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Judgment
Ranjit Singh, J
The application filed by the appellants for stay of the proceedings in the O.A. on the ground that the appellant company had become sick industrial company has been declined. Against this order, the appellants have filed the present appeal.
The appellants had obtained certain credit facilities from the respondent Bank to the tune of Rs. 10 crores. Appellant No.2 has stood as guarantor. The credit facilities were recalled on 26.3.2009 and thereafter the Bank instituted this O.A. for the recovery of Rs. 10,69,85,821/- with interest @ 20% p.a. with monthly rests and costs.
The appellants appeared before the Tribunal below and filed written statement. During the pendency of the O.A., the present application was filed for staying the proceedings in the O.A. under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, the SICA) on account of the company/being declared sick. The Tribunal after hearing the Counsel for the parties, declined the prayer made in the application which is now impugned through the present appeal.
The notice in the appeal was issued and reply has been filed. It was observed by this Tribunal in its order dated 30.12.2013, that a short legal question that would arise in this case is whether or not the provisions of Section 22 of SICA are applicable to the O.A. proceedings pending before the DRT. As per the Counsel for the appellants there has to be an automatic suspension of all legal proceedings including suit for recovery of money where Section 22(1) of the SICA is attracted. In support of this, the Counsel has placed before me a judgment in the case of LML Ltd. v. Sunil Mittal, III (2013) BC 694 (DB)=200 (2013) DLT 398 (DB)=2-13(2) DRTC 660 (DB) (Delhi). The Court in this case was dealing with a suit filed for recovery of principal amount and interest. The company had been registered as sick company before BIFR and in this context the Division Bench of the Delhi High Court has considered the question whether in view of a fore-noted scenario, where the company was declared as sick company by BIFR, could the suit filed by the respondent therein seeking recovery of money be proceeded with in the absence of permission from BIFR. Under Section 22 of SICA, no proceedings of execution, distress or the like against any of the properties of the industrial company shall lie or be proceeded with further, except with the consent of the Board. Section 22 of SICA reads as under:
"22. Suspension of Legal Proceedings, Contracts, etc.- (1) Where in respect of an Industrial Company an inquiry under Section 15 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 proper-ties 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."
The Division Bench has made a reference to a judgment of the Apex Court in the case of Raheja Universal Ltd. v. NRC Limited, I (2012) CLT 250 (SC)=I (2012) BC 686 (SC)=II (2012) SLT 113= (2012) CLT 250, where this issue was examined. The Division Bench of the Delhi High Court found that this issue was no more res integra. The observation of the Apex Court in the Reheja's case are noted which are as under:
"The said provision, thus mandates that no proceeding inter alia for exaction, distress or the like against any of the properties of the Industrial Company and no suit for recovery of money or for the enforcement of an security, shall lie or be proceeded with further, except with the consent of the Board or as the case may be the Appellate Authority. The said statutory injunction will operate when an inquiry had been initiated under Section 16 or a scheme referred to under Section 178 is under preparation and/or inter alia a sanctioned scheme is under implementation. It is not disputed before us that the amount awarded in favour of the respondent by the Counsel finds specific mention in the sanctioned scheme which is under implementation."
It is, therefore, held that where an amount claimed or the liability sought to be set up is covered under scheme, Section 22(1) will be attracted and there would be an automatic suspension of all legal proceedings including a suit for recovery of money.
The issue which arises in the present case apparently was not being considered by the Division Bench of the Hon'ble Delhi High Court. This may be a position in regard to a suit which is filed for recovery of an amount against the company which is before BIFR. In that eventuality, the provisions of Section 22 of SICA are held applicable bringing the proceeding to a halt automatically. But, the issue required to be examined in the present case is whether the provisions of Section 22 of SICA would apply to O.A. proceedings pending before DR or not. To an extent, this question has been answered though against the appellant in a judgment which the Counsel for the appellant has placed before me, titled as Inderjeet Arya & Anr. v. ICICI Bank Ltd. & Anr., I (2014) BC 111 (SC)=I (2014) SLT 148-I (2014) CLT 43 (SC)=2014 (1) DRTC 153 (SC). The Hon'ble Supreme Court, after referring to the judgment in the case of K.S.L. and Industries Ltd. v. Arihant Threads Ltd., VII(2008) SLT 243=153 (2008) DLT 27 (SC)=(2008) 9 SCC 763 and Kailash Nath Agarwal v. Pradeshiya Industrial & Investment Corporation of U.P. Ltd., II (2003) SLT 81-II (2003) BC 296 (SC)=(2003) 4 SCC 305, has held that the directors being guarantors of the sick company could obtain protection under Section 22 (1) of SICA only if action filed by the Bank comes within the ambit of a suit. It is observed that if the action filed by the Bank being in the nature of proceedings and not a suit, protection under Section 22(1) of SICA would not be available when the persons are guarantors. Further elaborating, it is held that the term suit would apply only to proceedings in Civil Court and not actions or recovery proceedings filed by Banks and Financial Institutions before a Tribunal such as DRT.
In my view, the direct answer to the question posed or requiring decision in the appeal has been squarely answered by the Supreme Court. While taking this view, the Hon'ble Supreme Court has relied upon the judgment in the case of Kailash Nath Aggarwal's case (supre) and K.S.L. and Industries Ltd. case (supra). In Kailash Nath Aggarwal's case, the Hon'ble Supreme Court has noticed the apparent distinction between a suit and 'proceedings' used in Section 22(1) of SICA. It is observed that while it may be true that two different words may be used to convey the same meaning but that is the exception rather than the rule. The general rule, as noticed by the Apex Court, is that when two different words are used by the same statute, prima facie one has to construe these different words as carrying different meanings in his context, the words suit and proceedings have not been used interchangeably in SICA. The Court thus held that the reasons which persuaded that Court to give the same meaning to two different words in the same statute cannot be applied here.
In KSL and Industries Ltd. 's case (supra), the Court has held that the law is fairly well-settled that a provision beginning with a non obstante clause (notwithstanding anything inconsistent contained therein in any other law for the time being in force) must be enforced and implemented by giving effect to the provisions of the act and by limiting the provisions of other laws. Considering the provisions of Section 34 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act), the Court came to the conclusion that it was crystal clear that the provisions of Section 34 of the RDDBFI Act should be given priority and primacy over SICA. The following observations in this regard would call for notice:
"91. Applying the above test to the instant case, it me, it is crystal clear that the provisions of the RDDB Act should be given priority and primacy over SICA. I may conceded that both the Acts are 'Special Acts' in the sense that they have been enacted for a specific purpose and object in view. Whereas SICA has been enacted, in the public interest with a view to securing the timely detection of sick or potentially sick companies owning industrial undertaking the speedy determination by a Board of experts of the preventive, ameliorative remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto, the RDDB Act has been enacted to secure and protect public revenue and for expeditious adjudication and recovery of debts due to Banks and financial institutions.
The RDDB Act is a subsequent Act in the point of time being the 1993 Act. It must, therefore, be presumed even in absence of any specific provisions in the 1993 Act that Parliament was aware of all statutes which had been enacted prior to 1993 including SICA of 1985. In spite of that, in Sub-section (1) of Section 34 of the RDDB Act, non obstante clause has been inserted so as to ensure expeditious adjudication and recovery of debts due to Banks and financial institutions.
But it is not only on the ground that the RDDB Act is a late Act and SICA is a former Act that I am holding that the RDDB Act will prevail over SICA. There is an additional factor also which is of extreme importance and supports the view which I am inclined to take. It is Sub-section (2) of Section 34. To recall Sub-section (2) of Section 34 of the RDDB Act declares that the provisions of this Act (the RDDB Act of 1993) are in addition to and not in derogation of certain enactments referred to in the said Sub-section SICA has been expressly mentioned in the said sub-section.
As already adverted to earlier, the RDDB Act, 1993 has been enacted with a view:
"To provide for the establishment of the Tribunals for expeditious adjudication and recovery of debts due to Banks and financial institutions..." (Preamble of the Act)
All other laws; therefore, whether general of special, prior or subsequent, must, in my considered view be interpreted and applied keeping in view the above object of enacting the 1993 Act. I have, therefore, no hesitation in holding that even though both the conflicting statutes (SICA of 1985 and the RDDB Act of 1993) contain non obstante clause, in case of conflict, The RDDB Act, 1993 will prevail over SICA, 1985 so far recovery of public revenue is concerned."
In view of above position, the order in appeal would not call for any interference. The appeal is accordingly dismissed.