IMPORTANT POINT
Whether on ground that Section 22 of SICA bars recovery proceedings under RDDBFI Act or protection of SICA not available to appellant company since recovery proceedings under RDDB Act concluded, writ petitions would have to be dismissed.

S.A. Bobde, J.—his appeal is placed before us by way of a reference, made by a two-Judge Bench of this Court, C.K. Thakker and Altamas Kabir, JJ. which heard the matter on an earlier occasion and held that the appeal deserves to be allowed and that the Judgment and Order passed by the High Court is liable to be set aside. In view of a difference of opinion having arisen on the interpretation of Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as the ‘RDDBFI’ Act) the matter has been referred for decision to this Bench by the Hon’ble Chief Justice of India.

2. The present appeal is preferred by KSL & Industries Ltd. (‘appellant’ for short) against the final Judgment and Order dated 23.02.06 passed by the Delhi High Court in Writ Petition Nos. 2041-2042 OF 2006. The High Court set aside the Order passed by the Debt Recovery Appellate Tribunal, Delhi (‘DRAT’ for short) and held that in view of the bar contained in Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereafter referred to as ‘SICA’) no recovery proceedings could be effected against Respondent No. 1 (M/s. Arihant Threads Ltd.) (‘Company’ for short).

3. The Company set up an export oriented spinning unit for manufacturing cotton yarn in Amritsar District, in the State of Punjab. The Company took on lease, Plot No. 454 in 1992 for a period of 99 years from Goindwal Sahib Industrial & Investment Corporation, on a condition that it would not transfer the interest in the property for the first fifteen years without prior permission of the lessor. The Company had a right to mortgage lease-hold rights to a Bank, the Punjab Financial Corporation or the Life Insurance Corporation of India as security for a loan. It got its project financed by the Industrial Development Bank of India (Rs.IDBI’ for short) by way of foreign currency loan and a working capital of Rs. 93.1 million.

4. Since the Company failed to repay loan installments, IDBI filed Original Application No. 1368 of 2001 on December 20.12.01 in Debt Recovery Tribunal, Chandigarh (‘DRT’ for short) for recovery of Rs. 25,26,60,836/- under the RDDBFI Act. In the proceedings before the DRT the Company remained absent, although, duly served. On 15.07.03, an ex-parte final order in favour of IDBI for recovery of above mentioned sum i.e. Rs. 25,26,60,836/- along with interest @ 7.8% p.a. was passed by DRT. DRT expressly directed that in the event of failure on the part of the Company to pay the decretal amount, IDBI will be entitled to sell the mortgaged property of the company and recover the amount. If the amount remained unrecovered even then, it shall be recovered from the sale of personal properties of the defendants therein.

5. On 09.09.03, the Recovery Officer issued a composite demand notice under Rule 2 of Second Schedule of the Income Tax Act, 1961 against the Company demanding payment of Rs. 28,60,87,384/-. He directed the Company to appear for settling terms and conditions of the proclamation of sale and for disclosure of its movable and immovable assets.

6. On 16.09.04, the Recovery Officer fixed the reserve price of the movable and immovable properties at Rs. 12.50 crores. On 18.10.04, the Company filed an appeal under Section 30 of the RDDBFI Act against the order dated 16.09.04 fixing reserve price of the movable and immovable properties at Rs. 12.50 crores. On 30.10.04, the appellant was declared the highest bidder at Rs. 12.52 crores and was thus successful. On 15.12.04, the Company moved an application for setting aside the ex-parte final order, passed on 15.07.03 by DRT Chandigarh in favour of IDBI, directing recovery of Rs. 25,26,60,836/- along with interest @ 7.8% p.a. The appellant, who had become the auction-purchaser of the company’s properties objected to the prayer of the Company for setting aside the ex-parte order and applied for impleadment. Meanwhile, the Company got its property valued by Himachal Consul