KOTAK MAHINDRA FINANCE LIMITED Vs. DEVE PAINTS LIMITED

JUDGEMENT

(1.) THE controversy involved in this group of four appeals is identical between the same parties and, therefore, all these appeals have been taken up together and are disposed of by common order. The Appeals No. 85/97 and 86/97 have been preferred by original defendant M/s. Kotak Mahendra Finance Limited. While appeal No. 87/97 and 88/97 have been filed by original plaintiffs M/s. Deve Paints Limited.

(2.) M/s. Deve Paints Limited, formerly known as M/s. Garware Paints Limited (for short, lessee company) filed two suits before the City Civil Court at Mumbai against M/s. Kotak Mahendra Finance Limited (for short, finance company ). The facts averred by the lessee company in both the suits are identical. In Suit No. 3113/96 the relief claimed by lessee company relates to vehicles bearing No. MH-01/a-6835, MH-01/a-9297, MH-01/6750, and MH-01/b-7414 and it is prayed by the lessee company that the finance company be restrained by way of an order and injunction from in any manner taking the possession of the aforesaid vehicles, while, in Suit No. 3646/96 the prayer made by the lessee company relates to vehicle No. MH-01/b-1602 and it is prayed by the lessee company therein that finance company be restrained by an order and injunction from taking possession of the said vehicle in any manner. The narration of facts in both the suits is identical and according to lessee company its new management took over in the month of December - 94 and after assessing the assets and liabilities of the company it transpired that its net worth had been eroaded and accordingly a reference was made to the Board for Industrial and Financial Reconstruction (B. I. F. R.) under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. On 25-9-95 the B. I. F. R. declared the lessee company as a sick unit and appointed the Industrial Development Bank of India (IDBI) as operating agency for co-ordinating with the lessee company and submission of revival programmes. The lessee company has averred that it has already submitted rehabilitation package to the BIFR for its consideration and proceedings before the BIFR are going on. It is the case of the lessee company that by various hire purchase agreements/lease agreements entered between it and the finance company, the finance company financed the lessee company for purchasing motor vehicles and office equipments. In the first week of June - 96 one representative from finance company visited the office of lessee company and sought information about the whereabouts of the various vehicles, office equipments and all documents concerning them. On 7-6-96 the lessee company requested the finance company to furnish the outstanding details in respect of the vehicles and its grievance is that though the finance company failed to furnish the details as sought by lessee company yet it threatened the lessee company that it would take back possession of the vehicles forcibly from it. That led to the filing of the suits aforesaid. The plaintiff alleges that on 15-6-96 vehicle bearing No. MH-01/b/7414 was forcibly taken possession of by the finance company. The basis of the claim in both the suits filed by lessee company is that it has become a sick unit and its entire affairs are with the BIFR for financial rehabilitation package for reviving it and during pendency of proceedings before the BIFR it is protected against all types of proceedings and attachments particularly under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, Act of 1985 ). Notices of motion were taken out by the lessee company in both the suits and the trial Court after hearing the learned Counsel for the parties by the impugned order on 14-1-97 dismissed both the notices of motion taken out by the lessee company. However, the trial Court observed that finance company will be at liberty to approach the BIFR to seek further orders about the seizure of vehicles and/or recovery of amounts with them. To complete the narration of facts it may be stated that the lessee company took out contempt notice of motion against the finance company on 20th January - 97. It was alleged therein that the representatives of the finance company forceably took away the possession of the vehicle No. MH-01/b-7414. In the said notice of motion after hearing the learned Counsel for the parties the trial Court directed the finance company to return the seized vehicle within a period of seven days from the passing of the order i. e. before 28-1-97 and thereafter the finance company will be at liberty to approach BIFR with such application as they deem fit. The said order passed by the City Civil Court is challenged in Appeal No. 86/97. It will not be out of place to mention here that on 28-1-97, this Court stayed the operation of the order dt. 21-1-97 and the said order is still operative.

(3.) THE question, principal and foremost, that falls for determination in this group of four appeals is: