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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protecting  our industries against foreign competition on the ground  that it  has given  rise to  an inefficient  and outdated industrial  system in  our country.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.