M/S BPL Ltd. v. State of Kerala & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **TUESDAY, THE 3RD DAY OF JUNE 2014/13TH JYAISHTA, 1936** **WP(C).No. 19456 of 2010 (F) ----------------------------** ## **PETITIONER(S): --------------------------** **M/S.BPL LTD., BPL WORKS, PALAKKAD, REPRESENTED BY ITS MANAGER (FINANCE & ACCOUNTS) MR.A.V.SUBRAMANIAN.** **BY ADVS.SRI.E.K.NANDAKUMAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.S.RAMU** **RESPONDENTS:** **----------------------------** **1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF LAND &, REVENUE SECRETARIAT, TRIVANDRUM.** **2. THE TAHSILDAR (R.R.) PALAKKAD DISTRICT, KERALA.** **3. THE DISTRICT COLLECTOR, PALAKKAD DISTRICT, KERALA.** **4. M/S.U.P.ELECTRONICS CORPORATION LTD., 10 ASHOK MARG, LUCKNOW-226001, UTTARPRADESH.** **R3 BY ADV. GOVERNMENT PLEADER SRI. LIJU STEPHEN R4 BY ADV. SRI.BABU VARGHESE (SR.) R4 BY ADV. SRI.KAPPILLIL ANILKUMAR R4 BY ADV. SRI.JOHNSON T. JOHN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-06-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 19456 of 2010 (F)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **EXT.P1 : TRUE COPY OF THE BIFR SANCTIONED SCHEME KNOWN AS SS96 ISSUED TO THE PETITIONER DT 18.4.1996** - **EXT.P2 : TRUE COPY OF THE ORDER THE BIFR DT 12.3.2004 ISSUED TO BPL DISPLAY DEVICES, 4TH RESPONDENT** - **EXT.P3 : TRUE COPY OF THE ORDER DT 3.2.2006 ISSUED BY THE AAIFR TO THE 4TH RESPONDENT** - **EXT.P4 : TRUE COPY OF THE ORDER ISSUED BY BIFR DT 29.8.2007 TO UPTRON COLOUR PICTURE TUBES, 4TH RESPONDENT** - **EXT.P5 : TRUE COPY OF THE ORDER OF THE BIFR DT 7.4.2008 ISSUED TO BPL DISPLAY DEVISES LTD. 4TH RESPONDENT** - **EXT.P6 : TRUE COY OF THE COMMON JUDGMNET IN APPEAL NOS. 235/06 AND 305/07 DT 6.8.2008 ISSUED BY THE AAIFR TO THE BDDL THE THE 4TH RESPONDENT** - **EXT.P7 : TRUE COPY OF THE ORDER IN MCA 1/2008 OF ALLAHABAD HIGH COURT DT 17.10.2008 DIRECTING THE WINDING UP OF THE COMPANY** - **EXT.P8 : TRUE COPY OF THE JUDGMENT OF THE DELHI HIGH COURT DT 25.5.2010 ISSUED TO THE 4TH RESPONDENT AND BPL DISPLAY DEVISCES LTD. IN WPC 8673/2009** - **EXT.P9 : TRUE COPY OF THE JUDGMENT OF THE HON'BLE HIGH COURT OF KERALAIN CP NO. 1/2007 DT 6.8.2008 TO the 4TH RESPONDENT AND THE PETITIONER** - **EXT.P10 : TRUE COY OF THE DEMAND NOTICE DT 3.6.2010 ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT U/S 7 OF THE KERALA REVENUE RECOVERY ACT** - **EXT.P11 : TRUE COY OFHTE DEMAND NOTICE DT 3.6.2010 ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT U/S 34 OF THE KERALA REVENUE RECOVERY ACT** - **EXT.P12 : TRUE COPY OF THE OBJECTION DT 11.6.2010 FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER U/S34(2)** - **EXT.P13 : TRUE COPY OF THE LETTER DT 15.6.2010 SENT BY THE 2ND RESPONDENT TO THE PETITIONER** - **EXT.P14 : TRUE COPY OF THE REPLY DT 14.10.2006 SENT BY THE ADVOCATE OF THE PETITIONER TO THE ADVOCATE OF THE 4TH RESPONDENT** - **EXT.P15 : TRUE COPY OF THE REPLY DT 23.9.2009 SENT BY THE ADVOCATE OF THE PETITIONER TO THE ADVOCATE OF THE 4TH RESPONDENT** ## **WP(C).No. 19456 of 2010 (F)** ## **RESPONDENTS' EXHIBITS:** **EXT.R4(a) : TRUE COPY OF THE RECOVERY CERTIFICATE DT. 11.9.2009 ISSUED BY THE 4TH RESPONDENT TO THE 3RD RESPONDENT EXT.R4(b) : TRUE COPY OF THE LETTER NO. B8/09/46882/9/n DIS DT 4.11.2009 FROM THE 3RD RESPONDENT TO THE 4TH RESPONDENT EXT.R4(c) : TRUE COPY OF THE LETTER NO. UPLC : CS: AC:185 DATED 26.11.2009 FRO THE 4TH RESPONDENT TO THE DISTRICT COLLECTOR, LUCKNOW EXT.R4(d) : TRUE COPY OF THE REVENUE RECOVERY CERTIFICATE ISSUED BY THE DISTRICT COLLECTOR, LUCKNOW TO THE DISTRICT COLLECTOR, PALAKKAD DT. 5.3.2010** **//TRUE COPY//** **P.A. TO JUDGE** **jma** ## **K. VINOD CHANDRAN, J** **- - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No. 19456 of 2010** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 3[rd] day of June, 2014** ## **J U D G M E N T** The petitioner is aggrieved by the recovery steps initiated, at the behest of the 4[th] 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 4[th] 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 4[th] 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 WPC No.19456/2010 ::2: 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 4[th] respondent herein filed an appeal to the Appellate Authority For Industrial and Financial WPC No.19456/2010 ::3: Reconstruction (for brevity “AAIFR”), which was disposed of by Ext.P3 directing the 4[th] respondent to approach the BIFR. 4. However, the 4[th] 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 4[th] 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 4[th] 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 WPC No.19456/2010 ::4: 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 4[th] 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 4[th] respondent sought permission to withdraw the appeal to agitate the issue before the appropriate forum. An application for winding up was filed by the 4[th] 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 4[th] respondent under the Indian WPC No.19456/2010 ::5: 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 4[th] respondent, as per the sanctioned scheme, Ext.P1. More specifically, the 4[th] 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 WPC No.19456/2010 ::6: 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 4[th] 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 4[th] respondent in the Company, M/s BDDL. The learned counsel appearing for the 4[th] respondent would take up the said contention, despite the 4[th] 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 WPC No.19456/2010 ::7: 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 WPC No.19456/2010 ::8: 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 4[th] respondent, based on the above extracted clause in a scheme initially sanctioned by the BIFR. The extracted clause by itself, does not confer any WPC No.19456/2010 ::9: 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 4[th] 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 4[th] 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 WPC No.19456/2010 ::10: 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 4[th] 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 WPC No.19456/2010 ::11: was invoked by the 4[th] 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