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Judgment
R. Sudhakar, J.—The petitioner in this case has been declared as Sick Industries within the meaning of Section 3(1) (o) of Sick Industrial
Companies (Special Provisions) Act 1985 by the Order of the BIFR dated 26.7.99 passed in case No. 89 of 1995 and IDBI was appointed as
the operating agency u/s 17(3) of Sick Industrial Companies (special Provisions) Act 1985 to examine the viability of the company and prepare a
draft scheme for its revival. Thereafter, several orders have been issued by the Board from time to time.
Insofar as the present case is concerned, the BIFR Bench-I, passed the following order on 11.5.2007.
We have examined the request of the company after obtaining the views of the IDBI (OA/MA), who have commented vide their letter dated
20.4.2007 that they did not receive any objection from the above said departments in response to the DRS circulated by the Board. As such,
company''s request could be considered favourably treating deemed consent of the concerned department u/s 19(2) of the Act. Accordingly, in
view of no objections having been received from the above mentioned departments either by IDBI or the Board, it is treated their deemed consent
to the reliefs sought in the DRS and modified paras 9 C (i), (ii) and D (ii) of the scheme sanctioned by the Board vide order dated 22.1.2007 be
read as under:
9 C (i) Commercial Tax Department:
(a) To grant extension in time upto March 31, 2014 for utilization of unutilized interest free sales tax loan of Rs. 594.95 lakh.
(b) To reschedule IFST loan by 9 years so as to be payable over a period of 7 years starting from April 1,2014.
(c) To waive the penalty on disputed amounts of sales tax aggregating Rs. 93,59,576/- for which the company has filed appeal before Appellate
Assistant, Commissioner, Coimbatore. In the event the appeals are not accepted, to grant permission to pay the tax demanded in five annual
instalments.
9.C (ii) Tamilnadu Electricity Board
(a) To maintain the electricity consumption charges/ minimum demand charges at the present level during the period of rehabilitation
(b) To grant exemption to the company from payment of fuel surcharge / peak hour consumption charges for continuous supply during the period
of rehabilitation.
(c) To give three months credit period for monthly payment of bills without any delayed payment surcharge/ interest.
(d) To exempt the company from payment of Electricity Duty / Cess/ taxes for a period of five years.
9.D (ii) Central Excise Department.
To waive interest of Rs. 6,97,567/- and Rs. 2,95,532/- levied by Excise Department during FY 2002 and FY 2005 respectively for delayed
payment of excise duty.
Let a copy of this order be sent to all concerned.
The copy of the order was communicated to the respondents 1 and 3 and other appropriate officers concerned. In terms of the order of the
Board, the petitioner is entitled to deferred payment of sales tax. The representation of the Petitioner through SIPCOT for implementing the order
of BIFR was not taken up and the petitioner was directed to approach the Government directly. Inturn, the petitioner made a representation to the
Additional Secretary, Industries Department/R1, which also went in vain. The petitioner therefore, approached this Court for a Mandamus, which
was issued on 31.8.2007 directing the authorities to consider the representation. Based on the said order, the Secretary to Government passed the
order, which is under challenge in this writ petition.
No counter has been filed inspite of notice.
The main contention of the learned Counsel for the petitioner is that the Industrial Department, which is a party in the BIFR Proceedings is
bound by the rehabilitation scheme. Any order passed by the BIFR is binding on the respondents herein. Section 19(3) of the Sick Industrial
Companies (Special Provisions) Act, 1985 provides for the same and it is read as follows:
where in respect of any scheme the consent referred to in Sub-section (2) is given by every person required by the scheme to provide financial
assistance, the Board, may, as soon as may be, sanction the scheme and on and from the date of such sanction the scheme shall be binding on all
concerned.
Before the BIFR, the respondents have not objected and that is recorded in the order itself.
In the impugned order, the first respondent/ the Government has stated that the Commissioner of Commercial Taxes Department has informed
that the petitioner is now doing business and the Unit is functioning well and found to be a viable unit. It is also stated that the petitioner is avoiding
repayment of Interest Free Sales Tax though they are capable of repaying the same. This stand should have been taken before the BIFR where the
respondent is a party.
In terms of Section 19(3) of Sick Industrial Companies (Special Provisions) Act, 1985, the Government is bound to implement the direction of
the BIFR without demur and it is binding on them. If they intend to demand the payment of sales tax for whatever reason, the department is entitled
to approach the BIFR any modification if permissible or by way of an appeal as provided under the Act. The report of the Commissioner of
Commercial Taxes Department cannot form the basis for the Government to set at naught the order of the BIFR, which has been passed after
giving an opportunity to all the parties concerned and will therefore be binding on all concerned. In any event, the reasons given in the impugned
proceedings cannot override the order of the BIFR and will be contrary to law and therefore unsustainable.
In such view of the matter, the impugned order is quashed. The petitioner will be entitled to appropriate relief as ordered by the BIFR. The
respondents shall extend benefits as applicable based on the order of the BIFR within a reasonable time preferably within a period of three months
from the date of receipt of a copy of this order. This writ petition is ordered as above. Consequently, M.P. Nos. 1 and 2 are closed. No costs.