1. The State Bank of Patiala (hereinafter referred to as "the respondent-bank") has filed O. A. No. 31 of 2003 against the appellant-M/s. Montari Industries Limited (the first defendant, and hereinafter referred to as "the appellant-defendant") and others for the recovery of Rs. 17,47,21,665.73 with interest and costs before the Debts Recovery Tribunal-II, Delhi (hereinafter referred to as "the DRT"). The appellant-defendant filed an application under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "SICA"), read with rule 18 of the Debts Recovery Tribunal (Procedure) Rules, 1993, for stay of proceedings before the DRT in view of the pendency of the appeal before the AAIFR.In that application it was averred that the BIFR by order dated August 1, 1997, declared the appellant-defendant as a sick industrial unit, appointed an operating agency to work out a rehabilitation scheme, but by order dated January 9, 2003, directed that the appellant-defendant be wound up. It was also averred that the appellant-defendant has preferred an appeal against the said order of the BIFR, and that the AAIFR has registered the same as Appeal No. 137 of 2003 on May 14, 2003. It was, therefore, urged that the proceedings against the defendants in the O. A. cannot be proceeded with except with the permission of the AAIFR.2. This application of the appellant-defendant was opposed by the respondent-bank. The learned presiding officer of the DRT, by order dated October 30, 2003, declined the request of the appellant-defendant to stay the proceedings.
3. Aggrieved, the appellant-defendant has preferred this appeal. The respondent-bank has filed a suitable reply opposing the same.
5. Learned counsel for the appellant-defendant points out that notice in the O. A. was ordered to be issued on May 13, 2003, for the hearing dated July 11, 2003, on which date the appellant-defendant entered appearance through counsel, and on August 26, 2003, the appellant-defendant had filed the application for stay of further proceedings. This application for stay was opposed by the respondent-bank on the ground that simply because an appeal against the order of the BIFR was filed by the appellant-defendant before the AAIFR and the same was registered as an appeal, the proceedings in the O. A.cannot be stayed. The further contention of the respondent-bank was and is that the appellant-defendant has neither been heard for the purpose of admission nor has any show-cause notice been issued, and, therefore, the provisions of Section 22 of the SICA are not attracted to the case of the appellant-defendant. The learned presiding officer of the DRT held that it is not the proper stage to stay the proceedings.
6. Therefore, the question is whether the proceedings before the DRT can be stayed in view of the fact that an appeal against the order of the BIFR has been filed and has been registered as an appeal before the AAIFR, though the appeal has not been heard for the purpose of admission and that no notice has been ordered to be issued to the respondent-bank. Learned counsel for the appellant-defendant relies upon the decision in Raja Kulkarni v. State of Bombay, AIR 1954 SC 73.
This decision related to a case under the Industrial Disputes Act, wherein it was held as follows (at page 74) : "It is contended that Section 24 contemplates the pendency of a valid and competent appeal, but as no valid or competent appeal under the law was pending, the appellants committed no offence under Section 27. We are unable to accept this contention. Section 24 on a plain and natural construction requires for its application no more than that an appeal should be pending and there is nothing in the language to justify the introduction of the qualification that it should be valid or competent." 7. He also relies upon the unreported decision dated June 18, 1999, of the hon'ble High Court of Bombay in Suit No. 1884 of 1999--ICICI Ltd. v. Flexo Film Wraps (India) Ltd. That was a case where the BIFR had rejected the reference, but in view of the appeal, the matter was ordered to be adjourned sine die. He also relies upon the decision of the hon'ble High Court of Delhi in L.G. Electronics India P. Ltd. v.Usha India Ltd. (decided on September 15, 2003) in Execution Application No. 50 of 2003 in Execution Petition No. 17 of 2003, wherein it was held that in view of the pendency of the appeal the provisions of Section 22 of SICA would be applicable.
8. In Real Value Appliances Ltd. v. Canara Bank [1998] 93 Comp Cas 26 ; [1998] 5 SCC 554, the hon'ble Supreme Court held that once the reference is registered, and once it is mandatory simultaneously to call for the information/documents from the informant and such a direction is given, then enquiry under Section 16(1) must be-for the purpose of Section 22- be deemed to have commenced. Section 22 and the prohibitions contained in it shall immediately come into play.
9. Relying upon these decisions, learned counsel for the appellant contends that once the appeal is registered, it is deemed to be pending till it is disposed of. He, therefore, contends that without leave of the AAIFR the O. A. cannot be further proceeded with, and, therefore, the proceedings in the O. A. have to be stayed.
"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 (1 of 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." 11. If we take into consideration the provision in Section 22 that where an appeal under Section 25 relating to an industrial company is pending, no suit for recovery of money shall be proceeded with further except with the leave of the Board or the Appellate Authority, and also the decisions referred to above, it will be clear that it is sufficient if an appeal under Section 25 of SICA is pending, for attracting the provisions of Section 22 of SICA. An appeal has to be treated as pending from the time when it was filed till it is finally disposed of.
Therefore, the contention of the respondent-bank that the mere filing and registration of the appeal is not sufficient to attract the provisions of Section 22 of the SICA, cannot be accepted.
12. Therefore, the appeal is allowed setting aside the impugned order dated October 30, 2003. The respondent-bank cannot further proceed with the O. A. except with the leave of the AAIFR. Till then the proceedings before the DRT have to be, and are accordingly, stayed. The application filed by the appellant-defendant before the DRT is ordered accordingly.
13. This is an application for grant of interim stay of the direction given by the DRT to file the written statement. Since the appeal itself has been disposed off today, this application indisposed off as no longer necessary.