The main legal point established in the judgment is that Section 22(1) of the Sick Industrial Companies (Special Provisions) Act 1985 provides protection to sick companies against execution proceedings and suits for recovery of money, with the intention to safeguard the properties of sick companies at any stage of the proceedings.

1. The judgment debtors in a suit for recovery of money are the petitioners in both the Civil Revision Petitions. The first petitioner is the company and the second petitioner is the Managing Director of the first petitioner company. They are aggrieved against the order passed in E.A.No.210 in E.P.No. 197 of 2008 whereby the application filed by the petitioners under Order 21 Rule 106 CPC read with Section 151 praying for setting aside the ex-parte order passed in the E.P. was rejected by the Court below. Likewise, the petitioners are aggrieved against an order made in E.A.No. 211 of 2009 in E.P.No. 197 of 2008 whereby the application filed under Section 151 CPC read with Section 22 of the Sick Industrial Companies (Special Provisions Act) seeking for stay of further proceedings was also rejected by the Court below.

2. The short facts that are required for consideration in this Civil Revision Petition are as follows:-

The petitioner company filed a reference application under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act 1985, before the Board for Industrial and Financial Reconstruction established under the said Act for declaring the petitioner company as a sick company and for determination of the measures to be adopted in respect of the said company. The said reference application was considered by the said Board and after having satisfied that the company fulfilled various criteria under the said Act for declaring it as sick industrial company as on 31.3.2000 in terms of Section 3(1) (o) of the said Act, the Board declared the petitioner company as a sick industrial company. The Board, while passing the said order on 20.2.2006, appointed IDBI as operating agency with a direction to prepare a revival scheme. The operating agency was further directed to keep in view the provisions of Section 18 of the said Act and also the guidelines issued by the Board, while carrying out the preparation of such revival scheme. The Board had fixed the cut-off date for the scheme as 31.3.2006.

3. In the mean time, the respondent filed O.S.No. 288 of 2005 on the file of the Additional Subordinate Judge , Coimbatore against the petitioners for recovery of a sum of Rs. 1,85,275/- with interest based on certain business transaction. In the said suit, an ex parte decree came to be passed on 31.1.2006. Thereafter, the respondent based on the said ex parte decree, filed E.P.No.197 of 2008 on 15.4.2008 for execution of the said decree. In the said execution petition, an ex-parte order came to be passed on 20.11.2008. Thereafter, the above said applications, viz., one for setting aside the ex parte order and another for staying of all further proceedings were filed by the petitioners before the executing court.

4. The petitioners contended before the Court below that very filing of the said suit and continuation of the same thereof is not maintainable as there is a specific bar under Section 22 of the Sick Industrial Companies (Special Provisions) Act 1985. It is also stated by the petitioners that the second petitioner being the Managing Director of the first Petitioner Company was out of station due to his business tours and also had to appear frequently before the BIFR at New Delhi. Therefore, he was not in a position to meet his counsel to file a counter statement in the execution petition in time. The said applications were resisted by the respondent on the ground that the BIFR order dated 20.2.2006 was passed subsequent to the decree of the Civil Court only and therefore the petitioners cannot have any protection under Section 22 (1) of the said Act. It is further stated by the respondent that clause 14 of the Guidelines issued by the Board along with the order dated 22.2.2006 stipulated that the recovery of dues from the petitioner shall not be covered by the BIFR declaration.

5. The court below rejected the applications by holding that the decree of the Civil court came to be passed on 31.1.2006 prior to