NCLAT : In Hada Textile Industries Limited vs. The Sales Tax Officer, Commercial Taxes & Ors.

If the scheme sanctioned under sub-section (4) of Section 18 of SICA Act, 1985 is treated to be a scheme sanctioned under sub-section (1) of Section 31 of the I&B Code, in such case, in absence of any provision of review of the scheme sanctioned under sub-section (1) of Section 31 of the I&B Code, no relief can be granted to the appellant.

The Appellant submitted that as per sub-section (b) of Section 4 of Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (‘the SICA Repeal Act’) as amended by Notification dated 28th May, 2016, all the BIFR matters stood abated except the sanctioned scheme which has been saved in terms of Section 5 of the Repeal Act. Therefore, the approved scheme continued and is binding.

The second proviso to clause (b) of Section 4 of the SICA Repeal Act, 2003 provided that any scheme sanctioned under sub-section (4) or any scheme under implementation under sub-section (12) of Section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall be deemed to be a scheme under implementation in terms of Section 424D of the Companies Act, 1956 and shall be dealt with as per the provisions contained in Part VI-A of the Companies Act, 1956 which provided for review or monitoring of scheme that are sanctioned or are under implementation.

According to the learned counsel for the appellant the above clarification in regard to the proviso regarding any scheme sanctioned under sub-section (4) or any scheme under implementation under sub-section (12) of Section 18 of the SICA Repeal Act, 1985 shall be deemed to be approved ‘Resolution Plan’ under sub-section (1) of Section 31 of the I&B Code.

The Adjudicating Authority has noticed the aforesaid fact and observed that even if it is deemed to be a ‘Resolution Plan’ under sub-section (1) of Section 31 of the I&B Code, the said plan can be dealt with in terms of the provisions of Part II of the I&B Code. In absence of any provision to review the scheme already sanctioned under sub-section (1) of Section 31 of the I&B Code, the Adjudicating Authority held that the scheme having already approved and as the company failed to turn its net worth positive within the period of sanctioned scheme, it will be presumed that the ‘Corporate Applicant’ has violated the sanctioned scheme, which will result in liquidation proceedings.

The Appellate Tribunal also agreed with the finding of the Adjudicating Authority that if the scheme sanctioned under sub-section (4) of Section 18 of SICA Act, 1985 is treated to be a scheme sanctioned under sub-section (1) of Section 31 of the I&B Code, which otherwise we do not accept, in such case also in absence of any provision of review of the scheme sanctioned under sub-section (1) of Section 31 of the I&B Code, no relief can be granted to the appellant.

Link : https://ibclaw.in/wp-content/uploads/2018/09/Hada-Textile-Industries-Limited-Vs.-Commercial-Taxes-Kolkata-Ors..pdf