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M/S Golden Tobacco Ltd. (Formerly Known as Gtc Industries Ltd.) vs.board for Industrial and Financial Reconstruction and Ors. - Court Judgment

LegalCrystal Citation
CourtDelhi High Court
Decided On
AppellantM/S Golden Tobacco Ltd. (Formerly Known as Gtc Industries Ltd.)
RespondentBoard for Industrial and Financial Reconstruction and Ors.
Excerpt:
.....petitioner has challenged an order dated 17th june, 2016 passed by the learned registrar of the bifr (board of industrial and financial reconstruction) in a reference made by the petitioner under section 15(1) of the sick industrial companies (special provisions) act 1986, hereinafter referred to as the sica and an order dated 23rd august, 2016 passed by the learned secretary of the bifr, dismissing an appeal therefrom. w.p.(c) no.7829/2016 page 1 of 7 2. the petitioner, a company incorporated under the companies act, 1956, which was formerly known as gtc industries ltd., carries on business inter alia of processing tobacco and manufacturing cigarettes. on 23rd july 2008, the name of the petitioner was changed to golden tobacco limited, which is its present name. it is pleaded that.....
Judgment:

* IN THE HIGH COURT OF DELHI AT NEW DELHI + Date of decision:

08. 11.2016 W.P.(C) 7829/2016 M/S GOLDEN TOBACCO LTD. (FORMERLY KNOWN AS GTC INDUSTRIES LTD.) ........ Petitioner

Through: Ms.Maneesha Dhir, Ms. Varsha Banerjee & Ms.Saloni Chowdhry, Advocates. versus BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION AND ORS. ........ RESPONDENTS

Through: Mr. Manish Mohan, CGSC for BIFR. Mr.Anil Panwar & Mr.Ram Kumar for respondent No.2. Jha, Advocates CORAM: HON'BLE MS. JUSTICE INDIRA BANERJEE HON'BLE MR. JUSTICE V. KAMESWAR RAO INDIRA BANERJEE, J (ORAL) JUDGMENT1 In this writ petition the petitioner has challenged an order dated 17th June, 2016 passed by the learned Registrar of the BIFR (Board of Industrial and Financial Reconstruction) in a Reference made by the petitioner under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act 1986, hereinafter referred to as the SICA and an order dated 23rd August, 2016 passed by the learned Secretary of the BIFR, dismissing an appeal therefrom. W.P.(C) No.7829/2016 Page 1 of 7 2. The petitioner, a company incorporated under the Companies Act, 1956, which was formerly known as GTC Industries Ltd., carries on business inter alia of processing tobacco and manufacturing cigarettes. On 23rd July 2008, the name of the petitioner was changed to Golden Tobacco Limited, which is its present name. It is pleaded that some time in 1996, the net worth of the petitioner company was completely eroded and it became sick. Accordingly, a reference was made to the BIFR under Section 15(1) of SICA, which was admitted and registered as BIFR case No.17/1997.

3. On 16th December 2002, the BIFR sanctioned a scheme for revival of the petitioner company. However, on or about 29th June 2007, BIFR discharged the petitioner company from the purview of SICA, as its net worth had, in the meanwhile become positive.

4. The petitioner was discharged from the purview of the SICA with a direction that the unimplemented provision of the sanctioned scheme for the unexpired period of the scheme as also unimplemented provisions of subsequent orders of the BIFR would continue to be implemented by the concerned agencies.

5. The Director General of Income Tax (Admn.) filed an appeal being Civil Appeal No.5038 of 2016 in the Hon‟ble Supreme Court challenging certain direction given by the BIFR in the said BIFR Case No.17/1997.

6. Before the Supreme Court, the Revenue contended that there were outstanding Income Tax dues amounting to Rs.761.35 crores W.P.(C) No.7829/2016 Page 2 of 7 from the petitioner company, for which a demand had been sent to the petitioner company on the premise that having lost the status of a sick company the petitioner company was not entitled to the protection of SICA.

7. The said appeal was allowed by the Hon‟ble Supreme Court by its judgment and order dated 12th May, 2016. The Hon‟ble Supreme Court inter alia directed interest and penalty or “32. We are not deciding this issue in the present appeal and permit the parties to approach the Board seeking clarification as to what was meant by the words 'to consider' i.e., whether the Board meant that it was mandatory on the part of the Revenue to waive the it was only recommendatory and, therefore, it was upto to the Department to agree or not to agree to the said request. The jurisdiction of the Board, whenever such application is filed, would be limited to the aforesaid aspect alone and the Board shall decide the issue within the period of two months. Otherwise, we make it clear that as the Scheme has lapsed no further proceedings of any nature are to be entertained by the Board including the application for modification filed by the Company and pending before the Board.

33. The Income Tax Department shall be entitled to take steps for attachment of the properties of the Company, including Ville Parle land as per the provisions of the Income Tax Act and shall be entitled to sell the same. If there are any secured creditors in respect of these properties, such attachment and sale shall be subject to the rights of those creditors. Out of the proceeds, the Principal amount of tax due to the Income Tax Department and even the admitted excise dues shall be paid to the Revenue. Insofar as W.P.(C) No.7829/2016 Page 3 of 7 payment of interest and penalty is concerned, that would be dependent upon the decision which the Board would give.” 8. According to the petitioner, due to drastic changes in the central excise structure in the Union Budget of 2008 as also restrictions imposed by the Central and State Governments from time to time, on the sale of cigarettes, the petitioner again started incurring losses, and on 31st March 2016 the net worth of the petitioner had again eroded. Therefore, based on the audited balance sheet for the year ending 31st March 2016, the petitioner filed a fresh reference before the BIFR under Section 15(1) of the SICA in the prescribed form on 26th May 2016.

9. The Registrar of the BIFR did not register the reference. By the impugned communication No.3(G-1)/BC/2016 dated 17.06.2016, the Registrar BIFR informed the petitioner that the petitioner‟s reference based on audited balance sheet of 31st March, 2016 could not be considered for registration since the petitioner‟s reference being case No.17/1997, registered in the earlier name of the Company was currently being heard by Bench I. The petitioner‟s balance sheet and other documents were forwarded to the concerned Bench, so that the same could be placed with the records of the pending Ref. Case No.17/1997.

10. The petitioner filed an appeal against the decision of the Registrar before the Secretary of the BIFR under Section 19(8)(1) of W.P.(C) No.7829/2016 Page 4 of 7 the BIFR Regulations, which has been dismissed by the impugned order dated 23rd August 2016.

11. By the impugned order dated 23rd August 2016, the Secretary of the BIFR informed the petitioner as under:-

"“2. I would like to inform you that your Appeal cited above cannot be treated as an Appeal under Section 19 (8) (1) of BIFR Regulation, 1987, due to the fact that the Registrar had not Declined any reference filed by your company. The relevant Regulation, pertaining to Appeal before Secretary, BIFR, is reproduced below: the Order of An appeal against the Registrar declining to register a reference shall be made by the aggrieved person to the Secretary within fifteen days of communication to him of such an order. Not with standing the above, I have examined the Registrar‟s letter cited above and have observed that your Reference filed under Section 15(1) of SICA was not Declined by the Registrar. The Registrar, in accordance to the laid down procedure of the Board had forwarded the instant reference to the respective Bench Office for „clubbing‟ the reference (17/1997) that is current pending of the same Company.” the same with W.P.(C) No.7829/2016 Page 5 of 7 12. May be, as argued by learned counsel for the petitioner Ms.Maneesha Dhir, the Secretary of the BIFR erred in holding that the application filed by the petitioner under Section 15(1) of the SICA had not been declined by the Registrar. The Registrar of the BIFR clearly declined to register the reference observing that the earlier reference filed by the petitioner being case No.17/1997 was being heard by a Bench of the BIFR.

13. Under the provisions of 19(8)(2) of the Regulations of the BIFR, an appeal from a decision of the Secretary lies before the Chairman of the BIFR. However, in view of the retirement of the erstwhile Chairman of the BIFR and consequential vacancies in the post of Chairman of BIFR, this writ petition was filed in this Court.

14. It appears that vacancies in the BIFR have now been filled up and a notification has been issued whereby one of the members has been authorised to officiate as the Chairman. The petitioner, therefore, has an alternative remedy of appeal.

15. Be that as it may, considering that the writ petition has been pending before us for a while and arguments made at length, we are not inclined to reject the writ petition only on the ground of existence of an alternative remedy.

16. There can be no doubt that ordinarily when a reference is made to the BIFR under Section 15(1), such reference has to be registered and referred to the Bench for admission. The Registrar cannot refuse to register the reference. W.P.(C) No.7829/2016 Page 6 of 7 17. However, SICA does not contemplate multiple references and certainly not a fresh reference while an earlier reference is pending. It is true that in this case, the earlier reference ended on 29th June 2007 when BIFR discharged, the petitioner from the purview of the SICA upon its net worth becoming positive. However, there was a direction for implementation of the provisions of the sanctioned scheme which would have to be monitored by the BIFR.

18. Furthermore the Supreme Court by its order dated 12th May 2016 clearly held “otherwise, we make it clear that as the scheme has lapsed, no further proceedings of any nature are to be entertained by the Board including the application for modification filed by the company and pending before the Board”.

19. Orders as prayed for in the petition would tantamount to variation and modification of an order of the Supreme Court which we have no power and/or authority and/or jurisdiction to do. The Supreme Court has clearly directed that „no further proceedings of any nature are to be entertained‟ by the Board. The writ petition is therefore, dismissed. INDIRA BANERJEE, J V. KAMESWAR RAO, J November 08, 2016 gm W.P.(C) No.7829/2016 Page 7 of 7


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