LexGHANSHYAM SARDA versus M/S. SHIV SHANKAR TRADING CO. & ORS.
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A [2014] 14 S.C.R. 556 GHANSHYAM SARDA v. MIS. SHIV SHAN KAR TRADING CO. & ORS. (Civil Appeal No .. 10221of2014) B " NOVEMBER 13, 2014 t [A~~L R. D~VE AND U~AY UMESH_ LAUT, JJ.] Sick Industrial Companies (Special Provisions) Act, 1985-'ss. 22(1), 26, 32'- Scope and ambit of- Company C registered as_ a sick company - Net worth having become positive, jurisdiction of the Board for Industrial and Financial Reconstruction (BIFR) over the company - Held: The Act gives complete supervisory control to the BIFR over the affairs of a sick Industrial Company from the stage of ~ . • , I 0 registration of reference and questions concerning status of sickness of such company are in the exclusive domain of the BIFR - Aspects of revival of such company b'eing completely within its exclusive domain, BIFR alone determines the issue whether such company nqw stands revived or not - Thus, BIFR would continue to have E jurisdiction over the sick company even if its net worth become positive .'... BIFR alone is empowered to determine whether net worth has become positive as a result of which it would cease to liave such jurisdiction -Any inquiry into such issue regarding net worth by anyone outside the Act including F' civil court, would be against the express intent of the Act and would lead to incongruous and undesired results - Suit as framed seeking deCiaration that the c0mpany was no longer a sick company within the meaning of the Act, not competent and maintainable - Civil court not right and justified in issuing G injunction. Allowing.the appeals, the Court HELD : 1.1 It is clear that after a reference is registered by the Board, all throughout the subsequent H stages, the BIFR has complete supervisory control over 556 GHANSHYAM SARDA v. M/S. SHIV SHAN KAR TRADING 557 . CO. &ORS. the affairs of such company till it is revived or the decision A to wind up such company is taken. The ambit and extent . of such control means and includes determination of such measures to achieve revival of the sick company and to check whether by such measures the revival is being achieved or not. This must cover the power to B decide at any stage subsequent to the registration of reference under Section 16 whether such company has ceased to be sick company or not. Cessation of the status as a sick company can be under Section 17(1) or as a result of scheme for revival being implemented and C determination of such.issue.is in the exclusive domain of the BIFR. [Para 25)[580-A-D] 1.2. The Sick Industrial Companies (Special Provisions) Act, 1985 is a self-contained Code in itself. The Act gives complete supervisory control to the BIFR D over the affairs of a sick Industrial Company from the stage of registration of reference and questions concerning status of sickness of such company are in the exclusive domain of the BIFR. Any submission or assertion by anyone including the Company that by E certain developments the Company has revived itself and/or that its net worth since the stage of registration having become positive no such· scheme for revival needs to be undertaken, must be and can only be dealt with by the BIFR. Any such assertion or claim has to be F made before the BIFR and only upon the satisfaction of the BIFR that a sick company is no longer sick, that such company could be .said to have ceased to be amenable to its supervisory control under the Act. The aspects of revival of such company being completely within its G exclusive domain, it is the BIFR alone, which can determine the issue whether such company now stands revived or not. The jurisdiction of the civil court in respect of these matters stands completely excluded. [Paras 26, 27][580-G-H; 581-8-F] H 558 SUPREME COURT REPORTS [2014] 14 S.C.R. A · 1.3 In the instant case, the.fact that the company . was registered as· a sick company is not doubted nor has it been contended that the BIFR had wrongly assumed initial jurisdiction. But what is projected is that the net worth having become positive the BIFR has now 8 lost.jurisdiction over the company. The BIFR having correctly assumed jurisdiction and when all the financial affairs of·such company were directly under the supervisory control of the BIFR, the power to decide whether it has since then lost the jurisdiction or not, is c also in the exclusive domain of the BIFR. The BIFR alone is empowered to determine whether net worth has bec
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