TaxTMI 
TaxTMI 
2019 (8) TMI 1903
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..... 3. It is further contended that the show cause notice dated 17th November, 2018 was delivered on the Counsel, who informed an ex-employee of Applicant/Judgment Debtor about the same vide e-mail dated 28th November, 2018. The employee obtained the copy of the show cause notice and the Execution Petition from the said counsel and filed the present application. It is also contended that Applicant was under a bona fide belief that the counsel engaged by them was diligently following the matter. The callous and negligent attitude of the counsel is the main reason that prevented them from appearing before this Court to prosecute the present suit. It is further contended that the Judgment Debtor/Defendant was declared as a sick company under the provisions of Sick Industrial Companies Act, 1985 (SICA), pursuant to the reference bearing No. 162/1998 registered with Board of Industrial and Financial Reconstruction (BIFR) on 18th September 1998. For the period from 18th September, 1998 till the 18th September, 2014, the reference remained pending. Learned counsel for the Applicant/Judgment Debtor contends that the institution of the present suit and the decree is in contravention of Sec....
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....sition, the decision of the Division Bench of this Court in Saketh India Limited (supra) is relevant. In the said case, the court analysed whether the provisions of SICA were attracted to a suit that is essentially for recovery of money. The Court conceived this question and held as under; "2. It appears from a perusal of the records that Summons in Form 4 under Order XXXVII of the CPC were served on Defendant No.1 by affixation at Hosur, Karnataka on 22.8.2005 and on Defendant No.2 on 30.8.2005 at Bangalore. The aforementioned Applications filed on behalf of the Defendants are dated 25.1.2006 and were filed on that very day; they have been supported by Affidavits of Defendant No.2 who is the Managing Director of Defendant No.1. On 7.11.2008, the learned Single Judge directed the Defendants to file, within four weeks, an affidavit stating whether or not the monies claimed by the Plaintiff have been admitted by the Defendant and have been reflected in the documents filed by the Defendant before the Board for Industrial and Financial Reconstruction ("BIFR" for short). On 16.3.2009, the learned Single Judge granted a last opportunity to file the said Affidavit. On the next da....
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....med to be correct. The CPC now mandates that the Written Statement must be filed within thirty days and in exceptional circumstances not later than ninety days of service. The rigours of this provision are not circumvented by preferring an application under Order VII Rule 11 of the CPC. We, therefore, conclude that the Appeal, inasmuch as it challenges the impugned Judgment, is bereft of merit. 5. We think it appropriate, however, to consider the provision of SICA and analyse what it endeavors to achieve. We must immediately take note of the fact that SICA has been repealed by Sick Industrial Companies (Special Provisions) Repeal Act, 2003. While it is yet to be notified, it is significant that provisions akin to Section 22 are conspicuous by their absence in the new Scheme of revival of sick companies inserted in form of Part VIA, namely, "Revival and Rehabilitation of Sick Industrial Companies". Obviously, empirical analysis discloses that more often than not companies which have sought shelter of SICA have done so to procrastinate, delay and defer clearing its liability, with the obvious intention of coercing creditors into unfair settlements rather than implementing pr....
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.... the latter. A holistic reading of Section 22(1) of SICA makes it manifestly clear that Parliament's intention was to insulate sick companies only against proceedings for winding-up or for execution, or distress or the like or for enforcement of any security or guarantee. In the case in hand, despite several opportunities granted to the Appellant, it has miserably and perhaps deliberately failed to substantiate that the claim mentioned in the Suit has been reflected in the Scheme placed before the BIFR but even more poignantly, that a scheme was, in fact, pending before BIFR. If an Appeal is pending, has BIFR failed to grant or has withdrawn registration under SICA. We see the conduct of the Appellant as nothing more than an abuse of SICA." 7. Similar view has been taken by this Court, in M/s Ralson Industries Ltd (supra). The relevant portion read as under; "3. Having heard the learned counsel for the petitioner, I do not see any reason or merit in the instant review application. The law as to the continuation of a suit filed against a sick company is no longer res integra, and is well laid by the Division Bench of this court in Saketh India Ltd. Vs. W. Diamond India L....
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....in the Scheme placed before the BIFR, the aggrieved party must be permitted to prove its claim. In holding so, the only prejudice that we can conceive of is incurring expenditure in legal fees. When this is weighed against the interests of a person claiming that the company is indebted to it, the balance tilts in favour of the latter. A holistic reading of Section 22(1) of SICA makes it manifestly clear that Parliament's intention was to insulate sick companies only against proceedings for winding-up or for execution, or distress or the like or for enforcement of any security or guarantee. In the case in hand, despite several opportunities granted to the Appellant, it has miserably and perhaps deliberately failed to substantiate that the claim mentioned in the Suit has been reflected in the Scheme placed before the BIFR but even more poignantly, that a scheme was, in fact, pending before BIFR. If an Appeal is pending, has BIFR failed to grant or has withdrawn registration under SICA. We see the conduct of the Appellant as nothing more than an abuse of SICA. 14. The discussion contained above leads to the thesis that as soon as a claim stands admitted, either because it....
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....h the miscellaneous applications stand dismissed." 8. The decision of the Supreme Court in Raheja Universal Limited vs NRC Limited and Ors. (2012) 4 SCC 148 is also significant wherein the court held as under: "Section 22 of the Act of 1985 is very significant and of wide ramifications and application. More often than not, the jurisdiction of the BIFR is being invoked, necessitated by varied actions of third parties against the sick industrial company. The proceedings, taken by way of execution, distress or the like, may have the effect of destabilizing the finalization and/or implementation of the scheme of revival under consideration of the BIFR. It appears that, the Legislature intended to ensure that no impediments are created to obstruct the finalization of the scheme by the specialized body. To protect the industrial growth and to ensure revival, this preventive provision has been enacted. The provision has an overriding effect as it contains non obstante clauses not only vis-à-vis the Companies Act but even qua any other law, even the memorandum and articles of association of the industrial company and/or any other instrument having effect under any other ....
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....ot be hit by Section 22 (1) of the SICA. Significantly, there is no denial to the averments made in the Plaint, the contents of the Plaint have to be presumed to be correct. The final decision of the Court is only determinative of the indebtedness of the Applicant. The suit even without the permission of BIFR was maintainable on the date of filing. 10. The Defendant/ Judgment Debtor finally came out of the purview of the said Act on 18th September, 2014. There is no explanation or reason offered by the Defendant that would justify the delay in approaching this court from the said date till the filing of the present application. The only argument that is forthcoming is that the Applicant became aware of the present proceedings on receiving the show cause notice dated 17th November, 2018. Defendants/Judgment Debtor has indulged in blame game by levying allegations against the counsel, shifting the burden on him. This Court in Moddus Media Pvt Ltd. vs M/s. Scone Exhibition Pvt. Ltd, 2017 SCC OnLine Del 8491 has held as under: "12. In these presents, the allegation of the appellant/defendant company is that their lawyer has stopped appearing after 10.11.2014. It is also all....