Shree Karthik Papers Ltd. v. The Government of Tamilnadu

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 27.11..2009CORAM:THE HONOURABLE MR. JUSTICE R.SUDHAKARW.P. No.2868 of 2008Shree Karthik Papers Ltd.,rep. By Managing Director,25,50 Feet Road,Krishnasamy Nagar,Ramanathapuram,Coimbatore 641 045. ...Petitioner Vs.1.The Government of Tamilnadu,rep. By its Addl. Secretary,Industries Department, Fort St. George, Chennai.9.2.The State Industies PromotionCorporation of Tamilnadu Ltd., (A Govt. Of Tamilnadu undertaking)rep. By its Managing Director,19A, Rukmani Lakshmipathy Road,Egmore, Chennai.8. 3.The Assistant Commissioner,Commercial Taxes, Zone-II,Coimbatore 641 018.4. The Commercial Tax Officer, Trichy Road Circle, Coimbatore 641 018. ... RespondentsPrayer: Petition filed under Article 226 of the Constitution of Indiato issue a Writ of Certiorarified Mandamus calling for the records onthe file of the first respondent in Letter No. 12388/Indus. (IT)/2005-3, dated 18.1.2008, quash the same and direct the firstrespondent to implement the order of the (BIFR) Bench for Industrialand Financial Reconstruction, dated 11.5.2007 in the properperspective. https://hcservices.ecourts.gov.in/hcservices/ For Petitioner : Mr. C. KrishnappanSr. Counsel for Mr. R. Achuthan For Respondents: Mrs C.K.VishnupriyaGovt. AdvocateORDERThe petitioner in this case has been declared as SickIndustries within the meaning of Section 3 (1) (o) of SickIndustrial Companies (Special Provisions) Act 1985 by the Order ofthe BIFR dated 26.7.99 passed in case No. 89 of 1995 and IDBI wasappointed as the operating agency under Section 17(3) of SickIndustrial Companies (special Provisions) Act 1985 to examine theviability of the company and prepare a draft scheme for its revival.Thereafter, several orders have been issued by the Board from time totime.2. Insofar as the present case is concerned, the BIFRBench-I, passed the following order on 11.5.2007." We have examined the request of the company afterobtaining the views of the IDBI (OA/MA), who have commentedvide their letter dated 20.4.2007 that they did not receiveany objection from the above said departments in responseto the DRS circulated by the Board. As such, company'srequest could be considered favourably treating deemedconsent of the concerned department u/s. 19(2) of the Act.Accordingly, in view of no objections having been receivedfrom the above mentioned departments either by IDBI or theBoard, it is treated their deemed consent to the reliefssought in the DRS and modified paras 9 C (i), (ii) and D(ii) of the scheme sanctioned by the Board vide order dated22.1.2007 be read as under:-9 C (i) Commercial Tax Department:-(a) To grant extension in time upto March 31, 2014 forutilization of unutilized interest free sales tax loan ofRs.594.95 lakh. (b) To reschedule IFST loan by 9 years so as to bepayable over a period of 7 years starting from April 1,2014. (c) To waive the penalty on disputed amounts of salestax aggregating Rs.93,59,576/- for which the company hasfiled appeal before Appellate Assistant, Commissioner,Coimbatore. In the event the appeals are not accepted, to https://hcservices.ecourts.gov.in/hcservices/ grant permission to pay the tax demanded in five annualinstalments. 9(C (ii) Tamilnadu Electricity Board(a) To maintain the electricity consumption charges/minimum demand charges at the present level during theperiod of rehabilitation(b) To grant exemption to the company from payment offuel surcharge / peack hour consumption charges forcontinuous supply during the period of rehabilitation.(c) To give three months credit period for monthlypayment of bills without any delayed payment surcharge/interest.(d) To exempt the company from payment of ElectricityDuty / Cess/ taxes for a period of five years.9.D (ii) Central Excise Department.To waive interest of Rs.6,97,567/- andRs.2,95,532/- levied by Excise Department during FY 2002 andFY 2005 respectively for delayed payment of excise duty. 4. Let a copy of this order be sent to all concerned. "3. The copy of the order was communicated to therespondents 1 and 3 and other appropriate officers concerned. Interms of the order of the Board, the petitioner is entitled todeferred payment of sales tax. The representation of the Petitionerthrough SIPCOT for implementing the order of BIFR was not taken upand the petitioner was directed to approach the Government directly.Inturn, the petitioner made a representation to the AdditionalSecretary, Industries Department/R1, which also went in vain. Thepetitioner therefore, approached this Court for a Mandamus, whichwas issued on 31.8.2007 directing the authorities to consider therepresentation. Based on the said order, the Secretary to Governmentpassed the order, which is under challenge in this writ petition. 4. No counter has been filed inspite of notice. 5. The main contention of the learned counsel for thepetitioner is that the Industrial Department, which is a party in theBIFR Proceedings is bound by the rehabilitation scheme. Any orderpassed by the BIFR is binding on the respondents herein. Section 19(3) of the Sick Industrial Companies (Special Provisions) Act, 1985provides for the same and it is read as follows:- https://hcservices.ecourts.gov.in/hcservices/ " where in respect of any scheme the consent referredto in sub-section (2) is given by every person required bythe scheme to provide financial assistance, the Board, may,as soon as may be, sanction the scheme and on and from thedate of such sanction the scheme shall be binding on allconcerned. "Before the BIFR, the respondents have not objected and that isrecorded in the order itself. 6. In the impugned order, the first respondent/ theGovernment has stated that the Commissioner of Commercial TaxesDepartment has informed that the petitioner is now doing business andthe Unit is functioning well and found to be a viable unit. It isalso stated that the petitioner is avoiding repayment of InterestFree Sales Tax though they are capable of repaying the same. Thisstand should have been taken before the BIFR where the respondent isa party. 7. In terms of Section 19 (3) of Sick Industrial Companies(Special Provisions) Act, 1985, the Government is bound to implementthe direction of the BIFR without demur and it is binding on them.If they intend to demand the payment of sales tax for whateverreason, the department is entitled to approach the BIFR anymodification if permissible or by way of an appeal as provided underthe Act. The report of the Commissioner of Commercial TaxesDepartment cannot form the basis for the Government to set at naughtthe order of the BIFR, which has been passed after giving anopportunity to all the parties concerned and will therefore bebinding on all concerned. In any event, the reasons given in theimpugned proceedings cannot override the order of the BIFR and willbe contrary to law and therefore unsustainable. 8. In such view of the matter, the impugned order isquashed. The petitioner will be entitled to appropriate relief asordered by the BIFR. The respondents shall extend benefits asapplicable based on the order of the BIFR within a reasonable timepreferably within a period of three months from the date of receiptof a copy of this order. This writ petition is ordered as above.Consequently, M.P. Nos. 1 and 2 are closed. No costs. ra Sd/- Asst.Registrar/True Copy/ Sub.Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To1. The Additional Secretary, Government of Tamilnadu, Industries Department, Fort St. George, Chennai.9.2. The Managing Director, State Industies Promotion Corporation of Tamilnadu Ltd., (A Govt. Of Tamilnadu undertaking) 19A, Rukmani Lakshmipathy Road, Egmore, Chennai.8. 3. The Assistant Commissioner, Commercial Taxes, Zone-II, Coimbatore 641 018.4. The Commercial Tax Officer, Trichy Road Circle, Coimbatore 641 018.+ 1 cc to the Mr. R. Achuthan, Advocate SR.64526+ 1 cc to the Government Pleader SR.64997 WP No. 2868/2008TP(CO)EU 7.01.2010.