THE HIGH COURT OF DELHI AT NEW DELHI % + Judgment delivered on:
02. 01.2014 W.P.(C) No.2562/2013 M/S VYSALI PHARMACEUITICALS LTD ... Petitioner versus APPELLATE AUTHORITY FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION AND ORS ... Respondents Advocates who appeared in this case: For the Petitioner : Mr Arjun Chawla For the Respondents : Mr Vivek Sibal and Mr Jitender Ratta, for respondent No.3 Ms Aparna Bhat and Ms Sudipta Sarkar, Advocates for respondent No.6 Mr Jogy Scaria, Advocate for respondent No.8 CORAM:HON’BLE MR JUSTICE BADAR DURREZ AHMED HON’BLE MR JUSTICE RAJIV SAHAI ENDLAW JUDGMENT
BADAR DURREZ AHMED, J (ORAL) 1. This writ petition is directed against the order dated 19.03.2013 passed by the Appellate Authority for Industrial and Financial Reconstruction, New Delhi (AAIFR) in Appeal No.193/2011 whereby the petitioner’s said appeal arising from the order dated 07.06.2011 passed by the Board for Industrial and Financial Reconstruction (BIFR) in Case No.33/2009, was rejected.
2. The order dated 07.06.2011 passed by the BIFR was one whereby the petitioner’s reference under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’) was rejected. While doing so, the BIFR observed as under:
“2.8.1 Having considered the submissions made and material on record, the Bench observed that the company has filed a reference based on ABS as on 31.3.2008 whereas the company’s networth had eroded fully as per ABS as on 31.3.2004. The company has not given any justifiable reasons for delay of more than 4 years in filing the instance reference. Besides ABS as on 31.3.2008 reveals that the investment of the company on plant & machinery now is Rs. 2.25 crore. In terms of the definition contained in Section 7(1) clause (ii) of the Micro, Small and Medium Enterprises Development Act, 2006 read with Notification S.O. 1642(E) dt. 29.9.2006, as amended by S.O. 199 (E) dt. 16.1.2009, the Enterprises where the investment in Plant & Machinery was more than Rs. 25.00 lakh but did not exceed Rs. 5.00 crore was a Small Enterprise. Therefore, presently the company is in the category of small scale industry which is not covered under SICA. The Bench on perusal of ABS as on 31.3.2003 further observed that the networth of the company had eroded by more than 50%. However, the company had not filed Form ‘C’ within 60 days of finalization of ABS which clearly reflect that the company had not complied with the provisions of Section 23 of SICA which has attracted initiation of action u/s 23(3) of SICA. 2.8.2 In view of the facts and reasons stated above, the Bench directs that the reference of the company is not maintainable under SICA and accordingly dismissed the reference. All stake holders are free to pursue their claims in accordance with law.”
3. From the above extract of the BIFR order dated 07.06.2011, it is apparent that the petitioner’s reference under SICA was rejected on two grounds. The first ground was that the reference which had been filed by the petitioner was based on the audited balance sheet as on 31.03.2008, whereas, the petitioner’s networth had eroded fully four years earlier, as was evident from the audited balance sheet as on 31.03.2004. The BIFR has specifically noted that the petitioner had not given any justifiable reasons for this delay of more than four years in filing the reference, when, under Section 15(1) of the SICA, the reference in this case was to be filed within 60 days of the finalization of accounts of the financial year ending 31.03.2004. Apart from the ground of delay, the BIFR also rejected the reference because of the fact that in terms of the Micro, Small and Medium Enterprises Development Act, 2006 read with Notification S.O. 1642(E) dated 29.09.2006 as amended by S.O. 199(E) dated 16.01.2009, the petitioner concern came to be classified as a small enterprise and therefore, the same did not fall within the purview of SICA.
4. The BIFR also noted that there was violation of the provisions of Section 23(1) of SICA inasmuch as the fact that the networth of the company had eroded by 50% as on 31.03.2003 had also not been reported by the petitioner within the stipulated period mentioned in Section 23 of SICA.
5. Insofar as the impugned order passed by the AAIFR is concerned, we find that only one point was urged before it and that was with regard to whether the petitioner fell within the classification of small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 or not. The petitioner had not even taken the point with regard to the rejection of the reference of account of delay as was recorded by the BIFR in the above extracted paragraph 2.8.2 of its order dated 07.06.2011. It has been contended by the learned counsel appearing on behalf of respondent No.3 that the entire discussion on whether the petitioner falls within the expression of ‘small enterprise’ or not under the said Act of 2006 is academic because even if the petitioner were to succeed on that ground, the order passed by the BIFR on 07.06.2011 has become final insofar as the point of delay is concerned. This is so because, according to the learned counsel for respondent No.3, no ground of challenge on this aspect of the matter was taken by the petitioner before AAIFR. Furthermore, even in the writ petition this ground of challenge has not been taken by the petitioner.
6. We are in agreement with the submission made by the learned counsel for respondent No.3 that consideration of the question as to whether the petitioner was a small enterprise under the said Act of 2006 or not would be academic in the backdrop of the fact that the petitioner did not challenge the other ground of rejection of his reference on the point of delay before the AAIFR. We, however, leave the question with regard to classification as a small enterprise open and do neither confirm nor reject the stand taken by the AAIFR. Insofar as the point of delay is concerned, we have not gone into the issue as to whether the delay was sufficiently explained or not because that point was not even taken before the AAIFR and, consequently, was not, as it could not have been, taken before us. The finding of the BIFR on the question of delay has remained unchallenged.
7. In view of the foregoing, the writ petition is dismissed. There shall be no order as to costs. BADAR DURREZ AHMED, J RAJIV SAHAI ENDLAW, J JANUARY02 2014 SU