TaxTMI 
TaxTMI 
2012 (4) TMI 831
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.... the Act before filing the said recovery suit. It is also the case of the appellant that in the leave to defend application filed by the appellant in response to the summons for judgment issued by the learned Trial Court in the said summary suit, one of the main objections, besides others, was that the appellant company was registered with the BIFR at serial No. 389/99 and, therefore, the said proceedings of the summary suit were liable to be stayed in terms of Section 22 of Sick Industrial Companies (Special Provisions) Act, 1985. It is further the case of the appellant that on 11.6.2002, BIFR had rejected the reference made by the appellant company and against the said order, the appellant had filed an appeal (appeal No. 200/2002) but despite the fact that the appellant had placed on record the entire record of the said appeal before the learned Trial Court, yet the learned Trial Court ignored the pendency of the appeal before AAIFR and wrongly dismissed the leave to defend application preferred by the appellant, ultimately decreeing the summary suit filed by the respondent. 2. Arguing for the appellant, Mr. Anil Grover, Learned Counsel submitted that the learned Trial Judge h....
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....No. 48/2009 against order dated 21st October, 2008 and vide order dated 26th May, 2009, the AAIFR had stayed the order dated 21st October, 2008 passed by BIFR. Counsel for the appellant placed reliance on Section 26 of SICA, which bars the jurisdiction of the Civil Court in respect of any matter, which the Appellate Authority or the Board is empowered by, or under, the said Act to determine. Counsel also submitted that the winding up petition filed by the appellant company is now pending consideration before the company Court at High Court of Punjab and Haryana where the official liquidator has already been appointed in the matter and in view of the appellant company being under liquidation, the respondent is required to approach the official liquidator for the said claim or any other claim against the appellant company. In support of his arguments counsel for the appellant placed reliance on the following judgments:- 1. Bhoruka Textiles Ltd. -vs-Kashmiri Rice Industries, 2009(7) SCC 521. 2. Intercraft Ltd. -vs-Cosmique Global & Anr. 173(2010) DLT 116 (DB) 3. Stitchting Doen-Postcode Loterji -vs-Vin Poly Recyclers Pvt. Ltd., 167 (2010) DLT 333 4.....
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....pursuant to the direction given by this Court vide orders dated 21.11.2005, the appellant has already deposited the decretal amount and the same now be directed to be released by this Court in favour of the respondent with the amount of interest accrued thereon. 4. I have heard Learned Counsel for the parties at considerable length and given my thoughtful consideration to the arguments advanced by them. 5. The respondent is a public limited company which had filed a suit under Order 37 CPC to claim recovery of an amount of Rs. 5,20,529/- with pendente lite and future interest @ 24% per annum against the appellant. The main allegation of the respondent was that the appellant had engaged the services of the respondent company for transporting its material to various destinations and consequently bills were raised by the respondent against such transportation charges but no payment was made by the appellant and the respondent thus claimed that an amount of Rs. 3,89,393/- towards amount of the bills and interest @ 24% per annum from the date of bills and a sum of Rs. 5,20,529/- with pendente lite and future interest @24% per annum became payable by the appellant. Leave to defend ....
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....sanctioned scheme is under implementation or where an appeal under section 25 relating to 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 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} shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. (2) Where the management of the sick industrial company is taken over or changed {in pursuance of any scheme sanctioned under section 18}, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or in the memorandum and articles of association of such company or any instrument having effect under the said Act or other law ....
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....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. 7. A plain and simple reading of the aforesaid provision would clearly show that a suit for recovery is barred where an inquiry under section 16 of the Act is pending. This provision further shows that even where an appeal under Section 25 relating to an industrial company is pending, then also a suit would be barred except with the consent of the Board or the Appellate Authority, as the case may be. The aforesaid provision clearly mandates that no proceedings inter alia 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....
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....ry under Section 16 before it can be said that Section 22 comes into play. According to us, this logic will also apply when an appeal is pending under Section 25 before AAIFR. This is for the reason that suppose a sick company succeeds before AAIFR and it is held that the order of BIFR rejecting the reference is invalid and therefore it is directed that a sick company needs to be rehabilitated by formulating a scheme, then, in certain cases there would be futility of such remand orders because unless Section 22 applies after filing of an appeal under Section 25 it is possible that there would be scramble among the creditors to appropriate the assets, whether by getting the decrees or otherwise, of a sick company and that by the time AAIFR sends the matter back to BIFR for formulating and implementing a revival scheme, there may not be available any assets or sufficient assets for revival of the sick company on account of eventuality of Section 22 not applying during the pendency of an appeal against an order rejecting the registration of a reference by BIFR. In such scenario, if a sick company succeeds in AAIFR, the appeal would yet become infructuous because in the meanwhile all t....
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.... dues payable by the company to the plaintiff in the scheme formulated before the BIFR. It is a settled legal position that it is not by mere pendency of an enquiry under Section 16 of the said Act or preparation of the scheme thereof being under consideration or even filing of an appeal under section 25 before the appellate authority that by itself would entitle the appellant for the said statutory injunction against the respondent/plaintiff as the benefit of the prohibition or embargo created under section 22 of the Act would come into operation only where the appellant/defendant has disclosed before the Court, that the amounts claimed by the respondent/plaintiff have been duly shown and disclosed in the scheme formulated and laid before the BIFR. The Apex Court in the case of Deputy Commercial Tax Officer and Ors. vs Corromandal Pharmaceuticals and Ors., (1997) 10 SCC 649 enunciated the law to hold that a cessation of legal proceedings would be justified only if the dues in respect of which adjudication is ongoing is also included in the contemplation of scheme presented by BIFR. The relevant paragraph of the said judgment for better appreciation is reproduced herein: 1....
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....f the circumstances, the safeguard is only against the impediment, that is likely to be caused in the implementation of the scheme. If that be so, only the liability or amounts covered by the scheme will be taken in, by Section 22 of the Act. So, we are of the view that though the language of Section 22 of the Act is of wide import regarding suspension of legal proceedings from the moment an inquiry is started, till after the implementation of the scheme or the disposal of an appeal under Section 25 of the Act, it will be reasonable to hold that the bar or embargo envisaged in Section 22(1) of the Act can apply only to such of those dues reckoned or included in the" sanctioned scheme. Such amounts like sales tax, etc. which the sick industrial company is enabled to collect after the date of the sanctioned scheme legitimately belonging to the Revenue, cannot be and could not have been intended to be covered within Section 22 of the Act. Any other construction will be unreasonable and unfair and will lead to a state of affairs enabling the sick industrial unit to collect amounts due to the Revenue and withhold it indefinitely and unreasonably. Such a construction which is unfair, unr....
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....ng suspension of legal proceedings from the moment an inquiry is started, till after the implementation of the scheme or the disposal of an appeal under Section 25 of the Act, it will be reasonable to hold that the bar or embargo envisaged in Section 22(1) of the Act can apply only to such of those dues reckoned or included in the sanctioned scheme. Another construction will be unreasonable and unfair and will lead to a state of affairs enabling the sick industrial unit to collect amounts due to the Revenue and withhold it indefinitely and unreasonably. Such a construction which is unfair, unreasonable and against spirit of the statute in a business sense, should be avoided. (13) It follows from the law laid down by the Supreme Court in Corromandal Pharmaceuticals case (supra) that to be entitled to stay of the legal proceedings under Section 22 of the Act a mere pendency of the enquiry would not suffice; the dues must be reckoned or included in the sanctioned scheme. Section 22(1) is also not attracted to the dues incurred after the date of the sanctioned scheme. 12. The Hon'ble Division Bench of this Court recently in Saketh India Limited vs W. Diamond In....