IN THE DELHI HIGH COURT 

Dr. A. M. Singhvi and Ajay Kumar Jain for the petitioner. 

Rohit Kumar for respondents Nos. 3 to 5. 

Rajiv Shakdhar for respondents Nos. 6 to 8. 

Sumant Batra for respondent No. 7. 

Ms. Geetanjali Mohan for respondent No. 15. 

JUDGMENT 

The judgment of the court was delivered by 

DALVEER BHANDARI J. - The petitioner in this petition has prayed that the order dated June 10, 1996, of the Appellate Authority for Industrial and Financial Reconstruction be set aside/quashed and paras. 18(a), 18(b) and 18(d) of the order dated April 30, 1996, be also set aside and quashed and also para. 3(iv) of the impugned order dated June 10, 1996. 

The petitioner-company was aggrieved by the sanctioned scheme and prayed that the scheme be modified in the following terms : 

(i) no interest is payable by the petitioner-company for the period from April 1, 1995, till the date of payment of one time settlement amount of Rs. 23.23 crores; 

(ii) the petitioner-company should not be directed to pay sales tax to the U.P. State Government; 

(iii) the scheme to be modified by which all the shareholders of the sick industrial company, i.e., SSL, are bound by the scheme sanctioned by the Board for Industrial and Financial Reconstruction and they have to compulsorily transfer the shareholding in favour of the new promoters, i.e., the petitioner. 

We would take up the other two grievances of the petitioner-company before dealing with the grievance of liability to pay interest amount. During the course of the arguments, learned counsel for the petitioner, agreed to pay the amount to the State of Uttar Pradesh towards sales tax liability. Therefore, it is not necessary to deal with this grievance of the petitioner. 

The petitioner submitted that all the shareholders of the sick industrial companies are bound by the scheme, sanctioned by the Board for Industrial and Financial Reconstruction and they have to compulsorily transfer the shareholding in favour of the new promoters. We do not find any merit in this prayer of the petitioner and the same is accordingly rejected. 

Therefore, we are really left with one main prayer of the petitioner, i.e., the liability of payment of interest by the petitioner-company. 

Dr. Singhvi, learned counsel for the petitioner, submitted that the scheme was sanctioned on December 29, 1995. The scheme dated December 29, 1995, along with order dated December 22, 1995, was despatched to the petitioner by the Board for Industrial and Financial Reconstruction on January 5, 1996, and the same was received by the petitioner-company on January 18, 1996. According to the sanctioned scheme the petitioner was given two months time to make payment. Therefore, the petitioner could pay the amount up to Match 18, 1996, without incurring any liability to pay interest. He further, submitted that it is the well settled principle of law that interest is payable on default or omission in carrying out the obligation. In the instant case, even according to the sanctioned scheme, the petitioner could legitimately pay the amount up to March 18, 1996. Therefore, the order of the Appellate Authority for Industrial and Financial Reconstruction to pay the interest from April 1, 1995, is ex facie erroneous, illegal and unsustainable in law. 

We have carefully examined the main contention raised by the petitioner. The scheme was sanctioned by the Appellate Authority for Industrial and Financial Reconstruction on December 29, 1995, and according to that scheme, two months' time was granted to the petitioner-company, to pay the amount. It has been submitted on behalf of the petitioner that the scheme dated December 29, 1995, along with order dated December 22, 1995, was despatched to the petitioner by the Board for Industrial and Financial Reconstruction on January 5, 1996, and the same was received by the company on January 18, 1996. Therefore, their liability, if any, would arise after two months from January 18, 1996. The submission of the appellant cannot be accepted because the scheme was sanctioned on December 29, 1995, and the petitioner-company was fully aware of this. Therefore, the time spent in receiving the copy of the scheme or order from the Appellate Authority for Industrial and Financial Reconstruction cannot be excluded and the petitioner cannot be given benefit of the same. 

According to our considered opinion, the petitioner's liability to pay the interest amount would start after the period of two months from December 29, 1995, the date from which the scheme was sanctioned. In other words, the petitioner-company could pay the entire amount without any liability of interest by the end of February, 1996. The omission or default for non-payment would arise from that point of time till the payment. The petitioner-company is under an obligation to pay the interest amount from March 1, 1996, till the date of payment, and not from April 1, 1995. The petitioner-company is directed to pay this amount forthwith. 

In view of our above findings, the writ petition is partly allowed. The liability of interest shall arise on account of default from March 1, 1996, till payment. The scheme as sanctioned by the Appellate Authority for Industrial and Financial Reconstruction is modified to the extent indicated. The writ petition is partly allowed and is accordingly disposed of.