GOVERNMENT OF INDIA, DEPARTMENT OF REVENUE DIRECTOR GENERAL OF INCOME TAX Vs. APPELLATE AUTHORITY FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION

JUDGEMENT

(1.) THIS is a writ petition whereby the petitioner challenges the order of the Appellate Authority for Industrial and Financial Reconstruction ('the AAIFR1) dated 16 -5 -2001 whereby the appeal of the petitioner, the Government of India (Department of Revenue), against the order of the Board for Industrial and Financial Reconstruction ('the BIFR') dated 22 -11 -2000 was dismissed. The facts giving rise to the writ petition are as follows :

(2.) IN 1992, the third respondent Rajasthan Explosive & Chemicals Ltd., was declared a sick industrial company by the BIFR. The promoters of the company were not able to make a viable proposal for rehabilitation of the third respondent and nurse it back to health. In view of this situation, the BIFR by its order dated 7 -7 -1999, inter alia, directed the IDBI, the operating agency, to issue an advertisement for change of management. One 'S', in pursuance of the advertisement, made a proposal for rehabilitation of the company. The proposal was found viable by the BIFR. On 6 -12 -1999, the BIFR directed IDBI, to formulate rehabilitation scheme based on the proposal of 'S'. Accordingly, a Draft Rehabilitation Scheme was prepared. The BIFR, by its order dated 14 -2 -2000 directed the Draft Rehabilitation Scheme (DRS) to be circulated to the concerned parties under Section 19 of the Sick Industrial Companies (Special Provisions) Act, 1985 ('SICA'). In the draft scheme the following reliefs from the Government of India (Department of Revenue) were envisaged :

(3.) IT may be noted that in para 7 of the order of the BIFR dated 8 -5 -2000, it was noted that Captain Solanki, the promoter of the company, had agreed to make good any shortfall that might arise in the implementation of the scheme on account of inadequate reliefs and concessions forthcoming from the Government/tax agencies. None of the parties including the Income Tax Department filed any appeal against the order of the BIFR dated 8 -5 -2000. The BIFR by its order dated 22 -11 -2000 circulated the sanctioned scheme for implementation to the concerned parties. It may be noticed that in the sanctioned scheme, the following reliefs were required to be given by the petitioner :