M.M. Kumar, J.@mdashThis petition filed under article 226 of the Constitution prays for issuance of direction to the respondents to implement the rehabilitation scheme, dated January 10, 2007 (P5), which has been sanctioned by the Board for Industrial and Financial Reconstruction (for brevity, "the BIFR"). The petitioner-company has also challenged the order dated September 13, 2000 (P1), passed by the Assessing Authority for Cess-cum-Member Secretary, Haryana State Board for Prevention and Control of Water Pollution, u/s 11 of the Water (Prevention and Control of Pollution) Cess Act, 1977 (for brevity, "the Cess Act") raising the demand of Rs. 8,16,851 on account of water cess payable by the petitioner, imposing the penalty of equivalent amount as well as interest of Rs. 7,49,418, total of which comes to Rs. 23,82,120. The order dated March 15, 2011 (P4), passed by the appellate authority, dismissing the appeal preferred by the petitioner-company u/s 13 of the Cess Act against the order dated September 13, 2000, has also been challenged. Still further, the communication dated April 20, 2010 (P8) has also been challenged whereby it has been asked to make payment of the outstanding amount of Rs. 23,83,120 before the sale of surplus assets of the petitioner-company and to avoid action under the Cess Act. The undisputed facts of the case are that the petitioner-company is engaged in the business of processing of textiles, having its processing unit at Faridabad. Due to recession in the international market, it started incurring losses and in the year 1996 an application u/s 25N of the Industrial Disputes Act, 1947, was filed before the Specified Authority-cum-Joint Labour Commissioner, Haryana, seeking permission to retrench surplus 991 workmen out of 2,163 workmen, which was allowed. Another application u/s 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for brevity, "the SICA") was filed before the BIFR. On October 4, 1996, the petitioner-company was declared as a sick industrial company in terms of section 3(1)(o) of the SICA.
2. It has been claimed that despite the complete lock out in the factory and the fact that with effect from September 12, 1996 the workers'' union took forceful possession of the plant, machinery and office of the petitioner-company, it continued to pay water cess from 1993 to 1996 at the rate of Rs. 85,000 on actual consumption basis. However, on September 13, 2000, the assessing authority of the respondent Haryana State Pollution Control Board-respondent No. 2, exercising powers under sections 10 and 11 of the Cess Act, raised the total demand of Rs. 23,83,120, which includes water cess, penalty and interest (P1). Feeling aggrieved, the petitioner-company filed an appeal on October 11, 2000 u/s 13 of the Cess Act, for setting aside the order dated September 13, 2000. It was specifically highlighted in the appeal that since the petitioner-company has been declared as a sick company by the BIFR on October 4, 1996, therefore, as per section 22 of the SICA no recovery could be effected from it without seeking prior permission from the BIFR. It was further stated that even the assets of the company could not be disposed of or alienated without the permission of the BIFR (P2). The appellate authority, however, dismissed the appeal on the merits, vide order dated March 15, 2001 (P4). With regard to the fact that the matter was pending before the BIFR and that the petitioner-company has been declared as a sick company, the appellate authority in the concluding paragraph of its order made the following observations:
However, the point raised by the company, that the dues are not recoverable after their cases has been registered with the BIFR, may be examined by the assessing authority. The appellant also raised the issue, that when the case is registered with the BIFR, it is wrong to impose penalty or charge interest and also to lodge proceedings under the Land Revenue Act for recovery of dues. The assessing authority will look into the matters at his own level and take suitable action. The appeal does not lie in this case.
3. It is, thus, evident that the appellate authority under the Cess Act has left it open for the assessing authority to apply his mind on the aforementioned issue and take a decision by examining the issue at his own level.
4. On January 10, 2007, the matter before the BIFR came up for consideration and after considering the suggestions and rival contentions of the parties, a rehabilitation scheme under the provisions of section 19(3) read with section 18(4) of the SICA was finalised, which has been placed on record (P5). Respondent No. 2--Board was a party before the BIFR. The representative of respondent No. 2--Board, namely, Shri P.K. Sharma, was present during the proceedings. In paragraph 12 of the order dated January 10, 2007, it has been specifically directed that the various Government and statutory authorities including the Haryana State Pollution Control Board would reassess their demands after taking into account the period for which the petitioner-company had remained closed.
5. In paragraph 13 of the petition, the petitioner-company has given the details of debts/liabilities which have been discharged by it when the proceedings were pending before the BIFR and even thereafter. The respondents, however, did not accept in principle that the rehabilitation scheme prepared by the BIFR was the rehabilitation scheme finalised by the BIFR (P6 colly). The petitioner-company also applied under the Right to Information Act, 2005 for supplying the reasons for not implementing the directions of the BIFR (P7). On April 20, 2010, a reply has been sent by respondent No. 3 stating that there is no provision to waive the interest/penal charges for default or non-payment of any dues under the Cess Act (P8). Faced with the action of the respondents, the petitioner-company has filed the instant petition.
6. In the written statement filed on behalf of respondents Nos. 2 and 3 there is no denial of the factual position. It has been reiterated that there is no provision in the Cess Act for waiving the water cess as claimed by the petitioner-company. The BIFR has made only a recommendation which is not binding upon them. It has been specifically admitted that no appeal against the order dated January 10, 2007 (P5), passed by the BIFR has been filed by respondents Nos. 2 and 3.
7. We have heard learned counsel for the parties at length and perused the paper book with their able assistance. It is a conceded position that the petitioner-company has been declared as a sick company by the BIFR on October 4, 1996 under the provisions of section 3(1)(o) of the SICA Eventually, vide order dated January 10, 2007, the BIFR has also formulated a rehabilitation scheme for revival of the petitioner-company, which has been duly approved in the presence of representatives of various parties including the respondent-Pollution Control Board. In paragraph 12 of the order dated January 10, 2007, the BIFR has specifically issued directions to various Government and statutory authorities including the respondent-Pollution Control Board that they would reassess their demands after taking into account the period for which the petitioner-company had remained closed. In paragraph 7(B)(x) of the rehabilitation scheme, in respect of the dues of the State Government of Haryana and its agencies, the following proposal has been approved by the BIFR:
(x) State Government of Haryana:
(a) To declare the company as a ''Relief Undertaking'' and grant all benefits and concessions as per the State Government''s policy guidelines for sick industrial units.
(b) To accept the payment of power charges based on actual consumption of power for August and September, 1996, i.e., till the company was in operation, after adjustment of the security deposit lying with them. The payment shall be made over a period of twelve months from the date of sanction of scheme on interest free basis and to waive the entire minimum demand charges, slow meter charges, late payment surcharge, interest, penalty meter rent, meter charge or any other charges etc.
(c) To accept the payment of water cess as based on actual discharge till the company was in operation, as per past average. The payment shall be made over a period of twelve months from the date of sanction of the scheme and to waive the entire interest, penalty etc.
(d) To waive interest/penal interest/penalty/damages, etc., for the defaults or for non-payment or for delayed payment of any dues payable to the State Government.
(emphasis added)
8. Once the rehabilitation scheme has been approved by the BIFR in the presence of the representative of the respondent-Pollution Control Board and it is their own admitted case that no appeal against the order dated January 10, 2007 passed by the BIFR has been filed before the Appellate Authority for Industrial and Financial Reconstruction (for brevity, "the AAIFR") by the respondent-Pollution Control Board, then the rehabilitation scheme would be binding on all the parties before the BIFR. We find no force in the argument raised on behalf of the respondent-Pollution Control Board that the rehabilitation scheme is not binding on them and there is no provision in the Cess Act for waiving the penalty and interest.
9. Even otherwise once a company is before the BIFR, section 22 of the SICA would come in operation. It would be profitable to reproduce the relevant part of section 22 of the SICA, which reads thus:
22. Suspension of legal proceedings, contracts, etc.--(1) Where in respect of an industrial company, an inquiry u/s 16 is pending or any scheme referred to u/s 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal u/s 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advances granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.
(emphasis added)
10. A perusal of the aforesaid provision would show that where in respect of an industrial company, amongst other things, a sanctioned scheme is under implementation then notwithstanding anything contained in any other law, no proceedings for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against or of any guarantee in respect of any loans or advances granted to the industrial company is to lie or be proceeded with further except with the express permission of the BIFR or the AAIFR as the case may be. The aforesaid provision came up for consideration before the hon''ble Supreme Court in the case of
