JUDGMENT
Sanjiv Khanna, J.
Page 0721
1. M/s Bestavision Electronics Limited (hereinafter referred to as the petitioner, for short) has challenged the legality and validity of Order dated 25th August, 2005 passed by Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as Commission, in short) in Unfair Trade Practice enquiry No. 417/1997 titled “Modern Radios and Ors. v. Bestavision electronics Ltd. and Anr.” By the impugned Order, the Commission has rejected the application of the petitioner under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA, for short) for stay of further proceedings in the complaint filed by M/s. Modern Radios and another (hereinafter referred to as the respondents, for short) under Section 36A r/w Section 12B of the Monopolies Restrictive and Trade Practices Act, 1969 (hereinafter referred to as the Act, for short).
2. It was urged by the learned Counsel for the petitioner that proceedings under the Act are akin to a suit for recovery of money and therefore Section 22 of SICA is applicable. Reliance was also placed upon Sections 12(1), 12A(2), 12B(2) of the Act which makes Code of Civil Procedure, 1908 applicable to the proceedings before the Commission and also on Section 12(2) of the Act by virtue of which the Commission is regarded as a Court for the purpose of Section 340, Code of Criminal Procedure, 1973 and Section 195, Indian Penal Code. Learned Counsel for the appellant relied upon the judgment of the Supreme Court in the case of Maharashtra Tubes Limited v. State Industrial and Investment Corporation of Maharashtra Limited and Anr. reported in 1993 Vol.78 Comp. Cases 803.
3. Learned Counsel for the respondents, on the other hand, relied upon the decision of a Division Bench of this Court in the case of Lloyds Insulations (India) Limited v. Cement Corporation of India reported in 2001 (57) DRJ 606. He also referred to the prayer clause made in the complaint filed before the Commission. It was stated that the core issue raised before the Commission is whether the petitioner had indulged in unfair trade practice. Reference was also made to another judgment of the Supreme Court in the case of Eagle Flask Industries Limited v. Talegaon Dabhade Municipal Council and Ors. .
4. The only issue which arises for consideration of this Court in the present Writ Petition is the scope and ambit of Section 22 of SICA with reference to Page 0722 proceedings under the Act pending before the Commission and whether the umbrella of protection given by Section 22 of SICA includes within it’s scope proceedings under the Act.
5. The answer to this question as is obvious lies in Section 22(1) of SICA, which reads as under:
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 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.
6. It is now well settled that when a company becomes sick within the meaning of Section 3(o) of SICA, a statutory reference application is required to be filed under the aforesaid Act. On the reference application being filed before the Board for Industrial and Financial Reconstruction, Section 22 of SICA comes into operation (See, Real Value Appliances Limited v. Canara Bank ).
7. The second part of Section 22(1) of SICA begins with a non-obstante clause and states that the said Section will prevail over the provisions of the Companies Act, 1956 or any other law or instrument having effect under the Companies Act, 1956 or any other law.
8. The third part of the said Section refers to the period during which protection under Section 22(1) continues. A company is entitled to protection during the period when reference is registered or is pending consideration or a sanctioned scheme is under implementation.
9. This third part confers and gives four separate but distinct protections. Firstly, it bars proceedings for winding up under the Companies Act, 1956. Secondly, it prohibits proceedings for execution, distress or like against the properties of the company. Thirdly, it bars any Court from appointing a receiver in respect of the properties belonging to the company and lastly, it bars any suit for recovery of money or for enforcement of security or guarantee in respect of any loan or advance given to the company.
Page 0723
10. It is an admitted case of the petitioner that the proceedings before the Commission under the Act are not proceedings for winding up or for appointment of a Receiver or even proceedings for execution, distress or like against the properties of the petitioner. It was submitted before us by the learned Counsel for the petitioner that the proceedings before the Commission under the Act are akin to a suit for recovery of money. It is difficult to accept this contention. Proceedings under the Act before the Commission cannot be regarded as a suit for recovery of money. Section 22 of SICA itself makes distinction between the terms “proceedings” and “suit”. The two terms are not synonymous. The legislature itself has used the term “proceedings” with reference to execution, distress or like, i.e. proceedings after adjudication of a claim that are initiated against any of the properties of the company or proceedings for appointment of a receiver, in contrast with a suit for recovery.
11. It may be appropriate here to refer to Section 22(1) of SICA as it read before its amendment in 1994:
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, 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.
12. Prior to amendment in 1994 proceedings relating to execution, distress and like were covered by the umbrella of protection and fell within the scope of Section 22(1) of SICA. After the amendment in 1994 this umbrella of protection was extended to cover suits for recovery of money. The legislature did not however deem it appropriate to extend this umbrella of protection to all legal proceedings or suits but limited it to a suit for recovery of money, security or guarantee in respect of loans and advance. The said protection has not been extended to legal proceedings which are not suits for recovery of money. The legislative intent is therefore clear and explicit from the language used in Section 22(1) of SICA.
13. Supreme Court in the case of Kailash Nath Aggarwal v. Pradeshia Industrial Investment Corporation of Uttar Pradesh Limited has examined Section 22(1) and has held that the words “suit” and “proceedings” are distinct and separate and it has been held that the word “suit” as used in the aforesaid Section means legal action taken in a Court of law. It implies some form of curial process. The Supreme Court also noticed in Page 0724 this case the intention of the legislature in using the omnibus word “like” with reference to proceedings for execution and distress, whereas a suit was qualified with the words “recovery of money and for execution, enforcement of security against the company or guarantee in respect of the loans/advance granted to the company “. The “proceedings” referred to in this part of Section 22(1) relate to post-decretal stage, i.e. execution, distress and like. As far as pre-decretal stage is concerned, only limited protection is granted against a suit for recovery of money and for execution, enforcement of security against the company or guarantee in respect of the loans/advance granted to the company. Accordingly, proceedings under U.P. Public Moneys (Recovery of Dues) Act, 1972, it was opined, were not covered by Section 22(1) of SICA as it was not a suit for recovery of money, though covered by the word “proceedings”, no protection could therefore be extended as the proceedings are not for execution, distress or like. The Supreme Court while deciding this case distinguished the case of Maharashtra Tubes (supra) that was referred to and relied upon by the learned Counsel for the petitioner before us. In Maharashtra tubes (supra) the Supreme Court examined the word “proceedings” as used in Section 22(1) and held it not only includes legal proceedings but any form of proceedings. However, the said proceedings must be for execution, distress or like. The intention of the legislature is to protect the properties of a sick industrial company from becoming the subject matter of coercive action like execution, distress or proceedings of similar quality and character, while the matter is still pending before the Board of Industrial and Financial Construction or the Appellate authorities. This was done to ensure that a scheme for rehabilitation of the company is not disturbed or affected by such coercive action. It was opined that the legislature had used the expression “like” as it could not have conceived of all possible coercive measures. In Maharashtra Tubes (supra), while referring to provisions of Section 29 of the State Financial Corporation Act, 1951 it was held that the action postulated by the said provision is coercive action in the nature of execution or distress proceedings.
14. To our mind, the said decision in Maharashtra Tubes (supra) is of no application to the present case as no proceedings of the nature of distress, execution or “like”, i.e. coercive proceedings, have been initiated against the petitioner. This situation may arise if ultimately an order under Section 12B of the Act awarding damages is passed and an execution application is filed and coercive steps for enforcement of the Order are initiated. This situation has not yet arisen.
15. The Division Bench of this Court in the case of Lloyd Insulation (supra) has also examined the decision in the case of Maharashtra Tubes (supra) and held that arbitration proceedings are not a suit for recovery of money within the meaning of Section 22(1) of SICA. This Court relied upon the decision of the Supreme Court in the case of BSI Limited and Anr. v. Gift Holding Pvt. Limited wherein the Supreme Page 0725 Court has held that the word “suit” is a generic term of comprehensive significance and cannot be given an extended meaning as to stretch to criminal prosecution under Section 136 of the Negotiable Instruments Act, 1888. The term “suit” mentioned and referred to Section 22(1) of SICA is restricted to recovery of money or for enforcement of security against the industrial company or of any guarantee in respect of any loans or advances given to the industrial company. Relying upon this decision and an earlier decision in the case of Nawab Usman Ali Khan v. Sagarmall , the Division Bench of this Court has held that proceedings under Sections 14 and 17 of the Arbitration Act cannot be regarded as a suit for recovery of money under Section 22(1) of the Act. In the case of Lloyd Insulation (supra), the Division Bench has summarized the legal propositions as under:
19. Accordingly we hold that the arbitration proceedings pending under Sections 14 and 17 of the Arbitration Act, 1940 in Suit Nos. 171-A/95 and 3125/92 cannot be treated as ‘suits for recovery of money’, and therefore, would not be covered by Sub-section (1) of Section 22 of the SICA. We may summarise the reasons for taking this view:
(1) The expression ‘suit’ under Sub-section (1) of Section 22 of SICA is to be given the meaning in which it is normally understood i.e. civil proceeding instituted by the presentation of a plaint. This would refer to the suit as contemplated by Section 9 of CPC. Proceeding under Section 14 read with Section 17 of the Indian Arbitration Act, 1940 for the passing of a judgment and decree of an award does not commence with a plaint or a petition in the nature of a plaint, and therefore, cannot be regarded as a suit. This is the authoritative pronouncement of Supreme Court in the case of Nawab Usmanali (supra) and is sufficient to annihilate all arguments of CCI Ltd. to the contrary.
(2) The Legislature, mindful of the expression ‘proceedings’ already occurring in Sub-section (1) of Section 22 of SICA still used the expression ‘suit’ insofar as recovery of money or the enforcement of any security against the industrial company or any guarantee in respect of any loans or advance granted to the industrial company is concerned. Therefore Legislature wanted to give restricted meaning to the word ‘suit’ which is understood in the common parlance and not all kinds of proceedings for recovery of money.
(3) The purpose of amendment by adding ‘suit for recovery of money’ etc. is clear when understood along with Sub-section (5) of Section 22 inasmuch as it is in suits where the law of limitation applies stricto sensu without any provisions for condensation of delay. A specific provision had to be added in the form of Sub-section (5) because of the expression ‘suit’ introduced in Sub-section (1) of Section 22.
(4) The Arbitrator has given the ‘award’. This award would be covered by the provisions of Sub-section (3) of Section 22 of SICA Page 0726 and this, by necessary implications, excludes the awards from the expression ‘suit’ occurring in Sub-section (1) of Section 22 of SICA. Otherwise, in respect of ‘awards’ both Sub-section (1) as well as Sub-section (3) of Section 22 would be applicable which would create an anomalous situation.
(5) The purpose for which Section 22 in SICA was inserted is still achieved by reading Sub-section (1) and Sub-section (3) of Section 22 in the manner indicated above inasmuch as still Board has power to declare that such an arbitration award shall remain suspended or be enforceable with such adoptions and in such a manner as may be specified by the Board. The only difference would be that instead of automatic stay of proceedings under Section 22(1), it will require a declaration by Board to this effect under Section 22(3) of SICA.
16. Reference can also be made to the judgment of the Supreme Court in the case of Eagle Flask (supra) wherein with reference to demand proceedings initiated by Municipal Councils and the relevant octroi rules, it has been held as under:
The effect of Section 22 of SICA has been considered by this Court in Real Value Appliances Ltd. v. Canara Bank and Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. It has rightly been contended by the learned Counsel for Respondent 1 Municipal Council that the effect of Section 22 is to be considered only when there is a demand for recovery. The question of recovery would arise only when there is a quantified demand on assessment. Admittedly that stage has not reached. Therefore, it is open to the Municipal Council to make an assessment and quantification of the octroi duty payable, if not already done. Only after the quantification is done and assessment made as provided in law, the question of recovery would arise. At that stage the effect of Section 22 can be considered in the background of what has been stated in Real Value and Rishabh Agro.
17. On the basis of reasoning given above, we do not find any merit in the present Writ Petition and the same is dismissed. However, in the facts and circumstances of the case, there will be no order as to costs.