@JUDGMENTTAG-ORDER
Lokeshwar Prasad, J.@mdashThis Order shall govern the disposal of the two civil revision petitions (CR 813/97 & 832/97), filed by the petitioner, u/s 115 of the Code of Civil Procedure, 1908 (hereinafter referred to as ''the CPC''). The facts relevant for the disposal of the above mentioned two Civil Revision Petitions, briefly stated, are that the respondents have filed a suit (Suit No.574/96 - entitled Smt. Kamla Lakhanpal & Ors. Vs. M/s Consolidates Steels & Alloys Limited) for the recovery of possession, as well as charges for the use and occupation, as also future mesne profits in respect of flat No.405, Ashoka Estate, 24, Barakhamba Road, New Delhi. The respondents in the above said suit, amongst others, have claimed the following reliefs:-
(a) A decree for the recovery of possession of the premises demised bearing flat No. 405, on the 4th floor of Ashok Estate, Barakhamba Road, New Delhi more specifically shown in red colour in the plan;
(b) A decree for the recovery of Rs.1,99,176/- (Rupees one lakh ninety nine thousand one hundred and seventy six only) on account of arrears of rent and arrears of house-tax;
(c) A decree, directing an enquiry as to mesne profits/damages as contemplated under Order XX Rule 12 of the CPC from 4.1.1996 and holding that mesne profits/damages at the rate of Rs. 75,000/- per month for use and occupation of the premises demised from 4.1.1996 till recovery of possession are due and a decree for the recovery thereof; and
(d) Interest at the rate of 18% per annum on the amount found due to the plaintiffs from the defendant from the date of suit till realisation.
2. After the service of the summons, the petitioner (defendant) appeared and filed a written statement resisting the claim of the respondents in the above said suit. On the completion of the pleadings, the respondents filed an application u/s 151 CPC seeking directions to the petitioner to pay charges for the use and occupation of the premises in question. The above said application of the respondents was disposed of by the learned Additional District Judge vide order dated 8.1.1997. The learned Additional District Judge, vide above said order, directed the petitioner to pay an amount of Rs.19,200/- per month from 4.1.1996 onwards up to 8.1.1997 and to continue to deposit the same month by month on or before the 5th day of each English Calendar Month. The petitioner failed to comply with the above orders of the learned Additional District Judge and the respondents moved an application dated the 20th February, 1997 u/s 151 CPC praying for striking off the defense of the petitioner. On or about 1.3.1997 the petitioner filed an application u/s 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ''the Act'') read with Section 151 CPC, seeking suspension of the proceedings in the suit, filed by the respondents and also the suspension of the operation of the order, passed by the learned Additional District Judge, dated the 8th January, 1997.
3. The learned Additional District Judge vide order dated 27.5.1997 while dismissing the application of the petitioner, filed u/s 22 of the Act, has allowed the application of the respondents, filed u/s 151 CPC, seeking for striking out the defense of the petitioner.
4. The petitioner, thereafter, filed two applications under Order XLVII Rule 1 read with Section 151 CPC for the review of orders dated the 27th May, 1997, passed by the learned Additional District Judge. The learned Additional District Judge, vide order dated 11.8.97 has dismissed both the review applications filed by the petitioner.
5. Feeling aggrieved, the petitioner has filed the above mentioned two revision petitions (CR 813/97 & CR 832/97 - both entitled Consolidated Steels & Alloys Limited Vs. Smt. Kamla Lakhanpal & Ors.). Notice of the above mentioned Revision Petitions was given to the respondents who have filed a common reply stating therein that the revision petitions, filed by the petitioner, be dismissed as the same are neither justified on merits nor the same are according to settled law.
6. I have heard the learned counsel for the parties at length and have also carefully gone through the documents/material on record. The learned counsel for the petitioner during the course of arguments, has placed reliance on a number of decisions in cases
7. The only question which arises for consideration in the above mentioned two civil revisions is as to whether the suit, instituted by the respondents against the petitioner, which is a ''sick industrial company'', within the meaning of Section 3(1)(o) of the Act, requires to be suspended u/s 22(1) of the Act.
8. Sub-Section (1) of Section 22 of the Act, which alone has relevance to the above question, reads as under:
"Suspension of legal proceedings, contracts, etc.
22(1) Where in respect of an industrial company, an inquiry u/s 16 is pending or any scheme referred to u/s 17 is under preparation for consideration or a sanctioned scheme is under implementation or where an appeal u/s 25 relating to an industrial company is pending, then, notwithstanding any- thing 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 shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority."
9. The Act was amended subsequently by the Amending Act No.12 of 1994 which came into force on 1.2.1994. As a result of the above amendment several provisions of the Act have been amended. For the purpose of the present case, the only amendment made in Sub-Section (1) of Section 22 of the Act, is relevant. As a result of the above said amendment the following words have been added after the words ''appointment of a receiver in respect thereof'':-
"and no suit for 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."
10. On a bare perusal of the above said provisions of Section 22(1) of the Act it is apparent that it is applicable only in the following situations/circumstances:
(i) when an enquiry u/s 16 is pending in respect of an industrial company, or
(ii) any scheme referred to u/s 17(3) is under preparation, or
(iii) the same is under consideration u/s 18, or
(iv) when a scheme sanctioned by the Board for Industrial & Financial Reconstruction (hereinafter referred to as ''the Board'') u/s 18(4) is under implementation, or
(v) where an appeal u/s 25 relating to the said Company is pending.
11. In the situations/circumstances mentioned above, there is an automatic bar as to the institution or continuance of the proceedings of the nature mentioned in the provision except with the consent of the Board or, as the case may be, the Appellate Authority. The proceedings coming under the prohibition, briefly stated, are:-
(i) for winding up of the industrial company;
(ii) for execution, distress or the like against any of the properties of the industrial company;
(iii) for the appointment of a receiver in respect thereof;
(iv) filing a suit against the sick industrial company for recovery of money or enforcement of any security or of any guarantee in respect of loan or advance granted to the industrial company.
12. While examining the object of the Act and the scope, ambit & sweep of Section 22 Their Lordships of the Supreme Court in case
"We may, in this context, point out that as indicated in the Preamble, the Act has been enacted to make special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined. The provision regarding suspension of legal proceedings contained in Section 22(1) seeks to advance the object of the Act by ensuring that a proceeding having an effect on the working of the finances of a sick industrial company shall not be instituted or continued during the period the matter is under consideration before the Board of the Appellate Authority or a sanctioned scheme is under implementation without the con- sent of the Board of the Appellate Authority. It could not be the intention of Parliament in enacting the said provision to aggravate the financial difficulties of a sick industrial company while the said matters were pending before the Board of the Appellate Authority by enabling a sick industrial company to continue to incur further liabilities during this period. This would be the consequence if sub-section (1) of S.22 is construed to bring about suspension of proceedings for eviction instituted by landlord against a sick industrial company which has ceased to enjoy the protection of the relevant rent law on account of default in payment of rent. It would also mean that the landlord of such a company must continue to suffer a loss by permitting the tenant (sick industrial company) to occupy the premises even though it is not in a position to pay the rent. Such an intention cannot be imputed to Parliament. We are, Therefore, of the view that Section 22(1) does not cover a proceeding instituted by a landlord of a sick industrial company for the eviction of the company premises let out to it."
13. As already stated the only question requiring decision by this Court in the present proceedings is as to whether the suit of the nature, filed by the respondents attracts the applicability of Section 22(1) of the Act, as amended. This very question came up for consideration before this Court in case
14. Now the only question which remains to be examined is whether a suit for the recovery of the charges for the use and occupation and also for future mesne profit, in respect of the premises in question, is a suit for the ''recovery of money'' within the meaning of the expression as inserted by the 1994 Amendment Act thereby enabling the petitioner to claim protection u/s 22(1) of the Act. The above question has to be examined keeping in view the fact that the petitioner company was declared as a ''sick industrial company'' within the meaning of Section 3(1)(o) of the Act on 8.8.1989 and the Board u/s 17 of the Act had approved the scheme on 22.5.1990. The premises in question were taken on rent by the petitioner company from the respondents on 4.1.1991 i.e. much after the petitioner company was declared as a ''sick industrial company'' and also much after the approval of the Scheme by the Board u/s 17 of the Act.
15. Their lordships of the Supreme Court in case
"On a fair reading of the provisions contained in Chapter III of Act 1/1986 and in particular Sections 15 to 22 , we are of the opinion that the plea put forward by the Revenue is reasonable and fair in all the circumstances of the case. Under the statute, the BIFR is to consider in what way various preventive or remedial measures should be afforded to a sick industrial company. In that behalf, BIFR is enabled to frame an appropriate scheme. To enable the BIFR to do so, certain preliminaries are required to be followed. It starts with the reference to be made by the Board of Directors of the sick company. The BIFR is directed to make appropriate inquiry as provided in Sections 16 & 17 of the Act. At the conclusion of the inquiry, after notice and opportunity afforded to various persons including the creditors, the BIFR is to prepare a scheme which shall come into force on such date as it may specify in that behalf. It is in implementation of the scheme wherein various preventive, remedial or other measures, are designed for the sick industrial company, steps by way of giving financial assistance etc. by Government, banks or other institutions, are contemplated. In other words, the scheme is implemented or given effect to, by affording financial assistance by way of loans, advances or guarantees or reliefs or concessions or sacrifices by Government, banks, public financial institutions and other authorities. In order to see that the scheme is successfully implemented and no impediment is caused for the successful carrying out of the scheme, the Board is enabled to have a say when the steps for recovery of the amounts or other coercive proceedings are taken against sick industrial company which, during the relevant time, acts under the guidance/control or supervision of the Board(BIFR). Any step for execution, distress or the like against the properties of the industrial company or other similar steps should not be pursued which will cause delay or impediment in the implementation of the sanctioned scheme. In order to safeguard such state of affairs, an embargo or bar is placed u/s 22 of the Act against any step for execution, distress or the like or other similar proceedings against the company without the consent of the Board or, as the case may be, the appellate authority. The language of Section 22 of the Act is certainly wide. But, in the totality of the circumstances, the safeguard is only against the impediment, that is likely to be caused in the implementation of the scheme. If that be so, only the liability or amounts covered by the scheme will be taken in, by Section 22 of the Act. So, we are of the view that though the language of Section 22 of the Act is of wide import regarding suspension of legal proceedings from the moment an inquiry is started, till after the implementation of the scheme or the disposal of an appeal u/s 25 of the Act, it will be reasonable to hold that the bar or embargo envisaged in Section 22(1) of the Act can apply only to such of those dues reckoned or included in the sanctioned scheme. Such amounts like sales tax, etc. which the sick industrial company is enable to collect after the date of the sanctioned scheme legitimately belonging to the Revenue, cannot be any could not have been intended to be covered within Section 22 of the Act. Any other construction will be unreasonable and unfair and will lead to a state of affairs enabling the sick industrial unit to collect amounts due to the Revenue and withhold it indefinitely and unreasonably. Such a construction which is unfair, unreasonable and against spirit of the statute in a business sense, should be avoided."
16. Following the decision of the Apex Court in the above mentioned case, which as a matter of fact clinches the issue finally, this Court in case
"It follows from the law laid down by the Supreme Court in Corromandal Pharmaceuticals case (supra) that to be entitled to stay of the legal proceedings u/s 22 of the Act a mere pendency of the enquiry would not suffice: the dues must be reckoned or included in the sanctioned scheme. Section 22(1) is also not attracted to the dues incurred after the date of the sanctioned scheme."
17. As already stated, the premises in question have been taken on rent by the petitioner company from the respondents much after the company was declared as a ''sick industrial company'' and also much after the approval of the Scheme by the Board. The charges sought to be recovered for the use and occupation of the premises in question and also the future mesne profit relate to the period after the sanction of the Scheme and, Therefore, the petitioner cannot claim protection u/s 22 of the Act, as amended.
18. As regards the various decisions, relied upon by the learned counsel for the petitioner during the course of arguments, in support of the case of the petitioner, the position is that there can be no two opinion insofar as the proposition of law as laid down therein, is concerned. However, the same, in the facts and circumstances of the present case, in no way help the cause of the petitioner in these revision petitions.
19. In view of the above discussion, the above mentioned two civil revision petitions, filed by the petitioner, in my opinion, are devoid of substance. The same merit dismissal. Accordingly the same are dismissed.
20. The order dated 11.8.97, passed by the Additional District Judge, dismissing the two review applications, filed by the petitioner, in para 2, contains certain observations, made by the learned trial judge, which, in my opinion, in the facts and circumstances of the case, are uncalled for and require to be taken off the record. Accordingly, it is directed that the same be expunged.
In the facts and circumstances of the case the parties are left to bear their own costs.
Civil Revision Petitions (CR 813/97 & CR 832/97) stand disposed of in above terms.
