YASH DEEP TREXIM PRIVATE LIMITEDversusNAMOKAR VINIMAY PVT. LTD. & ORS.

                       [2013] 10 S.C.R. 366

A            YASH DEEP TREXIM PRIVATE LIMITED
                                 v.
             NAMOKAR VINIMAY PVT. LTD. & ORS.
            (Civil Appeal Nos.8440-8445 of 2013 etc.)
                      SEPTEMBER 23, 2013
B
       [P. SATHASIVAM, CJI AND RANJAN GOGOi, JJ.]

       Sick Industrial Companies (Special Provisions) Act, 1985
  - s.3(o) - Applicability of the Act - To the foreign companies
C registered in India - Held: In view of object and scheme of the
  Act and the financial health of the company in question, the
  company does not fall within ambit of expression 'sick
  industrial company' defined uls. 3(o) - Hence provisions of the
  Act does not apply - The question whether the Act applies to
D foreign companies registered in India, is left open.

       The main question for consideration in the present
  appeals was whether the provisions of the Sick Industrial
  Companies (Special Provisions) Act, 1985 are applicable
E to the 'foreign companies' registered in India un.der the
  provisions of s.591 of the Companies Act, 19~ and
  therefore, the revival scheme framed by the Board for
  industrial and Financial Reconstruction, in respect of the
  respondent-Company, was required to be implemented.
  In addition to the main question, various other
F contentious issues with regard to the rights of one group
  of shareholders or the others to be in the control of the
  management of the Company were also raised.
        Disposing of the appeals, the Court
G
        HELD: 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
H                               366
     YASH DEEP TREXIM PRIVATE LIMITED v.                367
      NAMOKAR VIN IMAY PVT. LTD. & ORS.
brought into force to provide timely identification, by an     A
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 Act has cast
upon the BIFR the duty to cause a detailed inquiry to be       B
made 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 accord\ance with the provisions of the Companies Act.       c
[Para 7] [375-H; 376-A-E]

     2 .. 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           D
which is presently lying in 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      E
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        F
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 the Act to
the respondent company, therefore, does not arise. [Para       G
8] [377 -A-D]
    3. Since 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     H
    368     SUPREME COURT REPORTS              [2013] 10 S.C.R.


A 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 become
  academic and redundant Hence, the said question(s) left
  open for determination in an appropriate case and as and
B when the occasion would arise. [Para 9] 377-E-F]

         4. 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
C   of shareholders or the other. 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
D   above is the pendency of several other proceedings with
    regard to permanent stay of the winding up of the
    Company. Therefore, 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
E   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 clarified that
    the above is a mere working arrangement and the same
F   should not be understood as any expression of opinion
    by this Court on the entitlement of any particular group
    of shareholders to run and manage the affairs of the
    company which issue is left open. [Para 10] [377-H; 378-
    A-E]
G
        Radheshyam Ajitsaria and Anr. vs. Bengal Chatkal
    Mazdoor Unionand Ors. (2006) 11 SCC 771: 2006 (2) Suppl.
    SCR 918; Raheja Univeral Limited vs. NRG Limited and Ors.
    (2012) 4 sec 148: 2012 (3) SCR 388 - relied on.

H
      YASH DEEP TREXIM PRIVATE LIMITED v.                    369
          NAMOKAR VIN IMAY PVT. LTD.
                      Case Law Reference:                            A
    2006 (2) Suppl. SCR 918          relied on         Para 3

    2012 (3) SCR 388                 relied on         Para 7

    CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.                 B
8440-8445 of 2013.
    From the Judgment and Order dated 19.10.2012 of the
High Court of Calcutta in FMA Nos. 169, 170, 171, 172 of 2012,
1115 of 2011.
                                WITH
                                                                     c
C.A. Nos. 8446-8451, 8452-8457 and 8458-8463 of 2013.

     Gopal Subramanium, Amrendra Sharan, V. Giri., C.A.
Sundram, Rohinton Nariman, Guru Krishna Kumar, Shyam
Divan, Umesh Pratap Singh, Brijesh Kumar Singh, R.C. Kohli, D
S. Mehdi Imam, Rahul Gupta, M.L Lahoty, Ram Niwas, Samir
Ali Khan, Pradeep Aggarwal, Lal Pratap Singh, Gaurav
Kejriwal, A. Tanu, Ruchi Kohli, Sanjeev Sen, Manju Agarwal,
Rameshwar Prasad Goyal, Rudarjeet Sarkar, Ankur Chawla,
Meenakshi Chatterjee, Jayant Mohan, Vikas Mehta, Saurabh E
Kirpal, Renuka Iyer, Rajat Sehgal, Shakil Ahmed, Narhari, Aditi
Misra, Abhishek Gupta, Mohit D. Ram, S. Wasim A. Qadri,
Sunita Sharma, Sadha Sandhu, Rashmi Malhotra, Anil Katiyar,
Mahesh Srivastava, Vaibhav Srivastava, P.N. Puri, Appoorv
Kurup, Ardhendumauli Kumar Prasad, Pragati Neekhra, Parth F
Tiwari, Sanjoy K. Ghosh, Rupali S. Ghosh, D.P. Mukherjee,
Amit Sibbal, U.N. Goyal, Dr. Kailash Chand for the appearing
parties.

    The Judgment of the Court was delivered by                       G
     RANJAN GOGOi, J. 1. 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. C91.irt of Calcutta holding that the provisions   H
    370      SUPREME COURT REPORTS                [2013] 10 S.C.R.


A   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
B   Industrial and Financial Reconstruction (hereinafter referred to
    as "BIFR") in respect of the Baranagore Jute Factory Pie.
    (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
c   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 u~ to go into the said questions we have .
0   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.
E
         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
F   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
G   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
H   for running the affairs of the Respondent Company has been
   YASH DEEP TREXIM PRIVATE LIMITED v.        371
NAMOKAR VIN IMAY PVT. LTD. [RANJAN GOGOi, J.]
framed and implemented pursuant whereto the Company has A
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 B
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 c
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 D
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 E
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 b~~n the bone of contention giving F
rise to serious contentious issues, which issues, as indicated
earlier, we are not inclined to go intCl 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 G
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
1.   c2oos) 11 sec 111.                                        H
     372       SUPREME COURT REPORTS                 [2013] 10 S.C.R.


A     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
 B   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
.c   Respbndent Company or from creating any charge in respect
     of the assets of the Company without the leave of the Court.
     The. 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
 0
     scheme in question and pass orders for implementation of the
     same. The aforesaid writ petitions were d.isposed 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.
E    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/
 F   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
G    of the Company is located in India at Baranagore; 90% of its
     shareholders are Indians and 3700 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
 H
     YASH DEEP TREXIM PRIVATE LIMITED v.        373
  NAMOKAR VIN IMAY PVT. LTD. [RANJAN GOGOi, J.]
the High Court which has been challenged in the appeals                  A
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.            8
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,               C
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                 D
  function and contends that the Committee consisting of the two
  Directors who have instituted the appeals 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   E
  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                    F
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                     G
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             H
           374      SUPREME COURT REPORTS                [2013] 10 S.C.R.


    A  SLP(C) Nos. 39023-39028/2012, the appellant Radheshyam
       Ajitsaria is one of the promoters of the revival scheme under
       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
     B 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
    C      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
    D      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
    E      operation of the second Vivekananda Bridge across the river
           Hoogly. In the year 2003 provisional compensation was
           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
     F     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
    G      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
     H     13.9.2012 awarded an additional compensation package of



. _',:.:
   YASH DEEP TREXIM PRIVATE LIMITED v.       375
NAMOKAR VINIMAY PVT. LTD. [RANJAN GOGOi, J.]
Rs.57 crores along with interest, which on computation, would             A
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                 B
of nearly Rs.170 crores on account of compensation for
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 c0ntractual obligations and liabilities it would still be left with   c
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:
                                                                          D
      "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                  E
      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."
                                                                          F
      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 enactment         G
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. NRG Limited & Ors. 2 • At the cost of
repetition it may be usefully recapitulated that the Act was
2.   (2012) 4 sec 148.                                                    H
     376       SUPREME COURT REPORTS                 [2013] 10 S.C.R.


 A 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
 B 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 Ill of the Act dealing with references
   to the Board by the Management of sick industrial companies;
 c 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
   Univera/ 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
 D 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
.E 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
 F         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
 G
           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
 H
    YASH DEEP TREXIM PRIVATE LIMITED v.       377
 NAMOKAR VINIMAY PVT. LTD. [RANJAN GOGOi, J.]
     sick industrial company;"                                        A

     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
                                                                      B
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 R~.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              C
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              D
defined in Section 3(o) of the Act. Further applicability of SICA
to the tespondent 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)       E
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 sho.uld answer the said
                                                                      F
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    G
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                 H
   378      SUPREME COURT REPORTS                 [~013] 10 S.C.R.


A 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
8 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
C 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
D 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
E 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.

   K.K.T.                                     Appeals disposed of.