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TMI Blog2004 (12) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... t in 13 instalments. Similarly, the total hire-purchase value of the machinery and equipment in the second agreement was fixed at Rs. 21,56,039 and the defendant No.1 paid a sum of Rs. 1,88,931 as earnest money and the balance was agreed to be paid in 13 instalments. In terms of clause 2( v ) of the said agreement the dejure possession of the property always remained with the plaintiff; and defendant No.1 was only entitled to use the property at its factory premises. After the payments enumerated above, defendant No.1 defaulted in payment of the instalments. A request was made for extension of time for completing the payment. On the failure of the defendants in making payment the plaintiff also served a legal notice terminating the hire-purchase agreements. An offer was made by the defendants for a onetime settlement which was refused by the plaintiffs. It is stated that the defendants are likely to sell the machines, equipments and the mortgaged properties and if this were to happen, the plaintiff shall suffer irreparable loss and would not be able to recover the same or the value thereof. 3. A reading of Clause 2( v ) of the Hire Purchase Agreements leaves no possibility for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1985 (hereinafter referred to as SICA ) which has allegedly been registered by BIFR on 30-11-2000. The Defendant had contended that under the mandatory provisions of section 22 "the present suit is not maintainable as the same does not lie and/or in any event is liable to be stayed". Inasmuch as the Defendant has not affirmatively stated that properties in question belong to or owned by it in the only pleadings before this court (being I.A. No. 265/2003), this application deserves to be reproduced verbatim. Application under section 22 of Sick Industrial Companies (Special Provisions) Act read with section 151 of Code of Civil Procedure on behalf of Defendant Nos. 1 and 4. Most respectfully Showeth: 1. That the Plaintiff has filed the above Suit for recovery of Rs. 91.54 lakhs (approx.) and Rs. 25.77 lakhs as well as for possession and injunction in respect of alleged properties. It is stated that the Defendant No.1 company which is alleged to be a borrower/hiree to whom the machinery/equipments had been given on Hire Purchase Agreement is a sick industrial company within the meaning of Sick Industrial Companies (Special Provisions) Act. The Defendant No.1 has filed a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to the preceding words, namely, for execution, distress which means that the proceedings which are contemplated in this category are proceedings whereby recovery of dues is sought to be made by way of execution, distress or similar process against the property of the company. Proceedings for eviction instituted by a landlord against a tenant who happens to be a sick industrial company, cannot in our opinion, be regarded as falling in this category. We may, in this context, point out that, as indicated in the Preamble, the Act has been enacted to make special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of Experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined. The provision regarding suspension of legal proceedings contained in section 22(1) seeks to advance the object of the Act by ensuring that a proceeding having an effect on the working or the finances of a sick industrial company shall not be instituted or continued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Foremost Industries Ltd. AIR 1996 Delhi 310, the Single Judge had appointed a Receiver to take over the custody of the plant and equipment. In Prakash Industries Ltd. s case ( supra ) the Division Bench had held that since the Defendant was not paying the instalments it could not be allowed to continue to use machinery and earn money from it in an unbusinesslike manner. In cases where the Respondent has already invoked the provisions of the SICA, it is imperative for the court to intervene since otherwise not only would the instalments be rendered unrecoverable but there would be a danger of the equipments being damaged or becoming non-functional by careless handling of the Lessee/bailee. There may be an exception where the Defendant is legitimately carrying on business and is in a position to honour the decree or orders passed by the Court. This is not so once the Sick Industrial Companies (Special Provision) Act, 1985 comes into operation. 7. Predicated on these precedents I had appointed an Arbitrator in Atul Ltd. v. Prakash Industries Ltd. [2003] (3) AD (Delhi) 459. In Kotak Mahindra Finance Ltd. v. Deve Paints Ltd. AIR 1997 Bom. 401 it had been opined that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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