2003 (4) TMI 467 - HC - Companies Law

Summary

Issues Involved:
1. Applicability of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) to the execution of a decree for labour charges.
2. Determination of whether the petitioner is a creditor under SICA.
3. Validity of the stay order on the execution of the decree.

Issue-wise Detailed Analysis:

1. Applicability of Section 22 of SICA to the Execution of a Decree for Labour Charges:

The petitioner sought to quash the order staying the execution of a decree for labour charges related to painting and signboard work, invoking Section 22 of SICA. The respondent argued that execution could not proceed without the consent of the Board for Industrial and Financial Reconstruction (BIFR), as the respondent company was declared sick under SICA. The Court examined whether Section 22, which suspends legal proceedings against sick industrial companies, applied to the execution of a decree for labour charges.

2. Determination of Whether the Petitioner is a Creditor Under SICA:

The petitioner contended that he was not a creditor of the company but had performed labour work, which should not be classified as a loan or credit. The petitioner argued that the learned Civil Judge erred in staying the execution, as labour charges do not fall under the definition of loan/credit. The Court analyzed whether the petitioner's claim for labour charges could be considered a loan or advance under Section 22 of SICA.

3. Validity of the Stay Order on the Execution of the Decree:

The Court considered the main question of whether Section 22 of SICA, which suspends legal proceedings, including execution, applied to the petitioner's decree for labour charges. Section 22(1) of SICA was quoted, highlighting that no proceedings for execution against the properties of a sick industrial company shall lie without the consent of the Board. The Court referred to previous judgments, including the Supreme Court's decision in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, which emphasized that the suspension of legal proceedings under Section 22(1) aims to protect the finances of a sick industrial company.

The Court also considered other relevant judgments, such as Baburao P. Tawade v. Hes Ltd., where it was held that the bar under Section 22(1) of SICA does not apply to applications for recovery of earned dues by workmen. Similarly, in Modi Industries Ltd. v. Addl. Labour Commissioner, it was held that proceedings for recovery of wages due to workmen are not affected by Section 22 of SICA. The Court also referred to Keshri Steels v. M.P. Electricity Board, which held that claims for arrears of electricity charges do not attract the bar under Section 22 of SICA.

Conclusion:

The Court concluded that the petitioner's claim for labour charges for painting and signboard work does not fall under the category of loan or advance. Therefore, the bar under Section 22 of SICA is not attracted to such claims. The impugned order staying the execution of the decree was quashed, and the executing Court was directed to proceed with the execution. No order as to costs was made.