High Court Of Delhi
ICI India Ltd. & Anr. vs. Union Of India & Ors.
Section 72A
B.C. Patel, C.J. & Badar Durrez Ahmed, J.
Writ Petn. No. 1059 of 2000
27th September, 2004
Counsel Appeared
S.K. Aggarwal, for the Petitioners : R.D. Jolly with Ajay Jha, for the Respondents
JUDGMENT
B.C. Patel, C.J. :
In the second round of litigation, the petitioner, formerly known as Indian Explosives Limited and now known as ICI (India) Limited, has approached this Court as, despite the direction given by a Division Bench of this Court in its own case reported in IEL Ltd. vs. Union of India & Ors. (1992) 103 CTR (Del) 63 : (1992) 195 ITR 232 (Del), the Specified Authority under the provisions contained in the IT Act, 1961 (hereinafter referred to as “the Act”) and, particularly, in s. 72A, has made an order in utter disregard of the decision rendered by this Court and also upon a complete non-application of mind. The short facts, as set out in (1992) 103 CTR (Del) 63 : (1992) 195 ITR 232 (Del) (supra), are as under :
“Briefly stated, the facts are that a company known as Alkali and Chemicals Corporation of India Ltd. (hereinafter referred to as “ACCI”), was carrying on a business of manufacture and sale of polythene, rubber chemicals, paints, etc. The said ACCI was incurring losses especially in the financial years 1980-81 and 1981-82. Both the companies, namely, the petitioner and ACCI decided to amalgamate. Accordingly, on 30th Sept., 1982, the petitioner and ACCI passed resolutions in their respective board meetings approving the scheme of amalgamation subject to the obtaining of necessary permission from various authorities. The scheme of amalgamation, inter alia, postulated that the transfer of ACCI will be w.e.f. 1st Oct., 1982. This scheme was conditional upon certain approvals being obtained from different authorities, namely, under the Monopolies and Restrictive Trade Practices Act and the Foreign Exchange Regulation Act, and it was further provided that the scheme shall be deemed to be effective on the date on which the last of such approvals was obtained. The scheme also postulated issuance of shares of the petitioner-company to the erstwhile shareholders of ACCI.”
2. The Division Bench hearing the petition, at p. 243 of the report, issued a direction in the nature of writ of mandamus which is as under :
“We, therefore, issue a writ of mandamus quashing the decision of the Specified Authority contained in the impugned order dt. 7th April, 1986, and we direct the said Authority to reconsider the matter in the light of the observations made in this judgment and give a fresh recommendation by a speaking order within four months from today and the Central Government shall pass an order in consequence thereof within one month of the recommendation of the Specified Authority.”
3. In view of the direction aforesaid, the Specified Authority was required to examine the matter in the light of the observations made in the judgment and to recommend under the provisions contained in s. 72A of the Act and it was for the Central Government to pass an appropriate order on such recommendations. Curiously, in the instant case, there is no order made by the Central Government. There is an order dt. 3rd Nov., 1999 made by the Specified Authority, a copy of which is produced on record at p. 131. It must also be noted that against the aforesaid Division Bench decision, a Special Leave Petition was filed on behalf of the respondents. The order made by the Supreme Court is quoted as under : “The Special Leave Petition is dismissed because of not complying with different orders passed by this Court from time to time. The question of law, if any, is left open.”
4. Thus, the order made by the Division Bench of this Court in case of the petitioner itself was not disturbed. It is in view of this, that it was for the respondents to carry out the mandate issued by the Division Bench of this Court. However, the order made by the Specified Authority is as under : “In view of the above, the Specified Authority, therefore, decided to reject your proposal under s. 72A(3) of the IT Act, 1961.”
5. We would like to reproduce ss. 72A(1) and (3) of the Act : “72A. (1) Where there has been an amalgamation of a company owning an industrial undertaking or a ship with another company and the Central Government, on the recommendation of the Specified Authority, is satisfied that the following conditions. are fulfilled, namely : (a) the amalgamating company was not, immediately before such amalgamation, financially viable by reason of its liabilities, losses and other relevant factors; (b) the amalgamation was in the public interest; and (c) such other conditions as the Central Government may, by notification in the Official Gazette, specify, to ensure that the benefit under this section is restricted to amalgamations which would facilitate the rehabilitation or revival of the business of the amalgamating company, Then, the Central Government may make a declaration to that effect, and, thereupon, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, as the case may be, allowance for depreciation of the amalgamated company for the previous year in which the amalgamation was effected, and the other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly.” “(3) Where a company owning an industrial undertaking or a ship proposes to amalgamate with any other company and such other company submits the proposed scheme of amalgamation to the Specified Authority and that Authority is satisfied, after examining the scheme and taking into account all relevant facts, that the conditions referred to in sub-s. (1) would be fulfilled if such amalgamation is effected in accordance with such scheme or, as the case may be, in accordance with such scheme as modified in such manner as that Authority may specify, it shall intimate such other company that, after the amalgamation is effected in accordance with such scheme or, as the case may be, such scheme as so modified, it would make (unless there is any material change in the relevant facts) a recommendation to the Central Government under sub-s. (1).”
Sec. 72A(1) will come into operation after the amalgamation is made effective and not before that. So far as sub-s. (3) of s. 72A is concerned, it is in the nature of an advance ruling because it deals with a situation where, prior to the amalgamation, the company submits its proposal in the form of a scheme, of amalgamation to the Specified Authority. In this case, there is no dispute that the Authority was moved after amalgamation and therefore, the Authority was required to pass an order under s. 72A(1) of the Act and not under s. 72A(3) thereof. It is, thus, clear that not only is there a disobedience of the order made by this Court, but there is also a non-application of mind. The Division Bench earlier directed the Specified Authority to reconsider the matter in the light of the observations and to give a fresh recommendation by a speaking order within four months from the date of the judgment. Not only that, there was a further direction to the Central Government to pass an order in consequence thereof within one month of the recommendation of the Specified Authority order.
In view of this, the order passed by the Specified Authority dt. 3rd Nov., 1999 is quashed and the Specified Authority is directed to pass an order strictly in accordance with the decision of the Division Bench reported in (1992) 103 CTR (Del) 63 : (1992) 195 ITR 232 (Del) (supra) in the case of the petitioner itself and the Central Government shall also act in consonance with the aforesaid decision. The Specified Authority to decide the matter within period of four months and the Central Government shall take an appropriate decision within a period of two months thereafter. The learned counsel for the petitioner states that the Division Bench while disposing of the petition directed to stay further proceedings in relation to the asst. yrs. 1984-85 to 1987-88 and till today the stay continues in view of the subsequent orders passed by this Court in the writ petition. It goes without saying that this order shall continue till the decision is rendered by the Central Government.
[Citation : 274 ITR 105]
