BRAITHWATTE AND CO LTD Vs. D T M CONSTRUCTION PVT LTD
HIGH COURT OF CALCUTTA
BRAITHWATTE AND CO LTD
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B.Panigrahi, J. -
(1.)THE writ petitioner, BRAITHWATTE and CO. LTD. a Government of India undertaking, has filed this writ application Under Article 227 of the Constitution of India for following reliefs:-
"(a) Issue a notice directing the Opposite parties to show cause as to why the impugned order dated 22.3.95 passed by the Learned Assistant District Judge, 8th Court 24 Parganas (S) Alipore in Misc. Case No. 34 of 1994 shall not be set aside and/or cancelled. (b) Cause being shown and/or due to insufficient cause set aside the impugned order dated 22.3.95 passed by the Learned Assistant District Judge, 8th Court, 24 Parganas (S) Alipore in Misc. Case No. 34 of 1994 and pass appropriate orders directing the Sole Arbitrator to suspend the proceeding pending before the Arbitrator under section 22(i) SICA; (c) Stay all further proceeding a pending between the parties; (d) Ad-interim order of stay in terms of prayer (c) above."
THEre was some dispute between the petitioner and the opposite parties leading to an arbitration proceeding appointing a retired Judge of this Court, Justice L.M. Ghosh, as the role arbitration. Before the appointment of the retired Judge, the opposite party, DTM Construction Pvt. Ltd, twice moved application under section 28 of the Arbitration Act for extension of time before this Court but those applications were rejected on the sole question of territorial jurisdiction. Later on another application was filed before the Court at Alipore which resulted in the appointment of Justice L. M. Ghosh (retired) as an arbitrator before whom the arbitration proceeding is said to be pending. During the pendency of the proceeding, the petitioner Braithwatte and Co. Ltd. seems to have filed an application before the learned Arbitrator under section 22(i) of Sick Industries (Special Provisions) Act, 1992 (hereinafter referred to as SICA) for stay of the arbitration proceeding, in view of the statutory powers granted under section 22(i) by way of amendment by including the word "suit for recovery of Money" in section 22(i) of the Act. THE main contention of the petitioner before the arbitrator was that the provision of SICA Act being benevolent in nature which was aimed at protecting the greater interest of public as provided in the preamble of the said Act, the entire scheme of the Act would stand nugatory, unless the suit/proceeding for realisation of the amount against such Industry is not stayed. THE opposite party, DTM Construction Pvt. Ltd., has however, disputed the application of the provision of S.I.C.A. Act in respect of the Arbitration Proceeding. THEir main thrust of defence is that the arbitration proceeding would never mean and include the term 'suit'. After the amendment of S. I. C. A. Act and insertion of the word 'suit' it has to be understood that any suit which has been filed (i) for the recovery of money (ii) for enforcement of any security against industrial Company and (iii) for enforcement of any guarantee in respect of any loans or advance granted to the industrial company, then only the aforesaid provisions can come to the aid of the persons claiming benefit thereunder. It is however, stressed by the opposite party that the 'arbitration proceeding' having not come within the purview of the expression 'suit' and/or 'like' the benefit given thereunder cannot be claimed by the petitioner.
(2.)BEFORE the examination in the rival contention of the parties I feel it necessary to quote the provision of section 22 of the Industrial Company (Special Provision Act) 1985.
"22. Suspension of legal proceedings, contracts, etc.-(1) Where in respect of an industrial company, an inquiry 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 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 (and no suit for the recovery of money or for the enforcement of any security against the industrial Company or for 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." (Italics supplied for emphasis).
Mr. Roy Choudhury, the learned counsel appearing for the petitioner Company, has strongly urged that the company has suffered financial setback and its net worth had become eroded. Therefore, the Company finding no other alternative approached under section 15(i) S. T. C. A. for its rehabilitation to the authority, i.e., the Board of Industrial and Financial Reconstruction (B. I. F. R.). After hearing on 11.3.93, it declared the petitioner company as a Sick Industrial Company in terms of section 3(1) (e) of the S.I.C.A. The B.I.F.R has, eventually, appointed a Special Director to the Board of the petitioner company. In the said meeting, it was. inter alia, decided that for public interest B.I.F.R. has to take measures specified under section 18 of the S.I.C.A. and appointed Industrial Reconstruction Bank of India (I.R.B.I.) as the operating agency and authorised them to prepare a viability report for the revival of the company. While the said proceeding was pending the petitioner filed an application under section 22 of the S.I.C.A.
(3.)FROM the petitioner submission, it has emerged that B.I.F.R. has already declared the petitioner company as a Sick Industrial Company under the provision of S.I.C.A. It is further undisputed that B.I.F.R. had appointed Industrial Reconstruction Bank of India (IRBI) for preparing a report regarding the viability of the revival of the company. Therefore, in the above premises the facts of the case lie within a narrow compass as to whether the provision of section 22 of the S.I.C.A. can at all be attracted to the present arbitration proceeding.
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