REAL VALUE APPLIANCES LTD. ETC. versus CANARA BANK AND ORS. ETC.

Citation: [1998] 3 S.C.R. 170 · Decided: 05-05-1998 · Supreme Court of India · Bench: S. SAGHIR AHMAD · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
REAL VALUE APPLIANCES LTD. ETC. 
11. 
CANARA BANK AND ORS. ETC. 
MAYS,1998 
(S. SAGHIR AHMAD AND M. JAGANNADHA RAO, JJ.] 
Sick Industrial Companies (Special Provisiom) Act, 19851 Board of 
Industrial and Fina11cial Reconstruction Regulations, 1987 : 
C 
S.s. 15, 16122 Regulation 19(5)-Jndustrial Company-Petition for 
winding up pendings in High Court-A Regular suit for recovery of money 
against the Company, also pending in High Court-Thereafter company 
getting its reference u!s I 5 registered before BIFR and not disclosing this fact 
to High Court-High Court deprecating conduct of company and making 
D orders appointing provisiJJnal liquidator and Receiver holding that mere 
registration of reference u/s 15 did not amount to ''pendency of any inquiry'' 
under s.16-Held, High Court was right in deprecating conduct of company-
But registration of reference u!s 15 cannot be said to be invalid-Orders 
passed by High Court after registration of reference are in violation of 
prohibition contained in s.22-Inquiry u/s 16(1) must be deemed to have 
E commenced simultaneously with the registration of reference. 
F 
Interpretation of Statutes : 
Internal aid to construction-Headings-Held, Chapter headings 
cannot be treated as rigid compartments. 
A Winding up petition was filed against the appellant-company in the 
High Court. The Company Judge appointed a provisional liquidator. But, on 
appeal the Division Bench stayed the operation of the order. 
Meanwhile a suit for recovery was filed against the appellant-company 
G by the Canara Bank and the Union Bank of India. The application filed in 
the said suit for appointing a receiver to take formal possession of the 
mortgaged properties, which were subject matter of the suit, was dismissed 
by the Single Judge, but in interlocutory appeal the prayer was granted by 
the Division Bench by its order dated 28.7.1997. 
H 
The appellant after obtaining the stay in the company appeal went on 
170 
,._. 
REAL VALUE APPLIANCES LTD. v. CANARA BANK 
171 
seeking adjournments and opposing appointment of provisional liquidator on A 
the plea that it was a viable unit. On the other hand, the company approached 
the Board for Industrial and Financial Reconstruction (BIFR) on 17.7.1997 
and got its reference registered on 24.7.1997 but did not disclose this fact 
to the Division Bench of the High Court till 8.8.1997 on which date the 
Bench passed an order vacating the stay and confirming the appointment of B 
provisional liquidator holding that mere registration of reference under s.15 
of the Sick Industrial Companies (Special Provisions) Act, 1985 did not 
amount to "pendency of any inquiry" under s.16 so as to attract s.22 and, 
therefore, the Bench was well within its powers in vacating the stay. Aggrieved, 
the company filed before this Court C.A. No. 2573 of 1998 against the order 
dated 8.8.1997 passed in the company appeal and C.A. No. 2572 of 1998 . C 
challenging the order dated 28.7.1997 passed by the other Division Bench 
of the High Court in the interlocutory appeal appointing the Receiver. C.A. 
No. 2574of1998 was filed by the workman (Engineering Kamgar Sangh) 
against the order dated 8.8.1998. 
The respondents contended that the appellant-company was guilty of D 
suppression of facts before the High Court inasmuch as it took adjournments 
-"\ 
without informing the Court of its approaching the BIFR and getting the 
reference registered, and keeping in view the suppression of facts by the 
company and contradictory pleas taken by it in regard to its viability, the 
reference to BIFR must be treated as vitiated and amounting to 'fraud' and, E 
therefore, all consequential orders of the BIFR must be ignored. 
For the appellant it was contended that once the reference was registered 
under s.15 of the Act by the BIFR on 24.7.1997, in view of the mandate of 
s.22, the respective Division Benches of the High Court ought not to have 
passed the order dated 28.7.1997 and 8.8.1997. 
F 
Allowing the appeals, this Court 
HELD: 1.1. It cannot be said that the reference under s.15 of the Sick 
Industrial Companies (Special Provisions) Act, 1985 and the registration 
thereof by the BIFR became bad because of any conduct of the company G 
before the High Court. Equally, the subsequent orders passed by BIFR on the 
reference cannot, on that account, be said to be invalid. [179-G) 
1.2. It is true that on the one hand before the High Court the Company 
was opposing appointment of a R

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