Book Review: Idea of Justice by Amartya Sen

Though, like any other person, my mental image of Amartya Sen has always had the element of awe associated with it, not in the least because of the Nobel that he was awarded. In all my attempts at reading his works there arose a consistent feeling of warmth, in part due to the genteel manner with which he address even the scathing criticisms levelled against him and in part due to the overwhelming presence of a uniform train of thought that concerns itself for the betterment of humanity. Both these characteristics of his writings, combined, made his writings a pleasure reading for me. His writings as a philosopher has always had the strand of reasoning that appealed to the rationality within myself, making this book a must read for me. Clearly, as he himself has acknowledged in his several other writings, his education and exposure to the worldly ideas at Shantiniketan, ran by Rabindranath Tagore, has had a great impact in moulding his views. His outlook is global and inclusive at the same time. In a way this book can be seen as a culmination of the broad outlook of ideals that defined his works throughout. For me to peer into one of the greatest mind of contemporary times through his writings is invaluable in its own self. Hence it is with great enthusiasm, which I generally do not associate myself with, that I started reading this book.

Though not a fortuitous happening, Sen, being a contemporary of philosophers like Rawls et al, seems to have enthused by their writings and his encounters with them during his years at Harvard and Oxford clearly has nudged him to explore his own philosophy of what the nature of perfectly just society and its constituent just institutions. Driven by his own conceptions about aspects of a just society he proceeds to expound a possible alternative possibility of a perfectly just society to which a society can work its way to.

Evidently, the Rawlsianism cannot be unlodged as the primary interpretation of justice in the political philosophy in any time soon. Rawlsian theory of justice in effect defined the landscape of debates in 20th Century political philosophy. And it continues to serve as the template upon which any further different forms of understanding of the concepts of Justice is attempted. In this book, invariably, Sen’s exploration of his idea of justice begins with identifying his ideas within the overall construct of Rawls. In fact the first few of the chapters proceeds merely as a criticism of Rawlsian theory of justice. In a condensed form I have tried to produce here only the vital points of criticisms that he mounts up against Rawls

• The Transcendency of Form: While doubting the very fact that multiple and competing principles of justice while surviving the critical scrutiny can simultaneously claim the impartiality after their emergence from the primordial form of ignorance, as is claimed by Rawls, Sen’s argument takes a unique turn when it questions its practical redundancy. His reasoning is that the identification of a perfectly just social arrangement and institutions cannot be done by the emergence of a solitary reasoning rather than a comparative assessment of possibilities. According to Sen, identification of a transcendentally perfect arrangement in no manner addresses the problem one faces while making choices. The vital aspect of this line of reasoning is that he posits an approach with the help of relative assessment and ranking of available social choices in a decision making process. With this he sows the arguments in support of the setup that expounds in the subsequent chapters.
• Accounting Differences & Behaviour: Under the Rawlsian perfectly just society, people are expected to behave justly without an exception and are expected to make such choices that are in line with the choice that stands made by them under the veil of ignorance (a primordial state of unknowingness), a Rawlsian innovation. This according to Sen restricts the possibility of choices without accounting for actual behaviour of members of the contract (for Rawlsian just society is established primarily through a social contract). In all fairness one must accept that there can exists multiple social choices that are impartial and can compete with the reasoning of just institution that already stands identified in the contract. The inherent flaw that is present with Rawl's identification of justice is that the members of a social contract may make a choice, even after agreeing upon a just social mechanism, that could withstand critical scrutiny of rationality while at the same time not necessarily in agreement with the choice made already. This possibility comes across as an inherent contradiction when one takes into account the elementary importance that Rawls accords to liberty. This assumption of a spontaneous emergence of a universal reasonable behaviour on the part of all members of a society comes directly in contradiction to still a large question about how the chosen institutions would work in a world in which everyone’s actual behaviour may or may not come fully into line with the identified reasonable behaviour under the Rawlsian contract. This is one offshoot of the problem of transcendency in Rawlsian approach.
• Parochial Interpretation of Society: While the followers of Rawls has attempted to expand the horizon of his approach to make it more cosmopolitan, it still reeks of the parochial interpretation of society in terms of traditional nation-state theories. This according to Sen restricts the reach of justice in this form for it cannot take into account the effects of a social choice made by a particular set of people over others, i.e. the trans-boundary and external effects of a social choice. Moreover, this also denies the choice makers the information that can make the choice so made sophisticated than what it is.

With these, one might even be tempted to brand this work of Sen as another attempt to overcome the alleged deficiencies in Rawlsian construct and a further extension of it. However, Sen distinguishes himself from those rhetorics with his suggestion of a just social arrangement that is eminently practical, rather than the ‘detached from realities’ arrangements as suggested by Rawls and his followers.

After establishing firmly the deficiencies and inadequate reach of reasoning of Rawls, Sen builds up the case for his conception of justice. There is palpable departure by Sen in his approach to the setup of a just society and the process of decision-making towards such a setup itself. His exposition stands more grounded and practical in its implementation than the transcendental –teeming with multiple infeasible– approach of Rawls. He posits a process wherein all the social choices available are graded according to their relative merits and demerits, rather than identification of a singularly just principle that is expected to govern universally all the choices that are made, without any scope for flexibility. Sen, Rather than confining himself to a mere identification of a just principle, he evinces considerable reasoning for the comparative questions about justice and their social realisations.

Then what according to Sen can be a just social setup? To this end, he draws heavily upon the social choice tradition to construct his version of just society. Though he acknowledges the inherent deficiencies as demonstrated in Condorcet paradox and Arrow’s impossibility theorem, he relies on the broadened informational basis upon which a social choice is made in the social choice theory. Moreover, this conforms to his belief in non-confinement of reasonable and impartial choices that are potentially available for a decision maker while also not restricting the possibility of deviation in behavioural patterns of the people. As far as the process of deciding the rationality of the choices available itself goes, Sen invokes the metaphor of impartial spectator to invoke the concepts of impartiality and reasonableness of any choice. He finds the principles enunciated by Adam Smith in his Theory of Moral Sentiments in this regard to be grossly underrated, which he has vented in an article published earlier as well.[1]

In summation, the form of justice as is conceived by Sen in this work can be simplified in the following terms

• Plurality of Choices: The central requirement for any approach to justice, according to Sen, lies in its recognition of multiple rational and impartial choices in existence. It is not necessarily axiomatic, as is claimed by Rawls, that only one ideal form of justice and social choice that can lead up to it can exist.[2] He reasons that as long as a choice, that is reasonable, survives the critical scrutiny of rationality is based on a possibly wide informational basis can co-exist with others. While the Rawlsian decision-making process, to the contrary, involves the decision to be made under a ‘veil of ignorance’, wherein decision makers are anonymous and do not know anything about their interests or its effects upon their own. This is an informationally starved decision in comparison to Sen’s process, since here no one can possibly put forward any individualistic nuances that can possibly arise post the decision. Here Sen scores over Rawls without resorting to his elaborate setup of devised uncertainty. Rather than looking for a homogeneous virtue in terms of which all values that we can plausibly defend could be explained,[3] the plurality of reasons can be best judged when the competing principles of justice takes[4] on board the task of accommodating different kinds of reasons and evaluative concerns. The recognition that it is possible to order competition principles of justice, while accommodating their diverse qualitative considerations, and still be able to choose the best alternative as the situation demands is innate for any conception of Justice.
• Partial Resolution: This is the crucial contribution made by the author overall to the contemporary debates on justice. While stating that it is possible for partial qualitative ranking of available social choices, it is still more possible for a conflict to remain partially resolved with this partial ranking of choices. In his own words

"One implication of this line of reasoning is the recognition that a broad theory of justice that makes room for non-congruent considerations within the body of that broad theory need not thereby make itself incoherent, or unmanageable, or useless. Definite conclusions can emerge despite the plurality. When the competing concerns reflected in that plurality have far-reaching merits, on the relative strength of which we remain partially undecided, then it would make good sense to try to see how far we can go even without resolving completely the problems of relative weights. And sometimes we can go far enough for the theory to be of very considerable use in application, without sacrificing any of the rigorous demands of each competing line of argument."

This, rather than positing a strictly just society, envisages a situation where such steps lead to incremental enhancement of justice in the world. The relative advantage of this line of reasoning is the fact that even a case of non-resolution of conflicting situation does not necessarily make it unworkable. There is always an ever existing flexibility for a change in the choice so made as and when informationally significant aspects comes to the surface.

All being said and done I still feel that there is yet an aspect that Sen has questionably left open. Ironically, this arises from the strongest of arguments put forward by him. While it is plausible for the recognition of partial rankings and any unresolved conflicts in a social choice, it still leaves the question of how to resolve such noughts that arise directly because of this. He does not deal with this sufficiently, while this has the potential to question his theory overall. One possible solution that I can reasonably locate within his line of thinking is that as and when such seemingly irreconcilable situations arise we can broaden our informational perspective to further enhance the quality of available choices. This could reasonably serve as a solution for the limitations of Sen’s position.

Another limitation that I encountered in this book, though this does not necessarily involve his idea of justice, is his treatment of ethics. This I speak with specific reference to the chapter in which he discusses human rights. While treating human rights as certain ethical claims that stand recognized in the form of legislation, he treats the ethical assertions as fountain through which the human rights legislations arises, all this while he does not in any manner exposit the true nature of ethics in itself, leaving it to our own subjective perception. This acquires certain significance when he bases his argument completely over the overarching importance of ethical proclamations in human rights discourse. Although this is inane as a shortcoming, in terms of its impact upon overall argument put forward by the author, it does come across as a pebble in the shoe.

The limitations apart I would treat this as one of the most important contributions to the contemporary debate in the political philosophy post the Rawlsian era. With his innate and characteristic ability to infuse humanitarian reasoning this work stands out amongst the mechanical, elated and unnecessarily esoteric interpretation of justice that is prevalent in the debates. He stands as a maverick in this landscape for his reasoning in this field and this work is his true trophy.

________________________________________

[1] Adam Smith and the Contemporary World, Amartya Sen, Erasmus Journal for Philosophy and Economics, Volume 3, Issue 1, Spring 2010, pp. 50-67.

[2] See in particular Chapter 9- Plurality of Impartial Reasons

[3] Theory of Justice, Amartya Sen, Pg:394

[4] Ibid Pg:395

Scope and Interpretation of Chapter XII-G of Income Tax

Income tax cases sometimes give rise to peculiar instances in which any decision on seemingly simple-minded issues results in intricate and wide ranging repercussions upon an industry as a whole. This case is one such instance wherein the scope of special concessions granted for shipping industry by introduction of Chapter XII-G in the Income Tax Act was called into question. The question of law that was up for consideration of the Supreme Court was whether the High Court is right in holding that the assesse is eligible for tonnage tax on income received under slot charter arrangement from a ship which does not satisfy the conditions specified under Section 115 VD of the IT Act. It is important to note here that many shipping companies, apart from owning ships for carrying out shipping operations, hires slots for carrying out the operations, which sometimes contributes to the majority of their income. Any narrow interpretation of the chapter shall have adverse repercussions for these companies. The High Court in this case interpreted the case in favour of the assesse. However, the decision raises lot many question as far as interpretation is concerned. It has ignored certain vital aspects of Chapter XII-G while deciding the case. Here I shall try to expound few of those glaring errors in its reasoning. The revenue has challenged the judgement before the Supreme Court wherein arguments have already been heard and the judgement is awaited.

The brief facts of the case that led to this case before Supreme Court is given here for better understanding of the case. The petitioner is a ‘qualifying company’, as per Section 115 VC of the IT Act, whose income is assessable under XII-G of the Act, containing special provision relating to income of shipping companies in sections 115V to 115 VZC.  The assesse is also a ‘tonnage tax company’, whose income is calculated under the tonnage tax scheme under Chapter XII-G of the Act. Apart from owning and operating ships they also chartered ships under the ‘slot charter’ arrangements, wherein only a portion of the ship is chartered for the purposes. While filing his returns, for the income that were received vide the slot charter arrangement, did not submit the valid certificate, referred to in Section 115VX of the Act, to show that the chartered ships are ‘qualifying ships’. The assesse submitted the valid certificate only for those ships that it owned. Further the assesse contended that there is no requirement to submit the certificate for those ships which are chartered under the slot charter arrangement, since the income for the same is computed based on the ‘deemed tonnage’ as defined under Rule 11 Q of IT Rules, unlike the income from a fully chartered ship, which is calculated on ‘net tonnage’ basis. Also it was contended by the assesse that ship is not owned by it and hence the certificate required cannot be procured by them. The Assessing Officer (AO) for want of the ‘valid certificate’ denied the contention of the assesse, consequently denying the benefit, that is accorded under Chapter XII-G for a slot charter, and proceeded to estimate the income from slot charter for the relevant assessment years based on the net tonnage basis derived vide the profit and loss account submitted by the assesse.

Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal dismissed the consequent appeals filed by the assesse. Aggrieved the assesse filed an appeal before the High Court of Kerala. The Hon’ble High Court in its judgement/order allowed the appeal. The Court determined that the basis for determination of income for the purposes of tonnage tax scheme under Chapter XII-G of the Act, meant for the slot charter arrangement, shall be on the deemed tonnage basis. The reasoning for the same is provided as follows

             i.      Section 115 VG of the Act make available the computation of tonnage income, wherein subsection 4 states that tonnage means that the tonnage of a ship indicated in certificate referred to u/s 115VX of the Act and includes the deemed tonnage computed in prescribed manner. The explanation offered in the same section states that for the purposes of the sub-section deemed tonnage shall be the tonnage in respect of an arrangement of purchase of slots, slot charter, whose computation shall be on the basis of Rule 11Q of the IT Rules. Sub-rule 1 of the same make specific reference to Form No.66 of the Rules and the illustrative formula given in the relevant note appearing under that form as regards the sub-rule. For the purposes of Rule 11T the report of audit of accounts has to be mentioned in Form.66, wherein at Sl. No.10 the format of providing computation of tonnage, as per Sec.115VG, income is provided. Column No.1 of the same is the ‘Name of the Ship’, which stands with an asterisk, whose explanation is as under

“There is no need to mention the name of the ship, income from which is computed on deemed tonnage basis”

Therefore it clear that there is no need for providing the valid certificate in case the charter is a slot charter. Consequently, the income shall be calculated on deemed tonnage basis.

        ii.     The reading of Sections 115VB, 115VC, 115VD, makes it clear that, while it is necessary to own at least one ship to become a qualifying company, operating ships may either be owned or chartered by the company. It is also clearly seen that the income derived from slot charter operations by a company shall be included to determine the income of a company, even if such operations are carried on in ships which are not qualifying ships in terms of the provisions of the Act.

              iii.            There is nothing in the act or the rules to indicate that the income which falls within the definition of ‘deemed tonnage’ will be operative only if it is carried out through ‘qualifying ships’.

       iv.      Form No.66, under Rule 11T, provides for the conversion of TEUs into NT for the Slot Charter under Note 3. The same says that the formula for the conversion is provided for converting slots hired into net tonnage, since the slots can be hired all-round the year for short or long terms in varying numbers, therefore it is not possible to convert them to net tonnage just by identifying the particular vessel on which the slot is hired.

The High Court has faltered in not considering the following grounds in its judgement:

The basic requirement for a qualifying company to come within the ambit of tonnage tax scheme is that apart from satisfying other requirements of Chapter-XII G of the Act, is to provide for the proof that the business is carried out in a ‘qualifying ship’. The statute does not in any manner envisage a situation wherein an exemption can be carved out, for the hiring of slot for a charter, from satisfying the requirement of a qualifying ship. Moreover, the primary reliance placed by the High Court upon the provision in a form to interpret the chapter, especially when there are express provisions within the chapter, is a logical fallacy in its least.

The inference can be drawn from Section 115 VI wherein relevant shipping income is defined. Sub-section 6 of the same provides that when a qualifying company operates a ship which is not a ‘qualifying ship’ the income attributable to such operation shall be computed in accordance with the other provisions of this Act. As per this provision, though it merely provides for the income derived from ‘operation’ of a qualifying ship, it cannot be said by any stretch of logic that it only includes such an activity, for such an interpretation will fall foul of the sub-section 2 of Sec 115 V-I, which defines the core activities of a tonnage tax company for the purposes of calculation of relevant shipping income. Apart from this a combined reading of the provisions of the chapter shall make it clear that, though the specific requirement of a ‘qualifying ship’ is not provided anywhere, by necessary implication it shall be applicable for the slot charter arrangement as well. 

As per Section 115VD of the Act, that defines the qualifying ship which can be operated by a qualifying company, for which a valid certificate is necessary. Under Section 115VG it is clear that only a qualifying ship can be operated for the purposes of a slot charter. A combined reading of Section 115VB, 115VD, 115VG will clearly demonstrate that the ship chartered in under slot charter shall be a qualifying ship and the certificate of tonnage is necessary for ships. Therefore, the basic condition necessity that ship should be a qualifying ship cannot be parted with.

Interpretational fallacies of the High Court's judgement apart any parochial interpretation of this Chapter by the court shall result in a situation which will defeat the very purpose introducing this chapter altogether. Any interpretation by the Supreme Court under this chapter which should provide enough leeway for the assessee to accrue the benefits of this chapter even while going for slot charter arrangement. This could be an one off case to rule in favour of the revenue. However, while doing so the court has to be conscious of the fact the repercussions of any blanket restrictions by way of interpretation for slot charter. 

Book Review: Before the Memory Fades

It is not often that you find people who achieve the pinnacle of one’s profession and live to see it. Mr.Nariman, the godfather of Indian bar is one such exception. The very name evokes awe in the minds of many who are a part of the bar and it without any surprises also includes judges who are on the other side of the bar. My first experience of him happened when I was present in the court during his arguments against the proposed NJAC in Supreme Court. I must say there is a quality to his voice and tenor that made me think of Richard Attenborough for a moment. In comparison to the commanding opposition of the Attoney General Mr.Mukul Rohatgi, it was a mellifluous performance that one does not get to witness very often. It is sad that this incandescent voice of the bar is fading due to old age. Naturally as an aspiring member of the bar I picked up this autobiography of his at my first opportunity. With some unexpected eagerness, with which I generally am not associated with for biographies, I started reading the genius of a lawyer’s life. The first few chapters of the book fulfilling my expectations was about his personal life, written in an interesting way laced with sufficient humour to interest the reader. From these pages it is clear that he is from a somewhat well to do background. His professional pedigree too is from the best of stables in the country, chambers of Sir Jamsedji Kanga, of which other stalwarts of the profession like Palkhiwala, Seervai too are a part of. It is actually surprising that even at this age he remembers many interesting incidents at the bar that he fondly reminisces in this book. This part of the book moves without many surprises but with much more gentle humours making it a fast paced interesting albeit not so exciting read altogether.
The real turn in the whole book comes at the stage of his life when he accepts the post of Additional Solicitor General of India and shifts his residence to New Delhi. It happened during the time period when the whole country was at the cusp of radical change of times that will take it into one of most turbulent times that independent India is yet to go through. It was when he was holding this position that the ‘phony’ emergency, as he calls it, was declared in the country, leading to him resigning the post as a form of protest. Considering the then prevailing circumstances when there existed no security even for one’s own life, it was one of the bravest moves that this country has witnessed. As a matter of fact his resignation invited the much needed public attention to the negative effects of the emergency. This particular chapter gives some interesting insight into the mind of the man who mustered the courage to take such a step.
One of the opportunities that Nariman seems to have missed is to appear in the famous Fundamental Rights case (Keshavananda Barati Vs Union of India). His participation in that matter, apart from being a valuable contribution in the case, would have spiced up the reading a little more. The life of a towering personality like him will inevitably touch upon certain watershed moments of Indian judiciary for it is him who played an active role in crafting the outcome of certain number of those pages of history. The subsequent chapters of the book take a definite turn in its tenor and content when he starts to delve into few of those instances. Fraught with controversies even to this day, his decision to defend the Union Carbide in the massive litigation initiated after the Bhopal Gas Tragedy is one such instance. Interestingly he seeks he seeks to justify his stance through this book. Prior to the litigation his reputation for the cause of human rights was internationally celebrated, no less due to his decision not to continue in the post of law officer when the emergency was declared. His reputation in this regard also caused to raise many an eyebrows when he appeared as the lead counsel to defend Union Carbide. In this chapter he explains at length the reality, for much information available to the public are emotionally prejudiced. This chapter in particular helped me no less in understanding several questions that many lawyers are posed in their professional life. Much of the detractors of this decision of Nariman were emotionally opinionated judging him unfairly. But through this chapter he puts up a formidable defence explaining his stance rationally. He has even reproduced two letters (one by renowned Professor Upendra Baxi) that were addressed to him questioning this decision of his. Even prior to reading this book I had several doubts that existed over the role that a lawyer plays in any judicial proceedings. Two extreme forms of reasoning can be had for this question. In one form he is seen as someone who can appear on behalf of anyone that he pleases and in the other he has to judge the cause before entering his appearance. Gandhi, as a lawyer chose the second path. He rejected any cause which he believed is not just. This reasoning of Gandhi is somewhat irrational, for he judges upon the cause of a person even before he is afforded an opportunity before the court. The detractors of this decision of Nariman too sound the like. This reasoning may somewhat put the lawyering as anything for money profession, but the role of a lawyer in judiciary itself calls for it. I personally am not able to see any incongruity in this reasoning and I find it to be rationally robust. As this subject needs separate detailed critical examination I shall refrain from digging further on this. Apart from justification or rather explanation that he offers for his stance in this controversial case, he also offers many judicial solutions to work out of such intricate situations which create difficulties both judicially and emotionally. It does seem to look a little out of place since he himself was and always has been in a veritable position to make such changes. In one page he even offers somewhat of an explanation to this as well, albeit not so convincingly.
The next important chapter is where he narrates his experience as a nominated member of Rajya Sabha (Upper House) of the Parliament. How much ever he seems to have loved it and portrayed it to be a very useful stint as the member, one cannot escape the feeling that his membership was not of much consequence. This is definitely not a surprising when considering the fact that he is nominated member without any party affiliations. Within the political landscape that is fraught with ulterior political motives in every move made, there is little that a sole member can do without the support of major parties on the floor. At its very best his membership did indeed offer the infusion of intellect in the debates held on the floor, sufficing the purpose of his nomination for the membership.
Throughout the passages one can witness the passion that this man holds for this profession. It is hard to miss that in those seemingly autobiographical passages is hidden the man’s eagerness to deliver the message about the ideals for which the profession of advocacy stands for. Hidden is his lament over the disgraceful fall of standards. Nevertheless, more than his reminiscences about the yesteryear members of the bar, who upheld the ideals of the profession, the man himself stands as an exemplar for the wannabes. One thing that I sorely missed in the book is the absence of any interesting information about his maverick of a son Rohinton Nariman. It would have been interesting, personally, to know a little more about the life of Rohinton, whose trailblazing performance as a judge in Supreme Court is raising the standards in the Indian judiciary. All in all this is an extremely interesting read and well serves as an inspiration for aspiring lawyers and lawyers alike.

Recovery of Workmen's Dues Against Sick Company- An Overview

It is always interesting when two important statutory rights are tested for their prominence over each other. In a recent case that I dealt with I had an opportunity to witness one such instance. In this case the dispute was between the petitioner and respondent who claimed their rights under The Sick Industrial Companies (Special Provisions) Act, 1985 and Employees Provident Funds and Miscellaneous Provisions Act, 1952. It is an irrefutable fact that both the parties are conferred with substantial rights which cannot be brushed aside lightly.

In this case the dispute was over the recovery of statutory dues that are to be paid by a company, which is declared to be sick, to its workmen along with consequential damages and interest for delay in its payment. The primary question of law that was up for the consideration of the Court in the case was upon the overriding effect of Sick Industrial Companies Act (SICA) over other statutes. This especially has to be seen in the context of the case wherein the dispute involves the Employees Provident Funds Act (EPC Act). The relevant provision, Section 22 of SICA, which acts as a non-obstante clause is reproduced below.

22. Suspension of legal proceedings, contracts, etc.—

(1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof 32 [and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company] shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.

From the above provision it clear that the intention of the legislature is to provide precedence to the revival of a sick industrial undertaking, for which necessary steps already stands initiated under the relevant provision of the SICA. The underlying reasoning for this protection that is offered for sick companies is to provide a veritable opportunity for their commercial revival. This fact, as contemplated by the legislature while enacting SICA, was duly countenanced by the Supreme Court in the case of Maharashtra Tubes Ltd. Vs. State Industrial and Investment Corporation of Maharashtra Ltd. (1993) 2 SCC 144. There it was held as follows:

The purpose and object of this provision is clearly to await the outcome of the reference made to BIFR for the revival and rehabilitation of the sick industrial company. The words or the like' which follow the words 'execution' and 'distress are clearly intended to convey that the properties of the sick industrial company shall not be made the subject-matter of coercive action of similar quality and characteristic till the BIFR finally disposes of the reference made under 15 of the said lent. The legislature has advisedly used an omnibus expression' the like' as it could not have conceived of all possible coercive measures that may be taken against a sick undertaking.

This proposition abovementioned has been followed in many subsequent decisions. However, it is of importance to note that all the decisions, albeit upholding the primacy of SICA, were declared to be so in specific context of certain legislations which were subject matter of challenge in those cases. Few important decisions to this effect are as follows:

a.   Jay Engg. Works Ltd. Vs. Industry Facilitation Council (2006) 8 SCC 677: In this case the Supreme Court upheld the primacy of SICA against the proceedings initiated for delayed payments under Small Scale and Ancillary Industrial Undertakings act, 1993,  upon a sick company. It was specifically held that any coercive measures against a sick company cannot be initiated, except with the prior consent of the board.

The said provision, thus, mandates that no proceeding inter alia for execution, distress or the like against any of the properties of the industrial company and no suit for recovery of money or for the enforcement of any security, shall lie or be proceeded with further, except with the consent of the Board or as the case may be, the Appellate Authority. The said statutory injunction will operate when an inquiry had been initiated under Section 16 or a scheme referred to under Section 17 is under preparation and/ or inter alia a sanctioned scheme is under implementation. It is not disputed before us that the amount awarded in favour of the Respondent by the Council finds specific mention in the sanctioned scheme which is under implementation.

b.   Raheja Universal Limited Vs. NRC Limited & Ors (2012) 4 SCC 148: As mentioned above in this note, the Apex Court while observing specifically that cases discussed therein (Shree Vallabh Glass Works Ltd. (1990)2 SCC 440; Jay Engg. Works Ltd. Supra) the facts of the cases are distinct the conclusions thereof are to read in reference to those facts. However, it went on to clarify that there is no conflict as far as the protection that is to be granted under Section 22 of the SICA. It is worthy mention here that the proposition was upheld in the context of Transfer of Property Act.

55. Despite these judgments and with an intention to clarify the law, we would state that the matters which are connected with the sanctioning and implementation of the scheme right from the date on which it is presented or the date from which the scheme is made effective, whichever is earlier, would be the matters which squarely fall within the ambit and scope of Section 22 of the Act of 1989 subject to their satisfying the ingredients stated under that provision. This would include the proceedings before the civil court, revenue authorities and/or any other competent forum in the form of execution or distress in relation to recovery of amount by sale or otherwise of the assets of the sick industrial company. It is difficult for us to hold that merely because a demand by a creditor had not been made a part of the scheme, pre or post-sanctioning of the same for that reason alone, it would fall outside the ambit of protection of Section 22 of the Act of 1985.

56. The BIFR, being a specialised body which is required to act as per the legislative intent indicated above, has jurisdiction to examine the matter and grant or refuse its consent for institution, continuation and recovery of dues payable to a particular creditor, whatever the nature of such dues may be. If such an interpretation is not given, the very purpose of the Act of 1985 may stand defeated. For instance, a scheme is sanctioned by the BIFR and is at the stage of successful completion, where demand from the Revenue with regard to the sick industrial company is allowed, this can render the scheme ineffective and impossible to be executed, if permitted to be enforced against such company without approval/consent of the specialised body like the BIFR.

c.  Ghanshyam Sarda Vs. Shiv Shankar Trading Company & Ors. (2015) 1 SCC 298: A more recent decision on this subject matter. In this case while discussing the cases cited hereinabove extensively the Supreme Court declared that the provisions of SICA has to necessarily be given effect to, for the purposes of revival of a sick company. Moreover, the non-obstante clause provided under Section 22 of SICA necessarily extinguishes the jurisdiction to any other forum provided thereunder. It was also observed that during the entirety of implementation of scheme SICA grants protection to the company and leaves it to the discretion of BIFR whether to permit filing and maintaining of suit or other proceedings.

In the context of recovery of provident fund and other allied dues from a company, which is admittedly a sick undertaking was decided in the case of S.L.M. Maneklal Industries Ltd. Vs. Regional Provident Fund Commissioner 1997 (2) LLJ 283. The High Court while relying upon the case of Chamundi Mopeds v. Church of South India Trust 1991 (75) Comp. Case 440, to interpret the term "or the like" with reference to the words preceding namely, "for execution, distress" in Section 22 of SICA, held as follows

In the light of the steps taken by the Board under Sections 16 and 17 of the Act, no proceedings for execution, distress or the like proceedings against any of the properties of the petitioner-Company shall lie or to be proceeded further including the proceedings under the Act of 1952 except with the consent of the Board. The provisions are also in consonance with the principles of equity, inasmuch as that the Board has been given discretion to accord its approval for proceeding against the company by creditors, for the recovery of their dues, outstanding over-dues or arrears. Since the enquiry under Section 16 is ordered by the Board, the various proceedings set out under sub-section (1) of Section 22 are deemed to have been suspended under the provision does not extinguish the recovery but it only postpones, sub-section (5) of Section 22 provides for exclusion of the period during which the remedy is suspended while computing the period of limitation for recovering the dues.

In view of the aforesaid, the impugned notice dated July 28, 1995 for recovery of the arrears of Provident Fund and allied dues is ex facie illegal and is accordingly quashed and set aside. It is, however, open to the Respondent to approach the Board for appropriate directions under the provisions of the Act of 1985. @Para 5 & 6

As mentioned in the previous paragraphs, in specific context of recovery of Provident Fund (PF) dues, the interpretation offered for the overriding effect of SICA from the likes of Shree Chamundi Moped (Supra) case has not been followed in many subsequent cases. In all such cases it was held that holding the protection of SICA cannot be granted for provident fund dues, however upon different reasoning. Since mentioning all such decisions here will unnecessarily make this post lengthy only a few of those decisions are mentioned in the foot note hereunder.[1]

At this juncture an important question, as to the protection of SICA in the context of PF dues, arises. One of factor that is of fundamental importance, which has been ignored in the above mentioned case laws, is that the coercive action contemplated under the EPF Act such as executions, distress or similar process, for the recovery of dues remains the same. Such actions have specifically been deprecated by the Supreme Court in the above mentioned case laws. Technically, while the law as held by the Supreme Court in this background is holding the ground all the above mentioned case law does not hold good, for its reasoning goes against the ratio laid down by the Apex Court.

In the same subject matter a decision rendered by a division bench of Karnataka High Court[2], specific to the context of recovery of PF dues and accumulated interest therein, attains some significance. It was held that the punitive measure as initiated is liable to be quashed, as it was done without the express permission of the board. Extract of the relevant paragraph has been provided below.

It is not possible to accept the contention of the learned counsel for the appellants that the orders at Annexures-"E and F" are not punitive in nature as the said coders clearly commands that the writ petitioner should pay interest and penal damages as per the demand at Annexures "E and F" failing which steps would be taken for recovery of the amounts without further nonce under Sections 8B to 8G of EPF Act Section 8B to 80 of the EPF Act deals with recovery of dues towards PF Contribution including power to sell the property belonging to the company and the impugned orders at Annexures-"E and F" are issued stating that without further notice, such coercive steps would be taken. The orders do not spell out that the orders are only for determination of interest and penal damages and that it will not be executed without the consent of the BIFR. Therefore, the contention of the learned counsel appearing for the appellants that the orders at Annexures-"E and F" are not punitive in nature cannot be accepted. As rightly held by the learned Single Judge when once it is held that Annexures-"E and F" are hold to be punitive in nature, the provisions of Section 22(1) of the SICA Act gets attracted and as admittedly no consent is obtained the orders cannot be sustained and are liable to be quashed.

Case laws abound the legislations pitted against each other, prima facie, though may seem to be placed upon an equal pedestal, one cannot deny the obvious bias that exists towards the workmen and their cause. At any rate the abuse of Sick Industrial Companies Act that is prevalent leaves much to be desired. Unfortunately companies without sufficient bona fides take the protective umbrella of the legislation with sole intention to avoid temporarily their statutory duties. Therefore it is imperative that the workmen are allowed the protection against such an abuse. To that extent large number of case laws affirms this point of view and rightly so.

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[1] 2002 (1) LLJ 775

  2001 (2) LLJ 1423

  2001 (2) LLJ 1193

  2002 (1) LLJ 30 (AP)

[2] Doddaballapur Spinning Mills Pvt. Ltd. (rep. by its M.D.) Vs. Regional Provident Fund Commissioner and Ors. W.P. Nos. 46277 and 52330/2003