2003 (6) TMI 395 - HC - Companies Law

Summary

Issues:
1. Petition for Writ of Mandamus to recover unpaid gratuity under Tamil Nadu Revenue Recovery Act, 1864.
2. Applicability of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 on recovery proceedings.

Analysis:

Issue 1:
The petitioner sought a Writ of Mandamus to direct respondents 1 and 2 to initiate action under section 9 of the Tamil Nadu Revenue Recovery Act, 1864, to recover unpaid gratuity of Rs. 80,979 with interest from the third respondent. The petitioner, a retired employee, had filed a case under the Payment of Gratuity Act, 1972, resulting in a direction to the third respondent to pay the due amount. Despite non-payment, a certificate under section 8 of the Revenue Recovery Act was issued. The third respondent cited the Sick Industrial Companies Act, 1985, as a reason for non-payment, indicating that coercive action should not proceed without Appellate Authority's leave. The petitioner's plea was based on the non-realization of the amount despite the issuance of a distraint order.

Issue 2:
The central question revolved around the applicability of section 22 of the Sick Industrial Companies Act, 1985, on recovery proceedings. The Act mandates suspension of legal proceedings against a sick industrial company pending an inquiry or scheme consideration. The Supreme Court rulings emphasized the Act's focus on industrial revival and the need for consent before coercive actions. Previous court decisions supported the requirement of Board consent for execution proceedings, aligning with the Act's objectives. Despite the petitioner's reliance on various decisions favoring recovery, the judgment upheld the Act's provisions, directing respondents 1 and 2 to approach the Board under section 22 for further action, ultimately denying the Writ of Mandamus sought by the petitioner.

In conclusion, the judgment delved into the intricacies of recovery proceedings under the Revenue Recovery Act and the implications of the Sick Industrial Companies Act, emphasizing the need for Board consent in cases involving sick industrial companies. The detailed analysis provided clarity on the legal framework governing such matters, ensuring adherence to statutory provisions and judicial precedents.