2005 (2) TMI 527 - HC - Companies Law

Summary

Issues Involved:
1. Requirement of separate permissions under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) for proceeding with the recovery suit and for executing the decree.
2. Validity of BIFR's composite permission covering both suit proceedings and execution proceedings.
3. Interpretation of Section 22(1) of SICA post-1994 amendment.

Detailed Analysis:

1. Requirement of Separate Permissions under Section 22(1) of SICA:
The primary issue in the writ petition was whether separate permissions were required under Section 22(1) of SICA for proceeding with the recovery suit and for executing the decree, or if a composite permission would suffice. The petitioner contended that after the 1994 amendment to Section 22, which included the expression "pertaining to suit for recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to industrial company," separate permissions were necessary for filing the suit and for executing the decree.

2. Validity of BIFR's Composite Permission:
The BIFR had granted permission to respondent No. 3 to proceed with the suit, which was interpreted to include both the suit proceedings and the execution of the decree. The petitioner argued that the BIFR's order did not explicitly cover execution proceedings and that a separate permission should have been sought. However, the BIFR, in its orders dated 31-8-1998, 31-10-2002, and 28-1-2004, clarified that the permission granted included both the suit and execution proceedings. The Appellate Authority for Industrial and Financial Reconstruction (AAIFR) upheld this interpretation, stating that once permission to file a suit was granted, further action to recover the money would necessarily follow unless explicitly limited by the BIFR.

3. Interpretation of Section 22(1) of SICA Post-1994 Amendment:
The court analyzed Section 22(1) of SICA, which suspends legal proceedings against a sick industrial company except with the consent of the BIFR or the appellate authority. The petitioner argued that the 1994 amendment necessitated separate permissions for suit proceedings and execution proceedings. However, the court found that Section 22(1) did not prescribe any specific mode of granting permission and did not bar the issuance of a composite order covering both stages. The court noted that the BIFR had granted permission in 1998, post-amendment, and was aware of the amendment's implications. Therefore, the BIFR's composite permission was valid and covered both the suit and execution proceedings.

Conclusion:
The court dismissed the petition, agreeing with the AAIFR's view that the BIFR had granted permission for both the suit and execution proceedings. The court held that Section 22(1) of SICA did not require separate orders for filing a suit and executing a decree and that a composite order could be issued. The court emphasized that the BIFR and AAIFR are the competent authorities to grant such permissions, and their clarification that the permission covered both stages was binding. The petitioner's resistance to the execution of the decree, which had been affirmed up to the Supreme Court, was not justified.