TMI Blog2009 (10) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... ., Dunlop India Ltd was declared a sick industrial company in terms of Section 3(1)(o) of SICA and IDBI (Industrial Development Bank of India) was appointed as the O.A. (Operating Agency) under Section 17(3) of SICA to examine the viability of the company and submit its report for its revival. Subsequently, the O.A. was changed and State Bank of India was appointed as the O.A. After several hearings, the BIFR vide its order dated 19.10.2001 directed the company to sort out all issues and submit its Draft Rehabilitation Scheme through O.A. within 60 days. Pending approval of draft rehabilitation scheme, on 31.08.2006 and on 06.11.2006, respondent No. 2 filed applications before BIFR seeking its permission for issue of ₹ 2 crore equity shares of ₹ 10/- each fully paid up at par to its promoters and/or its associates on private placement basis against full consideration to be utilized for rehabilitation of the company and passing further specific directions incidental thereto for the purpose of listing these shares in stock exchanges in dematerialized form. On the basis of above request of respondent No. 2, the BIFR passed an order dated 16.03.2007 permitting the company t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction over it and dismissed the appeal on that ground. 3. Aggrieved with the same, the present petition is filed. 4. Learned Counsel for petitioner has contended that respondent No. 2 has shown profits by sale of assets, as such, it should not have been deregistered from BIFR. In this regard, learned Counsel has referred to the order of BIFR dated 23.07.2007. It is contended that vide said order, explanation from respondent No. 2 was sought as to why immovable assets of the company had been sold without the permission of BIFR when restrictions under Section 22 of SICA were in force and further, why action should not be taken against the company/its Directors/officials under Section 24 of SICA and nullify the sale/transfer. It is contended that in the said order, BIFR also noted the contention of O.A. (SBI) that profits are there on account of sale of its assets/shares due to which the net worth has been shown positive and the same was not acceptable being not within the objectives of SICA. Learned Counsel for the petitioner has also contended that the company was declared sick on 22.06.1998 under Section 22 of the SICA due to which, petitioner was prevented from initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner Bank as it has refused to settle the matter with the respondent No. 2 and is challenging the impugned order of AAIFR. It is contended that impugned order dated 03.03.2008 records that the company has come out of its sickness, against which, the petitioner Bank should not have any grievance as the same does not affect the right/interest of the petitioner Bank in any manner. It is further contended that petitioner has already acted upon the order of AAIFR by filing recovery proceedings of its alleged dues before the Debts Recovery Tribunal, Calcutta. As such, it is estopped from challenging the correctness of the said order. It is further contended that the said fact of filing O.A. for recovery of the dues is concealed by the petitioner in the writ petition, as such, petitioner is not entitled for discretional relief of this Court. It is further contended that the present petition is barred by delay and laches. 7. We have heard learned Counsel for the parties and gone through the material on record. 8. As noted above, the respondent No. 2 was declared a sick industrial undertaking in terms of Section 3(1)(o) of the SICA on 22.06.1998. O.A. had been appointed and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000 (296.06) -(252.21) 31.03.2001 (385.44) -(332.99) 31.03.2002 (474.01) -(421.56) 31.03.2003 (513.24) -(460.79) 31.03.2004 (477.22) -(428.12) 31.03.2005 (482.68) -(433.58) 31.03.2006 (410.80) -(361.70) 31.03.2007 78.76 +242.65 18. Pursuant to financial restructuring, the petitioner transferred certain assets to its wholly owned 100% subsidiary companies, which in consideration of such transfer allotted fully paid- up equity shares to the petitioner. The surplus arising out of such transfer has inter alia set off the accumulated losses of the petitioner company. The waiver of liabilities arising out of one time settlement by banks and creditors, with necessary induction of funds by new promoters also contributed to the positive net worth. Disclosure to this effect has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make a formal application to the BIFR for withdrawing its jurisdiction when the company s net worth becomes positive. There is no express provision in the Act which indicates when the BIFR loses its jurisdiction with regard to a company which was once sick. The SICA, 1985 is all about making a sick company healthy and there are lot of detailed provisions regarding the executive financial aspects of infusing such health into a sick company. But many legal aspects are left not provided for in the Act. One such important absence is a provision as to when the company is again free and the creditors as well as all other parties are again free to proceed against the company. When, however, obvious answers are not provided by obvious express words used by Parliament itself, the Courts fill up the gap. There is absolutely no doubt that once a company ceases to be a sick industrial company as defined by the SICA, 1985, all proceedings taken by the BIFR in relation to it must thereafter absolutely cease. The question crying loud for an answer it whether the BIFR can come to a conclusion as to the loss of its own jurisdiction in relation to any particular company which was once sick and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per counter-affidavit of the respondent No. 2 on record, the value of the flat is much more than the alleged dues. In view of above position, the contention of the petitioner about sale of assets by the respondent No. 2 to its sister concern, which is based on observation of BIFR in its order dated 23.07.2007 has no relevance for the disposal of present petition inasmuch as the right/interest of petitioner is fully protected with the mortgage of aforesaid flat with it. The petitioner s position in relation to the loan advanced to Respondent No. 2 is the same as it was prior to the Respondent No. 2 being declared a sick company. The removal of the intervening impediment of sickness, in fact, enures to the benefit of the petitioner. Further, petitioner never raised any grievance about sale of assets by the respondent No. 2 to its sister concern before the BIFR or the AAIFR and is raising the same for the first time at much belated stage when the same does not affect the petitioner in any manner. 12. The other contention of the petitioner that due to respondent No. 2 being declared sick industrial company , petitioner was prevented for 10 years from initiating action for recov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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