Delhi High Court
Wekcast Steels Ltd. vs Cement Corporation Of India on 20 November, 1997
Equivalent citations: 1997VIAD(DELHI)1130, [1998]91COMPCAS859(DELHI), 70(1997)DLT783, 1998(44)DRJ50
Author: K.S. Gupta
Bench: K.S. Gupta
JUDGMENT K.S. Gupta, J.
1. The Cement Corporation of India Limited, respondent, has filed this application under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, alleging that K. C. Sodhia was appointed as sole arbitrator to adjudicate the disputes relating to purchase order No. 4/81/6(14)/81 - MMO, dated June 12 1981, regarding supply of grinding media and he gave his award, dated June 30, 1992, directing the respondent to pay Rs. 1,34,283 within 30 days to the petitioner. On receipt of the notice of filing of the award, the respondent filed objections under sections 30 and 33 of the Arbitration Act for setting aside the aforesaid award. It is alleged that respondent is a Government company and was referred to the BIFR under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985. By a letter dated August 8, 1996, the Board has declared the respondent a sick company and the IFCI has been appointed as operating agency. It is prayed that under section 22 of the said Act proceedings in this case be stayed. Along with the application, copy of the said letter, dated August 8, 1996, has also been filed.
2. In the reply, the petition has not denied that the respondent was referred to the BIFR under section 15 and by a letter dated August 8, 1985, the Board has declared the respondent a sick company and the IFCI has been appointed as operating agency, as alleged. It is stated that the award is still to be made the rule of the court. Only the proceedings to execute the decree, if any, are liable to be stayed under section 22.
3. In support of the contention that on identical facts further proceedings were stayed under section 22(1) of the Act. Shri S. K. Taneja has invited my attention to a decision in Lloyd Insulations (India) Ltd. v. Cement Corporation of India [1997] 89 Comp Cas 483 (Delhi); [1997] 66 DLT 858.
4. The provisions contained in the aforesaid section 22(1) came to be considered by the Supreme Court in Shree Chamundi Moped Ltd. v. Church of South India Trust Association of the report it was held :
"In this regard, it may be mentioned that the following proceedings only are automatically suspended under section 22(1) of the Act :
(1) Proceedings for winding up of the sick industrial company; (2) Proceedings for execution, distress or the like against the properties of the sick industrial company; and (3) Proceedings for the appointment of a receiver.
5. Eviction proceedings initiated by a landlord against a tenant company would not fall in categories (1) and (3) referred to above. The question is whether they fall in category (2). It has been urged by learned counsel for the appellant-company that such proceedings fall in category (2) since they are proceedings against the property of the sick industrial company. The submission is that the leasehold right of the appellant-company in the premises leased our to it is property and since the eviction proceedings would result in the appellant-company being deprived of the said property, the said proceedings would be covered by category (2). We are unable to agree. The second category contemplates proceedings for execution, distress or the like against any other properties of the industrial company. The words 'or the like' have to be construed with reference to the preceding words, namely, 'for execution, distress' which means that the proceedings which are contemplated in this category are proceedings whereby recovery of dues is sought to be made by way of execution, distress on similar process against the property of the company. Proceedings for eviction instituted by a landlord against a tenant who happens to be a sick industrial company, cannot, in our opinion be regarded as falling in this category."
6. Indisputably, the objections under sections 30 and 33 of the Arbitration Act filed by the respondent are yet to be decided and the stage for recovery of dues by way of execution, distress or similar process against the property of the respondent has not reached so far. That being the position, in view of the ratio in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association [1992] 75 Comp Cas 440 (SC), proceedings in the case cannot be stayed under aforesaid section 22(1). The said decision rendered by the apex court seems to have been not brought to the notice of the learned single judge who decided Lloyd Insulations (India) Ltd. v. Cement Corporation India [1997] 89 Comp Cas 483 (Delhi). The application is dismissed being misconceived.
7. List in March, 1998, for arguments.