INNOVATIVE MARINE FOODS LTD. Vs. INDIAN BANK
DEBTS RECOVERY APPELLATE TRIBUNAL
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K. Gnanaprakasam, J. -
(1.) Heard the learned Advocates for the appellant and the respondent Bank.
(2.) THE appellant is an Industrial Company against whom the respondent Bank filed OA No. 355/2002 on the file of DRT, Ernakulam. Before the DRT, the appellant filed an application IA -671/2003 contending that the appellant had already been declared as a sick industrial company by the BIFR (Board for Industrial and Financial Reconstruction). Under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, as early as on 12.11.1999 and, therefore, as per Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, no suit or other proceedings will lie against the appellant company and guarantors, without the leave of the BIFR and prayed for the dismissal of the OA but, however, the said application was filed under Section 19(25) of the RDDB&FI Act, 1993. The DRT dismissed the said petition on the ground that there is no merit in the said IA in view of the decision rendered by the Supreme Court in , Kailash Nath Agarwal and Ors., Appellants v. Pradeshiya Industrial & Investment Corporation of U.P. and Anr., respondents, and the same is under challenge in this appeal.
The point for consideration in this appeal is whether the protection given under Section 22(1) of SICA, to the Borrower, would enure to the benefit of the guarantor also.
The learned Advocate for the appellant would contend that the DRT had not passed any speaking order and the order passed is one line order. Even otherwise, the observation of the DRT is not proper in the light of the judgment relied upon by it.
(3.) IN the judgment rendered by the Hon'ble Supreme Court, which was cited before the DRT, the issue that arose for the consideration of the Supreme Court was with regard to the scope of protection afforded in the Industrial Company and to the guarantors under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, referred to as SICA. Before going through the various passages referred to by both the learned Advocate for the appellant and the respondent, it would be appropriate to rely upon the very section itself i.e. Section 22(1) of the SICA (Special Provisions) Act, 1985, which runs as under:
"22. Suspension of legal proceedings, contracts, etc. - -(1) Where in respect of an industrial company, an injury 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 Company Act, 1956 (I 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.";
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