2008 Supreme(SC) 1267

2008(6) Supreme 182
supreme court of india
(From High Court of Delhi)
C.K. Thakker and Altamas Kabir, JJ.
KSL & Industries Ltd. — Appellant
versus
M/s. Arihant Threads Ltd. & Ors. — Respondents
Civil Appeal No. 5225 of 2008
Arising out of Special Leave Petition (Civil) No. 5041 of 2006
Decided on : 25-08-2008

Important Points
Merely because by its conduct the company kept the court in the dark, the reference-application to BIFR would not become bad.
In determining whether a statute is a special or a general one, the focus must be on the principal subject matter plus the particular perspective.

Headnote:(a)Sick Industrial Companies (Special Provisions) Act, 1985 – Section 22 – a First part of the provision bars proceedings and the second part, suit – The word “suit” and “proceeding” have not been used interchangeably. (Paras 25 and 26)

       (2003) 4 SCC 305 – Relied upon.

       (b)Words and Phrases – Suit and Proceedings – Distinctions elaborated. (Paras 28)

       1989 Supp (2) SCC 627; 60 IA 13: AIR 1933 PC 63 – Relied upon.

       (c)Recovery of Debts Due to Banks and Financial Institutions Act, 1993 – Section 30 – It gives a right to any person aggrieved by an order of the Recovery Officer, to prefer an appeal to the Tribunal against any orders of the Recovery Officer which may not be in accordance with law. (Para 32)

       (2002) 4 SCC 275 – Relied upon.

       (d)Sick Industrial Companies (Special Provisions) Act, 1985 – Section 22 (1) – If Section 22(1) is attracted, the proceedings must be held to be barred – Also, embargo under Section 22(1) would not apply to payment of tax collected by the sick industrial company after the date of the sanctioned scheme and legitimately belonged to the Revenue. (Paras 35 and 38)

       (1993) 2 SCC 144; (1997)10 SCC 649 – Relied upon.

       (e)Sick Industrial Companies (Special Provisions) Act, 1985 – Section 22 – Merely because by its conduct the company kept the court in the dark, the reference-application to BIFR would not become bad – If the company was entitled to the benefit of SICA, it could not be denied the same on that count. (Para 42)

       (1998)5 SCC 554 – Relied upon.

       (f)Sick Industrial Companies (Special Provisions) Act, 1985 – Section 22 – In case SICA is attracted, then notwithstanding that the order for winding up of the Company had been passed, the bar would get attracted – Without requisite sanction under Section 22 of SICA, no suit can be proceeded with.(Paras 43 and 44)

       (2000)5 SCC 515; (2000)6 SCC 545; (2006)8 SCC 677 – Relied upon.

       (g)Interpretation of Statutes – When two Acts contain provisions giving overriding effect, it would be a difficult question as to which Act should prevail – This could be done on much broader considerations of the purpose and policy underlying the two Acts and the clear intendment conveyed by the language of the relevant provisions therein – Further, a special law would have primacy over the general law – In determining whether a statute is a special or a general one, the focus must be on the principal subject matter plus the particular perspective. (Para 49, 50, 53 and 56)

       1956 SCR 603; (1977)1 SCC 750; (1990)2 SCC 288; (1981)1 SCC 315; (2000)7 SCC 291; (2000)4 SCC 406; (2008)1 SCC 125; (2001)3 SCC 71 – Relied upon.

       (1997) 89 Comp Cas 547 – Approved.

       (h)Recovery of Debts Due to Banks and Financial Institutions Act, 1993 – Section 34 (2) – SICA and RDDB Act both are special Acts, but RDDB Act is of later origin in point of time – Additionally, provisions of RDDB Act are “in addition to and not in derogation of” certain enactments including SICA – Hence in instant case, RDDB Act shall prevail upon SICA. (Para 68)

       Facts of the case :

       1.Respondent No. 1 (M/s. Arihant Threads Ltd.) was incorporated as a joint venture with Punjab State Industrial Development Corporation. It set up an export oriented spinning unit for manufacturing cotton yarn.

       2.In 1992, Goindwal Sahib Industrial & Investment Corporation allotted Plot No. 454, Flocal Point of Goindwal Sahib Industrial Area by way of lease to the Company for a period of 99 years with a specific condition that the lessee will not transfer the interest in the property for first fifteen years without prior permission of the lessor.

       3.It was, however, stated that the lessee would be entitled to mortgage lease-hold rights to a Bank, Punjab Financial Corporation or Life Insurance Corporation of India as security for a loan to be raised for construction of factory building, purchase of raw materials, etc.

       4.The Industrial Development Bank of India which was the predecessor of the Stressed Assets Stabilisation Fund, financed the project undertaken by the Company by way of foreign currency loan and also working capital of Rs. 93.1 million.

       5. Company suffered huge loss and could not repay the amount of loan. Since the Company failed to pay instalments, IDBI filed Original Application in Debt Recovery Tribunal, Chandigarh for recovery of Rs.25,26,60,836/-.

       6.On June 10, 2002, M/s Roland Exports (successor of Goindwal Industrial & Investment Corporation) cancelled the lease agreement on account of non-payment of lease money amounting to Rs.3,19,94,149/-

       7.An ex-parte final order in favour of IDBI (SAFS) for recovery of Rs. 25,26,60,836/- along with interest @ 7.8% p.a. was passed by DRT.

       8.Recovery process ensued. Company’s fixed assets were valued at Rs.17.51 crores. Recovery Officer fixed the reserve price of the property at Rs.12.50 crores. He also fixed the date for sale of immovable and for movable properties. The auction was, however, adjourned.

       9.The Company filed an appeal against the order fixing reserve price of Rs. 12.50 crores in the DRT which allowed auction sale to proceed but ordered that the sale should not be confirmed till further orders.

       10.Auction was concluded and the appellant was declared the highest and successful bidder at Rs.12.52 crores. It deposited 25% of the reserve price and appointed representative of the appellant was appointed receiver to prepare inventory of auctioned property.

       11. On December 15, 2004, the Company moved an application for setting aside ex-parte final order passed on July 15, 2003 by DRT, Chandigarh on the ground that realizable value of its properties were Rs.20.22 crores and not Rs.12.52 crores. DRT-I, Delhi allowed the Appeal, set aside the auction sale subject to the Company fulfilling terms and conditions with regard to payment of certain amount, interest, expenses etc. This order was stayed by DRAT but the appeal of the company was finally dismissed and that of the appellant was allowed.

       12.On December 21, 2005, the Company filed a Reference before the Board of Industrial Finance & Reconstruction under SICA. On February 10, 2006,

       13.Within three days the Company filed two Writ Petitions against an order of DRAT dated February 10, 2006. The High Court allowed the writ petitions and set aside the order passed by DRAT on the ground that Section 22 of SICA operated as a complete bar to recovery proceedings and no order could have been passed by the Tribunal.

       Finding of the Court :

       RDDB Act shall prevail upon SICA in the instant case.

       Result : In view of the difference of opinion on interpretation of Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, matter referred to a larger Bench.