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1999 Supreme(Cal) 479
High Court Of Calcutta
SATYABRATA SINGH, M. H. S. ANSARI
TAULIS PHARMA LTD. - Appellant
Versus
BENGAL IMMUNITY LTD. - Respondent
A. C. O. 98 Of 1999
Decided On : 08/30/1999
B.R.BHATTACHARJEE, S.N.MUKHERJEE
Section 22(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar claims that arise after the sanction of a rehabilitation scheme under the Act.
Headnote:
COMPANY LAW - SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT - SECTION 22 - WINDING UP - INTERPRETATION - SCHEME SANCTIONED UNDER SECTION 18 - CLAIM ARISING AFTER SANCTION OF SCHEME - WHETHER BARRED UNDER SECTION 22(3) - HELD, NO.
Fact of the Case:
Petitioner, a creditor of the respondent company, filed an application for winding up of the company. The company had filed an application under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 ('the Act') before the Board for Industrial and Financial Reconstruction ('the BIFR'), and a rehabilitation scheme had been sanctioned. The petitioner's claim arose after the sanction of the scheme but during its implementation. The issue before the court was whether the petitioner's claim was barred under Section 22(3) of the Act.
Finding of the Court:
The court held that the petitioner's claim was not barred under Section 22(3) of the Act. The court interpreted Section 22(3) strictly and held that it only barred claims that existed immediately before the date of the order declaring the suspension of contracts, etc. The court further held that the scheme sanctioned under Section 18 of the Act could not comprehend claims that had not been included in the scheme.
Issues: Whether the petitioner's claim, which arose after the sanction of the rehabilitation scheme under the Sick Industrial Companies (Special Provisions) Act, 1985, was barred under Section 22(3) of the Act.
Ratio Decidendi: The court interpreted Section 22(3) of the Act strictly and held that it only barred claims that existed immediately before the date of the order declaring the suspension of contracts, etc. The court further held that the scheme sanctioned under Section 18 of the Act could not comprehend claims that had not been included in the scheme.
Final Decision: The court set aside the impugned judgment and remitted the matter back to the trial court for consideration on the merits.
( 1 ) THIS appeal is directed against the judgment and order dated 8-4-1999, passed by a learned single judge of this court whereby and whereunder an application filed by the appellant herein for winding up of a company was dismissed. The only question which arises for consideration in this appeal is the interpretation of the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 ('the Act' ).
( 2 ) THE admitted facts of the matter are that pursuant to a contract between the parties the petitioner had sold and delivered to the company diverse quantities of goods which the company had received and accepted but failed and/or neglected to pay the price thereof despite several demands. The respondent has terminated the contract.
( 3 ) A statutory notice in terms of Section 434 of the Companies Act, 1956, was served but the same had not been replied to. It is also admitted that the company has filed an application in terms of the second proviso appended to Section 15 of the Act before the Board for Industrial and Financial Reconstruction ('the BIFR') wherein a rehabilitation scheme had been sanctioned. Admittedly, the claim of the writ petitioner had not been included in the scheme as the same arose after sanction thereof but during its implementation.
( 4 ) THE contention of Mr. S. N. Mukherjee, the learned counsel appearing on behalf of the appellant, is that keeping in view the provisions of Section 22 any claim made after the order sanctioned in the scheme passed by the BIFR would not attract the provision of Sub-section (3) of Section 22 and in support of the said contention reliance has been placed on Dy. CTO v. Corromandal Pharmaceuticals [1997] 89 Comp. Cas. 1, 14 SCL 154 (SC), Sirmor Sudburg Auto Ltd v. Kuldip Singh Lamba [1998] 91 Comp. Cas. 727 (Delhi), Pranami Press v. Vinedale Distilleries Ltd. [1998] 94 Comp. Cas. 926, 17 SCL 10 (AP) and Vibgyar Ink Chem (P.) Ltd. v. Safe Pack Polymers Ltd. , [1998]93 Comp. Cas. 407.
( 5 ) MR. B. R. Bhattacharjee, the learned counsel appearing on behalf of the respondent, on the other hand, inter alia, submitted that the appellant had already filed a suit in respect of the self-same claim. According to the learned counsel the provisions of Section 22 (3) had to be read in the light of Sub-section (8) of Section 18 as also Sub-section (4) of Section 22. The learned counsel submits that winding up proceedings being executory in nature and a moratorium in respect of all claims having been granted under Section 22 (3) will come into operation. Reliance in this connection has been placed on Corromandal Pharmaceuticals case (supra ).
( 6 ) THE Sick Industrial Companies (Special Provisions) Act, was enacted to make special provision with a view to securing the timely detection of sick and potentially sick companies owningindustrial undertakings, the speedy determination by a board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto,
( 7 ) SICK industrial company has been defined in Section 3 (o) of the Act to mean :"an industrial company (being a company registered for not less than five years) which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth. "when a company considers itself to be a sick company, it may take recourse to the provisions of Chapter III of the Act, Section 15 of the Act provides for reference to the BIFR.
( 8 ) UPON such reference an enquiry in respect of the sick industrial company is to be made and on completion thereof a suitable order is required to be passed in terms of Section 17. Sub-section (3) of Section 17 reads thus :" (3) If the Board decides under Sub-section (1) that it is not practicable for a sick industrial company to (make its net worth exceed the
