WA/391/2008 of MS RANGAREDDY amp ASSOCIATES HYD Vs DEWAN BAHADUR RAMAGOPAL MILLS LTD., AND 8 OTHERS on 29 December 2023

1. Dewan Bahadur Ramagopal Mills Limited, Represented by its ManagingDirector, S. Krishnam Raju S/o. Late Sri S.V. Vissam Raju, Rl/o. No. 839-U,Road No'41 ' Jubilee Hills' Hyderabad' ....RESpoNDENr/pErroNERDirector, S. Krishnam Raju S/o. Late Sri S.V. Vissam Raju, Rl/o. No. 839-U,Road No'41 ' Jubilee Hills' Hyderabad' ....RESpoNDENr/pErroNER2. The Board of lndustrial and Financial Reconstructions,, rep. by its Registrar,New Delhi.New Delhi.3. The lndustrial Finance Corporation of lndia,, rep. by its Assitant General[\,4anager, Bank of Baorda Buildings, 16, Sansad lVlarg, New Delhi.[\,4anager, Bank of Baorda Buildings, 16, Sansad lVlarg, New Delhi.4. A.P. lndustrial Development Corporation,, rep. by its Vice Chairman andManaging Director, Parishrama Bhavan, Basheerbagh, Hyderabad.Managing Director, Parishrama Bhavan, Basheerbagh, Hyderabad.5. State Bank of Hyderabad,, Rep. by its Assist€nt General Manager, CreditDepartment, Head Office, Gunfoundry, Hyderabad.Department, Head Office, Gunfoundry, Hyderabad.6. The Punjab National Bank,, Rep. by its Manager, Head Office, Bhikaji KamaPlace, New Delhi.Place, New Delhi.

7. The Diwan Bahadur Ramgopal Mills Employees Union,, Rep. by its GeneralSecretary, 6/D, LIGH, Barkatpura, Hyderabad.Secretary, 6/D, LIGH, Barkatpura, Hyderabad.8. The lndustrial lnvestment Bank of lndia,, Rep. by Divisional General Manager,Hyderabad Branch Office, 7th Floor, United lndia Insurance CompanyBuildings, Basheerbagh, Hyderabad.Hyderabad Branch Office, 7th Floor, United lndia Insurance CompanyBuildings, Basheerbagh, Hyderabad.

9. DBR Mllls Staff Union,, rep. by its General Secretary, KVR Krishnamachary,s/o. Venkatachary, Rt/o. Maredpally, Secundera.bad poNDENTS/RESpoNDENTSs/o. Venkatachary, Rt/o. Maredpally, Secundera.bad poNDENTS/RESpoNDENTS

I.A. NO: 1 OF 2008(WAMP. NO: 814 OF 2008)

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be [pleased ]to staythe operations of the order dated 08.02.2008 in W.P.No.'l 1173 of 2007 passed bythe Hon'ble Single Judge of this Hon'ble Court

l.A. NO: 2 OF 2008(WAMP. NO: 815 OF 2008)

Petition under Section 151 CPC praying that in the circumstances stated inthe affidavit filed in support of the petition, the High Court may be pleased to directthe BIFR 2nd respondent herein not to act in pursuance of the impugned orderand restrain BIFR from accepting the deposit of Rs.50.00 lakhs by the Respondentpending disposal of the above writ appeal Counsel for the Appellant: SRI P. S. RAJASEKHAR, COUNSEL FORSMT. SHIREEN SETHNA BARIA

Counsel for Respondent No. 1: SRI VEDULA SRINIVAS, SENIOR COUNSELFOR SMT. VEDULA CHITRALEKHA

Counsel for Respondent No. 5: SRI K. V. SUBRAHMANYA NARUSU

Counsel for Respondent No. 6: SRI K. SURYANARAYANA

Counsel for Respondent No. 7: SRI S. SRI RAM

Counsel for Respondent No. 9: Ms. SAGARIKA KONERU

The Coufi made the following: ORDER

THE HON'BLE THE CHIEF JUSTICE ALOK ARADHEANI)THE HON'BLE SRI JUSTICE T. VINOD KUMAR

WRIT APPEAL No.39l OF 2008

JUDGMENT: [(Per ]the llon'ble SriJustice T.Vinod Kwiar)

This Intra-court appeal under Clause 15 of the LettersPatent is filed challenging the order of the learned Single Judgedated 08.O4.2008 in Writ Petition No.l1173 of 2OO7 as beingcontrary to settled legal proposition that the High Court in writjurisdiction under Article 226 of the Constitution of lndiashould confine itself to the question of legality and cannot sit asa Court of Appeal by deciding issues involving disputedquestions of facts.

2. The appellant herein is respondent No.4 in the WritPetition being W.P. No. 11173 of 2OO7.

3. The facts matrix of the case has been set out in detail inthe order under challenge. Thus, shom of unnecessary details itis sufl-rcient to state that the respondent No. t herein (company)had filed the underlying petition aggrieved by the order dated03.05.2007 passed by the Board for Industrial and FinancialReconstruction (for short 'BIFR). The order passed by BIFR waschallenged on $,re ground that the Draft Rehabilitation Scheme (DRS) submitted by the appellant u,as sanctioned on 28.05. 1997with some modifications, without notice to the petitioner; thatthe DRS was not circulated; that equal opportunity should beprovided to the company to make OTS settlements beforeseeking revival schemes from third parties; that the AppellateAuthority constituted under Section 25 of the Sick IndustrialCompanies (Special Provisions) Act, 1985, (for short 'SICAJ hadset aside the draft scheme submitted by the appellant andsanctioned by the BIFR and remanded the matter back to BIFRfor fresh consideration, after hearing the company and all theparties concerned noting therein that the consent of thecompany was erroneously recorded by BIFR; and thus thecompany was entitled to submit suggestions/ objections inresponse to DRS and was also entitled to hearing before BIFR towith some modifications, without notice to the petitioner; thatthe DRS was not circulated; that equal opportunity should beprovided to the company to make OTS settlements beforeseeking revival schemes from third parties; that the AppellateAuthority constituted under Section 25 of the Sick IndustrialCompanies (Special Provisions) Act, 1985, (for short 'SICAJ hadset aside the draft scheme submitted by the appellant andsanctioned by the BIFR and remanded the matter back to BIFRfor fresh consideration, after hearing the company and all theparties concerned noting therein that the consent of thecompany was erroneously recorded by BIFR; and thus thecompany was entitled to submit suggestions/ objections inresponse to DRS and was also entitled to hearing before BIFR toprotect their interest.

4. The learned Single Judge of this Court by the impugnedorder had set aside the order of BIFR dated 03.05.2007 bywhich the DRS submitted by the appellant was sanctioned andremitted the matter for fresh consideration, permitting thecompany to submit its suggestions/objections within 30 daysfrom the date of order.

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5. The learned Singte Judge while setting aside the orderpassed by the BIFR sanctioning the DRS submitted by theappellant had held that the Draft Rehabilitation Scheme wasnot circulated to the company; that the company was notpresent when orders dated 12.08. 1997 and 01.06. 1998 werepassed; that the company was not given opportunity to submitits objections/ suggestions under Section 18(3) of SICA; and ttratsince the company received the DRS only on 17. I I . 1998, itcannot be deprived of its right to file objections/ suggestions ascontemplated under Section 18(3)(a) and (b) of SICA.

6. The learned Single Judge further held that even at thestage of submitting objections/ suggestions if the companybrings up a better proposal and inspires tl,e confidence of BIFR,its employees, etc. it is open for the BIFR to a take just, fair andreasonable decision.

7. The learned Single Judge further held that the BIFR isentitled to review any scheme and direct the Operaling Agency(OA) to prepare fresh scheme under Section 18 of SICA; thateven the scheme sanctioned is not final; that the Board can, forany compelling reasons, review the sanctioned scheme; and thatthe appellant cannot claim a vested interest thereby deprivingthe right ol the company.

8. Assailing the said order of the learned single Judge, thepresent appeal is filed.

9. Heard Sri P.S. Rajasekhar, learned Counsel appearing forMrs. Shireen Sethna Baria, learned Counsel for th<: appellant,Sri. Vedula Srinivas, learned Senior Counsel appearing for Mrs.Vedula Chitralekha, learned counsel for respondent No.1 andMs. Sagarika Koneru, learned Counsel for respondent No.9 andperused the record.

10. The challenge in the present appeal to the order of theIearned Single Judge is primarily threefold.

i. Firstly, that the writ Petition challenging the order ofBIFR ought not to have been entertained, since theaggrieved party has an alternate remedy of Appeal underSection 25 of SICA;BIFR ought not to have been entertained, since theaggrieved party has an alternate remedy of Appeal underSection 25 of SICA;

ii. Secondly, the finding of the learned Single Juclge holdingthat the Company was entitled to submit fresh revivalscheme as an objection/ suggestion to the DRS runscontrary to the object of Section 18 of SICA; anclthat the Company was entitled to submit fresh revivalscheme as an objection/ suggestion to the DRS runscontrary to the object of Section 18 of SICA; ancl

iii. Lastly, the finding that the Company did not have noticeof. ther DRS till 17.11.1998 and thereby can be givenof. ther DRS till 17.11.1998 and thereby can be given \

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another opportunity to submit its objections/ suggestionsis erroneous, since the approved DRS was published indaily newspapers and also because the Company hadfailed to submit its objections/ suggestions even after thematter was remanded by the appeliate authority.

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I 1. Insofar as the challenge to the impugned order on theground of existence of alternate remedy is concerned, it is to benoted that before the learned Single Judge, the parties to theWrit Petition including the appellant herein had consented forhearing the Writ Petition on merits. The learned Single Judgehad noted the said consent of the appellant in paia 15 of theimpugned order as under:

"15. The aforesaid order of the BIFR dated 03.05.2007 hasbeen questioned in this Writ Petition. Though an appeal liesagainst the said order passed b,y the BIFR to the AAIFR underSection 25 of SICA,the contesting resDondeut RFLAconsented to hear the Writ Petition on merits instead ofrelegating the [petitioner ]to file an appeal before theappellate authority, as ituld cause further delay irrresoldistes alnotheies. In view of theaforesaid consent of the contesting respondent RRA, the WritPetition has been heard on merits.'

(enphasis supplted)

12. In view of the consent given by the appellant to proceedwith the hearing of the Writ Petition, it is not open for the III

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appellant to now plead otherwise. Thus, the challenge in thepresent appeal on this ground has to fail.

13. Turning to the other ground of challenge in permitting thecompany to submit fresh revival scheme as anobjection/ suggestion to the DRS, it is to be noted that thepurpose of the Act is to not just declare a company as sickindustriai company with its net worth eroded, rather it is topromote ameliorative, remedial and other measures which needto be taken in respect of such companies in public interest.

14. Section 18 of SICA deals with Preparation and Sanction ofSchemes. Sub-section (3) thereof mandates that the draftscheme approved by BIFR shall be sent to the sick industrialcompany and the OA. The provision further mandates that BIFRshall pubiish or direct the publication of the draft scheme indaily newspapers in order to enable the concerned parties to filetheir objections and suggestions for BIFR to consider. While so,sub-section (5) thereoi confers powers on the BIFR to reviewany sanctioned scheme and make modifications as it may deemfit, including the preparation of a fresh scheme. Thus, from abare reading of sub-section (5), it can be understood that ascheme sanctioned under Section 18 of SICA is not unalterable ,,r (See: Raheja Uniuersal Limited [ys. ]IVRC Limited and Orsl).Section 18(6) of SICA specifies that whenever such an exerciseunder Section 18(5) of SICA is undertaken, the provisions ofsub-sections (3) and (4) of Section 18 shall appiy in relationthereto.Section 18(6) of SICA specifies that whenever such an exerciseunder Section 18(5) of SICA is undertaken, the provisions ofsub-sections (3) and (4) of Section 18 shall appiy in relationthereto.

15. It is pertinent to note that the exercise under Section18(5) of SICA may be undertaken either on the recommendationof the OA or othenaise. The usage of the word 'othenaise'demonstrates that BIFR has a discretionary power to direct thepreparalion of a fresh scheme for any other reason it deemsnecessary. At the cost of repetition, the purport of conferringsuch discretionary powers on BIFR is to ensure that thesanctioned scheme is of utmost viability. Since, the legislaturehas not limited the exercise of the powers conferred underSection 18(5) of SICA to only specific situations, this Court is ofthe view that if a proposal which is best suited in a givensituation is made in the form of objection/ suggestion to theDRS, the same cannot be rejected on the ground of it being anew proposal.

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16. So far as the contention of the appellant that thecompany ought not be given another opportunity after failing tosubmit objections / suggestions to the DRS rvhen the matter wasremanded by the appellate authority is concerned, firstly, it is tobe seen that the appellate authority while remanding the matterto BIFR for fresh consideration after hearing the company uideorder dated 06.01.2000 had recorded a categorical finding thatthe company was absent in the hearings held on 12.O8.L997and 01.06.1998, and that their consent was erroneouslyrecorded by BIFR. Though the appellant herein had preferredW.P. No.7670 of 2OO0 aggrieved by the said findings, the saidWrit Petition was dismissed by the learned Single Judge uideorder dated 23.O2.2OOO. Admittedly, no further appeal waspreferred against the order dated 23.O2.20OO. Therefore, havingaccepted the order in W.P. No.7670 of 20OO dated 23.O2.2OOO, the appellant herein cannot be permitted to raise the very sameplea again. Secondly, in light of the foregoing discussion on thediscretionary power of BIFR under Section 18(5) of SICA, thecompany could at any point bring out a fresh proposal forconsideration of BIFR.

17 . At.*,his stage, it is relevant to note that an appeal to theDivision Bench under Clause 15 of Letters Patent from an order f of a learned Single Judge is oniy provided for convenience to theparties. However, it is well settled that the powers of this Courtunder Clause 15 of Letters Patent can only be exercised whenthe order of the learned Single Judge is totally perverse (See.' JV.Seshaiah Vs. South Centrol Railutag and Ors2).

18. Further, in the light of the judgment of the Hon'bleSupreme Court in The Management ol Narendra & CompangPrlaate Limited us. the Workmen oJ Narendra & Cornpang!,and Shgam Sel and. Pouter Limited and Another us. ShgamSteel Industrles Llmiteda, the impugned order passed by thelearned Single Judge does not fall under the term 'judgment' olClause 15 of the l,etters Patent, as the said order does not give afinality to the right of the parties. Since the impugned ordermerely directs the BIFR to take a just, fair and reasonabledecision after providing the company an opportunity to submitits suggestions/objections, this Court is of the view that nograve prejudice is caused to the appellant for the present WritAppeal to be entertained by this Court.

2 20t9 6) AUr 843 (2016) 3 SCC 34O3 (2016) 3 SCC 34O4 {2023l t SCC 634

19. Resultantly, this Court is of the view that the impugnedorder does not ca-l1 for any interference in exercise of powersunder Clause 15 of lrtters Patent. Accordingly, the instant WritAppeal is dismissed.

20. However, this Court is conscious of the fact that duringthe pendency of the instant appeal, the BIFR was dissolved onaccount of The Sick Industrial Companies (Special Provisions)Repeal Act, 2OO3 (for short 'Repealing Act of 2O03'), notihed on25.11.2016 uide notification No.S.O. 3568(E), & 3569(E) andbrought into force with effect from 01.12.2016. Further, sincethe matter could not be pursued by the parties on account ofthe operation of stay during the pendency of the instant appeal,this Court deems it appropriate to grant liberty to the companyto take appropriate steps in accordance with the Repealing Actof 2O03, the Companies (Transfer of Pending Proceedings) Rules,2O16 passed urrCe G.S.R. 1119(E). dated O9.12.2016 read withthe Insolvency and Bankruptcy Code (Removal of Difficulties)Order,2OlT passed uideS.O. 1683(E). dated 24.O5.2O17.

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DATED: 2911212023

1[t\][5 ][STA][rei]a i\I0 [5 ][tEB ][?rlt]t)\t-q*=*#/JUDGMENT

WA.No.391 of 2008

DISMISSING THE WRIT APPEALWITHOIJT COSTS@0A\