1996 (2) TMI 365 - HC - Companies Law

Court prioritizes Special Securities Act over Sick Companies Act in stay of proceedings application, deeming it frivolous.

The court held that the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 prevails over the Sick Industrial Companies ... Discharge of liabilities Issues Involved:1. Whether the Sick Industrial Companies (Special Provisions) Act, 1985 ('Sick Companies Act') prevails over the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 ('the said Act').2. Whether the application for stay of proceedings under section 22 of the Sick Companies Act is maintainable.Summary:Issue 1: Prevalence of Sick Companies Act over the said ActThe primary legal issue addressed is whether the Sick Companies Act prevails over the said Act. The applicants argued that the Sick Companies Act, by virtue of section 22, suspends all proceedings against a company under inquiry u/s 16. They emphasized that the Sick Companies Act aims to prevent the ill-effects of industrial sickness, which includes loss of production, employment, and revenue, and thus should take precedence over other laws.The court, however, held that the said Act, being a later enactment with its own non obstante clause, prevails over the Sick Companies Act. The court reasoned that the Legislature, aware of the Sick Companies Act, specifically provided in section 13 of the said Act that its provisions would prevail over any other law. The court also noted that the said Act was amended in 1994 to give civil jurisdiction to the court, indicating the Legislature's intent for the said Act to have overriding effect.Issue 2: Application for Stay of Proceedings u/s 22 of the Sick Companies ActThe applicants sought a stay of proceedings under section 22 of the Sick Companies Act, arguing that a reference had been registered u/s 16. The court found that there were no pending proceedings initiated by the custodian or the notified party. Instead, it was the company that had approached the court for extensions of time to make payments, which were granted. The court concluded that since there were no pending proceedings to stay, the application was not maintainable.The court dismissed the application with costs, labeling it as frivolous and ordering the applicants to pay actual costs to the respondent and the custodian.Conclusion:The court ruled that the provisions of the said Act prevail over the Sick Companies Act, and the application for stay of proceedings under section 22 of the Sick Companies Act was dismissed due to the absence of pending proceedings. The applicants were ordered to pay costs for filing a frivolous petition.