Ashok Bhan, J.
1. The petitioner-judgment-debtor (hereinafter referred to as 'the judgment-debtor') is an industrial company incorporated under the Companies Act, 1956. The decree-holder-respondents (hereinafter referred to as 'the decree-holders') filed a civil suit for recovery of a certain amount which was decreed. An appeal against that order was filed on March 29, 1988. The order of the trial court was confirmed by the appellate court. The decree-holders filed an application for execution of the decree passed in their favour.
2. Parliament of India enacted the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'the Act'), with the following objectives (See [1986] 59 Comp Cas (St.) 93) :
'An Act to make in the public interest, special provisions 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.'
3. Section 22 of the Act deals with suspension of legal proceedings pending against a sick industrial unit in any court and the same is reproduced 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 (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 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, notwithstanding anything contained in the Companies Act, 1956 (1 of 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) 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, assurance 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 or 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 may 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 (1 of 1956), or any other law, the memorandum and articles of association of the company or any instrument having effect under the said Act or other 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 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.'
4. The Act received the assent of the President on January 8, 1986. The provisions except as contained in sections 15 to 34 of the Act came into force on January 12, 1987, on the basis of Notification No. GSR 24(E), published in the Gazette of India, Extry. No. 21, Part II, Section 3(1)(i), dated January 12, 1987. Thereafter, vide Notification No. S. O. 444(E), dated April 28, 1987, sections 15 to 34 of the Act were brought into force with effect from May 15, 1987. The judgment-debtor made an application under the Act for being declared a sick unit. The judgment-debtor-company was declared a sick unit on March 3, 1989. The judgment-debtor filed the objections under Section 47, Civil Procedure Code, and, under Section 22 of the Act for suspension/stay of the legal proceedings in the execution. The objections filed under Section 47, Civil Procedure Code, and under Section 22 of the Act have been dismissed by virtue of the impugned order. The judgment-debtor, being aggrieved, have come in revision petition against the said order.
5. I have considered the matter at length. The executing court has taken an erroneous view in this case. It was held that, no doubt, in view of the provisions of Section 22 of the Act, the execution proceedings could not be taken into hand or, if proceedings are already started, those ought to have been stayed but, since, in the present case, the judgment-debtor had not taken the objection regarding the stay of proceedings under Section 22 before the appellate court in the grounds of appeal while filing an appeal against the decree and brought to the notice of the appellate court the change in law, the judgment-debtor could not be permitted to take this objection in the execution proceedings and dismissed the objection petition. Section 22 of the Act came into force with effect from May 15, 1987. An appeal against the decree was filed by the judgment-debtor on March 29, 1988. The judgment-debtor-company was declared a sick unit on March 3, 1989. Firstly, the petitioner could not take this objection in the grounds of appeal as it was declared a sick unit on March 3, 1989, i.e., almost one year after the filing of the appeal against the decree ; and, secondly, it is immaterial as to whether such a ground was taken in the grounds of appeal or not or as to whether the change in law, i.e., regarding the enactment of the Sick Industrial Companies (Special Provisions) Act, 1985, was brought to the notice of the appellate court. A reading of the objections and Section 22 of the Act (reproduced in the earlier part of the judgment) brings out the mandate of Legislature. The executing court has failed to appreciate the said mandate which is clear and prohibits the continuance of any proceedings for winding up, execution, distress or the like against any of the properties of the company which has been declared a sick unit under the Sick Industrial Companies (Special Provisions) Act, 1985. Section 22 of the Act has a non obstante clause and says that-
'. . . 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 shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the appellate authority.'
6. Thus, it places a bar on the filing or continuation of any proceedings in the nature of winding up, execution, distress, etc., against any of the properties of the company and under the circumstances it was mandatory for the executing court to have given effect to the mandate of Section 22(1) quoted above, which.it has failed to do.
7. Accordingly, the revision petition is accepted ; the impugned order dated September 4, 1989, is set aside and it is ordered that the execution proceedings before the executing court shall remain stayed. It is, however, made clear that the proceedings can be revived with the consent of the Board or the appellate authority, as the case may be, as provided in Section 22 of the Act. No costs.