- (1.) HEARD counsel for the parties.
(2.) THE appellant filed a suit that it having been declared sick under the Sick Industrial Companies (Special Provisions) [act, 1985 (briefly, the Act), the Mandi Samiti (Defendant) be restrained from making recovery of mandi samiti dues. Also the appellant made an application for interim order before the court below which was rejected on the ground that the liability was crystalised before the appellant Unit was declared sick and, therefore, the appellant was not entitled to the exemption under the Act. Before us also, learned counsel for the Mandi Samiti urges that the liability of mandi samiti dues stood crystalised much before the date when the appellant Unit was declared sick and, therefore, the appellant will not entitled to the protection given by the Act. Section 22 (2) of the Act provides that where an inquiry under Section 16 is pending or any scheme referred to in Section 17 is under preparation or during the period of consideration of any scheme under Section 16 or where any such scheme is sanctioned thereunder for due implementation of the scheme, the Board may by order declare with respect to the sick industrial company concern ed that the operation of all or any of the contracts, assurance of property, agreement etc. to which such sick industrial company is a party or which may be applicable to such sick industrial company immediately before the date of such order, shall remain suspended or that all or any of the rights privilege, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as may be specified by the court. This provision came up for consideration before the Supreme Court for interpretation in the case of Gram Panchayat and another v. Shree Vallabh Glass Works Ltd and others, AIR 1990 SC 1017 and then the Supreme Court enunciated that where proceedings under Sections 16 and 17 of the Act were pending against certain Company, the proceedings to recover property tax under Section 129 of Bombay Village Panchayats Act, 1958 shall not lie without consent of the Board for Industrial and Financial Reconstruction, in view of sub-section (1) of Section 22 of the Act. Section 22 (1) provides that in case the enquiry under Section 16 in is pending or any scheme referred to under Section 17 is under preparation or consideration by the Board or any appeal under Section 22 is pending then certain proceedings against the sick industrial company are to be suspended or presumed to be suspended. The nature of the proceedings which are automatically suspended are inter alia, the proceedings for execution, distress or the like against the properties of sick industrial company. The proceedings in respect of such matters could, however, be continued against the sick industrial company with the consent or appro val of the Board or of the Appellate Authority as the case may be. The court clearly -held that in the light of the steps taken by the Board under Sections 16 and 17 of the Act, no proceedings for execution, distress or the like proceedings against any of the properties of the company shall lie or be proceeded further except with the consent of the Board. Indeed, there would be automatic suspension of such proceedings against the company's properties. As soon as the enquiry under Section 16 is ordered by the Board, the various proceedings set out under sub-section (1) of Section 22 would be deemed to have been suspended. The Supreme Court further observed that it may be against the principles of equity of the creditors are not allowed to recover there dues from the company, but such creditors may approach the Board for permis sion to proceed against the Company for the recovery of their due/out-standing/overdues or arrears by whatever name it is called. The Board at it discretion may accord its approval for proceedings against the Company. If the approval is not granted, the remedy is not extinguished. It is not only postponed, sub-section (5) of Section 22 provides for exclusion of the period during which the remedy is suspended while computing the period of limitation for recovering the dues.
(3.) FOLLOWING this authority, the approach of the court below that Section 22 (3) of the Acts takes within its ambit only future liability, cannot be countenanced. Protection under Section 22 (3) of the Act is as much available to the existing liability as to the future liability. Section 22 (3) of the Act envisages an injunction against recovery sought to be made from a sick unit and the nature of the liability whether existing or future is irrelevant, The appeal therefore succeeds and is allowed, impugned order dated 11-3-1996 passed by the court below is set aside, The Maudi Samiti is. restrained from making recovery of the mandi samiti dues, so long as the appellant Unit continues to remain sick or so long as permission for recovery is not granted by the. Board as provided under the Act. Appeal allowed. .;