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TMI Blog1998 (7) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... junction of this Court from in any manner dealing with and/or disposing of and/or parting with possession and/or alienating and/or encumbering and/or creating third party right, title and interest in respect of the leased equipment more particular description of which is set out in the schedule being exhibit A to the petition or any part thereof, and for interim and ad interim reliefs in terms of prayers ( a ) and ( b ) above. 3. The petitioners carry on the business, inter alia, of leasing, having their registered office in Bombay. The respondents carry on the business of, inter alia, manufacturing and selling polyester filament yarn, polyester chips and cotton yarn. By an agreement dated 16-8-1994 (exhibit B to the petition) executed by and between the petitioners as the owners and the respondents as the lessee, the petitioners gave on lease to the respondents the said leased equipment, namely, the DG set consisting of engine and alternator (Unit II) of Wartsila ABB make with the particulars set out and described in schedule exhibit A to the petition, on terms and conditions as contained in the said lease agreement. The said agreement sets out the terms and condition wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the case of the petitioners that so far as the respondents are concerned, they are heavily indebted to the petitioners but the respondent-company are otherwise also in a precarious financial condition and that one of the leading public financial institution, namely, the Industrial Credit and Investment Corpn. of India Limited (ICICI) has filed a suit on the original side of this Court being Suit No. 3287 of 1997 1 wherein a receiver has been appointed in respect of almost all the movable and immovable properties of the respondents. According to the petitioners, as per the special audit conducted by the plaintiffs, namely, the ICICI in the said suit, it is revealed that there is a large scale siphoning out of funds by the management of the respondent-company. The respondents have not paid insurance on the assets and, therefore, in order to protect the petitioners rights, the petitioners have filed this petition and have sought appointment of the Court receiver. 7. The respondents have filed their reply and it is urged on their behalf that so far as this petition is concerned, this Court does not have the jurisdiction to entertain this petition inasmuch as the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was not granted for the purpose of enabling the court to entertain a suit for land." 9. Reliance has also been placed on behalf of the respondents on a ruling in Noorjahan v. Sadrunnisa [1993] Mh LJ 208 in support of their contention that the requirement of obtaining leave under clause XII of the Letters Patent cannot be ignored. So far as this issue is concerned, a perusal of the pleadings pertaining to the jurisdiction reflects that the petitioners carry on business and have their office in Bombay. Under the agreement, the lease rentals were payable by the respondents to the petitioners in Bombay; the respondents also have their office in Bombay, though it is urged on behalf of the respondents that at the material time their office at Bombay was closed. The mere fact that the office of the respondents at Bombay was closed at the relevant time, does not entitle the respondents to contend that this Court has no jurisdiction. It is not the case of the respondents that they had no office at Bombay at the relevant time but the contention is that their office at Bombay was closed at the relevant time. Further, so far as the arbitration proceedings are concerned, in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or otherwise, the lessee shall at its own cost and expense forthwith deliver or cause to be delivered to the lessor, equipment at such time and place as may be directed by the lessor in good working order and condition (subject to normal wear and tear). This clause, therefore, provides that the equipment is to be returned to the lessor, being the petitioners herein, who have the ownership right in respect thereof and that this agreement does not confer any right, title or interest in the equipment to the lessee, namely, the respondents herein. Clause 6.2 of the agreement provides that the lessee shall have to affix a name plate or other mark on the equipment identifying the sole and exclusive ownership thereof of the lessor and not allow or permit the same to be removed or defaced. Clause 6.4 provides that the respondents, who are the lessees, will hold the equipment as the bailee of the lessor and not claim any right, title or interest in the equipment other than that of a lessee or contest the lessor s sole and exclusive ownership thereof. Clause 6.12 provides that the lessee, namely, the respondents herein, shall not transfer, assign or otherwise dispose of or purport to transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim protection of the bar under section 22 of the SICA. In that respect on behalf of the petitioners, reliance has been placed upon a ruling in the case of Ananta Udyog (P.) Ltd. v. Cholamandalam Investment Finance Co. Ltd. [1995] 83 Comp. Cas. 498 (Mad.) wherein it has been observed as follows (headnote): "...The proceedings which can be stayed under section 22 of the Act are the proceedings against the properties of the industrial company alone. The property to be seized and sold in pursuance of the order obtained by the respondent in the suit was not the property of the appellant-company and would not fall within the scope of section 22(1) of the Act. Since no appeal had been filed against this order, it had become final, and the respondent was free to have it enforced. Further proceedings in the suit, however, being for recovery of money, were liable to be stayed under section 22 of the Act." (p. 498) 15. On behalf of the petitioners, reliance has been placed upon a judgment in Notice of Motion No. 1154 of 1991 in Suit No. 1163 of 1991, delivered on 23-8-1996 by Shri Justice Variava, wherein it has been observed as follows : "This question has arisen often befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the leased equipment. Further, the lease agreement was terminated by the petitioners by virtue of the fact that the respondents did not pay the rentals and, therefore, so far as the property is concerned, it is not possible to hold that the respondents had any right in the property as the same is of the exclusive ownership of the petitioners. In order to invoke the bar under section 22(1) of the SICA, it is absolutely essential that the assets in question must belong to the industrial company. So far as the property in the present case is concerned, the same is not the property of the respondents, ownership in respect thereof being that of the petitioners. 18. On behalf of the petitioners, reliance has also been placed upon a judgment delivered by Shri Justice V.R. Datar, in [Arbitration Petition No. 188 of 1995, dated 23-12-1997], Toefer International Asia v. Hindustan Agro Chemicals. There also the question under consideration was that since the petitioner had not obtained leave under section 22 of the SICA, therefore, they are not entitled to maintain the arbitration petition. However, so far as this judgment is concerned, the same does not apply to the facts of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. Such a narrow meaning would run counter to the scheme of the law and frustrate the very object and purpose of section 22(1) of the 1985 Act." (p. 819) 21. The aforesaid ruling does not apply to the facts of the present case inasmuch as the petitioners herein have filed arbitration proceedings which are being conducted and which are in progress and during the pendency of the said proceedings, by virtue of the fact that the petitioners claim ownership rights in respect of the leased equipment in question, the petitioners have sought necessary protection of their rights. 22. Reliance has also been placed on behalf of the respondents on Real Value Appliances Ltd. v. Canara Bank [1998] 93 Comp. Cas. 26 (SC) wherein it was observed that once the reference is registered after scrutiny, it is mandatory for the BIFR to conduct an inquiry and from that time, action against the company s assets must remain stayed till final decisions are taken by the BIFR. So far as the assets, which are the subject-matter of the petition are concerned, the same do not belong to the respondents nor have the respondents any right in respect of the said assets. Hence, so far as this ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, the object of fixing the equipment to the flooring with nuts and bolts is only with a view that the same is better used but the same does not create any right in favour of the respondents in respect of the said equipment. 25. Further, it is contended on behalf of the respondents that the equipment is not in a working condition and on the contrary, they have placed an order for replacement in February, 1997. If the said equipment was not in working condition and there is a breakdown as mentioned by the respondents in their affidavit dated 19-3-1998, and a letter addressed to Wartsila Diesel Qy. Finland, dated 16-9-1996 (exhibit 4 to the said affidavit-in-reply), requesting them to depute their ABB experts to chalk out the action plan immediately, so far as the respondents are concerned, in that event the same should have been returned to the petitioners instead of accrediting the lease rentals to their account and, therefore, the argument advanced on their behalf cannot be sustained and, therefore, in view of the fact that the ownership rights vest in the petitioners, the petitioners have a right to seek protection of their property. 26. Hence, the petition made a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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