Document Fragment View

Matching Fragments

K.K. Balu, Member

1. These applications in C A. No. 609/634A/SRB/2002, C. A. No. 70/634A/SRB/2003, C. A. No. 71/634A/SRB/2003 and C. A. No. 442/634A/SRB/2003 are filed by Shri A. Seshacharyulu, Smt. P. Jagadeswari, Shri P. Srinivas and Shri Kalangi Venkata Narayana, respectively, under Section 634A of the Companies Act, 1956 ("the Act") for enforcement of the order dated November 24, 2000, made against M/s. Pennar Industries Ltd. ("the company") to repay the deposits together with interest thereon in accordance with the scheme approved by the Company Law Board (CLB). The company has failed to repay the deposit amount in compliance with the order of the CLB. Hence the applications. The applications came up for hearing before this Bench from time to time and finally on May 26, 2003. As the company is common and relief sought in these applications is one and the same, they are disposed of by this common order.

3. Shri D. B. Saxena, advocate appearing for the company has submitted that one of the creditors has filed a Company Petition No. 19 of 2002 under Section 433 of the Act before the High Court of Andhra Pradesh for winding up of the company. The winding up proceedings are pending. By virtue of Section 446 actionable claims against the company cannot be proceeded with without the leave of the winding up court. Shri Saxena, relying upon the decision in Maiyan Dalip Rajeshwari Debi v. Sri S. Mohan Bikram Sah, AIR 1945 All 409, pointed out that a fixed deposit is not a deposit of specie, but a debt or an actionable claim and accordingly the proceedings before the CLB cannot be proceeded with without the leave of the winding up court. The company's accumulated losses as at the end of the financial year ended June 30, 2002, exceeded its net-worth, a reference has been made to the Board for Industrial and Financial Reconstruction ("BIFR"), under the proviso to Sub-section (1) of Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA"), and the reference has been registered by the BIFR as case No. 87 of 2002. By virtue of Section 22, no legal proceedings against a sick industrial company can be proceeded with without the consent of the BIFR, in support of which Shri Saxena relied on Patheja Bros. Forgings and Stamping v. ICICI Ltd. [2000] 102 Comp Cas 21 (SC). According to Shri Saxena, the proceedings under Section 634A are recovery proceedings for recovery of the deposit amount having an element of execution unlike a claim made by depositors for the return of their deposits after maturity made Section 58A(9) of the Act, in support of which he heavily relied on Deepak Insulated Cable Corporation Ltd. v. Union of India [2001] 104 Comp Cas 401 (Karn). Shri Saxena, therefore, urged that Section 634A proceedings cannot further be proceeded with without the consent of the BIFR.

6. Moreover, the present proceedings under Section 634A being in the nature of execution of the order of the CLB are clearly barred by the provisions of Section 22(1) of the SICA as held in Deepak Insulated Cable Corporation Ltd. [2001] 104 Comp Cas 401 (Karn) cited by learned counsel for the company.

7. In view of the above legal position, unless the applicants obtain the leave of the winding up court and consent of the BIFR, the present proceedings cannot further be proceeded with before the CLB. The applicants are at liberty to initiate appropriate action, if so advised and thereafter approach this Bench for further directions.