• [2008] 9 S.C.R. 267
~
TATA MOTORS LTD. A
v.
PHARMACEUTICAL PRODUCTS OF INDIA LTD. & ANR.
(Civil Appeal No. 3640 of 2008)
MAY 16, 2008
B
[S.B. SINHA, LOKESHWAR SINGH PANTA AND
- ~.
MARKANDEY KAT JU, JJ]
Companies Act, 1956; s. 391/Sick Industrial Companies
(Special Provisions) Act, 1984; Ss. 15-20, 26 and 32: c
Liability of sick Company to pay to secured and unse-
cured creditors - Interpretation of provisions of 1956 Act and
1984 Act- Reference by sick company to Board for Industrial
and Financial Reconstruction - Board while recommending
... for winding up of the company appointed an operating agency D
-4 - Appellate Authority staying operation of the order of Board -
Framing of schemes by operating agency for settling dues pf
selective creditors excluding the appellant-company and other
creditors - Approval of - Company Judge approving the
Scheme - Letters Patent Appeal dismissed by High Court - E
Correctness of - Held: Incorrect - Provisions under Special
Act override the provisions of a general Act - S.26 of SICA
bars the jurisdiction of Civil Courts in respect of any matter,
the Board or AA/FR is empowered to determine - Thus, juris-
~ diction of the High Court in a case of this nature is limited - F
Order of the Board not appeared to be fair and reasonable to
meet the requirements of law - Hence, not only the impugned
judgment but also the order of the Board as also the Appel-
late Authority cannot be sustained and set aside - Matter re-
miffed to the Board for consideration afresh in accordance
G
with the provisions of SICA - Interpretation of Statutes.
-+ Respondent No.1, a company took loan from another
company, the predecessor-in-interest of the appellant. Re-
spondent No. 1, being unable to pay the dues to appel-
267 H
268 SUPREME COURT REPORTS [2008] 9 S.C.R.
A lant and other secured and unsecured creditors made a
reference before the Board for Industrial and Financial
Reconstruction. The Board appointed Industrial Devel-
opment Bank of India (IDBI) as an operating agency and
recommended winding up of the respondent-company.
B An appeal was preferred thereagainst by the appellant-
creditor before the Appellate Authority for Industrial and
Financial Reconstruction (AAIFR). The Appellate author-
ity stayed the operation of the order of the Board. Before
the Appellate authority two separate Schemes were
C framed, one of them related to an arrangement between
respondent No. 1 and one Mis. Wanbury Ltd. for settling
of dues. Respondent No. 1, however, filed an application
before the High Court in terms of Section 391 of the Com-
panies Act, during the pendency of the appeal, a Scheme
was presented before the Company Judge purported to
D be settling of dues of about 80 percent of the creditors.
Allegedly, even at that stage, it was not disclosed before
the Company Court that unsecured creditors listed in the
Scheme were only a selected few creditors, as a result
whereof a large number of creditors had been excluded.
E Before the Company Judge, the appellant filed an appli-
cation for intervention objecting the scheme on certain
grounds. Rejecting objections, the scheme was approved
by the High Court. Letters Patent Appeal preferred there-
against by the appellant was dismissed by the High Court.
F Hence, the present appeal.
Appellant contended that SICA being a special stat-
ute, the provision thereof shall prevail over the provisions
of the 1956 Act; that the High Court committed a manifest
G error in entertaining the respondent's application for
merger under Sections 391 to 394 of the Act, although
the matter was pending before the AAIFR; that the High
Court failed to notice the binding precedent of this Court
in NGEF Ltd. vs. Chandra Developers (P) Ltd. (2005) 8 SCC
219 wherein it has clearly been held by this Court that
H
TATA MOTORS v, PHARMACEUTICAL PRODUCTS 269
OF INDIA
SICA will prevail over the 1956 Act; that Section 26 of the A
SICA bars the jurisdiction of the company Judge; and that
the Division Bench of the High Court has failed to con-
sider that the Company Judge had no jurisdiction to en-
tertain such a proceeding.
Respondent No. 1 submitted that the operation of B
the order of BIFR having been stayed, the Company Peti-
~
tion was maintainable; that Section 19 of SICA will have
no application as it speaks of financial assistance by the
persons specified therein; that Section 22 of SICA must
be read in the context of Section 19 thereof; that Section c
26 or any other provision of SICA do not oust the jurisdic-
tion of the Company Court; that SICA would prevail over
1956 Act only if the provisions of the latter are inconsis-
tent with the provisions of SICA and not otherwise; and
• that the Scheme in question being subject to approval by D
+ BIFR and that BIFR by reason of its order dated 151 May,
2007 had granted approval thereof, the legal requirements
must be held to have been complied with.
Allowing the appeal, the Court
E
HELD: 1.1 The provisions of a special Act override
the provisions of a general Act. A later of it will override an
earlier Act. The Companies Act, 1956 is a general Act. It
-·,,.- consolidates and restates the law relating to companies
and certain other associations. It is prior in point of time F
to Sick Industrial Companies (Special Provisions) Act,
1984. Wherever any inconstancy is seen in the provisions
of the two Acts, SICA would prevail. (Para - 19) [285-E-F]
1.2 SICA is a special statute. It is a self contained Code.
The jurisdiction of the Company Judge in a. case where G
reference had been made to BIFR would be subject to
the provisions of SICA. (Para - 20) [285-G]
1.3 SICA was enacted to secure the principles speci-
fied in Article 39 of the Constitution of India. It seeks to
H
270 SUPREME COURT REPORTS [2008] 9 S.C.R.
A give effect to the larger public interest. It should be given
primacy because of its higher public purpose. Section 26
of SICA bars the jurisdiction of the Civil Courts. (Para -
22) [291-F-G]
NGEF Ltd. vs. Chandra Developers (P) Ltd. (2005) 8 SCC
B 219 and Bombay Dyeing & Manufacturing Co. Ltd. vs. Bombay
Environmental Action Group (2006) 3 SCC 434 - referred to.
).
1.4 What scheme should be prepared by the operat-
ing agency for revival and rehabilitation of the sick indus-
c trial company is within the domain of BIFR. Section 26 of
SICA not only covers orders passed under SICA but also
any matter which BIFR is empowered to determine. (Para
- 22) [291-H; 292-A]
1.5 The jurisdiction of civil court is barred in respect
D of any matter for which the appellate authority or the
Board is empowered. The High Court may not be a civil
..
court but its jurisdiction in a case of this nature is limited.
+
(Para - 23) [291-A-B]
Jyoti Bhushan Gupta vs. Banaras Bank Ltd. (1962) Supp
E 1 SCR 73 and Damji Valli Shah vs. Life Insurance Corpora-
tion of India (1965) 2 SCR 665 - referred to.
2.1 The jurisdiction of the Company Court is now
vested in the Tribunal. Therefore, it will be difficult to hold,
F in view of a changed situation, that Section 26 of SICA ~
ousts the jurisdiction of the Company Court in totality.
(Para - 26) [294-D]
2.2 It is not possible to harmonize the provisions of Sec-
,... tions 391 to 394 of the 1956 Act with the provisions of SICA.
I_; In the facts and circumstances of the case, the judgment of
the High Court cannot be sustained. (Para - 26) [295-C,B]
3.1 The Scheme provides for not only entering into
an arrangement as regards repayment of debts to se-
cured creditors and unsecured creditors but also provides
H
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 271
OF INDIA
,.._
for a merger, subject of course, to an appropriate order A
being passed by BIFR. The question is as to whether such
a Scheme could be placed for approval before BIFR. This
Court is of the view that it could not be. Before BIFR could
approve a scheme, the same must be drawn in terms of
the provisions of the Act and not de hors the same. It is B
required to apply its own mind. The operating agency is
_...
supposed to make a scheme. The operating agency be-
~
fore the AAIFR took one stand and before this Court it
has taken another. According to it, it was not involved in
the preparation of the Scheme. It had no occasion to apply c
its own mind. Furthermore, after the Single Judge passed
its order, AAIFR disposed of the appeal only in terms of the
order of the High Court directing BIFR to consider the
scheme vetted by the operating agency within a period of
three months from the date of this order and take neces-
~
D
sary further steps for the revival of the appellant company
+ in accordance with law. The order of BIFR also clearly
shows that it has granted its approval in view of the obser-
vations made by the appellate authority. It might have done
so keeping in view the doctrine of judicial discipline in mind.
(Paras - 28 and 29) [295-E-H; 296-A-C] E
3.2 The order of BIFR is not an outcome of any pre-
application of mind. There is no finding that it has taken
into consideration all the relevant facts. There is nothing
"'r to show that such an order is fair or reasonable or meets F
the requirements of law. Hence, this Court is of the opin-
ion that not only the judgment of the High Court but also
the orders of BIFR as also the AAIFR should be set aside
... and the matter should be remitted to the BIFR so as to
enable it to proceed in accordance with the provisions of
G
SICA afresh. (Paras - 30 and 31) [296-D-E]
-( 4. It is a fit case where this Court should exercise its
jurisdiction under Section 142 of the Constitution of In-
dia to meet the object for which the Act has been enacted.
(Para - 27) [295-D] H
272 SUPREME COURT REPORTS [2008] 9 S.C.R.
A CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3640
of 2008
From the Judgment and Order dated 16.10.2006 of the
High Court of Judicature at Bombay in Appeal No. 725 of 2006
in Company Petition No. 470 of 2005 connected with Com-
B pany Application No. 282 of 2005
R.F. Nariman, C.A. Sundaram, Abhishek, M. Singhavi,
Shyam Divan, Birendra Saraf, Amar Dave, Nandini Gore, Sonia ...
Nigam, S. Jayaram, Rohni Musa, Sudanshu Batra, Abhishek
c Gupta, Pramit Saxena, Amit Yadav, S.V. Deshpande, S.M.
Jadhav, P.K. Manohar, Arvind Kumar Gupta and Bipin Bihari
Singh for the Appearing Parties.
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted
D
~
Introduction
+
2. Interpretation/application of the provisions of the Sick
Industrial Companies (Special provisions) Act, 1984 (SICA) vis-
a-vis the Companies Act, 1956 (1956 Act) is in question in this
E appeal which arises out of a judgment and order dated 16th
October, 2006 passed by a Division Bench of the High Court of
Judicature at Bombay in Appeal No.725 of 2006 arising out of
a judgment and order dated 13th February, 2006 passed by a
learned Single Judge of the Bombay High Court approving a
F Scheme filed by the respondent herein in Company Petition .. ,
No.470 of 2005 which was under Section 391 of the 1956 Act.
Background Facts:
3. First respondent is a company registered and incorpo-
G rated under the 1956 Act. It took loan from Tata Finance Ltd,
..
,;;
predecessor-in-interest of the appellant on interest@ 18% per
annum. Disputes and differences arose between the parties, 'r
which were referred to arbitral tribunal. An award was passed
on 301h July, 2002 in the Arbitration proceedings for a sum of
H Rs.1,51,36, 795/- together with interest @ 18% per annum till
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 273
OF INDIA [S.B. SINHA, J.]
payment and/or realization. It is stated that the total amount due A
to the appellant from the respondent would be near about 5.7
crores of rupees. There were other secured and unsecured
creditors also.
Proceedings under SICA
B
..... 4. Respondent being unable to pay the dues made a ref-
-I erence in terms of Section 15 of SICA before the Board for
Industrial and Financial Reconstruction (BIFR). The BIFR ap-
pointed Industrial Development Bank of India (IDBI) as an op-
erating agency. It purported to have considered various c
schemes. However, as Unit Trust of India (UTI) raised an objec-
tion for giving up any of its dues and there were six secured
creditors and large number of unsecured creditors, BIFR on or
about 271h October, 2004 passed an order recommending wind-
.._... ing up of the respondent. An appeal was preferred thereagainst
D
before the Appellate Authority for Industrial and Financial Re-
construction (AAIFR).
5. The AAIFR granted stay of operation of the order of
BIFR dated 27th October, 2004 by an order dated 131h Septem-
ber, 2005. Before the AAIFR two separate Schemes were E
framed, one of them related to an arrangement between the
respondent and Mis. Wanbury Ltd. It agreed to settle the out-
standing dues of the creditors of PPIL. But before· doing so, it
thought it fit to settle all the large creditors being Financial lnsti-
'.,- tutions and Banks. The scheme envisaged payment to a class F
of creditors.
It was also envisaged:
" In addition, two immovable properties of the company
(which were its primary and main assets) were to be sold
G
and the unsecured creditors were to be paid a proportion
of the sale proceeds. The balance of the sale proceeds
were to be paid over to the secured creditors.
Upon payment of the cash consideration, Wan bury was to
get complete control over the Respondent including all its H
274 SUPREME COURT REPORTS [2008] 9 S.C.R.
A assets subject to the approval of the merger before the
appropriate forum.
The scheme was to become effective upon approval of
overall settlement including an order for merger or any
other mode of acquisition of assets of PPIL by Wanbury
B or such scheme of PPIL by BIFR/AAIFR."
Appellant was kept outside the said Scheme. The scheme ~
involved some selective secured creditors and some selective
unsecured creditors.
C Company Court Proceedings
6. Respondent, however, filed an application before the
High Court of Judicature at Bombay purported to be in terms of
Section 391 of the 1956 Act during the pendency of the said
appeal on or about 291h April, 2005. A Scheme was presented •
0
before the Company Judge purported to be involving about 80 +
percent of the creditors, most of them being banks, financial
institutions. Allegedly, even at that stage, it was not disclosed
before the Company Court that unsecured creditors listed in
E the Scheme were only a selected few creditors, as a result
whereof a large number of creditors had been excluded.
7. Before the Company Judge, the appellant filed an ap-
plication for intervention. It filed an objection to the said Scheme
primarily on the grounds:-
F "That the revival/rehabilitation of the company was under
consideration of a specialized body formed under the Sick
Industries Act which is a special legislation and would
prevail over the provisions of the Companies Act.
That the non-obstante clause contained in the Sick
G.
Industries Act will have the effect of overriding and excluding
the provisions of the Companies more so where there is
an overlapping between the two Act.
That considering the scheme of the Sick Industries Act,
H the revival/restructing of the company cannot be considered
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 275
OF INDIA [S.B. SINHA, J.]
by two separate forums separately. A
That the scheme involved financial reconstruction, sale of
assets of the company and merger/take over by Wanbury..
These issues expressly fall within the domain of the BIFR
under Section 18 of the Sick Industries Act.
-
B
That a scheme could not be presented only in respect of
selected unsecured creditors to the exclusion of the other
...
similarly placed unsecured creditors such as the
Petitioners.
That the entire scheme was nothing but a fraud which was c
being played whereby the company and its assets were
being transferred to Wanbury which was associated with
the company itself."
UTI also filed an objection.
.. D
.... 8. The said contentions of the appellant, however, were
rejected by a learned Single Judge of the High Court by his
order dated 13th April, 2006 and the Scheme was approve?.
Order of the AA/FR
E
9. In view of the aforementioned order of the High Court,
AAIFR also on or about 1s1 June, 2006 approved the said
Scheme opining :-
"5. Learned counsel for the Appellant Company states
that the scheme of Compromise and Arrangement approve F
by the Bombay High Court have been incorporated in the
scheme of revival cum merger submitted to IDBI (Operating
Agency) in pursuance of direction given by us on 9.11.2005.
6. In view of IDBl's recommendation of the revival cum G
merger proposal submitted by PPIL, which· is in
accordance with Bombay High Court's order dated
13.2.2006, we set aside the impugned order dated
27.10.2004 and direct BIFR to consider the scheme vetted
by the OA within a period of three months from the date of
H
276 SUPREME COURT REPORTS (2008) 9 S.C.R.
A this order and take necessary further steps for the revival
of the appellant company in accordance with law."
10. An intra court appeal was preferred thereagainst by
the appellant on or about 3rc1 August, 2006. By reason of the
impugned judgment the said Letters Patent Appeal has been
B dismissed, stating:-
"2. The Appellant claims to be an unsecured creditor to ..
the extent of Rs .1.51 crores as set out in the award dated
30.7.2002 with further interest atthe rate of 18% per annum.
c It is not in dispute that the Scheme of Arrangement
approved by the learned Company Judge between
Pharmaceutical Products of India Ltd. and its unsecured
creditors and Wanbury does not affect the rights of the
appellant as the appellant, though an unsecured creditor,
is not specified in Schedule-I, appended to the Scheme.
D
In this backdrop, the impugned order cannot be faulted.
However, it is clarified that whatever objections the
appellant may have against the revival scheme pending
before the BIFR, pursuant to the order dated 1.6.2006
passed by the AAIFR, they may place their objections
E before the BIFR and obviously upon such objections being
placed theBIFR shall consider the revival scheme of the
respondent-Company on is own merits, keeping in view
all relevant fact and circumstances, including the objections
of the appellant."
F
Subsequent Events
11. We may also take note of some subsequent events. In
view of the order of AAIFR dated 1st June, 2006, BIFR issued
notice on 1st February, 2007 to consider the Scheme-cum-
G merger with M/s. Wan bury Ltd. propounded by the respondent
company returnable on 29th March, 2007. On the said date, all
the interested parties including the appellant were heard. By an
order dated 1st May, 2007, BIFR is said to have sanctioned the
Scheme-cum-merger of Mis. Wanbury Ltd. with the respondent:
H
TATA MOTORS v. PHARMACE:UTICAL PRODUCTS 277
OF !NOIA [S.B. SINHA, J.]
12. We may also place on record that inter alia on the A
premise that the said Scheme of merger was approved in gross
violation of this Court's order dated 15'h December, 2006, a
contempt petition was filed. We are not concerned with the said
Contempt Petition herein.
Contentions B
13. Mr. R.F. Nariman, learned Senior Counsel appearing
-(~ on behalf of the appellant, in support of this appeal would sub-
mit :-
1. SICA being a special statute, the provision thereof c
shall prevail over the provisions of the 1956 Act.
2. The High Court committed a manifest error in
entertaining the respondent's application for merger
under Sections 391 to 394 of the Act, although the
D
~ matter was pending before the AAIFR.
. 3. The High Court failed to notice the binding precedent
of this Court in NGEF Ltd. vs. Chandra Developers
(P) Ltd. : (2005) 8 SCC 219 wherein it has clearly
been held that SICA will prevail over the 1956 Act. E
4. The Division Bench of the High Court has failed to
consider that the Company Judge had no jurisdiction
to entertain any proceeding.
5. Section 26 of the SICA bars the jurisdiction of the F
Company Judge.
14. Mr. C.A. Sundaram, learned senior counsel appear-
ing on behalf of the respondent, on the other hand would urge :-
1. The operation of the order of BIFR having been G
stayed, the Company Petition was maintainable at
the instance of the respondent.
2. Section 19 of SICA will have no application as it
speaks of financial assistance by the persons
specified therein. H
278 SUPREME COURT REPORTS [2008] 9 S.C.R.
A 3 Section 22 of SICA must be read in the context of
Section 19 thereof.
4. Section 26 or any other provision of SICA do not
oust the jurisdiction of the Company Court.
B 5 SICA as interpreted by this Court in NGEF Ltd.
(supra) would prevail over 1956 Act only if the
provisions of the latter are inconsistent with the
provisions of SICA and not otherwise.
6. The Scheme in question being subject to approval
c by BIFR and that BIFR by a reason of its order dated
151 May, 2007 had granted approval thereof, the legal
requirements must be held to have been complied
with.
STATUTORY PROVISIONS
D
SICA +
15. SICA was enacted to make, in the public interest, spe-
cial provisions with a view to securing the timely detection of
E s1c1< and potentially sick companies owning industrial under-
takings, the speedy determination by a Board of experts of the
p1e1.•e-rtive, ~meliorative, remedial and other measures which
neerl to be taken with respect to such companies and the ex-
peditiouc; enforcement of the measures so determined and for
matters connected therewith or incidental thereto.
F
16 . .Sed1on 15 of SICA provides for making reference by
tt-.1:; budld uf u1recturs of the Company on becoming an indus-
:na1 t-0mJ.idny, d sick industrial company, to the Board for deter-
mmati.31 of ttie meC:1::.ures to be adopted with respect to the
,. ccn ·tJdf; 1 0.,..;\lun l t, J.lrov1de::; for making inquiry into the work-
, .J
inq ot .:;1cK 111uusil 1ai co111f.JC1ny by the Board atter receiving ref-
<.:• c'lt,a. ~1:;1,uu11 ·1 / prov1ue::; tor powers ot Board to make suit-
,.;:._ . 1;v· _. ~:1e -.uP1plet10n uf m(j .Jll)' Sub sect10n U,1 thereof
't:af: as unaer: ·
1-1 1 ' nJ.:cn 1t Board to make su.tRble 0rder on the
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 279
OF INDIA [S.B. SINHA, J.]
completion of inquiry. A
(3) If the Board decides under sub-section (1) that it is not
practicable for a sick industrial company to make its net
worth exceed the accumulated losses within a reasonable
time and that it is necessary or expedient in the public
interest to adopt all or any of the measures specified in B
section 18 in relation to the said company it may, as soon
as may be, by order in writing, direct any operating agency
specified in the order to prepare, having regard to such
guidelines as may be specified in the order, a scheme
providing for such measures in relation to such company." C
17. Section 18 provides for preparation and sanction of
Scheme. Sections 18(1}(c}, 18(3) and 18(6A) read as under:-
"Section 18 - Preparation and sanction of Schemes
D
(1) Where an order is made under sub-section (3) of
A
section 17 in relation to any sick industrial company, the
+ operating agency specified in the order shall prepare, as
expeditiously as possible and ordinarily within a period of
ninety days from the date of such order, a scheme with
respect to such company providing for any one or more of E
the following measures, namely:-
111
(c) the amalgamation of-
(i) the sick industrial company with any other company, or
F
' )- (ii) any other company with the sick industrial company;
(hereafter in this section, in the case of sub-clause (i), the
other company, and in the case of sub-clause (ii), the sick
industrial company, referred to as "transferee company");
G
(3) (a) The Scheme prepared by the operating agency
shall be examined by the Board and a copy of the scheme
with modification, if any, made by the Board shall be sent,
in draft, to the sick industrial company and the operating
agency and in the case of amalgamation, also to any other
H
280 SUPREME COURT REPORTS (2008] 9 S.C.R.
A company concerned, and the Board shall publish or cause
to be published the draft scheme in brief in such daily
newspapers as the Board may consider necessary, for
suggestions and objections, if any, within such period as
the Board may specify.
B (b) The Board may make such modifications, if any, in the
draft scheme as it may consider necessary in the light of
the suggestions and objections received from the sick
industrial company and the operating agency and also
from the transferee industrial company and any other
c company concerned in the amalgamation and from any
shareholder or any creditors or employees of such
companies:
Provided that where the scheme relates to amalgamation
the said scheme shall be laid before the company other
D
than the sick industrial company in the general meeting
for the approval of the scheme by its shareholders and no
such scheme shall be proceeded with unless it has been
approved, with or without modification, by a special
resolution passed by the shareholders of the company
E other than the sick industrial company.
(6A) Where a sanctioned scheme provides for the transfer
of any property or liability of the sick industrial company in
favour of any other company or person or where such
F scheme provides for the transfer of any property or liability
of any other company or person in favour of the sick
industrial company, then, by virtue of, and to the extent
provided in, the scheme, on and from the date of coming
into operation of the sanctioned scheme or any provision
thereof, the property shall be transferred to, and vest in,
G
and the liability shall become the liability of, such other
company or person or, as the case may be, the sick
industrial company."
18.Section 19 provides for rehabilitation by giving finan-
H cial assistance; sub-sections (1 ), (2) and (4) whereof reads as
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 281
OF INDIA [S.B. SINHA, J.]
;.
under:- A
"Section 19 - Rehabilitation by giving financial assistance.
-(1) Where the scheme relates to preventive, ameliorative,
remedial and other measures with respect to any sick
industrial company, the scheme may provide for financial
B
assistance by way of loans, advances or guarantees or
reliefs or concessions or sacrifrces from the Central
..... Government, a State Government, any scheduled bank or
~ other bank, a public financial institution or State level
institution or any institution or other authority (any
Government, bank, institution or other authority required c
by ascheme to provide for such financial assistance being
hereafter in this section referred to as the person required
by the scheme to provide financial assistance) to the sick
industrial company.
D
(2) Every scheme referred to in sub-section (1) shall be
>
circulated to every person required by the scheme to
+ provide financial assistance for his consent within a period
of sixty days from the date of such circulation or within
such further period, not exceeding sixty days, as may be
allowed by the Board, and if no consent is received within E
such period or further period, it shall be deemed that
consent has been given.
(4) Where in respect of any scheme consent under sub-
section (2) is not given by any person required by the F
scheme to provide financial assistance, the Board may
adopt such other measures, including the winding up of
the sick industrial company, as it may deem fit."
Sections 20, 26 and 32 of SICA read as under :-
G
"Section 20 - Winding up of sick industrial company. - (1)
Where the Board, after making inquiry under section 16
and after consideration of all the relevant facts and
circumstances and after giving an opportunity of being
heard to all concerned parties, is of opinion that the sick H
282 SUPREME COURT REPORTS [2008] 9 S. C.R.
A industrial company is not likely to make its net worth exceed ,I..
the accumulated losses within a reasonable time while
meeting all its financial obligations and that the company
as a result thereof is not likely to become viable in future
and that it is just and equitable that the company should
B be wound up, it may record and forward its opinion to the
concerned High Court.
(2) The High Court shall, on the basis of the opinion of the ......
Board, order winding up of the sick industrial company ,,.
and may proceed and cause to proceed with the winding
c up of the sick industrial company in accordance with the
provisions of the Companies Act, 1956 (1 of 1956).
(3) For the purpose of winding up of the sick industrial
company, the High Court may appoint any officer of the
operating agency, if the operating agency gives its
D
consent, as the liquidator of the sick industrial company
•
and the officer so appointed shall for the purposes of the
...+
winding up of the sick industrial company be deemed to
be, and have all the powers of, the official liquidator under
the Companies Act, 1956 (1 of 1956).
E
(4) Notwithstanding anything contained in sub-section (2)
or sub-section (3), the Board may cause to be sold the
assets of the sick industrial company in such manner as
it may deem fit and forward the sale proceeds to the High
F Court for orders for distribution in accordance with the
provisions of section 529A, and other provisions of the ~
'
Companies Act, 1956 (1 of 1956).
Section 26 - Bar of jurisdiction. - No order passed or
proposal made under this Act shall be appealable except
G as provided therein and no civil court shall have jurisdiction
in respect of any matter which the Appellate Authority or
the Board is empowered by, or under, this Act to determine
)-
and no injunction shall be granted by any court or other
authority in respect of any action taken or to be taken in
H pursuance of any power conferred by or under this Act.
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 283
OF INDIA [S.B. SINHA, J.]
Section 32 - Effect of the Act on other laws. - (1) The A
provisions of this Act and of any rules or schemes made
thereunder shall have effect notwithstanding anything
inconsistent therewith contained in any other law except
the provisions of the Foreign Exchange Regulation Act,
1973 (46 of 1973)and the Urban Land (Ceiling and B
Regulation) Act, 1976 (33 of 1976) for the time being in
force or in the Memorandum or Articles of Association of
an industrial company or in any other instrument having
effect by virtue of any law other than this Act.
(2) Where there has been under any scheme under this C
Act an amalgamation of a sick industrial company with
another company, the provisions of section 72A of the
Income-tax Act, 1961 (43 of 1961 ), shall, subject to the
modifications that the power of the Central Government
> under that section may be exercised by the Board without D
the Central Government under that section may be
+
exercised by the Board without any recommendation by
the specified authority referred to in that section, apply in
relation to such amalgamation as they apply in relation to
the amalgamation of a company owning an industrial E
undertaking with another company."
The Companies Act, 1956
Section 391 of the Companies Act, 1956 reads as under:
Section 391 - Power to compromise or make F
arrangements with creditors and members.- (1) Where a
compromise or arrangement is proposed-
(a) between a company and its creditors or any class of
them; or
G
(b) between a company and its members or any class of
them,
the Tribunal may, on the application of the company or of
any creditor or member of the company or, in the case of H
284 SUPREME COURT REPORTS [2008] 9 S.C.R.
A a company which is being wound up, of the liquidator,
order a meeting of the creditors or class of creditors, or
of the members or class of members, as the case may be
to be called, held and conducted in such manner as the
Tribunal directs.
B (2) If a majority in number representing three-fourths in
value of the creditors, or class of creditors, or members, .._
or class of members as the case may be, present and
~
voting either in person or, where proxies are allowed under
the rules made under section 643, by proxy, at the meeting,
c agree to any compromise or arrangement, the compromise
or arrangement shall, if sanctioned by the Tribunal, be
binding on all the creditors, all the creditors of the class,
all the members, or all the members of the class, as the
case may be, and also on the company, or, in the case of
D a company which is being wound up, on the liquidator and
contributories of the company:
•
+
Provided that no order sanctioning any compromise or
arrangement shall be made by the Tribunal unless the
Tribunal is satisfied that the company or any other person
E by whom an application has been made under sub-section
(1) has disclosed to the court, by affidavit or otherwise, all
material facts relating to the company, such as the latest
financial position of the company, the latest auditor's report
on the accounts of the company, the pendency of any
F investigation proceedings in relation to the company under
sections 235 to 351, and the like.
(3) An order made by the Tribunal under sub-section (2)
shall have no effect until a certified copy of the order has
been filed with the Registrar.
G
(4) A copy of every such order shall be annexed to every
copy of the memorandum of the company issued after the
certified copy of the order has been filed as aforesaid, or
in the case of a company not having a memorandum, to
H every copy so issued of the instrument constituting or
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 285
OF INDIA [S.B. SINHA, J.]
defining the constitution of the company. A
(5) If default is made in complying with sub-section (4), the
company, and every officer of the company who is in default,
shall be punishable with fine which may extend to one
hundred rupees for each copy in respect of which default
is made. B
,,,.
~
(6) The Tribunal may, at any time after an application has
been made to it under this section stay the commencement
or continuation of any suit or proceeding against the
company on such terms as the Tribunal thinks fit, until the c
application is finally disposed of."
Interpretation of the Statutory Provisions
19. It was conceded by Mr. Sundaram SICA being a spe-
cial law vis.-a-vis the 1956 Act, it shall prevail over the latter.
> D
The learned counsel, however, qualifies his submission by con-
+.
tending that SICA only excludes the provisions of the Compa-
nies Act when they are inconsistent with each other.
The provisions of a special Act will override the provisions
of a general Act. A later of it will override an earlier Act. 1956 E
Act is a general Act. It consolidates and restates the law relat-
ing to companies and certain other associations. It is prior in
point of time to SICA.
~ ~
Wherever any inconstancy is seen in the provisions of the
'r F
two Acts, SICA would prevail. SICA furthermore is a complete
code. It contains a non-obstante clause in Section 32.
20. SICA is a special statute. It is a self contained Code.
The jurisdiction of the Company Judge in a case where refer-
ence had been made to BIFR would be subject to the provi- G
sions of SICA.
We may, at this stage, notice the effect of SICA vis-a-vis
the other Acts, as has been noticed by this Court in some of its
judgments
H
286 SUPREME COURT REPORTS [2008] 9 S C.R
A 21. In NGEF Ltd. vs Chandra Developers (P) Ltd. : (2005)
8 SCC 219, in regard to the jurisdiction of the Company Court
it was held :-
"20. Mr K.K. Venugopal, the learned Senior Counsel, would
submit that having regard to sub-section (2) of Section
B 536 of the Companies Act, the High Court has the
jurisdiction to permit sale of assets of the Company even .....
before passing of the winding-up order, in relation whereto ,,
Section 20(4) of SICA will have no application.
c 23. The provisions relating to winding up by the courts
occur in Chapter II of the Companies Act, 1956. Section
433 of the Act enumerates the circumstances in which the
company may be wound up by the court including the
inability on the part of the company to pay its debts. Section
441 of the Act specifies as to when the proceeding for
D "
winding up of a company by the court shall commence at
the time of the presentation of the petition for the winding +
up.
In a case, however, where winding-up proceedings are
E initiated in terms of recommendations made by BIFR or
AAIFR, as the case may be, no such petition is required
to be presented. Section 443 lays down the power of a
court on hearing petition; clause (d) of sub-section (1)
whereof provides for a power to make an order for winding
F up of the company with or without costs or any other order -(~ '
that it thinks fit. Section 444 lays down the consequences
of the winding-up order. In terms of Section 446 of the Act,
in the event of passing of a winding-up order or
appointment of liquidator as Provisional Liquidator, no
suit or legal proceeding would commence or if pending at
G
the date of the winding-up order, shall not be proceeded
with against the company except by leave of the court and 'r
subject to such terms as the court may impose. Sub-section ~
(2) of Section 446 provides for a non obstante clause, in
terms whereof the Company Court shall have jurisdiction
H
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 287
OF INDIA [S.B. SINHA, J.]
to entertain or dispose of any suit or proceedings specified A
therein. Section 451 lays down general provisions as to
liquidators. Section 457 specifies the power of the
liquidator which is required to be exercised with the
sanction of the court. Sub-section (2) of Section 536 reads
as under: B
"536. Avoidance of transfers, etc., after commencement
of winding up.-(1) * * *
(2) In the case of a winding up by the Tribunal, any
disposition of the property (including actionable claims) c
of the company, and any transfer of shares in the company
or alteration in the status of its members, made after the
commencement of the winding up, shall, unless the Tribunal
otherwise orders, be void."
In regard to jurisdiction of the Company Court it was held:- D
"39. The provisions of SICA contain non obstante clauses.
It is a special statute. It is a complete code in itself. The
jurisdiction of the Company Court in such matters would
arise only when BIFR or AAAIFR, as the case may be, has
exercised its jurisdiction under Section 20 of SICA E
recommending winding up of the Company upon arriving
at a finding that there does not exist any chance of revival
of the Company."
It was furthermore held: F
"40. Mr Venugopal has placed reliance upon a decision
of a learned Single Judge of the Karnataka High Court in
Karnataka State Industrial Investment and Development
Corpn. Ltd. v. lntermodel Transport Technology Systems
for the proposition that despite. the fact BIFR retains G
jurisdiction to get the assets of a sick company sold in
terms of sub-section (4) of Section 20 of SICA; still the
leave of the Company Court, therefor would be required.
The said decision, however, has been reversed by the
Division Bench of the Karnataka High Court in BPL Ltd. H
288 SUPREME COURT REPORTS [2008] 9 S.C.R.
A v. lntermodal Transport Technology Systems (Karnataka)
Ltd. holding that the Company Court has no such
jurisdiction. We generally accept the views of the Division
Bench.
41. It is difficult to accept the submission of the learned
B counsel appearing on behalf of the respondents that both
the Company Court and BIFR exercise concurrent
jurisdiction. If such a construction is upheld, there shall be
chaos and confusion. A company declared to be sick in
terms of the provisions of SICA, continues to be sick unless
c it is directed to be wound up. Till the company remains a
sick company having regard to the provisions of sub-
section (4) of Section 20, BIFR alone shall have jurisdiction
as regards sale of its assets till an order of winding up is
passed by a Company Court.
D
42. Apart from the fact that sub-section (4) of Section 20
contains a non obstante clause and, thus, it shall prevail
over the provisions contained in sub-section (2). The said
Act is also a latter statute.
E 43. The provisions of SICA would prevail over the
provisions of the Companies Act. Section 20 of SICA
relates to winding up of the sick industrial company. Before
BIFR or AAIFR, as the case may be, makes a
recommendation for winding up of the Company, an enquiry
F is made in terms of Section 16 thereof wherefor all relevant
facts and circumstances are required to be taken into
consideration. Before an opinion is arrived at in that behalf,
the parties are given an opportunity of hearing. The
satisfaction arrived at by BIFR that the Company is not
likely to become viable in future and it is just and equitable
G
that the Company should be wound up must be based on
objective criteria. The High Court indisputably on receipt
of such recommendation of BIFR would initiate a
proceeding for winding up in terms of Section 433 of the
Companies Act. Sub-section (2) of Section 536 ipso facto
H
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 289
OF INDIA [S.B. SINHA, J.]
;._
does not confer any jurisdiction upon the Company Court A
to direct sale of the assets of the sick company. It has to
exercise its power thereunder subject to the provisions of
the special statute governing the field. Despite the fact
that the procedures laid down under the Compani~s Act
would be applicable therefor but they must be read with B
- 1
sub-section (4) of Section 20 of SICA which contains a
non obstante clause and in terms thereof, BIFR is
authorised to sell the assets of the sick industrial company
in such a manner as it may deem fit. By reason of the said
provision, BIFR is also empowered to forward the sale c
proceeds to the High Court for orders for distribution in
accordance with Section 529-A and other provisions of
the Companies Act which in no uncertain terms would
mean that the distribution of the sale proceeds would be
for the purpose of meeting the claims of the creditors in
,j, D
the manner laid down therein. The intention of Parliament
~· in enading the said provision becomes clear as in terms
of Section 22-A of SICA, BIFR is empowered to issue any
direction in the interest of the sick industrial company or
its creditors or shareholders and direct the sick industrial
company not to dispose of its assets except with its assent. E
Section 32, as noticed hereinbefore, again contains a
non obstante clause. "'rhe scheme suggests that BIFR
retains control over the assets of the Company and in
terms of the aforementioned provisions may either prevent
any sale or permit any sale of the assets of the sick industrial F
company. Such a power in BIFR remains till a winding-up
order is passed by the High Court and a stage arrives for
the High Court for issuing orders for distribution of the
sale proceeds.
G
44. SICA was furthermore enacted subsequent to the
provisions of the Companies Act. It is not, thus, possible
to accept the submission that the High Court exercises a
concurrent jurisdiction."
It was ruled that the Company Court and the BIFR do not H
290 SUPREME COURT REPORTS [2008) 9 S. C.R.
A exercise concurrent jurisdiction, holding:-
"45. It may be true that the High Court's jurisdiction is that
of the Appellate Authority but keeping in view the
terminology contained in sub-section (4) of Section 20
read with Section 32 of the Act, it leaves no manner of
B doubt that the provisions of SICA shall prevail over the
provisions of the Companies Act. For the aforementioned ~
purpose, it was not necessary for Parliament to mention >
specifically the provisions of sub-section (4) of Section 20
that the same shall prevail over Section 536 of the
c Companies Act, as was suggested by the learned counsel
appearing for the first respondent. The construction of the
provisions of both the Acts, as suggested by the learned
counsel, that both the provisions of sub-section (4) of
Section 20 and Section 536 should be read conjointly so
D as to enable an applicant to obtain a sanction of both .
BIFR and the Company Court, thus, do not appeal to us." +
The Court noticed the non obstante clause contained in
clause (4) of Section 20 as also Section 32 of SICA to hold that
the High Court does not exercise concurrent jurisdiction with
E BIFR. The fact that SICA was enacted in 1984 had also been
taken into consideration.
The Court considered in details the exercise of the juris-
diction of the Company Court vis-a-vis the BIFR to opine :-
F "69. BIFR admittedly had the power to sell the assets of
the Company but the High Court until a winding-up order
is issued does not have the same. BIFR in its order dated
24-8-2002 might have made an observation to the effect
that the Company may approach the High Court in case
G it intended to dispose of its property by private negotiation
but the same would not mean that BIFR could delegate its
power in favour of the High Court. BIFR being a statutory
authority, in the absence of any provision empowering it to
delegate its power in favour of any other authority had no
H jurisdiction to do so. "Delegatus non potest delegare" is
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 291
OF INDIA [S.B. SINHA, J.]
a well-known maxim which means unless expressly A
authorised a delegatee cannot sub-delegate its power.
Moreover, the said observations of BIFR would only mean
that the Company Court could exercise its power in
accordance with law and not dehors it. If the Company
Court had no jurisdiction to pass the impugned order, it B
could not derive any jurisdiction only because BIFR said
so."
(See also Morgan Securities and Credit Pvt. Ltd. v. Modi
Rubber Ltd. [AIR 2007 SC 683]
c
22. The principle laid down therein has been reiterated in
Bombay Dyeing & Manufacturing Co. Ltd. vs. Bombay Envi-
ronmental Action Group : (2006) 3 SCC 434 stating :
"13. The 1993 Act was enacted to provide for and regulate
the payment of interest on delayed payments to small- D
scale and ancillary industrial undertakings and for matters
-+ connected therewith.
14. The provisions of the 1993 Act, therefore, do not
envisage a situation where an industrial company becomes
sick and requires framing of a scheme for its revival. E
15. It is no doubt true that an award in relation to a claim
of a small-scale industry if made by the Council would be
governed by the provisions of the Arbitration and
~ Conciliation Act, 1996 (for short "the 1996 Act")." F
)f'
SICA furthermore was enacted to secure the principles
specified in Article 39 of the Constitution of India. It seeks to
give effect to the larger public interest. It should be given pri-
macy because of its higher public purpose. Section 26 of SICA
bars the jurisdiction of the Civil Courts. G
What scheme should be prepared by the operating agency
l
for revival and rehabilitation of the sick industrial company is
within the domain of BIFR. Section 26 not only covers orders
passed under SICA but also any matter which BIFR is empow-
H
292 SUPREME COURT REPORTS [2008] 9 S.C.R.
A ered to determine.
23. The jurisdiction of civil court is, thus, barred in respect
of any matter for which the appellate authority or the Board is
empowered. The High Court may not be a civil court but its ju-
risdiction in a case of this nature is limited.
B
24. Our attention has been drawn to the decision of this
Court in Jyoti Bhushan Gupta v. Banaras Bank Ltd, [ (1962)
Supp 1 SCR 73] where the question which arose for consider-
ation was as to whether Article 183 of the Limitation Act shall
c have any application in regard to the applicability of the provi-
sions of the Limitation Act, it was stated :-
"By the Companies Act of 1913, the High Court was
invested with jurisdiction to order payment of the amounts
due by debtors of companies ordered to be wound up.
D This jurisdiction may be invoked as of right against all
persons whose names are placed on the list of
contributories. The jurisdiction is ordinary : it does not
depend on any extraordinary action on the part of the High
Court. The jurisdiction is also original in character because
E the petition for exercise of the jurisdiction is entertainable
by the High Court as a court of first instance and not in
exercise of its appellate jurisdiction. Again by s. 187 no
special jurisdiction is conferred. The High Court
adjudicates upon the liability of the debtor to pay debts
F due by him to the Company : the jurisdiction is therefore
civil. Normally, a creditor has to file a suit to enforce liability
for payment of a debt due to him from his debtor. The
Legislature has by s. 187 of the Companies Act
empowered the High Court in a summary proceeding to
determine the liability and to pass an order for payment
G
but on that account the real character of the jurisdiction
exercised by the High Court is not altered. Nor is there
any substance in the contention that the authority to order
payment of a debt under s. 187 is merely a power of the
High Court and not its jurisdiction. Bys. 3 read withs. 187
H
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 293
OF INDIA [S.B. SINHA, J.]
of the Companies Act the High Court has jurisdiction to A
direct payment of the amount due by a contributory : and
an order passed for payment manifestly is an order passed
in exercise of the jurisdiction vested in the High Court by
s. 3 read with s. 187 of the Companies Act. "
It was furthermore observed:-
B
"The jurisdiction to deal with the claims of companies
ordered to be wound up is conferred by the Indian
Companies Act and to that extent the Letters Patent are
modified. There is, however, no difference in the character c
of the original civil jurisdiction which is conferred upon the
High Court by Letters Patent and the jurisdiction conferred
by special Acts. When in exercise of its authority conferred
by a special statute the High Court in an application
presented to it as a court of first instance declares liability
0
to pay a debt, the jurisdiction exercised is original and
civil and if the exercise of that jurisdiction does not depend
upon any preliminary step invoking exercise of discretion
of the High Court, the jurisdiction is ordinary."
25. In Damji Valli Shah v. Life Insurance Corporation of E
India, [(1965) 2 SCR 665 ], the question which arose for con-
sideration was as to whether a similar provision made in the
Life Insurance Corporation Act, 1956 shall bar the jurisdiction
of the Company Court in terms of Section 446 (1) of the Com-
panies Act. Referring to Section 41 of the Life Insurance Cor- F
poratitm Act, 1956 it was stated that the Tribunal constituted
under the LIC Act will have exclusive jurisdiction. It was opined:-
"20. It is in view of the exclusive jurisdiction which sub-s.
(2) of s. 446 of the Companies Act confers on the company
Court to entertain or dispose of any suit or.proceeding by G
or against a company or any claim made by or against it
that the restriction referred to in sub-s. (1) has been
imposed on the commencement of the proceedings or
proceeding with such proceedings against a company
after a winding-up order has been made. In view of s. 41 H
294 SUPREME COURT REPORTS [2008) 9 S.C.R.
A of the UC Act the company Court has no jurisdiction to
entertain and adjudicate upon any matter which the Tribunal
is empowered to decide or determine under that Act. It is
not disputed that the Tribunal has jurisdiction under the
Act to entertain and decide matters raised in the petition
B filed by the Corporation under s. 15 of the UC Act. It must
follow that the consequential provisions of sub-s. (1) of s.
446 of the Companies Act will not operate on the
proceedings which be pending before the Tribunal or which
may be sought to be commenced before it."
C 26. What in this case, however, has been contended is
that BIFR had no jurisdiction to make a scheme as envisaged
under Section 391 of the Act. Even otherwise, 'civil court' has a
definite connotation. The jurisdiction of the Company Court is
now vested in the Tribunal. Therefore, it will be difficult to hold,
D in view of a changed situation, that Section 26 ousts the juris-
diction of the Company Court in totality. The decision, however,
also says that the special statute shall prevail over the general
rule.
Although it may not be very relevant, we may notice that
E this Court in Dwarka Prasad Agarwal v. Ramesh Chander
Agarwal, [(2003) 6 sec 220) opined as under :-
"22. The dispute between the parties was eminently a
civil dispute and not a dispute under the provisions of the
F Companies Act. Section 9 of the Code of Civil Procedure
confers jurisdiction upon the civil courts to determine all
disputes of civil nature unless the same is barred under a
statute either expressly or by necessary implication. Bar
of jurisdiction of a civil court is not to be readily inferred.
A provision seeking to bar jurisdiction of a civil court
G
requires strict interpretation. The court, it is well settled,
would normally lean in favour of construction, which would
uphold retention of jurisdiction of the civil court. The burden
of proof in this behalf shall be on the party who asserts that
the civil court's jurisdiction is ousted . (See Sahebgouda
H
TATA MOTORS v. PHARMACEUTICAL PRODUCTS 295
OF INDIA [S.B. SINHA, J.]
,,;.
v. Ogeppa) Even otherwise, the civil court's jurisdiction is A
not completely ousted under the Companies Act, 1956."
We are, therefore, of the opinion that the judgment of the
High Court cannot be sustained. We may furthermore notice
that the decision of the learned single judge has been over-
B
.... ruled by a Division Bench of the Bombay High Court in Ashok
Organics Industries Ltd. v. Dena Bank (Company Petition No.
-1 108 of 2006, disposed of on 25.1.2008).
It is also not possible to harmonize the provisions of Sec-
tions 391 to 394 of the 1956 Act with the provisions of SICA. c
For the views we have taken, it is not necessary to con-
sider the other contentions raised at the bar.
27. The question, however, is what relief should be granted
,A in view of the subsequent events. Various intervention applica-
D
...+ tions have been filed. We do not intend to make any observa-
tion in regard thereto. We are, however, of the opinion that it is
a fit case where we should exercise our jurisdiction under Sec-
ti on 142 of the Constitution of India to meet the object for which
the Act has been enacted.
E
28. We have been taken through the Scheme. The Scheme
provides for not only entering into an arrangement as regards
repayment of debts to secured creditors and unsecured credi-
.._ tors but also provides for a merger, subject of course, to an
).;'
appropriate order being passed by BIFR. The question is as to F
whether such a Scheme could be placed for approval before
BIFR. We are of the view that it could not be. Before BIFR could
approve a scheme, the same must be drawn in terms of the
provisions of the Act and not de hors the scheme. It is required
to apply its own mind. The operating agency is supposed to
G
make a scheme. The operating agency before the AAIFR took
~ one stand; before us it has taken another. According to it, it was
not involved in the preparation of the Scheme. It had no occa-
sion to apply its own mind. Furthermore, after the learned Single
Judge passed its order, AAIFR disposed of the appeal only in
H
296 SUPREME COURT REPORTS [2008] 9 S.C.R.
A terms of the order of the High Court stating :-
"In view of IDB l's recommendation of the revival cum merger
proposal submitted by PPIL, which is in accordance with
Bombay High Court's order dated 13.2.2006, we set aside
the impugned order dated 27.10.2004 and direct BIFR to
B consider the scheme vetted by the OA within a period of
three months from the date of this order and take
necessary further steps for the revival of the appellant
...
)'"
company in accordance with law.'"
c 29. The order of BIFR dated 1•1 May, 2007 also clearly
show that it has granted its approval in view of the observations
made by the appellate authority. It might have done so keeping
in view the doctrine of judicial discipline in mind.
30. The order of BIFR is not an outcome of any pre-appli-
D cation of mind. There is no finding that it has taken into consid- .
eration all the relevant facts. There is nothing to show that such ~
an order is fair or reasonable or meets the requirements of law.
31. We are, therefore, of the opinion that not only the judg-
ment of the High Court but also the orders of BIFR as also the
E AAIFR should be set aside and the matter should be remitted
to the BIFR so as to enable it to proceed in accordance with the
provisions of SICA afresh.
32. The appeal is allowed with the aforementioned obser-
F vations and directions. In the facts and circumstances of the .,.
case, there shall be no order as to costs.
Appeal Allowed.