Full Judgment
S. Ashok Kumar, J.
1. The applicant has filed the application praying for a decree and judgment for payment of the admitted hundi amount by the first respondent to the applicant.
2. Learned Counsel for the first respondent/defendant contends that the first respondent has been already referred to the Board for Industrial and Financial Reconstruction and therefore no proceedings for recovery of money can be instituted or ordered during the pendency of the Board for Industrial and Financial Reconstruction proceedings. Counsel for the first respondent/defendant has produced the letter dated November 18, 2003, sent by the Board for Industrial and Financial Reconstruction, wherein, it is referred to that the reference made under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, by the defendant has been registered as Case No. 381 of 2003 before the Board for Industrial and Financial Reconstruction.
3. Counsel for the plaintiff/applicant submits that mere submission of a reference under Section 15(1) is not a bar for initiating proceedings against a sick company. In support of his contention learned Counsel wants to rely upon the judgment in the case of Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. , wherein it was held that on the date of passing of the order of winding up of the company, if no proceedings was pending before the Board for Industrial and Financial Reconstruction, then Section 22 of the Sick Industrial Companies (Special Provisions) Act will have no application. But this is a case in which proceedings are pending before the Board for Industrial and Financial Reconstruction as seen from letter dated November 18, 2003. In Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. : (2000)5SCC515 the Supreme Court has held that the deemed date of commencement of inquiry for the purpose of Section 22 of the Sick Industrial Companies Act is the date of submission of reference under Section 15. As far as this case is concerned, a reference has been made by the respondent-company under Section 15 which has already been taken up and registered by the Board for Industrial and Financial Reconstruction. As per the judgment referred to above, the deemed date of commencement of enquiry for the purpose of Section 22, is the date of submission of reference under Section 15. As far as this case is concerned not only reference has been submitted to the Board for Industrial Financial Reconstruction but it has also been registered as a case.
4. This court in the case of I. Jairaj v. B. Champalal Jain has also held as follows (page 82 of 122 Comp Cas):
It is settled law that a once a company is registered with the Board for Industrial and Financial Reconstruction, all proceedings filed against a company and its guarantors must be stayed forthwith and shall not be proceeded with without the consent of the Board for Industrial and Financial Reconstruction. Section 22 imposes a prohibition on recovery from guarantors of the sick industrial company. The purpose behind such a provision is to prevent the isolated burdening of the guarantor or co-obligant with the debt of the sick industrial company, until recovery can be commenced against the sick industrial company itself, which fact has been disregarded by the learned trial judge. Further, the materials placed clearly show that the loan was granted to the sick industrial company and that the petitioner was only the director of the company. It is also clear that the petitioner has signed the debt instrument only as a director on behalf of the sick industrial company and I hold that the benefit of Section 22 of the Act will accrue to him. By virtue of the provisions of Section 22 of the Act, all co-obligants are also entitled to the benefit of stay in terms thereof, until permission is obtained from the Board for Industrial and Financial Reconstruction.
5. Therefore, the contention of the applicant/plaintiff that a decree should be passed for admitted hundi cannot be done at this stage. Hence the petition is dismissed.
6. However, liberty is given to the petitioner to revive such application, once the Board for Industrial and Financial Reconstruction proceedings are over.