WEIZMANN LIMITED Vs. KEDIA DISTILLERIES LTD

JUDGEMENT

(1.) LEAVE under Rules 147 and 148 of the High Court notice of motion in terms of the draft notice of motion handed in. Notice of motion is made returnable forthwith. Mr. Kadam waives service.

(2.) THIS notice of motion has been taken out by the defendants for stay of further proceedings in the suit including steps taken by the Court Receiver. It is also prayed that the order dated 4th February 1998 and 4th September 1998 passed by this Court in Notice of Motion No.1172 of 1997 in Suit No.1186 of 1997 be modified and varied on such terms as this Court may deem fit.

(3.) I have heard the learned counsel appearing for the parties. Mr. Bharucha, the learned counsel appearing for the sick company, states that the order of the BIFR has categorically declared that all enforcement against the company of contracts entered into immediately before the date of the order shall remain suspended for a period of 3 months from the date of the order. Accordingly all rights, privileges, obligations and liabilities accruing or arising thereunder shall remain suspended for the period of declaration, whilst the reference was pending under section 22(1) of the Act, the defendants have taken out notice of motion for vacating the order dated 4th February 1998. This motion was however dismissed on the ground that the Receiver had already taken possession before the reference was registered. Mr. Bharucha submits that the dismissal of the earlier notice of motion is no impediment to the case of the defendants for the relief claimed in the present notice of motion. He submits that there is a substantial difference between the provisions of Section 22(1) and Section 22(3) of the Act. Under Section 22(3), the Board may order or declare suspension of the rights under the contract which may have been entered into by the sick industrial company prior to the passing of the order. In the present case, the declaration has been made for a period of 3 months. That will expire on 25th April 1999. He further submits that sub-section (4) has a non-obstante clause which provides that notwithstanding any decree or order having been passed, the same shall remain stayed during the period of the declaration. It is only on the expiry of the period of declaration that any right so suspended shall became revived and enforceable. In support of his submission, the learned counsel has relied upon the judgment of the Supreme Court in the case of Real Value Appliances Ltd. V. Canara Bank (AIR 1998 SC 2064). In the aforesaid judgment, in paragraph 15 the Supreme Court has noticed that certain facts have not been brought the notice of the High Court. The High Court had deprecated the conduct of the Company therein. It was held that this conduct of the appellant company before the High Court of Bombay could not make the registration of the reference before the BIFR bad. In paragraph 23 of the aforesaid judgment, it is also held that "It is also the legislative intention to see that no proceedings against the assets are taken before any such decision is given by the BIFR for in case the Company's assets are sold, or the company wound up it may indeed become difficult later to restore the status quo ante". Relying on the aforesaid observations, the learned counsel submits that the orders dated 4th February 1998 and 4th September 1998 in Notice of Motion No.1173 of 1997 deserve to be stayed.