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2014 Supreme(AP) 424
High Court of Andhra Pradesh Court
P. NAVEEN RAO, J.
M/s. Shri Maruthi Textiles Ltd. Nagari, Chittoor District
Versus
The Board for Industrial & Financial Reconstruction, New Delhi & Others
Writ Petition No. 29185 of 2011
Decided On: 25-03-2014
For the Petitioner:E. Manohar, Senior Counsel, P. Kamalakar, Advocate.
For the Respondents:R1, Ponnam Ashok Gound, R2 to R5, R.N. Reddy, R5, Government Pleader for Revenue, R6, L.J. Veera Reddy, Advocates.
Headnote:
Employees Provident Fund and Miscellaneous Provisions Act, 1952 - Sick Industrial Companies (Special Provisions) Act, 1985 - Section 20(1) - Companies Act, 1956 - Section 529-A - Employees Provident Fund Organization - Provident fund - Petitioner company was governed by property of petitioner to an extent of acres was attached - In exercise of powers vested by Act - Competent authority determined arrears of contribution levied interest and damages for delay in making contributions total amount of dues determined was petitioner company did not pay amount quantified after observing due formalities proclamation of sale order was issued by Recovery Officer on land to an extent - Accordingly open auction was conducted respondent stood as highest bidder and sale was confirmed in his favor - Sale certificate was issued to respondent - Sale certificate was registered by the fifth respondent on - After registration of sale certificate this writ petition was instituted - Petitioner company went into losses resulting in initiating proceedings by Board for Industrial and Financial Reconstruction - Opined that sick industrial company was not likely to make its net worth exceed its accumulated losses within a reasonable time and not likely to become viable in future and recommended that company should be wound up in accordance – Held, Power Article of Constitution is discretionary and supervisory in nature - It is not issued merely because it is lawful to do so. The extraordinary power in the writ Jurisdiction does not exist to set right mere errors of law which do not occasion any substantial injustice - A writ can be issued only in case of a grave miscarriage of justice or where there has been a flagrant violation of law - Writ court has not only to protect a person from being subjected to a violation of law but also to advance justice and not to thwart it - Constitution does not place any fetter on power of extraordinary jurisdiction but leaves it to discretion of court – However being that power is discretionary court has to balance competing interests keeping in mind that interests of justice and public interest coalesce generally - A court of equity when exercising its equitable jurisdiction must act so as to prevent perpetration of a legal fraud and promote good faith and equity - An order in equity is one which is equitable to all parties concerned - Petition can be entertained only after being fully satisfied about factual statements and not in a casual and cavalier manner - Petition dismissed (Para 26)
1. The petitioner company was governed by the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for brevity hereinafter referred to as ‘Act, 1952’). The petitioner company did not pay its contribution to the Provident fund Account for a long time. By order dated 28-03-2007 property of petitioner to an extent of 12.31 acres was attached. In exercise of powers vested by Act, 1952, the competent authority determined arrears of contribution, levied interest and damages for the delay in making the contributions. The total amount of dues determined was Rs.60,21,000/-. Since petitioner company did not pay the amount quantified, after observing due formalities proclamation of sale order was issued on 14.09.2010 by the Recovery Officer on land to an extent of Ac.4.89 cents in Sy.Nos.162/2 (3.11 acres), 162/1 (Part 1.78 acres) at Chennai Road, Melapattu Group, Natham Revenue Village, Nagari Municipality, Chittoor District out of 12.31 acres attached. Accordingly, open auction was conducted, wherein sixth respondent stood as highest bidder at Rs.64,50,000/- and the sale was confirmed in his favour. Sale certificate dated 22.11.2010 was issued to the 6th respondent. The sale certificate was registered by the fifth respondent on 05.09.2011. After the registration of sale certificate this writ petition was instituted.
2. Petitioner company went into losses, resulting in initiating proceedings by the Board for Industrial and Financial Reconstruction (BIFR). In case No.95/95, the Board by Order dated 21.06.2000, opined that the sick industrial company was not likely to make its net worth exceed its accumulated losses within a reasonable time and not likely to become viable in the future and recommended that the company should be wound up in accordance with Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’).
3. Aggrieved by the orders passed by the BIFR, petitioner company preferred Appeal No.172/2000. The appellate authority dismissed the appeal on 12.01.2001. The same was challenged in W.P.No.6086/2001, but was dismissed on 19.03.2009 for non-prosecution. So far no orders are passed winding up the petitioner company as per the recommendation of BIFR.
4. Heard learned senior counsel Sri E.Manohar, appearing for Sri P.Kamalakar, counsel for the petitioner and Sri Ponnam Ashok Gound, counsel for respondent no.1, Sri R.N.Reddy, counsel for respondents 2 to 4, Government Pleader for Stamps and Registration for respondent No.5 and Sri L.J.Veera Reddy, counsel for respondent No.6.
5. Learned senior counsel contended that as per the provision contained in Section 20(4) of the SICA, until winding up proceedings are passed by the High Court, only BIFR is competent to sell the assets of the sick industrial company and if sale is conducted, the sale proceeds can be distributed to the lenders and others in accordance with the provision of Section 529-A and other provisions of the Companies Act, 1956 only after obtaining the orders of the High Court. The provisions of SICA shall prevail over any other provision on the same subject. He, therefore, contended that the action of the Employees Provident Fund Organization(EPFO) in conducting sale of the property of the petitioner company, which was already declared as sick industrial company by referring to section 11 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘Act, 1952’) is ex facie illegal.
6. Learned senior counsel further contended that principle of estoppel is not attracted in this case. There is no estopple against statute and in view of the provision contained in Section 20(4) of SICA, the auction conducted by the respondent organization is ex facie illegal and void. Thus, merely because petitioner did not respond to the notices issued and amounts determined are statutory liability, doctrine of estoppel cannot be invoked to non-suit the petitioner.
