligations and enjoy all the rights to the extent provided in laws of India. 27. Mr. Pal contended that on a plain reading of SICA, it is clear that BJC is covered. He invited the attention of the Court to section 3(1)( d ) of SICA and submitted that it is only clause ( i ) of section 3(1) of the Companies Act that is attracted and not the other clauses/sub-sections of section 3. In view of clause ( i ), what is to be seen is the occurrence of formation and registration of a company under the Companies Act. The Companies Act does neither say that the persons who constitute the formation must be Indians, nor does it say that formation of the company must physically be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ravancore v. Mohammed Mohammed Khan AIR 1981 SC 1744. He next argued that although literal reading of a statute is the usual principle in a given situation, departure might be warranted to avoid absurdity. The decisions in Ramaswamy Nadar v. State of Madras AIR 1958 SC 56, CIT v. National Taj Traders [1980] 1 SCC 370 1 , Giridhari Lal Sons v. Balbir Nath Mathur AIR 1986 SC 1499, Hameedia Hardware Stores v. B. Mohan Lal Sowcar AIR 1988 SC 1060 and Western Bank Ltd. v. Schindler Ch. 1977-1 were relied on in this connection. A strained interpretation is also permissible in a given case, for which reference was made to the decision in High Court of Gujarat v. Gujarat Kishan Mazdoor Panchayat AIR 2003 SC 1201. For dynamic interpretation of SICA, the decisions in R v. R [1991] 4 All ER 481, State of Punjab v. Amritsar Beverages [2006] 7 SCC 607, and Anuj Garg v. Hotel Association of India [2008] 3 SCC 1 were referred to. For the proposition that Courts while construing provisions of socio-economic legislation must interpret them in a manner which furthers its purpose rather than frustrates it, he relied on the decision in Bharat Prasad v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Director in the sole context of section 34. The decision in Sonia Bhatia v. State of U.P. AIR 1981 SC 1274 was cited for considering the effect of an explanation provided in a statute. 32. Mr. Pal also contended that the conduct of the writ petitioner in W.P. 12412 (W) of 2010 is such that it ought not to be permitted to invoke the discretionary jurisdiction under Article 226. Referring to paragraphs 75, 76, 78 and 87 of the writ petition, he sought to demonstrate before the Court that the statement made in paragraph 3 to the effect that the petitioner was shocked and surprised in March, 2009 that BJC had been referred to BIFR was false and misleading. A learned advocate had represented the writ petitioner and orders passed by the BIFR from time to time were within its knowledge. 33. The locus standi of the writ petitioner to maintain the petition was also questioned. Referring to an order passed by a learned Judge of the Company Court dated August 5, 2008, it was submitted that the petitioner was relegated to a civil suit for enforcing its claim. The writ petitioner being a post scheme creditor had applied for intervention in the proceedings before the BIFR which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Companies Act, not having been incorporated under any of the Acts mentioned in clauses ( a ) to ( e ) of section 3( i )( ii ) thereof. Having regard to the provisions in Parts X and XI of the Companies Act, more particularly sections 582 to 584, 589 and 591(2), a foreign company has to be dealt with differently from an existing company. 38. According to him, it is inconceivable that Indian Parliament would introduce measures to rescue BJC under the Indian laws. Benefit of beneficial legislation to a foreign company is not the purpose or object of SICA. Section 3( i )( d ) cannot thus be made elastic to include a foreign company. The proceedings of the BIFR, thus, ought to be set aside was his ultimate submission. 39. Mr. S.C. Prasad, learned counsel for the Provident Fund Commissioner argued in support of the writ petitioners while questioning the propriety of SS-09, while Mr. Tilak Kumar Basu, learned senior counsel for the Official Liquidator took a neutral stand and submitted that whatever order the Court passes would be complied with by him. 40. I have extensively heard learned counsel for the parties, perused the materials on record and considered all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar facts involved therein, are distinguishable. 43. The question of locus standi of the writ petitioner in W.P. No. 12412(W) of 2010, an unsecured creditor, needs to be addressed next. Indubitably, the Company Court by its order dated August 5, 2008 has relegated the writ petitioner to a civil suit for enforcement of its claim against BJC and though the same has been carried in appeal before the Division Bench of this Court, till date there has been no order in connection therewith. There is substance in the contention of Mr. Pal that the writ petitioner is not in the scheme and even if the proceedings before the BIFR are continued it is not affected at all. It is settled law that mere filing of an appeal does not operate as a stay of the order impugned. The writ petitioner must, until circumstances change, be held to be bound by such order. In order to maintain a writ petition, the party approaching the Court ought to have a judicially enforceable right as well as a legally protected right. The writ petitioner has not been denied a legal right. Till such time the Division Bench interferes with the order dated August 5, 2008, the writ petitioner has no right to seek its remed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s hereby declared that an industrial company existing immediately before the commencement of the Sick Industrial Companies (Special Provisions) Amendment Act, 1993, registered for not less than five years and having at the end of any financial year accumulated losses equal to or exceeding its entire net worth, shall be deemed to be a sick industrial company; 15. Reference to Board. (1) Where an industrial company has become a sick industrial company, the Board of Directors of the company, shall, within sixty days from the date of finalisation of the duly audited accounts of the company for the financial year as at the end of which the company has become a sick industrial company, make a reference to the Board for determination of the measures which shall be adopted with respect to the company: Provided that******" 46. From the above provisions it is clear that a decision on the surviving petitions would involve proper interpretation of section 3(1)( d ) of SICA, seeking to define company . The definition of company in the Companies Act, 1956 (hereafter the Companies Act) has been incorporated in SICA by reference. Sections 2(10) and 3(1) of the Companies Act (to the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion arises what an individual meant when he used certain words, he may be asked to explain himself and he may do so and say that he meant one thing and not the other. But if it is the legislature that has expressed itself by making the laws and difficulties arise in interpreting what the legislature has said, a legislature cannot be asked to sit to resolve those difficulties. The legislatures, unlike individuals, cannot come forward to explain themselves as often as difficulties of interpretation arise. So the task of interpreting the laws by finding out what the legislature meant is allotted to the courts. Now, if one person puts into words the thoughts of another (as the draftsman puts into words the thoughts of the legislature) and a third person (the court) is to find out what they meant, more difficulties are bound to crop up. The draftsman may not have caught the spirit of the legislation at all; the words used by him may not adequately convey what is meant to be conveyed; the words may be ambiguous: they may be words capable of being differently understood by different persons. How are the courts to set about the task of resolving difficulties of interpretation of the laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation . It will then become necessary for the court to impute an intention to Parliament in regard to secondary situations . Such secondary intention may be imputed in relation to a secondary situation so as to best serve the same purpose as the primary statutory intention does in relation to a primary situation. 9. So we see that the primary and foremost task of a court in interpreting a statute is to ascertain the intention of the legislature, actual or imputed. Having ascertained the intention, the court must then strive to so interpret the statute as to promote or advance the object and purpose of the enactment. For this purpose, where necessary the court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need be no meek and mute submission to the plainness of the language. To avoid patent injustice, anomaly or absurdity or to avoid invalidation of a law, the court would be well justified in departing from the so-called golden rule of construction so as to give effect to the object and purpose of the enactment by supplementing the written word if necessary." 48. Another discussion on interpretation of statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. In the interpretation of statutes, the courts always presume that the legislature inserted every part thereof for a purpose and the legislative intention is that every part of the statute should have an effect." (emphasis supplied) 49. Also, the decision in Seaford Court Estates Ltd. v. Asher [1949] 2 All ER 155 (CA) rendered by Lord Denning on purposive approach cannot be kept out of consideration. It was observed therein as follows : "The English language is not an instrument of mathematical precision. Our literature would be much the poorer if it were. This is where the draftsmen of Acts of Parliament have often been unfairly criticised. A Judge, believing himself to be fettered by the supposed rule that he must look to the language and nothing else, laments that the draftsmen have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the Judges trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not mean that if there was in the original Act a section not incorporated, which came by way of a proviso or exception on that which is incorporated, that should be referred to. But all others, including the interpretation clause, if there be one, may be referred to. It is a dangerous mode of draftsmanship to incorporate a section from a former Act; for unless the draftsman has a much clearer recollection of the whole of the former Act than can always be expected, there is great risk that something may be expressed which was not intended." 53. I have no reason to disagree with the above exposition of law. Therefore, it would be prudent to understand the meaning of the word company in SICA in the sense it has been defined in the Companies Act [ vide section 3(1)] and apply it wherever it occurs in SICA. 54. However, at this stage, the submission of Mr. Pal that without recourse to any principles of interpretation a plain reading of the provisions of SICA and the Companies Act show that BJC is squarely covered by SICA is taken up for consideration. Apart from Mr. Pal, none else have advanced this extreme argument. 55. The Companies Act does not define a foreign compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes of the Companies Act. The question that has to be posed in the circumstances is whether BJC is a company formed and registered under the 1956 Act? The answer has to be in the negative and, therefore, question of SICA being applicable to a foreign company, on a plain reading thereof as well as the Companies Act, without any interpretative exercise, does not arise. The contention of Mr. Pal, accordingly, stands overruled. 56. Section 3(1)( d ) says that "Company means ...", and not "Company includes ...". In Punjab Land Development Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court, [1990] 3 SCC 682, while considering whether the definition of retrenchment in section 2( oo ) of the Industrial Disputes Act, 1947 ought to be understood in its narrow, natural and contextual meaning or in its wider literal meaning, a Constitution Bench relying on the decision in Gough v. Gough [1891] QB 665, held that : "When a statute says that a word or phrase shall mean - not merely that it shall include - certain things or acts, the definition is a hard-and-fast definition, and no other meaning can be assigned to the expression than is put down in definition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where any offence punishable under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. For the purposes of this section, ( a ) company means any body corporate and includes a firm or other association of individuals; and ( b ) director , in relation to a firm, means a partner in the firm." 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent piece of social welfare legislation enacted to provide for the payment of bonus to persons employed in certain establishments on the basis of profits or on the basis of production or productivity and for matters connected therewith. It is important to note that the Parliament in its wisdom specifically intended a company referred to in the Payment of Bonus Act to include a foreign company under section 591(2) of the Companies Act and such foreign company as employer, being an establishment in private sector, would be subject to all its provisions regarding payment of bonus to employees. 64. I consider it to be settled law on the basis of the authorities noticed hereinabove that it is the duty of the Court to see what Parliament has said, instead of reading into the law what ought to have been said. Where exact and precise words are used, they clearly show the intention of the Parliament. It is not open to the Court to speculate as to what may be the supposed intention of the Parliament, because a case has arisen which is not covered by the exact and precise words used by the Parliament. The Court has to judge the intention of the legislature not by speculating as to what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Howsoever high the public purpose behind enactment of SICA, I do not feel that as a judge I am competent to modify the language of an Act of Parliament to bring it in accordance with what is right or reasonable. 68. I have noted that in Smt. Leelabai Gajanan Pansare s case ( supra ) the Supreme Court relied on the decision in Union of India v. R.C. Jain [1981] 2 SCC 308 where it has been ruled that "The definition of an expression in one Act must not be imported into another". There, the Delhi Development Authority had been paying bonus to its employees under the Payment of Bonus Act for quite sometime. However, on the advice of the Ministry of Law, payment was abruptly stopped. According to the Payment of Bonus Act, nothing therein shall apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any Department of the Central Government or State Government or Local Authority. The stoppage of payment was questioned before the High Court and the challenge succeeded. The question that arose for consideration was whether the Delhi Development Authority is a local authority or not. If it were a local authority, the Payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earted attempt to hint at it in reply) and hence I have considered it improper to embark on a detailed discussion on this aspect, not to speak of giving a final decision. Such question is left open for an appropriate decision in a properly argued case, in future. 71. I accept the submission of Mr. Kundu that while interpreting the word company as defined in SICA, attention must be paid to what has been said and what has not been said. Extending the ambit and coverage of SICA to a foreign company would lead to altering the material of which SICA is woven, instead of ironing out the creases. I also accept the submission of Mr. Chatterjee that section 3(1)( d ) of SICA means what it says. It is absolutely a different thing altogether that the writ petition argued by him has failed for a different reason. 72. For the foregoing reasons, I am of the firm opinion that coverage of SICA does not extend to take within its fold, a foreign company; a fortiorari , it follows that reference of BJC to the BIFR was not legal and valid and the BIFR usurped a jurisdiction not conferred on it by law. 73. In the result, the proceedings before the BIFR being Case No. 294 of 2004 includ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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