MESSRS STANDARD METAL INDUSTRIES Vs. INDIAN OVERSEAS BANK

JUDGEMENT

(1.) THE defendants who failed in their attempt to stay the suit O. S. No. 523 of 1989 on the file of the Sub Court, Vellore (I. A. No. 38 of 1996) I have filed the above revision petition. The plaintiff filed the above suit against the defendants seeking a decree for a sum of Rs. 38,669 with future interest at the rate of 10% p. a. until payment in full. It is not in dispute that the first defendant is the proprietary concern. Unfortunately, the petitioners/defendants filed a petition under Sec. 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter called "the Act") to stay all further proceedings in the suit till the proceedings under the said Act by the Department are over. According to the petitioners, the first defendant has to be declared as a sick industry and they have initiated the proceedings for a declaration that the first defendant company as a sick industry as per the provisions of the Act. So, on that basis the petitioners want to suspend the legal proceedings. The trial Court after considering the issues raised before it, rejected the petition, as the same cannot be sustained. Aggrieved against the same, the above revision petition is filed.

(2.) THE learned counsel for the petitioners has submitted that since the proceedings under the Act is pending, it is mandatory on the part of the civil Court to stay the proceedings, pending before it. In support of his submission, the learned counsel cited a decision reported in M/s. Celvil Enterprises v. M/s. Elconment Limited and Another 1991 I L. W. 617.

(3.) THERE is no dispute that the first defendant is only a proprietary concern. So, we have to see whether the defendants are entitled to invoke the provisions of the Act. The Act has been enacted with a view of securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. The company has been defined under See. 3 (d) as follows :