1998 (6) TMI 491 - HC - Companies Law

Writ petition seeking revenue recovery dismissed due to lack of locus standi and legal enforceable right

The court dismissed the writ petition seeking a mandamus for revenue recovery proceedings under the Tamil Nadu Cooperative Societies Act, 1983. The ... Suspension of legal proceedings, contracts etc. Issues Involved:1. Issuance of writ of mandamus for revenue recovery proceedings under section 48(a) of the Tamil Nadu Cooperative Societies Act, 1983.2. Locus standi of the petitioner to file the writ petition.3. Applicability of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, on revenue recovery proceedings.Detailed Analysis:1. Issuance of Writ of Mandamus for Revenue Recovery Proceedings:The petitioner requested a writ of mandamus directing respondents 1 to 3 to initiate revenue recovery proceedings under section 48(a) of the Tamil Nadu Cooperative Societies Act, 1983, for recovering nearly Rs. 87 lakhs from the fourth respondent, which was due to the fifth respondent society. The petitioner, an employee and shareholder of the fifth respondent society, argued that the fourth respondent had deducted loan amounts from employees' wages but failed to remit these amounts to the society since 1993. Despite repeated requests and notices, the fourth respondent did not pay the dues, causing significant hardship to the employees. The petitioner contended that respondents 1 to 3 had a statutory duty under section 48 to recover the amount due to the society through revenue recovery proceedings, which they failed to discharge.2. Locus Standi of the Petitioner:The fourth respondent challenged the petitioner's locus standi, arguing that the petitioner was not authorized by the fifth respondent society or other employees to file the writ petition. According to the fourth respondent, only the secretary of the society or a person authorized by the bye-laws could initiate such proceedings. Furthermore, the fourth respondent claimed that the petitioner was no longer a creditor as the amount due to him had already been paid. The court upheld this contention, stating that the petitioner, being merely a shareholder and not a creditor, had no standing to file the writ petition. The court noted that there was no evidence suggesting that the society was incapable of seeking legal remedies or was colluding with the fourth respondent to stall recovery proceedings.3. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985:The fourth respondent argued that no recovery proceedings could be initiated due to the bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The fourth respondent had registered its name with the Board for Industrial and Financial Reconstruction (BIFR) as a sick industrial company, and an inquiry under section 16(2) of the Act was ongoing. The court referred to the Supreme Court's decision in Real Value Appliances Ltd v. Canara Bank, which clarified that once a company's reference is registered with the BIFR, an inquiry under section 16 is deemed to have commenced, triggering an automatic stay on all recovery proceedings under section 22. The court concluded that since the fourth respondent's name was registered and an inquiry was ordered, section 22's bar on recovery proceedings applied, and a writ of mandamus could not be issued.Conclusion:The writ petition was dismissed on the grounds that the petitioner lacked locus standi and that section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, barred the initiation of recovery proceedings. The court emphasized that a writ of mandamus could only be issued where the petitioner had a legally enforceable right, which was not the case here. Consequently, the petition and the connected miscellaneous petition were dismissed without costs.