CRESCENT IRON AND STEEL CORPORATION LTD. versus UNION OF INDIA AND ANOTHER

Citation: [1992] SUPP. 1 S.C.R. 931 · Decided: 09-10-1992 · Supreme Court of India · Bench: KULDIP SINGH · Disposal: Appeal(s) allowed

Judgment (excerpt)

.. 
CRESCENT IRON AND STEEL CORPORATION LTD. 
A 
v. 
UNION OF INDIA AND ANOTHER 
OCTOBER 9, 1992 
[KULDIP SINGH AND N.M. KASLIWAL, JJ.] 
B 
Sick Industrial Company (Special Provisions) Act 1985: 
Section 15( 1 rSick Company making reference to Bf FR-During pen-
dency of reference government granting permission to close down undertak-
C 
ing-B[FR directing winding up of company-Appellate Authority upholding 
order-Validity of the order. 
The appellant, a private limited company was running.a fonndry. It 
declared a lock out in its foundry in Jnly, 1985. The company made a 
reference to the Board for Industrial and Financial Reconstruction under D 
Section 15(1) of the Sick Industrial Company (Special Provisions) Act, 
1985, and during its pendency made an application to the State Govern-
ment under Section 25(0) of the Industrial Disputes Act, 1947, seeking 
permission to close down its undertaking at the existing location and 
requested the BIFR to revive the undertaking at another location preferab· E 
ly in a backward area of the State. It was also alleged that the company 
had paid up all the secured and unsecured creditors, as well as the wo~kers 
employed in the foundry. 
The BIFR on 15.2.91 passed an order proposing the winding up of 
the company. On 16.5.91, at a general meeting of the company, a special F 
resolution was passed by the share-holders that the aforesaid order of the 
BIFR was not in the interest of the company. 
The company forwarded the resolution along with a letter dt. 21.5.91 
and requested the BIFR to revoke its order dated 15.2.91. The BIFR by its G 
order dt. 23.5.91 observed that it was not possible to adopt any measures 
for the revival of the company, and reiterated its stand that the company 
should be wound up. 
Aggrieved, the company tiled an appeal before the Appellate 
Authority for Industrial and Financial Reconstruction, which by its order H 
931 
932 
SUPREME COURT REPORTS (1992] SUPP.1 S.C.R. 
A dated September 13, 1991, upheld the order of the BIFR and did not find 
any reason to take a different view. It further held that carrying out the 
same activity at the new site does not constitute rehabilitation of a sick 
unit, Iha! the developing of the land for commercial activity also does not 
constitute rehabilitation by a sick unit, and that there was no provision in 
B the SICA to drop a case once a reference has been made and heard by the 
BIFR. 
The appellant company appealed to this Court, challenge the order 
of the Appellate Authority by contending that during the pendency of the 
reference before the BIFR, the shares of the company have been trans-
C ferred in favour of the present shareholders, the new management had 
settled liabilities of all the creditors, workers' dues, as well as the Govern-
ment dues, by arranging funds of their own, that the claims of the 
nationalised banks have also been settled, all the workers of the foundry 
except two have voluntarily resigned and have been paid their dues, that 
D the State Government by its order dated 13. 7 .92 has also taken the view 
that no permission for closure under Section 25(0) of the Industrial 
Disputes Act, 1947 would now be necessary. Reliance was also placed on 
the order dated 31.3.1989 of the BIFR in the case of Belapur Sugar and 
Allied Industries Limited rejecting the reference made under Section 15(1) 
of the SICA, which was affirmed by the Appellate Authority by order dated 
E 13.7.1989. 
'I 
Allowing the appeal, this Court, 
HELD: 1. The foundry unit at Guregaon, Bombay is lying closed 
F since 1985 and according to the new management of the company, the 
liabilities of all the secured and unsecured creditors have been settled and 
out of 288 workers, 286 have already resigned and accepted the retrench-
ment compensation, the remai11ing two workers being not traceable. The 
new management is taking steps with the State Government and other 
authority for shifting of the location of the new foundry unit at a place 
G outside the metropolis of Bombay. The State Government in its letter dated 
13.7.92 has also taken the view that no permission for closure of the 
industrial undertaking under Section 25(4) of the Industrial Disputes Act 
would be necessary. The shareholders in a general meeting of the appellant 
company held on 16.5.91, passed a special resolution that the order of 
H BIFR dated 15.2.91 was not in the interest of the company. The Appellate 
CRESCENTIRON ANDSTEELCORPN. v. U.0.1. 
933 
Aut

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