# RAHEJA UNVIERSAL LIMITED v. NRC LIMITED & ORS

- **Citation:** [2012] 3 S.C.R. 388
- **Court:** Supreme Court of India
- **Decided:** 2012-02-07
- **Case number:** Civil Appeal No. 1920 of 2012
- **Bench:** S.H. Kapadia, K.S. Radhakrishnan, Swatanter Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/raheja-unviersal-limited-v-nrc-limited-ors-28270
- **Pages:** 72

## Headnote

Sick Industrial Companies (Special Provisions) Act,
c 1985:
ss. 22, 22(3), 22A, 17(3) -
Sale of assets of sick
company - Rehabilitation scheme - Determination of the
right of purchaser - Jurisdiction of BIFR to restrain transfer
D of sick industrial company's property - Respondent-Company
entered into memorandum of understanding and agreement
for sale of its land to appellant-Company to obtain funds for
financial restructuring and received part payment from the
appellant-Company - Failure of appellant-Company to pay
E third instalment and financial position of respondentCompany not improved - Proposal by respondent-Company
to the consortium of banks for Corporate Debt Restructuring
(CDR) - Approval of scheme of rehabilitation - Prior to
implementation of the scheme, the respondent-Company
sought declaration from BIFR that it was a 'sick company' and
F for adoption of the rehabilitation scheme approved by creditor
banks ,... BIFR by order u/s. 17(3) adopted rehabilitation
Scheme and directed that the sale of assets including
investments would require prior approval of the BIFR -
Thereafter, execution of second Supplementary Agreement
G by respondent-Company and possession of land given to the
appellant-Company, without the· prior approval of the BIFR -
Appeal before AA/FR - AA/FR permitted the land to be sold
- High Court quashed the order of AA/FR - On appeal, held:
Memorandum of understanding and agreement to sell the
H
388
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
389
ORS.
land was signed prior to the presentation of the scheme before
A
the BIFR - However, second supplementary agreement was
executed subsequent to the presentation of the scheme
before the BIFR as also after the BIFR had passed an order
uls. 17(3) - Asset of the company and/or its sale proceeds
received under the agreements had been integral part of the
B
formation and finalization of the revival scheme, and as such
transaction cannot be stated to be beyond the ambit and
scope of s. 22(3) whereby all these instruments to which the
sick industrial company is a party, would be subject to the
orders of BIFR - Further, in view of the provisions of s. 53A,
C
even if the part performance of the agreement is accepted,
yet no title is created in favour of the appellant-Company -
As regards the issue of jurisdiction, BIFR had the jurisdiction
to issue prohibitory order which was passed clearly at the
stage of the consideration of the revival scheme for the
D
formulation of which asset was duly taken into consideration
- Prohibitory orders were issued by the BIFR within the ambit
and scope of ss. 22(1), 22(3) and 22A - Furthet; there was
no jurisdictional or other error in the order of the High Court
in restoring the order of the BIFR - Land being the primary
E
asset of the respondent-Company, could not be permitted to
be dissolved by sale or otherwise without the consent and
approval of the BIFR - BIFR is the authority proprio vigore
and required to oversee the entire affairs of a sick industrial
company - Thus, order of the BIFR, which merged into the
order of the High Court upheld - Transfer of Property Act,
1882' - SS. 53A, 54.
F
ss. 22 and 22A - Scope and ambit of - Held: Section
22 deals with the suspension of legal proceedings, execution
and distress sale etc. against the assets of a sick company
G !'
while Section 22A deals with restrictions and prohibitory orders
which the BIFR can pass, all for the purposes of preparation
of the scheme and proper implementation and effective
management of the revival of the sick industrial company -
Section 22 operates from the presentation of the scheme, its
H
390
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A consideration, preparation, finalization and ultimately the
implementation of the said scheme and consequent
rehabilitation of .the sick industrial company, while Section
22A operates only during the preparation or consideration of
the scheme, or upto the commencement of the proceedings
B for winding up before the concerned H

## Text

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A
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[2012] 3 S.C.R. 388
RAHEJA UNVIERSAL LIMITED
v.
NRC LIMITED & ORS.
(Civil Appeal No. 1920 of 2012)
FEBRUARY 07, 2012
[S.H. KAPADIA, CJI., K.S. RADHAKRISHNAN AND
SWATANTER KUMAR, JJ.)
Sick Industrial Companies (Special Provisions) Act,
c 1985:
ss. 22, 22(3), 22A, 17(3) -
Sale of assets of sick
company - Rehabilitation scheme - Determination of the
right of purchaser - Jurisdiction of BIFR to restrain transfer
D of sick industrial company's property - Respondent-Company
entered into memorandum of understanding and agreement
for sale of its land to appellant-Company to obtain funds for
financial restructuring and received part payment from the
appellant-Company - Failure of appellant-Company to pay
E third instalment and financial position of respondentCompany not improved - Proposal by respondent-Company
to the consortium of banks for Corporate Debt Restructuring
(CDR) - Approval of scheme of rehabilitation - Prior to
implementation of the scheme, the respondent-Company
sought declaration from BIFR that it was a 'sick company' and
F for adoption of the rehabilitation scheme approved by creditor
banks ,... BIFR by order u/s. 17(3) adopted rehabilitation
Scheme and directed that the sale of assets including
investments would require prior approval of the BIFR -
Thereafter, execution of second Supplementary Agreement
G by respondent-Company and possession of land given to the
appellant-Company, without the· prior approval of the BIFR -
Appeal before AA/FR - AA/FR permitted the land to be sold
- High Court quashed the order of AA/FR - On appeal, held:
Memorandum of understanding and agreement to sell the
H
388
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
389
ORS.
land was signed prior to the presentation of the scheme before
A
the BIFR - However, second supplementary agreement was
executed subsequent to the presentation of the scheme
before the BIFR as also after the BIFR had passed an order
uls. 17(3) - Asset of the company and/or its sale proceeds
received under the agreements had been integral part of the
B
formation and finalization of the revival scheme, and as such
transaction cannot be stated to be beyond the ambit and
scope of s. 22(3) whereby all these instruments to which the
sick industrial company is a party, would be subject to the
orders of BIFR - Further, in view of the provisions of s. 53A,
C
even if the part performance of the agreement is accepted,
yet no title is created in favour of the appellant-Company -
As regards the issue of jurisdiction, BIFR had the jurisdiction
to issue prohibitory order which was passed clearly at the
stage of the consideration of the revival scheme for the
D
formulation of which asset was duly taken into consideration
- Prohibitory orders were issued by the BIFR within the ambit
and scope of ss. 22(1), 22(3) and 22A - Furthet; there was
no jurisdictional or other error in the order of the High Court
in restoring the order of the BIFR - Land being the primary
E
asset of the respondent-Company, could not be permitted to
be dissolved by sale or otherwise without the consent and
approval of the BIFR - BIFR is the authority proprio vigore
and required to oversee the entire affairs of a sick industrial
company - Thus, order of the BIFR, which merged into the
order of the High Court upheld - Transfer of Property Act,
1882' - SS. 53A, 54.
F
ss. 22 and 22A - Scope and ambit of - Held: Section
22 deals with the suspension of legal proceedings, execution
and distress sale etc. against the assets of a sick company
G !'
while Section 22A deals with restrictions and prohibitory orders
which the BIFR can pass, all for the purposes of preparation
of the scheme and proper implementation and effective
management of the revival of the sick industrial company -
Section 22 operates from the presentation of the scheme, its
H
390
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A consideration, preparation, finalization and ultimately the
implementation of the said scheme and consequent
rehabilitation of .the sick industrial company, while Section
22A operates only during the preparation or consideration of
the scheme, or upto the commencement of the proceedings
B for winding up before the concerned High Court, in the event
the B/FR recommends winding up proceedings -
These
provisions primarily ensure that the scheme prepared by the
BIFR does not get frustrated because of certain other legal
proceedings and to prevent untimely and unwarranted
c disposal of the assets of the sick industrial company - These
Sections operate at different stages and in different fields.
ss. 22 and 22A - Powers of Bf FR under- Held: Sections
22 and 22A specify the complete jurisdiction and authority of
the BIFR in relation to preparation, consideration, finalization
D and implementation of a revival scheme in relation to a sick
industrial company - BIFR is vested with the power to issue
directions in the interest of the company or even in public
interest, tc prevent the disposal of assets of the company
during the period of preparation, consideration or
E implementation of the scheme - Also, BIFR is expected to
ensure proper implementation by appropriately monitoring the
scheme during the entire relevant period.
Overriding effect of the 1985 Act - Whether the provisions
F of the! 1985 Act would prevail over the provisions of the
Transfer of Property Act, 1882 - Held: Provisions of the 1985
Act would prevail over the provisions of the 1882 Act - 1882
Act is a general law controlling and operating in a very wide
field, enacted for and related to transfer of immovable property
G in India and to decide the disputes as well as to resolve the
confusion and conflict, in existence - It does not have
application to a particular situation or class of persons -
However, the 1985 Act is a special legislation providing for
imperative functioning of specialized bodies like the BIFR and
AA/FR and is intended to apply to a sick industrial company
H
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
391
ORS.
-
It has no application even to other different kinds of A
companies within the purview of the Companies Act -
Legislature gave an overriding effect to the provisions of the
1985 Act and even the jurisdiction of the civil courts is
restricted - Transfer of Property Act, 1882.
Legislative scheme and object of - Held: Is to develop
8
the mechanism of revival and rehabilitation of sick industrial
units and channelization of the complete administrative-cumquasi judicial process within the framework of the Act -The
Act empowers the quasi-judicial body-Bl FR,. to take
appropriate measures for revival and rehabilitation of the
C
potentially viable sick industrial companies and for liquidation
of non-viable companies within the time specified - It is
regulatory only to a limited extent - As regards matters
covered under the Act as also matters allied to the
formulation and sanction of the scheme, the jurisdiction of the
D
civil courts is ousted and has to be decided by the BIFR itself.
Respondent-Company faced a financial crunch. The
consortium of banks sanctioned loan against the current
assets as well as fixed assets of the respondentE
Company including the surplus land. Thereafter, the
respondent-Company sought to dispose of the surplus
land so as to bring in additional funds required for
financial restructuring. They entered into memorandum
of understanding and other agreements with appellantF
Company for the sale of land and receiving payment of
the sale consideration in instalments from the appellants.
The appellant-Company failed to pay the third instalment
and as such the respondent-Company could not attain
the object of financial restructuring. The parties executed
Supplementary Agreement for pre-ponement of the
G
instalments payable in terms of the agreement as well as
giving of possession of the land to the appellantCompany. The respondent-Company then submitted a
proposal to the consortium of banks for Corporate Debt
Restructuring (CDR). The scheme of rehabilitation in
H
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SUPREME COURT REPORTS
[2012] 3 S.C.R.
A relation to the sick industrial company was approved by
the CDR. Prior to the complete implementation of the
revival scheme, the respondent-Company applied to the
BIFR under Section 15 of the Sick Industrial Companies
(Special Provisions) Act, 1985 for being declared as a
B 'sick company' and for acceptance and adoption of the
rehabilitation scheme approved by the CDR. BIFR by an
order under Section 17(3) of the 1985 Act, adopted the
rehabilitation Scheme, appointed an operating agency,
fixed the cut-off date for financial revival and directed that
c the sale of assets including investments would require
prior approval of the BIFR. Thereafter, the parties
executed second Supplementary Agreement and
possession of the land was given to the appellantCompany, without the prior approval of the BIFR.
0 Aggrieved, appellant-Company as well as the respondentCompany filed appeal before the Appellate Authority for
Industrial and Financial Reconstruction (AAIFR). AAIFR
set aside the certain findings of the BIFR permitting the
land though an asset of the company to be sold. The
High Court quashed the order of the AAIFR holding that
E the order of the BIFR was within the scope of Section
22(3) of the 1985 Act; and that the order of the AAIFR
permitting the sale of the land in furtherance to the
agreement between the parties was not sustainable.
Therefore, the appellant-Company filed the instant
F appeals.
Dismissing the appeals, the Court
HElD: 1.1. The Sick Industrial Companies (Special
Provisions) Act, 1985 basically and predominantly is
G remedial and ameliorative in so far as it empowers the
quasi-judicial body, the BIFR, to take appropriate
measures for revival and rehabilitation of the potentially
viable sick industrial companies and for liquidation of
non-viable companies. It is regulatory only to a limited
H
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
393
ORS.
extent. The provisions of the Act of 1985 impose an A
obligation on the sick industrial companies and
potentially sick industrial companies to make references
to the BIFR within the time specified under the Act of
1985. Default thereof is punishable under the provisions
of the Act of 1985. Largely, the proceedings before the B
BIFR are specific to rehabilitation or winding up of the
sick company and the Act of 1985 hardly contemplates
adversarial proceedings. The bodies constituted under
the Act of 1985 would least exercise their jurisdiction to
a /is between any party or upon the rival interests of the C
parties. With regard to the matters covered under the Act
of 1985, the jurisdiction of the civil courts is ousted and
the matters which are even allied to. the formulation and
sanction of the scheme would have to be decided by the
BIFR itself. [Para 11) [420-E-H; 421-A]
1.2. The BIFR has been vested with wide powers and,
being an expert body, is required to perform duties and
functions of wide-ranged nature. If one looks into the
· legislative intent in relation to a sick industrial company,
D
it is obvious that the BIFR has to first make an effort to E
provide an opportunity to the sick industrial company to
make its net worth exceed the accumulated losses within
a reasonable time, failing which the BIFR has to formulate
a scheme for revival of the company, even by providing
financial assistance in cases wherein the BIFR in its F
wisdom deems it necessary and finally only when both
these options fail and the public interest so requires, the
BIFR may recommend winding up of the sick industrial
company. So long as the scheme is under consideration
before the BIFR or it is being implemented after being G
sanctioned and is made operational from a given date, it
is the legislative intent that such scheme should not be
interjected by any other judicial process or frustrated by
the impediments created by third parties and even by the
management of the sick industrial company, in relation H
394
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A to the assets of the company. In other words, the object
and purpose of the Act of the 1985 is to ensure smooth
sanctioning of the scheme and its due implementation.
Both these stages, i.e., pre and post sanctioning of the
scheme by the BIFR, are equally material stages where
B the provisions of Sections 22 and 22A read with Section
32 of the Act of 1985 would come into play. Such an
approach would also be acceptable as otherwise the
entire scheme under Chapter Ill of the Act of 1985 would
be frustrated. Doctrine of frustration envisages that an
C
exerci~e of special jurisdiction in futility, is neither the
requirement of legislature nor judicial dictum. [Para 22]
[434-D-H; 435-A]
1.3. The relevant provisions of the Act of 1985 clearly
demonstrate that BIFR is vested with the power to issue
D directions in the interest of the company or even in public
interest, to prevent the disposal of assets of the company
during the period of preparation, consideration or
implementation of th~ scheme. Not only this, BIFR is
expected to ensure proper implementation by·
E appropriately monitoring the scheme during the entire
relevant r:>eriod .. Sections 22 and 22A thus, specify the
complete jurisdiction and authority of the BIFR in relation
to preparation, consideration, finalization and
implementation of a revival scheme in relation to a sick
F
industrial company. [Para 30] [441-E-G]
1 .4. The powers of the BIFR under Section 22(3) can
be segregated under two different heads. Firstly, the
power to suspend simplicitor the operation of all or any
G of the contracts, assurances of property, agreements,
settlements, awards, standing orders· or any other
instrument in force, to which the sick industrial company
is a party or which may be applicable to the sick industrial
company before the date of such order. Secondly, any
rights, privileges, obligations or liabilities accruing or
H arising before the said date, shall be enforceable with
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
395
ORS.
such adaptation and in such manner as may be specified
A
by the BIFR. Section clearly demonstrates the intent of
the framers of law, that the BIFR has the power to even
make changes in such instruments, documents etc.
which create rights and liabilities vis-a-vis the sick
industrial company, and before permitting them to be
enforced. Such an approach alone can be justified, as
otherwise the expression 'shall be enforceable with such
adaptation and in such manner as may be specified by
the BIFR would be meaningless. It is a settled principle
B
of interpretation of statutes that every word and c
expression used by the legislature has to be given its
proper and effective meaning as the legislature uses no
expression without purpose or meaning. The maxim Lex
Nil Frusta Jubet i.e. Law Commands nothing vainly
further elucidates this principle. Of course, the power to
D
make this declaration is controlled by limitation of time
as specified in the p·roviso to the Section. Lifting of such
declaration by lapse of time or otherwise or in accordance
with the provisions of Section 22(4) shall bring the status
quo ante as if such declaration had never been made.
Section 22A is obviously a power over and above the
wide powers vested in BIFR under the provisions of
Section 22 of the Act of 1985. [Paras 27 and 28] [439-BH; 440-A]
E
1.5. All these provisions which fall under Chapter Ill
F
of the Act of 1985 have to be read conjointly and that too,
along with other relevant provisions and the scheme of
the Act of 1985. It is a settled canon of interpretation of
statutes that the statute should not be construed in its
entirety and a sub-section or a section therein should not G
be read and construed in isolation. Chapter Ill, in fact, is
the soul and essence of the Act of 1985 and it provides
for the methodology that is to be adopted for the
purposes of detecting, reviving or even winding up a sick
industrial company. Provisions under the Act of 1985
H
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SUPREME COURT REPORTS
[2012] 3 S.C.R.
A also provide for an appeal against the orders of the BIFR
before another specialised body, i.e., the AAIFR. This is
a self-contained code and because of the non obstante
provisions, contained therein, it has an overriding effect
over the other laws. As per Section 32 of the Act of 1985,
B the Act is required to be enforced with all its vigour and
in precedence to other laws. [Para 21] [433-G-H; 434-A·
C]
1.6. The intent of introducing Section 22A was to
empower the BIFR to issue any direction to the sick
C industll'ial company, its creditors and shareholders, in the
interest of the company or even in public interest,
directing the company not to dispose of any assets,
except with the consent of the BIFR. The directions so
issued are to remain in force during the preparation and
D consideration of the scheme. Section 22 is the reservoir
of the statutory powers empowering the BIFR to
determine a scheme, right from its presentation till its
complete implementation in accordance with law, free of
interjections and interference from other judicial
E processes. Section 22(1) deals with the execution,
distress or the like proceedings against the company's
properties, including appointment of a Receiver. It also
specifically provides that even a winding up petition
would not be instituted and no other proceedings shall
F lie or proceed further, except with the consent of the
BIFR. In contradistinction to this power, Section 22(3)
states that pending an enquiry or a scheme under the
provisions of the Act of 1985 and even where the scheme
is sanctioned, for the due implementation of such
G scheme, the BIFR may, by an order, declare with respect
to the sick industrial company concerned that the
operation of all or any of the contracts, assurances of
property, agreements, settlements, awards, standing
orders or other instruments in force to which such sick
H industrial company is a party or which may be applicable
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
397
ORS.
to such sick industrial company immediately before the
A
date of such order, shall remain suspended or that all or
any of the rights or privileges, obligations and liabilities
accruing or arising thereunder befqre the said date, shall
remain suspended and shall be enforceable with such
adoption and in such a manner as may be specified by
B
the BIFR. In other words, all those instruments to which
the sick industrial company is a party, will be subject to
the orders of the BIFR. Further, such proceedings can
even be modified by the BIFR, of course, for the limited
purpose of implementing the scheme. The declarations c
made by the BIFR under Section 22(3) are subject to the
restrictions of time as stated under the proviso to this
section. The maximum period for which such a
declaration in aggregate can continue is seven years. The
legislative intent of giving an over-riding effect to the
0
declarations of the BIFR, as contemplated under Section
22(3) of the Act of 1985, is further fortified by the language
of Section 22(4), which states that any declaration made
under Section 22(3) shall take effect notwithstanding
anythinQ contained in the Companies Act, 1956 or any
E
other law, the memorandum and articles of association
of the company or any instrument, decree, order of a
court, settlement etc. Any remedy for enforcement of a
right which may be available to a third party and any such
proceedings before any court or tribunal shall remain
stayed or be continued subject to such declaration.
Section 22(4)(b) brings status quo ante and in fact, makes
F
it clear that on cessation of such a declaration, the right,
privilege, obligation or liability which was suspended
shall become revived and enforceable as if the
declaration had never been made. The proceedings will G
continue from the stage at which they were stayed. It can
safely be perceived that the provisions of Section 22 of
the Act of 1985 are self-explanatory. They would cease
to operate within their own limitations and not by force
of any other law, agreement, memorandum or even
H
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SUPREME COURT REPORTS
[2012] 3 S.C.R.
A articles of association of the company. The purpose is so·
very clear that during the examination, finalization and
implementation of the scheme, there should be no
impedliment caused to the smooth execution of the
scheme of revival of the sick industrial company. It is only
B when the specified period of restrictions and declarations
contemplated under the provisions of the Act of 1985 is
over, that the status quo ante as it existed at the time of
the consideration and finalization of the scheme, would
become operative. This is done primarily with the object
c that the assets of the company are not diverted, wasted,
taken away and/or disposed of in any manner, during the
relevant period. [Para 26] [437-B-H; 438-A-H; 439-A-B]
1.~7. Section 22A of the Act of 1985 empowers the
BIFR to pass injunctive or restraint orders in the interest
D of the sick industrial company or even in public interest
requiring the sick industrial company not to dispose of,
except with the consent of the BIFR, any asset during the
period of preparation or consideration of the scheme
under Section 18 of the Act of 1985 and during the period
E beginning with the recording of opinion for winsting up
of the 1::ompany under Section 20(1) of the Act of 1985 by
the Blf'R upto commencement of the proceedings relating
to winding up before the High Court. These injunctive
orders; are to be in operation during the period of
. F preparation or consideration of the scheme under
Section 18 of the Act of 1985. Section 22A, thus, has a
narrower scope than Section 22. Section 22 operates
from the presentation of the scheme, its consideration,
preparation,
finalization
and
ultimately
the
implementation of the said scheme and consequent
G rehabilitation of the sick industrial company, while
Section 22A operates only during the preparation or
consideration of the scheme, or upto the commencement
of the proceedings for winding up before the concerned
High Court, in the event the BIFR recommends winding
H up proceedings. [Paras 20, 29) [433-E-F: 440-C-El
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
399
ORS.
1.8. Section 22 and 22A of the Act of 1985 primarily
A
ensure that the scheme prepared by the BIFR does not
get frustrated because of certain other legal proceedings
and to prevent untimely and unwarranted disposal of the
assets of the sick industrial company. These Sections
clearly state certain restrictions which would impact upon
B
the implementation of the scheme as well as on the
assets of the c-ompany. These Sections operate at
different stages and in different fields. [Para 20) [432-GH]
1.9. Sections 22(1 ), (3) and 22A have to be read along
C
with the provisions of Section 26 of the Act of 1985 which
ousts the jurisdiction of the civil courts and vests
exclusive jurisdiction for the specified purposes with the
BIFR. Section 32 of the Act of 1985, gives an overriding
effect to the provisions of the Act of 1985 over the other D
laws in force except the law specifically stated therein .
. Sections 22, 22A, 26 and 32 have to be read and
construed conjointly. A common thread of legislative
intent to treat this law as a special law, in contradistinction to the other laws except the laws stated in the
E
provisions and to ensure its effective implementation with
utmost expeditiousness, runs through all these
provisions. It also mandates that no injunction shall be
granted by any court or authority in respect of an action
taken or to be taken in pursuance of the powers conferred
F
to or by under this Act. [Para 31) [441-B-E]
1.10. The provisions of Sections 22(1) and 22(3) of the
Act are the provisions of wide connotation and would
normally bring the specified proceedings, contractual and
non-contractual liabilities, within the ambit and scope of G
the bar and restrictions contained in Sections 22(1) and
22(3) of the Act of 1985 respectively. The legislative intent
is explicit that the BIFR has wide powers to impose
restrictions in the form of declaration and even
H
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[2012] 3 S.C.R.
A prohibitory/injunctive orders right from the stage of
consideration of a scheme till its successful
implementation within the ambit and scope of Sections
22(3) and 22A of the Act. Section 22 of the Act of 1985 is·
very significant and of wide ramifications and application.
8 More often than not, the jurisdiction of the BIFR is being
invoked, necessitated by varied actions of third parties
against the sick industrial company. The proceedings,
taken by way of execution, distress or the like, may have
the effect of destabilizing the finalization and/or
implementation of the scheme of revival under
C consideration of the BIFR. It appears that, the Legislature
intended to ensure that no impediments are created to
obstruct the finalization of the scheme by the specialized
body. To protect the industrial growth and to ensure
revival, this preventive provision has been enacted. The
D provision has an overriding effect as it contains non
obstante clauses not only vis-a-vis the Companies Act
but even qua any other law, even the memorandum and
articles of association of the industrial company and/or
any other instrument having effect under any other Act
E or law. These proceedings cannot be permitted to be
taken out or continued without the consent of the BIFR
or the AAIFR, as the case may be. The expression 'no
proceedings' that finds place in Section 22(1) is of wide
spectrum but is certainly not free of exceptions. The
F framers of law have given a definite meaning to the
expression 'proceedings' appearing under Section 22(1)
of the Act of 1985. These proceedings are for winding up
of the industrial company or for execution, distress or the
like against any of the properties of the industrial
G company or for the appointment of a Receiver in respect
thereof. The expression 'the like' has to be read ejusdem
generis to the term 'proceedings'. The words 'execution,
distress or the like' have a definite connotation. These
proceedings can have the effect of nullifying or
H obstructing the sanctioning or implementation of the
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
401
ORS.
revival scheme, as contemplated under the provisions of A
the Act of 1985. This is what is required to be avoided for
effective implementation of the scheme. The other facet
of the same Section is that, no suit for recovery of money,
or for enforcement of any security against the industrial
company, or any guarantee in respect of any loan or
B
advance granted to the industrial company shall lie, or be
proceeded with further without the consent of the BIFR. ·
Again, the intention is to protect the properties/assets of
the sick industrial company, which is the subject matter
of the scheme. It is difficult to state with precision the
C
principle that would uniformly apply to all the
proceedings/suits falling under Section 22(1) of the Act
of 1985. Firstly, it will depend upon the facts and
circumstances of a given case, it must satisfy the
ingredients of Section 22(1) and fall under any of the
D
various classes of proceedings stated thereunder.
Secondly, these proceedings should have the impact of
interfering with the formulation, consideration, finalization
or implementation of the scheme. Once these ingredients
are satisfied, normally the bar or limitation contained in
E
Section 22(1) of the Act of 1985 would apply. [Para 35)
(443-C-H; 444-A-G]
Gram Panchayat & Anr. v. Shree Vallabh Glass Works
Ltd. & Ors. (1990) 2 SCC 440: 1990 (1) SCR 966; Deputy
F
Commercial Tax
Officer & Ors.
v.
Corromandal
Pharamaceuticals & Ors. (1997) 10 SCC 649: 1997 (2) SCR
1026; Jay Engineering Works Ltd. v. Industry Facilitation
Council & Anr. AIR 2006 SC 3252: 2006 (6) Suppl. SCR
189; Maharashtra Tubes Ltd. v. State Industrial and
Investment Corporation of Maharashtra (1993) 2 SCC 144:
G
1993 (1) SCR 340; Tata Davy Ltd. v. State of Orissa AIR 1998
SC 2928: 1997 (3) Suppl. SCR 232 - referred to.
1.11. The land was one of the major assets of the
Respondent Company and in the event the said asset
H
402
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A was kept outside the scope of the scheme or its sale was
permitted by the BIFR, probably the company could
never be revived and any effort in that direction de hors
such asset of the company would be in futility. Besides,
thE~ fact that the statutory protection contained in Section
B 22(3) was available to the company, it could be stated
with more emphasis that the BIFR could even adopt and
peU'mit the transaction with such adoption as it may have
deemed appropriate. The imperative nature of the
functions of the BIFR under the provisions of the Act of
c 1985 and the overriding effect of its provisions fully
support such a view. [Para 36) [445-E-G]
, 2.1. The provisions of the Act of 1985 shall normally
override the other laws except the laws which have been
specifically excluded by the Legislature under Section 32
D of ~he Act of 1985. The Act of 1985 has been held to be a
special statute vis-a-vis the other laws. [Para 39) [447-E]
2.2. The Act of 1882 is a general law and controls and
operates in a very wide field. It was an Act enacted for
E and related to transfer of immovable property in India and
to decide the disputes as well as to resolve the confusion
and conflict, which was in existence, as the courts were
forced to decide the disputes according to their own
notions of justice and fair play. The Act of 1882 does not
F have application to a particular situation or class of
persons. On the contrary, the Act of 1985 is a special
legislation providing for imperative functioning of
specialized bodies like the BIFR and AAIFR and is
intended to apply to a very specific situation, i.e., where
a company is a sick industrial company. It has no
G application even to other different kinds of companies
within the purview of the Companies Act, except sick
industrial companies. The Legislature has undoubtedly
given an overriding effect to the provisions of the Act of
1985 and even restricted the jurisdiction of the civil courts,
H
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
403
ORS.
as is demonstrated from the language of Sections 26 and A
32 of the Act of 1985. Thus, the provisions of the Act of
1985 shall prevail over the provisions of the Act of 1882.
[Para 40] [448-A-D]
Tata Davy Ltd. v. State of Orissa AIR 1998 SC 2928:
1997 (3) Suppl. SCR 232; Tata Motors Ltd. (2008) 7 SCC
B
619: 2008 (9) SCR 267; NGEF Ltd. v. Chandra Developers
(P) Ltd. and Anr. (2005) 8 SCC 219: 2005 (3 ) Suppl. SCR
747- referred to.
3.1. The submission that in view of the provisions of C
Sections 53A and 54 of the Act of 1882, the title in the
property in question is vested in the RespondentCompany and they are entitled to transfer of the property,
free from any restrictions or limitations, and as such, the
order of the High Court is liable to be set aside and that D
of the AAIFR be restored, cannot be accepted entirely or
even in part for that matter. Section 54 defines 'Sale' as
a transfer of ownership in exchange for price paid or
promised or part-paid and part-promised. Such a transfer
of tangible immovable property of the value of Rs.100/-
and upwards can be made only by a registered E
instrument. On a plain reading of Section 54, it is clear
that an agreement for sale or an agreement to sell itself
does not create any interest or charge in such property.
[Paras 43 and 44] [450-E-G; 451-C]
F
'Transfer of Property Act' by Mui/a, 9th Edn, p 181 -
referred to.
3.2. The provisions of Section 53A of the 1882 Act
recognize a right of a transferee, where a transferor has
given and the transferee has taken possession of the G
property or any part thereof. Even Section 53A does not
create title of the transferee in the property in question
but gives him a very limited right, that too, subject to the
satisfaction of the conditions as stated in Section 53A of
the Act of 1882 itself. Thus, even if the part performance H .
404
SUPREME COURT REPORTS
(2012) 3 S.C.R.
A of the agreement is accepted, still no title is created in
favour of the Respondent-Company. Provisions of
Section 53A would also not, in any way, alter the position
of the Act of 1985 having an overriding effect vis-a-vis the
provisions of the Act of 1882. The provisions of Act of
B 1985 shall have precedence and overriding effect over the
provisions of the Act of 1882. [Paras 47, 48] [456-B, F]
State of UP. v. District Judge and Ors. AIR 1997 SC 53:
1996 (7) Suppl. SCR 513 - referred to.
C
3.3. The memorandum of understanding and
agreement to sell the land belonging to the company
between the appellant and the respondent-company was
signed prior to the presentation of the scheme before the
BIFR. However, second supplementary agreement was
executed not only subsequent to the presentation of the
D scheme before the BIFR but even after the BIFR had
passed an order under Section 17(3) of the Act of 1985 •.
It cannot be disputed that even the sale proceeds
received under the agreements have been utilized for the
revival of the company to a large extent. The agreement
E with the workers dated 5th September, 2008 stands
testimony to this fact. Once the asset of the company and/
or its sale proceeds have been integral part of the
formation and finalization of the revival scheme, such
transaction by any stretch of imagination cannot be
F stated to be beyond the ambit and scope of Section 22(3)
of the Act of 1985. Thus, BIFR has the power to issue
declarations in relation to contracts, agreements,
settlements, awards, standing orders or even other
instruments in force to which the sick industrial company
G is a party. The power to suspend or power to enforce the
same subject to such adaptations as the BIFR may
consider appropriate is a power of great magnitude and
scope, the only restriction thereupon is as contemplated
in the proviso to Section 22(3) of the Act of 1985. [Para
H 46] [454-D; 455-A, G]
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED & 405
ORS.
3.4. The BIFR after declaring the RespondentA
Company as a sick company and appointing the Punjab
National Bank as the Operating Agency, had fixed the cut
off date as 30th July, 2007, as indicated in the CDR
Scheme. The CDR scheme had been approved, after
taking into consideration the agreement to sell and the B
sale proceeds likely to be received therefrom. The BIFR
had passed certain directions/declarations in the order
passed under Section 17(3) of the Act of 1985 requiring
the company to state clearly the details of the land to be
sold including survey numbers as well as the remaining c
land with the company and confirming if the remaining
land was adequate for functioning and viability of the
company on long term basis. The BIFR raised the query
whether all the secured creditors who had charge over
the land, had approved the sale of 350 acres of land D
belonging to the respondent-company for a sum of
Rs.166.40 crore and for entering into memorandum of
understanding with the appellant company in that behalf.
Besides issuing a directive that assets including
investments would require prior approval of the BIFR as E
the company was under the purview of SICA, it also
issued a clear prohibitory order requiring the secured
creditors not to take any coercive steps against the
company without prior permission of the BIFR. This
order of the BIFR was therefore, passed clearly at the
stage of the consideration of the revival scheme which F
had been approved by the CDR Group as well as the
secured creditors. The scheme for revival of the company
on long term basis, thus, was primarily dependent upon
the sale proceeds of the land in question on the one hand
and the utility of the remaining land for revival of the G
company on the other. The land was the paramount asset
of the company for its revival and successful
implementation of the scheme in accordance with law.
The asset was duly taken into consideration in
formulation of the scheme as contemplated under H
406
SUPREME COURT REPORTS
[2012] 3 S.C.R.,
A Sections 17 and · 18 of the Act of 1985 and appropriate
directions, prohibitory orders were issued within the
ambit and scope of Sections 22(1), 22(3) and 22A of the
Act of 1985. In view of the clear statement of law and facts
of the instant case, there is no merit in the submission
B of the Respondent-Company that the BIFR had no
jurisdiction to pass such directives. [Para 49] [457-B-H;
458-A]
3.5. AAIFR had disturbed the order of BIFR and held
that the contract between the parties could not be
C suspended under Section 22(3) and it was not in the
i111terest of the Respondent-Company. It had permitted the
sale to be completed without any restriction. The High
Court set aside the said order and restored the order of
the BIFR. There is no jurisdictional or other error in the
D order of the High Court in restoring the order of the BIFR.
The land being the primary asset of the RespondentCompany, could not be permitted to be dissolved by sale
01· otherwise without the consent and approval of the
BIFR. The BIFR is the authority proprio vigore and
E required to oversee the entire affairs of a sick industrial
ce>mpany and to ensure that the same are within the
fr•:imework of the scheme formulated and approved by
the Board for revival of the company in accordance with
the provisions of the Act of 1985. On facts as well, neither
F the BIFR nor the High Court had exceeded its jurisdiction
in passing the impugned orders. It is not that the
RE~spondent-Company has been divested of its right by
the BIFR. All that has been done was to suspend the final
transfer of the property in its favour in accordance with
G the provisions of the Act and the limitations imposed
therein. Once the scheme is implemented or the period
specified under the provisions of Sections 22(3) and 22(4)
expires, the declaration would cease to exist and the
appellant would be entitled to enforce its rights in
accordance with law as if no such declaration or
H restriction ever existed. [Para 501 r458-C-G1
RAHEJA UNVIERSAL LIMITED v. NRC LIMITED &
407
ORS.
3.6. The principle of law that emerges, which
A
consistently has judicial benediction, is that a scheme for
rehabilitation or restructuring of a sick industrial
company undertaken by a specialized body like the BIFR/
AAIFR should, as far as legally permissible, remain
obstruction free and the events should take place as preB
ordained, during consideration and successful
implementation of the formulated scheme. Wide
jurisdiction is vested in BIFR/AAIFR to issue directives,
declarations and prohibitory orders within the
rationalized scope and limitations prescribed under c
Section 22(1), 22(3) and 22A of the Act of 1985. [Para 51]
[458-H;459-A-B]
3.7. The order of the BIFR dated 16th July, 2009
which _has merged into the order of the High Court dated
29th July, 2011 is maintained while that of the AAIFR
D
dated 28th May, 2010 is set aside. The parties are directed
to appear before the BIFR which would proceed with the
matter in accordance with law. [Para 54] [459-F-G]
Shree Sajjan Mills Limited & Ors. v. Municipal
E
Corporation, Rat/am (2009) 17 SCC 665; M/s. Shree
Chamundi Mopeds Ltd. v. Church of South India Trust
Association, Madras AIR 1992 SC1439: 1992 (2) SCR 999;
Rambaran Prosad vs. Ram Mohit Hazra AIR 1967 SC 744:.
1967 SCR 293; Dharma Naika v. Rama Naika AIR 2008 SC
F
1276: 2008 (2) SCR 451; Mrs. Saradamani Kandappan vs.
Rajalakshmi & Ors. JT 2011 (8) SC 129; Shalini Shyam
Sheffy & Anr. v. Rajendra Shankar Patil (2010) 8 SCC 329:
2010 (8) SCR 836
Case Law Reference:
G
1990 (1) SCR 966
1997 (2) SCR 1026
Referred to
Para 11, 13,
17, 23, 32
Referred to
Para 12, 23,
33
H
408
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A
2006 (6) Suppl. SCR 189 Referred to
Para 14, 16,
23, 34, 37
(2009) 11 sec 665
Referred to
Para 15
1993 (1) SCR 340
Referred to
Para 32
B
1997 (3) Suppl.