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TMI Blog2001 (6) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... ring this submission in detail rejected the objection holding that the provisions of section 22 will not operate to stay the proceedings before the arbitrator. The arbitrator made an award for payment of the amount against the applicant as also the company. They were held jointly and severally liable to pay the amount. Neither the company nor the applicant challenged the award by filing a petition under section 34 of the Arbitra-tion and Conciliation Act, 1996. Ultimately, on the basis of the award of the arbitrator, an insolvency notice was taken out by the respondent/decree holder against the applicant, because the award holds the applicant jointly and severally liable for the amount with the company. The learned counsel appearing for the applicant raised two contentions : ( i ) that as in view of the provisions of section 22, the arbitrator could not have made an award, and the award made by the arbitrator is inexecutable and, therefore, it cannot be made the basis of an insolvency notice, ( ii ) the second submission of the learned counsel is that in view of the provisions of section 22, execution of a decree against the company as also its guarantors cannot be proceeded with. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tan Agro Chemicals Ltd. [Arbitration Petition No. 188 of 1995 dated 23-12-1997]. 4. It may be pointed out here that the learned counsel appearing for the applicant also relies on a judgment of a learned single judge of this Court in Jaybharat Credit Ltd. v. APS Star Industries Ltd. [2001] 106 Comp. Cas. 593 (Bom.), wherein the learned single judge has held that even execution proceedings against the guarantors of the sick company are barred by the provisions of section 22. 5. The learned counsel appearing for the respondent/decree holder in relation to that judgment submits that firstly the learned single judge has not considered the other judgments of this Hon ble High Court referred to above. According to the learned counsel, taking out of an insolvency notice is not an execution proceeding and, therefore, according to the learned counsel, the judgment of the learned single judge in Jaybharat Credit Ltd. s case ( supra ) referred to above is not relevant. It is clear from the rival submissions that both the objections raised by the learned counsel for the applicant are based on the provisions of sub-section (1) of section 22. Sub-section (1) of section 22 reads a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress, etc. are concerned, no proceedings of this nature shall lie or be proceeded with except with the consent of the Board. However, when the section was amended to add the claims for recovery of money, the Legislature used the expression suit and not proceedings Thus, if one has to really see the intention, it was to confine to suits only i.e., suits which are understood in common parlance, namely, which are filed in civil courts. It is for this reason that while amending sub-section (1) of section 22 of the SICA, sub-section (5), it was provided that in computing the period of limitation for the enforcement of any right, privilege, obligation or liability the period during which it or the remedy for the enforcement thereof remains suspended under this sub-section shall be excluded. The reason is obvious. It is the suit in respect of which if limitation expires, there is no provision for condonation of delay in the Limitation Act which is not the case in respect of proceedings under sections 14 and 17 of the Arbitration Act. Therefore, the need was felt to introduce specific provision i.e., section 22(5) of the SICA for saving limitation in respect of suits coming wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956, or any other law or the memorandum and articles of association of the industrial company, or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the appellate authority. Thus, it is clear that the proceedings for winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof could not lie and if already taken up could not be proceeded with further except with the consent of the Board or the appellate authority. It is clear that this was with a view to giving a free hand to the Board for Industrial and Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lsa International Ltd. s case ( supra ) only on the second question. The judgment of the Division Bench on the first question was neither relevant for consideration of the question that was being considered by the Supreme Court nor was it actually considered by the Supreme Court. Therefore, the observations of the Division Bench in relation to the question whether the expression suit in section 22 encompasses execution proceedings are still valid and in force and, therefore, binding on this court. 10. In this view of the matter, in my opinion, the execution proceedings on the basis of the award made against the guarantor, i.e., the applicant, would not be barred by the provisions of section 22. The Division Bench of this court in its judgment in the case of Sharad R. Khanna ( supra ) has clearly held that the issuance of an insolvency notice is an independent proceeding and cannot be termed as further proceedings in the original suit. Thus, the Division Bench has held that even where there is a decree passed in a suit, an insolvency notice can be based on that decree as against the guarantor. The following observations appearing in paragraph 8 of that judgment are releva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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