Vikramajit Sen, J.
1. The point raised by the Respondent in this case is that the winding up petition is not maintainable by virtue of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA for short). This question has already generated several decisions by the Apex court but the nodes appears to have drawn a dichotomy of opinion.
2. For facility of reference, Section 22(1) of SICA is reproduced below:
'22. Suspension of legal proceedings, contract, 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.'
3. The decision in Maharashtra Tubes Ltd. V. State Industrial & Investment Corporation Limited and Anr., : [1993]1SCR340 supports the contention that the present proceedings are not maintainable. It was observed by the Hon'ble Supreme Court as under:
'Section 22(1) shorn of the irrelevant part provides that where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in any 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 appointment of a Receiver in respect thereof shall lie or be proceeded with further, except with the consent of the BIFR or, as the case may be, the Appellate Authority. The purposes and object of this provision is clearly to await the outcome of the reference made to the BIFR for the revival and rehabilitation of the sick industrial company. The words `or the like' which follow the words `execution' and `distress' are clearly intended to convey that the properties of the sick industrial company shall not be made the subject matter of coercive action of similar quality and characteristic till the BIFR finally disposes of the reference made under section 15 of the said enactment. The legislature has advisedly used an omnibus expression `the like' as it could not have conceived of all possible coercive measures that may be taken against a sick undertaking. The action contemplated by section 29 of the 1951 Act is undoubtedly a coercive measure directed at the take over of the management and property of the industrial concern and confers a further right on the Financial Corporation to transfer by way of lease or sale of properties of the said concern and any such transfer effected by the Financial Corporation would vest in the transferee all rights in or to the transferred property as if the transfer was made by the owner of the property. So also under the said provision the Financial Corporation will have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods. It is, thereforee, obvious on a plain reading of section 29 of the 1951 Act that it permits coercive action against the defaulting industrial concern of the type which would be taken in execution or distress proceedings; the only difference being that in the latter case the concerned party would have to use the forum prescribed by law for the purpose of securing attachment and sale of property of the defaulting industrial concern whereas in the case of a Financial Corporation that right is conferred on the creditor corporation itself which is permitted to takeover the management and possession of the properties and deal with them as if it were the owner of the properties. If the corporation is permitted to resort to the provision of section 29 of the 1951 Act while proceedings under sections 15 to 19 of the 1985 Act are pending it will render the entire process nugatory. In such a situation the law merely expects the corporation and for that matter any other creditor to obtain the consent of the BIFR or, as the case may be, the Appellate Authority to proceed against the industrial concern. The law has not left them without a remedy. We are, thereforee, of the opinion that the word `proceedings' in section 22(1) cannot be given a narrow or restricted meaning to limit the same to legal proceedings. Such a narrow meaning would run counter to the scheme of the law and frustrate the very object and purpose of section 22(1) of the 1985 Act.
......... The High Court was considerably influenced by the fact that the appellant company owed crores of rupees to banks and felt that so far as such creditors are concerned, different considerations may come into play but the High Court with respect failed to appreciate that the 1985 Act was enacted primarily to assist sick industrial undertakings which inter alias failed to meet their financial obligations. It is, thereforee, difficult to accept the view of the High Court that where the creditors of a sick industrial concern happen to be Banks or State Financial Corporations different considerations would come into play. It must be realised that in the modern industrial environment large industries are generally financed by banks and statutory corporations created specially for that purpose and if they are permitted to resort to independent action in total disregard of the pending inquiry under sections 15 to 19 of the 1985 Act the entire exercise under the said provisions would be rendered nugatory by the time the BIFR is able to evolve a scheme of revival or rehabilitation of sick industrial concern by the simple device of the Financial Corporation resorting to section 29 of the 1951 Act. We are, thereforee, of the opinion that where an inquiry is pending under section 16/17 or an appeal is pending under section 25 of the 1985 Act there should be cessation of the coercive activities of the type mentioned in section 22(1) to permit the BIFR to consider what remedial measures it should take with respect to the sick industrial company. The expression `proceedings' in section 22(1), thereforee, cannot be confined to legal proceedings understood in the narrow sense of proceedings in a Court of law or a legal tribunal for attachment and sale or the debtor's property.'
4. In Deputy Commercial Tax Officer and others, v. Corromandal Pharmaceuticals and others, : [1997]2SCR1026 the Hon'ble Supreme Court had considered its previous decisions in Gram Panchayat v. Shree Vallabh Glass Works Limited, : [1990]1SCR966 as well as Maharashtra Tubes Limited (supra). These decisions were distinguished on the premise that in those cases the liability of the sick company had arisen for the first time after the date of scheme sanctioned by Board of Industrial and Financial Reconstruction ( BIFR). The Court observed that 'the language of Section 22 is of wide import regarding suspension of legal proceedings from the moment an inquiry is started, till after the implementation of the scheme or the disposal of an appeal under Section 25 it will be reasonable to hold that the bar or embargo envisaged in Section 22(1) can apply only to such of those dues reckoned or included in the sanctioned scheme. Such amounts like sales tax, etc. which the sick industrial company is enabled to collect after the date of the sanctioned scheme legitimately belonging to the Revenue, cannot be and could not have been intended to be covered within Section 22 of the Act'.
5. The judgments in Shree Vallabh Glass Works (supra) as well as Corromandal's case (supra) were reflected upon by the Apex Court in Tata Davy Limited v. State of Orissa and others, : (1997)IILLJ989SC . The Bench favored the earlier view in Shree Vallabah Glass works (supra); significantly, Maharashtra Tubes was neither cited nor considered. The Hon'ble Court held that - 'In the larger interest of the industrial health of the nation, Section 22 of the Central Act requires all creditors seeking to recover their dues from sick industrial companies in respect of whom an inquiry under Section 16 is pending or a scheme is under preparation or consideration or has been sanctioned, to obtain the consent of the Board to such recovery. If such consent is not secured and the recovery is deferred, the creditors' remedy is protected for the period of deferment and is, by reason of Section 22(5), excluded in the computation of the period of limitation.' It is because of the seemingly divergement views that I have mentioned that a dichotomy can be discerned in the opinion of the Apex Court on whether all proceeding automatically come to an immediate halt.
6. In Sirmor Sudburg Auto Ltd. v. Kuldip Singh Lamba, [1998] 91 Com.Cas. 727, by Hon'ble R.C. Lahoti, J., while in this Court, opined that 'to be entitled to stay of the legal proceedings u/s. 22 of the Act a mere pendency of the enquiry would not suffice, the dues must be reckoned or included in the sanctioned scheme. A suit for eviction against a sick industrial company is not liable to be stayed under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.' This decision has been followed by the Division Bench of the Calcutta High Court in Taulis Pharma Ltd. v. Bengal Immunity Ltd., [2002] 108 Comp. Cas. 237. Similar views have also been taken in Vibgyar Ink Chem (Pvt.) Ltd. v. Safe Pack Polymers Ltd., [1998] 93 Comp.Cas. 407, which is also a decision of the Division Bench of the Andhra Pradesh High Court. Justice Umesh C. Banerjee, as the Chief Justice of that High Court, has inter alias observed as follows:
'It is not the intention of the law court, in our view, to expand the scope of legislation and one ought not to read anything further than one reads in plain and simple manner, Admittedly, the company, while the matter is pending before the Board, has enjoyed the benefits of these supplies. The Board has not been able to consider these claims. Obviously, the scheme as framed also has no reference to the claim of the petitioner, a creditor. Does that mean and imply the petitioner-creditor shall have to wait until after the fullest implementation of the scheme, in terms of the scheme, as sanctioned by the Board? It is an independent transaction de hors the scheme and obviously cannot thus be covered within the ambit of section 22 of the 1985 Act.'
Justice Lahoti's view has also been followed by a Single Judge of the Calcutta High Court in Fort William Industries Limited v. Usha Bentron Limited, [2002] 108 Comp. Cas. 176 and a Single Judge of this Court in the Cement Corporation of India v. Manohar Basin, : 82(1999)DLT343 .
7. The Apex Court in Real Value Appliances v. Canara Bank : [1998]3SCR170 has observed that the inquiry under Section 16 of the SICA 'must be treated as having commenced as soon as the reference is completed after scrutiny and that from that time, action against the Comany's assets must remain stayed as stated in Section 22 till final decision is taken by the BIFR.' This decision was affirmed by the Hon'ble Supreme Court in Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. : (2000)5SCC515 and it was clarified that Section 22 would be attracted even after a winding up order is passed. I have underlined the word `assets' since it is my understanding that the Hon'ble Court intended to state that the action against the assets, in contradistinction to the omnibus and wider `legal action', is what requires to be stayed.
8. In HIG Temp Chemicals Pvt. Ltd. v. Satya Steel Strips (P) Ltd., [1991] 42 Comp.Cas.447 a learned Single Judge of the High Court of Andhra Pradesh found it futile to keep the winding-up petition pending where the Respondent-company was receiving the attention of the BIFR. He followed the view of the Division Bench in Arvindbhai N. Talati v. Testeels Ltd., : (1989)2GLR1158 where it was held that where winding up proceedings had commenced they should be dismissed and need not be kept in abeyance. A learned Single Judge of the Rajasthan High Court in Tarun Shah v. Perfect Thread Mills Limited, [1989] 66 Comp.Cas.947 dismissed a Section 434 petition as prior permission of the BIFR had not been obtained. Similarly, a learned Single Judge of the Kerala High Court relied on foregoing judgments and held that a winding up petition filed without the consent of BIFR is not maintainable. The decisions of the Bench in Industrial Cables (India) Ltd. v. Goyal MG Gases Ltd., [2002] 108 Comp.Cas.895 is not discordant with the earlier judgments since the issue before it was not whether the winding up petition can be dismissed, or must only be stayed or adjourned since die.
9. With respect, I am unable to subscribe to the opinion of a learned Single Judge of the Bombay High Court in Special Steels v. Jay Prestressed Products Ltd. [1991] 72 Comp.Cas.277 that the pivotal question in connection with the current conundrum concerns the assets of the company and its functioning, and these would not be jeopardised if a civil suit continues. It seems to me that the SICA objective would be severely undermined, if not crippled, if the company's finances, administration and managerial attention is dissipated by the necessity of defending divers litigation. It was in this backdrop that Hardip Singh & Anr. v. Income Tax Officer, Amritsar & Ors., : [1979]118ITR57(SC) was cited with the intent of making good the argument that the winding up petition should continue and only when the third and final stage of the dissolution of the Company was reached, should the moratorium of Section 22 of the SICA be implemented
10. I must confess that, not unoften, I had gathered the impression that the insulation of Section 22 of SICA is dishonestly invoked and enjoyed by parties to delay, if not defeat, the legitimate claims of their creditors. I, thereforee, felt impelled to provide some succour to such creditors/petitioners by means of judicial engineering or ingenuity. Doubts can be entertained on whether it is fair and correct to extrapolate the Corromondal ratio to reach the conclusion that any claim which has not been reflected in the Reference before the BIFR would be beyond their bounds and thereforee justiciable before the Company Judge. The answer appears to me to be that Parliament is as much the repository of common conscience as the judiciary, although the former may be more engrossed with law than with justice; probably because the Judge can be impervious to all kinds of pressures. The Hon'ble Supreme Court was fully mindful of and alive to this discomfort, but both in Real Value case (supra) and Rishabh Agro case (supra) gave effect to and remained within the parameters of the principle that the plain meaning of the words employed in a statute must be adhered to. In any event, the creditors are not bereft of remedy. Even the unsecured creditor can provide information and material to the Board under Section 16(1)B, and may also initiate steps to obtain permission of the Board under Section 18(3). An appeal has also been provided to the BIFR. When it is recalled that winding-up is essentially a discretionary relief, it leaves no scope but to direct all creditors in the direction of BIFR.
11. What Section 22 states is that ' no proceeding for winding-up of the industrial company........shall lie or be proceeded with further..........' The Court should eschew a tautological interpretation in favor of one which imparts a distinct meaning to the words employed by the Legislature. I would, thereforee, draw a distinction between the word `lie' on the one hand ' be proceeded with' on the other. Parliament has taken pains not only to state that proceedings shall not continue, but that they shall not exist any further. This is the only meaning which can be given to the word 'lie' since otherwise it would be reduced to a surplusage. The Hon'ble Supreme Court in the Real Value case made a pointed reference to the action against the company's assets being stayed; it need not have used the words assets since the Section does not speak so. In any event, as also observed by various other High Courts, no useful purpose will be served in keeping a winding up petition in suspended animation while proceedings before the BIFR continue. The application under Section 22 is allowed The petition is accordingly dismissed with liberty granted to the Petitioner to file a fresh petition on the same cause of action if the need arises. This is, in fact, what SICA envisages since it has suspended the running of limitation.
Parties to bear their respective costs.
All the pending applications also stand disposed of.