The main legal point established in the judgment is that the protection provided to a sick industrial company under SICA, particularly under Section 22, prevails over the provisions of the Securitisation Act, and the bank's actions against the company's assets must remain stayed until final decisions are made by the BIFR.

Judgement

A. K. GANGULY, C.J. :- This writ petition has been filed by Noble Aqua Private Ltd. petitioner No. 1, who claims to be a company registered under the Companies Act and petitioner No. 2 is the Managing Director of petitioner No. 1 and the petitioner No.3 is the wife of petitioner No.2, the Managing Director of the petitioner-company.

2. The petitioners are challenging a notice dated 7-4 2007 issued under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short 'Securitisation Act'). The basic challenge in the writ petition is that the said notice is in contravention of provision of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'SICA').

3. The petitioners' case is that it was engaged in the export business of Marine Food Products along with processing and manufacturing of marine food products since 1995. The company was earning profit till 2002-03. But in view of a sudden fall in export business, the company sustained huge loss from the year 2003-04 and it could not repay its loan. As such the company approached the Board for Industrial and Financial Reconstruction (hereinafter referred to as the 'BIFR') by an application under Section 15(1) of the SICA on 7-10-2005 in the requisite form. Initially the BIFR refused to register the reference, but the petitioner appealed against the said order and ultimately by an order dated 26-12-2005 in Appeal Case No. 39 of 2005 the application of the petitioner was directed to be registered under Section 15(1) of the SICA. Thus the petitioner's request for declaring his industrial unit as a sick unit was registered as ease No. 173 of 2005. After completion of all formalities, the BIFR by its order dated 19-10-2006 sent notices to different parties including the Chairman and Managing Director of State Bank of India and fixed the date of hearing to 14-11-2006 in the office of BIFR. New Delhi.

4. In the hearing before the BIFR, representatives of the opposite party-Bank attended and opposed the petitioner's plea for declaring it a sick company. However, in the adjudication before the BIFR a declaration was given that the petitioner company has become a sick unit as on 31-3-2005 in terms of Section 3(1)(o) of SICA and in terms of the power available to BIFR under Section 17(3) of SICA, the BIFR Bench appointed the opposite party Bank as Operating Agency with directions to prepare a revival scheme for it, if feasible. The said order dated 14-11-2006 (Annexure-8) also records the request made by the opposite party Bank for permission under Section 22(1) of SICA, but the same was opposed by the consultant appearing for the company to the effect that the said permission would delay the revival of the company and the said permission was not ultimately granted.

5. It may be noted that no appeal was filed by the opposite parry-bank against the said order of BIFR. Even before hearing took place before the BIFR a petition was filed before the DRT, Cuttack by the petitioner on 10-7-2006 for suspension of further proceedings before the DRT, Cuttack. However, after the aforesaid order of the BIFR, SBI on several dates requested the petitioner-company to furnish its financial position and wanted it to deposit certain money. This was done by the SBI by its communication dated 6-12-2006 and 11-12-2006. To that the petitioner gave its reply by letter dated 20-12-2006. The petitioner then requested the SBI regarding revival package of its unit by its letter dated 22-12-2006. The petitioner also wrote letter to the BIFR requesting them to give a suitable direction to the operating agency of SBI to give the petitioner company time to furnish all details and for not insisting on the closure of its small bank account operation for the job work income purpose. However, the SBI gave a letter dated 26-12-2006 in this regard. In that letter (Annexure-14), reference was made to the DRT