Recovery suits and ex parte decrees: SICA protection is limited, and reopening needs a credible explanation for absence.

Section 22 of SICA does not bar a mere recovery suit or action to prove indebtedness unless the proceeding is shown to be coercive, or in the nature of execution, distress or similar enforcement against the sick company's assets; on the stated facts, the suit was maintainable because no such coercive effect was established. An ex parte decree will not be set aside under Order IX Rule 13 CPC without sufficient cause, and the explanation for non-appearance must be credible and supported; here, prior service, earlier appearance through counsel, unexplained cessation of participation, and prolonged silence showed no sufficient cause. The decree therefore remained undisturbed.

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Issues: (i) Whether the recovery suit and decree were hit by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985; (ii) Whether the ex parte decree deserved to be set aside under Order IX Rule 13 of the Code of Civil Procedure, 1908.

Issue (i): Whether the recovery suit and decree were hit by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: The protective bar under Section 22 applies to proceedings in the nature of winding up, execution, distress or like coercive action, and not to every suit for recovery of money. A simple suit to prove indebtedness, where no coercive enforcement against the sick company's assets is shown, is not ipso facto barred. On the facts, the applicant did not establish that the claim was admitted in any sanctioned scheme or that the suit had the effect of execution or distress against property.

Conclusion: The suit was maintainable and was not barred by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Issue (ii): Whether the ex parte decree deserved to be set aside under Order IX Rule 13 of the Code of Civil Procedure, 1908.

Analysis: The applicant had been served, had earlier appeared through counsel, and thereafter stopped participating without a satisfactory explanation. The plea that the counsel was negligent was found vague and unsupported, and the applicant also remained silent for years after the company came out of the SICA regime. The delay and absence of diligence showed no sufficient cause for reopening the decree.

Conclusion: The ex parte decree was not liable to be set aside.

Final Conclusion: The application for setting aside the ex parte decree failed, and the connected challenge to the execution stay also failed, leaving the decree undisturbed.

Ratio Decidendi: Section 22 of SICA does not bar a mere suit for recovery or proof of debt unless the proceedings are shown to be coercive or in the nature of execution, distress or the like, and an ex parte decree will not be set aside absent sufficient cause and a credible explanation for prolonged non-appearance and delay.

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