Full Judgment Text
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PETITIONER:
DEPUTY COMMERCIAL TAX OFFICER & ORS.
Vs.
RESPONDENT:
CORROMANDAL PHARMACEUTICALS & ORS.
DATE OF JUDGMENT: 12/03/1997
BENCH:
J, B.P. JEEVAN REDDY
ACT:
HEADNOTE:
JUDGMENT:
O R D E R
B.P. JEEVAN REDDY, J.
I agree respectfully with the opinion prepared by my
learned brother K.S. Paripooran, J.
Looking at the provisions of the Sick Industrial
Companies (Special Provisions) Act, 1985 [ the Act], I was
wondering how out of tune the Act has become with the
economic policies being pursued now in this country. Since
1991-92, we are launched upon, what is being called,
liberalisation of our economy. We have given up the policy
of protecting our industries against foreign competition on
the ground that it has given rise to an inefficient and
outdated industrial system in our country. Our industries
are suddenly being asked to compete with foreign companies,
many of whom being giant multi-nationals have vast resources
at their disposal. They are merrily gobbling up our poor
native companies. Many local industries, unable to stand the
said competition are joining the foreign giants in one form
of venture or other. Several hundreds of small-scale and
medium scale units in telecom sector, for example, have
suffered enormously because of our love for foreign
companies and their capital. The state of several public
sector companies is no better. I am not saying that we have
totally embraced, what may be called "Reaganism" or
"Thatcherism". The fact, however, remains that it is no
longer thought advisable to keep alive inefficient and
uneconomic industries by injecting public funds or in the
name of safeguarding the employment of the workers. And here
is this Act, a product of the era of protectionism seeking
to keep alive "sick" companies by pumping in funds - mostly
public funds - and by providing various concessions. In the
process, nobody enquires why a particular industrial company
has become sick, viz., whether it is an induced one or
whether it is on account of factors beyond their control.
The object of the Act is undoubtedly laudatory but it must
also provide for appropriate measures against person
responsible where it is found that sickness is caused by
factors other than circumstances beyond the control of the
management. It is also a well-known fact that the
proceedings before the Board of Industrial and Financial
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Reconstruction take a long time to conclude and all the
while the protective umbrella of Section 22 is held over the
company which has reported sick. We have come across cases
where unfair advantage is sought to be taken of the
provisions of Section 22 by certain industrial companies -
and the wide language employed in the section is providing
them a cover. We are sure section 22 was not meant to breed
dishonesty nor can it be so operated as to encourage unfair
practices. The ultimate prejudice to public monies should
not be overlooked in the process of promoting industrial
progress. We are quite sure that the Government is fully
alive to the situation and are equally certain that they
must be thinking of necessary modifications in the Act.
These few observations are meant merely to record the need
for changes in the Act.