LexGRAM PANCHAYAT AND ANR. versus SHREE VALLABH GLASS WORKS LIMITED AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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GRAM PANCHAYAT AND ANR.
v.
SHREE VALLABH GLASS WORKS LIMITED AND ORS.
MARCH 15, 1990
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[K. JAGANNATHA SHETTY AND R.M. SAHAI, JJ.]
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The Sick Industrial Companies (Special Provisions) Act, 1985:
Ss. 16, 17 & 22-Sick industrial company-Proceedings for recovery of
amount due-Validity of
Section 16 of the Sick Industrial Companies (Special Provisions)
Act, 1985 authorises the Board for Industrial and Financial Recons-
truction established under the Act to make enquiry for determining
whether any industrial company has become a sick industrial company.
Section 17(2) empowers the Board to grant a reasonable time to such a
company to make its net worth positive. Where such a course is not
practicable s. 17(3) empowers the Board to appoint an operating agency
to prepare a scheme for rehabilitation/revival of the company. Section
22(1) provides that in case the enquiry under s. 16 is pending or any
scheme referred to under s. 17 is under preparation or consideration by
the Board or any appeal under s. 25 is pending, then proceedings for
winding np, execution, distress or the like are to be suspended or pre-
sumed to be suspended. The proceedings in respect of these matters
could, however, be continued with the consent of the Board or of the
appellate authority as tbe case may be. Section 22(5) provides for exclu-
sion of the period during which the remedy remains suspended, in
computing the period of limitation for enforcement of the right.
The respondent company had been declared by the Board to be a
sick industrial company under s. 16 of the Act and an operating agenc;i:
had been appointed under s. 17(3) to prepare a scheme for rehabilita-
tion/revival of the company.
The respondent company owed a large sum to the petitioner
Panchayat on account of property tax and other dues. When the
petitioners initiated coercive proeeedings to recover that amount the
company moved the High Court by way of a writ petition under Article
226 of the Act. The High Court restrained the petitioners from recover-
ing the said amount ltithout the consent of the Board.
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Dismissing the special leave petition, the Court,
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GRAM PANCHAYAT v. VALLABH GLASS WORKS {SHETTY, J.]
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HELD: The High Court was justified in quashing the recovery
proceedings taken against the properties of the company. [970G-H]
The Board by order dated 27 August, 1987 had stated that it was
satisfied that the company had become a sick industrial company and
directed that further proceedings under the Act shall be taken. By
another order made on the same day under s. 17(2) .the Board had
found that it was not practicable for the company to make its net worth
positive within a reasonable time and had proceeded to take action
under s. 17(3) and appointed the ICICI as the operating agency to
prepare a scheme for rehabilitation/revival of the company. In view of
these steps taken by the Board under ss. 16 and 17 of the Act, no
proceedings for execution, distress or the like against any of the proper-
ties of the industrial company shall lie or be proceeded with further by
virtue of s. 22(1) except with the conseutof the Boai-d. [970A-D]
The Board at its discretion may accord approval. If the approval
is not granted the remedy is not extinguished. It is only postponed.
Sub-section (5) of s. 22 provides for exclusion of the period during
which the remedy is suspended while computing the period of limitation
for recovering the dues. [970F-GJ
CIVIL APPELLATE JURISDICTION: Special Leave Petition
· (Civil) No. 14395 of 1989.
From the Judgment and Order dated 18.7.1989 of the Bombay
High Court in W.P. No. 6108of 1987.
V .N. Ganpule for the Petitioners.
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P. Chidambmm, Mrs. Raian Karanjawala, N:H. Seer.bai, Karan-
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jawala and Ravinder Kumar for the Respondents.
The Judgment of the Court was delivered by
K. JAGANNATHA SHETTY, J. The petitioners seek leave to
appeal against the decision of the Bombay High Court in Writ Petition
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No. 6108/87 quashing the proceedings for recovery of property tax and
other expenses due from the first respondent-co~pany.
The matter arises in this way: For the purpose of prevention and
revival of sick industries, the Central Government has enacted the Act
called "Tlt~i_ck Industri_al Coml'._anies (Special Provisions) Act, 1985
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SUPREME COURT REPORTS
[1990] 1 S.C.R.
('The Act'). The Act extends to the whole of India including the StExcerpt shown. Read the full judgment & AI analysis in Lexace.