M/s. CG-PPI Adhesive Products Ltd. vs M/s. BPL Display Devices Limited, A-41, 42 and 42/1, site IV, Industrial Area, Sahibabad, Dist. Ghazibad, U.P. 201 010 their Managing Director

A.P. Lavande, J.—Heard Mr. Kantak, Learned Counsel for the petitioner.

None appears on behalf of the respondent, though served.

In terms of order dated 27/3/2008, the parties were put on notice that the petition may be finally disposed of at the stage of admission.

Hence, Rule. Heard forthwith.

By this petition under Article 227 of the Constitution of India, the petitioner challenges order dated 01/09/2007 passed by the Civil Judge, Senior Division, Ponda in Special Civil Suit No.31/2005/A allowing an application filed by the respondent for stay of the proceedings.

The petitioner is the plaintiff in the above suit filed against the respondent/defendant seeking recovery of the amount of Rs. 19,45,353.43(Rupees Nineteen lakhs forty five thousand three hundred fifty three and paise forty three only) along with interest thereon. After service of summons, the defendant filed an application dated 20/1/2006 seeking stay of proceedings of the suit u/s 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("The Act" for short) read with Section 151 of C.P.C. The application was opposed by the plaintiff. The learned trial Judge by the impugned order dated 1/9/2007 upheld the objection taken by the defendant and consequently stayed the suit. Aggrieved by the said order, the plaintiff has approached this Court.

Mr. Kantak, Learned Counsel for the petitioner submitted that the learned trial Judge has erred in staying the suit upon misconstruction of Section 22 of the Act. Learned Counsel further submitted that the liability of the defendant to pay the amount arose much after reference was made to the Board u/s 15 of the Act and therefore, the suit is not liable to be stayed. Learned Counsel further submitted that the suit filed by an industrial company is liable to be stayed only if the suit is for recovery of the money due, under a guarantee in respect of any loans or advances granted to the industrial company. According to the Learned Counsel, the liability of the defendant in the present case arises on supply of goods to the defendant during the period 25/03/2003 to 31/07/2003 i.e much after reference was made to the Board u/s 15 of the Act. Learned Counsel further submitted that the learned trial Judge has misconstrued the ratio of the judgment of the Apex Court in the case of M/s. Patheja Brothers Forgings and Stamping and anr. v. ICICI Ltd and Others reported in JT 2000 (8) SC 545. Learned Counsel further submitted that the suit is not liable to be stayed in as much as the plaintiff would be left with no remedy to seek recovery of the amount due to the plaintiff from the defendant in respect of the supply made to it. In support of his submissions, Learned Counsel placed reliance upon the following judgments:

i) Jay Engineering Works Ltd. v. Industry FacilitationCouncil & anr.; AIR 2006 SSC 3252.

ii) Indian Steel and Wire Products Ltd. Vs. Kothari Metals Ltd. etc., .

iii) Deputy Commercial Tax Officer and Others Vs. Corromandal Pharmaceuticals and Others, .

As stated above, in spite of service of notice, none has appeared on behalf of the respondent to support the impugned order.

I have carefully considered the submissions, perused the record and the judgments relied upon. The only question which arises for consideration is whether the learned trial Judge was legally justified in staying the suit by placing reliance upon Section 22 of the Act.

In the case of Corromandal Pharmaceuticals and others (supra), relied upon by Mr. Kantak, the Apex Court held that the bar or embargo envisaged in Section 22(1) (''Section 22(1) of the Act'' for short) can apply only to such of those dues reckoned or included in the sanctioned scheme. The Apex Court further held that though the language of Section 22 is of wide import regarding suspension of legal proceedings from the moment the enquiry is started till after the implementation of the scheme or the disposal of an appeal u/s 25, the embargo u/s 22 is not absolute.

Learned Single Judge of this Court in the case of Gargi Huttenes Albertus (P.) Ltd. Vs. New Standard Engg. Co. Ltd., held that if the defendant had purchased goods after the scheme was sanctioned by BIFR, bar u/s 22 of the Act was not applicable as the liability in respect of the goods had arisen after the date of sanctioned scheme. The learned Single Judge placed reliance upon the judgment of the Apex Court in the case of Corromandal Pharmaceuticals and others (supra).

In the present case, perusal of the impugned order discloses that the learned Judge in the impugned order has placed reliance upon the judgment of the Apex Court in the case of M/s. Patheja Brothers Forgings and Stampings and another (supra) and has held that bar u/s 22 of the Act is applicable. As stated above, in view of the judgment of the Apex Court in the case of Corromandal Pharmaceuticals and others (supra) and judgment of the learned Single Judge of this Court in the case of Gargi Huttenes Albertus Pvt. Ltd. (supra), it is clear that bar u/s 22(1) of the Act applies only to such dues reckoned or included in the sanctioned scheme. The learned Judge has not considered whether the amount claimed by the petitioner herein was included in the sanctioned scheme. Therefore, it would be appropriate to set aside the order and remand the matter to the trial Court for fresh consideration.

In view of the above, the impugned order dated 1st September, 2007 passed by the Civil Judge, Senior Division, Ponda in Special Civil Suit No.31/2005/A is quashed and set aside and the matter is remanded to the trial Court to pass fresh order, after giving an opportunity of hearing to both sides. The trial Court shall decide whether the amount claimed by the petitioner/ plaintiff has been included in the sanctioned scheme and after considering the same, pass an appropriate order in the light of the ratio laid down by the Apex Court and this Court, in

The petitioner shall appear before the trial Court on 21st October, 2011 at 10.00 a.m. The trial Court shall pass appropriate order in the light of the observations made above, after giving notice to the respondent/ defendant.

Rule is made partly absolute in aforesaid terms. No order as to costs.