TaxTMI 
TaxTMI 
2019 (11) TMI 1766
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....ank Ltd. 2. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs; "(a) For a writ of mandamus and/or any other appropriate writ, direction or order in the nature of Certiorari under Articles 226 and 227 of the Constitution of India, calling for the record of the Petitioner's case and after going through the legality thereof to quash and set aside qua the petitioner herein, the Recovery Proceeding (being R.P. No.265 of 2014), which are pending before the Recovery Officer pursuant to the Recovery Certificate granted by the learned DRT in favour of respondent No.1 in Original Application (being O.A. No.162 of 2003). (b) For a Writ of Mandamus and/or any other appropriate writ, direction or order in the nature of Certiorari under Articles 226 and 227 of the Constitution of India, calling for the record of the Petitioner's case and after going through the legality thereof to quash and set aside qua the Petitioner herein, the impugned order and judgment dated 1st December, 2014, passed in Original Application No.162 of 2003, by the Presiding Officer of Learned DRT, Ahmedabad. C/SCA/6129/2018 JUDGMEN....
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....etailed hereinafter. The aforesaid challenge also includes (i) the Demand Notice dated 2nd November, 2015, (Impugned Demand Notice), (ii) the Orders dated 29th March, 2017 and 31st January, 2018, [Impugned Orders] passed by the Recovery Officer in the Impugned Recovery Officer. By the Impugned Order dated 31st January, 2018, the Recovery Officer has inter alia attached the bank accounts of the Petitioner and further passed an Order of Attachment dated 31st January, 2018, [Impugned Order of Attachment] attaching the movable and immovable properties of the Petitioner. The reference of Impugned Recovery Proceeding hereinafter shall include the above mentioned Impugned Demand Notice, Impugned Order and Order of Attachment. Consequently, the Petitioner is also seeking to set aside the order and judgment dated 1st December, 2014, passed in the CA as nullity. 3. Respondent No.1 is a public sector bank having its Regional Office and concerned dealing Branch Office at the address mentioned in the cause title. Respondent No.1 is the applicant of the impugned Recovery Proceeding on the basis of the Recovery Certificate granted by the Learned DRT in favour of Respondent No.1 and against Res....
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....re the Learned DRT for recovery of dues of Rs.26,12,78,787 with further interest @12% p.a. ["Purported Claim"]. It is pertinent to note that despite of knowledge of pending Reference, GTB chose to recover its purported Claim against the Petitioner by impleading the Petitioner as Defendant No.2 to the Original Application without obtaining necessary leave from the BIFR. The Petitioner craves leave to refer and rely upon the papers and proceedings of the Original Application. Hereto annexed marked at Exhibit "C" is a copy of the Original Application No.162 of 2003 (without annexures). 5.4 On 23rd December, 2003, the Petitioner filed an application before the Learned DRT seeking stay of the Original Application in view of bar under Section 22 of SICA. Hereto annexed and marked at Exhibit "D" is a copy of the stay application of the petitioner 5.5 Meanwhile, pursuant to the notification dated 13th August, 2004, issued by the Reserve Bank of India (RBI), the Scheme of Amalgamation of GTB with Oriental Bank of Commerce (Respondent No.1 herein) under Section 45 of the Banking Regulation Act, 1949, was sanctioned and the said Scheme came into force with effect from 14th August, 2004.....
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....r craves leave to refer and rely upon the papers and proceedings of the Appeal, including interim applications taken out by the Petitioner therein. Meanwhile. on the basis of its Order and Judgment dated 1dy December, 2014, the Learned DRT granted in favour of Respondent No.1, a Recovery Certificate against Respondent No.2 and the Petitioner. Hereto annexed and marked at Exhibit "H" is a copy of the Order dated 1st December, 2015, of the Learned DRAT Mumbai. 5.10 On the basis of the Recovery Certificate, the Recovery Officer at the instance of Respondent No.1 proceeded inter alia against the Petitioner by issuing Demand Notice dated 2nd November, 2015 in the Impugned Recovery Proceeding. The Petitioner then filed an Affidavit dated 30th December, 2015 before the Recovery Officer inter alia raising objections to the Impugned Recovery Proceeding and seeking withdrawal of these proceedings on the ground that the Petitioner was before BIFR under the provisions of SICA. In reply to the said objections of the Petitioner, Respondent No.1 filed its reply dated 9th December, 2016, inter alia raising false and frivolous contentions. The Recovery Officer by its order dated 29th March, 2017....
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....y to pay the debts. The respondent has filed M(C)P No.1985/2003 and IA No.614/2007 u/s. 22 of the Sick Industrial Companies (Special Provisions) Act (for short "SICA Act") for passing appropriate orders keeping in view the fact that the reference of the respondents has been registered before the BIFR and no permission has been obtained by the petitioner from the BIFR. Along with IA No.4097/2014, the respondent has filed the BIFR proceedings dated 22.1.2014 in support of the plea that the matter is still pending before the BIFR. (2) Having heard the learned counsel for parties, it is found that the reference at the instance of the respondent is registered by the BIFR as Case No.743/2002. The said fact was initially confirmed by the BIFR vide letter dated 30.11.2002 filed along with M(C)P No.1985/2003. The present petition for winding up has been filed on 8.1.2003 i.e. after registration of the reference by the BIFR. The record of proceedings of hearing dated 22..1.2014 before the BIFR reveals that the reference is still pending before the BIFR. (3) Section 22 of the SICA Act provides for suspension of legal proceedings where in respect of an industrial company, an enquiry u/s.....
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....ssed." 5. Thereafter, the respondent No.1-Bank instituted proceedings before the DRT at Ahmedabad under the provisions of the Recovery of Debts & Bankruptcy Act,,1993 (for short "the Act, 1993"). It is pertinent to state, at this stage, that while the respondent No.1 instituted the proceedings before the DRT, the writ applicant-Company was already before the BIFR. It is also pertinent to note that the original application came to be filed by the respondent No.1 in the DRT on 22nd July, 2003. Much prior to the same, an intimation was given by the writ applicant to the respondent No.1-Bank dated 13th January, 2003 as regards the writ applicant being registered with the BIFR. The reference before the BIFR is dated 30th October, 2002. 6. It appears from the materials on record that the writ applicant preferred an application in the Original Application No.162 of 2003 to suspend the further proceedings of the original application on the ground that the reference was pending with the BIFR under the provisions of the SICA. 7. Unfortunately, it appears that the DRT failed to pass appropriate order on the said application. 8. Ultimately, the DRT took up the original application filed b....
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....endant No.2 be ordered to be deleted holding that the said defendant No.2 is not a necessary and proper party." 10. After the impugned order came to be passed by the DRT, the writ applicant preferred an Appeal No.102 of 2015 before the Debts Recovery Appellate Tribunal at Mumbai. On 14th December, 2015, the Appellate Tribunal passed the following order; "Since the matter has been seized up by the BIFR, therefore, stand over to 07.04.2016 for hearing on waiver application." 11. Thus, it appears that the Appellate Tribunal declined to proceed with the hearing of the appeal taking cognizance of the fact that the proceedings were pending before the BIFR. 12. In the meantime, the recovery certificate came to be issued, and pursuant to the same, the Recovery Officer passed an order of attachment dated 31st January, 2018. The order of attachment of movable and immovable property reads thus; "ORDER OF ATTACHMENT OF MOVALE AND IMMOVALE PROPERTY. R.C. No.265/2014 O.A. No.162/2003 ORIENTAL BANK OF COMMERCE, NAVRANGPURA, A'BAD Certificate Holder V/S. M/s. Gujarat State Co-operative Cotton Federation Ltd. & Ors. Certificate Debtor To, CD No.2 M/s. SIT Ind....
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....came to be instituted by the respondent No.1-Bank before the DRT, and at the point of time when the order came to be passed by the DRT, the writ applicant had got itself registered with the BIFR as a sick unit. In such circumstances, the writ applicant would be governed by the provisions of the SICA Act, 1985. Mr. Thakore invited the attention of this Court to Section 22 of the Act, 1985, which reads thus; "22. Suspension of legal proceedings, contracts, etc.- (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings 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 r....
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.... instrument having effect under the said Act or other law or any agreement or any decree or order of a court, tribunal, officer or other authority or of any submission, settlement or standing order and accordingly,- (a) any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any court, tribunal, officer or other authority shall remain stayed or be continued subject to such declaration; and (b) on the declaration ceasing to have effect- (i) any right, privilege, obligation or liability so remaining suspended or modified, shall become revived and enforceable as if the declaration had never been made; and (ii) any proceeding so remaining stayed shall be proceeded with, subject to the provisions of any law which may then be in force, from the stage which had been reached when the proceedings became stayed. (5) In computing the period of limitation for the enforcement of any right, privilege, obligation or liability, the period during which it or the remedy for the enforcement thereof remains suspended under this section shall be excluded." 16. Mr. Thakor....
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....s. Arihand Threads Limited & Ors., (2015) 1 SCC 166 and (ii) Managing Director, Bhoruka Textiles Limited vs. Kashmiri Rice Industries, (2009) 7 SCC 521. 21. In such circumstances, referred to above, Mr. Thakore, the learned senior counsel prays that there being merit in this writ application, the same be allowed and the impugned order be quashed. 22. Mr. Thakore also clarified that it would be open for the respondent No.1-Bank to institute fresh proceedings before the DRT in accordance with law. Submissions on behalf of the respondent No.1-Bank 23. Mr. Mishra, the learned counsel appearing for the respondent No.1-Bank submitted that the loan was actually availed from the Bank by name Global Trust Bank. The Global Trust Bank came to be amalgamated with the respondent No.1-Bank. In such circumstances, the respondent No.1-Bank instituted the proceedings before the DRT for the recovery of the loan amount with interest. According to Mr. Mishra, the writ applicant ought to have persuade the application which was preferred by it before the DRT as regards the maintainability of the proceedings in view of the bar of the provisions of Section 22 of the Act, 1985. Mr. Mishra pointed out t....
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....ar, to preserve the steps already taken for reconstruction of a sick company in relation to the properties of such sick company, which may be charged as security with the banks or financial institutions, that Parliament has specifically enacted sub-section (2). The SICA had been enacted in respect of specified and limited companies i.e. those which owned industrial undertakings specified in the schedule to the IDR Act, as mentioned earlier, whereas the RDDB Act deals with all persons, who may have taken a loan from a bank or a financial institution in cash or otherwise, whether secured or unsecured etc. 41. Indeed, the question as to which Act shall prevail must be considered with respect to the purpose of the two enactments; which of the two Acts is the general or special; which is later. It must also be considered whether they can be harmoniously construed. 42. The conflict that is said to arise is between Section 22 of the SICA which purports to make untenable "proceedings" for recovery of the debt against the sick company and "suits" for recovery on the one hand and on the other hand Section 34 of the RDDB Act contains an overriding effect to its own provision, obviously ....
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.... the doctrine of generalia specialibus non derogant (general provisions will not abrogate special provisions), it was submitted that an employee of the LIC cannot invoke the provisions of the ID Act in his complaint, and the matter would have to be decided in accordance with the LIC Act. The Court observed that the LIC Act was "special" as regards nationalization of the life insurance business. But however, the disputes between employer and employee had to be dealt with under the ID Act which was a special law for resolving such disputes and if a dispute arose between employer and employee in the Life Insurance Corporation, the LIC Act must be treated as "general law" and the ID Act should be treated as "special law." The Court thus observed:- "52. In determining whether a statute is a special or a general one, the focus must be on the principal subject-matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinctions when dealing with finer Page 22 of 31 Downloaded on : Fri Dec 02 17:35:11 IST 2022 C/SCA/6129/2018 JUDGMENT points of law. In law, we have a cosmos of relatively no a....
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....e learned counsel for the parties we find that, the purpose of the two enactments is entirely different. As observed earlier, the purpose of one is to provide ameliorative measures for reconstruction of sick companies, and the purpose of the other is to provide for speedy recovery of debts of banks and financial institutions. Both the Acts are "special" in this sense. However, with reference to the specific purpose of reconstruction of sick companies, the SICA must be held to be a special law, though it may be considered to be a general law in relation to the recovery of debts. Whereas, the RDDB Act may be considered to be a special law in relation to the recovery of debts and the SICA may be considered to be a general law in this regard. For this purpose we rely on the decision in LIC Vs. Vijay Bahadur (supra). Normally the latter of the two would prevail on the principle that the Legislature was aware that it had enacted the earlier Act and yet chose to enact the subsequent Act with a non- obstante clause. In this case, however, the express intendment of Parliament in the non-obstante clause of the RDDB Act does not permit us to take that view. Though the RDDB Act is the later en....
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....s such an application for recovery made under the provisions of the RDB Act. We might remind ourselves of the oft-quoted statement of the principles of contextual construction laid down by this Court in Reserve Bank of India Versus Peerless General Finance and Investment Co. Ltd. & Ors.[6], where this Court has observed:- "33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and ....
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....ed senior counsel is right in his submission that the impugned order could not have been passed by the DRT. 28. In Managing Director, Bhoruka Textiles Ltd. (supra), a two Judge Bench of the Supreme Court had the occasion to deal with an identical issue. We quote the relevant observations; "6. The Act was enacted to make, in the public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. Indisputably, thus, the appellant is an industrial undertaking. 7. Chapter III of the Act provides for reference, enquiries and schemes. Section 15 of the Act provides for reference to the Board in terms whereof the Board of Directors of the company is required to make a reference within 60 days from the date of the duly audited accounts of the company for the financial year as at the end of which the company has become a sic....
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..... It envisages speedy disposal of the enquiry and preferably within the time framed provided for thereafter. Section 17 empowers the court to make suitable orders on the completion of enquiry. Preparation and sanction of the scheme is also contemplated under the Act. 10. Section 22 of the Act must be interpreted giving a plain meaning to its contents. An enquiry in terms of Section 16 of the Act by the Board is permissible upon receipt of a reference. Thus, reference having been made on 27-12-2001 and the suit having been filed on 17-12- 2002, the receipt of a reference must be held to be the starting period for proceeding with the enquiry. 11. The effect of the provisions of the Act has been considered by a three-Judge Bench decision of this Court in Tata Motors Ltd. v. Pharmaceutical Products of India Ltd. 2008 7 SCC 619 wherein it, in no uncertain terms, held that SICA is a special statute and, thus, overrides other Acts like the Companies Act, 1956, stating: (SCC p. 635, paras 31-33) "31. SICA furthermore was enacted to secure the principles specified in Article 39 of the Constitution of India. It seeks to give effect to the larger public interest. It should be given p....