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of <h1>Court Grants Stay of Proceedings Upon Company Registration with BIFR</h1> <h3>Jairaj Versus B. Champalal Jain</h3> Jairaj Versus B. Champalal Jain - [2004] 54 SCL 432 (MAD.) Issues:1. Whether the suits should be stayed pending proceedings before the BIFRRs.Analysis:The judgment involves a dispute where the petitioner, a director of a company, filed applications seeking to stay the trial of suits for recovery of money based on promissory notes filed by the first respondent. The petitioner argued that as the company was registered with the BIFR as a sick industrial company, the suits should be stayed. The first respondent contended that the petitioner was neither a company nor a guarantor, thus the petitions should be dismissed.The main issue before the court was whether the suits should be stayed until the completion of the proceedings before the BIFR. The court noted that the petitioner had signed the promissory notes as a director of the company, which was registered with the BIFR as a sick industrial company. The court referred to Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, which prohibits legal proceedings against a sick industrial company without consent from the BIFR.The court found that the trial judge had erred in dismissing the petitioner's application for stay. Referring to precedents, the court emphasized that the benefit of Section 22 of the Act extends to guarantors and co-obligants of a sick industrial company. The court held that once a company is registered with the BIFR, all proceedings against the company and its guarantors must be stayed unless consent is obtained from the BIFR.Based on the evidence presented, including the promissory notes and the BIFR order, the court concluded that the trial judge had disregarded the provisions of Section 22. The court set aside the trial judge's order and granted a stay of proceedings in the suits. The parties were given the liberty to seek further orders based on the BIFR's decisions. The Civil Revision Petitions were allowed, and no costs were imposed.
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