2012 (4) TMI 831 - HC - Companies Law

Summary

Issues Involved:
1. Application of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
2. Jurisdiction of the Civil Court in light of Section 22 of SICA.
3. Validity of the judgment and decree dated 3rd February, 2005.

Summary:

Issue 1: Application of Section 22 of SICA

By this appeal filed u/s 96 of the Code of Civil Procedure, 1908, the appellant challenges the judgment and decree dated 3rd February, 2005, passed by the Additional District Judge, Tis Hazari Courts Delhi, decreeing the suit for recovery of Rs. 5,20,529/- filed by the respondent u/s Order XXXVII of CPC. The appellant contends that the recovery suit was barred by Section 22 of SICA as no permission was sought u/s 22(1) before filing the suit. The appellant's company was registered with BIFR and an appeal was pending before AAIFR. The trial court ignored the pendency of the appeal and wrongly dismissed the leave to defend application, ultimately decreeing the summary suit.

Issue 2: Jurisdiction of the Civil Court in light of Section 22 of SICA

Arguing for the appellant, counsel submitted that the trial judge ignored the mandate of Section 22 of SICA, which bars suits for recovery of money against an industrial company under inquiry or appeal without the consent of the Board or Appellate Authority. The trial court's judgment was claimed to be coram non judice due to lack of inherent jurisdiction. Counsel cited several judgments to support the argument that Section 22's provisions come into play immediately upon registration u/s 15 of SICA and apply equally to pending appeals u/s 25.

Issue 3: Validity of the judgment and decree dated 3rd February, 2005

The respondent opposed the appeal, stating that BIFR had dismissed the appellant's references with strictures and the appellant failed to place material evidence of the pending appeal before the trial court. The trial court dismissed the leave to defend application as the appellant did not raise any triable issues and found that the appellant approached BIFR with unclean hands. The trial court held that merely filing an appeal does not attract Section 22 of SICA. The High Court, however, found this reasoning unfounded and illegal, setting aside the trial court's finding on Section 22's applicability.

The High Court further noted that for the statutory injunction of Section 22 to apply, the appellant must show that the dues claimed by the respondent were included in the scheme before BIFR. The appellant failed to place any such material on record. The court cited Supreme Court and Division Bench judgments to support that mere pendency of an inquiry or appeal does not suffice for Section 22's bar unless the dues are included in the scheme.

In conclusion, the High Court dismissed the appeal, finding no merit in the appellant's arguments. The court directed the release of the decretal amount along with interest accrued thereon to the respondent.