The main legal point established in the judgment is that the modification of a rehabilitation scheme under the Sick Industrial Companies (Special Provisions) Act, 1985 must be in accordance with the provisions of the Act and cannot impose further obligations on concerned parties without their consent. The court also emphasized the need for compliance with the terms of the Scheme and the limitations on the jurisdiction of the BIFR.

JUDGMENT

Vibhu Bakhru, J.

Introduction

1. The Principal Director General of Income Tax (Admn. & TPS) [hereafter `DGIT'] has filed the present petition impugning an order dated 01.07.2016 (hereafter `impugned order') passed by the Board for Industrial and Financial Reconstruction (hereafter `BIFR') in Case No.53/1995 relating to respondent no.1 - M/s The Indian Plywood Mfg. Co. Pvt. Ltd. (hereafter `the Company').

2. In terms of the impugned order, the BIFR had directed the Income Tax Authorities to comply with its earlier order dated 26.02.2013 within a period of 45 days.

3. The aforesaid order dated 26.02.2013 passed by the BIFR modified the Rehabilitation Scheme (hereafter `the Scheme'), which was approved by the BIFR under Section 18(5) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereafter `SICA') by an order dated 13.02.2001. The Scheme was amended to the limited extent of including additional exemptions from payment of income tax under the Income Tax Act, 1961 (hereafter `IT Act').

The controversy

4. The DGIT assails the impugned order, essentially, on two fronts. First, that further concessions, as contemplated in the order dated 26.02.2013, could not be granted as the Scheme had come to an end. According to the DGIT no further concessions could be considered or granted without extending the term of the Scheme. Second, that in terms of the order dated 26.02.2013, the Scheme was modified to require the Income Tax Department to consider the grant of further concessions as specified in the said order and there is no requirement to necessarily grant the same.

5. The DGIT preferred an appeal [Appeal No. 33/2016] against the impugned order before the Appellate Authority for Industrial and Financial Reconstruction (hereafter `AAIFR') under Section 25 of SICA. However, in terms of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (hereafter `the Repeal Act'), which came into force with effect from 01.12.2016, SICA stood repealed and the DGIT's appeal before the AAIFR stood abated. Thus, the DGIT has filed the present petition praying that the directions to comply with the order dated 26.02.2013 - which is construed by the Company as a direction to grant further concessions - be set aside.

6. Mr. Mehta, learned counsel appearing for the Company contested the present petition on several grounds. First, he submitted that the present petition is not maintainable. According to him, since the remedy of an appeal against any revival scheme or an order of the BIFR, under Section 25 of SICA, is no longer available as a result of the legislative repeal of SICA; a challenge to the orders passed by BIFR would not be maintainable in any other forum as well.

7. Second, he submitted that in terms of the Insolvency and Bankruptcy (Removal of Difficulties) Order, 2017 [S.O. 1683(E) dated 24.05.2017], the DGIT's remedy would be an appeal before the National Company Law Appellate Tribunal (hereafter `NCLAT') and it is not open for the DGIT to file a petition under Articles 226 and 227 of the Constitution of India. He also submitted that in terms of Section 5 of the Repeal Act, the repeal of SICA does not affect a rehabilitation scheme sanctioned by the BIFR. He referred to Ashapura Minechem Ltd. v. Union of India & Ors., 2017 SCC OnLine Del 11784 in support of his contention that appeal against the order of BIFR would lie to NCLAT

8. Third, he submitted that in terms of SICA, the BIFR would continue to have jurisdiction over a sick company, notwithstanding that its net worth has turned positive, till it is de-registered. He submitted that the order dated 26.02.2013 had the effect of modifying the Scheme which continues to be binding and the DGIT's understanding that the term of the Scheme had come to an end is erroneous. He also contended that the Scheme merely includes projections for seven years, however, that does not imply that the Scheme has ceased to be operative after the expiry of the said period