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TMI Blog2004 (1) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the parties. Besides the loan agreement, memorandum of hypothecation of equipments, belonging to the Respondents, was also executed. As dispute arose between the parties, the matter was referred to sole arbitrator, who in turn, passed arbitral award on 21st January, 2000 as per the consent terms signed by the parties. The Claimants had filed Arbitration Petition No. 359 of 1999, in which Court Receiver was appointed as per order dated 29th October, 1999. The Court Receiver took possession of the subject property and appointed the Respondents as agents of the Court Receiver in December 1999. The above factual position is not in dispute. However, after the arbitral award was passed by the sole arbitrator, in February 2000 case No. 104 of 2000 came to be filed before the B.I.F.R at the instance of the Respondents under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA for the sake of brevity). While the said proceedings were pending, Execution Application Lodging No. 270 of 2000 came to be filed by the Claimants in this Court, which, however, was disposed of, again on the basis of consent terms on 28-8-2000. Clause 8A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut passing any accounts and the Claimants shall be entitled to sell and/or otherwise transfer the hypothecated equipment (described in the Schedule annexed Exhibit A to the Statement of Claim) to such persons, in such manner and at such price as the Claimants may deem fit and receive and appropriate the proceeds thereof in the following manner : ( a )firstly towards the costs, charges and expenses relating to the sale/transfer of the equipment and ( b )secondly towards the amounts due and payable by the Respondent to the Claimants and the decree shall be marked partly satisfied accordingly: Provided that the Claimants shall not sell the hypothecated equipment, if the Respondent pays all the amounts due and payable by them to the Claimants within a period of 15 days after the date on which notice of sale is received by the Respondent from the Claimants. ( iii )Without prejudice to the other rights and remedies of the Claimants including right and remedy to recover and receive from the Respondent the amounts mentioned in sub-clause ( i ) hereinabove and right to sell the hypothecated equipment and appropriate the sale proceeds as mentioned in sub-clause ( ii ) hereinabove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nour its commitment under the said consent terms. Although this grievance was placed on record before the B.I.F.R., the B.I.F.R. proceeded to formulate the scheme on 30th October, 2002, as referred to above. It is in this backdrop the present application has been filed by the Respondents for declaration and further relief, as referred to above. 5. This Chamber Summons is resisted by the Claimants on the ground that the application is not maintainable and moreover, the relief as claimed cannot be granted by this Court. 6. Insofar as the objection regarding maintainability of the present Chamber Summons is concerned, it is contended on behalf of the Claimants that as the execution application has already been disposed of on 28-8-2000, the question of entertaining this Chamber Summons in the disposed of execution application does not arise. This submission has been rightly countered by the Respondents by contending that the Chamber Summons is obviously referable to remedy under section 47 of the Code of Civil Procedure. There is substance in the argument that in view of the expansive provisions contained in section 47 of the Code, the Chamber Summons as filed is obviously main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. On that view, the Appellate Authority allowed the Respondent to execute the decree against the assets of the Petitioner company, which view is upheld by the High Court in the facts of the case. Reliance is then placed on the decision of this Court in Industrial Development Bank of India v. Nira Pulp Paper Mills Ltd. [1994] 79 Comp. Cas. 811. In that case, the Court rejected the plea of the defendants that the Court Receiver appointed by the Court cannot be continued in view of the subsequent reference made to B.I.F.R. The Court held that the properties in question became custodia legis and the defendants were holding those properties only as agents of Receiver. The Court has found that the date on which the B.I.F.R. passed orders, the defendants had no independent possession of the suit properties in their own rights as lawful owners thereof and for which reason, section 22 of the SICA did not apply. Reliance is also placed on the decision of this Court in ICICI Ltd. v. Alpine Industries Ltd. 1999(3) Bom. C.R. 771, which deals with the issue as to what is the effect of registration of reference with B.I.F.R. in relation to property, which is custodia legis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned earlier, when the first scheme was formulated, the Claimants gave express consent with reservation only regarding the cut off date, as stated in the Minutes dated 24th September, 2001. That was consent, in fact. Whereas, before the final scheme was framed, no response was given by the Claimants within the specified time, as is mentioned in the Minutes dated 21st August, 2002. This is consent in law in view of the deeming fiction envisaged in section 19(2) of the SICA. It is not the case of the Claimants that the proposed scheme was not circulated to it at all. Understood thus, the scheme crystallises the claim of the Claimants qua the Respondent Company in terms of the Scheme and the provision made therefor in the scheme and the same is statutorily binding on the Claimants. It is only if the Scheme was to be suitably modified so as to make further provision for the claim of the Claimants, it would become entitled to recover further amount commensurately. It is also possible to take the view that if the B.I.F.R. was to grant permission to the Claimants under section 22 of the SICA to proceed with the execution, even then the Claimants may become entitled to recover furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul exclusion of their claim in the scheme finally made, such a grievance can be considered only by the specified Authority in terms of SICA. 11. On the above reasoning, to my mind, none of the decisions pressed into service on behalf of the Claimants will be of any avail. The question that arises for my consideration was obviously not in issue in any of the abvoesaid decisions. 12. I also find substance in the argument canvassed on behalf of the Respondents that the Claimants cannot be permitted to agitate the above grievance before this Court, especially when the Claimants have already filed proper application before the B.I.F.R. in Case No. 104 of 2000 praying for the following reliefs : "( a )recall its Order dated 30th October, 2002 read with Order dated 16th January, 2003, insofar as it relates to the Applicant; ( b )Order and direct the company to make provisions for the repayment of the entire decretal amount outstanding in accordance with the order dated 28th August, 2000 of the Hon ble High Court, Bombay; ( c )to declare the sanctioned scheme as failed in the event the company fails to provide and pay the entire decretal amount outstanding as per prayer ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable against the Respondents in law. It was his submission that there is nothing on record to show that the decree as passed in terms of consent terms has been satisfied by the Respondents. It was argued that this Court ought not to countenance the situation that the decree passed by competent Civil Court is rendered into a paper decree, having regard to the fact that the same was passed when the proceedings before the B.I.F.R. were pending and the respondents consciously agreed for the disposal of the execution application inspite of the pendency of those proceedings under SICA. Moreover, such a plea is untenable in view of the mandate of section 34 of the Arbitration and Conciliation Act, 1996. Indeed, it is not the case of the Respondents that the decree in terms of consent terms has been satisfied by them. It is also not the case of the Respondents that the arbitral award in excess of the amounts specified in the final scheme be set aside. To my mind, although the argument raised on behalf of the Claimants seems to be attractive, however, for the reasons already recorded earlier, that the final scheme would bind the Claimants being creditor, it would not be entitled for any fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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