Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not stay proceedings in a suit for recovery of money against a company declared as a sick company.

1. Plaintiff-petitioner (hereinafter referred to as the petitioner) filed a suit against the defendant-respondents (hereinafter referred to as the respondents) for the recovery of Rs. 2,09,794.00 (Rs. 1,60,194.60 as principal amount and Rs. 49,600.40 as interest) and future interest at the rate of 1% per month. During the pendency of the suit respondents-company which is a private limited, filed an application stating therein that on a reference made to the Board for industrial and financial reconstruction, in the prescribed form under the Provisions of Sec. 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the Act), the respondent-company has been declared a sick company and so keeping in view the provisions of Sec. 22(1) of the Act, proceedings in the suit be stayed. The trial Court accepted this application and stayed further proceedings in the suit. The suit was adjourned sine die and the file was ordered to be consigned to the record room. Petitioner has come up in revision challenging the said order.

2. Mr. D. D. Gupta, Advocate, appearing for the petitioner contended that only certain specified proceedings are contemplated to be stayed under S. 22 of the Act, like winding up, execution distress or appointment of a receiver and the proceedings in the suit cannot be stayed and, therefore, the trial Court has clearly erred in staying the proceedings in the suit.

3. I find force in the submission of the learned counsel appearing for the petitioner. Sec. 22(1) of the Act reads as under :-

"S. 22 Suspension of Legal Proceedings, Contracts etc. (1) Where in respect of an industrial company, an inquiry under Sec. 16 is pending or any scheme referred to under S, 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under sec. 25 relating to an industrial company is pending, then notwithstanding anything contained in the Companies Act, 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 shall lie or be proceeded further, except with the consent of the Board or, as the case may be, the Appellate Authority."

4. A careful reading of the provisions of sub-clause (1) of sec. 22 of the Act, would show that there are certain types of proceedings which cannot proceed during the pendency of an application under sec. 15(1) of the Act before the Board constituted under the Act, that is :-

(i) Proceedings for winding up; (ii) Proceedings for execution, distress or the like against any of the properties of the industrial company; and (iii) for the appointment of a receiver in respect thereof.

If a company files an application under S.15(1) of the Act before the Board constituted under the Act, then the proceedings such as specified cannot be initiated and if initiated, the same cannot be proceeded with. In this particular case, we are concerned with the proposed action of the plaintiff in a Civil suit for the recovery of certain specified amount. The legislature in its wisdom, did not include the word suit but if the suit is decreed then its execution has to be stayed. The reason seems to be that the legislature wanted to protect a sick unit from being wound up or going bankrupt in execution of a decree or where there is some sort of recovery being made against the property of such company.

5. The word the like in Sec. 22(1), would not help the respondent-company either. The word the like would not include stay of proceedings in the suit because had that been the intention, the legislature would have put the word suit before the word execution in this section. The word the like would mean the proceedings in the natur