2010 (2) TMI 1316 - HC - Indian Laws

Summary

Issues involved: Interpretation of Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) regarding staying further proceedings in a suit for recovery of money under Order 37 of the CPC.

Summary:
1. The appellant challenged the order staying proceedings in the suit under Section 22 of SICA, arguing that since nothing remained to be "proceeded with" in the suit, Section 22 did not apply. The contention was based on the judgment in Arjun Singh v. Mohindra Kumar AIR 1964 SC 993.

2. The learned Single Judge held that SICA prevails over other laws, and registration of reference under SICA denudes the court's jurisdiction until approval under Section 22 is sought.

3. Unlike Order 9 Rule 7 of CPC, Section 22 of SICA bars the institution or further proceedings of a suit for recovery of money. The question arises whether proceedings include pronouncement of judgment after arguments are heard and reserved.

4. The appellant relied on legal precedents to support the argument that once judgment is reserved, no further proceedings are required in the suit.

5. The respondent's counsel cited cases emphasizing that pronouncement of judgment is a crucial stage in legal proceedings and the court retains jurisdiction until judgment is pronounced.

6. The term "proceeding" encompasses all steps in a legal action from commencement to judgment execution. The process of pronouncing judgment involves specific legal requirements.

7. The legal steps required after judgment is reserved, such as notice of pronouncement, are considered part of the proceedings. The literal interpretation of Section 22 supports the bar on further proceedings.

8. Section 22 aims to protect sick companies from legal actions, including suits, and the bar applies to all suits against such companies. Differentiating between steps for judgment and other proceedings lacks a rational basis.

9. The appellant's reference to Section 33 of CPC to argue for pronouncement of judgment after hearing is rejected, as Section 22 of SICA prevails. Allowing judgment pronouncement post-reservation could lead to inconsistent legal interpretations.

10. The appeal is dismissed with no order as to costs, concluding that the bar under Section 22 applies to prevent further proceedings in the suit.