GIRISH UPADHYAY Vs. PASCHIM PETROCHEM LTD

JUDGEMENT

(1.) IN all these cases, as validity of a common provision of law is under challenge and a common question is involved, though they were heard separately, they are disposed of by this common judgment.

(2.) THE petitioners of all the writ petitions have challenged the constitutional validity of the 3rd proviso to Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 [hereinafter referred to as "the SICA"] as incorporated in the year 2002, which reads as under:-

(3.) THE learned counsel appearing on behalf of the petitioners, assailing the validity of the 3rd proviso to Section 15 of the SICA, has contended that the said provision is violative of Articles 14, 19(1)(g) and 21 of the Constitution of India as it defeats the entire object and purpose of the SICA, more particularly Section 15. It is contrary to the object and purpose of the SICA which was brought into force in public interest with a view to securing the timely detection of sick and potentially sick industrial Companies owning industrial undertakings and speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures. He would further contend that the object and purpose of the SICA of inquiring and declaring a unit as a sick industry, the process of preparing a scheme for such industry, which are the primary duty and objectivity, will get defeated if the 3rd proviso to Section 15 of the SICK holds the field. It creates an unreasonable situation affecting the livelihood of the workmen and other similarly situated creditors and infringing Articles 14, 19(1)(g) and 21 of the Constitution of India. Highlighting the provisions of the SICA, the learned counsel would further contend that the umbrella of the Board for Industrial and Financial Reconstruction ["the BIFR" for short] providing balancing interest of all creditors is being taken away by virtue of the 3rd proviso in question. Even the workers, Income-tax department, Customs & Excise department of the Central Government or Sales-tax department of a State will be precluded to claim their dues and will get nothing from the sale proceedings of the industrial unit, if sold by the secured creditor prior to winding up. According to him, by taking measures under Section 13(4) of the SARFAESI Act, the order of sickness made by the BIFR on the basis of the reference will not come to an end; the BIFR being a statutory expert body having expertise in banking, can decide and declare the Company in reference as a sick Company and requires to examine on the front of rehabilitation, to provide nursing treatment and/or to wind up such Company, as the case may be, and, therefore, even for measures under Section 13(4) of the SARFAESI Act, prior permission of the BIFR is required to be obtained. He would further contend that the 3rd proviso to Section 15 not only defeats the object and purpose of the SICA, but is also contrary to the substantive statutory provision i.e. Section 15 to which it is a proviso. He would rely on the decision of the Orissa High Court in the case of Noble Aqua Pvt. Ltd. vs. State Bank of India, reported in AIR 2008 Orissa 103, wherein the Orissa High Court held that after declaring an industry as sick, at the stage of reference, the 2nd proviso to Section 15 of the SICA is not applicable.