Steel Tubes Of India Ltd. vs Tehsildar And Ors. on 20 January, 2003

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Madhya Pradesh High Court
Steel Tubes Of India Ltd. vs Tehsildar And Ors. on 20 January, 2003
Equivalent citations: (2003) 2 CompLJ 31 MP, 2004 52 SCL 217 MP
Author: A Sapre
Bench: A Sapre

ORDER

A.M. Sapre, J.

1. Heard on confirmation/modification of an ad interim writ granted by this court (Vacation Judge) on 23.12.2002, directing parties to maintain status quo as it existed on 23.12.2002.

2. Having heard the learned counsel for the parties at length and having perused the record of the case, I am of the considered view that a prima facie case is made out by the petitioner on the strength of law laid down by the Supreme Court in the case of Gram Panchayat v. Shree Vallabh Glass Works Ltd. (1992) 3 Comp LJ 346 (SC) : (1990) 2 SCC 440 ; Maharashtra Tubes Ltd. v State Industrial and Investment Corporation of Maharashtra (1994) 2 Comp LJ 346 (SC) : (1993) 2 SCC 144, and, lastly, in the case of Real Value Appliances v. Canara Bank (1998) 3 Comp LJ 58 (SC) : AIR 1998 SC 2064. Accordingly, it is necessary for this court to pass appropriate orders in the form of ad interim writ to safeguard the interest of the petitioner company, keeping in consideration the law laid down in aforementioned three cases.

3. In substance, the challenge in this petition is to the attachment notices issued by the respondent No. 1–Tehsildar at the instance of respondent No. 5–a Government company (Annexure P-2 and P-7) for realisation of the outstanding loan amount said to have been advanced by them to the petitioner amounting to rupees 36,01,12,702. It is complained that the respondents have attached the petitioner’s running industrial unit by putting locks in the petitioners’ industrial premises causing immense loss and injury to the petitioner in running the unit. It is the case of petitioner that the petitioner company has applied to BIFR under Section 15 of SICA for being declared as sick industrial company within the meaning of Clause (o) of Sub-section (1) of Section 3 of the Act and the BIFR has also registered the reference (being Case No. 303 of 2002–Annexure P-5) for holding an inquiry as contemplated under Sections 16 and 17 of the Act (SICA). It is contended that in a case where the reference under Section 15 of SICA is pending, no coercive steps for attaching the petitioner’s property (industrial unit) could have been taken.

4. Law on this issue is no more res integra. It is indeed settled by the Supreme Court in aforementioned three cases. Once it is noticed as ruled by the Supreme Court that a reference under Section 15 of SICA is pending before BIFR, and the inquiry into the affairs of the company is in progress, none of the creditors of the company are entitled to proceed against the assets of the company for realisation of their dues unless consented to by the BIFR as per Section 22 of SICA for being proceeded with against the company. In other words, Section 22, ibid., creates a bar for realisation of the dues and unless permitted by the BIFR, no coercive action is possible. So what is decisive is the prior consent of BIFR in such matters.

5. Submission of learned counsel for the respondent No. 5 was that attachment of properties should be continued except that respondent No. 5 will not sell the attached properties. It was also contended that since the petitioner did not inform respondent No. 5 by playing hide and seek in relation to pendency of reference to BIFR, the impugned notices were rightly issued by attaching the properties, I do not agree to this submission. In my opinion, once it is not disputed that reference under Section 15 is registered and pending, bar under Section 22, ibid., becomes operative. Indeed, [unless ?] legal position becomes very clear on this issue, no factual submission can be entertained.

6. Accordingly, and in view of aforesaid discussion, it is directed by issuing an ad interim writ against the respondents jointly and severally that no effect shall be given to attachment notices dated 25.7.2002 (Annexure P-7) issued by respondent No. 1–Tehsildar for recovery of Rs. 36,01,12,697 against the petitioner as also against any of the assets/properties belonging to petitioner. The effect of this direction will be that all/any type of restraint, it put, by the respondents on the properties of the petitioner shall be removed. It is further directed that respondent No. 5 will be free and/or entitled to forthwith move/apply to BIFR for obtaining consent as contemplated under Section 22 of SICA for realisation of their outstanding dues from the petitioner and any of their properties.

7. Since, several creditors have started making recoveries of their dues from the petitioner, including banks and Stale, it is directed the BIFR to ensure speedy disposal of the reference case being Case No. 303 of 2002 in relation to the petitioner, preferably, within six months from the date of the order, Parties are directed to place the copy of this order before the BIFR within a week to enable the BIFR to proceed with the case on priority. The Registrar of this court is also directed to send a copy of this order to BIFR for their information and for necessary compliance. Accordingly, the order, dated 23.12.2002 directing parties to maintain status quo is clarified for compliance.

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