Ghanshyam Sarda and Others vs Shiv Shankar Trading Co. and Others

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2014 Supreme(Gau) 842

Gauhati High Court
Ujjal Bhuyan, J.
Ghanshyam Sarda and Others - Appellant
Versus
Shiv Shankar Trading Co. and Others - Respondent
F.A.O. No. 10 of 2010 and W.P. (C) Nos. 4303 and 6286 of 2013
Decided On : 06-01-2014

K.N. Choudhary, Senior Advocate, A. Dhar and A. Kohli, Advocates for the Appellant; N. Dutta, D.K. Mishra, Senior Advocates, S.C. Keyed and A. Lal, Advocates for the Respondent

Subject

SICK INDUSTRIAL COMPANIES - JURISDICTION

Act Referred

CIVIL PROCEDURE CODE : O.104, O.21, O.9
SICK INDUSTRIAL COMPANIES SPECIAL PROVISIONS ACT : S.22, S.22(1), S.18, S.16

Headnote

Sick Industrial Companies Act, 1985 - Service - Petition has been filed by the company challenging the legality and validity of the order passed by the BIFR in BIFR Case on the ground that the said order is not only in violation of the injunction of the civil court, but stood vitiated because of participation of respondent No. 2, a Member of the BIFR, in the proceedings of the said case, though he had earlier recused himself from hearing the matter as per order - Held, It goes without saying that justice must not only be done, but must be seen to have been done - Likewise, to dispel any apprehension of bias which a party may harbor against the presiding officer hearing the case, the test applied should be from the stand point of the litigant - It is his apprehension which must be addressed and dispelled even though the presiding officer may not at all be biased in the case - Coming to the present case, having once recused himself from hearing the case, it is neither desirable nor expected that the Honble Member should again start hearing the case, more so when proceedings have assumed almost adversarial character - Case dismissed.

Ujjal Bhuyan, J.—F.A.O. No. 10 of 2013 was tagged with W.P. (C) No. 4303 of 2013 following order dated August 14, 2013, passed in W.P. (C) No. 4303 of 2013. Thereafter, as per order dated November 1, 2013, passed in W.P. (C) No. 6286 of 2013, the said case was tagged with W.P. (C) No. 4303 of 2013. The subject matter of all the three cases being interrelated, and as agreed to by learned counsel for all the parties, those were heard together and are being disposed of by this common judgment and order. F.A.O. No. 10 of 2013 has been filed by one Sri Ghanshyam Sarda against an order of injunction dated May 13, 2013, passed by the learned Civil Judge No. 3, Kamrup, Guwahati in Misc. (J) Case No. 254 of 2013, arising out of Title Suit (TS) No. 166 of 2013. By the aforesaid order of injunction, the Board for Industrial and Financial Reconstruction (BIFR) has been restrained from proceeding further with BIFR Case No. 149 of 1994. The suit has been filed by one M/s. Shiv Shankar Trading Co., an unsecured creditor of J.K. Jute Mills Co. Ltd. (company), which has been declared as a sick industrial company under the Sick Industrial Companies (Special Provisions) Act,. 1985, reference under which has been registered with the BIFR as BIFR Case No. 149 of 1994.

2. W.P. (C) No. 4303 of 2013 has been filed by the said M/s. Shiv Shankar Trading Co., the plaintiff in T.S. No. 166 of 2013, challenging the legality and validity of the proceedings before the BIFR dated May 16, 2013 and order of the BIFR dated July 1, 2013, passed in BIFR Case No. 149 of 1994 on the ground that the proceedings and order of the BIFR are in violation of the injunction order of the civil court.

3. W.P. (C) No. 6286 of 2013 has been filed by the company challenging the legality and validity of the order dated September 5, 2013, passed by the BIFR in BIFR Case No. 149 of 1994 on the ground that the said order is not only in violation of the injunction of the civil court, but stood vitiated because of participation of respondent No. 2, a Member of the BIFR, in the proceedings of the said case, though he had earlier recused himself from hearing the matter as per order dated January 31, 2013.

4. Though papers filed before the court are voluminous, and exhaustive arguments were advanced by learned counsel for the parties, attempt has been made to confine the proceeding only to the immediate issues confronting the court in the present litigation. Consequently, only the bare essential facts relevant for the present adjudication are briefly set out hereunder.

5. The plaintiff in T.S. No. 166 of 2013 claims to be an unsecured creditor of the company having supplied raw jute to it during the year 2002-03. As the company did not make payment for the supply made, which was to the tune of Rs. 38,65,607 the plaintiff made enquiries and came to know that the company had moved the BIFR for a declaration that it is a sick company and seeking protection under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The BIFR had, in fact, declared the company as a sick company under the SICA and proceedings are on under the provisions of the SICA for revival of the company. In spite of its status as a sick company, the company entered into the above deal with the plaintiff without informing it about the said position.

6. The plaintiff contended that as per latest audited balance-sheet of the company, its net worth has become positive. Since its net worth has become positive, it would no longer be a sick company and, therefore, it would no longer have the protection of the BIFR under the SICA. In other words, the BIFR would no longer have jurisdiction to continue the proceedings in BIFR Case No. 149 of 1994 which would pave the way for the plaintiff to institute appropriate legal proceeding against the company for realisation of dues.

7. The plaintiff then instituted T.S. No. 166 of 2013 at Guwahati seeking a declaration that the company is not a sick company withi