NIMA CHEMICAL PRIVATE LTD Vs. SECRETARY NEPA LTD

JUDGEMENT

(1.) INVOKING the civil revisional jurisdiction under Section 115 of th Code of Civil Procedure the plaintiff petitioner has called in question the legal validity of order dt. 10.3.99 parsed by the Second Additional District Judge, East Nimar, Khandwa, in Civil Suit no. 20 -B/95. The facts as have been unfurled in the revision petition are that the non -applicant is a Company registered under the Companies Act, 1956 and is a Public Sector undertaking. The said Comany is engaged in the manufacturing of news print paper. In the year 1992 the non -applicant Company invited tenders for supply of alumslurry and in pursuant of the tender notice the petitioner submitted its offer for supply of the aforesaid raw material. The offer of the petitioner was accepted and a purchase order was issued to it on 26.5.92. Pursuant to the purchase order alumslurry was supplied to the non -applicant Company worth Rs. 2,50,000/ -. As per the purchase order issued by the non -applicant Company the payment for the material supplied by the applicant was to be made good within 30 days from the date of receipt of material at the site of inspection. After receiving the raw material the non -applicant Company backed out from the payment conditions mentioned in the purchase order which compelled the petitioner to file the aforesaid civil suit for payment of amount under question. The suit was filed under Order 37 of the Code of Civil Procedure (hereinafter referred to as the 'Code').

(2.) AFTER filing of the suit the non -applicant Company moved an application under Order 37 Rule 5 of the Code seeking leave to defend the suit filed by the applicant Company. The said application was allowed by the Trial Court by order dt. 18.10.95 with a condition that the non -applicant Company would furnish a Bank Guarantee of Rs. 6,00,000/ -. The said conditional order was assailed before this court in Civil Revision no. 1301/96. In the revision petition it was averred that the non -applicant Company is having working capital and its assets are worth crores of rupees, therefore, the condition of furnishing a Bank Guarantee was unjustified. The said contention of the non -applicant Company was accepted by this court and the condition of furnishing Bank Guarantee was dispensed with. After disposal of the Civil Revision the petitioner filed an application under Section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'the Act') read with Section 151 of the Code that the non -applicant Company has become a sick industry and therefore, the provisions of Section 22 of the -Act would come into play and the suit should be stayed. It is averred -in the civil revision that by order dt. 3.8.98 the Board of Industrial Financial and Re -construction (hereinafter referred to as 'BIFR') had accepted the proposal of the non -applicant as a sick industry and had implemented the Scheme for its revival. It is alleged that the said Company is presently a running unit and they are purchasing raw materials from others but are not paying the dues of the present Company. It has been stated in the revision petition that the application was filed before the court below under Section 22 of the Act for stay of the suit. The learned Trial Judge by order dt. 10.3.99 allowed the application and directed stay of further proceedings of the suit. The said order is the cause of grievance of the present revisionist. I have heard Mr. Rajeev Shrivastava, learned counsel for the applicant and Mr. Ravish Agarwal, learned counsel for the non -applicant. Submission of Mr. Shrivastava is that the liability has arisen out of a contractual obligation and hence, the proceedings would be covered under Section 22(3) of the Act and, therefore, there is no justification for stay of the suit. It is his further submission that the non -applicant Company has not obtained any order from the BIFR with regard to stay of the realisation of the amount and, therefore, the learned Trial Judge should not have stayed the suit. The learned counsel has contended that the learned Trial Judge has fallen into gross error by opining that Section 22 (1) would be applicable to a case of this nature though the facts make it graphically clear that the provisions enshrined under Section 22(3) of the Act would be applicable. Mr. Rajeev Shrivastava, learned counsel to buttress his submissions has placed reliance on the decisions rendered in the cases of Indian Maiz and Chemicals Ltd. Vs. State of U.P. and others, : (1997) 9 SCC 462, Keshari Steels (M/s) and another Vs. M.P.E.B. and others,, 1998 (1) JLJ 367, Allwyn (A Unit of Voltas Ltd.), and others Vs. Deputy Labour Commissioner, : 1999(1), MPLJ 195, M/s Rom Industries Ltd. and another Vs. State of M.P. and another, : 2000(1) MPHT, 433. Countering the aforesaid submissions Mr. Ravish Agarwal, learned counsel for the non -applicant has contended that the case of this nature is covered under the ambit and sweep of Section 22(1) of the Act inasmuch as it is a suit for recovery of money and the same comes within the mischief of Section 22(1) of the Act and not under Section 22(3) of the Act.

(3.) MR . Agarwal, learned counsel has placed reliance on the cases of Gram Panchayat and another Vs. Shree Vallabh Glass Works Limited and others, : 1990 (2) SCC 440, Deputy Commercial Tax Officer Vs. Corromandal Pharmaceuticals. : AIR 1997 SC 2027, Tata Davy Ltd. Vs. State of Orissa and others, : (1997) 6 SCC 669, Real Value Appliances Ltd. Vs. Canara Bank, : (1998) 5 SCC 554. To appreciate the rival submissions raised at the Bar it is apposite to refer to Section 22(1) and 22(3) of the Act. The said provisions read as under: 22. Suspension of legal proceedings, contracts etc. -(1) 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 or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. (3) Where an inquiry under section 16 is pending or any scheme referred to in section 17 is under preparation or during the period of consideration of any scheme under section 18 or where any such scheme is sanctioned thereunder, for due implementation of the scheme, the Board may by order declare with respect to the sick industrial company concerned that the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force, to which such sick industrial company is a party or which may be applicable to such sick industrial company immediately before the date of such order, shall remain suspended to that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as may be specified by the Board : Provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate.