MOHAMMAD NIZAMUDDIN Vs. SHAKTI LPG LIMITED

JUDGEMENT

(1.) Although the petitioners are different, respondent is the same in both the petitions. Both the petitions were filed seeking winding up of the respondent company under Section 433 (e) and (f) of the Companies Act, on the premise that the respondent company had been unable to pay its debts and, therefore, it had lost its substratum and therefore liable to be wound up. Initially, notice before admission was ordered to the respondent. The respondent appeared through its counsel. When the matter had been coming up for filing counter affidavit on the side of the respondent, its counsel filed an affidavit stating that the matter had already been referred to the Board of Industrial Finance and Rehabilitation, for short 'BIFR', and the same had been pending before it.

(2.) The learned counsel for the petitioners, Sri V.Srinivas represents that when the respondent company is not an industrial company and merely because the matter has been referred to BIFR and the same is pending enquiry, the proceedings in this Company Petition cannot be stopped and it is open to the Company Court to consider whether the respondent company is an industrial company or not and in the event of the Company Court comes to the conclusion that the respondent company is not an industrial company notwithstanding the pendency of the petition before the BIFR the Company Petition can be proceeded further. Per contra Sri V.S.Raju, learned counsel for the respondent would seek to contend that once the application is registered by the BIFR, the proceedings shall not be further proceeded with by the Company Court. Having regard to the respective contentions, the short point that falls for determination at the threshold of these two petitions is obviously the jurisdictional question, inasmuch as there has been no gain saying that the application before the BIFR has been registered and is pending enquiry and it is not known whether the BIFR has been satisfied itself as to whether the respondent company is an industrial company or not.

(3.) The essential requisites need be satisfied before a company seeking industrial finance and rehabilitation from the Board under the provisions of Sick Industrial Companies (Special Provision) Act, (1 of 1985) for short 'SICA', are that the company must be an industrial company and it should become sick. So, what is a sine qua non is that before seeking rehabilitation the company must be a sick industrial company. That gives the necessary jurisdiction to the BIFR to enquire into the matter for determining whether it has become a sick industrial company or not. That is the reason why it is the contention of Sri V.Srinivas, learned counsel for the petitioners that it is still open to this Company Court to investigate whether the respondent company is an industrial company or not. Obviously, the respondent company is a public limited company. It has been specifically averred in the petition in para 5 that the main object of the company for which it was established was to carry on business of manufacturing, producing, processing of Liquified Petroleum Gas (LPG) and other allied gases and to set up manufacturing, processing, transporting/conveying facilities of Liquified Petroleum Gas. Among other objects, the notable being to set up Gas bunks, filling stations and to operate the same for the distribution and selling the gas or to grant the rights of such operations on franchise or otherwise. It is the contention of the learned counsel that the respondent company is mainly engaged itself in filling up Liquified Petroleum Gas in the cylinders, in other words bottling and distribution of the same to the consumers and, therefore, it is not an industrial company. To buttress the said contention, the learned counsel seeks to place reliance upon a very recent pronouncement of a Division Bench of this Court in SHV ENERGY SOUTH EAST LTD. v. STATE INVESTMENT PROMOTION BOARD1. That was a case where the petitioner's industrial units were engaged in the activity of filling up of LPG into specified sizes of cylinders and there had been no element of manufacture involved in the process. When they claimed exemption from sales tax in terms of G.O.Ms.No.108, Industries and Commerce (IP) Department, dated 20.05.1996, it was held that since the petitioner's units were non-manufacturing units and, therefore, they were not eligible for tax exemption. In that view of the matter, in the instant case the learned counsel for the petitioners would contend that the respondent company is similarly placed with that of the petitioner's units in the above referred Judgement and, therefore, for want of manufacturing process, the respondent company cannot be called as an industrial unit.