I.C.I.C.I. Ltd. Vs. Parasrampuria Synthetics Ltd. & Ors.
EmailAppeal: Civil Appeal Nos. 3381-82 of 2000
(I.A. No. 1 in S.L.P. (C) Nos. 6048-6049/2000)
(I.A. No. 1 in S.L.P. (C) Nos. 6048-6049/2000)
Petitioner: I.C.I.C.I. Ltd.
Respondent: Parasrampuria Synthetics Ltd. & Ors.
Apeal: Civil Appeal Nos. 3381-82 of 2000
(I.A. No. 1 in S.L.P. (C) Nos. 6048-6049/2000)
(I.A. No. 1 in S.L.P. (C) Nos. 6048-6049/2000)
Judges: SYED SHAH MOHAMMED QUADRI & DORAISWAMY RAJU, JJ.
Date of Judgment: Oct 05, 2000
Head Note:
CONSTITUTION
Article 136 – Relief – Company declared sick by BIFR – In appeal, orders passed for taking documents on record and permission to proceed in suit against Company and guarantors – In writ, pro-ceedings before Tribunal stayed with liberty to approach BIFR – Appeal – High Court orders stayed but sale of assets allowed in interim orders – In view of writ against orders of Tribunal and interim orders by High Court, how to safeguard the interest of parties. Held that Tribunal may proceed to hear appeals. Compa-ny allowed to file objections. Sale to proceed as no prejudice is likely to be caused by sale by two authorities, one under orders of Tribunal and other by Receiver under orders of Court.
(Paras 12 to 15)
JUDGEMENT:
ORDER
1. Leave is granted.
2. The appellant is one of the creditors of the first respondent – Parasrampuria Synthetics Ltd. (hereinafter referred to as ‘PSL’). Invoking the provisions of Sick Industrial Companies Act (for short, ‘the SICA’), PSL approached the B.I.F.R. seeking a declaration that it is a sick Company. On March 17, 1999, B.I.F.R. declared PSL as a sick Company. Against that order of the B.I.F.R., an appeal is filed by the appellant before the A.A.F.I.F. (hereinafter referred to as ‘the Tribunal’), (A.A.I.F.R?) which is now pending. Two orders of the Tribunal – first passed on 28.9.1999 in MA 61/99 which relates to taking on record the documents filed by the appellant and the second passed on 13.10.99 in MA 33/99, which, inter alia, relates to granting of permission to the appellant to proceed with the Suit No. 3287 of 1997 filed by it against PSL, and its guarantors for recovery of loan advanced by it – were questioned by PSL in Writ Petition No. 1517 of 1999 before the High Court of Madhya Pradesh at Indore.
3. On 14.2.2000 the High Court passed the following interim order :-
“When the matter is taken up Mr. Mehta prays for adjournment. List on 21.2.2000 on condition that there shall be a stay of further proceedings before the Tribunal till that day.”
4. On 23.2.2000 the High Court modified the said order by pass-ing the following order :-
“Heard on admission. Admit. No notice is necessary to the other side as the respondents are represented.
The interim relief granted earlier to continue. However, the parties are free to approach the B.I.F.R., if they want.”
5. Aggrieved by the said two orders of the High Court, the appellant filed these appeals by special leave.
6. On 17.4.2000 this Court passed the following order :-
“Notice.
Stay of the High Court in the meanwhile. Further proceedings in the High Court is also stayed.
The petitioner will be at liberty to proceed with the sale of the assets.”
7. PSL filed IA No. 1/2000 to modify the said order in this Court.
8. The learned Counsel for the parties have consented to address their arguments in the appeals and we have heard them according-ly.
9. The contentions of Mr. G.L. Sanghi, learned senior Counsel appearing for the PSL, are : (1) the Tribunal is not having a judicial member and in spite of the direction of the High Court no judicial member has been appointed, so the Tribunal cannot be allowed to proceed with the appeal; (2) the Tribunal is proceed-ing in a manner which amounts to denial of giving fair hearing to the PSL, therefore, the Tribunal should not be allowed to proceed in the matter; (3) PSL consented for sale of the properties on the understanding that no permission will be granted to the ap-pellant to proceed with the suit and as the permission to proceed with the suit is granted, the consent given must be deemed to have been withdrawn and, therefore, sale of the properties has to be stayed; (4) if the suit is allowed to proceed it will result in two sales taking place one by the Receiver appointed by the Court and another by the Authority pursuant to the order of the Appellate
Tribunal and this will cause prejudice to PSL.
10. Mr. C.S. Vaidyanathan, learned senior Counsel appearing for the appellant, argues that the Tribunal’s constitution is not the subject matter of the orders impugned in the writ petition and that in regard to the fair procedure we may give appropriate directions to the Tribunal but the hearing of the appeal may not be stayed as it has become part heard. With regard to the per-mission granted to the appellant to proceed with the suit the learned Counsel invited our attention to para 9 (c) of the order and submits that it contains sufficient safeguard for PSL and that stay of suit will not be in the interest of any of the parties as the interest on loan amounting to lacs of rupees will be adding up. Mr. K.K. Venugopal, the learned senior Counsel, who appears for the lead bank supported the case of the appellant and stressed the point that by sale of properties at least some burden of interest would be reduced.
11. On the aforesaid submissions, the only point which falls for our consideration is that in view of orders passed by the Tribun-al which are subject matter of writ petition and in view of the interim orders passed by the High Court, what appropriate order be passed by this Court to safeguard the rights of all
the par-ties and to meet the ends of justice.
12. We have given our anxious consideration to the various submissions made by the learned Counsel. We do not propose to express any opinion on the question of there being no Judicial Member in the Tribunal as it is not the subject matter of the said two orders, impugned in writ petition before the High Court. Suffice it to say that on that ground it will not be just and proper to stay the hearing of the appeal before the Tribunal and it may proceed with the hearing of the appeal and disposed it of in accordance with law subject, of course, to the directions contained herein.
13. Regarding the hearing of the appeal and the procedure to be adopted by the Tribunal, we are of the view that it will not be in the interest of justice to stay hearing of the appeal. Howev-er, the Tribunal is directed to grant a period of one week to PSL to file its objections to the affidavit of the appellant for taking the documents on record and after considering the objec-tions the Tribunal may pass appropriate orders in regard to those documents.
14. Insofar as the sale of the properties is concerned which has also been permitted by the interim order of this Court, we see no justifiable reason to interdict the sale of properties. The sale of the properties as ordered by the Tribunal may go on.
15. With regard to the permission granted by the Tribunal to proceed with the suit, in our view, the rights of PSL are not prejudiced as the apprehension expressed by the learned Counsel that sales will be conducted by two authorities – one by an authority under the order of the Tribunal and the other by the Receiver under the order of the Court – will not be in the inter-est of PSL, is not tenable. The order of the Tribunal granting permission to the appellant to proceed with the suit, provides in para 9 (c) as under :-
“ICICI is permitted to proceed with Suit No. 3287/97 against PSL and its guarantors in Hon’ble Mumbai High Court subject to the condition that if any decree is obtained, and if its claim is not satisfied by its share in the sale proceeds in pursuance of clause (b) above, such decree can only be executed with prior consent as may be necessary under Section 22(1) of SICA.”
From the perusal of the clause it is evident that if a decree is passed in favour of the appellant, further permission has to be obtained under Section 22 (1) of the Act for execution of the decree. At that stage the conduct of the sale of properties by the Court
Receiver can be prescribed appropriately.
16. It is needless to mention that any order passed by the Tribunal will be subject to the result of the writ petition.
17. The appeals are disposed of accordingly. No order as to costs.
1. Leave is granted.
2. The appellant is one of the creditors of the first respondent – Parasrampuria Synthetics Ltd. (hereinafter referred to as ‘PSL’). Invoking the provisions of Sick Industrial Companies Act (for short, ‘the SICA’), PSL approached the B.I.F.R. seeking a declaration that it is a sick Company. On March 17, 1999, B.I.F.R. declared PSL as a sick Company. Against that order of the B.I.F.R., an appeal is filed by the appellant before the A.A.F.I.F. (hereinafter referred to as ‘the Tribunal’), (A.A.I.F.R?) which is now pending. Two orders of the Tribunal – first passed on 28.9.1999 in MA 61/99 which relates to taking on record the documents filed by the appellant and the second passed on 13.10.99 in MA 33/99, which, inter alia, relates to granting of permission to the appellant to proceed with the Suit No. 3287 of 1997 filed by it against PSL, and its guarantors for recovery of loan advanced by it – were questioned by PSL in Writ Petition No. 1517 of 1999 before the High Court of Madhya Pradesh at Indore.
3. On 14.2.2000 the High Court passed the following interim order :-
“When the matter is taken up Mr. Mehta prays for adjournment. List on 21.2.2000 on condition that there shall be a stay of further proceedings before the Tribunal till that day.”
4. On 23.2.2000 the High Court modified the said order by pass-ing the following order :-
“Heard on admission. Admit. No notice is necessary to the other side as the respondents are represented.
The interim relief granted earlier to continue. However, the parties are free to approach the B.I.F.R., if they want.”
5. Aggrieved by the said two orders of the High Court, the appellant filed these appeals by special leave.
6. On 17.4.2000 this Court passed the following order :-
“Notice.
Stay of the High Court in the meanwhile. Further proceedings in the High Court is also stayed.
The petitioner will be at liberty to proceed with the sale of the assets.”
7. PSL filed IA No. 1/2000 to modify the said order in this Court.
8. The learned Counsel for the parties have consented to address their arguments in the appeals and we have heard them according-ly.
9. The contentions of Mr. G.L. Sanghi, learned senior Counsel appearing for the PSL, are : (1) the Tribunal is not having a judicial member and in spite of the direction of the High Court no judicial member has been appointed, so the Tribunal cannot be allowed to proceed with the appeal; (2) the Tribunal is proceed-ing in a manner which amounts to denial of giving fair hearing to the PSL, therefore, the Tribunal should not be allowed to proceed in the matter; (3) PSL consented for sale of the properties on the understanding that no permission will be granted to the ap-pellant to proceed with the suit and as the permission to proceed with the suit is granted, the consent given must be deemed to have been withdrawn and, therefore, sale of the properties has to be stayed; (4) if the suit is allowed to proceed it will result in two sales taking place one by the Receiver appointed by the Court and another by the Authority pursuant to the order of the Appellate
Tribunal and this will cause prejudice to PSL.
10. Mr. C.S. Vaidyanathan, learned senior Counsel appearing for the appellant, argues that the Tribunal’s constitution is not the subject matter of the orders impugned in the writ petition and that in regard to the fair procedure we may give appropriate directions to the Tribunal but the hearing of the appeal may not be stayed as it has become part heard. With regard to the per-mission granted to the appellant to proceed with the suit the learned Counsel invited our attention to para 9 (c) of the order and submits that it contains sufficient safeguard for PSL and that stay of suit will not be in the interest of any of the parties as the interest on loan amounting to lacs of rupees will be adding up. Mr. K.K. Venugopal, the learned senior Counsel, who appears for the lead bank supported the case of the appellant and stressed the point that by sale of properties at least some burden of interest would be reduced.
11. On the aforesaid submissions, the only point which falls for our consideration is that in view of orders passed by the Tribun-al which are subject matter of writ petition and in view of the interim orders passed by the High Court, what appropriate order be passed by this Court to safeguard the rights of all
the par-ties and to meet the ends of justice.
12. We have given our anxious consideration to the various submissions made by the learned Counsel. We do not propose to express any opinion on the question of there being no Judicial Member in the Tribunal as it is not the subject matter of the said two orders, impugned in writ petition before the High Court. Suffice it to say that on that ground it will not be just and proper to stay the hearing of the appeal before the Tribunal and it may proceed with the hearing of the appeal and disposed it of in accordance with law subject, of course, to the directions contained herein.
13. Regarding the hearing of the appeal and the procedure to be adopted by the Tribunal, we are of the view that it will not be in the interest of justice to stay hearing of the appeal. Howev-er, the Tribunal is directed to grant a period of one week to PSL to file its objections to the affidavit of the appellant for taking the documents on record and after considering the objec-tions the Tribunal may pass appropriate orders in regard to those documents.
14. Insofar as the sale of the properties is concerned which has also been permitted by the interim order of this Court, we see no justifiable reason to interdict the sale of properties. The sale of the properties as ordered by the Tribunal may go on.
15. With regard to the permission granted by the Tribunal to proceed with the suit, in our view, the rights of PSL are not prejudiced as the apprehension expressed by the learned Counsel that sales will be conducted by two authorities – one by an authority under the order of the Tribunal and the other by the Receiver under the order of the Court – will not be in the inter-est of PSL, is not tenable. The order of the Tribunal granting permission to the appellant to proceed with the suit, provides in para 9 (c) as under :-
“ICICI is permitted to proceed with Suit No. 3287/97 against PSL and its guarantors in Hon’ble Mumbai High Court subject to the condition that if any decree is obtained, and if its claim is not satisfied by its share in the sale proceeds in pursuance of clause (b) above, such decree can only be executed with prior consent as may be necessary under Section 22(1) of SICA.”
From the perusal of the clause it is evident that if a decree is passed in favour of the appellant, further permission has to be obtained under Section 22 (1) of the Act for execution of the decree. At that stage the conduct of the sale of properties by the Court
Receiver can be prescribed appropriately.
16. It is needless to mention that any order passed by the Tribunal will be subject to the result of the writ petition.
17. The appeals are disposed of accordingly. No order as to costs.
