CRESCENT IRON AND STEEL CORPORATION LTD.versusUNION OF INDIA AND ANOTHER

            CRESCENT IRON AND STEEL CORPORATION LTD.                              A
                                        v.
..                    UNION OF INDIA AND ANOTHER

                                OCTOBER 9, 1992

                 [KULDIP SINGH AND N.M. KASLIWAL, JJ.]                            B

          Sick Industrial Company (Special Provisions) Act 1985:

          Section 15(1rSick Company making reference to BfFR-During pen-
     dency of reference government granting permission to close down undertak- C
     ing-B[FR directing winding up of company-Appellate Authority upholding
     order-Validity of the order.

           The appellant, a private limited company was running.a fonndry. It
     declared a lock out in its foundry in Jnly, 1985. The company made a
     reference to the Board for Industrial and Financial Reconstruction under D
     Section 15(1) of the Sick Industrial Company (Special Provisions) Act,
     1985, and during its pendency made an application to the State Govern-
     ment under Section 25(0) of the Industrial Disputes Act, 1947, seeking
     permission to close down its undertaking at the existing location and
     requested the BIFR to revive the undertaking at another location preferab· E
     ly in a backward area of the State. It was also alleged that the company
     had paid up all the secured and unsecured creditors, as well as the wo~kers
     employed in the foundry.

           The BIFR on 15.2.91 passed an order proposing the winding up of
     the company. On 16.5.91, at a general meeting of the company, a special      F
     resolution was passed by the share-holders that the aforesaid order of the
     BIFR was not in the interest of the company.

           The company forwarded the resolution along with a letter dt. 21.5.91
     and requested the BIFR to revoke its order dated 15.2.91. The BIFR by its    G
     order dt. 23.5.91 observed that it was not possible to adopt any measures
     for the revival of the company, and reiterated its stand that the company
     should be wound up.

          Aggrieved, the company tiled an appeal before the Appellate
     Authority for Industrial and Financial Reconstruction, which by its order H
                                       931
    932                   SUPREME COURT REPORTS (1992] SUPP.1 S.C.R.

A dated September 13, 1991, upheld the order of the BIFR and did not find
    any reason to take a different view. It further held that carrying out the
    same activity at the new site does not constitute rehabilitation of a sick
    unit, Iha! the developing of the land for commercial activity also does not
    constitute rehabilitation by a sick unit, and that there was no provision in
    the SICA to drop a case once a reference has been made and heard by the
B   BIFR.

        The appellant company appealed to this Court, challenge the order
  of the Appellate Authority by contending that during the pendency of the
  reference before the BIFR, the shares of the company have been trans-
C ferred in favour of the present shareholders, the new management had
  settled liabilities of all the creditors, workers' dues, as well as the Govern-
  ment dues, by arranging funds of their own, that the claims of the
  nationalised banks have also been settled, all the workers of the foundry
  except two have voluntarily resigned and have been paid their dues, that
D the State Government by its order dated 13.7.92 has also taken the view
  that no permission for closure under Section 25(0) of the Industrial
  Disputes Act, 1947 would now be necessary. Reliance was also placed on
  the order dated 31.3.1989 of the BIFR in the case of Belapur Sugar and
  Allied Industries Limited rejecting the reference made under Section 15(1)
  of the SICA, which was affirmed by the Appellate Authority by order dated
E 13.7.1989.
                                 'I


          Allowing the appeal, this Court,

          HELD: 1. The foundry unit at Guregaon, Bombay is lying closed
F since 1985 and according to the new management of the company, the
  liabilities of all the secured and unsecured creditors have been settled and
  out of 288 workers, 286 have already resigned and accepted the retrench-
  ment compensation, the remai11ing two workers being not traceable. The
  new management is taking steps with the State Government and other
  authority for shifting of the location of the new foundry unit at a place
G outside the metropolis of Bombay. The State Government in its letter dated
  13.7.92 has also taken the view that no permission for closure of the
  industrial undertaking under Section 25(4) of the Industrial Disputes Act
  would be necessary. The shareholders in a general meeting of the appellant
  company held on 16.5.91, passed a special resolution that the order of
H BIFR dated 15.2.91 was not in the interest of the company. The Appellate
             CRESCENTIRON ANDSTEELCORPN. v. U.0.1.                    933

Authority has not taken all these factors into consideration while passing A
the order dated 13.9.91. The order of the State Government dated 13.7.92
has come Into existence after the passing of the order by the Appellate
Authority. [935-H, 936 A-DI

     2. The BIFR and the Appellate Authority are authorised to take into
consideration the facts and circumstances of each case and then m decide     B
whether any reference under Section 13 (1) of the Sick Industrial Company
(Special Provisions) Act, 1985 was at all necessary or not. [936-E]

      3. The order of the Appellate Authority dated 13.9.91 as well as the
orders of the BIFR dated 15.2.91 and 23.5.91 are set aside and the matter    C
is remanded to the BIFR for passing a fresh order. [936-F]

        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4055 of
1992.

     From the Judgment and Order dated 13.9.91 of the Appellate              D
Authority for Industrial & Financial Reconstruction, New Delhi, in Appeal
No.71/91.

     Ashok K. Desai, Niten Thakkar, Sunil Dogra and P.H. Parekh for
the Appellant.
                                                                             E
        A Sobba Rao and Ms. Sushma Suri for the Respondents.

        The Judgment of the Court was delivered by

        KASLIWAL, J. Special leave granted.
                                                                             F
      The appellant Crescent Iron and Steel Corporation Limited (in short
'the appellant company'), a private limited company was running a foundry.
The appellant declared a lock out in its foundry in July 1985. The appellant
company made a reference to the Board for Industrial and Financial
Reconstruction (hereinafter referred to as the 'BIFR'). under Section 15(1)
of the Sick Industrial Company (Special Provisions) Act, 1985 (in short G
'SICA'). During the pendency of the said reference the appellant company
made an application to the State of Maharashtra under Section 25(0) of
the Industrial Disputes Act, 1947 for seeking permission to close down its
undertaking located at Goregaon and requested the BIFR to revive the
undertaking at another location preferably in a backward area of H
    934                  SUPREME COURT REPORTS (1992] SUPP.1 S.C.R.

A Maharashtra. The appellant company also alleged to have paid up all the
    secured and unsecured creditors of the company as well as all the workers
    employed in the f0undry. The BIFR on 15.2.1991 passed an order propos-
    ing the winding up of the appellant company. On 16.5.1991 at a general
    meeting of.the appellant company a special resolution was passed by the
    shareholders that the order of BIFR dated 15.2.1991 was not in the interest
B   of tho company. The appellant company forwarded the aforesaid special
    resolution along with a letter dated 21.5.1991 requesting the BIFR to
    revoke its order dated 15.2.1991. The BIFR vide its order dated 23.5.1991
    observed that it was not possible to adopt any measures for revival of the
    company and reiterated its stand that the appellant company should be
C   wound up.

          Aggrieved against the aforesaid order of the BIFR dated 23.5.1991,
    the appellant company filed an appeal before the Appellate Authority for
    Industrial and Financial Reconstructi~n, New Delhi. The Appellate
D   Authority of its order dated September 13, 1991 upheld the order of the
    BIFR and did not find any reason to take a different view. The Appellate
    Authority further held that even carrying out the same activity at the new
    site does not constitute rehabilitation of a sick unit. It also held that
    developing of the land for commercial activity also does not constitute
    rehabilitation of a sick unit and there was no provisions in th•. SICA to
E   drop a case, once a reference has been made and beard by the BIFR. The
    appellant company has now come in appeal before this Court challenging
    the aforesaid order of the Appellate Authority.

          It was contended by Mr. Ashok Desai, learned senior counsel ap-
F   pearing for the appellant company that during the pendency of the refer-
    ence before the BIFR the shares of the appellant company held by Voltas
    Limited, were transferred in favour of the present share holders, after
    obtaining approval of the concerned authorities. The new management bad
    settled liabilities of all the creditors, workers' dues, as well as guvernment
    dues, by arranging fonds of their own. As regards the claims of the Canara
G   Bank, the dues had been settled to the satisfaction of that bank and in case
    of United Bank of India, part of the dues had been settled and for the
    balance amount undertaking had been given, supported by bank guarantee
    of the satisfaction of the that bank. All the workers of the foundry had also
    voluntarily resigned and have been paid their dues, except for two workers
H   whose whereabouts could not be traced. The final settlement of the dues
    CRESCENTIRON AND STEEL CORPN. v. U.0.1. [KASLIWAL, J.]              935

of the workers was done with a view to shifting the location of the industrial A
undertaking outside the metropolis of Bombay and for establishing a new
foundry unit. It has now been submitted by Shri Desai that the State
Government by its order dated 13.7.1992 has.also taken the view that no
permission for closure under Section 25 (0) of the Industrial Disputes Act,
1947 would now be necessary. The aforesaid letter of the Government of B
Maharashtra dated 13.7.1992 has been placed on record. It was thus
submitted that it would not be in the interest of justice to wind up the
company.

      Mr. Desai also submitted that the BIFR in case No.188/88 in the
matter of Belapur Sugar and Allied Industries Limited on 31.3.1989 passed      C
an order rejecting the reference made under Section 15(1) of the SI CA. A
copy of the aforesaid order has been placed on record and our attention
was drawn to the following observations made in the said case.

        "The management of the company has closed down the
        sugar factory and is in no position to revive it. All the              D
        workers have been paid off and there is no labour left.
        There is no industrial unit, sick or otherwise nor is there
        any factory employing 50 or more workers, in existence in
        this case, as required under the I(D&R) Act. The Bench
        was, therefore, of the opinion that it has no jurisdiction at          E
        all in this case. All this was put to the management of the
        company and to the banks and institutions concerned at
        the time of hearing and was accepted by them.

        The reference is accordingly rejected in limine, as not
        maintainable."                                                         F

    It was also pointed out by Mr. Desai that the aforesaid order of the
BIFR was affirmed by the Appellate Authority by "rder dated 13.7.1989.

      We have considered the submissions made by Shri Desai and have
perused the record thoroughly. The foundry unit at Goregaon Bombay is          G
lying closed since 1985 and according to the new management of the
compal\y the liabilities of all the secured and unsecured creditors has been
settled and out of 288 workers, 286 have already resigned and accepted the
retrenchment compensation. The remaining two workmen are not traceM
able. The new management of the appellant company is taking steps with H
    936                   SUPREME COURT REPORTS [1992] SUPP. 1 S.C.R.

A the State Government and other authorities for shifting of the location of
    the new foundry unit at a place outside the metropolis of Bombay which
    would also be in the interest of the avoidance of pollution hazard. The State
    Government in its letter dated 13.7.1992 has also taken the view that no
    permission for closure of the industrial undertaking under Section 25(4) of
    the Industrial Disputes Act, 1947 would be necessary. The shareholders in
B   a general meeting of the appellant company held on 16.5.1991 have passed
    a special resolution that the order of BIFR dated 15.2.1991 was not in the
    interest of the f'Ompany. The Appellate Authority had not taken all these
    factors into consideration while passing the impugned order dated
    13.9.1991.
c          All the above circumstances have happened after the pa.,ing of the
    order by the BIFR and the order of the State Government dated 13.7.1992
    has come into existence after the order passed by the Appellate Authority.
    The BIFR and the Appellate Authority are authorised to take into con-
    sideration the facts and circumstances of each case and then to decide
D   whether any reference under Section 15(1) of the Sick Industrial Company
    (Special Provisions) Act, 1985 was at all necessary or not and 1:0 pass any
    othe.r appropriate order meeting the ends of justice in each case.

          In the result, we allow this appeal, set aside the order of Ihe Appel-
    late Authority ·dated 13.9.1991 as well as the orders of the BIFR dated
E   15.2.1991 and 23.5.1991 and remand the matter to the BIFR for passing a
    fresh order in accordance with law and in the light of the observations
    made above. No order as to costs.

    N.V.K.                                                      Appeal allowed.