{"id":41033,"date":"2004-02-05T00:00:00","date_gmt":"2004-02-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/hyderabad-engineering-vs-a-p-industry-facilitation-on-5-february-2004"},"modified":"2016-11-25T05:12:09","modified_gmt":"2016-11-24T23:42:09","slug":"hyderabad-engineering-vs-a-p-industry-facilitation-on-5-february-2004","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/hyderabad-engineering-vs-a-p-industry-facilitation-on-5-february-2004","title":{"rendered":"Hyderabad Engineering … vs A.P. Industry Facilitation … on 5 February, 2004"},"content":{"rendered":"
Andhra High Court<\/div>\n
Hyderabad Engineering … vs A.P. Industry Facilitation … on 5 February, 2004<\/div>\n
Equivalent citations: III (2004) BC 168, 2004 120 CompCas 195 AP, 2004 55 SCL 715 AP<\/div>\n
Author: V Rao<\/div>\n
Bench: V Rao<\/div>\n<\/p>\n
<\/pre>\n
JUDGMENT<\/p>\n
V.V.S. Rao, J.<\/p>\n
1. The petitioner is a company registered under the Companies Act, 1956 (hereafter called “the company”). The present writ petition is filed assailing the order of the first respondent, namely, the A. P. Industry Facilitation Council, in Case No. 29\/3\/3\/53, dated September 29, 2003. Be it noted that the first respondent is a body constituted under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereafter called “the 1993 Act”).\n<\/p>\n
2. The petitioner-company is a unit of M\/s. Jay Engineering Industries, New Delhi. The second respondent-company filed a claim petition before first respondent claiming interest on delayed payments under the 1993 Act. It is a small scale industry registered with the District Industries Centre, engaged in the manufacturing of die-casted fans components. The second respondent filed a claim petition under Section 6 of the 1993 Act before the first respondent alleging that the petitioner-company placed twenty-eight orders from June 30, 1999, to June 1, 2001, for an amount of Rs. 32,09,388.91, that out of this amount of Rs. 15,07,110 has been paid and an amount of Rs. 23,83,330.24 including interest of Rs. 6,81,051.33 is due as on date of filing application. The petitioner filed a statement of defence disputing the claim of the second respondent, inter alia, contending that M\/s. Jay Engineering Works Ltd. became a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereafter called “the SICA”), Case No. 11 of 1994 was registered by the Board for Industrial and Financial Reconstruction (“the BIFR” for brevity) and that the BIFR, by order dated April 8, 2003, sanctioned a revised rehabilitation scheme. The petitioner also filed application purportedly under Section 22 of the SICA for stay of proceedings before the first respondent alleging that since the sanctioned scheme of the BIFR is under implementation, the proceedings against the petitioner-sick company is neither tenable nor valid under law as the first respondent has no jurisdiction to entertain the claim regarding payment of interest. The second respondent filed a counter, inter alia, contending that in view of the non obstante clause in Section 10 of the 1993 Act, the provisions of the SICA Act are not attracted.\n<\/p>\n
3. By impugned order dated September 29, 2003, the first respondent referred to Section 10 of the 1993 Act as well as the rules made by the Government of A. P., vide G. O. Ms. No. 307, dated October 11, 1999, made in exercise of powers conferred on them under Sub-section (3) of Section 7(b) of the Act and a circular issued by the Government of India in the Ministry of Small Scale Industries, dated June 19, 2000, and rejected the application for stay holding that the 1993 Act has overriding effect on the SICA Act.\n<\/p>\n
4. Learned counsel for the petitioner, Sri M. S. R. Subrahmanyam, contends as follows : If there are two Acts passed by Parliament with overriding clauses, the general principal is that the later enactment will prevail. Where the later statute is a general one and the earlier statute is a special enactment, the earlier statute only prevails. However, where both the enactments are special statutes in relation to matters dealt with and there is inconsistency between the two enactments, the conflict has to be resolved by reference to objects and policies underlying the two enactments. The clear intendment conveyed by the language of the relevant provisions of the statute must be the basis and not point of time of enactment, while resolving the question which prevails over other. He also relied on the decisions of the Supreme Court in Ashoka Marketing Ltd. v. Punjab National Bank,  and Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. . Learned counsel would urge that the SICA is a special enactment and is intended to subserve public interest by staying all proceedings against a sick company for recovery of amounts, etc., during the pendency of implementation scheme sanctioned by the BIFR. By reason of the non obstante clause contained in Section 32, the provisions of the SICA and the rules made thereunder have overriding effect. The 1993 Act was enacted to ensure prompt payment to small scale industries and ancillary units which is of general nature. Therefore, the provisions of the SICA would prevail over the 1993 Act though the same also contains an overriding provision in Section 10.\n<\/p>\n
5. The question is whether the SICA has overriding effect over the 1993 Interest Payments Act. Learned counsel for the petitioner though has not placed before this court the circular of the Government of India, dated June 19, 2003, to the effect that sections 6 and 10 of the 1993 Act have overriding effect on the SICA. However, he placed before this court a communication from the Deputy Director in the Ministry of Small Scale Industries, Government of India, bearing F. No. 17\/7\/2002-SSI(P)-I, dated June 18, 2003. The communication addressed to the Director of Industries reads as under :\n<\/p>\n
“The Industrial Facilitation Councils (IFCs) have been set up by States as per the provision of Section 7 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (amended in 1998). Representations have been received by this Ministry seeking clarification on the following issues :\n<\/p>\n
(i) There is no effective mechanism of execution of the award by IFCS. Even, if any award is passed against respondent (large industry), they never care to pay and as such the order of the Council lie unexecuted.\n<\/p>\n
(ii) In cases where respondents are sick industrial units registered under the BIFR, no suit for recovery of money can be proceeded against them as per Section 22 or Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985. Thus, the overriding effect of Section 10 of the Interest on Delayed Payments Act becomes ineffective.\n<\/p>\n
The matter has been examined in consultation with the Department of Legal Affairs, Ministry of Law and Justice. It is clarified that :\n<\/p>\n
(i) The orders passed by the Industry Facilitation Councils, if not challenged within the prescribed limitation period, become a decree of the court enforceable as per the normal process of law.\n<\/p>\n
(ii) Whenever there are overriding provisions in two Acts, then the provision of the later Act should follow in preference to earlier Act. Thus, overriding provisions of the Interest on Delayed Payments Act, 1993, would take preference over the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985.”\n<\/p>\n
6. A reference to the provisions of both the enactments, objects and reasons for which they were enacted would compel this court to agree with the view taken by the Department of Legal Affairs, Ministry of Law and Justice, based on which Government of India sent communication as above. This is also directly covered by the judgment of the Supreme Court in Solidaire India Ltd. v. Fairgrowth Financial Services Ltd.<\/a> [2001] 104 Comp Cas 569; [2001] 3 SCC 71 which, among others, placed reliance on Maharashtra Tubes Ltd. . In the said case, the Supreme Court referred to the following exposition of law by the Special Court under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. In Bhoruka Steel Ltd. v. Fairgrowth Financial Services Ltd. [1997] 89 Comp Cas 547, the Special Court held as under (headnote) :\n<\/p>\n
“Where there are two special statutes which contain non obstante clauses the later statute must prevail. This is because at the time of enactment of the later statute, the Legislature was aware of the earlier legislation and its non obstante clause. If the Legislature still confers the later enactment with a non obstante clause it means that the Legislature wanted that enactment to prevail. If the Legislature does not want the later enactment to prevail then it could and would provide in the later enactment that the provisions of the earlier enactment continue to apply.\n<\/p>\n
The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, provides in Section 13, that its provisions are to prevail over any other Act. Being a later enactment, it would prevail over the Sick Industrial Companies (Special Provisions) Act, 1985. Had the Legislature wanted to exclude the provisions of the Sick Companies Act from the ambit of the said Act, the Legislature would have specifically so provided. The fact that the Legislature did not specifically so provide necessarily means that the Legislature intended that the provisions of the said Act were to prevail even over the provisions of the Sick Companies Act.\n<\/p>\n
Under Section 3 of the 1992 Act, all property of notified persons is to stand attached. Under Section 3(4), it is only the Special Court which can give directions to the Custodian in respect of property of the notified party. Similarly, under Section 11(1), the Special Court can give directions regarding property of a notified party. Under Section 11(2), the Special Court is to distribute the assets of the notified party in the manner set out thereunder. Monies payable to the notified parties are assets of the notified party and are, therefore, assets which stand attached. These are assets which have to be collected by the Special Court for the purposes of distribution under Section 11(2). The distribution can only take place provided the assets are first collected. The whole aim of these provisions is to ensure that monies which are siphoned off from banks and financial institutions into private pockets are returned to the banks and financial institutions. The time and manner of distribution is to be decided by the Special Court only. Under Section 22 of the 1985 Act, recovery proceedings can only be with the consent of the Board for Industrial and Financial Reconstruction or the appellate authority under that Act. The Legislature being aware of the provisions of Section 22 under the 1985 Act still empowered only the Special Court under the 1992 Act to give directions to recover and to distribute the assets of the notified persons in the manner set down under Section 11(2) of the 1992 Act. This can only mean that the Legislature wanted the provisions of Section 11(2) of the 1992 Act to prevail over the provisions of any other law including those of the Sick Industrial Companies (Special Provisions) Act, 1985.\n<\/p>\n
It is a settled rule of interpretation that if one construction leads to a conflict, whereas on another construction, two Acts can be harmoniously constructed then the latter must be adopted. If an interpretation is given that the Sick Industrial Companies (Special Provisions) Act, 1985, is to prevail then there would be a clear conflict. However, there would be no conflict if it is held that the 1992 Act is to prevail. On such an interpretation the objects of both would be fulfilled and there would be no conflict. It is clear that the Legislature intended that public monies should be recovered first even from sick companies. Provided the sick company was in a position to first pay back the public money, there would be no difficulty in reconstruction. The Board for Industrial and Financial Reconstruction whilst considering a scheme for reconstruction has to keep in mind the fact that it is to be paid off or directed by the Special Court. The Special Court can, if it is convinced, grant time or instalments.”\n<\/p>\n
7. In Solidaire India Ltd. [2001] 104 Comp Cas 569 ; [2001] 3 SCC 71, the Supreme Court, while agreeing with the decision of the Special Court in Bhoruka Steel Ltd. [1997] 89 Comp Cas 547 laid down that the later Act has to prevail over the earlier Act, having regard to legislative practice that whenever the Legislature wishes to do so, it makes provisions in the subsequent Act itself giving preponderance to the earlier Act. It may be mentioned that the 1993 Interest Payments Act by Section 10 categorically lays, down that the provisions of the said Act have effect notwithstanding anything inconsistent therewith contained in another law for the time being in force. Indeed in Solidaire India Ltd. [2001] 104 Comp Cas 569 ; [2001] 3 SCC 71, the Supreme Court was resolving the question whether the Special Courts Act, 1992, prevails over the SICA. Following the decisions of the Supreme Court in Solidaire India Ltd., this court holds that the impugned order of the first respondent does not suffer from any illegality or error apparent on the face of record.\n<\/p>\n
8. The writ petition is misconceived and devoid of merits and it is accordingly dismissed in limine. No costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Andhra High Court Hyderabad Engineering … vs A.P. Industry Facilitation … on 5 February, 2004 Equivalent citations: III (2004) BC 168, 2004 120 CompCas 195 AP, 2004 55 SCL 715 AP Author: V Rao Bench: V Rao JUDGMENT V.V.S. Rao, J. 1. The petitioner is a company registered under the Companies Act, 1956 (hereafter called […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,8],"tags":[],"class_list":["post-41033","post","type-post","status-publish","format-standard","hentry","category-andhra-high-court","category-high-court"],"yoast_head":"\nHyderabad Engineering ... vs A.P. 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