SRINIVASAN, J.

The respondent has entered a caveat through counsel and with the consent of learned counsel on both sides, the appeal is taken up for final hearing. The appellants instituted a proceeding under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "the Act") before the BIFR to declare itself as a sick industrial company. That proceeding was dismissed on March 17, 1994, on the footing that the first appellant was not an industrial company. The respondent filed C. S. No. 410 of 1994, in the original side of this court for recovery of a sum of Rs. 11, 83, 813.11 with subsequent interest. The suit was based on hire purchase agreements, between the respondent and the appellants dated May 28, 1990, and later dates. Pending the suit, the respondent filed an application in O. A. No. 2307 of 1994, for seizure and sale of the machinery which is the subject-matter of the hire purchase agreement. An order was passed on September 17, 1994, after contest, in favour of the respondent by the judge on the original side. That order was not challenged by the appellant by an appeal.

The appellant, however, filed an appeal against the order of the BIFR before the appellate authority for Industrial and Financial Reconstruction known as "AAIFR" on November 28, 1994. Pending the said appeal, the appellants filed an application on the original side in O. A. No. 21 of 1995, for stay of all further proceedings in the suit till the disposal of the appeal before the AAIFR. That application was contested by the respondent and the learned single judge has dismissed the same holding that the provisions of section 22 of the Act will not apply. Aggrieved by the said order, the appellant has preferred this appeal.

The contention of the appellant is that under section 22 of the Act, there is a statutory suspension of all legal proceedings and enforcement of contracts, etc., if a proceeding is initiated under the provisions of the Act before the authority concerned and is pending.Section 22(1) of the Act reads as follows:

"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 (1 of 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."

It is argued by learned counsel for the appellants that the suit being one for recovery of money, it will fall squarely with the scope of section 22 of the Act and the learned single judge is in error in taking the view that the section will not apply.

Per contra, learned counsel for the respondent contends that section 22 of the Act will come into play only after the proceeding is taken against the properties of the industrial company. According to learned counsel, in the present case, the properties are covered by the hire purchase agreements and they do not belong to the industrial company. Reference is made to relevant clauses in the hire purchase agreements. Clause 2(a) of the agreement states expressly that the properties shall remain the absolute property of the company until the payments mentioned therein were made completely, Claus