Back
2006 Supreme(MP) 1062
2007(2) JLJ 298
(SUPREME COURT)
S.B. Sinha and Dalveer Bhandari, JJ.
Jay Engineering Works Ltd. v. Industry Facilitation Council
and another
Civil Appeals No.4126 and 4127 of 2006: against the judgment of
M.P. High Court, Bench at Indore, passed in LPA No.232 of 2003
[reported in 2005(2) JLJ 9]; Decided on 14.9.2006.
S. Ganesh with Ms. B. Vijayalakshmi Menon for appellant;
Sushil Kumar Jain with Punit Jain and Ms. Diksha Mishra for respondents.
Headnote:(1) Sick Industrial Companies (Special Provisions) Act, 1985 -- Ss.22(1) (as amended in 1994), 16 and 17 -- Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertaking Act, 1993 -- Ss.6(2) and 10 -- Act of 1993 does not envisage a situation where industry becoming sick and requires revival -- Board approved scheme for revival -- liability towards respondent included in the scheme -- duly put to implementation -- recovery proceedings could not have been started against sick industry-appellant.
The appellant herein is a public limited company engaged in business of manufacturing electronic fans and fuel injection equipments. Respondent No.2 is a small scale industry. It manufactures copper wires. It supplied its products to the appellant herein during the period 28.12.1996 to 3.6.2000. As the appellant Company became sick, its Board of Directors made a reference in terms of section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short "the 1985 Act") on 8.4.1994. The appellant Company was declared as a sick unit by the Board for Industrial and Financial Reconstruction (for short "the Board"). A rehabilitation scheme was framed by the Board but it was declared to have failed by an order dated 12.7.2001. By reason of the said order, however, Industrial Development Bank of India (IDBI) was appointed as an operating agency. A fresh report was submitted by the said operating agency on 20.3.2003 which was accepted by the Board whereupon a fresh rehabilitation scheme was sanctioned on 8.4.2003.
In the meanwhile, respondent No.2 herein filed a claim petition before the Industry Facilitation Council (for short "the Council"), respondent No.1 herein, in terms of the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (for short "the 1993 Act"). Before the Council, the appellant herein raised a plea that it had been declared to be a sick company by the Board and as such the matter should not be proceeded further. The Council, however, opined that only because the appellant Company has been declared sick by the Board, it would not bind the Council to take a decision in the matter. [Paras 1 & 2
The said award of the Council was put in execution. The bank account of the appellant was attached by the District Court, Ratlam. A writ petition was filed by the appellant herein before the Madhya Pradesh High Court questioning the same which by reason of the impugned judgment has been dismissed by a learned Single Judge. A letters patent appeal preferred thereagainst was dismissed by the impugned judgment.
The High Court in its impugned judgment proceeded on the premise that the 1993 Act could prevail over the 1985 Act. [Paras 4 & 5
Held : In the said scheme, the award made in favour of the respondents finds place in the category of "dormant creditors". The liabilities of the appellant vis-a-vis respondent No.2 were, therefore, indisputably a subject-matter of the said scheme. The High Court, in our opinion, committed an error in proceeding on the premise that the awarded amount had not been included and could not be included in the sanctioned rehabilitation scheme, the same being part of transactions which took place after 21.11.1997 ignoring the revised scheme made in the year 2003. [Para 9
The said provision, thus, mandates that no proceeding inter alia for execution, distress or the like against any of the properties of the industrial company and no suit for recovery of money or for the enforcement of any security, shall lie or be proceeded with further, except with the consent of the Board or as the case may be, the appellate authority. The said statutory injunction will operate when an inquiry had been initiated under section 16 or a scheme referred to under section 17 is under preparation and/or inter alia a sanctioned scheme is under implementation. It is not disputed before us that the amount awarded in favour of respondent No.2 by the Council finds specific mention in the sanctioned scheme which is under implementation.
The award of the Council being an award, deemed to have been made under the provisions of the 1996 Act, indisputably is being executed before a civil Court. Execution of an award, beyond any cavil of doubt, would attract the provisions of section 22 of the 1985 Act. Whereas an adjudicatory process of making an award under the 1993 Act may not come within the purview of the 1985 Act but once an award made is sought to be executed, it shall come into play. Once the awarded amount has been included in the scheme approved by the Board, in our opinion. Section 22 of the 1985 Act would apply. (1997)10 SCC 649 distinguished. 2005(2) JLJ 9 reversed. [Paras 17 & 18
(2) Sick Industrial Companies (Special Provisions) Act, 1985 -- Preamble -- enacted with a view to timely detect sick or potentially sick companies. (1993)2 SCC 144 relied on. [Para 23
(3) Interpretation of Statutes -- both the Acts containing non-obstante clauses -- ordinary rule of construction is that the latter shall prevail -- it is equally well settled that ultimate conclusion thereupon would depend upon the limited context of the Statute. (2000)4 SCC 406 and (2005)2 SCC 638 relied on. [Para 29
(4) Interpretation of Statutes -- two or more laws operating in same field -- each containing non-obstante clause -- cases of such conflict have to be decided in reference in the to the object and purpose of the laws under consideration. (1977)1 SCC 750 relied on. [Para 30
(5) Interpretation of Statutes -- rule of harmonious construction -- legislative policy -- would be taken in account. (2006)10 SCC 452 relied on. [Para 33
¼1½ :X.k vkS|ksfxd daiuh ¼fo‘ks"k mica/k½ vf/kfu;e] 1985 && /kkjk 22¼1½ ¼lu~ 1994 esa ;Fkk la‘kksf/kr½] 16 rFkk 17 && y?kq vkSj vkuq"kafxd vkS|ksfxd miØeksa dks foyafcr lank; ij C;kt vf/kfu;e] 1993 && /kkjk 6¼2½ rFkk 10 && lu~ 1993 ds vf/kfu;e esa ,slh ifjfLFkfr ifjdfYir ugha gS tgk¡ m|ksx :X.k gks tk, vkSj mldk iqu:Tthou visf{kr gks && cksMZ }kjk iqu:Tthou ds fy, ;kstuk vuqeksfnr && izR;FkhZ ds izfr nkf;Ro ;kstuk esa lfEefyr && lE;d~ fØ;kUo;u fd;k x;k && :X.k m|ksx && vihykFkhZ ds fo:) olwyh dh dk;Zokgh vkjaHk ugha dh tk ldrh FkhA
,rfLeu~ vihykFkhZ bySDVªksfud ia[kksa vkSj ¶;wy batsD‘ku midj.kksa ds fuekZ.k ds dkjckj esa yxh ifCyd fyfeVsM daiuh gSA izR;FkhZ Ø-2 y?kq m|ksx gSA mlds }kjk rk¡cs ds rkjksa dk fuekZ.k fd;k tkrk gSA mlus 28-12-1996 ls 3-6-2000 dh vof/k ds nkSjku ,rfLeu~ vihykFkhZ dks vius mRikn iznk; fd,A D;ksafd vihykFkhZ daiuh :X.k gks xbZ] mlds funs‘kd eaMy us 8-4-1994 dks :X.k vkS|ksfxd daiuh ¼fo‘ks"k mica/k½ vf/kfu;e] 1985 ¼la{ksi ds fy, ^^lu~ 1985 dk vf/kfu;e**½ dh /kkjk 15 ds vuqlkj funsZ‘k fd;kA vkS|ksfxd vkSj foÙkh; iquxZBu cksMZ ¼la{ksi ds fy, ^^cksMZ**½ }kjk vihykFkhZ daiuh :X.k bdkbZ ?kksf"kr dj nh xbZA cksMZ }kjk iquokZl ;kstuk cukbZ xbZ ijarq vkns‘k fnukad 12-7-2001 }kjk og foQy ?kksf"kr dj nh xbZA rFkkfi mDr vkns‘k ds dkj.k Hkkjrh; vkS|ksfxd fodkl cSad ¼vkb Mh ch vkb½ izpkyu laca/kh vfHkdj.k fu;qDr fd;k x;kA mDr izpkyu laca/kh vfHkdj.k }kjk 20-3-2003 dks ubZ fjiksVZ is‘k dh xbZ tks cksMZ }kjk Lohdkj dh xbZ ftl ij 8-4-2003 dks ubZ iquokZl ;kstuk eatwj dh xbZA
bl chp ,rfLeu~ izR;FkhZ Ø-2 us baMLVªh QSflfyVs‘ku dkmfUly ¼la{ksi ds fy, ^^dkmfUly**½] ,rfLeu~ izR;FkhZ Ø-1 ds le{k y?kq vkSj vkuq"kafxd vkS|ksfxd miØeksa dks foyafcr lank; ij C;kt vf/kfu;e] 1993 ¼la{ksi ds fy, ^^lu~ 1993 dk vf/kfu;e**½ ds mica/kksa ds vuqlkj nkok vthZ Qkby dhA dkmfUly ds le{k ,rfLeu~ vihykFkhZ us vfHkokd~ fd;k fd mls cksMZ }kjk :X.k daiuh ?kksf"kr fd;k x;k gS blfy, ekeys esa vkxs dk;Zokgh ugha dh tkuk pkfg,A rFkkfi dkmfUly dh jk; Fkh fd dsoy blfy, fd vihykFkhZ daiuh cksMZ }kjk :X.k ?kksf"kr dh xbZ gS] ifj"kn~ ekeys esa fofuf‘p; ysus dks vkc) ugha gksxhA ¼iSjk 2 ,oa 3
dkmfUly dk mDr vf/kfu.kZ; fu"ikfnr fd;k x;kA vihykFkhZ dk cSad [kkrk ftyk U;k;ky; jryke }kjk dqdZ dj fy;k x;kA ,rfLeu~ vihykFkhZ }kjk e/; izns‘k mPp U;k;ky; ds le{k mls iz‘uxr djrs gq, fjV ;kfpdk Qkby dh xbZ tks vkf{kIr fu.kZ; }kjk fo}ku ,dy U;k;k/kh‘k }kjk [kkfjt dj nh xbZ gSA mlds fo:) izLrqr dh xbZ ySVlZ isVsaV vihy vkf{kIr fu.kZ; }kjk [kkfjt dj nh xbZA
mPp U;k;ky; us vius vkf{kIr fu.kZ; esa bl vk/kkj ij dk;Zokgh dh gS fd lu~ 1993 dk vf/kfu;e lu~ 1985 ds vf/kfu;e ij vfHkHkkoh gksxkA ¼iSjk 4 ,oa 5
vfHkfu/kkZfjr % mDr ;kstuk esa izR;FkhZx.k ds i{k esa fd, x, vf/kfu.kZ; esa ^^fuf"Ø; ysunkjksa** ds izoxZ esa gSA blfy,] izR;FkhZ Ø-2 ds izfr vihykFkhZ dk nkf;Ro fufoZokn :i ls ;kstuk dh fo"k;oLrq FkhA gekjh jk; esa mPp U;k;ky; us o"kZ 2003 eas fojfpr ;kstuk dh mis{kk djrs gq, bl vk/kkj ij vxzlj gksus esa xyrh dh fd vf/kfu.khZr jde] mu laO;ogkjksa dk Hkkx gksus ls tks 21-11-1997 ds i‘pkr~ gq, Fks] eatwj iquokZl ;kstuk esa lfEefyr ugha Fkh vkSj lfEefyr ugha dh tk ldrh FkhA ¼iSjk 9
bl izdkj] mDr mica/k esa ;g vkKk gS fd vU; ckrksa ds lkFk] vkS|ksfxd daiuh dh fdUgha Hkh laifÙk;ksa ds fo:) ;k ;FkkfLFkfr vihy izkf/kdkjh dh lgefr ds flok; fu"iknu] djLFke~ vFkok bl izdkj dh dksbZ dk;Zokgh vkSj /ku dh olwyh ;k fdlh izdkj dh izfrHkwfr ds izorZu ds fy, dksbZ okn ugha gksxk vFkok dk;Zokgh vxzlj ugha gksxh] mDr dkuwuh O;kns‘k izofrZr gksxk] tc /kkjk 16 ds v/khu dksbZ tk¡p izkjaHk gks pqdh Fkh vFkok dksbZ eatwj ;kstuk dk;kZfUor gks jgh gksA gekjs le{k ;g fookfr ugha gS fd ifj"kn~ }kjk izR;FkhZ Ø-2 ds i{k esa vf/kfu.khZr jkf‘k dk ;kstuk esa fofufnZ"V :i ls mYys[k gS tks dk;kZfUor gks jgh gSA
dkmfUly dk vf/kfu.kZ;] 1996 ds vf/kfu;e ds mcia/kksa ds v/khu fd;k x;k vf/kfu.kZ; le>k tkus ds dkj.k fufoZokfnr :i ls flfoy U;k;ky; ds le{k fu"ikfnr fd;k tk jgk gSA tcfd 1993 ds vf/kfu;e ds v/khu vf/kfu.kZ; fd, tkus dh U;k;fu.kZ;u izfØ;k] Hkys&gh 1985 ds vf/kfu;e dh O;kfIr esa ugha vkrh gks] fdarq tc ,d ckj fd;k x;k vf/kfu.kZ; ds fu"iknu dh bZIlk dh tkrh gS] og izofrZr gks tk,xkA ,d ckj vf/kfu.khZr jde cksMZ }kjk vuqeksfnr ;kstuk esa lfEefyr dj yh xbZ gS] 1985 ds vf/kfu;e dh /kkjk 22 ykxw gksxhA ¼1997½10 ,l lh lh 649 izHksfnrA 2005¼2½ ts ,y ts 9 myVk x;kA ¼iSjk 17 ,oa 18
¼2½ :X.k vkS|ksfxd daiuh ¼fo‘ks"k mica/k½ vf/kfu;e] 1985 && mn~nsf‘kdk && :X.k vFkok :X.k gksus dh laHkkouk&;qDr daiuh le; ij igpkuus dh n`f"V ls vf/kfu;fer fd;k x;k gSA ¼1993½2 ,l lh lh 144 voyafcrA ¼iSjk 23
¼3½ fof/k dk fuoZpu && nksuksa vf/kfu;eksa esa loksZifj [kaM lekfo"V && fuoZpu dk lkekU; fu;e ;g gS fd ijorhZ vfHkHkkoh gksxk && ;g Hkh leku :i ls lqLFkkfir gS fd ml ij vafre fu"d"kZ dkuwu ds lhfer lanHkZ ij fuHkZj gksxkA ¼2000½4 ,l lh lh 406 rFkk ¼2005½2 ,l lh lh 638 voyafcrA ¼iSjk 29
¼4½ fof/k dk fuoZpu && ,d&gh {ks= esa nks vFkok vf/kd fof/k;k¡ izo`Ùk && izR;sd esa loksZifj [kaM lekfo"V && ,sls }a} ds ekeys fopkjk/khu fof/k;ksa ds mn~ns‘; vkSj iz;kstu ds lanHkZ esa fofuf‘pr fd, tkuk pkfg,A ¼1977½1 ,l lh lh 750 voyafcrA ¼iSjk 30
¼5½ fof/k dk fuoZpu && lqlaxr fuoZpu dk fu;e && fo/kk;h uhfr && ij fopkj fd;k tkuk pkfg,A ¼2006½10 ,l lh lh 452 voyafcrA ¼iSjk 33
Sinha, J. -- 1. Leave granted.
2. The appellant herein is a public limited company engaged in business of manufacturing electronic fans and fuel injection equipments. Respondent No.2 is a small scale industry. It manufactures copper wires. It supplied its products to the appellant herein during the period 28.12.1996 to 3.6.2000. As the appellant Company became sick, its Board of Directors made a reference in terms of section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short "the 1985 Act") on 8.4.1994. The appellant Company was declared as a sick unit by the Board for Industrial and Financial Reconstruction (for short "the Board"). A rehabilitation scheme was framed by the Board but it was declared to have failed by an order dated 12.7.2001. By reason of the said order, however, Industrial Development Bank of India (IDBI) was appointed as a operating agency. A fresh report was submitted by the said operating agency on 20.3.2003 which was accepted by the Board whereupon a fresh rehabilitation scheme was sanctioned on 8.4.2003.
3. In the meanwhile, respondent No.2 herein filed a claim petition before the Industry Facilitation Council (for short "the Council"), respondent No.1 herein, in terms of the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (for short "the 1993 Act"). Before the Council, the appellant herein raised a plea that it had been declared to be a sick company by the Board and as such the matter should not be proceeded further. The Council, however, opined that only because the appellant Company has been declared sick by the Board, it would not bind the Council to take a decision in the matter. It passed an award directing :
"That upon the submissions made by both the parties in the above case and in the light of the contentions raised it is prayed that the delay of two years to four years was caused by the respondents for making the payment to the petitioner, which is enough. Therefore, the Council has passed the order that an amount of Rs.10,92,253/- and one and a half per cent interest of PLR of State Bank of India is due to the petitioner M/s. Diamond Wire Industries, Ratlam, of the respondent M/s. Jay Engineering Works Limited, New Delhi.
4. The said award of the Council was put in execution. The bank account of the appellant was attached by the District Court, Ratlam. A writ petition was filed by the appellant herein before the Madhya Pradesh High Court questioning the same which by reason of the impugned judgment has been dismissed by a learned Single Judge. A letters patent appeal preferred thereagainst was dismissed by the impugned judgment.
5. The High Court in its impugned judgment proceeded on the premise that the 1993 Act could prevail over the 1985 Act.
6. Mr. S. Ganesh, learned senior counsel appearing on behalf of the appellant, at the outset, drew our attention to the fact that the award made by the Council in favour of respondent No.2 had been taken into consideration in the revised scheme itself and as such the award of the Council was non-executable. It was urged that both the 1985 Act and 1993 Act operate in different fields and in that view of the matter, the question that the 1993 Act prevailing over the 1985 Act would not arise in the instant case.
7. Mr. Sushil Kumar Jain, learned counsel appearing on behalf of the respondents, on the other hand, submitted that the scheme approved by the Board in 2003 is not applicable to the case of the respondents. It was submitted that in any event by reason of the said scheme the liability of the creditors could not be reduced.
8. It is not in dispute that the award was made by the Council in favour of respondent No.2. However, it is also not in dispute that the Board in terms of its order dated 8.4.2003 approved the scheme which inter alia envisaged the following :
"(xi) Rs. 462 lakhs for settlement of 'dormant trade creditors' on the basis of 25% principal amount.
