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REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS.8440-8445  OF 2013

(Arising out of SLP (C) Nos.39005-39010 of 2012)

Yash Deep Trexim Private Limited ... Appellant (s)

Versus

Namokar Vinimay Pvt. Ltd. & Ors. ... Respondent (s)

With Civil Appeal Nos.8446-8451  of 2013

(Arising Out of SLP (C) Nos.39011-39016 of 2012)

Civil Appeal Nos.8452-8457  of 2013 (Arising Out of SLP (C) Nos.39017-39022 of 2012)

Civil Appeal Nos.8458-8463  of 2013 (Arising Out of SLP (C) Nos.39023-39028 of 2012)

J U D G M E N T

RANJAN GOGOI, J.

Leave granted.

2. The  common  challenge  in  these  appeals  is  against  the  

judgment  and  order  dated  19.10.2012  passed  by  a  Division  

Bench of the High Court of Calcutta holding that the provisions

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of the Sick Industrial Companies (Special Provisions) Act, 1985  

(hereinafter  for  short  “SICA”)  are  applicable  to  the  “foreign  

companies” registered in India under the provisions of Section  

591  of  the  Companies  Act,  1956  (hereinafter  for  short  “the  

Act”) and, therefore, the revival scheme framed by the Board  

for Industrial and Financial Reconstruction (hereinafter referred  

to  as  “BIFR”)  in  respect  of  the  Baranagore  Jute  Factory  Plc.  

(hereinafter for short ‘the Respondent Company’) is required to  

be implemented.  Though the question raised in these appeals  

is short and precise, as noticed above, learned counsels for the  

parties have raised various issues and contentions which, in no  

way, appear to be even remotely connected with the question  

of law that arises from the order of the High Court. We would,  

therefore, like to make it clear at the outset that in spite of the  

strenuous efforts on the part of the learned counsels for the  

parties to persuade us to go into the said questions we have  

considered it wholly unnecessary to do so for reasons indicated  

hereinafter.  Instead, we must deal with what strictly arises for  

our answer in the present appeals leaving the parties to avail of  

such remedies as may be open to them in law in respect of all  

other grievances raised.

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3. We  may  now  take  note  of  a  few  relevant  facts.   The  

Respondent  Company  was  wound  up  by  an  order  dated  

28.10.1987 of the learned Company Judge of the Calcutta High  

Court.  The appeal filed against the winding up order by some  

of the workers of the Company came to be dismissed by the  

Appellate Bench of the High Court on 18.11.1987.  Thereafter,  

on an approach being made, the winding up proceedings were  

stayed for a period of six months on 22.9.1988 and a scheme  

for  revival  of  the  Company  suggested  by  some  of  the  

shareholders  was  accepted  by  the  learned  Company  Judge.  

Our perusal of the relevant facts and the voluminous pleadings  

brought on record would seem to suggest that the initial order  

of stay of the winding up dated 22.9.1988 has been extended  

from time to time and till the present date different schemes  

for running the affairs of the Respondent Company has been  

framed and implemented pursuant whereto the Company has  

been  functioning  as  a  going  concern.   We  also  deem  it  

necessary to put on record that it has been contended before  

us that several applications registered and numbered as C.A.  

No.  126/2005,  C.A.  No.  302/2005,  C.A.  No.  303/2005,  

C.A.No.370/2009, C.A.No.957/2010 for a permanent stay of the

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winding  up  proceedings  have  been filed  before  the  Calcutta  

High Court and the same are presently pending.  The above  

plea has been urged notwithstanding the observations of this  

Court in  Radheshyam Ajitsaria & Anr. v. Bengal Chatkal   

Mazdoor Union & Ors.1 to the effect that in permanent stay  

of  the winding up proceedings in  respect  of  the Respondent  

Company had been granted by the High Court.

4. From  the  pleadings  of  the  parties  placed  before  us  it  

appears  that  the Respondent Company is  the owner  of  vast  

immovable properties in and around Kolkata which,  with the  

passage of time, have enormously appreciated in value.  It is  

this  particular  asset  of  the  Respondent  Company  which  has  

been  the  bone  of  contention  between  different  groups  of  

shareholders who have claimed the right to run the affairs of  

the  Company  under  the  schemes  framed  by  the  learned  

Company Judge from time to time.  The action of one group of  

shareholders purportedly to the disadvantage of another and  

the acquisition of majority share holding by one such group to  

the detriment of the other by enlarging the equity base of the  

Respondent Company has been the bone of contention giving  

1 (2006) 11 SCC 771

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rise to serious contentious issues,  which issues,  as indicated  

earlier, we are not inclined to go into as the same not only has  

to be agitated before the appropriate forum but also does not  

arise from the order passed by the High Court which has been  

subjected to challenge in the appeals before us.  All that would  

be  necessary  for  us  to  note,  in  addition  to  the  facts  stated  

above, is that a Reference made in the year 2004 to the BIFR  

by two of the Directors of the Respondent Company claiming to  

be in office at that point of time was ordered by the Calcutta  

High Court to be disposed of on merits.  The said order is dated  

20.02.2006 passed in W.P. No. 221 of 2006.  On the basis of the  

said order proceedings before the BIFR were taken up and a  

scheme under Sections 18(4) and 19(3) of the SICA was framed  

and notified for immediate implementation by the order of the  

BIFR dated 4.11.2009.  The said order came to be challenged  

before the High Court in W.P. No. 1166/2009 (re-numbered as  

W.P. 5535(W)/2010).  There was an interim order in the said  

writ  petition  restraining  the  respondents  therein  from taking  

any  steps  in  the  matter  of  sale  of  any  property  of  the  

Respondent Company or from creating any charge in respect of  

the assets of the Company without the leave of the Court.  The

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writ petition was, however, withdrawn on 16.6.2010 whereafter  

three  separate  writ  petitions  bearing  Nos.  12377/2010,  

12406/2010  and  12412/2010  were  filed  challenging  the  

jurisdiction of the BIFR to entertain the reference; frame the  

scheme in question and pass orders for implementation of the  

same.   The aforesaid  writ  petitions were disposed of  by the  

learned  Single  Judge  of  the  High  Court  by  order  dated  

25.1.2011  holding  that  the  SICA  is  not  applicable  to  the  

Respondent  Company,  it  being  incorporated  outside  India.  

Consequently, the scheme framed by the BIFR was set aside  

and quashed.  As against the aforesaid order dated 25.1.2011  

passed  by  the  learned  Single  Judge  of  the  High  Court  six  

appeals  were  filed  by  the  aggrieved  parties  bearing  

Nos.169/2012,  170/2012,  171/2012,  172/2012,  173/2012 and  

1115/2011.  The Appellate Bench of the High Court by order  

dated  19.10.2012  took  the  view  that  on  a  purposive  

interpretation of the provisions of SICA the said Act would be  

applicable  to  the  Respondent  Company.   In  this  regard  the  

Division Bench of the High Court specifically took note of the  

fact that the only factory of the Company is located in India at  

Baranagore;  90%  of  its  shareholders  are  Indians  and  3700

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workers  are  working  in  the  jute  factory  in  West  Bengal.  

Aggrieved, the present appeals have been filed before us.

5. Having noticed the question(s) arising from the order of  

the  High  Court  which  has  been  challenged  in  the  appeals  

presently under consideration, we may now briefly take note of  

the contentions raised in the appeals filed by the respective  

appellants before this Court.   

The appellant in the appeals arising out of SLP (C) Nos.  

39005-39010/2012,  apart  from questioning the jurisdiction of  

the  BIFR,  also  contends  that  the  first  respondent  (Namokar  

Vinimay  Pvt.  Ltd.)  in  the  said  appeals  had  fraudulently  

increased its equity holding from 9% to 90% on payment of a  

paltry  sum of  Rs.  5  crores  by  committing  acts  of  cheating,  

forgery, fraud etc. The majority shareholding of the appellant  

has been thereby reduced, it is claimed.

In  the  appeals  arising  out  of  SLP  (C)  Nos.39011-

39016/2012  the  workers’  union  has  raised  grievances  with  

regard  to  the  competence  of  the  existing  Management  

Committee  to  function  and  contends  that  the  Committee  

consisting of the two Directors who have instituted the appeals

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arising  out  of  SLP(C)  Nos.  39017-39022/2012  would  be  

competent  in  law  to  run  the  affairs  of  the  Respondent  

Company.   Certain  alleged  fraudulent  acts  in  the  matter  of  

disposition of  the property/transfer  of  shares  by the existing  

Management  Committee  are  also  alleged  by  the  workers’  

union.   

On the other hand in the appeals arising out of SLP(C) Nos.  

39017-39022/2012, two Directors, namely, Chaitan Choudhury  

and  Ridh  Karan  Rakhecha  who  have  purportedly  filed  the  

appeal  on  behalf  of  the  Respondent  Company,  apart  from  

raising the issue of jurisdiction of the BIFR and the applicability  

of the SICA to the Company, had also struck issues with regard  

to  the  changes  in  the  composition  of  the  Management  

Committee  and  the  frauds  and  the  misdeeds  allegedly  

committed by the first respondent, i.e., Namokar Vinimay Pvt.  

Ltd.  in  bringing  out  the  above  changes.  Peculiarly,  the  

reference of the case of the respondent Company to the BIFR  

was  made by  the  very  same appellants.   In  the  last  set  of  

appeals  in  chronological  order,  i.e.,  appeals  arising  out  of  

SLP(C)  Nos.  39023-39028/2012,  the  appellant  Radheshyam  

Ajitsaria is one of the promoters of the revival scheme under

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which a Committee of Management had been constituted in the  

year  1988/1989  by  the  learned  Company  Judge  of  the  High  

Court to run the affairs of the Company.  The appellants therein  

are aggrieved by the BIFR’s scheme which, according to the  

appellant,  would  be  in  serious  derogation  of  the  scheme  

approved by the High Court.

6. Having noted the broad features of the grievances raised  

in  each  of  these  appeals  we  may  now take  note  of  certain  

connected facts on the basis of which we will be required to  

decide  the  necessity  and  expediency  to  adjudicate  the  core  

question arising in these appeals and the other issues that have  

been sought  to  be agitated before  us.   It  has  already  been  

stated  in  the  earlier  part  of  this  order  that  the  Respondent  

Company is the owner of vast tracts of immovable property in  

and  around  Kolkata  which  has,  with  the  passage  of  time,  

appreciated in value.  Way back in the year 1988 an area of  

about 24 acres of land owned by the Company was acquired for  

the  purpose  of  building,  maintenance,  management  and  

operation of the second Vivekananda Bridge across the river  

Hoogly.   In  the  year  2003  provisional  compensation  was

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assessed  at  Rs.21,28,21000/-  and  on  deposit  of  the  said  

amount possession of the land was taken over.  The acquisition  

of the land came to be challenged before the High Court and  

the said challenge was also carried to this Court.  The net result  

of  the  aforesaid  exercise(s)  was  an  enhancement  of  the  

compensation initially by the High Court to the extent of 30%  

and thereafter by this Court by fictionally shifting the date of  

entitlement of compensation from the date of acquisition to the  

date of taking over of possession.  An award dated 30.01.2006  

was made in terms of the order of this Court which had led to  

further  disputes  between the parties.   Eventually,  all  parties  

agreed to refer the matter to the sole arbitration of a retired  

Chief Justice of this Court who by a final Award dated 13.9.2012  

awarded an additional compensation package of Rs.57 crores  

along with interest,  which on computation,  would amount to  

about  Rs.50  crores.   A  sum  of     Rs.95  crores  has  been  

deposited by the National Highway Authority of India with the  

Registrar  of  the  Calcutta  High  Court  on  9.11.2012  in  the  

account  of  the  Respondent  Company.   In  this  manner  the  

Respondent Company has received/entitled to receive a sum of  

nearly  Rs.170  crores  on  account  of  compensation  for

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acquisition of the land. The Respondent Company has clearly  

and categorically and on the basis of the precise details of its  

liabilities  has  contended  that  even  after  meeting  all  its  

statutory and contractual obligations and liabilities it would still  

be left  with  a  surplus  of  nearly  Rs.50 crores  and,  therefore,  

would  not  be  a  ‘sick  company’  any  more.   The  aforesaid  

claim/position  has  been  admitted  by  the  appellant  in  the  

appeals  arising  out  of  SLP  (C)  Nos.39005-39010/2012  in  

paragraph ‘I’ of the SLP by stating as follows :

“It is submitted that in all  an amount of Rs.170  crores has been paid by NHAI to the Respondent  No.22  Company  out  of  which  Rs.95  crores  has  been  deposited  with  the  Registrar  of  the  High  Court  on  9.11.2012  to  the  credit  of  the  Respondent  No.22  Company  pursuant  to  the  award  dated  13.9.2012  and  as  such  the  Respondent No.22 Company would be out of BIFR  as it will have a surplus fund available and profits  of about Rs.50 crores even after meeting out all  losses and liabilities.”

7. To  appreciate  the  effect  of  the  aforesaid  facts  on  the  

necessity of any adjudication of the present appeals, the object  

behind  enactment  of  the  SICA  and  the  statutory  scheme  

contemplated by the Act may be briefly noticed. An elaborate  

exposition  of  the  legislative  history  and  object  behind

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enactment of the SICA as well as the scheme under provisions  

of the Act is  to be found in a recent pronouncement of this  

Court in  Raheja Univeral Limited v. NRC Limited & Ors.2.  

At the cost of repetition it may be usefully recapitulated that  

the Act was enacted to overcome the grossly inadequate and  

time consuming institutional arrangements that were then in  

place for revival and rehabilitation of sick industrial companies.  

The Act was brought into force to provide timely identification,  

by an expert body, of sick industrial companies and to design  

suitable  rehabilitation  packages  in  order  to  obviate  the  

enormous loss that would be occasioned by such units going  

permanently out of business.  The provisions of Sections 15 to  

19 contained in Chapter III of the Act dealing with references to  

the  Board  by  the  Management  of  sick  industrial  companies;  

enquiries into the working of such companies and the measures  

to be undertaken by the Board to make a sick industry viable  

had  received  a  full  consideration  of  this  Court  in  Raheja  

Univeral Limited (supra). The details in this regard need not  

be noticed once again save and except that the Act has cast  

upon the BIFR the duty to cause a detailed inquiry to be made  

2 (2012) 4 SCC 148

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into the functioning of any sick industrial company and to take  

steps to revive the functioning of such company failing which to  

refer  the cases of  such  companies  to  the jurisdictional  High  

Court for winding up in accordance with the provisions of the  

Companies Act.  In this regard, specific notice must be had of  

Section 3(o) of the Act which defines a sick industrial company  

in the following terms:

“(o) “sick  industrial  company”  means  an  industrial  company  (being  a  company  registered for not less than five years) which  has  at  the  end  of  any  financial  year  accumulated losses equal to or exceeding its  entire net worth.

Explanation.—For the removal of doubts,  it  is  hereby  declared  that  an  industrial  company  existing  immediately  before  the  commencement  of  the  Sick  Industrial  Companies  (Special  Provisions)  Amendment  Act,  1993  registered  for  not  less  than  five  years and having at the end of any financial  year  accumulated  losses  equal  to  or  exceeding  its  entire  net  worth,  shall  be  deemed to be a sick industrial company;”

8. In  the  present  case  the  entitlement  of  the  respondent  

company  to  receive  a  total  amount  of  Rs.170  crores  

(approximately)  by way of  acquisition compensation and the  

payment of Rs.95 crores by NHAI which is presently lying in

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deposit with the Registrar of the Calcutta High Court is not in  

dispute.  That the respondent company would be left with a  

surplus of about Rs.50 crores after meeting all its losses and  

liabilities  is  a  common  ground  amongst  all  the  contesting  

parties.  The rehabilitation scheme framed by the Board by its  

order  dated  04.10.1999  is  yet  to  be  implemented.   In  the  

aforesaid situation keeping in view the object and scheme of  

the Act and the virtual consensus of the contesting parties with  

regard  to  the  present  financial  health  of  the  respondent  

company it is clear that the company can no longer fall within  

the  ambit  of  the  expression  “sick  industrial  company”  as  

defined in Section 3(o) of the Act.  Further applicability of SICA  

to the respondent company, therefore, does not arise.

9. If the respondent company no longer falls within the ambit  

of a ‘sick industrial company’ as defined by Section 3(o) of the  

Act and the Act has ceased to apply to the company and the  

rehabilitation package worked out  by the Board has not  yet  

been  implemented,  the  question(s)  arising  in  the  present  

appeals have surely become academic and redundant.  If that  

be  so,  we  do  not  see  why  we  should  answer  the  said

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question(s) in the present group of appeals.  Instead, in fitness  

of  things,  we  should  leave  the  said  question  (s)  open  for  

determination  in  an  appropriate  case  and  as  and  when  the  

occasion would arise.

10. In so far as the other issues, particularly, with regard to  

the management of the company is concerned we have already  

found that none of the said issues arise from the order of the  

High Court under appeal before us.  Even otherwise, we will not  

be justified to go into any of the said issues and express any  

opinion thereon inasmuch as this Court exercising jurisdiction  

under  Article  136  of  the  Constitution  is  not  the  appropriate  

forum to adjudicate grievances/claims with regard to the right  

of management of the affairs of the company by one group of  

shareholders or the other.  It has been urged before us that  

several  contentious  issues  with  regard  to  the  rights  of  one  

group  of  shareholders  or  the  other  to  be  in  control  of  the  

management of  the Company had been raised and some of  

such claims are still pending before the High Court.  Coupled  

with the above is the pendency of several other proceedings  

with  regard  to  permanent  stay  of  the  winding  up  of  the

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Company. Taking into account all that has been stated above  

we are of the view that it would be just, proper and equitable to  

leave the contesting parties to pursue their  remedies before  

the High Court or such other forum as may be competent in  

law.   For the present, the Management of the Company as on  

date  will  continue  until  orders,  if  any,  varying  the  current  

position are passed by any forum competent in law.  It is made  

clear that the above is a mere working arrangement that we  

have  considered  appropriate  for  the  present  and  the  same  

should not be understood as any expression of opinion by us on  

the entitlement of any particular group of shareholders to run  

and  manage  the  affairs  of  the  company  which  issue  is  left  

open.

11. Consequently, all these appeals shall stand disposed of in  

terms of our above observations and directions.

...………………………CJI. [P. SATHASIVAM]

.........……………………J. [RANJAN GOGOI]

New Delhi,

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September 23, 2013.