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IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Sudhanshu Dhulia, J.
Kashipur Sugar Mills Ltd., Kashipur - Petitioner
Versus
State of Uttarakhand and others - Respondents
And
Kashipur Sugar Mills Ltd., Kashipur - Petitioner
Versus
State of Uttarakhand and others - Respondents
Writ Petition (M/S) No. 1922 of 2012
Writ Petition (M/S) No. 1839 of 2012
Decided on : 19.9.2012
SICA - Recovery of Sugarcane Dues - 1953 Act, Section 17 - SICA, Section 22
Fact of the Case:
The petitioner, a sugar company under BIFR, challenged recovery proceedings for unpaid sugarcane dues under the 1953 Act. The petitioner argued that as a sick industry under SICA, recovery required approval from the Board. The State contended that there was no bar to recovery under SICA and the rehabilitation scheme had expired.
Finding of the Court:
The court found that the petitioner, being a sick industry, did not have blanket protection from recovery under SICA. The rehabilitation scheme had expired, and current dues had to be paid in the normal course.
Issues: Interpretation of SICA Section 22, applicability of recovery under 1953 Act, and the effect of the expired rehabilitation scheme.
Ratio Decidendi: The court held that SICA did not provide absolute protection from recovery, and the expired rehabilitation scheme did not shield the petitioner from paying current dues.
Final Decision: Both writ petitions were dismissed, and the interim order was vacated. No costs were awarded.
Sudhanshu Dhulia, J. (Oral)
1. Heard Mr. Anil Kumar Joshi, Counsel for the petitioners and Mr. A. S. Rawat, Additional Advocate General with Mr. Paresh Tripathi, Additional Chief Standing Counsel and Ms. Menka Tripathi, Standing Counsel for the State of Uttarakhand.
2. Petitioner in both the writ petitions is Kashipur Sugar Mills Limited. It is a sugar company which is presently in Board for Industrial and Financial Reconstruction (hereinafter referred to as “BIFR”) under the purview of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as “SICA”). Meanwhile, the operation, particularly the production of sugar in the factory continues. The company was supplied sugarcane by the farmers and sugarcane cultivators in Uttarakhand. The price of sugarcane has not been given to the these cultivators and consequently under section 17 (4) of the Uttar Pradesh State Sugar Cane (Regulations of Supply and Purchase) Act, 1953 (hereinafter referred to as “1953 Act”), recovery proceedings have been initiated by the Cane Commissioner, Uttarakhand against the petitioner. Section 17(4) of the 1953 Act reads as under:-
“17. Payment of cane price.-
(1) …
(2) …
(3) …
(4) The Cane Commissioner shall forward to the Collector a certificate under his signature specifying the amount of arrears on account of the price of cane plus interest, if any, due from the occupier and the Collector, in receipt of such certificate, shall proceed to recover from such occupier the amount specified therein as if it were an arrear of land revenue.”
3. In writ petition no. (M/S) 1839 of 2012 there is a recovery of `2485.07/- lacs and in writ petition no. (M/S) 1922 of 2012 the recovery is `255.05/- lacs. The Tehsildar has issued recovery citations in both the writ petitions and the amount has to be recovered as arrears of land revenue. These two recovery citations have been challenged by the petitioner in two writ petitions.
4. Admittedly, petitioner has been declared as sick industry and is presently in BIFR for its rehabilitation. The petitioner takes reliance upon Section 22 of SICA. Section 22 of SICA reads as under:-
“22. Suspension of legal proceedings, contracts, etc.- (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956 ) or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof 3[ and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company] shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.
(2) Where the management of the sick industrial company is taken over or changed, 3 [in pursuance of any scheme sanctioned under section 18], notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law or in the memorandum and articles of association of such company or any instrument having effect under the said Act or other law –
(a) it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company;
(b) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the Board.
(3) [Where an inquiry under section 16 is pending or any
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