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2006 (II) OLR — 423
A. K. GANGULY AND I. MAHANTY, JJ.
Sri Bireswar Das Mohapatra and another...Petitioners
Versus
State Bank of India...Opp. Party
W. P. (C) No. 8567 of 2006
Decided on 17th August, 2006.
The existence of an alternative remedy only inhibits the exercise of discretion by the High Court, not its jurisdiction. Though certain exceptions have been carved out through judicial pronouncements, indicating where High Court can intervene despite the existence of an alternative remedy, but those are in the nature of guidelines for exercise of discretion by the High Court. They are, if I may say so, not exhaustive but are illus¬trative. In fact there is no straight jacket formula in this regard. Whether a High Court would exercise its discretion in the given facts of a case depends on its facts and the legal ques¬tions arising from those facts.
That is why even though Section 18 of RDBI Act creates a bar of jurisdiction on other Courts but it does not as obvious¬ly it cannot create any bar on the jurisdiction of the High Court under Articles 226 and 227 of the Constitution of India in rela¬tion to matters under Section 17 of RDBI Act. (Para - 17)
2. SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 - Secs. 20, 32 - Recovery of Debts due to Banks and Financial Institutions Act - Sec. 34 - Proceedings initiated under SICA - Winding up proceeding before the Company Judge of High Court has commenced on the recommendation of BIFR - Question of jurisdic¬tion of DRT - The proceedings before DRT cannot be continued without notice to the Official Liquidator appointed in the wind¬ing up proceedings - Direction issued.
Now if we turn our attention to the two overriding clauses in SICA and RDBI Act, both of which have been set out above, this Court thinks that both the clauses require close examination. If both the overriding clauses are compared it will be seen that Section 32 of SICA is only subject to Foreign Ex¬change Regulation Act, Urban Land Ceiling Act and Section 72(a) of the Income Tax Act subject to amalgamation of sick industrial company with another company. Save and except that, the provi¬sions of SICA have been given an overriding effect over any other law. In so far as Section 34 of RDBI Act is concerned, Section 34 (1) is subject to Section 34 (2) and Section 34 (2) makes it clear that provision of RDBI Act shall be in addition to and not in derogation of various Acts and one of them is SICA.
It is, therefore, clear from a conjoint reading of Section 34 (1) and 34 (2) of RDBI Act that while framing the provisions of RDBI Act, a later law, the Parliament was conscious of the existence of SICA and did not want to give the provision of RDBI Act an overriding effect on the provision of SICA. The reasons for which are not far to seek.
Section 34 (2) of RDBI even by way of tautology emphasizes that its provisions are in addition to those of SICA. So it would be wrong to interpret that the provisions of RDBI Act override SICA. The correct interpretation is that both the statutes must be allowed to operate in their own field even though these is a bit of over¬lapping between the two.
From such harmonious construction it follows that the proceedings in respect of the said Company which are pending before DRT under RDBI Act and the pending winding up proceeding of the same company in liquidation before the High Court which commenced on the recommendation of BIFR under Section 20 of SICA are not totally separable from each other. One cannot proceed independently of the other in so far as the sale of assets of the company in liquidation and the realization of the dues of its creditors including those of the bank are concerned. (Paras - 29 to 43)
3. BANK GUARANTOR’S - Filing of writ petition - Guarantor’s contract can be invoked by the bank of its claim against the principal debtor fails - In such a situation the guarantors have the locus to maintain the writ petition. (Para - 14)
JUDGMENT
A. K. GANGULY, J. — This writ petition has been filed by the guarantors to the loanee who obtained loan from the State Bank of India, Bhubaneswar, Industrial Estate Branch (hereinafter re¬ferred to as the ‘SBI’). The petitioners are also erstwhile Managing Director and Director of M/s. East End Engineers (P) Ltd., which is a Company under the Companies Act and the loanee from the Bank.
2. The material facts of the case are the said Company, namely, M/s. East End Engineers (P) Ltd. took loans from SBI after executing security documents and creating equitable mortgage of immovable property supported by the guarantee of the petitioners. In order to realise its loans, SBI filed on 28.7.1993 a suit in the Civil Court being TMS No. 207 of 1993. Thereafter the said company was declared sick and under the provisions of SICA the BIFR made a recommendation under Section 20 of SICA for its winding up. On the basis of such recommenda¬tion by the BIFR, winding up proceeding commenced before the learned Company Judge of this Court. The final winding up order has not yet been passed. In the said winding up proceeding, the Official Liquidator and Registrar of Company have been noticed and one Mahendra Sarangi, posted as J.G.M. Recovery, Legal Af¬fairs and Valuation, was appointed as the Officer of the Operat¬ing Agency in order to assist the Official Liquidator. Direction has also been given by the learned Company Judge on the Official Liquidator for taking steps for realization of the assets and that proceeds are to be deposited in the High Court for its distribution in accordance with the provisions of Section 529A and other provisions of the Companies Act. A copy of the said order is annexed to the writ petition. After constitution of the DRT, the suit filed by the SBI (TMS 207/1993) was transferred to DRT and proceedings have been taken before DRT.
3. Initially a writ petition, challenging DRT proceeding, was filed before this High Court. That writ petition was disposed of by a Division Bench of this Court by order dated 20.2.2004 directing the petitioner to raise the question of maintainability before the DRT and the DRT was directed to consider the same on its own merit and in accordance with law and then dispose of the same. Pursuant to the said order, the petitioner filed a prelimi¬nary objection taking therein a specific point that pursuant to the recommendation of BIFR under Section 20(2) of the SICA, a winding up proceeding was initiated before the Company Judge of this Court. The Bank, as secured creditors, participated in the said proceedings. Ultimately by order dated 27.3.1995 the learned Company Judge passed an order directing the initiation of a winding up proceeding and thereafter the Official Liquidator was appointed on 27.3.1995 for taking possession of the assets of the company and the said winding up proceeding is still continuing. It was submitted that the filing of the original suit by the Bank before the Civil Court was in contravention of Section 22 of SICA as such the proceeding before the DRT is not maintainable.
4. The DRT ultimately by its order dated 16.12.2004 in MA No. 202 of 2004 arising out of TC No. 140 of 2001 held that the preliminary objection will be decided in the main OA and not separately. Against the said order another writ petition was filed being Writ Petition No. 1373 of 2005 and ultimately the said writ petition was disposed of on 16.5.2006 by directing the DRT to decide the question of maintainability first before proceeding with the original application. Pursuant thereto, the DRT by its order dated 15.6.2006 dismissed the preliminary objection. Against that order this writ petition has been filed.
5. Assailing the order dated 15.6.2006, the learned counsel on behalf of the petitioners urged that in the instant case winding up proceeding being Company Case No. 10 of 1994 has not been initiated under Sections 439/444 of Companies Act but this was done in view of the provision of Section
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