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TMI Blog2012 (12) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... rious Loans Act as that plaintiff is not a banking company or other notified company as per the Usurious Loans Act hence not exempted from application of the provisions of Usurious Loans Act as applicable to Delhi and therefore the contractual rate of interest cannot prevail in the face of the statute. No doubt arises that for the liability of the defendant no.1 company, who was the principal borrower, the defendant no.2 stood as a guarantor for payment of the principal amount of the loan of Rs. 65 lacs. - The triable issues in law which entitle leave to defend are only bona fide triable issues. On every disputed question of fact an issue has to be framed, but, it is only a bona fide triable issue which entitles leave to defend. In my opinion, mere technical defences, and which of course are also without any basis in view of the categorical language of the agreement dated 17.11.1998, read with the averments in the plaint, shows that there does not arise a triable issue entitling leave to defend. The issues raised in the leave to defend application are only moonshine and do not entitle the defendant no.2 for leave to defend. - CS(OS) No. 2373/2001 - - - Dated:- 11-10-2012 - MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that Parliament has incorporated an amendment in the Section with effect from 1.2.1994 in these words - "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 advance 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". It appears to us that the phrase "recovery of money" must be construed ejusdem generis and accordingly recovery proceedings in the nature of execution or any other coercive enforcement that has been ordained to be not maintainable. We do not find any logic in holding legal proceedings to be not maintainable, or to be liable to be halted unless, even if the debt sought to be proved in the Plaint has not been admitted. Given the delays presently endemic in the justice delivery system if a creditor is disallowed even from proving the indebtedness of a recalcitrant debtor SICA company, it would cause unjustified hardship. Whichever way we look at the matter, there can be no logic in denying legal recourse to a party for proving its debt. In the event that at l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it has not been pointed out to me as to how dues in the subject suit are admitted by the defendant No.1 in the present suit. 5. In fact now the controversy as to the interpretation of Section 22 is set at rest by the recent judgment of the Supreme Court rendered by a Division Bench of three Judges in the case of Raheja Universal Ltd. Vs. NRC Ltd., 2012 (4) SCC 148. The relevant paras of this judgment are paras 55, 58, 61 and 76 to 81, which read as under:- 55. Despite these judgments and with an intention to clarify the law, we would state that the matters which are connected with the sanctioning and implementation of the scheme right from the date on which it is presented or the date from which the scheme is made effective, whichever is earlier, would be the matters which squarely fall within the ambit and scope of Section 22 of the Act of 1989 subject to their satisfying the ingredients stated under that provision. This would include the proceedings before the civil court, revenue authorities and/or any other competent forum in the form of execution or distress in relation to recovery of amount by sale or otherwise of the assets of the sick industrial company. It is diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of consideration of a scheme till its successful implementation within the ambit and scope of Sections 22(3) and 22A of the Act. 77. Section 22 of the Act of 1985 is very significant and of wide ramifications and application. More often than not, the jurisdiction of the BIFR is being invoked, necessitated by varied actions of third parties against the sick industrial company. The proceedings, taken by way of execution, distress or the like, may have the effect of destabilizing the finalization and/or implementation of the scheme of revival under consideration of the BIFR. It appears that, the Legislature intended to ensure that no impediments are created to obstruct the finalization of the scheme by the specialized body. To protect the industrial growth and to ensure revival, this preventive provision has been enacted. The provision has an overriding effect as it contains non obstante clauses not only vis--vis the Companies Act but even qua any other law, even the memorandum and articles of association of the industrial company and/or any other instrument having effect under any other Act or law. These proceedings cannot be permitted to be taken out or continued without the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawing the money from the bank account of the company would certainly defeat the very purpose of the protection sought to be created by the Legislature under Section 22(1) of the Act of 1985. (underlining added) 6. The salient conclusions which can be arrived at from reading of the aforesaid paras in the case of Raheja Universal (supra) are:- (i) The proceedings which are affected by Section 22(1) are proceedings in the nature of execution, distress or the like. (ii) It depends on facts of each case as to whether the suit is hit by Section 22 i.e all suits including of recovery, are not hit by Section 22(1). (iii) Only those suits which have the effect of execution, distress or like action against the properties of the sick company are hit by Section 22 i.e where a suit is simply for recovery of moneys, and the properties of a sick company are not threatened by the proceedings including interim proceedings such as appointment of receiver, execution, distress or the like, such suits can continue without permission under Section 22. 7. Learned counsel for the defendant no.2 sought to place reliance on the following three judgments to argue that permission under Section 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised in the application for leave to defend by defendant no.1 is that it is a sick company. There is no credible denial of the dues which are payable under the subject suit. The relevant paras of this leave to defend application are paras 3 to 13 and which only talk of defendant no.1-company being a sick company or with respect to prior proceedings under Section 138 of the Negotiable Instrument Act, 1881 or allegedly that of all material documents having been suppressed from the record. The defence is therefore quite clearly only a moonshine, and since as already stated above, Section 22 of SICA does not apply, the application for leave to defend is dismissed and the suit is decreed against the defendant no.1 for the reasons given hereinafter. I may however clarify that for execution of the decree or like proceedings against defendant No.1 prior permission will have to be taken under Section 22 of SICA. 12. The subject suit has been filed by the plaintiff for recovery of Rs. 1,46,95,206/- and which amount comprises of the principal amount of Rs. 65 lacs and the balance is interest thereon. The suit amount is the liquidated amount arising out of the written agreement dated 17.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by D-2). 16. This is an application filed by the defendant no.2 seeking leave to defend. The application is almost identically worded as is the application of defendant no.1 seeking leave to defend, and which has been dismissed above. The only additional aspect that the defendant no.2 has contended is that there is no personal guarantee which has been executed by the defendant no.2, and, therefore, defendant no.2 cannot be made liable to pay the amount as claimed in the present suit. I may note that there is no denial of the fact that the agreement dated 17.11.1998 was executed in favour of the plaintiff. When we look at the agreement dated 17.11.1998 executed by defendant No.2 who is the Managing Director of defendant No.1 in favour of the plaintiff, we find that the same contains the following Clause 4: 4. It is also agreed that Bhai Manjit Singh being the Promoter and Managing Director of THE PARTY OF THE SECOND PART (Montari Industries Ltd) has in his personal capacity agreed and guaranteed the payment of Rs.67,00,000/-(Rupees sixty seven lacs) being the principal amount of loan to the party of the FIRST Part and has also agreed to take over the liability from Montari In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there must be sufficient averments in the plaint to fasten liability upon a particular person as a guarantor. Once again, the judgment of Steel Authority of India Ltd. (supra) does not apply to the facts of the present case inasmuch as, plaint in the present case clearly makes out averments of the fact that defendant no.2 is liable. The fact that there is a defaulted payment under the agreement dated 17.11.1998 by the defendant no.1, and therefore there is liability of both the defendant nos.1 and 2 is quite clearly averred in paras 11,12,14,15,16 and 19 of the suit plaint, and the same read as under:- 11. That during the pendency of the above mentioned Cr. M. (Main) No. 2220/1997 FMI Investments Pvt. Ltd. Vs. State Others, the defendant no.2 as Managing Director of Defendant No.21 approached the plaintiff and both the parties entered into an amicable settlement vide agreement dated 17th November, 1998 whereby the defendants acknowledged and admitted the amount of Rs.67,00,000/- (Rupees Sixty seven lakhs only) and repayment schedule was made for the repayment of the said amount in four instalments. The schedule for repayment of the said was made as follows:- Repayme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to the defendants and made demands but the defendants failed and neglected to pay the same. Defendant No.2 as Managing Director of Defendant No.1 also made promise that he is going to sell the property No.61, Golf Links, New Delhi to some prospective buyer and on receipt of the sale consideration or part thereof he will make the payment to the plaintiff but he again failed and neglected to pay the same. Defendant No.2 has already entered into an agreement to sell the said property for a sum of Rs.8.25 Crores and has received substantial amounts as part payment from the purchasers M/s Senior Builders Pvt. Ltd. New Delhi but so far has not paid the dues of the plaintiff. 16. That as per clause 4 of the said agreement dated 17.11.1998, defendant No.2 in his personal capacity as well as liable to pay the entire amounts due to the plaintiff. 19. That the suit is based on the written contract/agreement entered into between the parties on 17.11.1998. The said written contract/agreement came out of the ICD loan granted by the plaintiff to the defendants as mentioned above and defendant no.2 in his personal capacity not only admitted and acknowledged the said debts and liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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