RAHEJA UNVIERSAL LIMITED versus NRC LIMITED & ORS.

Citation: [2012] 3 S.C.R. 388 · Decided: 07-02-2012 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

0 
A 
B 
[2012] 3 S.C.R. 388 
RAHEJA UNVIERSAL LIMITED 
v. 
NRC LIMITED & ORS. 
(Civil Appeal No. 1920 of 2012) 
FEBRUARY 07, 2012 
[S.H. KAPADIA, CJI., K.S. RADHAKRISHNAN AND 
SWATANTER KUMAR, JJ.) 
Sick Industrial Companies (Special Provisions) Act, 
c 1985: 
ss. 22, 22(3), 22A, 17(3) -
Sale of assets of sick 
company - Rehabilitation scheme - Determination of the 
right of purchaser - Jurisdiction of BIFR to restrain transfer 
D of sick industrial company's property - Respondent-Company 
entered into memorandum of understanding and agreement 
for sale of its land to appellant-Company to obtain funds for 
financial restructuring and received part payment from the 
appellant-Company - Failure of appellant-Company to pay 
E third instalment and financial position of respondent-
Company not improved - Proposal by respondent-Company 
to the consortium of banks for Corporate Debt Restructuring 
(CDR) - Approval of scheme of rehabilitation - Prior to 
implementation of the scheme, the respondent-Company 
sought declaration from BIFR that it was a 'sick company' and 
F for adoption of the rehabilitation scheme approved by creditor 
banks ,... BIFR by order u/s. 17(3) adopted rehabilitation 
Scheme and directed that the sale of assets including 
investments would require prior approval of the BIFR -
Thereafter, execution of second Supplementary Agreement 
G by respondent-Company and possession of land given to the 
appellant-Company, without the· prior approval of the BIFR -
Appeal before AA/FR - AA/FR permitted the land to be sold 
- High Court quashed the order of AA/FR - On appeal, held: 
Memorandum of understanding and agreement to sell the 
H 
388 
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED & 
389 
ORS. 
land was signed prior to the presentation of the scheme before 
A 
the BIFR - However, second supplementary agreement was 
executed subsequent to the presentation of the scheme 
before the BIFR as also after the BIFR had passed an order 
uls. 17(3) - Asset of the company and/or its sale proceeds 
received under the agreements had been integral part of the 
B 
formation and finalization of the revival scheme, and as such 
transaction cannot be stated to be beyond the ambit and 
scope of s. 22(3) whereby all these instruments to which the 
sick industrial company is a party, would be subject to the 
orders of BIFR - Further, in view of the provisions of s. 53A, 
C 
even if the part performance of the agreement is accepted, 
yet no title is created in favour of the appellant-Company -
As regards the issue of jurisdiction, BIFR had the jurisdiction 
to issue prohibitory order which was passed clearly at the 
stage of the consideration of the revival scheme for the 
D 
formulation of which asset was duly taken into consideration 
- Prohibitory orders were issued by the BIFR within the ambit 
and scope of ss. 22(1), 22(3) and 22A - Furthet; there was 
no jurisdictional or other error in the order of the High Court 
in restoring the order of the BIFR - Land being the primary 
E 
asset of the respondent-Company, could not be permitted to 
be dissolved by sale or otherwise without the consent and 
approval of the BIFR - BIFR is the authority proprio vigore 
and required to oversee the entire affairs of a sick industrial 
company - Thus, order of the BIFR, which merged into the 
order of the High Court upheld - Transfer of Property Act, 
1882' - SS. 53A, 54. 
F 
ss. 22 and 22A - Scope and ambit of - Held: Section 
22 deals with the suspension of legal proceedings, execution 
and distress sale etc. against the assets of a sick company 
G !' 
while Section 22A deals with restrictions and prohibitory orders 
which the BIFR can pass, all for the purposes of preparation 
of the scheme and proper implementation and effective 
management of the revival of the sick industrial company -
Section 22 operates from the presentation of the scheme, its 
H 
390 
SUPREME COURT REPORTS 
[2012] 3 S.C.R. 
A consideration, preparation, finalization and ultimately the 
implementation of the said scheme and consequent 
rehabilitation of .the sick industrial company, while Section 
22A operates only during the preparation or consideration of 
the scheme, or upto the commencement of the proceedings 
B for winding up before the concerned High Court, in the event 
the B/FR recommends winding up proceedings -
These 
provisions primarily ensure that the scheme prepared by the 
BIFR does not get frustrated because of certain other legal 
proceedings and to pre

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