Hon'ble Judges/Coram:
S.C. Agrawal and S.V. Manohar

JUDGMENT

S.C. Agrawal, J.

1. This appeal, by special leave, is directed against the judgment of the Allahabad High Court dated December 9,1994 in Civil Miscellaneous Writ Petition No. 27998 of 1994 filed by respondents Nos. 1, 2 and 3 whereby it has been held that the U.P. State Sugar Corporation Ltd., appellant hereinafter referred to as 'the Corporation') was not entitled to alienate its assets in view of the pendency of the proceedings before the Board of Industrial and Financial Reconstruction (hereinafter referred to as 'the Board') under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'the Act').

2. The Corporation is a company registered under the Companies Act, 1956. The State of U.P. holds 99.9% shares in the Corporation. The Corporation was incorporated with the object of taking over and running the private sugar mills which had been acquired by the State of U.P. under the U.P. Sugar Undertakings (Acquisition) Act, 1971. 29 such sugar mills had been acquired and the Corporation has established 6 more units and at present it is holding 35 sugar units spread over the State of U.P. The 29 sugar mills which had been acquired were old units and some of them were established nearly forty years prior to their acquisition in 1971. Their plant and machinery were obsolete and the units functioned at a very low capacity. Their operations were highly unprofitable and consequently the Corporation has been suffering continuing losses. In August 1992, the Government of U.P. took a policy decision to privatize some of the units of the Corporation and a Privatisation Committee comprising senior officials of the State Government after examining the matter came to the conclusion that the sale of continuing losses making units was absolutely necessary. The Board of Directors of the Corporation considered the matter and on February 27,1993 they resolved that 8 of the units at Meerut, Bareilly, Barabanki, Burhwal, Nawabganj, Munderwa, Baitalpur and Ghughli be initially privatised. The said proposal for sale of units was accepted by the State Government and the said decision was communicated to the Corporation on September 4, 1993. The State Government also formed a Committee to recommend the procedure to be followed for such sale. The said Committee submitted its report on October 19, 1993 wherein the details of sale procedure to be followed was set out. This report was again considered by the Privatisation Committ........