Delhi High Court
National Textile Corporation vs Smt. Kamla Sharma on 13 February, 1997
Equivalent citations: 66(1997)DLT375
JUDGMENT Jaspal Singh, J.
1. The respondent, under whom the petitioner-company is admittedly a tenant, instituted a suit for possession and for recovery of mesne profits/damages, etc. In response to the same the petitioner-company moved an application under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter called "the Act"), alleging that since an enquiry had already been held under section 16 and a scheme was already under preparation or consideration within the meaning of section 17 of the said Act, therefore, the suit was not maintainable. The learned Additional District Judge, however, did not agree. He dismissed the application. Hence, this civil revision.
2. A perusal of the application under section 22 of the Act would go to show that the company had challenged the maintainability of the suit only so far as it related to the relief of mesne profits/damages, etc. It did not say that the suit for possession too could not lie. I am mentioning this because now it has been argued before me that even the suit for possession would not lie. Thus, a submission has been made which was conspicuous by its absence in the application. I may also mention by way of preliminaries that learned counsel for the respondent has submitted that as far as the claim for mesne profit or damages for use and occupation is concerned, the respondent-plaintiff would approach for consent as required under the Act and that it may be taken that she is now pressing the suit only as far as it relates to the relief for possession.
3. With the preliminaries over it may be mentioned that the entire arguments revolved around a judgment of the Supreme Court in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. . It was contended that in the light of the said judgment, the word "proceedings" in section 22(1) has to be broadly construed so as not to confine it to "legal proceedings" as used in the marginal note with the provisions, and that, where an enquiry is pending under section 16/17 of the Act or an appeal is pending under section 25 of the Act there should be cessation of the coercive activities of the type mentioned in section 22(1). Learned counsel submitted that a suit for possession was nothing but a coercive activity within the meaning of the said provision.
Is it so ?
4. Before I venture to answer, let us have a look at the provision. This is how section 22 of the Act runs :
"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."
5. I feel the answer is provided by yet another judgment of the Supreme Court in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, , wherein it was held that the plea that the leasehold rights of a sick company in the premises leased out to it is property and since the eviction proceedings would result in the company being deprived of the said property, the said proceedings would be covered by category (2) of section 22 is not tenable. However, learned counsel does not want me to follow the said dictum. He says that the later judgment in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. [1993] 78 Comp Cas 803 (SC) expands the grip of the provision. It does, no doubt, but not to the extent as canvassed. What is equally significant is that the judgment in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. [1993] 78 Comp Cas 803 (SC) did not relate to a suit for possession. In any case it merely states that there should be cessation of the coercive activity "of the type" mentioned in section 22(1) of the Act. In view of the judgment in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, , a suit for possession of the premises leased out to a company covered by the Act cannot be taken to be a coercive activity "of the type" mentioned in section 22(1) of the Act.
6. Learned counsel submits, as a last resort, that the judgment in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, was before the amendment of section 22 of the Act. He submits that the amended section 22 relates not only to the legal proceedings but even to a suit and that under the circumstances the judgment delivered in the year 1992 by the Supreme Court loses its relevance. I still remain unpersuaded. True, there has been an amendment by Act 12 of 1994 which says that "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. However, the suit being for possession and not for recovery of money or for enforcement of any security or any guarantee in respect of any loan or advance, I fail to see how this amendment comes to the rescue of the petitioner or how it washes away the effect of the judgment of the Supreme Court in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, . The amendment has a limited range and a suit for possession is surely beyond its reach.
7. For the reasons recorded above, I hold that section 22 is no hurdle in the way of the suit for possession. The revision petition thus stands dismissed. No order is made as to costs.