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TMI Blog2006 (9) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... s having made 1-3 year deposits with the Appellant Company to more than 26 lakhs. The said deposits have been received by the Appellant Company as borrowings utilised towards the working capital requirements of the appellant. Due to foreign competition and demand recession, the appellant became sick and was forced to make a reference to the Board of Industrial and Financial Reconstruction (for short, BIFR ) under section 15 of the Sick Industrial Undertakings (Special Provisions) Act, 1985 ( the Act for short) during January 2000. BIFR registered the said reference as Case No. 49/2000. Enquiry was ordered in the matter. IFCI was appointed as Operating Agency to prepare comprehensive report in the matter. 3. Respondents made applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the appellant. Per contra, learned counsel for the respondent would support the order in question. 7. After hearing, we have seen the order passed by the Company Law Board. In fact, the appellant raised this very plea before the Company Law Board and the Company Law Board has chosen to reject the same in the light of the order of this Court in WA No. 9750 of 1996 dated 5-1-2000. Let us see as to whether the appellant s argument can be accepted in the given circumstances. 8. Section 22 of the Act reads as under : " Suspension of legal proceedings, contracts, etc. (1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3] 2 SCC 144 - refers to section 22 of the Act. The Apex Court ruled that the expression proceedings in section 22(1) must be widely construed; and that it cannot be confined to legal proceedings understood in the narrow sense of proceedings in a court of law or a legal Tribunal for attachment and sale of debtor s property, notwithstanding the use of that expression in the marginal note. Tata Davy Ltd. v. State of Orissa [1997] 14 SCL 81 (SC) - is a case dealing with section 22 of the Act. The Court in that case ruled that the State cannot recover arrears of tax without seeking consent of the Board in this regard. Gram Panchayat v. Shree Vallabh Glass Works Ltd. [1990] 2 SCC 440 - is a judgment of the Supreme Court in which the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question in para 4 of its order reading as follows: "4. The question for our consideration is whether section 22 of the Act extends to and attracts proceedings under section 58A(9) of the Companies Act, 1956?" (p. 402) The Division Bench after noticing section 22 of the Act has ruled in paragraphs 6 and 7 of its judgment reading as under: "6. The term deposit has been defined by the Explanation to section 58A as a deposit of money with a company including an amount borrowed by it but excluding such categories of amount as may be prescribed in consultation with the Reserve Bank of India. The learned Single Judge has considered this question in detail. He has placed reliance on the decision of Supreme Court in Vijay Mills Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reted in a limited sense and cannot be said to cover situations where there really is no element of execution, distress or the like against any property owned by the industrial company. Interpreting the term no suit for recovery of money , thus, we find that it certainly would not cover a simple claim made by depositors for the return of their deposits after maturity. As held by the Apex Court in the decision, supra, it is a sum kept with the company by the depositors in trust for return after maturity. The learned Single Judge has on proper and detailed appreciation of the matter has come to the correct conclusions. The reasons assigned by the learned Single Judge for arriving at the said conclusion are well-founded and do not call for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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