TaxTMI 
TaxTMI 
TaxTMI 
2004 (2) TMI 375
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....ame was challenged by the petitioner by an appeal filed in May, 1999. By an order dated 18-5-1999 passed by the Co-operative Appellate Court, the appeal was admitted for final hearing and the parties were directed to maintain status quo in relating to the alleged properties of the petitioner-company. Meanwhile, the petitioner, on the ground that the net worth of the company had been eroded, made a reference under SICA which was registered as Reference No. 152 of 2001. However, the said Reference came to be dismissed on 24-1-2003 whereupon the petitioner filed appeal under section 25 of SICA being Appeal No. 89 of 2003 before the Appellate Authority and the same is pending for final disposal. Meanwhile, the Appeal No. 30 of 1999 before the Co-operative Appellate Court came up for hearing on 9-7-2003; however, applying the provision of section 22(1) of SICA the Co-operative Appellate Court suspended the proceedings till further orders. Hence the present petition. 3. The contention of the learned Advocate for the petitioner is that the provision of section 22 of SICA apply to the proceedings initiated against the sick company and not to the proceedings filed by the sick company or th....
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....) to mean the Board for Industrial and Financial Reconstruction established under section 4. The expression 'industrial company' is specified in section 3(e) to mean a company which owns one or more industrial undertakings, and the expression 'sick industrial company' has been defined in section 3(o) to mean an industrial company being a company registered for not less than five years which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth. 5. The section 22(1) is to be found in Chapter III of SICA. The said chapter relates to 'References, Inquiries and Schemes' and it comprises of the sections 15 to 22A. The section 15 thereunder relates to reference to Board. In terms of section 15(1) when an industrial company becomes a sick industrial company, such company has to make a reference to the Board within the period prescribed thereunder. Even otherwise the Central Government or the State Government as well as the Reserve Bank and other public financial institutions or scheduled banks are also entitled to make a reference under section 15(2). Inquiry into the working of the sick industrial companies is contemplated under section 16. O....
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....ings are applicable only in cases where such proceedings are originated consequent to initiation thereof by or at the instance of a party or person other than the industrial company, nor it specifies that the proceedings initiated or continued by the industrial company in relation to monetary claim or the matters relating to its properties or assets against such industrial company do not attract the said provision of law. Therefore, the provision, as it stands, merely prescribes embargo over the proceedings relating to monetary claim and pertaining to the properties and assets against such industrial companies without the consent of the Board or the Appellate Authority, as the case may be. 7. Referring to the clause ". . . for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof, and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company. . . .", it is sought to be contended that the said clause clearly indic....
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....l proceedings' and 'be proceeded with further' should be given wider interpretation so as to include all the proceedings wherein the issue relates to the monetary claim or enforcement of guarantee or security pertaining to loans or advance to the industrial company and the same is made against such company. 9. Referring to the statements of objects and reasons as well as the notes on the clauses appended thereto, it was sought to the contended that the same clearly bring out the intention of the Legislature to give protection to such industries and with that view the claim against those companies are sought to be suspended and not the claim of those companies against others. Again, this is also de hors the issue for consideration for the reasons stated above which need not be repeated. However, it is true that reference to the statement of objects and reasons is certainly permissible for understanding the back ground, the antecedent state of affairs, surrounding circumstances in relation to the statute and evil which the statute was sought to remedy but not as an aid to the construction of the statute or for ascertaining the meaning of the words used in the statute and the law in ....
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....dings with respect to such industrial companies, in relation to the provisions contained in section 22 of SICA, without any reservation or exclusion of the proceedings continued by such company against an order passed in the matter originated from the proceedings instituted by others against the company. 12. In Maharashtra Tubes Ltd.'s case (supra), it was held by the Apex Court that : ". . . Section 22(1) provides that during the pendency of (i) an inquiry under section 16 or (ii) preparation or consideration of a scheme under section 17 or (iii) an appeal under section 25, no proceedings for winding up of the concerned industrial company or for execution, distress or the like shall lie or be proceeded with in relation to the properties of that concern unless BIFR/appellate authority has consented thereto. The underlying idea is that every such action should be frozen unless expressly permitted by the specified authority until the investigation for the revival of the industrial undertaking is finally determined. . . ." [Emphasis supplied] (p. 153) The observation 'every such action should be frozen' clearly relate to the continuation of any such proceedings without exclusion of....
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....he decision of the Apex Court in the case of Real Value Appliances Ltd. v. Canara Bank AIR 1998 SC 20641, nowhere lays down that the company against which proceedings have been initiated is prohibited from taking legal steps for enforcement of its rights. That cannot be construed to mean contrary to the statutory provision in section 22(1), prescribing restrictions on the continuation of such proceedings in any manner and more particularly in view of the ruling by the Apex Court in Maharashtra Tubes Ltd.'s case (supra). The decision of the Apex Court in Real Value Appliances Ltd.'s case (supra) was in totally different set of facts and the question involved was not the one under consideration in the matter in hand. Therein the point raised was to the effect that for the application of the provision of section 22(1), BIFR, subsequent to the registration of the reference vide section 15, shall apply its mind and consider it necessary vide section 16 to make an inquiry and issue notices on reference to the affected parties who are required to be heard and only then it can be said that an inquiry is pending and unless an inquiry is pending there cannot be statutory stay of proceedings ....