GHANSHYAM SARDA versus M/S. SHIV SHANKAR TRADING CO. & ORS.

GHANSHYAM SARDA versus M/S. SHIV SHANKAR TRADING CO. & ORS.

The Supreme Court held that the BIFR exclusively retains jurisdiction to determine whether the company is revived or its net worth has turned positive. Civil courts cannot declare the company outside BIFR's jurisdiction. Suits for recovery of money against the company require the express consent of BIFR. The company remains under BIFR's jurisdiction until BIFR determines otherwise; the civil suit for declaration and recovery without such consent is not maintainable. Property sale by the company without BIFR's permission is questionable and is to be assessed by BIFR.

Parties
Appellant: Ghanshyam Sarda; Respondents: M/S. Shiv Shankar Trading Co. & Ors.
Jurisdiction
India
Judgment Date
13 November 2014
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
Appeals allowed; civil court order set aside
Legal Topics
Sick Industrial Companies Act, Jurisdiction of BIFR, Revival of Sick Company, Civil Court Injunction, Recovery of Money
Company Law Sick Industrial Companies Act Jurisdiction of BIFR Revival of Sick Company Civil Court Injunction Recovery of Money

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Parties

Ghanshyam Sarda

Appellant

M/S. Shiv Shankar Trading Co. & Ors.

Respondents

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Whether BIFR retains jurisdiction after net worth becomes positive
  2. 2 Whether civil court can declare a company no longer sick under SICA
  3. 3 Maintainability of civil suit for recovery without BIFR consent

Ratio Decidendi

The Supreme Court held that the BIFR exclusively retains jurisdiction to determine whether the company is revived or its net worth has turned positive. Civil courts cannot declare the company outside BIFR's jurisdiction. Suits for recovery of money against the company require the express consent of BIFR. The company remains under BIFR's jurisdiction until BIFR determines otherwise; the civil suit for declaration and recovery without such consent is not maintainable. Property sale by the company without BIFR's permission is questionable and is to be assessed by BIFR.

Court Disposition

Appeals allowed; civil court order set aside

Orders

  • Order dated 06.01.2014 of Gauhati High Court set aside
  • Title Suit No.166 of 2013 not maintainable insofar as declaration and jurisdiction of BIFR are concerned