AR. LAKSHMANAN J.

The plaintiff above-named filed a memo under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "the Act"), to stay the proceedings in C. S. No. 439 of 1992, on the ground that no suit for recovery of money or enforcement of any security against the industrial company or of any guarantee in respect of any loan or advance granted to the industrial company shall lie or be proceeded with further except with the consent of the Board for Industrial and Financial Reconstruction (hereinafter referred to as "the Board"). In view of the said amendment to the Act by Amendment Act 12 of 1994, the company suit cannot be proceeded with inasmuch as there is a counter-claim seeking recovery of the money against the plaintiff. The plaintiff, therefore, prayed that since the plaintiff is a sick industrial undertaking and due to the amended provisions of section 22 of the Act, the suit cannot be proceeded with as the provisions are mandatory. The first defendant filed C. P. No. 69 of 1991 in this court on July 25, 1991, for winding up of the plaintiff on the ground that it had failed and neglected to pay the sum of Rs. 49, 62, 101 with interest. Pending disposal of the main company petition, the first defendant filed Company Application No. 1028 of 1991 to direct the plaintiff to deposit a sum of Rs. 57, 39, 464 in this court or to direct the plaintiff to furnish a bank guarantee for the said sum or in the alternative to appoint the official liquidator as provisional liquidator to take charge of the assets and affairs and be in charge of the plaintiff-company pending disposal of the main company petition.

Company Application No. 2266 of 1991 was filed by the plaintiff to revoke the order of admission in C. P. No. 69 of 1991, dated August 2, 1991, and direct the same to be dismissed with costs. By judgment dated January 7, 1992, I dismissed Company Application No. 2266 of 1991, and directed the plaintiff to a furnish bank guarantee for a sum of Rs. 30 lakhs within a month of the said order and posted the company petition for hearing on April 9, 1992.The plaintiff filed O. S. No. 480 of 1991 on the file of the First Additional Sub-Court, Trichy, against the defendants herein for a decree in favour of the plaintiff for a total claim of Rs. 53, 40, 408.77 together with subsequent interest at the rate of 18.5 per cent. per annum from the date of plaint till realisation and for costs. The said suit was filed on June 26, 1991. Subsequently, by consent of both parties, the same was withdrawn from the Sub-Court, Trichy, to the file of this court to be tried along with C. P. No. 69 of 1991. The same was renumbered as C. S. No. 439 of 1992 land was called along with C. P. No. 69 of 1991.

The first defendant claimed a sum of Rs. 86, 10, 605 from the plaintiff in the form of an additional written statement and by way of counter-claim, together with interest at 25 per cent. per annum from March 25, 1994, till realisation. It was filed on October 9, 1993, in the above suit and the same was taken on file on March 11, 1994. It is pertinent at this stage to notice that the amended Act came into force from February 1, 1994.

The examination of the plaintiff's witnesses commenced in August, 1993, continued thereafter from time to time and concluded on January 20, 1995. Thereafter, the examination of DW-1 was commenced and his examination-in-chief was concluded on February 10, 1995. The plaintiff took time for cross-examination of the said witness. While so, a memo under section 22 of the Act for stay of all further proceedings was filed on April 21, 1995. The above fact would clearly establish that notwithstanding the counter-claim, the plaintiff had participated in the proceedings and decided to proceed with the suit.

An objection was filed to the memo by the defendants through their learned counsel, Mr. C. Harikrishnan. According to him, the defendants came to know that the plaintiff had