LexM/S. S.R.F. LIMITED versus M/S. GARWARE PLASTICS AND POLYESTERS LTD. AND ORS.
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' , I ,l.. I M/S. S.R.F. LIMITED A v. M/S. GARWARE PLASTICS AND POLYESTERS LTD. AND ORS. MARCH 7, 1995 [K. RAMASWAMY AND N. VENKATACHALA, JJ.] B Sick Industrial Companies (Special Provisions) Act, 1985: Ss.3(1)(0),15(1),16,17(1),17(3),18,21 and 28-Sick industrial com- pany-Revival of-Interested person-Operating agency inviting offers from C parties evincing interest in revival of sick company-Respondent and another company submitting their schemes on 'stand alone' basis-Appellant submit- ting proposal for merger of sick company with it-Scheme of respondent rejected-Board of Industrial and Financial Reconstructioh approving scheme of merger-Respondent evincing no interest in the matter any fu.rther, except D . filing appeal against final order of Board-Held, respondent not an interested · person-It has acquiesced by consent to orders barred by Board--Central Government and Board of Direct Taxes necessary parties in merger scheme and should be given notice. Respondent No. 4 (in Civil Appeal No. 3277195) was a public limited E company. It was closed with effect form August 1990 and was declared a sick company under Sick Industrial Companies (Special Provisions) Act, 1985 by the Board of Industrial and Financial Reconstruction (BIFR) on 6.12.1991, Industrial Financial Corporation of India (IFCI) was appointed as operating agency to prepare a financial package to revive the sick F . company by 30.9.1992. IFCI invited offers requiring the interested parties to submit their revival proposals before 15.5.1992. Three companies name· ly, the appellant and respondent No. 1 (in Civil Appeal No. 3277/95) and Assam Asbestos Ltd. submitted their schemes. The schemes submitted by respondent No. 1 and the Assam Asbestos Ltd. were on :stand alone' basis whereas the proposal of the appellant was for merger of the sick company G with it. The proposal ofrespondent No.·1 was rejected. Thereafter respon· dent No. 1 did not show any interest in the matter. It neither appeared before the BIFR at the time of hearing nor did it respond to any of the communictions of the operating agency. ultimately, by order dated 23.4.1993, BIFR approved the scheme of revival of the sick company by the H 565 566 SUPREME COURT REPORTS [1995) 2 S.C.R. A appellant with certain observations regarding benefits under s. 72-A of the Income tax Act, 1961. However, on clarification by the appellant giving up s.72-A benefits, the Board modified the order and approved the merger by its order dated 19.11.1993, and directed circulation and publication of the draft scheme fixing 27.1.1994 for hearing of objections or suggestions to the scheme. B . Respondent No. 1 filed an appeal before the Appellate Authority for Indrt~trial and Financial Reconstruction against the order dated 19.11.1993 passed by BIFR. It also filed a writ petition before the High Court of Bombay at its Orangabad Bench, .which had no territorial juris- C diction. The Appellate Authority dismissed the appeal on 28.1.94. There- after respondent No. 1 amended the writ petition, which was transferred to Deihi High Court. The High Court opined that respondent No. 1 was· an interested . D person deeply interested in revival of the sick company. It allowed the writ petition and set aside the order dated 19.11.1993 and the other orders passed by BIFR and the Appellate Authority holding that the same were violative of principles of natural justice and fair play. It also held that since the merger scheme entailed huge financial sacrifice at the cost of the central exchanquer, the order of revival of the sick company without notice. E either to the Central Government or the Central Board of Direct Taxes, was bad in law. Aggrieved, the company seeking revival of the sick company by its merger filed Civil appeal No. 3277/95, and the sick company filed Civil Appeal No. 3275/95, challenging the order of the High Court. A share holder of the sick company also filed another appeal (CA No. 3276/95) F against the order of the Appellate Authority confirming merger of the sick company. It was contended for the appellant companies in civil Appeals No. 3277/95 and 3275/95 that the conduct of respondent No.1 would show that it was not an interested party in as much as it never evinced interest after G rejection of its initial scheme nor did it submit any fresh proposals. In fact it was a trade rival having trade interests and was interested in prolonging
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