SIPANI AUTOMOBILES LTD. vs KIRTI MALVIYA

THIS order will govern the disposal of revision petition Nos. 2449-2553 filed by petitioner/judgment debtor against a common order dated 2.7.2002 dismissing application(s) filed under Section 151, C.P.C. by Consumer Disputes Redressal Commission, Delhi in Execution Case Nos. 370 of 1997 filed by Dr. Kirti Malviya, 554 of 1992 filed by Ram Narain Yadav, 158 of 1994 filed by Ashish Midha, 256 of 1994 filed by Raman Singh and 255 of 1994 filed by Abdur Shafi decree holders/respondents.

AFORESAID order would show that petitioner was directed to refund the amount(s) as detailed in final order(s) passed in the complaints and as it did not refund the amounts, the respondent filed said execution applications under Sections 27/25 of the Consumer Protection Act, 1986 (for short the Act). Petitioner filed application under Section 151, CPC seeking stay of execution applications under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short SICA) which were dismissed by the impugned order taking note of the order dated 22.11.2002 in RP Nos. 1248 of 1999 to 1316 of 2000 M/s. RBBL Industries Limited & Anr. v. Pushpa Devi Oberio & Ors. passed by the State Commission. Submission advanced by Mr. R.S. Hegde for petitioner was that the proceedings under Section 27 of the Act are civil in nature and, therefore, Section 22(1), SICA would be applicable to the execution applications filed by the respondents. Reliance was placed particularly on the decisions in Ashish Kumar Biswas v. D.D.A. & Ors., I (1997) CPJ 409=1986-96 Consumer 2299 (NS); M/s. Rajindra Properties & Industries v. R.S. Nandwani & Anr., 1986-96 Consumer 3372 (NS) and to Para No. 58 (at pp-3-4)of the authority in State of Karnataka v. Vishwa Bharati House Building (Coop) Society & Ors., I (2003) SLT 435=2003 (1) Scale 309. As part of submission, it was further contended that by the order dated 31.3.2003, Board for Industrial and Financial Reconstruction, New Delhi has issued show cause notice under Section 20(1), SICA for hearing objections/suggestions in the reference pending before it against the petitioner company and in view of this order the pending execution applications cannot be proceeded with further. On the other hand, relying on the decisions in Gujarat Steel Tube Company v. Virchandhai B. Shah & Ors.; M/s. BSI Ltd. & Anr. v. Gift Holdings Private Ltd. & Anr., II (2000) SLT 184=I (2000) BC 292 (SC)=I (2002) CCR 226 (SC)=AIR 2000 SC 96; M/s Kusum Ingots & Alloys v. Pennar Peterson Securities Ltd. & Ors., I (2002) BC 300 (SC)=I (2000) CCR 308 (SC)=II (2000) SLT 325=AIR 2000 SC 954; and Anil Handa v. Indian Acrylic Ltd., X (1999) SLT 1=IV (1999) CCR 285=AIR 2000 SC 145, the submission advanced by Shri Ram Prakash Gupta for respondents was that the proceedings under Section 27 are criminal in nature, and therefore, the provisions cotained in Section 22, SICA would not be attracted. Brief notes of submissions have also been filed on behalf of the parties. Section 22(1), SICA which is material, reads thus : "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, 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 and no suit for the 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, by the Appellate Authority."

Bare reading of the section would show that it only creates an embargo against disposal of assets of the company for recovery of its debts; the purpose of such an embargo is to preserve the assets of the company from being attached or sold for realisation of dues of the creditors; section does not bar payment of money by its directors for satisfaction of the legally enforceable dues. Petitioner company has not filed the copies of applications filed under Section 27/25 of the Act by the respondents. Presumably, in the applications, the prayer made was for sentencing to imprisonment the managing director and/or directors of the company for non-compliance of the order(s) for making payments by the petitioner company. A command to a Corporation is in fact a command to those who are officially responsible for the conduct of its affairs and if they after being apprised of the order, fail to take appropriate action, they are also guilty of dis-obedience and may be punished. That being so, without examining the issue, whether proceedings under Section 27 are of civil or criminal nature, the managing director and/or director of petitioner company cannot escape liability for payment and seek stay of the execution applications invoking aid of Section 22(1), SICA.

AS regards later limb of submission referred to above, it may be seen that by the order dated 31.3.2003, BIFR, has issued show cause notice under Section 20(1), SICA for hearing objections/suggestions if the petitioner company should be wound up or not. In case the Board, for reasons to be recorded by it, forms opinion about the winding up of petitioner company, same is to be forwarded to the concerned High Court and High Court on the basis of that opinion shall pass order for the winding up of company. The provisions contained in Section 446 of the Companies Act, 1945 would be attracted only after such a opinion is forwarded by the Board to the High Court. The impugned order, thus, does not call for any intereference in revisional jurisdiction under Section 21(b) of the Act. Accordingly, afore-mentioned revision petitions are dismissed with Rs. 10,000/- as cost. However, in view of pendency of FA No. 457 of 1997 filed against the order dated 28.4.1997 in Complaint Case No. 176 of 1992, further proceedings in Execution 370 of 1997 filed by Dr. (Mrs.) Kirti Malviya shall remain stayed till final disposal of the appeal. Revision Petitions dismissed.