Lease ownership and territorial jurisdiction: leased equipment stayed lessor property, so the sickness bar did not apply.

Jurisdiction under clause XII of the Letters Patent was treated as available because the petitioners carried on business in Bombay, lease rentals were payable there, the respondents had an office there, and arbitration was being conducted there; a claimed closure of the Bombay office did not defeat territorial jurisdiction. Section 22 of the Sick Industrial Companies Act was held inapplicable because the leased equipment remained the petitioners' property under the lease, with no title passing to the respondents. Temporary fixation of the equipment for operational use did not convert it into immovable property, and payment of customs or excise-related charges did not confer ownership. The petition was therefore maintainable and a receiver could be appointed.

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Issues: (i) Whether the Court had jurisdiction to entertain the petition notwithstanding the objection based on clause XII of the Letters Patent and territorial limits. (ii) Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred the petition for appointment of a receiver over the leased equipment.

Issue (i): Whether the Court had jurisdiction to entertain the petition notwithstanding the objection based on clause XII of the Letters Patent and territorial limits.

Analysis: The petitioners carried on business in Bombay and the lease rentals were payable there. The respondents also had an office in Bombay, and the arbitration proceedings were being conducted in Bombay. In these circumstances, the mere assertion that the Bombay office was closed at the relevant time did not destroy jurisdiction. The objection founded on clause XII of the Letters Patent was therefore not accepted.

Conclusion: The jurisdictional objection was rejected and the petition was held maintainable before the Court.

Issue (ii): Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred the petition for appointment of a receiver over the leased equipment.

Analysis: The lease agreement expressly reserved ownership in the petitioners, required return of the equipment on termination, and prohibited the respondents from claiming any title or interest in it. The Court treated the equipment as belonging to the petitioners and not as an asset of the respondent-company. It further held that equipment temporarily fixed to the floor for operational use did not become immovable property, and payment of customs duty, excise duty, or related expenses by the respondents did not confer ownership. Since section 22 protects proceedings against the properties of the sick industrial company, it had no application to property owned by the lessor.

Conclusion: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 did not bar the relief sought, and the petitioners were entitled to possession-related protection.

Final Conclusion: The petition was maintainable, the statutory bar was inapplicable, and a receiver could be appointed for the leased equipment with consequential protective directions.

Ratio Decidendi: In a lease where ownership remains with the lessor and the lessee acquires no title in the equipment, section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar proceedings to recover or protect that equipment, and temporary affixation for use does not make such equipment immovable property.

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