2002 (10) TMI 409 - HC - Companies Law

Summary

Issues:
1. Stay of proceedings in a money suit under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis:
1. The case involved a Revisional Application under section 115 of the Code of Civil Procedure challenging an order for stay of further proceedings in a money suit under section 22(1) of the 1985 Act. The Assistant District Judge allowed the Company's application for stay based on being declared a Sick Industrial Company by the Board for Industrial and Financial Reconstruction (BIFR). The petitioner contested, claiming the Company had recovered financially and should not fall under section 22(1) of the Act.

2. The petitioner argued that the Company's financial improvement and increased production indicated it was no longer a Sick Industrial Company. The Assistant District Judge, however, upheld the stay order until the finalization of the Scheme by the Board. The petitioner challenged this decision, citing the Company's profitability and export activities as evidence of its improved financial status.

3. The petitioner contended that the amendment to section 22(1) of the 1985 Act, which included money suits, should not apply retrospectively to their suit filed in 1992. They referred to a Delhi High Court decision supporting this argument, emphasizing that the amendment should only affect suits filed after its introduction in 1994.

4. The respondent relied on precedents such as Maharashtra Tubes Ltd., Braithwaite & Co. Ltd., and Rishabh Agro Industries Ltd. to support the stay of proceedings in money suits of Sick Industrial Companies under section 22(1) of the Act. The Court interpreted the scope of "proceedings" in section 22(1) broadly, encompassing legal actions beyond traditional court proceedings.

5. The Court found that the Assistant District Judge had erred in applying the stay order to the petitioner's suit, which was filed before the amendment to section 22(1) extended to money suits. Consequently, the Revisional Application was allowed, and there was no order as to costs.