Research › Search › Judgment

Calcutta High Court · body

2002 DIGILAW 646 (CAL)

BADRI PRASAD SHAW v. BRAITHWAIT AND CO. LTD.

2002-10-01

HRISHIKESH BANERJI

body2002
HRISHIKESH BANERJI, J. ( 1 ) THIS Revisional Application under Section 115 of the Code of Civil Procedure is directed against Order No. 10 dated February 24, 1997 passed by the learned Assistant District Judge, 5th Court, Alipore in Money Suit No. 18 of 1995 of his file. ( 2 ) BY the impugned order the learned Assistant District Judge allowed the opposite party No. 1 - Company's application for stay of further proceedings of the said Money Suit in accordance with the provisions of Section 22 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (the 1985 Act' for short ). The plaintiff-petitioner instituted the above suit for recovery of a sum of Rs. 3,00,000 from the opposite party No. 1 - Company. The suit was filed in the year 1992 in the Court of learned Assistant District Judge, 1st Court, Chinsurah, Hooghly claiming compensation of Rs. 3,00,000. The Opposite party No. 1 - Company filed a written statement denying the allegations made by the petitioner in the plaint of the petitioner's suit as mentioned above. The defendant No. 1 - Company also filed another suit on July 7, 1992 in the 3rd Court of Munsif at Alipore for declaration that the notice under Section 80 of the Code of Civil Procedure filed by the petitioner in this suit, was illegal and void. ( 3 ) ON an application made under Section 24 of the Code of Civil Procedure filed by the petitioner, the suit pending in Hooghly was transferred to the 5th Court of the learned Assistant District Judge, Alipore and the said transferred suit was registered as Money Suit No. 18 of 1995 in the said Court. ( 4 ) BY the present Revisional Application the petitioner challenges the order dated February 24, 1997 passed by the learned Assistant District Judge, 5th Court, Alipore whereby the opposite party No. 1 - Company's application for stay of further proceedings of the money suit purported to be under the provisions of Section 22 of the 1985 Act. ( 5 ) IT is the case of the opposite party No. 1 - Company that it has been suffering from loss for consecutive years and made a reference to the Board for Industrial and Financial Reconstruction (the 'board' for short) under Section 15 (1) of the 1985 Act. ( 5 ) IT is the case of the opposite party No. 1 - Company that it has been suffering from loss for consecutive years and made a reference to the Board for Industrial and Financial Reconstruction (the 'board' for short) under Section 15 (1) of the 1985 Act. On 11-3-1993 the Board declared the opposite party No. 1 - Company a Sick Industrial Company in terms of Section 3 (1) (o) of the 1985 Act. The Company applied for stay of the proceedings in the Money Suit filed by the plaintiff. ( 6 ) THE petitioner contested the said application alleging that the Company had regained its financial position and manufacturing work has been proceeding in full swing in the said Company. According to the petitioner the Company does not come within the purview of Section 22 (1) of the 1985 Act. ( 7 ) THE learned Assistant District Judge, however, held that since the Company has been declared a Sick Industry the further proceedings in the present suit for recovery of money should be stayed under the provisions of Section 22 of the 1985 Act and accordingly ordered such stay till the finalisation of the Scheme by the Board. ( 8 ) CHALLENGING the above order the plaintiff/appellant has filed the present revision application, inter alia, on the grounds that the defendant-Company has regained its financial position and manufacturing works have been proceeding in full swing and as such the said Company does not come within the provisions of Section 22 (1) of the 1985 Act. It is further stated that the defendant-Company has already overcome the transitional period for revival of the Company and at present the said Company is a profiteering concern; that the opposite party No. 1 - Company has made a profit of Rs. 3. 72 crore; that the Company has also recorded increase in its gross production from Rs. 95 crore in 1995-96 to Rs. 140 crore in 1996-97 and that the Company is engaged in export business with certain foreign States viz. , Germany, Finland and Zambia. In such circumstances, it is contented on behalf of the petitioner that the impugned order passed by the learned Assistant District Judge should be set aside and the present application filed by the petitioner should be allowed. ( 9 ) MR. , Germany, Finland and Zambia. In such circumstances, it is contented on behalf of the petitioner that the impugned order passed by the learned Assistant District Judge should be set aside and the present application filed by the petitioner should be allowed. ( 9 ) MR. Dasgupta appearing for the petitioner submits that there should be no suspension of the proceedings in the Money Suit filed by the petitioner in view of the fact that the said Money Suit was filed in the year 1992 while the amendment of Section 22 bringing Money Suits within the purview of the said section providing for suspension of legal proceedings in respect of Money Suits, was introduced w. e. f. 1-2-1994. ( 10 ) IN support of the above contention Mr. Dasgupta has also referred to the Delhi High Court decision in the case of Krimpex Synthetics Ltd. v. Union of India, where it has been held that the above amendment would not operate retrospectively but would be prospective and would apply to all the suits filed or proceeded with after the amendment in Section 22 (1) came into force. ( 11 ) REFERRING to the above decision Mr. Dasgupta submits that in view of the aforesaid amendment and having regard to the present condition of opposite party No. 1 - Company there should be no stay of proceedings of the suit as ordered by the learned Assistant District Judge. ( 12 ) MR. Roy Chowdhury refers to certain provisions of Section 3 (1) (o) of the 1985 Act and also cites the following decisions in support of his contention that stay of the proceedings of the Money Suit filed by the petitioner as ordered by the trial Court should continue:--1. Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. 2. Braithwaite and Co. Ltd. v. D. T. M. Construction P. Ltd. [1996] (1) CLJ 69 3. Rishabh Agro Industries Ltd. v. P. N. B. Capital Services Ltd. ( 13 ) IN Maharashtra Tubes Ltd. 's case (supra) it has been held that where an inquiry is pending under Section 16/17 or an appeal is pending under Section 25 of the 1985 Act there should be cessation of the coercive activities of the type mentioned in Section 22 (1) to permit the BIFR to consider what remedial measures it should take with respect to the Sick Industrial Company. ( 14 ) IN this case it has been held that the expression "proceedings" appearing in Section 22 (1) must be widely construed and 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 the debtor's property, notwithstanding the use of that expression in the marginal note. Section 22 as it stood before the introduction of the Amendment Act of 1993 w. e. f. 1-2-1994 was as follows:--"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 consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect 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. . . . . shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. " ( 15 ) FROM a reading of the aforesaid section it is clear that before the introduction of the amendment on 1-2-1994 suits for recovery of money or for the enforcement of any security against industrial company or of any guarantee in respect of the loans or advance granted to the industrial company were not covered by Section 22 of the 1985 Act. ( 16 ) THE other decision to which Mr. Roy Chowdhury referred is the one in Braithwaite and Co. Ltd's case (supra ). This decision is also not applicable to the facts of the present case as suits for recovery of money had come within the mischief of Section 22 (1) of the 1985 Act before the Misc. Case No. 34 of 1994 referred to in the cited decision, was filed in the Court of learned Assistant District Judge, 24-Parganas. This decision is also not applicable to the facts of the present case as suits for recovery of money had come within the mischief of Section 22 (1) of the 1985 Act before the Misc. Case No. 34 of 1994 referred to in the cited decision, was filed in the Court of learned Assistant District Judge, 24-Parganas. Therefore, this decision is also not applicable to the facts of the present case in which the amendment bringing the Money Suits within the mischief of Section 22 (1) of the 1985 Act was introduced after the filing of the Money Suit by the petitioner herein in the year 1992. ( 17 ) THE decision in Rishabh Agro Industries Ltd. 's case (supra) cited by Mr. Roy Chowdhury is also not applicable to the facts of the present case as in the said matter also the provisions of Section 22 (1) were resorted to after the Money Suits were brought within the purview of the said subsection - of Section 22. ( 18 ) ACCORDINGLY, it is found that the learned Assistant District Judge acted in the exercise of his jurisdiction illegally overlooking the fact that the Money Suit was filed by the petitioner herein before the amendment in Section 22 (1) of the 1985 Act bringing Money Suits within the mischief of the said section. ( 19 ) THE Revisional Application is accordingly allowed. There will, however, be no order as to costs.