SOUTHERN REFINERIES LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) Whether the State Government after having participated in the proceedings before the Board for Industrial and Financial Reconstruction, for short, BIFR, can resile from giving sales tax exemption and concessional Central Sales Tax (CST) for a further period in the light of the sickness of the appellant company and proceed to act in a manner contrary to the directions contained in the order of BIFR without having preferred an appeal against the said order, is the short question which we are called upon to answer in this intra court appeal. Briefly put, the appellant's case is as follows:

(2.) Bifr, to which the company was referred under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985, for short, the Act, after making necessary enquiries into the matter declared the company sick vide Ext. P-2 order and placed the company under the control of the board from the date of Ext. P-2 order. Though the scheme for revival was drawn up by the operating agency (ICICI), it could not take off and, therefore, BIFR in its meeting held on 6-7-1999 directed the ICICI to formulate a fresh rehabilitation scheme based on the company's revised proposal and based on that, BIFR approved the rehabilitation scheme on 26-12-2000 vide Ext. P-3 order which, inter alia, provided for specific relief to the company in the form of sales tax exemption and concessional Central Sales Tax (CST) under the Kerala Government Notifications No. SRO 520/1992 & 521/1992 without any ceiling. This was circulated among all concerned.

(3.) However, during January 2001, i.e., while the draft rehabilitation scheme was under consideration, the sales tax authorities under the State Government raised demands against the appellant company and initiated steps for revenue recovery, besides freezing the company's bank accounts. As the appellant company felt that this action was in contravention of Section 22 of the Act which suggests that, where a scheme is under preparation, consideration or implementation in a sick industrial company, no proceedings for execution or recovery of money can be initiated against it notwithstanding anything contained in any other law except with the consent of the Board, the appellant company moved this Court by filing O.P. No. 10157 of 2001, which was disposed of vide Ext. P-5 judgment directing the appellant company to approach the Government for implementation of BIFR direction. In the meanwhile, the ICICI which is the operating agency submitted the draft rehabilitation scheme with changes ordered by BIFR Bench on 28-5-2001 and accordingly, Ext. P-6 scheme was sanctioned by BIFR directing the State Government to consider extending of sale tax exemption and concessional CST till 31-3-2006 without ceiling. By implementing the rehabilitation scheme, appellant company was able to achieve positive net worth during 2005-2006 and accumulated losses were wiped off during the next accounting period.