VIJAYA STEEL ROLLING MILLS PRIVATE LIMITED BANGALORE Vs. BALAJI ENGINEERING AND CONSTRUCTION WORKS BANGALORESICK INDUSTRIAL COMPANIES SPECIAL

JUDGEMENT

(1.) IN civil revision petition No. 38 of 1993 connected with civil revision petition No. 221 of 1993 as far as the civil revision petition nos. 38 of 1993 and 221 of 1993 are concerned, these deal with the interim orders that were passed by the executing court and they would technically not survive because of civil revision petition No. 4258 of 1995 which deals with the subsequent order passed and which effectively concerns the entire matter.

(2.) THE civil revision petition nos. 38 of 1993 and 221 of 1993 are accordingly disposed of and the interim orders, if any, passed therein to stand vacated. Order in civil revision petition No. 4258 of 1995 I have heard the learned advocates on both sides and to my mind, there is only one distinct, clear cut aspect that falls for determination in this case, that is with regard to the question as to whether the Provisions of the sick industrial companies (special Provisions) Act, 1985 would prohibit the execution of the decree passed in 1986. The petitioners' learned Advocate has submitted that from the documents produced by him before the trial court, the principal amount of Rs. 1,05,000/- has been reflected in the schedule 'g' and that in keeping with the requirements of law, this amount has been paid by the petitioners. His basic submission is that since the undertaking was found to be a sick unit and since the rehabilitation scheme has been approved of by the board, that as far as the subsequent action is concerned, namely, the recovery of interest through execution of the decree, that there is a legal embargo with regard to the proceeding until the year 1998. The petitioners' learned Advocate submits that the learned judge presiding over the lower court was in error in having rejected the objections filed on behalf of the petitioners and that therefore, the order requires interference with. The learned counsel who represents the respondents, has submitted that the order passed by the trial court is perfectly in order. He has drawn my attention to the fact that Section 22 which undoubtedly does provide for suspension of legal action, suits, execution etc. For a prescribed period of time, takes into account different situations and that the petitioners' learned Advocate is wrong when he contends that Section 22 prescribes an absolute bar. The learned counsel submits that there is one situation in which no such bar would apply and that is the one which is provided for in sub-clause (2) of that Section whereunder, the other protections do not hold good where the management of a sick company has been taken over or has changed. He has referred to the record of the case for purposes of pointing out that the undisputed position is that the management has been taken over and in this situation, he submits that sub-clause (2) would hold good. The learned counsel points out to the court that the scheme of the law is that certain nominal restrictions are placed on the new management with regard to the changes that are likely to take place, but beyond this, that the remaining Provisions of the Section particularly, the aspect of suspension of recoveries would not apply. Quite apart from this, the learned counsel submits that the terms and conditions under which the takeover has been permitted will have to be looked into and he draws my attention specifically to clause (7) which clearly provides for a situation whereunder, the new management is required to provide necessary funds for meeting various liabilities. It is in these circumstances that he submits that the executing court has very rightly permitted the execution of the decree that was passed as early as in the year 1986. 2. It is true that the petitioners' learned Advocate has vehemently submitted that this is a sick unit and that therefore, special consideration is required to be bestowed. Unfortunately, such equitable considerations cannot be pressed into service in situations of the present type because, apart from anything else, this act itself provides for certain concessions and certain deferment of liability which is essentially for purposes of facilitating a recovery of the unit. Where the management has been taken over and that too, with the sanction of the board, the situation in law gets completely reversed in so far as the party that has now stepped into the shoes of the earlier management during the period when the unit was a sick one, does so with open eyes and being conscious of all the various liabilities quite apart from the assets. Under these circumstances, the law provides for a total relaxation of the various other benefits which would otherwise have continued, had the old management been still in control. The respondents' learned Advocate is to an extent right when he points out that sub-clause (2) of Section 22 governs the present case and that therefore, it obliterates all other considerations. It may be that the petitioners have paid over the original principal amount, but this is not a full satisfaction of the decree and the executing court can only withhold the execution provided, sufficient justification is pointed out within the framework of law. In the present instance, I find that the position is directly the opposite in so far as the law does not prescribe any bar having regard to the changeover and the terms of takeover also specifically and positively provides for the provision of adequate funds to meet the liabilities. Under these circumstances, irrespective of the grounds that have been set-out by the lower court, the rejection of the i. as. Was fully justified. To my mind, no interference is called for with regard that order except to the limited extent that this court has substantiated different reasons for the same.

(3.) THIS court while admitting the companion civil revision petitions which have been disposed of by me, provided for the provision of a bank guarantee. That bank gurantee was required to be renewed from time to time and I am informed that even though the same is supposed to have technically elapsed a few days or weeks back, the petitioners are under an obligation to renew that bank guarantee until the disposal of this petition. It shall therefore, be treated as subsisting. In these circumstances, the petitioners are given 8 weeks' time to satisfy the decree completely during which period, they shall either pay up the amount to the respondents or in the alternative, if they do not choose to do so, they shall ensure that the bank guarantee is renewed for another three months. If the amount is not paid by the petitioners within a period of eight weeks, it shall be open to the respondents to invoke the bank guarantee for purposes of obtaining payment of the unsatisfied amount of the decree.