Barar Industries Ltd. vs Nagpur Engineering Co. Ltd.

Pradip Mohanty, J.—This civil revision is directed against the Order dated 02.05.2001 passed in Execution Case No. 10 of 2000 by the Civil Judge (Senior Division), Anandpur.

The case of the Petitioner is that the aforesaid execution case arises out of the compromise decree between the Petitioner-company and the Opposite Party company in Special Civil Suit No. 92 of 1996 of the Court of Civil Judge (Senior Division), Nagpur. The Opposite Party was the Plaintiff in the said suit and the Petitioner was the Defendant. The compromise decree was passed on 20th January 1996. After the compromise decree, the Petitioner approached the Board for Industrial and Financial Reconstruction (for short "BIFR") constituted under the provisions of Sick Industrial Companies (Special Provisions) Act 1985. The BIFR accepted the application and registered O.A. No. 76 of 1997. While the matter was pending before the BIFR, the Opposite Party-decree holderfiled an execution case for execution of the aforesaid compromise decree, which was transferred to the Civil Judge (Senior Division), Anandpur, and registered as Execution Case No. 10 of 2000. On receipt of the notice to show cause in the above noted execution case, the Petitioner-Judgment debtor appeared and filed its show cause stating therein that the matter is under consideration of the BIFR. In the said show cause, it took a stand that Section 22 of the aforesaid Act completely ousted the jurisdiction of the Civil Court since the matter was pending before the BIFR. The Court below, however, rejected the contentions made in the said show cause and proceeded with the execution case.

The case of the Opposite Party is that the above noted execution case has been instituted basing on the compromise decree passed by the Civil Judge (Senior Division), Nagpur in Special Civil Suit No. 92 of 1996. The provisions of Section 22 of the Act will not apply to the Petitioner-company since the Scheme has not been prepared. Only after the enquiry under Sections, 16 and 17, the Judgment debtor-company can be declared as sick. But at the time of consent decree no BIFR was pending. The Petitioner-company has no right to stop the execution proceeding on the ground of pendency of the BIFR proceeding. The Learned Judge after hearing the parties, by Order dated 02.05.2001 rightly rejected the said show cause and directed the decree holder-Opposite Party to take immediate steps for execution of the decree, since there is absolutely no merit in the show cause filed by the Petitioner-Judgment debtor company.

Mr. Palit, Learned Counsel for the Petitioner-company submits that the impugned order passed by the Learned Civil Judge (Senior Division), Anandpur is erroneous and is based on completely misreading of Section 22 of the aforesaid Act, which prohibits all legal proceedings. He has relied upon a decision reported in Maharashtra Tubes Ltd. Vs. State Industrial and Investment Corporation of Maharashtra Ltd. and Another, .

Counsel for the Opposite Party submits that at present no case is pending either before the BIFR or before the Appellate authority. He further submits that in the meantime the financial institutions, i.e., IDBI and IFCI have filed petitions before the Debts Recovery Tribunal, Cuttack for realization of their respective outstanding dues. A recovery proceeding has been initiated against the Petitioner vide R.P. Case No.(200)-A/03 CTC.

Now, the short question that arises for consideration is whether Section 22 of the Act can operate as a bar for execution of the decree. For ready reference, Section 22(1) is quoted below:

Suspension of Legal Proceeding, Contracts, etc.

(1) Where in respect of an Industrial Company, an enquiry under Section-16 is pending or any scheme referred to u/s 17 is under preparation or consideration or a sanction scheme is under implementation or where an appeal u/s 25 relating to an industrial company is pending, then notwithstanding any thing contained in the Company''s Act (Act 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 proceeding for the winding up of the industrial company or for execution, distressed 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 recovery of money or for the enforcement of any security against 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.

A bare reading of the above provision makes it explicitly clear that while the matter is pending u/s 16 or Section 17 or Section 25, as the case may be, Section 22 would operate as a bar. In the decision cited by the Counsel for the Petitioner, it has also been held that the expression ''proceedings'' in Section 22(1) takes within its ambit all proceedings including legal proceedings in a Court of law or a tribunal.

In the instant case, no BIFR proceeding is pending at present either u/s 16 or Section 17 or Section 25 of the Act. The same has been disposed of since long. In such view of the matter, this Court without going into the legality or otherwise of the impugned order disposes of the revision with a direction to the Court below to proceed with the execution case. With the disposal of the revision, all the interim orders passed in this case stand vacated.