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IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJIV KHANNA, PRATHIBA M. SINGH, JJ.
ASHAPURA MINECHEM LTD. - Petitioner
Versus
UNION OF INDIA AND ORS. - Respondents
W.P.(C) 9674 OF 2017
Decided On : 01-11-2017
SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) REPEAL ACT, 2003 - CONSTITUTIONAL VALIDITY - ARTICLE 14 - CLASSIFICATION - NOTIFICATION NO. S.O. 3568(E) DATED 25TH NOVEMBER, 2016, NOTIFICATION NO. S.O. 3569(E) DATED 25TH NOVEMBER, 2016 AND NOTIFICATION NO. S.O. 1683(E) DATED 24TH MAY, 2017 - VALIDITY - WHETHER THE PROVISIONS ARE VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION OF INDIA.
Fact of the Case:
The petitioner company made a reference before the Board of Industrial and Financial Reconstruction (BIFR) on 2nd June, 2011, which, vide order dated 12th March, 2012 declared it to be a sick company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SIC Act). The petitioner had submitted a Draft Rehabilitation Scheme, which was pending when vide Notification No. S.O. 3568(E) dated 25th November, 2016 the Repeal Act was enforced with effect from 1st December, 2016. Consequently, the SIC Act was repealed and ceased to be operative and proceedings under the SIC Act before the BIFR abated. The petitioner challenged the constitutional validity of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (Repeal Act, for short) and restricts his challenge to the amended provisions of Section 4(b) and Section 5(1)(d) of the Repeal Act as being violative of Article 14 of the Constitution of India. The petitioner also prays for quashing of Notification No. S.O. 3568(E) dated 25th November, 2016, Notification No. S.O. 3569(E) dated 25th November, 2016 and Notification No. S.O. 1683(E) dated 24th May, 2017.
Finding of the Court:
The Court held that the classification of cases where draft schemes for reconstruction have been sanctioned and those cases where schemes are pending is non-discriminatory and is based on intelligible differentia as also has nexus to the object sought to be achieved by enacting the Code; the inclusion of the Eighth Schedule to the Code is in exercise of powers under Section 242 and Section 252 and is thus not ultra vires; the prescribing of a cut-off date by way of notifications i.e. December, 2016 is not contrary to law.
Issues: 1. Whether the provisions of Section 4(b) and Section 5(1)(d) of the Repeal Act are violative of Article 14 of the Constitution of India? 2. Whether the Notification No. S.O. 3568(E) dated 25th November, 2016, Notification No. S.O. 3569(E) dated 25th November, 2016 and Notification No. S.O. 1683(E) dated 24th May, 2017 are valid?
Ratio Decidendi: 1. The classification made, differentiating between cases where schemes stand sanctioned under Section 18(4) and (12) of the SIC Act and where the draft scheme for rehabilitation were pending consideration, is a valid, germane and realistic classification. These cases form a well defined class by themselves. 2. The subsequent Notification S.O. 1683(E) dated 24th May, 2017, which has also been described as “Removal of Difficulty Order, 2017”, enacts two more provisos under clause (b) to Section 4 of the repealed Act to clarify that the schemes sanctioned under Section 18(4) or (12) of the SIC Act shall be deemed to be approved resolution plan under Section 31(1) of the Act. The fourth proviso protects and gives limited right to specified parties in situations stipulated, to file an appeal before NCLAT within 90 days of publication of the order against the deemed approved resolution plan. The aforesaid classification is rational and certainly not discriminatory.
Final Decision: The writ petition is accordingly dismissed with no order as to costs.
SANJIV KHANNA, J.
CM APPL. 39391/2017 (Exemption)
Allowed, subject to all just exceptions. The application accordingly stands disposed of.
W.P.(C) 9674/2017 & CM APPL. 39390/2017 (STAY)
1. Learned counsel for the petitioner/Ashapura Minichem Limited (hereafter ‘Ashapura’) has given up the prayer challenging constitutional validity of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (Repeal Act, for short) and restricts his challenge to the amended provisions of Section 4(b) and Section 5(1)(d) of the Repeal Act as being violative of Article 14 of the Constitution of India.
2. The petitioner also prays for quashing of Notification No. S.O. 3568 (E) dated 25th November, 2016, Notification No. S.O. 3569 (E) dated 25th November, 2016 and Notification No. S.O. 1683 (E) dated 24th May, 2017.
3. The Petitioner is a company engaged in mining, processing, sale, and export of minerals.
4. On 2nd June, 2011, the petitioner company made a reference before the Board of Industrial and Financial Reconstruction (BIFR or Board, for short), which, vide order dated 12th March, 2012 declared it to be a sick company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SIC Act for short).
5. The petitioner had submitted a Draft Rehabilitation Scheme, which was pending when vide Notification No. S.O. 3568(E) dated 25th November, 2016 the Repeal Act was enforced with effect from 1st December, 2016. Consequently, the SIC Act was repealed and ceased to be operative and proceedings under the SIC Act before the BIFR abated.
6. Repeal Act was enacted by the Parliament in 2004, but was not notified under Section 1(2), till Notification No. S.O. 3568(E) dated 25th November, 2016.
7. Section 4(b) of the Repeal Act as originally enacted was as under:-
"4. Consequential provisions.—On the dissolution of the Appellate Authority and the Board,—
(a) XXXX
(b) any appeal preferred to the Appellate Authority or any reference made to the Board or any inquiry pending before the Board or any other authority or any proceeding of whatever nature pending before the Appellate Authority or the Board immediately before the commencement of this Act shall stand abated :
Provided that a company:—
(i) in respect of which such appeal or reference or inquiry stand abated under this clause may make a reference under Part VI-A of the Companies Act, 1956 (1 of 1956) within one hundred and eighty days from the commencement of this Act in accordance with the provisions of the Companies Act, 1956;
(ii) which had become a sick industrial company as defined in clause (46-AA) of Section 2 of the Companies Act, 1956 (1 of 1956), before the commencement of the Companies (Second Amendment) Act, 2002 (11 of 2003) may make a reference under Part VI-A of the Companies Act, 1956 within one hundred and eighty days from the commencement of the Companies (Second Amendment) Act, 2002 or within sixty days of final adoption of accounts after such commencement, whichever is earlier,
and reference so made shall be dealt with in accordance with the provisions of the Companies Act, 1956 (1 of 1956) :
Provided further that no fee shall be payable for making such reference under Part VI-A of the Companies Act, 1956 (1 of 1956) by a company whose appeal or reference or inquiry stand abated under this clause :
Provided also that any scheme sanctioned under subsection (4) or any scheme under implementation under sub-section (12) of Section 18 of the repealed enactment shall be deemed to be a scheme sanctioned or under implementation under Section 424-D of the Companies Act, 1956 (1 of 1956) and shall be dealt with in accordance with the provisions contained in Part VI-A of that Act;"
However, the said sub-section was never enforced.
8. By another Notification No. S.O.3569(E) also dated 25th November, 2016, Section 4(b) of Repeal Act was amended/modified -w.e.f. 1st November 2016, to read as under:
“AFTER AMENDMENT OF SICA (REPEAL) ACT, 2003, W.E.F. 1ST NOVEMBER, 2016:
4. C
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