Decree deemed unenforceable due to lack of jurisdiction under Sick Industrial Companies Act

The Court held that the decree obtained against the defendant was unenforceable due to the pending proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The Court lacked jurisdiction to pass the decree during the SICA proceedings without the consent of the Board, rendering the decree a nullity. As a result, the decree was deemed inexecutable, and all execution proceedings were rejected, with orders recalled in favor of the defendant judgment debtor.

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Issues: (i) Whether a suit for enforcement of a guarantee given in respect of a loan advanced to a company against which an inquiry under section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 was pending was barred by section 22(1) of that Act; (ii) whether a decree passed in such a suit without consent of the Board was a nullity and inexecutable; (iii) whether the objection could be raised in execution notwithstanding that the decree was passed in the defendant's presence and no application under Order 9 Rule 13 of the Code of Civil Procedure, 1908 was filed.

Analysis: Section 22(1) creates a clear statutory embargo against a suit or proceeding for enforcement of a guarantee in respect of a loan or advance granted to a sick industrial company while an inquiry under section 16 is pending, unless the requisite consent is obtained. The guarantee in question was found to be intrinsically linked to the loan advanced to the industrial company and was executed to secure repayment of those dues; the omission of the company and the principal borrower from the suit did not change the true nature of the claim. The Court held that the language of section 22(1) is unambiguous and that, once the statutory bar applied, the Court lacked inherent jurisdiction to entertain or proceed with the suit, rendering the decree a nullity. A null decree is non est and cannot be enforced; its invalidity may be raised at the stage of execution under section 47 of the Code of Civil Procedure, 1908, and such a jurisdictional defect cannot be cured by constructive res judicata. The absence of an ex parte decree and the inapplicability of Order 9 Rule 13 did not prevent examination of executability and jurisdiction in execution.

Conclusion: The suit was held to be not maintainable under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, the decree was declared void and a nullity, and the execution was rejected with all orders in execution recalled.

Final Conclusion: The statutory bar under the sick company legislation was applied to a guarantee connected with the borrower's loan, and the Court declined to enforce the decree as it had been passed without jurisdiction.

Ratio Decidendi: Where section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 applies, a decree passed on a suit for enforcement of a guarantee in respect of a loan advanced to the sick industrial company, without the Board's consent, is a nullity and may be challenged as inexecutable in execution proceedings.

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