Appeal Dismissed for Failure to Substantiate Claims under SICA; Costs Imposed

The court dismissed the appeal as the appellant failed to substantiate claims under SICA and comply with court orders. The related appeal on executing the decree was also dismissed, citing that SICA did not prohibit the execution proceedings since the decreetal amount was not included in the BIFR scheme. Costs were imposed on the appellant for the dismissed appeal.

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Issues Involved:
1. Condonation of delay in entering appearance.
2. Rejection of the plaint under Order VII, Rule 11(d) of CPC.
3. Application of SICA provisions to the case.
4. Execution of a decree in light of SICA provisions.

Detailed Analysis:

1. Condonation of Delay in Entering Appearance:

The appellant, Saketh India Limited, filed an application (IA No. 1171 of 2006) seeking condonation of delay in entering appearance. The learned Single Judge dismissed this application due to the appellant's failure to comply with court orders to file the required affidavit and pay the imposed costs. The court noted that multiple opportunities were given to the appellant, but they were not availed, leading to the dismissal of the application. Consequently, the court opined that all averments in the plaint were deemed admitted, resulting in the decree of the suit.

2. Rejection of the Plaint under Order VII, Rule 11(d) of CPC:

The appellant also sought the rejection of the plaint under Order VII, Rule 11(d) of CPC (IA No. 1170 of 2006), arguing that the company had been declared a sick industrial unit under SICA. The court dismissed this application, emphasizing that the appellant failed to substantiate its claim of pending proceedings before the BIFR or AAIFR. The court highlighted that the appellant did not comply with orders to demonstrate that the claimed dues were reflected in the scheme before BIFR. The court concluded that the provisions of SICA did not bar the legal proceedings in this case.

3. Application of SICA Provisions to the Case:

The appellant argued that SICA placed a complete prohibition on all judicial proceedings, necessitating the rejection of the plaint. The court, however, was not persuaded by this argument. It noted that the appellant failed to demonstrate compliance with SICA provisions, such as showing that the claimed amount was included in the scheme before BIFR. The court emphasized that SICA's protection would apply only if the dues were included in the sanctioned scheme. The court referenced several judgments, including Deputy Commercial Tax Officer v. Corromandal Pharmaceuticals and Jay Engineering Works Ltd. v. Industry Facilitation Council, to support its conclusion that SICA did not bar the ongoing legal proceedings in this case.

4. Execution of a Decree in Light of SICA Provisions:

In a related appeal (EFA(OS) No. 33/2008), the court addressed the execution of a decree dated 19.1.2005 for a sum of rupees 1,41,28,854, along with interest. The judgment debtor objected to the execution proceedings based on SICA provisions. The court noted that the decreetal amount did not find mention in the scheme presented to BIFR, and hence, there was no legal impediment to carrying out the execution proceedings. The court relied on judgments such as Real Value Appliances Ltd. v. Canara Bank and Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. to conclude that the execution proceedings were not barred by SICA. The court emphasized that once a claim stands admitted or favorably adjudicated, the protection of section 22 of SICA would apply, but in this case, the decreetal amount was not included in the scheme, justifying the continuation of execution proceedings.

Conclusion:

The court dismissed the appeal, concluding that the appellant failed to substantiate its claims under SICA and did not comply with court orders. The court also dismissed the related appeal concerning the execution of the decree, emphasizing that SICA did not bar the execution proceedings in this case. The court imposed costs on the appellant for the dismissed appeal.

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