1.These appeals have been preferred by the appellant under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996, against the order dated 10-9-2001 passed by learned Addl. District Judge, Burhanpur. By an order dated 22-1-1999, Additional District Judge, Burhanpur directed Nepa Limited, Nepanagar, (a Government of India undertaking) to appoint an Arbitrator in respect of dispute regarding unpaid price of bamboo transportation by the respondent contractor. Common question arises in these appeals.
2. The facts are noticed from M.A. No. 1440 of 2001, (Nepa Limited, Nepanagar v. Jaswant Singh). In terms of Clause 15 of the tender notice the Chairman-cum-Managing Director, Nepa Limited appointed Shri R.C. Tandon, Sr. Advocate, as Sole Arbitrator requesting him to commence the arbitration proceedings. The contractor filed a dispute claiming Rs. 6,12,902.25 paise as unpaid price of bamboo transportation made during June to October, 1996 and further claimed interest @ 24% per annum upto 30-4-1999 amounting to Rs. 3,98,356.85 paise, total Rs. 10,11,259.10 paise in addition to future interest and costs. The Nepa Limited denied the claim submitting inter alia that there was no breach of Clause 5 (1) and (2) of the contract so that the arbitration Clause 15 was not attracted. There is no cause for arbitration. Transportation having been completed there was no occasion to refer the dispute to Arbitrator. Unpaid price of transportation charges is recoverable by civil suit. Nepa Nagar Limited has been declared a sick industry and the enquiry under Section 16/17, Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'SICA'), were pending before the Board for Industrial and Financial Reconstruction (hereinafter referred to as 'BIFR') so that the arbitration proceedings can not be continued being barred under Section 22 of SICA. There was no stipulation to pay interest.
3. During the progress in proceedings on 1-11-1999, it was 'admitted' between the parties that a balance of Rs. 5,71,181.94 paise was outstanding against Nepa Limited. By an award dated 30-3-2000, the Arbitrator found inter alia that Clause 15 of the agreement providing for settlement of dispute by arbitration survives though the work had been completed. The Arbitrator has jurisdiction to make an award irrespective of fact that Nepa Limited is declared sick industry and enquiry under Section 16/17 of SICA were pending. The contractor is not entitled to benefit of the Interest Act, 1978. The contractor is entitled to interest for preference period under Section 34 of the Code of Civil Procedure. Interest @ 6% per annum from 1-1-1997 till making of the award was awarded. It was held that the Arbitrator has no power to award future interest.
4. The appellant Nepa Limited, Nepanagar filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, prayed for setting aside the arbitral award. Application was filed in the Court of Addl. District Judge, Burhanpur. It was submitted that the arbitral award is in conflict with the public policy. The dispute is not capable of settlement by arbitration.
5. As per' order dated 10-9-2001 the Court-below has found that the dispute was arbitrable under Clause 15 and Section 22 of SICA did not bar the arbitral proceedings. Award of interest for pre-reference period was just and proper. The award in neither in conflict with public policy nor the subject-matter incapable of arbitration. Application for setting aside the award has been rejected. Hence, these appeals have been preferred.
6. The only ground raised Shri Ravish Agrawal, learned Sr. Counsel appearing with Shri Pranay Verma, Advocate appearing for the appellants is that in view of Section 22 of SICA award could not have been passed. No suit for recovery of money or for enforcement of any security against the industrial company or of any guarantee in respect of any loan or advance granted to industrial company lie in view of the pending proceedings under Section 16/17 of the SICA before BIFR. Counsel has placed reliance on Order 7 Rule 2 of the CPC which deals with the recovery of money and definition of money claim in Black's Law Dictionary to contend that even the transportation charges are covered in money claim recovery of which is barred under Section 22 of SICA. He has relied upon various decision to be referred later on.
7. Shri N.S. Kale, learned Sr. Counsel appearing on behalf of the respondents submitted that the recovery of transportation charges of bamboo is not interdicted by Section 22 of SICA as bamboo was transported for running Of the factory. It is not a case of loan or advance. The aim and object of SICA is the financial reconstruction not to thwart the very activity of the industrial concern. What is necessary for running of the factory. Stay of recovery is not contemplated under Section 22 of SICA. Thus, he has submitted that no interference is called for.
8. In order to appreciate rival submission it is necessary to consider ambit and scope and intendment of Section 22 of SICA. Section 22 of SICA is quoted below :--
'22. Suspension of legal proceedings, contracts, etc.-- (1) Where in respect of an industrial company, an: inquiry 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 or where an appeal under Section 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 and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.
(2) Where the management of the sick industrial company is taken over or changed in pursuance of any scheme sanctioned under Section 18, notwithstanding anything contained in the Companies Act, 1956 or any other law or in the memorandum and articles of association of such company or any instrument having effect under the said Act or other law--
(a) it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company;
(b) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the Board.
(3) Where an inquiry under Section 16 is pending or any scheme referred to in Section 17 is under preparation or during the period of consideration of any scheme under Section 18 or where any such scheme is sanctioned thereunder, for due implementation of the scheme, the Board may by order declare with respect to the sick industrial company concerned that the operation of all or any of the contracts, assurances of property, agreements settlements, awards, standing orders or other instruments in force, to which such sick industrial company is a party or which may be applicable to such sick industrial company immediately before the date of such order, shall remain suspended to that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as many be specified by the Board :
Provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate.
(4) Any declaration made under Sub-section (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 or any other law, the memorandum and articles off association of the company or any instrument having effect under the said Act or the law or any agreement or any decree or order of a Court, Tribunal, officer or other authority or of any submission, settlement or standing order and accordingly :--
(a) any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any Court, Tribunal, officer or other authority shall remain stayed or be continued subject to such declaration; and
(b) on the declaration ceasing to have effect--
(i) any right, privilege, obligation or liability so remaining suspended or modified, shall become revived and enforceable as if the declaration had never been made; and
(ii) any proceeding so remaining stayed shall be proceeded with subject to the provisions of any law which may then be in force, from the stage which had been reached when the proceedings became stayed.
(5) In computing the period of limitation for the enforcement of any right, privilege, obligation or liability the period during which it or the remedy for the enforcement thereof remains suspended under this section shall be excluded.'
9. It is clear from Section 22 that if an enquiry is pending under Section 16/17 or any scheme referred to under Section 17 is under preparation inter alia no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any 'loans or advance' granted to the industrial company shall lie, except with the consent of the Board or the appellate authority, as the case may be. What is interdicted by Section 22 is suit for recovery of money in respect of any loans or advance granted to an industrial company. Same shall not lie or proceeded with except with the consent of BIFR/appellate authority. Object of SICA is to facilitate rehabilitation and winding up of an industrial undertaking, restructuring/reschedulement of loans and advances, in case of revival etc.
10. The object of the Act is not to thwart the very function of an industrial undertaking. In case recovery of transportation charges of bamboo is to be thwarted which is essential for running of the industrial company, that would have the effect of creating hurdles and obstructions, in the very object of SICA as once it is held that for transportation of bamboo, Industrial undertaking is not liable to pay at once and recovery is deferred and no proceeding can be filed without consent BIFR/appellate authority, running of the unit may itself be jeopardised.
11. The Apex Court in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, Madras, AIR 1992 SC 1439, has laid down that suit to recover the rent by a landlord against a tenant is not barred under Section 22(1). Suspension of such proceedings is not the intention of the Parliament. Therefore, the Apex Court has held that Section 22(1) does not cover a proceeding instituted by a landlord of a sick industrial company for the eviction of the company premises let out to it.
12. One of us sitting singly had an occasion to deal with question of applicability of Section 22 of SICA in Gulabdas Namdeo v. Ambuja Cement Eastern Ltd. and Ors., 2003(3) MPLJ 528 = 2003(3) M.P.H.T. 250. It was opined that the execution was with respect to the work done and services obtained by sick industrial company as such provision of Section 22 of SICA is not attracted.
13. In Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd., (2000) 5 SCC 515, the Apex Court has observed that the object of Section 22 is to afford the maximum protection of employment optimize the use of financial resources, salvaging the assets of production, realising the amounts due to the banks and to replace the existing time consuming and inadequate machinery by efficient machinery. The Apex court has observed thus :--
'5. The Act is shown to have been made, in public interest, with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. The object of the Act appears to be to afford maximum protection of employment, optimize the use of financial resources, salvaging the assets of production, realising the amounts due to the banks and to replace the existing time-consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts to safeguard the economy of the country and protect viably sick units. Chapter III deals with the reference, inquiries and claims. Section 15 provides that when an industrial company becomes a sick industrial company as defined under Section 2(o) of the Act, the Board of Directors of the company, shall, within 60 days from the date of finalisation of the duly audited accounts of the company for the financial year make a reference to the Board for determination of the measures which shall be adopted with respect to the company.'
14. In (2003) 155 ELT 13, the Apex Court has laid down that payment of predeposit under Section 35F of the Excise Act is not looked under Section 22 of SICA.
15. In Baburao P. Tawade and Ors. v. Hes Limited and Anr., 1995 Lab.IC 2200, His Lordship Shri B.N. Srikrishna, J., as he then was considered the provisions of Section 22 of the SICA and it was held for recovery of earned dues by workman, consent of BIFR is not to be obtained. It was held thus :--
'14. Having considered the position in law as canvassed at the bar, on the strength of the judgments referred to by me, I am of the view that, even if the application had been made by the workmen under Section 33C(2) of the Industrial Disputes Act for recovery of the monies due to them, after the reference under SICA made to the BIFR, such application could not have attracted the bar under Section 22(1) of SICA; much less can the writ petition under Articles 226 and 227 of the Constitution of India pending before this Court to challenge the adverse order in the application under Section 33C(2) of the Industrial Disputes Act, be held to attract the bar under Section 22(1) of SICA. In my view, the bar under Section 22(1) of SICA would not apply to the present writ petition, which can not be dismissed on the ground that no consent had been obtained from the BIFR for the continuation of the present proceedings.'
16. Allahabad High Court in Modi Industries Ltd. v. Additional Labour Commissioner, Ghaziabad, (1994) 1 Lab.LJ 482 = 1994 Lab.IC 1609, has held that the Parliament while putting Section 22 of the Act could never have intended that the industrial unit under the garb of sickness or for any like difficulty may be allowed to shirk its liability to pay the wages to its workers for the work they have done. In our opinion the claim of the transportation charges which are in question in the instant cases stand on the same footing, as that is claimed for the work done, expenditure incurred in transportation of Bamboo which is necessary for running of industry itself. The Allahabad High Court has observed thus :--
'15. In my opinion the aforesaid reasoning adopted by Hon'ble Supreme Court applies with full force to the facts of the present case also. The Parliament while putting Section 22 of the Act 1985 could never have intended that the industrial unit under the garb of sickness or for any like difficulty may be allowed to shirk its liability to pay the wages to its workers for the work they have done. Thus proceedings under Section 3 of the U.P. Act of 1978 will not be affected by Section 22 of Act of 1985.'
17. In Keshri Steels and Anr. v. M.P. Electricity Board and Ors., 1998 (2) MPLJ 535, this Court has held that under Section 22 of SICA payment of arrears of electricity charges of M.P. Electricity Board for energy consumed is not barred, such a claim is neither loan nor advance. The defence of the industrial company being sick was not accepted.
18. The Apex Court in Patheja Bros. Forgings & Stamping and Anr. v. ICICI Ltd. and Ors., (2000) 6 SCC 545, has laid down that the words of Section 22 are crystal clear. There is no ambiguity therein. It must, therefore, be held that no suit for the enforcement of a guarantee in respect of a loan or advance granted to the industrial company concerned will lie or be proceeded with. What has been emphasized by the Apex Court is with respect to suit for loan or advance. The Apex Court has observed thus :--
'5. It was contended by learned Counsel for the appellants that the provisions of Section 22 were clear and that thereunder no suit for the enforcement of any guarantee in respect of any loan or advance granted to the industrial company concerned would lie or could be proceeded with, except with the consent of the Board or the appellate authority under the said Act. The learned Solicitor General, appearing for the first respondent, submitted that the suit contemplated by Section 22 was a suit only against the industrial company and that it was only when the industrial company was itself the guarantor or it was sued by a guarantor on subrogation that the provisions of Section 22 would apply. He also submitted that the provisions of Section 22 had to be read in harmony with other provisions of the said Act and he relied in particular upon Section 17(3), Section 18(1)(e) and Section 22A thereof.'
19. We find ourselves to unable accept the submission of learned Counsel appearing for the appellant that we should read 'recovery of money' or 'suit for recovery of money' independently from loan or advance. The provision can not be construed dehors of the context and legislative intent. He has relied on definition of 'money claims' in Black's Law Dictionary, wherein money claims has been defined thus :--
'In English practice, under the Judicature Act of 1875; claims for the price of goods sold, for money lent, for arrears of rent, etc., and other claims where money is directly payable on a contract express or implied, as opposed to the cases where money is claimed by way of damages for some independent wrong, whether by breach of contract or otherwise. These 'money claims' correspond very nearly to the 'money counts' or 'common counts' formerly in use.'
20. Counsel has also pressed into service Order 7 Rule 2, CPC. What is meaning of money suit, there is no dispute with the proposition that it is a money claim. However, claim is not with respect to loan or advance. Thus, the bar created by Section 22 of SICA is not attracted and consent of BIFR/appellate authority is not necessary as the case may be. Learned Senior Counsel has further placed reliance on a decision of Apex Court in The Gram Panchayat and Anr. v. Shri Vallabh Glass Works, (1990) 2 SCC 440 = AIR 1990 SC 1017, it was a case of recovery of property tax wherein Apex Court held that the Gram Panchayat is not entitled to recovery property tax and other amount due without the consent of Board. The decision is with respect to different kind of claim not for work done and is distinguishable, hence, is not attracted.
21. In Tata Davy Ltd. v. State of Orissa and Ors., (1997) 6 SCC 669, which has been relied by learned Senior Counsel for the appellant, recovery was of the 'sales tax' dues under Orissa Sales Tax Act, 1947. Recovery of the said arrears was sought to be made by attachment of the appellants property. Apex Court held that arrears of sales tax could not be recovered from the appellant company without first obtaining consent of the said Board in this behalf. Recovery in Tata Davy Ltd. (supra) was of the sales tax dues realization by the Govt. It was not for the work done/obtained for running industrial unit. Recovery of sales tax, property tax can be deferred and provision of Section 22 is attracted.
22. Shri Ravish Agrawal, learned Sr. Counsel has further relied upon Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd., (2000) 5 SCC 515, wherein winding of proceedings under the Companies Act, 1956 pending before the Company Judge was kept in abeyance till disposal of the appeal under the authority of SICA. Question considered by the Apex Court was totally different. Another decision which has been relied upon in Maharashtra Tubes Ltd. v. State Industrial & Investment Corporation of Maharashtra Ltd. and Anr., (1993) 2 SCC 144, the question which arose for consideration was of stay of proceedings under Section 29 and/or Section 31 of the State Financial Corporation Act, 1951 during the pendency of the enquiry under Section 16 or preparation/consideration/sanction of scheme under Section 17. It was held that such proceedings would be barred under Section 22(1). Proceedings were for recovery of loan. Hence, decision has no application to the facts of the instant case.
23. In Patheja Brothers (supra), it was held that guarantee can not be enforced in respect of a 'loan or advance' granted to an industrial company unless prior consent of Board is obtained. What the Apex Court has emphasised is about the recovery of loanor advance not with respect to charges for the work done necessary for running of factory which is necessary for its revival. Decision renders no support to the submission espoused by learned Senior Counsel appearing for the appellants.
24. In Kailash Nath Agarwal v. Pradeshiya Industrial & Investment Corporation of U.P. Ltd., (2003) 4 SCC 305, the Apex Court has held that the words 'suit' and 'proceedings' used in Section 22(1) have not been changed interchangeably in SICA. Having regard to the judicial interpretation of the word 'suit', it is not possible to accede to the submission of the appellants that the word 'suit' in Section 22(1) of the Act means anything other than some form of curial process. There is the absence of expansive words 'or the like' which appear after the expression 'proceedings', after the word 'suit'. The exclusion of such 'omnibus expression' after the word 'suit' must be given some weight in interpreting the word. The Apex Court has held thus :--
'20. There is an apparent distinction between the expressions 'proceeding' and 'suit' used in Section 22(1). While it is true that two different words may be used in the same statute to convey the same meaning, that is the exception rather than the rule. The general rule is that when two different words are used by the same statute, prima facie one has to construe these different words as carrying different meanings. In Kanhaiyalal Vishindas Gidwani, (2001) 1 SCC 78, this Court found that the words 'subscribed' and 'signed' had been used in the Representation of the People Act, 1951 interchangeably and, therefore, in that context the Court came to the conclusion that when the legislature used the word 'subscribed' it did not intend anything more than 'signing'. The words 'suit' and 'proceeding' have not been used interchangeably in SICA. Therefore, the reasons which persuaded this, Court to give, the same meaning to two different words in a statute can not be applied here.
25. Having regard to the judicial interpretation of the word 'suit', it is difficult to accede to the submission of the appellants that the word 'suit' in Section 22(1) of the Act means anything other than some form of curial process.
27. Since the legislature has expressly chosen to make a distinction between the suits for recovery of the money and enforcement off guarantees and proceedings for the recovery of money that must be given effect to.
30. We have been unable to find a corresponding reason for widening the scope of the word 'suit' so as to cover proceedings against the guarantor of an industrial company. The object for enacting SICA and for introducing the 1994 amendment was to facilitate the rehabilitation or the winding up of sick industrial companies. It is not the stated object of the Act to protect any other person or body. If the creditor enforces the guarantee in respect of the loan granted to the industrial company, we do not see how the provisions of the Act would be rendered nugatory or in any way affected. All that could happen would be that the guarantor would step into the shoes of the creditor vis-a-vis the company to the extent of the liability met.'
The Apex Court has laid down that object of SICA is to facilitate rehabilitation or the winding up of sick industrial companies proceedings against guarantor can continue. The question before the Apex Court was the scope of protection offered to guarantor under Section 22(1) of the SICA. Notice was served upon the guarantor in respect of recovery of loan granted to the company by PICUP. The Apex Court has held that Section 22(1) only prohibits recovery against the industrial company, there is no protection afforded to guarantors against recovery proceedings under the U.P. Act. Thus, we find that considering the intendment of the SICA which is for rehabilitation of sick industrial undertaking an interpretation which jeopardise the rehabilitation can not be adopted.
25. Counsel has further relied upon a decision of Madras High Court in Blue Star Ltd. v. Hindustan Photo Films ., (1997) 90 Company Cases 340, wherein Madras High Court has held that Section 22 of the SICA prohibits the institution or continuance of any suit for recovery of money or for the enforcement of any security or any guarantee, even in respect of any loans or advances granted to the industrial company. As already mentioned above, the case in hand is not a case of loan or advance and is on account of realization of transportation charges of bamboo transported which was very essential for functioning of a unit. Thus, in our opinion, Section 22 of the SICA is not attracted to the arbitration award, hence, permission of BIFR was not necessary to be obtained.
26. We find no merit in these appeal. Resultantly, appeals are hereby dismissed. Parties to bear their own costs as incurred.