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TMI Blog2006 (9) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing electronic fans and fuel injection equipments. Respondent No. 2 is a small scale industry. It manufactures copper wires. It supplied its products to the Appellant herein during the period 28-12-1996 and 3-6-2000. As the Appellant-Company became sick, its Board of Directors made a reference in terms of section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short the 1985 Act ) on 8-4-1994. The Appellant-Company was declared as sick unit by the Board for Industrial and Financial Construction (for short "the Board"). A rehabilitation scheme was framed by the Board but it was declared to have failed by an order on 12-7-2001. By reason of the said order, however, Industrial Development Bank of India (IDBI) was appointed as an operating agency. A fresh report was submitted by the said operating agency on 20-3-2003 which was accepted by the Board whereupon a fresh rehabilitation scheme was sanctioned on 8-4-2003. 3. In the meanwhile, the Respondent No. 2 herein filed a claim petition before the Industry Facilitation Council (for short "the Council") Respondent No. 1 herein in terms of the provisions of the Interest on Delayed Payments to Small Scale a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he award was made by the Council in favour of the Respondent No. 2. However, it is also not in dispute that the Board in terms of its order dated 8-4-2003 approved the Scheme which, inter alia, envisaged the following : "( xi )Rs. 462 lakhs for Settlement of "Dormant Trade Creditors" on the basis of 25 per cent principal amount, ( xii )Rs. 540 lakhs for settlement of current overdues of suppliers to be paid over a period of 18 months." 9. In the said Scheme, the award made in favour of the Respondents finds place in the category of Dormant Creditors . The liabilities of the Appellant vis-a-vis the Respondent No. 2 was, therefore, indisputably a subject-matter of the said Scheme. The High Court, in our opinion, committed an error in proceeding on the premise that the awarded amount had not been included and could not be included in the sanctioned rehabilitation scheme, the same being part of transactions which took place after 21-11-1997 ignoring the revised scheme made in the year 2003. 10. The High Court furthermore opined that inclusion of the Respondent as a deferred creditor in the fresh rehabilitation scheme dated 8-4-2003 also did not affect the situation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advances granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority." 17. The said provision, thus, mandates that no proceeding, inter alia, for execution, distress or the like against any of the properties of the industrial company and no suit for recovery of money or for the enforcement of any security, shall lie or be proceeded with further, except with the consent of the Board or as the case may be, the Appellate Authority. The said statutory injunction will operate when an inquiry had been initiated under section 16 or a scheme referred to under section 17 is under preparation and/or inter alia a sanctioned scheme is under implementation. It is not disputed before us that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by reason of the fact that the liability of the sick company for the first time arose after the date of sanctioned scheme and the sick industrial unit was enabled to collect tax due to the Revenue from the exporters thereafter but declined to pay it over to the Revenue where for recovery proceedings had to be taken. This Court categorically opined that there cannot be any impediment in the enforcement of the scheme. Section 22 of the 1985 Act provides for a safeguard against impediment that is likely to be caused in the implementation of the scheme. Section 22 was also held to be of wide import as regards suspension of legal proceedings from the moment, the inquiry is started till after the implementation of the scheme or disposal of the scheme under section 25 of the 1985 Act. It was categorically held : ". . .it will be reasonable to hold that the bar or embargo envisaged in section 22(1) of the Act can apply only to such of those dues reckoned or included in the sanctioned scheme. . . ." The ratio laid down in the said decision, therefore, instead of assisting the Respondent assists the Appellant. 23. In Maharashtra Tubes Ltd. v. State Industrial Investment Corpn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect notwithstanding anything inconsistent therewith contained in any other law including the Standing Orders made under the Industrial Employment (Standing Orders) Act, but it will have no application in a case where something different is envisaged in terms of the statutory scheme. A beneficial statute, as is well known, may receive liberal construction but the same cannot be extended beyond the statutory scheme. . . ." (p. 653) 29. In Shri Sarwan Singh v. Shri Kasturi Lal [1977] 1 SCC 750, this Court opined : ". . .When two or more laws operate in the same field and each contains a non obstante clause stating that its provisions will override those of any other law, stimulating and incisive problems of interpretation arise. Since statutory interpretation has no conventional protocol, cases of such conflict have to be decided in reference to the object and purpose of the laws under consideration. . . ." The endeavour of the court would, however, always be to adopt a rule of harmonious construction. 30. In NGEF Ltd. v. Chandra Developers (P.) Ltd. [2005] 8 SCC 219, interpreting sub-section (4) of section 20 of SICA, it was held : "It is difficult to accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athers Ltd. [2006] 67 SCL 383 (SC) the law is stated in the following terms : "The non obstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy. Only because the dues of the workmen and the debt due to the secured creditors are treated pari passu with each other, the same by itself, in our considered view, would not lead to the conclusion that the concept of inter se priorities amongst the secured creditors had thereby been intended to be given a total go-by. A non obstante clause must be given effect to, to the extent the Parliament intended and not beyond the same." 32. For the reasons aforementioned, the impugned judgment cannot be sustained. Before parting with this case, however, we may observe that we have not adverted to the question raised by the learned counsel for the Respondents as to whether the Board while implementing the scheme could reduce the quantum of the liability of creditors, as we are of the opinion that such a contention need not be gone into at this stage. It will, therefore, further be open to the Respondent No. 2 to approach the Board, if any occas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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