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Issues: Whether the company court could, in exercise of section 391(6) of the Companies Act, 1956, stay proceedings initiated under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the State Financial Corporations Act, 1951 pending consideration of a scheme under section 391 of the Companies Act, 1956.
Analysis: The provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 were held to be a special later enactment conferring exclusive jurisdiction on the Debts Recovery Tribunal for adjudication and recovery of debts due to banks and financial institutions. The scheme of sections 17, 18, 19 and 34 of that Act was treated as a complete code intended to secure speedy recovery, and the non obstante clause was taken to give it overriding effect where there is inconsistency. The court held that an order under section 391(6) of the Companies Act, 1956 staying recovery proceedings would directly interfere with the creditor's statutory remedies and would modify the original contractual rights in a manner inconsistent with the special recovery statutes. The same reasoning was applied to proceedings under section 29 of the State Financial Corporations Act, 1951, which also confers special recovery powers on the financial corporation.
Conclusion: Section 391(6) of the Companies Act, 1956 cannot be invoked to restrain or stay proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or section 29 of the State Financial Corporations Act, 1951. The appeals fail to that extent and the challenge to the interim protection granted by the company court is rejected.
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