9911796707
TMI Blog2003 (12) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... , the respondent herein, stating that the company was proposing a scheme of compromise/arrangement with its secured and unsecured creditors, an order was passed in terms of minutes. The minutes which were tendered before the Court, inter alia, provided that six months thereafter the company would hold a meeting of the secured and unsecured creditors for considering the scheme of compromise or arrangement. On the same date an order was prayed in terms of prayer clauses ( a ) and ( c ) of Company Application (Ldg.) No. 880 of 2003 which was in the following terms : ( a )That till the sanction of the Scheme/arrangement this Hon ble Court be pleased to pass an order staying, all legal proceedings including proceedings under the Secrutisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng before this Court. Despite this no notice was given. 3. The order dated 15th October, 2003 records that counsel appearing on behalf of the applicant (the respondent herein) stated that the company was depositing Rs. 20 lakhs every month towards liability with regard to " various creditors " with the Economic Offences Wing of the Crime Branch of Greater Bombay Police Department and the company would continue to do so. It was on the basis of the aforesaid statement that an order came to be passed in terms of prayer clauses ( a ) and ( c ) of the company application. The grant of relief in terms of prayer clause ( c ) is not in contest because it requires investment of the monies deposited with the Police department in a nationalised ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Protection Act, 1986 in different parts of the country including Mumbai, Gujarat, Calcutta, Hyderabad, Rajasthan and Delhi. Several arbitration proceedings are also pending against the company. All these have been stayed on the basis of a patently incorrect and untrue representation made before the Court that an amount of Rs. 20 lakhs was being deposited with the Police to meet the obligations towards various creditors. 6. The Central Bank of India who has moved the Court with the company application for vacating the ex parte order has outstandings in the amount of Rs. 28.02 crores as on 21st October, 2003. Besides the Central Bank, which has appeared before this Court, Karnataka Bank which is the lead bank in the consortium of len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to the manner in which the company proposes to infuse funds in future. Thereafter there is a statement that the company has introduced a scheme of compromise/arrangement. In support of the application for the grant of a stay under section 391(6) there is only a bald averment that "in the circumstances aforesaid it is just fair and proper and in the interest of all concerned that pending the sanction of the scheme for compromise this Court to stay all the proceedings against the Company". 8. An order under section 391(6) of the Companies Act, 1956 cannot be sought as a matter of course. The Court, undoubtedly, has a wide discretion to pass an order, at any time after an application has been made to it under section 391(6), staying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses Pvt. Ltd. [1991] 72 Comp. Cas. 61 . 9. In the present case while moving the Court for grant of a stay under section 391(6) there was a passing reference in paragraph 9 of the affidavit in support to the fact that the reference which had been made by the company under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 "did not succeed before B.I.F.R." and that the appeal which has been filed before the A.A.I.F.R. is pending. The order of the B.I.F.R. has not been annexed. At this stage it is not necessary to comment upon the merits of the proceedings before the A.A.I.F.R. since the appeal is pending. However, the order of the B.I.F.R. which has now been placed on the record by the Central Bank discloses th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court all relevant material which has not been produced in the present case. In my view, it will neither be appropriate nor in the interest of justice for this Court, in exercise of its powers under section 391(6), to restrain the secured creditors including banks and financial institutions from taking recourse to the proceedings which have been instituted before the Debt Recovery Tribunals under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. This is particularly so in view of the law laid down by the Supreme Court in Allahabad Bank v. Canara Bank [2000] 4 SCC 406 which recognized the exclusive jurisdiction of the Debt Recovery Tribunals in the matter of adjudication under the Act and in the execution of orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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