ORDER
Devinder Gupta, J.
1. In this petition filed under Article 226 of the Constitution of India, challenge has been made by the petitioner Company to that part of the order passed by Board for Industrial and Financial Reconstruction (BIFR) on 28.2.1997 in case No. 117/87 in Re: M/s. Anglo India Jute Mills Company Limited (AIJM) in the proceedings held on 6.2.1997; by which the petitioner was directed to pay rental @ Rs.10,000/- per month for Flat No.34, Woodland Estate, Alipore, Calcutta, without adjusting the amount against any dues claimed by it from Anglo India Jute Mills Company Limited, further directing that rental payable shall be increased to Rs. 27,000/- per month w.e.f. 1.4.1997 and within a period of six months, the petitioner shall make necessary arrangement to vacate the flat in favor of Anglo India Jute Mills and against the order passed on 15.4.1998 by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) dismissing its appeal.
2. Relevant facts, in brief, are that the Anglo India Jute Mills Company Limited (Respondent No.7 herein) of which J.P. Goenka and A. Goenka (Respondents Nos. 8 and 9 respectively) are the erstwhile promoters became a sick industrial unit. Its case was referred to the Board for Industrial and Financial Reconstruction (BIFR) in December, 1987. The then promoters tried to revive the sick unit, but their efforts remained unfruitful. A proposal was given by respondent No.6 Company in or about September, 1992 for revival of the sick unit. This proposal was accepted by BIFR Subject to certain conditions and a scheme to that effect was sanctioned on 4.2.1994. The sanctioned scheme dated 4.2.1994, inter-alia, stipulated some obligations on the out-going, promoters and it is alleged that the said promoters fulfillled those obligations. The sanctioned scheme did not contain any provision regarding flat No.34, Woodland Estate, Alipore, Calcutta, of which it is claimed that the first petitioner Company is a lawful tenant since 1.4.1991 and which has been occupied by its employee Mr. Bakshi eversince.
3. It is the petitioner's case that in the sanctioned scheme, BIFR did not include the flat because recovery of possession of tenanted premises is outside the purview Sick Industrial Companies (Special Provisions) Act, 1985 (Act No.1 of 1986) (hereinafter referred to as 'SICA'). On 29.3.1994 a corrigendum was issued to the sanctioned scheme dated 4.2.1994 ratifying or clarifying certain anomalies in the said scheme. Another corrigendum was issued on 10.5.1994 providing for payment of interest @ 17.5% on the agreed dues of Rs.350 lakhs of State Bank of India from the date of sanction of the scheme. After the scheme was sanctioned, first review meeting was held on 26.5.1994. In the said meeting, suggestions were made by respondent Nos.6 and 7 and other parties to the scheme. In the second review meeting held on 14.11.1994, it is stated that O.P. Chandak appeared as a representative of respondents Nos.8 and 9. On 20.7.1995 third review meeting was held when respondent Nos.6 and 7, inter-alia, stated to have stressed their claim, for the first time, in respect of the flat in question. It is stated that BIFR directed respondent No.7 to cause a notice to be issued to the erstwhile promoters, namely, respondents Nos.8 and 9 for arranging to hand over vacant possession of the Company's properties held by them within 120 days or pay the market rent of the properties. BIFR also stated that upon completion of the lease arrangement, the property shall revert to the Company unless there is specific arrangement between the Company and the issue holders of the property agreeing to extend the lease on mutually acceptable basis.
4. It is petitioner's case that respondent No.7 despite having full knowledge of the flat and status of petitioner's Company as a lawful tenant at all material points of times, having received rent without demur, chose not to make any claim for including the flat within the purview of rehabilitation scheme for almost one-and-a-half years after the scheme was sanctioned on 4.2.1994. The issue regarding handing over of the flat was raised for the first time only in the third review meeting held on 20.7.1995. Notice was never issued to the first petitioner Company to attend and participate in the meetings.
5. Apprehending that respondent No.7 might resort to unlawful action to deprive and deny the first petitioner of its lawful tenancy rights of the flat in question, a suit for declaration was filed by it on 27.1.1996 under the West Bengal Premises Tenancy Act, 1956 (hereinafter referred to as 'WB Tenancy Act') before Civil Court at Alipore, Calcutta. Respondent No.7 submitted to the jurisdiction of Alipore Court and filed an application on 12.6.1996 under order 7 Rule 11 C.P.C. praying for stay of the proceedings and for rejection of the plaint, in view of pending proceedings before the BIFR. It was pointed out during the course of argument that Alipore Court declined to grant ad-interim stay of the proceedings and now the matter is stated to be pending in Calcutta High Court and the proceedings in the said Suit No.5/96 have been stayed.
6. The petitioner alleges that BIFR arbitrarily and unlawfully varied the scope of original sanctioned scheme by summarily ordering, without any notice to petitioner No.1, that petitioner No.1 shall increase the rent payable to respondent No.7 from Rs.10,000/- to Rs.27,000/- and vacate the flat within a period of six months. No hearing was afforded to the petitioner before passing the said order. BIFR also over looked the statements of the representative of IFCI, the monitoring agency, to the effect that the flat in question is tenanted to the petitioner and tenancy was created prior to sanction of the rehabilitation scheme. Statement was affirmed by respondent No.7. Feeling aggrieved, an appeal was preferred by the petitioner before AAIFR on the ground that no hearing was afforded to it and no notice was ever issued and that BIFR also exceeded in its jurisdiction in as much it had no authority to determine a lawful tenancy in respect of the flat, which was not even a part of the sanctioned scheme of rehabilitation. AAIFR on 15.4.1998 dismissed the appeal erroneously concluding that the petitioner had been given hearing and that BIFR had jurisdiction and power to determine tenancy as well as fixing enhanced rent. AAIFR proceeded to record other finding holding that SICA had over-riding effect on the WB Tenancy Act and in view of proviso to Article 254(2) of the Constitution of India, the provision made in WB Tenancy Act, 1956 can be varied or repealed by any law, made by the Parliament with respect to the same matter.
7. Reiterating the facts alleged in the petition, Mr. Chidambaram on behalf of the petitioner urged that the WB Tenancy Act, 1956 and the SICA operate in two different fields of legislation, the subjects being covered by the Concurrent List and Union List respectively. Article 254 of the Constitution of India applies only if the two enactments fall in the Concurrent List. One law may be repugnant to another if they are with respect to the same matter, which certainly is not the case here. As such, Article 254 of the Constitution has no application. View of AAIFR that Section 32(1) of SICA will have over-riding effect on WB Tenancy Act, is a result of misreading of the scope of the said section. Eviction proceedings are clearly not barred under Section 22(1) of SICA. thereforee, the question of tenancy rights of the petitioner Company should be adjudicated upon by Courts constituted for the said purpose under an appropriate law. Even the rent payable is liable to be determined by an appropriate, Rent Control Authority. SICA does not have jurisdiction as regards recovery of rent or assessment of rent payable by a tenant and to pass a summary eviction order. thereforee, application of the provisions of SICA to the present case is untenable. Misinterpretation by AAIFR of various provision of SICA has led it to include a residential promises within the purview of industrial undertaking and thus it has erroneously proceeded to dismiss the petitioner's appeal in which primary question raised, in addition to the jurisdiction was the non-compliance with the provisions of natural justice. In this background, the petitioner has prayed for quashing of the impugned order.
8. On behalf of the respondents, it was contended that proper and adequate hearing was afforded to the petitioner. O.P. Chandak, who has signed and verified the plaint in civil suit before Civil Court and the proceedings in Calcutta High Court has described himself as the President and Constituted Attorney of the petitioner. He had notice of the proceedings before BIFR from the very beginning. In the meeting called by IFCI also. Mr. Chandak represented petitioner No.1 and even before BIFR he had put in appearance. Mr. P.K. Basu, Constituted Attorney and Principal Officer of the petitioner No.1 appeared before IFCI in a joint meeting held on 31.1.1997, describing himself as the Constituted Attorney and Principal Officer of the petitioner. Respondents Nos.8 and 9 and their associates are holding about 83.6% shares in petitioner No.1 and respondent No.8 is the Director of petitioner No.1 Company, who had notice of all the proceedings before BIFR. From the minutes of BIFR it would be seen that Mr. Chandak represented promoters and the petitioners in respect of the flat in question in the review meeting of BIFR held on 20.7.1995; in the review hearing before BIFR on 22.8.1996; in the joint meeting before IFCI held on 31.1.1997; and in the review meeting of BIFR held on 6.2.1997. M/S Khaitan & Company Advocates had sent notices on behalf of respondents Nos.8 and 9 and also on behalf of the petitioner Company with respect to the flat in question.
9. The case of respondent No.6 is that the order dated 20.7.1995 passed by BIFR has not been appealed against. The petitioners being shareholders and creditors of respondent No.7, by virtue of applicability of Sections 18(8), 26 and 32 of SICA, are bound by the scheme. It has been denied by respondent No.6 that Woodland flat was not a part of the rehabilitation scheme. It is claimed that it was shown in the balance sheet read with the statement of the palnt register as one of the assets. Claim of the petitioner Company that the flat is tenanted to it by respondent No.7 is sham and fictitious in as much as there is no lease agreement and no Board Resolution of respondent No.7 authorising anyone to create tenancy; tenancy plea is malafide and is an abuse of process of law as tenancy is claimed by erstwhile promoter of respondent No.7 in addition to respondents Nos.8 and 9, who also own 83.6% shareholding in the petitioner Company; no rent was paid from April, 1991 to March, 1992. Subsequently, the petitioner Company claimed adjustment of the amount of rent towards the trade advance. For the first time rent was paid in December, 1992 and that also after the BIFR had passed stay order dated 4.6.1992 and after respondent No.6 had submitted its rehabilitation scheme in September, 1992. As per the report of Operating Agency, fair rental is not less than Rs. 65,000/- p.m.
10. We have been taken through the entire record during the course of elaborate arguments addressed by Mr. P. Chidambaran, learned Senior Advocate on behalf of the petitioners, by Mr. Kapil Sibbal, learned Senior Advocate appearing on behalf of respondent No.6 and Dr. A.M. Singhvi, learned Senior Advocate for respondent No.7.
11. The primary questions for consideration are the competence and jurisdiction of BIFR and AAIFR to pass orders for eviction against a person in occupation claiming to be a tenant, from residential flat owned by a Sick Industrial Company and to order enhancement and determination of rent payable for the tenanted premises and whether the impugned order passed by BIFR is vitiated due to non-observance of the principles of natural justice and non-providing of adequate hearing and opportunity to put forth its case.
12. SICA was enacted under entries 44 and 54 of the Union List by the Parliament. It is a complete and exhaustive code on the subject and was enacted to make in the public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures, which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto.
13. Sick Industrial Company has been defined in the Act in clause (o) of sub-section (1) of Section 3 to mean an industrial company (being a Company registered for not less than five years), which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth. Industrial Company has been defined in clause (o) of sub-section (1) of Section 3 to mean a Company which owns one or more industrial undertakings. Definition of Industrial Undertaking in clause (f) of sub-section (1) of Section 3 reads:-
'(f) Industrial Company means any undertaking pertaining to a scheduled industry carried on in one or more factories by any company but does not include-
(i) an ancillary industrial undertaking as defined in clause (aa) of Section 3 of the Industries (Development and Regulations) Act, 1951; and
(ii) a small scale industrial undertaking as defined in clause (j) of the aforesaid Section 3'
14. Board for Industrial and Financial Reconstruction (BIFR) is established by Central Government under the powers conferred on it by Section 4 of the Act to exercise the jurisdiction and powers and discharge the functions and duties conferred or imposed on Board by or under this Act'. The Appellate Authority for Industrial and Financial Reconstruction is constituted under Section 5 of the Act. Chapter-III of the Act deals with references, inquiries and schemes. Section 18 makes provision for preparation and sanction of schemes and it says that where an order is made under sub-section (3) of Section 17 in relation to any Sick Industrial Company, the Operating Agency specified in the order shall prepare, as expeditiously as possible and ordinarily within a period of ninety days from the date of such order, a scheme with respect to such company providing for any one or more of the following measures, enumerated in clauses (a) to (f) as under:-
'(a) the financial reconstruction of the sick industrial company:
(b) the proper management of the sick industrial company by change in, or take over of, management of the sick in industrial company:
(c) the amalgamation of-
(i) the sick industrial company with any other company; or
(ii) any other company with the sick industrial company:
(hereafter in this section, in the case of sub-clause (i), the other company, and in the case of sub-clause (ii), the sick industrial company, referred to as 'transferee company'.
(d) the sale or lease of a part or whole of any industrial undertaking of the sick industrial company:
[(da) the rationalisation of managerial personnel, supervisory staff and workmen in accordance with law:]
(e) such other preventive, ameliorative and remedial measures as may be appropriate;
(f) such incidental, consequential or supplemental measures as may be necessary or expedient in connection with or for the purposes of the measures specified in clauses (a) to (e).
15. One of the measures, which may be provided for in the scheme, to be framed by Operating Agencies, is the sale or lease of a particular or whole of an industrial undertaking or sick industrial company. Clauses (i), (j) and (k) of sub-section (2) of Section 18 with reference to clause (d) of sub-section (1) of Section 18 further clarifies in detail as regards sale or lease of a part or whole of any industrial undertaking of Sick Industrial Company as under:-
(i) sale of the industrial undertaking of the sick industrial company free from all encumbrances and all liabilities of the company or other such encumbrances and liabilities as may be specified, to any person, including a co-operative society formed by the employees of such undertaking and fixing of reserve price for such sale;
(j) lease of the industrial undertaking of the sick industrial company to any person, including a co-operative society formed by the employees of such under taking.
(k) method of sale of the assets of the industrial undertaking of the sick industrial company such as by public auction or by inviting tenders or in any other manner as may be specified and for the manner of publicity therefore.
16. Clause (b) of sub-section (2) of Section 18 says that amongst other provisions, the scheme may also provide for transfer of the business, properties, assets and liabilities of the Sick Industrial Company to the transferee Company on such terms and conditions, as may be specified in the scheme. While clause (i) in sub-section (2) above provides for sale of the industrial undertaking of the Sick Industrial Company free from all encumbrances and all liabilities of the Company or other such encumbrances or liabilities, as may be specified, to any person, including a co-operative society formed by the employees of such undertaking and fixing a reserve price for such sale; clause (b) of sub-section (2) does not make a similar provision of transfer of assets of the Sick Industrial Company, free from all encumbrances.
17. The scheme prepared by Operating Agency is required to be examined by the Board, who is enjoined upon to publish or cause to be published, after considering suggestions and objections, if any. The Board is empowered to modify the draft scheme in the light of suggestions and objections. Sub-section (6A) of Section 18 envisages that a sanctioned scheme, when it provides for transfer of any property or liability of Sick Industrial Company in favor of any other Company or person, the property shall be transferred to, and vest in, and the liability shall become the liability of such other Company, as the case may be. It reads:-
'6A. Where a sanctioned scheme provides for the transfer of any property or liability of the sick industrial company in favor of any other company or person or where such scheme provides for the transfer of any property or liability of any other company or person in favor of the sick industrial company, then, by virtue of, and to the extent provided in, the scheme, on and from the date of coming into operation of the sanctioned scheme or any provision thereof, the property shall be transferred to, and vest in, and the liability shall become the liability of, such other company or person or, as the case may be, the sick industrial company.'
18. Sub-section (6A) of Section 18 also does not provide that transfer of property of Sick Industrial Company will be free of all encumbrances or that it will vest in the transferee Company free from all encumbrances.
19. Section 22 of the Act provides for suspension of legal proceedings, contracts etc, in respect of an industrial Company with respect to which an inquiry under Section 16 of the Act is pending or for which any scheme referred to in Section 17 is under preparation or consideration or sanctioned scheme is under implementation or where appeal under Section 15 is pending. Section 22A of the Act empowers the Board, in certain circumstances, to direct the sick industrial company not to dispose of, except with the consent of the Board, any of its assets during the period of preparation or consideration of the scheme under Section 18 or during the period beginning with the recording of opinion by the Board for winding up of the company under sub-section (1) of Section 20 and up to commencement of the proceedings relating to the winding up before the concerned High Court. Section 26 creates a bar of jurisdiction of Civil Court or any other authority over matters, which are to be dealt with by BIFR or AAIFR. It says:-
'26. Bar of jurisdiction.- No order passed or proposal made under this Act shall be appealable except as, provided therein and no civil Court shall have jurisdiction in respect of any matter which the Appellate Authority or the Board is empowered by, or under, this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.'
20. Effect of the provisions of this Act on other laws is provided for in Section 32, saying that the provisions of this Act and of any rules or schemes made there under shall have effect notwithstanding anything inconsistent therewith contained in any other law.
21. WB Premises Tenancy Act, 1956 has been enacted under Entries 6, 7 and 13 of the Concurrent List. SICA 1985 was enacted under Entries 44 and 55 of the Union List by the Parliament. Both the enactments operate in two different fields of Legislation. The AAIFR in the impugned order (Annexure-A) held that in view of the proviso to Article 254(2) of the Constitution, the provisions made in West Bengal Premises Tenancy Act, 1956 can be varied or repealed by any law made by the Parliament with respect to the same matter and thus proceeded to hold that BIFR had necessary jurisdiction and powers to fix the rent of the Woodland Flat, the property belonging to respondent No.7, a sick industrial company for which a scheme had been sanctioned by BIFR as well as ordering restoration of the possession by the tenant to respondent No.7. In holding so, in the impugned order, AAIFR observed:-
'Therefore, in view of the proviso to Article 254(2) of the Constitution, the provisions made in West Bengal Premise Tenancy Act 1956 can be varied or repealed by any law, made by Parliament with respect to the same matter. The Act under which the scheme was sanctioned by BIFR for the rehabilitation of AIJM was enacted by Parliament subsequent to the West Bengal Premises Tenancy Act, 1956. The non-obstinate clause in S.32(1) of the Act, being the later Act, over-rides the provisions of West Bengal Premises Tenancy Act, 1956. It is a self contained one. It contains detailed provisions regarding the preparation of schemes for sick industrial companies and implementation thereof. A scheme for a sick industrial company can, inter alia, provide for the sale or lease of a part or whole of any industrial undertaking of the sick industrial company (S. 18(1)(d) of the Act). Clauses (i), (j) (k) of sub-section 2 of Section 18 of the Act contain provisions about the sale or lease of the industrial undertaking/assets of the sick industrial company and the procedure therefore; industrial undertaking of a sick industrial company can be sold free from all encumbrances and all liabilities of the company or such other encumbrances or liabilities as may be specified, to any person, and a reserve price may be fixed for such sale; the industrial undertaking of the sick industrial company can be leased to any person. Provision for lease necessarily implies determination of the lease rent. thereforee, BIFR can, as part of a scheme prepared and sanctioned/ modified under various provisions of S.18 of the Act, provide for lease or transfer of the assets of the sick industrial company and all other incidental consequences, supplemental measures; in case of lease, such incidental, consequential or supplemental measures will, naturally include details like period of lease, amount of rent, termination of lease etc. thereforee, as regards the assets of the sick industrial company, the provisions of the Act and the provisions made in any scheme sanctioned under the Act over-ride the provisions of West Bengal Premises Tenancy Act, 1956. We conclude that BIFR has the necessary jurisdiction and powers to fix the rent of the Woodland flat, a property belonging to AIJM - a sick industrial company for which a scheme has been sanctioned by BIFR - as well as order the restoration of the possession of the said flat to AIJM.'
22. The aforementioned view taken by AAIFR is not in consonance with law. Supreme Court in Tata Davy Ltd. Vs . State of Orissa and others : (1997)IILLJ989SC held that SICA, 1985 has been enacted by the Parliament under Entry 52 of the Union List, which empowers Parliament to legislate in respect of industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. The Central Act declares that it is for giving effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 of the Constitution, namely, that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. It was held that SICA, 1985 does not impair or interfere with the rights of the States to legislate with respect to Sales Tax under Entry 54 of List II of Seventh Schedule.
23. Referring to the scope of Entry 52 of List I, in the content of legislature dealing with regulation of supply and production of sugar cane factories required for use in sugar factories, the Supreme Court in Ch. Tika Ramji and others Vs . The State of Uttar Pradesh and others : [1956]1SCR393 observed:-
'Industry in the wide sense of the term' would be capable of comprising three different aspects: (1) raw materials which are an integral part of the industrial process, (2) the process of manufacture or production, and (3) the distribution of the products of the industry. The raw materials would be goods which would be comprised in Entry 27 of List 2. The process of manufacture or production would be comprised in Entry 24 of List 2 except where the industry was a controlled industry when it would fall within Entry 52 of List 2 except where they were the products of the controlled industries when they would fall within Entry 33 of List 3.'
24. In B. Vishwanathiah and Company and others Vs . State of Karnataka and others : [1991]1SCR305 quoting the aforementioned passage in Tika Ramji's case (supra), it was held that it is not all aspects of the industry that fall within the scope of Entry 52 of List I. It is only one aspect of the industry, that is, the process of manufacture or production that falls under Entry 52 of List 1. It does not include raw materials used in the industry or the distribution of the products of the industry. In Harakchand Ratanchand Banthia Vs . Union of India : [1970]1SCR479 and Kannan Devan Hills Produce Company Ltd. Vs . State of Kerala : [1973]1SCR356 also this view was reaffirmed by the Supreme Court holding that ambit of Entry 52 of List I should be limited and confined only to the process of manufacture or production of an industry. Though particular expression 'industry' in Entry 52 of List I in its wide sense may comprehend many aspects, but in view of the scope of other entries in the other lists, the ambit of Entry 52 of List I should be limited and confined only to the process of manufacture or production.
25. From the aforementioned, it can safely be said that what would fall in Entry 52 of List I is only the process of manufacture or production. The provision of SICA thus deal only with the process of manufacture or production and for this reason alone industrial undertaking has been defined in clause (f) of sub-section (1) of Section 3 of the Act to mean any undertaking pertaining to a scheduled industry carried on in one or more factories by any company. Sick industrial company is an industrial company. Industrial Company is that company, which owns one or more industrial undertakings. Industrial undertaking in its turn is such an undertaking, which pertain to a scheduled industry carried on in one or more factories by any company. It however, does not include an ancillary industrial undertaking as defined in Industrial (Development and Regulation) Act, 1951 nor a small scale industrial undertaking as defined in the said Industrial (Development and Regulation) Act. By virtue of clause (4) of Section 1 also, the Act applies to all scheduled industries other than schedule industry relating to ships and other vessels drawn by power, Preamble of the Act also says that it is an Act dealing with special provisions with a view to securing timely detection of sick and potentially sick companies owing industrial undertakings. The scope of SICA is limited to the provisions and contents expressly stated therein and the powers and jurisdiction of BIFR and AAIFR cannot exceed those as are provided in SICA. BIFR wrongly relied upon Article 254 of the Constitution, which can apply only in case the two enactments fall under the concurrent list. One law may be repugnant to another if they are with respect to the same matter, which is not the position here. Article 254 of the Constitution has no applicability to the present case.
26. The Supreme Court in Zeverbhai Amaidas. Vs . State of Bombay : [1955]1SCR799 on Article 254(2) held:-
'The important thing to consider with reference to this provision is whether the legislation is 'in respect of the same matter'. If the legislation deals with matters, which formed subject of the earlier legislation but with other and distinct matters though of a cognate and allied character, then Art.254(2) will have no application. The principle embodied in section 107(2) and Article 254(2) is that when there is legislation covering the same ground both by the centre and by the Province, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.'
27. In Deep Chand Vs . State of U.P. : AIR1959SC648 , it was held that repugnancy between two statutes may be ascertained on the basis of the following three principles:-
'1. Whether there is direct conflict between the two provisions:
2. Whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing the Act of the State Legislature; and
3. Whether the law made by Parliament and the law made by the State Legislature occupy the same field.'
28. Three tests of inconsistency or repugnancy are referred to by Nicholas in his Australian Constitution, 2nd Edition, page 303:-
'1. There may be inconsistency in the actual terms of the competing statutes:
(2). Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court, is intended to be a complete exhaustive code, and
3. Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter.'
Supreme Court in Tika Ramji's case (supra) accepted the above three tests amongst others as useful guide to decide the question of repugnancy.
29. In M/s. Hoechst Pharmaceuticals Ltd. and another etc. Vs . State of Bihar and others : [1985]154ITR64(SC) , it was held:-
'Article 254(1) has no application to cases of repugnancy due to over lapping found between List II on the one hand and List I and List III on the other. The question of repugnancy arises only when both the legislatures are competent to legislate in the same field i.e. with respect to one of the matters enumerated in the Concurrent List. Hence Article 254(1) cannot apply unless both the union and State laws relate to a subject specified in the Concurrent List and they occupy the same field.'
30. As SICA and W.B. Premises Tenancy Act occupy two separate and distinct fields, there is no question of repugnancy and the view of AAIFR that by virtue of Section 32(1), SICA will have an overriding effect on the W.B. Premises Tenancy Act is not correct. The provisions of Section 32(1) of the Act will have an overriding bearing only in respect of those laws, which are inconsistent with SICA on the same subject.
31. WB Premises Tenancy Act relates to tenancies in the State of West Bengal. SICA cannot be said to have conferred on BIFR or AAFIR any power to adjudicate upon the tenancy rights or such other matters for which WB Premises Tenancy Act has been enacted by the West Bengal State Legislature.
Dealing with the provisions of SICA, 1985 and the scope and applicability of Section 22(1), the Supreme Court in Shree Chamundi Mopeds Ltd, Vs . Church of Bouth India Trust Association : [1992]2SCR999 held that under Section 22(1) of the Act, only the following proceeding are automatically suspended:-
'(1) Proceedings for winding up of the industrial company:
(2) Proceedings for execution, distress or the like against the properties of the sick industrial company: and
(3) Proceedings for the appointment of receiver.'
32. It was held that eviction proceedings initiated by a landlord against a tenant company would not fall in the categories aforementioned. While holding so, it was held that:-
'We may, in this context, point out that, as indicated in the Preamble, the Act has been enacted to make special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive,ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement legal proceedings contained in Section 22(1) seeks to advance the object of the Act by ensuring that a proceeding having an effect on the working or the finances of a sick industrial company shall not be instituted or continued during the period the matter is under consideration before the Board of the Appellate Authority or a sanctioned scheme is under implementation without the consent of the Board or the Appellant Authority. It could not be the intention of Parliament in enacting the said provision to aggravate the financial difficulties of a sick industrial company while the said matters were pending before the Board or the Appellate Authority by enabling a sick industrial company to continue to incur further liabilities during this period. This would be the consequence if sub-section (1) of Section 22 is construed to bring about suspension of proceedings for eviction instituted by landlord against a sick industrial company which has ceased to enjoy the protection of the relevant rent law on account of default in payment of rent. It would also means that the landlord of such a company must continue to suffer a loss by permitting the tenant (sick industrial company) to occupy the premises even though it is not in a position to pay the rent. Such an intention cannot be impugned to Parliament. We are, thereforee, of the view that Section 22(1) does not cover a proceeding instituted by a landlord of a sick industrial company for the eviction of the company premises let out to it.'
33. From the facts, as are apparent on the record and as is the admitted position the petitioner company is not a party to the scheme of rehabilitation. Its relationship with respondent No.7 is that of a landlord and tenant. The Sanctioned Rehabilitation Scheme dated 4.2.1994, inter alia, stipulated some obligations on the outgoing promoters and the same were to the following effect:-
'(a) To agree to transfer the shares held by them in the name of new promoters against payment of written down value of the shares.
(b) To agree to freezing off of other dues owed by AIJM to original promoters and associates:
(c) To agree to keep intact the investments held by AIJM including shares held in Wool Combers of India Limited:
(d) To facilitate handing over of office space of 4000 sq.ft. held by their associate concern, Landale & Clark, to new promoters, at 18, Netaji Subhash Chand on leave and license basis, and
(e) To hand over gratuity fund of Rs.140 lakhs or more accumulated for the benefit of employees to the new management.'
34. Sanctioned Scheme nowhere made any provision as regards flat in Woodland Estate, Alipur, Calcutta. The petitioners' case is that petitioner No.1 company is a lawful tenant since 1.4.1991 and the flat is in occupation of its employee Shri Bakshi ever since. BHR rightly did not include the flat in question in the Rehabilitation Scheme because tenanted properties are out side the purview of SICA. Handing over possession of the flat by petitioner company to respondent No.7 has never been contemplated in the sanctioned scheme.
35. As noticed above, the scheme could provide for sale or lease of a part or whole of any industrial undertaking of the sick industrial company to the transferee company [Section 18(1)(d) of SICA] and thereby to transfer to the transferee industrial company of the business properties, assets and liabilities of the sick industrial company on terms and conditions, as may be specified in the Scheme [Section 18(2)(b) of SICA]. Only the sale of industrial undertaking of sick industrial company could be free from all encumbrances. The flat in question cannot by any stretch of imagination be covered by the definition of industrial undertaking. The flat would be included only as an asset of the company. In case it has to be treated as a part of the asset of the sick industrial company, in that case assuming that the flat of respondent No.7 company already stood transferred by virtue of clause (b) of sub-section (2) of Section 18 of the SICA to the transferee company, in that case it is not provided in the Act nor it is in the Scheme of the Act that such transfer will have the effect of affecting the tenancy rights of a tenant. Tenancy being an encumbrance on the property, no such transfer of assets of the sick industrial company is envisaged in the Act free from all encumbrances. At the most the transferee company, will stop into the shoes of the Sick Industrial Company, in case assets of respondent No.7 company can be said to have been transferred to the transferee company. In that case the property will vest in the transferee company with the tenancy remaining intact. The transferee company will have to secure eviction of the tenant only by having recourse to the proceedings under the WB Premises Tenancy Act, 1956 or under any other raw for the time being in force relating to the tenancies. Neither BIFR nor AAIFR could exercise authority or jurisdiction with respect to tenancy rights of the petitioner. The petitioner company being not party to the Scheme of Rehabilitation and having no connection with respondent No.7 company except being a tenant of respondent No.7 company, there was no question of any misfeasance proceedings being taken out against the petitioner company under Section 24 of the Act. Neither BIFR nor AAIFR have any authority to determine the tenancy or fix the standard rent or passing summary eviction order. Bar of Section 26 has also no application. There is also no scope of applicability of Section 29 in the case. Section 29 authorises the Board or the Operating Agency, on being directed by the Board, to seek assistance of Chief Metropolitan Magistrate or District Magistrate to take into custody or under its control all properties, effects and actionable claims to which a sick industrial company is or appears to be entitled. Properties i.e. flat belonging to respondent No.7 company was under encumbrance (on tenan-cy) with the petitioner company. Section 29 no where authorises Board to seek assistance of a Magistrate to take possession of the property by removal of encumbrances.
36. A similar question arose when under Section 456 of the Companies Act, 1956 the Official Liquidator was required to take into its custody or control all the properties of the company in winding up. The question was whether the Official Liquidator could demand actual possession of the property from a mortgagee, who was in lawful possession of the same. A Division Bench of Bombay High Court in Maharashtra State Financial Corporation, Bombay v. The Official Liquidator, High Court Bombay and Liquidator of M/s. Atrois Chemicals Private Limited : AIR1993Bom392 held that:-
'The property of the company does not vest in Court or 'Official Liquidator. The property remains the property of the company. The Official Liquidator cannot take possession of the property from the mortgages in lawful possession.'
A Division Bench of this Court also in Globe Financiers (P) Ltd. v. Official Liquidator. (1970) 40 Comp Cas 1161 held:-
'There is no provision in the Companies Act that the liquidator shall sell properties of the company free from all restrictive covenants or legal disability........'
37. The petitioner is a company within the meaning of the Companies Act, 1956. Being a company it is an independent juristic entity. No notice was issued to it by BIFR before passing the impugned order. Since no notice was issued, it had no occasion to depute its representative during the hearings before the BIFR. On behalf of the respondents, it was contended that there are circumstances on record to suggest that the petitioner company had all along notice and knowledge of the proceedings through its authorised representative. It is so stated by alleging that Shri O.P. Chandak who has singed and verified the plaint in Suit No. 275/95 in High Court of Calcutta and having described himself as the President and constituted attorney, had notice of the proceedings before BIFR. Shri Chandak was present in the meeting called by I.F.C.I. and also signed ratter on behalf of petitioner No.1 company requesting I.F.C.I. to advise necessary developments in the matter to enable petitioner No.1 company to arrange to do the needful in that respect. Shri P.K. Basu, Constituted Attorney and Principal Officer of the petitioner company appeared and pleaded before I.F.C.I at joint meeting on 31.1.1997 that respondents 8 and 9 and their associates held about 83.6% shares in petitioner No.1 company. Khaitan & Co. Advocates of petitioner No.1 company, who were also advocates for respondents 8 and 9, had sent notice on behalf of respondents 8 and 9 and also on behalf of petitioner No.1 company.
38. 'Be that as it may, the fact remains and it is the admitted position that before making the impugned order as regards payment of enhanced rent and for eviction, no notice was even served by BIFR on the petitioner company. The respondents are banking upon some circumstances to suggest that representatives of the petitioner were aware of the proceedings. Such participation by the person in the proceedings will not be a substitute for proper notice apprising the petitioner company of the exact nature of the proceedings pending against it or allowing a fair opportunity of being heard since those representatives were not representing the petitioners, but were representing respondents No. 8 and 9 only. Notice ought to have been served on the petitioner that why an order be not passed. It was necessary to have apprised the petitioner company that BIFR intended to pass such an order so as to enable the petitioner to raise all question by it before BIFR, which were raised in the appeal preferred by it. Matter had to be examined before BIFR whether or not it could exercise jurisdiction or not. However, BIFR proceeded to examine material in the absence of the petitioner company and accepted the claim of respondent No.7 that circumstances suggest that the tenancy is bogus. When the petitioner had no notice from BIFR, it has to be held that proceedings are void. No such finding could have been recorded without affording the petitioner company an opportunity of being heard. The question that the plea of tenancy is mala fide or that there is no proper tenancy created in favor of petitioner company could not have been examined without any notice. The order being bad in law is liable to be set aside.
39. In view of the above, we have no hesitation in allowing the petition and setting aside the impugned order holding that neither BIFR nor AAIFR has any authority or jurisdiction to pass impugned order against the petitioner calling upon it to pay enhanced rent or to vacate tenancy premises. The order of BIFR is also held to be bad in law because of violation of principles of natural justice. Accordingly, the writ petition is allowed and the impugned orders are set aside. Parties are left to bear their own costs.