State Bank Of India And Others v. Sree Rayalaseema Paper Mills Ltd. And Others

Order

1. Leave granted.

2. The issue raised in these appeals relates to the interpretation of Section 25(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short “the Act”), which expressly provides that the time for preferring an appeal starts from the date on which the copy of the order sought to be challenged is issued to the aggrieved party. The period prescribed for preferring an appeal is 45 days with a condonable further limit of 15 days making a total period of 60 days within which an appeal could be filed.

3. A question has arisen as to whether the phrase “issued to him” in Section 25(1) of the Act includes service on the aggrieved party.

4. In this case, the impugned order of the Board for Industrial and Financial Reconstruction (BIFR) was passed on 2-8-1999. According to the application filed by the appellants before the Appellate Authority under the Act, it is averred that they had received the copy of the order of BIFR on 21-9-1999. They preferred the appeal on 4-11-1999, that is, within the period of 45 days from the date of the receipt and 15 days from the date of issuance of the impugned order.

5. The Appellate Authority accepting that the words “issued to him” in Section 25(1) of the Act, should be construed as actual service, held that there was no reason to disbelieve the statement of the appellant Banks that they had received the impugned order on 21-9-1999. It therefore came to the conclusion that the appeal was within time. The appeal was accordingly admitted. Aggrieved, the respondents filed a writ application before the High Court challenging the admission of the appeal by the Appellate Authority. The learned Single Judge by his order dated 16-3-2000 allowed the writ application of the respondents and held that limitation should be calculated from the date of the pronouncement of the appeal filed by the appellants before the Appellate Authority was barred by limitation and consequently the order of admission passed by the Appellate Authority was quashed.

6. The matter was then carried in appeal before the Division Bench of the High Court. The Division Bench upheld the decision of the learned Single Judge but on a different ground. The Division Bench held that the words “issued to him” must be construed to mean the date of actual issuance and not the date of receipt of the order. It found that the limitation, therefore, started running from 16-9-1999, that is, the date after the recorded date of issuance of the order of BIFR. It was found that since the appeal was presented on the 50th day, it was beyond the period prescribed under the proviso to Section 25(1) of the Act. The Division Bench held that the appeal was, therefore, barred by limitation by 5 days and “as there was no cause for the Appellate Authority to consider whether the reasons for delay of 5 days were plausible or not, the appeal filed by the appellant before the Appellate Authority is time-barred”.

7. Aggrieved by the order of the Division Bench of the High Court, the appellants are before us. The appellant Banks have relied upon the decision of this Court in CWT v. Kundan Lal Behari Lal (1975) 4 SCC 844 and submitted that the High Court had clearly misconstrued the provisions of Section 25(1) of the Act. It is pointed out to us that the word “issued” has been judicially construed as including the entire process of sending notices as well as service thereof. According to the appellants the same reasoning should be followed by this Court in the instant case as far as the provisions under Section 25(1) of the Act are concerned, although the decision in Kundan Lal Behari Lal case (1975) 4 SCC 844 was in respect of the provisions of Section 18(2-A) of the Wealth Tax Act. It is further submitted that, in any event, the High Court should have seen that the period within which the appeal was preferred was a condonable period and that since the Appellate Authority had not, in fact, exercised its discretion on that issue which was basically an issue of fact, the matter should have been remanded back by the High Court to the Appellate Authority for deciding the sufficiency of the cause for the short delay. It is further pointed out that no application for condonation of delay was necessary before the Appellate Authority which had held that the appeal was filed within the period of limitation. Finally, it is submitted that in any event this was not an issue which should have been decided in these proceedings.

8. Learned counsel appearing on behalf of the respondents have submitted that the order of BIFR was a consent order and that the appeal was in any event not maintainable. It is further submitted that Section 25(1) of the Act should be strictly construed particularly having regard to the press note issued by AAIFR regarding the necessity to file appeals immediately after the pronouncement of the order of BIFR. It is further submitted that there had been considerable delay in preferring the special leave petition before this Court and, therefore, this Court should not, in view of these changed circumstances interfere under Article 136 of the Constitution with the order already passed by the High Court. It is finally submitted that the conduct of the appellants was such that this Court should not exercise its discretion in the appellants' favour.

9. The two questions before us are whether there was any delay in preferring the appeal under Section 25(1) of the Act and if there was, whether the delay was condonable or not. As far as the first question is concerned, we do not intend to express any opinion on the construction of Section 25(1) and we leave it open. However, as far as the second question is concerned, even assuming that the appeal of the appellants was time-barred, sufficiency of cause had been shown in the appeal itself by the appellants for condoning the very short delay of 5 days. We do not wish to express any view on the merits of the various contentions raised by the respondents as to whether the appeal should otherwise be entertained by the Appellate Authority nor indeed as to whether the Appellate Authority should interfere with the order of BIFR given the changed circumstances during the interregnum. We make it clear that we are limiting this decision only to the question of the order of admission as far as the Appellate Authority is concerned. The orders of the Division Bench as well as of the learned Single Judge of the High Court are therefore set aside. The matter is restored to the file of AAIFR. As far as the order of stay granted by the Appellate Authority is concerned, although the stay had been vacated by the learned Single Judge on 16-3-2000, at the time of the issuing of notice by this Court on 1-11-2002, this Court had issued an order of status quo with regard to the implementation of the modified scheme as approved by BIFR. We direct that this order of status quo will continue to operate subject to any further direction which the Appellate Authority may make on the submissions of the parties concerned uninfluenced by the continuance of the order of status quo made by this Court. Considering the nature of and the circumstances of the case, we direct AAIFR to decide the matter as expeditiously as possible preferably within a period of four months from the date of the receipt of the order.

10. There shall be no order as to costs.