2008 (8) TMI 566

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....ction under sections 22 and 21(a) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("the SICA") in view of the fact that a reference was registered on 15-12-2005. 4. Learned counsel for the petitioner relies on several precedents for the proposition that section 22 is not intended to protect the company from recovery of debts which are incurred by it de hors the scheme. In short, according to the petitioner, the orders were placed by the respondent-company for the goods after the reference was registered on December 15, 2005 and the company must, therefore, pay for the goods and then seek protection under section 22 of the SICA, relying on the judgment of the Supreme Court in the case of Dy. CTO v. Corromandal Pharmaceutic....

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....e, according to me, if all such transactions which take place during the post declaration period are also to be brought in the clutches of section 22(1) of the Act, no party would enter into any commercial dealings with such a sick unit and in that case, the chances of revival would be absolutely bleak. No party would sell its raw materials or any goods or machinery to such a sick unit from which recovery of money would be neither easy nor possible and if that happens, such a sick unit will not be able to operate if the creditors are told that there was absolutely no certainty of getting their money for the goods sold by them. Such an event would defeat the very purpose of this Act, that is, the revival of a sick unit in the larger public i....

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.... "It is not the intention of the law court, in our view, to expand the scope of legislation and one ought not to read anything further than one reads in plain and simple manner. Admittedly, the company, while the matter is pending before the Board, has enjoyed the benefits of these supplies. The Board has not been able to consider these claims. Obviously, the scheme as framed also has no reference to the claim of the petitioner, a creditor. Does that mean and imply the petitioner-creditor shall have to wait until after the fullest implementation of the scheme, in terms of the scheme, as sanctioned by the Board ? It is an independent transaction de hors the scheme and obviously cannot, thus, be covered within the ambit of section 22 of the....