Prospective operation of stay provisions bars retrospective application to a pre-amendment money suit under sick industry law

An amendment expanding section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to cover money suits applies prospectively and cannot be used to stay a suit filed before the amendment took effect. Because the recovery suit had been instituted in 1992, when money suits were outside the statutory embargo, the later expansion of the stay provision did not govern that proceeding. The court held that the trial court had overlooked this material temporal distinction and wrongly applied the stay, making the order unsustainable.

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Issues: Whether the stay of further proceedings in a money suit under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 could apply to a suit instituted before the 1 February 1994 amendment that brought money suits within its sweep.

Analysis: The suit for recovery of money was filed in 1992, when section 22(1) did not cover money suits. The later amendment, which extended the protection of section 22(1) to such suits, was held to be prospective in operation. The Court distinguished the authorities relied upon in support of continuance of the stay, since those cases involved proceedings commenced after money suits had already been brought within the statutory embargo. In these circumstances, the trial court overlooked the material fact that the suit pre-dated the amendment and therefore wrongly applied the stay provision.

Conclusion: The stay order was unsustainable and the revision succeeded in favour of the appellant.

Ratio Decidendi: An amendment enlarging the sweep of section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 to include money suits applies prospectively and cannot be used to stay a suit instituted before the amendment came into force.

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