Reserved IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL WRIT PETITION NO. 342 OF 2009 (MS) State of Uttarakhand and another. …………Petitioners. Versus M/s Dhampur Sugar (Kashipur) Ltd., Kashipur, Uttarakhand and others. …….Respondents. Mr. K.P. Upadhyay, Addl. Chief Standing Counsel for State of Uttarakhand / petitioners. Mr. Ravi Kiran Jain, Senior Advocate assisted by Mr. Vipul Sharma, Advocate for respondent no. 1. 20th August, 2009 Hon’ble Sudhanshu Dhulia, J. Respondent no. 1 is a sugar company. This Sugar Company had gone before the Board for Industrial and Financial Reconstruction (from hereinafter referred to as the BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985 (from hereinafter referred to as the Act) and consequently, the Board came to a conclusion that this industry can in fact be revived and hence after a due process it framed a scheme for its revival under Section 18 of the Act vide an order dated 8th January, 2008. Apart from other directions in this scheme, one of the directions was that for this sugar company the restrictions on export of molasses were removed as generally 10% of the total production of molasses has to be reserved for the consumption of industries which are making country liquor. Hence the entire production of molasses cannot be exported. It is this order by which the State of Uttarakhand is 2 apparently aggrieved. Since an order passed by BIFR under Section 18 of the Act is an appealable order, earlier the petitioner filed an appeal against the order of BIFR dated 8th January, 2008 which was dismissed by the appellate Tribunal on the grounds of limitation on 22.01.2009. As such, before the merit of the case can be discussed, it would be prudent to first examine as to whether the order passed by the appellate authority is a just and proper order ? However, it must be stated here that by a subsequent amendment to this writ petition the petitioner has now challenged not only the order of the appellate Tribunal dated 22nd January, 2009 but the previous two orders of the BIFR dated 8th January, 2008 and 13th October, 2008 as well. But of these two orders later. First, the appellate Tribunal’s order. As referred above, an order passed by the BIFR is appealable under Section 25 of the Act. Section 25 reads as under: “25. Appeal.—(1) Any person aggrieved by an order of the Board made under this Act may, within forty-five days from the date on which a copy of the order is issued to him, prefer an appeal to the Appellate Authority: Provided that the Appellate Authority may entertain any appeal after the said period of forty five days but not after sixty days from the date aforesaid if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. (2) On receipt of an appeal under sub-section (1), the Appellate Authority may, after giving an opportunity to the appellant to be heard, if he so 3 desires, and after making such further inquiry as it deems fit, confirm, modify or set aside the order appealed against [or remand the matter to the Board for fresh consideration.]” According to the petitioners which is the State of Uttarakhand, it is a “party aggrieved”, as by lifting the embargo on the export of molasses, the BIFR has, in fact, encroached upon the orders passed by the State as indeed there is a restriction on the export of molasses outside the State of Uttarakhand under the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964. In its objections before the appellate Tribunal, as well as here the petitioner has stated that the demand of molasses far exceeds its production and when the molasses available in Uttarakhand cannot meet the demand in the State it is not in the interest of the State that any molasses is allowed to go out of the State, particularly when under the present ‘orders’ which are applicable in Uttarakhand 10% of the total production of molasses has to be kept reserved for the ‘country liquor’ industry in the State. Shortage in the supply of molasses will adversely affect the production of country liquor in the State. Therefore, the order dated 8th January, 2008 was challenged before the appellate authority under Section 25 of the Act. All the same, the appeal of the petitioner was dismissed on the grounds that it was barred by limitation. Learned counsel for the petitioner Mr. K.P. Upadhyay, Addl. Chief Standing Counsel has argued that the appeal could not have been dismissed on a technical grounds of limitation as the State had a reasonable explanation for delay in filing of the appeal and the delay ought to have been 4 condoned and the appeal should have been heard on its merits. On the other hand, the learned counsel for the Sugar Factory Mr. Ravi Kiran Jain, states that the appeal has been filed on 29th December, 2008, against the order dated 8th January, 2008 of BIFR and therefore the appeal was preferred after more than eleven months. Even if the period of limitation is calculated from the date of the receipt of the order, then too the petitioner has filed the appeal against this order after ‘69 days’. The appeal, has to be filed within a period of 60 days. Under Section 25 (1) of SICA though normally an appeal should be filed within 45 days from the date on which a copy of the order is issued to the appellant, but the appellate authority may entertain any appeal after the said period of forty-five days “but not after” sixty days from the aforesaid date. Sri Jain submits that the appellate authority is not vested with the powers to condone any delay beyond a period of sixty days from the date the cause of action accrues. Since, admittedly the appeal has been filed beyond the period of 60 days, therefore, it is barred by limitation and hence the appeal has been rightly dismissed, submits the respondent. The learned counsel for the petitioner on the other hand would argue that the provision of the Limitation Act would be applicable in the present case and since the Limitation Act prescribes exclusion of time from the period of limitation, this benefit ought to have been given to the petitioner, which has, in fact, been denied by the appellate authority. Indeed under the Limitation Act powers have been given to the Court to condone the delay on a given contingency. These powers are given in Part II and III of 5 the Limitation Act, under various provisions but precisely under Section 4 to Section 24 of this Act. However, the limitation Act would not be applicable in the present case in view of the language given in Section 29 of the Limitation Act itself, which reads as under: “29. Savings.—(1) Nothing in this Act shall affect section 25 of the Indian Contract Act, 1872 (9 of 1972). (2) Where any special or local law prescribes for any suit, appeal or application a period of limitation different from the period prescribed by the Schedule, the provisions of section 3 shall apply as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law. (3) Save as otherwise provided in any law for the time being in force with respect to marriage and divorce, nothing in this Act shall apply to any suit or other proceeding under any such law. (4) Section 25 and 26 and the definition of “easement” in section 2 shall not apply to cases arising in the territories to which the Indian Easement Act, 1882 (5 of 1882), may for the time being extend.” 6 Admittedly the Sick Industrial Companies (Special Provisions) Act, 1985 is a special Act and therefore the provisions contained in the Special Act regarding the period of limitation would override the provisions of the Limitation Act as there is an express exclusion of the Limitation Act by the Special Act. The express exclusion is under Section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985, whereby while calculating the period of limitation it has been provided that the appeal can be preferred within 45 days, however, the appellate authority may entertain an appeal after the said period of 45 days ‘but not after 60 days’. It is the words “but not after 60 days”, which are emphasised by the learned counsel for the respondent and it has been submitted by him that this would amount to an express exclusion of the Limitation Act, in the proceedings before the appellate Tribunal. It was brought to the notice of this Court that while interpreting a similar provisions in the Arbitration and Conciliation Act, 1996, i.e. Section 34, the Hon’ble Apex Court had come to a conclusion that the word “but not thereafter” contained in Section 34 of the Arbitration and Conciliation Act amounts to an express exclusion of the limitation Act and therefore, the period of limitation will be governed as per the provisions given in the special law and there can be no condonation of delay if an appeal is filed beyond such a period. Section 34 of the Arbitration and Conciliation Act, 1996 reads as follows: “34. Application for setting aside arbitral award.— (1) …………… (2) …………… 7 (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the Arbitral Tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub- section (1), the court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.” The interpretation of the phrase “but not thereafter” given in the proviso to Clause (3) of Section 34 of the Arbitration and Conciliation Act was made by the Apex Court as referred above in Union of India Vs. Popular Construction Co. reported in (2001) 8 SCC 470, while observing as follows: “12. As far as the language of Section 34 of the 1996 Act is concerned, the crucial words are “but not thereafter” used in the proviso to sub- 8 section (3). In our opinion, this phrase would amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, and would therefore bar the application of Section 5 of that Act. Parliament did not need to go further. To hold that the court could entertain an application to set aside the award beyond the extended period under the proviso, would render the phrase “but not thereafter” wholly otiose. No principle of interpretation would justify such a result.” The two phrases “but not after sixty days” in the Act and “but not thereafter” in Arbitration and Conciliation Act, have the same meaning, particularly in the context to which it has been said and therefore the same interpretation ought to be given of the phrase in Section 25 of SICA, as has been given to it by the Hon’ble Apex Court in the case referred above. An express bar was also derived by the Hon’ble Supreme Court from the scheme of the Arbitration and Conciliation Act as well, whereupon the supervision and control of the courts were minimized and speedy relief was the paramount consideration of the Arbitration and Conciliation Act. In the present case as well, this Court finds that the basic aim of the Sick Industrial Companies (Special Provisions) Act, 1985 was to provide speedy relief and therefore, the time for filing of an appeal has also been curtailed and stringent provisions have been provided therein. As such, this Court finds no anomaly in order dated 22.01.2009, passed by the appellate Tribunal, while dismissing the appeal of the petitioner. 9 However, since now by an amendment, the order dated 8th January, 2008 and 13th October, 2008 passed by BIFR have also been challenged, this Court will also examine the merits of these two orders as well. The main argument of the petitioners here was that not only the petitioners were not heard while passing the order dated 8th January, 2008, but the order is an invasion on a matter of policy framed by the State Government. On this aspect as well, this Court is not inclined to accept the argument of the petitioner. Firstly, on balance this Court finds that the overwhelming nature of the objects and reasons of the Act and the non- obstante clause contained in Section 32 of the Act show that this Act will have an overriding effect. Section 32 of SICA reads as under: “32. Effect of the act on other laws.—(1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976) for the time being in force or in the Memorandum or Article of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act. (2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of section 72A of the Income-tax Act, 10 1961 (43 of 1961), shall, subject to the modification that the power of Central Government under that section may be exercised by the Board without the Central Government under that section may be exercised by the Board without any recommendation by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owing an industrial undertaking with another company.” The Sick Industrial Companies (Special Provisions) Act, 1985 was enacted by the Parliament in order to revive “sick industries”. A sick industry can be revived if in the wisdom of the ‘Board’ constituted under the Act, there are plausible chances of its revival. A ‘Scheme’ for its revival is hence passed by the Board which consists of experts in the field of science, technology, economics, banking industry, law, labour matters, industrial finance, industrial management, industrial reconstruction, administration, investment, accountancy, marketing, etc. If this body of experts i.e. the Board finds that the industry which has come before it can be revived then consequently the Board frames a scheme for its revival and therefore such a scheme has to be given its due importance. In the present case the respondent company went before the Board under Section 15 of the Act and the Board after examining all the aspects, and hearing all the parties, passed an order on January 8, 2008 in form of a scheme for the revival of this company. Such a scheme shall have an effect notwithstanding any inconsistency, if any, between this scheme and the order 11 passed by the controller or the State Government under the Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 (from hereinafter referred to as Adhiniyam) on which such a heavy reliance has been placed by the learned counsel for the petitioner. Moreover, this scheme has been passed by the BIFR after hearing the representatives of the State of Uttarakhand and the relief has been given to only one of the many sugar factories in Uttarakhand i.e. respondent, which is to be revived in public interest. Further since the rehabilitation scheme is itself for a period of four years, the apprehension of the petitioner that the relief granted to the sugar factory is unlimited, is also misconceived. Learned counsel for the respondent Sri Ravi Kiran Jain has further argued that the Sick Industrial Companies (Special Provision) Act, 1985 is a central Act of the year 1985, whereas the control of molasses is governed under the Adhiniyam, which is a State Act of the year, 1964 and since SICA is a special Act, special will override the general. Although the two Acts i.e. SICA and Adhiniyam, 1964 occupy two different fields, yet it is a settled position of law that in case of any clear and direct contradiction between the two Acts due to the non obstante clause in the Act, the provisions of SICA will prevail over the provisions of Adhiniyam. Moreover, SICA is a special Act and the special will override the general. The conflict here, according to the petitioner is between Section 8 (1) of the Adhiniyam, 1964 and the scheme prepared by BIFR under SICA. Section 8 of the Adhiniyam, 1964 reads as follows: 12 “8. Sale and supply of molasses.—(1) The Controller [with the prior approval of the State Government by order require] may the occupier of any sugar factory to [sell or supply] in the prescribed manner such quantity of molasses to such person, as may be specified in the order, and the occupier shall, notwithstanding any contract comply with the order : “[(1-a) Notwithstanding anything contained in sub-section (1) the occupier of a sugar factory shall sell or supply forty per cent of the molasses produced in each quarter of a molasses year in the sugar factory to such chemical industries which are actual users of molasses and are granted licence under the United Provinces Excise Act, 1910 : Provided that such quantum of molasses as is not required by the said chemical industries may be sold or supplied by the occupier of the sugar factory to any other unit which is actual users of molasses with the prior approval of the Controller.” (2) The order under sub-section (1) : (a) shall require supply to be made only to a person who requires it for his distillery or for any purpose of industrial development : [(aa) may require the person referred to in Clause (a) to utilise the molasses supplied to him under an order made under this section for the purpose specified in the application made by him under sub-section (1) of Section 7-A and to observe all such restrictions and conditions as may be prescribed.] 13 (b) may be for the entire quantity of molasses in stock or to be produced during the year or for any portion thereof; but the proportion of molasses to be supplied from each sugar factory to its estimated total produce of molasses during the year shall be the same throughout the State save where, in the opinion of the Controller, a variation is necessitated by any of the following factors : (i) the requirements of distilleries within the area in which molasses may be transported from the sugar factory at a reasonable cost; (ii) the requirements for other purposes of industrial development within such area; and (iii) the availability of transport facilities in the area. (3) The Controller may make such modifications in the order under sub-section (1) as may be necessary to correct any error or omission or to meet a subsequent change in any of the factors mentioned in Clause (b) of sub- section (2).” Under Section 8 of the Adhiniyam, the Controller, who is an authority appointed under the Adhiniyam with the prior approval of the State Government passes an order requiring the sugar factory to sell or supply in a prescribed manner such a quantity of molasses to such person as may be specified in the order. According to the petitioner under the said provisions of the Adhiniyam, orders have been passed, whereby all the sugar factories in State of Uttarakhand, who are producing molasses have to reserve 10% of the total production of the 14 molasses for manufacturing of country liquor in the State. However, under the scheme framed by BIFR for revival of respondent company, he would not be required to sell this 10% of the total production of molasses for consumption of those, who are manufacturing country liquor in the State but even this 10% of the total production of molasses, the petitioner can export out of the State as per the scheme. This will indeed be the position. However, in the larger interest which is the revival of a sick industry, this inconvenience will be a price which the State will have to bear. It is also necessary to note that the preamble of the Sick Industrial Companies (Special Provisions) Act, 1985 reads as follows: “An Act to make, in the public interest, special provision with a view to securing the timely detection of sick and potentially sick companies owing industrial undertaking, 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.” Consequently thereafter Section 2 of the Sick Industrial Companies (Special Provisions) Act makes following declaration: “2. Declaration.—It is hereby declared that this Act is for giving effect to the policy of the State towards securing the principles specified in 15 clauses (b) and (c) of article 39 of the Constitution.” Article 39 (b) and (c) of the Constitution of India reads as follows: “(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; (c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;” Hence, it is clear that this Act was enacted as the need was felt in public interest to provide a legislation which should bring a timely determination by a body of experts for preventive, ameliorative, remedial and other measures that would need to be adopted with respect to sick companies and for enforcement of the measures considered appropriate with utmost practicable dispatch. The scope and the ambit of the Act are vast and are in public interest which is to revive a sick industry. On the other hand, the scope of Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 is rather limited regarding the control of molasses, which is produced in the State. On balance, and also keeping in view the non-obstante clause of Section 32 of the Act, this court finds that the primacy has to be given to the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 and the schemes framed therein under the Act over any other law presently enforced in the State except those mentioned in Section 32 of the Act. 16 Thus there are overwhelming factors in favour of the respondent. There is a scheme of revival in its favour, which is only for a period of four years. Moreover, 10% of the molasses of the total molasses produced by the petitioner would in fact be a small quantity which under the scheme respondent is at liberty to export where probably it will fetch him a better price. Molasses is also not an essential food commodity, which if exported from the State will cause undue hardship for the people in the State. Also, the lifting of the restriction on molasses is only for one company, which is a very small percentage of the