Khan J. -- 1. The million-dollar question that falls for determination is whether the bank guanrantees executed at the behest of appellants in favour of M.P. Electricity Board fell under the protective umbrella of section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 (for short the Act).

2. Appellants set up a mini steel plant and rolling mill and applied for supply of high tension electricity. Respondent Board agreed to supply them 15,000 KVA power for two years from 1.2.95. An agreement was executed between the parties, clause 27(a) whereof required a consumer to furnish security by cash deposit or in some other form. Appellants were asked to• give five bank guarantees through State Bank of India, Dewas. The terms and conditions also envisaged that the Board shall be competent to enhance the security amount and to supply it towards payments or arrears of any money which may become due by the consumer.

3. It appears that appellants fell in red and could not clear their electricity bills in time. Meanwhile they moved the Board for Industrial And Financial Re-construction (BFIR) u/s 15 of the Act which recommended winding up of their company. They took appeal against this before the Appellate Authority which is pending. They thereafter embarked on a litigation spree and filed series of writ petitions. They first filed M.P. No. 93/94 to .assail the recovery of arrears of electricity charges and obtained interim stay dated 8.5.96 and then filed W.P. No. 1331/96 to resist the disconnection of electricity supply. They lastly filed invocation of five bank guarantees addressed to S.B.I., Dewas (respondent No.5) on the plea that the action amounted to recovery of arrears of electricity charges which was barred u/s 22 of the Act. The writ Court rejected their plea holding that payment of dues for consumed electricity was neither a loan nor advance to attract the bar under section 22. Hence this appeal.

4. Appellant's case as craftily articulated by their counsel, Mr. Choudhary is that realisation of the amount covered by bank guarantees amounted to recovery of arrears of electricity charges and was a coercive proceeding barred under section 22. According to him contract of guarantee was not an isolated or independent contract but the one related to payment of arrears and to secure payment of electricity charges and once the Board action to en-cash these guarantees was aimed at recovering the arrears, it was prohibited by section 22 save with the consent of BFIR or the Appellant Authority. He lastly urged that the disputed bank guarantees continued to be the property of appellants and no proceeding would lie to realise these by the Board which had no right of appropriation. Any such action tent-amounted to a distress proceeding against appellant's property which was hit by provisions of section 22. He heavily relied upon 1992 SCC 144,1997(94) ELT 477, 1992 (96) STC 41 and 1991(105) STC 327.

5. The Board counsel Mr. Nair submitted that the matter involved a contractual obligation which fell outside the ambit of section 22. He referred to the Supreme Court judgment in Indian Maize and Chemicals Ltd. (89 Compo Cases 420) to show that enforcement of a contractual obligation or of regulations of electric energy supply could not constitute a proceeding for execution, distress, or the like as contemplated by section 22. He also pointed to clause 30A of the agreement to show that the Electricity Board had reserved the right to apply and appropriate any security furnished by the consumer. He cited AIR 1997 SC 144 and (1996) 5 SCC 450 along-with 89 Company Cases 420 and 1974 Company Cases 256 in support.

6. Section 22 which assumes crucial importance reads under :-

"22. Suspension of legal proceedings, contracts, etc. -- (1) Where in respect of an industrial company, an enquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation