The petitioner is aggrieved by the recovery steps initiated, at the behest of the 4th respondent, by the revenue recovery authorities within the State of Kerala. 2. The brief facts, necessary for the consideration of the sustainability of the revenue recovery proceedings, are that the 4th respondent was a Company registered under the Companies Act, 1956, within the State of Uttar Pradesh, with 100% shares held by the Government of Uttar Pradesh. The 4th respondent was having shares in one other Company, viz., M/s.Uptron Colour Pictures Tubes Limited [for brevity “UCPTL”], which was subsequently changed as “BPL Display Devices Ltd.[for brevity “BDDL”]. The said Company also is one registered under the Companies Act, in the State of Uttar Pradesh. The said UCPTL was declared “sick” by the Board for Industrial and Financial Reconstruction (for brevity “BIFR”) under the Sick Industrial Companies (Special Provisions) Act, 1985 (for brevity “SICA”) and a scheme was sanctioned as per Exhibit P1. As per the scheme, the petitioner herein was allowed to take over the Company, which led to the change in name of the Company.
3. As per the Sanctioned Scheme, 1996 (for brevity “SS-96” ) the BIFR allowed the petitioner herein to take over the sick company and implement the scheme sanctioned by the BIFR. It was in implementation of such scheme that the petitioner took over the management of the company and even effected the change of name of the Company to BDDL. The sanctioned scheme is produced by the petitioner at Ext.P1. The attempted revival of the Company, BDDL, having failed; the sanctioned scheme itself was declared as inoperative by Ext.P2 order of the BIFR dated 12.03.2004. The 4th respondent herein filed an appeal to the Appellate Authority For Industrial and Financial Reconstruction (for brevity “AAIFR”), which was disposed of by Ext.P3 directing the 4th respondent to approach the BIFR.
4. However, the 4th respondent did not take up the opportunity specifically granted by AAIFR in Ext.P3 order. Later on, the scheme having been found to be unworkable and the implementation itself having been declared to be failed by BIFR, the BIFR issued winding up notice-Ext.P4 dated 29.08.2007. The petitioner and the 4th respondent were heard, before Ext.P5 order was passed, recommending winding up of the Company, BDDL. A belated appeal filed against Ext.P5, before AAIFR by the 4th respondent was dismissed on 06.08.2008, by Ext.P6 order. Despite reservations made by the AAIFR, with respect to remedies before the High Court, none seems to have taken up the matter, but for the proceedings referred, hereunder. The winding up order by the BIFR became final. On the recommendation of the BIFR, the High Court at Allahabad appointed an official liquidator by Ext.P7 dated 17.10.2008.
5. The 4th respondent, in the meanwhile, approached Delhi High Court against the recommendation of the BIFR, confirmed by the dismissal of appeal by the AAIFR. However, later on as is revealed from Ext.P8 order of the High Court of Delhi, the 4th respondent sought permission to withdraw the appeal to agitate the issue before the appropriate forum. An application for winding up was filed by the 4th respondent against the petitioner Company before this Court as CP NO.1/2007, which stood dismissed by Ext.P9 dated 06.08.2008. It is admitted by all parties that an appeal is pending from the said judgment. However, in the present case, we are concerned with the revenue recovery initiated against the first petitioner, on a claim raised by 4th respondent under the Indian Revenue Recovery Act before the District Collector at Lucknow, which has been transmitted to the District Collector at Palakkad. The impugned recovery notices are Exts.P10 and P11 produced along with the writ petition.
6. The revenue recovery proceedings evidently, has been initiated for purported recovery of the amount allegedly due to the 4th respondent, as per the sanctioned scheme, Ext.P1. More specifically, the 4th respondent claims under Clause 3.3(a) which is extracted hereunder:-
“3.3(a): The holding of UPECL would reduce to Rs.170 lakhs consequent to the writing down of equity to the extent of 90%. However, the equity stake would not entitle UPECL to any additional rights exceeding those of an ordinary shareholder. The right of first offer for sale of the 17 lakh shares would be with BPL. BPL has given a firm buy-back of the equity shares (to a max.of 8.5 lakh shares) at Rs.60 per share if the share price falls below the same and the buy-back would be effective after four years from the date of commercial production of UCPTL.”
7. The claim of the 4th respondent was that on revival of the industry, after completion of four years of production, the petitioner company was obliged to purchase the shares held by the 4th respondent in the Company, M/s BDDL. The learned counsel appearing for the 4th respondent would take up the said contention, despite the 4th respondent having failed before the various authorities, as indicated above. The recovery now initiated are independent proceedings against which the petitioner would have to necessarily resort to the alternate remedies available, is the argument.
8. It is trite that when effective alternative remedies are available this Court, would not invoke the extra ordinary remedy under Article 226, except in cases where there is total lack of jurisdiction, blatant illegality or violation of principles of natural justice.
9. The decision of the Hon'ble Supreme Court in 2005 (142) STC 1 in State of H.P and others v. Gujarat Ambuja Cement Ltd, and another can be usefully referred to, to advance this proposition. The Hon'ble Supreme Court held so:-
There are two well recognised exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in violation of the principles of natural justice. We may add that where the proceedings itself are an abuse of process of law the High Court in an appropriate case can entertain a writ petition.
10. In the present case, what is to be noticed is that admittedly the recovery proceedings have been initiated by the 4th respondent, based on the above extracted clause in a scheme initially sanctioned by the BIFR. The extracted clause by itself, does not confer any preferential status or rights on the basis of the majority stake in the share-holding. The buy-back is dependant upon commencing of commercial production, as also continued operation for a specific period; four years. The Sanctioned Scheme, being Ext.P1, produced herein, was declared to have failed by Ext.P2 order, by the BIFR itself. The challenge made against such order was not pursued by the 4th respondent herein. Subsequently, the sick Company being M/s.BDDL was recommended for winding up, the proceedings taken against such recommendation also did not result in any success. The proceedings initiated before the Delhi High Court against the winding up order confirmed by the AAIFR was withdrawn, as is noticed earlier. Based on the very same demand, the 4th respondent had attempted to move this Court for winding up of the petitioner Company. That too, resulted in failure as is evidenced by Ext.P9. The very substratum of the claim is built upon the specific clause, in a sanctioned scheme, which scheme ended in failure and which was set at naught by the BIFR, which initially sanctioned the scheme. The implementation of the scheme also did not fructify, and the Company ended up; being wound up.
11. In such circumstances, the 4th respondent cannot claim recovery of the amounts, which were the specific condition pursuant to revival, as per the sanctioned scheme. The very basis of the claim is effaced, by the scheme having been set at naught by the BIFR. The revenue recovery proceedings cannot be hence, said to be an independent proceeding fully unconnected with the proceedings before the BIFR. The claim for recovery is based on a clause in a scheme, which ended on failure and which is no more operational. The clause relied on, is also not absolute and is subject to reservation. The claim raised was negatived by various forums; the remedy before which was invoked by the 4th respondent. This Court finds that this is a fit case in which the extraordinary remedy under Article 226 can be invoked for reason of the claim for money being not at all sustainable, as also the proceedings being a clear abuse of process of law.
12. In such circumstances, the revenue recovery issued at Ext.P10 and P11 are set aside. No proceedings for recovery can be initiated against the petitioner on the strength of the aforesaid two demand notices, as the claim for money; based on which the demand is raised, has been found by this Court to be not sustainable.
Writ petition allowed. No costs.
Sd/-
(K. VINOD CHANDRAN, JUDGE) jma //true copy// P.A to Judge