Debt Recovery Appellate Tribunal - Delhi
O.P. Goyal vs Ifci Ltd. And Ors. on 14 August, 2002
Equivalent citations: II(2003)BC39
JUDGMENT
K.S. Kumaran, J. (Chairman)
1. O.A. No. 390/2000 filed by the 1st respondent-IFCI Ltd. against the 2nd respondent-Haryana Steel and Alloys Ltd., appellant-O.P. Goyal and others is pending before Debts Recovery Tribunal-I, Delhi (herein referred as "DRT"). Appellant-O.P. Goyal filed a Miscellaneous Application for stay of further proceedings on the ground that a reference under Section 15(a) of the Sick Industrial Companies (Special Provisions) Act, 1985 is pending. But the said application was opposed by the 1st respondent herein on the ground that the BIFR has on 11.5.2000 permitted the legal proceedings to be taken. The said application for stay was dismissed by the learned Presiding Officer of the DRT on 13.9.2001. The appellant filed Miscellaneous Appeal No. 202/2001 before this Tribunal against the said order and had also filed the orders dated 11.5.2000, 7.7.2000, 1.9.2000 and 15.11.2000 passed by the BIFR. By relying on these documents, the appellant contended that there was no permission in favour of the 1 st respondent to file the O.A. against them. This Tribunal disposed of the said Miscellaneous Appeal with a direction to the appellant to move an application for review inasmuch as the documents filed in the appeal were not before the DRT.
2. Accordingly, the appellant moved an application for Review of the earlier order of dismissal of the application for stay, and for grant of stay. This application has also been dismissed by the learned Presiding Officer of the DRT by his order dated 16.1.2002. That is why the appellant has preferred this appeal. This 1st respondent has filed a reply opposing this appeal.
3. I have heard the Counsels for both the sides and perused the records.
4. The learned Counsel for the appellant referred to the order dated 11.5.2000 and contended that there was no specific permission given by the BIFR to the 1st respondent herein to initiate proceedings against the appellant or the 2rd respondent and others. In particular he referred to the following portion of the order :
"In view of the issue of the legitimacy of BOD being in doubt and the consequent reservations regarding the acceptability of the reference to the Bench itself, no need was felt to withhold the legal processes at other fora at this stage. However, no Court Receiver should be appointed and decrees, if any, awarded against the company, should not be executed as of now."
5. The learned Counsel for the appellant contended that the perusal of this order dated 11.5.2000 passed by the BIFR will show that since the BIFR entertained some doubt as to the constitution and the legitimacy of the Board of Directors and consequently had reservations regarding the acceptability of the reference itself, it, passed this order. He, particularly, laid stress on the words "at this stage". Learned Counsel for the appellant, contended that it is evident that the 1st respondent has not been given specific permission to initiate legal proceedings, but even this general permission was only for a limited period as is evident from the use of the words "at this stage".
6. The learned Counsel for the appellant also referred to the order dated 7.7.2000 passed by the BIFR authorising the Punjab National Bank to hold a local inquiry regarding the allegation about the stripping of the company's assets, etc., and that the Goyal Group shall explain why the concerned parties shall not be allowed to invoke the personal guarantees furnished by the "Goyal Group". He also referred to the order dated 1.9.2000 passed by the BIFR wherein it was observed that appellant-O.P. Goyal herein had transferred his share to certain others, but personal guarantee have not been withdrawn as the company continued under the same management, and directed that the status quo in this regard be maintained. Learned Counsel for the appellant also referred to the order dated 15.11.2000 passed by the BIFR wherein certain directions were given.
7. The learned Counsel of the appellant further contended that the reference on behalf of the 2nd respondent-company was registered as Case No. 389/1999 by the BIFR on 15.12.1999 whereas O.A. No. 390/2000 has been filed before the DRT, Delhi on 31.7.2000. He contended that in the absence of specific permission from the BIFR all proceedings for the Recovery of money from the 2nd respondent-company will stand stayed under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. Therefore, learned.Counsel for the appellant contended that the Review application should have been accepted and stay of further proceedings should have been granted in favour of the appellant.
8. But the learned Counsel for the 1st respondent contended that the order dated 11.5.2000 passed by the BIFR, the relevant portion which has been extracted above will clearly show that BIFR was not satisfied about the composition and the legitimacy of the Board of Directors and had also entertained doubt about the acceptability of the reference itself, and, therefore, it ordered that there was no need to withhold other legal processes at other fora at that stage. He, therefore, contended that this order dated 11.5.2000 enabled the 1st respondent to file the O.A. for the recovery of the money. He further contended that none of the orders dated 7.7.2000,1.9.2000 and 15.11.2000 revoked this general permission given by the BIFR to initiate proceedings. Therefore, he contended even though the reference was registered on 15.12.1999, BIFR held that there was no need to withhold the legal processes at other fora, and, therefore, in the absence of any order revoking this general permission no order of stay can be granted as prayed for by the appellant.
9. I agree with the learned Counsel for the 1st respondent in this respect. It is only after the Registration of the reference that the general permission referred to above has been granted by BIFR though not positively, but in the negative form. BIFR expressed itself clearly that at that stage there was no need to withhold the legal processes at other fora. The BIFR did not restrict its permission to any particular period. The use of the words "at this stage" does not relate to the period during which the permission is to remain in force, but to the period when the order was made. The words "at this stage" has to be taken to refer to the then existing circumstances, namely, that there was doubt about the composition and the legitimacy by the Board of Directors and the acceptability of the reference itself. But, subsequently the order was not revoked specifically. In none of the orders of BIFR dated 7.7.2000, 1.9.2000 and 15.11.2001 has the BIFR, stated that it was withdrawing the permission granted by it by the order dated 11.5.2000. Further I find that the BIFR has provided for some safety measures also, BIFR specifically ordered on 11.5.2000 itself that no Court Receiver should be appointed and decrees if any, awarded, against the company should not be executed as of now. Therefore, while on the one hand, there is no specific withdrawal of the general permission granted by the order dated 11.5.2000, there is also sufficient protection given to the company in the same order that the decrees, even if any, passed against the company cannot be executed. Therefore, I am of the view that contention that the 1st respondent had no permission to the O.A. for the recovery of the money from the 2nd respondent and others or that it was revoked by any of the subsequent orders cannot be accepted.
10. Of course, the learned Counsel for the appellant contended that the 1st respondent had moved the BIFR for specific permission and this will show that there was no permission in favour of the 1st respondent. But the learned Counsel for the 1st respondent pointed out that the said application was filed only by way of abandon caution and that the filing of that petition will not take away the permission already granted. I agree with the learned Counsel for the 1st respondent. Merely because the 1 st respondent subsequently applied for specific permission, it does not mean that the general permission granted by Order dated 11.5.2000 is not available to it. That does not in any way militate against the case of 1st respondent, that there was general permission to take legal proceedings against the 2nd respondent, the appellant, and others. This general permission has not been revoked specifically. Therefore, this contention of the appellant will be of no avail.
11. The learned Counsel for the appellant contended that the bar contained in Section 22 of the Sick Industrial Companies (Special Provisions) Act is not only against the commencement of the proceedings, but also it operates against the continuation of those proceedings. In this regard, the learned Counsel for the appellant relied upon the decision of the Hon'ble Supreme Court in "Rishabh Agro Industries Ltd. v. Punjab National Bank Capital Services Ltd., IV (2000)SLT717=AIR 2000 SC 1583." But this decision will not help the appellant, because in the present case on hand, BIFR has by its order dated 11.5.2000 clothed creditors with the general permission to take legal proceedings.
12. In these circumstances, I am of the view that the stay prayed for by the appellant cannot be granted and so the appeal has to fail. Accordingly, the appeal is dismissed.
Copy of this order be furnished to all the parties and forwarded to the DRT concerned.