M/s. BHARAT HEAVY ELECTRICALS LIMITED & ANR. ...RESPONDENTS Through: Mr. Bhaskar P. Gupta, Sr. Advocate with Mr. A.K. Roy, Advocate for Respondent No.1. Respondent No.2 is a proforma party. HON'BLE MR. JUSTICE SANJAY KISHAN KAUL HON‟BLE MR. JUSTICE RAJIV SHAKDHER 1. Whether the Reporters of local papers may be allowed to see the judgment? YES 2. To be referred to Reporter or not? YES 3. Whether the judgment should be YES reported in the Digest? SANJAY KISHAN KAUL, J. 1. The present writ petition raises the following question of law: "Whether a Public Sector Enterprise/Undertaking (for short „PSU‟) having dues outstanding in respect of a commercial transaction from a sick company within the meaning of The Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as „the SICA‟) falls within the definition of "other authority" for purposes of Section 19(1) of the SICA and is entitled to the benefit of subsection (2) of Section 19 of the SICA of circulation of the scheme and entitlement to obtain its consent?" _____________________________________________________________________________________________ WP (C) No.8271 of 2010 Page 1 of 15 2. Respondent No.1 Company supplied one unit of 12KA, 360V DC 6 Pulse Tyristor Converter System to the petitioner Company against a purchase order dated 10.4.1996 for a plant at Alwar. Only some part payments were made when the net worth of the petitioner Company was wiped out and, thus, proceedings were initiated by the petitioner Company under the SICA for being declared as a sick company. These proceedings resulted in examination of a scheme for revival of the petitioner Company and the final approved scheme in terms of the order dated 30.11.2006 of the BIFR envisaged settlement of dues of secured and unsecured creditors at 26.50 per cent and 10 per cent of the principal amount respectively. 3. It is the case of respondent No.1 Company that it did not come to know of these proceedings, and it is only after about two (2) years when an appeal was filed before the AAIFR (aggrieved by the fact that respondent No.1 Company was being treated under the head of „unsecured creditors‟, which would entitle it only to 10 per cent of the principal amount) did it become aware of the said proceedings. It is the case of respondent No.1 Company that the said Company is a Central PSU and has to be treated as "State" within the meaning of Article 12 of the Constitution of India and would, thus, be covered within the meaning of "other authority" under Section 19(1) of the SICA which would entitle it to a prior notice under Section 19(2) of the SICA. 4. In order to appreciate the controversy, the relevant provisions are reproduced as under: "19. Rehabilitation By Giving Financial Assistance. (1) Where the scheme relates to preventive, ameliorative, remedial and other measures with respect to any sick industrial company, the scheme may provide for financial assistance by way of loans, advances or guarantees or relief's or concessions or _____________________________________________________________________________________________ WP (C) No.8271 of 2010 Page 2 of 15 sacrifices from the Central Government, a State Government, any scheduled bank or other bank, a public financial ins