TMI Blog2007 (5) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant (hereinafter referred to as 'the decree holder') entered into a lease agreement with the respondent No. 1 (hereinafter referred to as the JD No. 1) in respect of premises bearing No. A-42, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi, at a monthly rent of Rs. 7,26,600/- exclusive of electricity and water charges vide lease dated 15.3.1997. Separate maintenance agreement was also signed between the decree holder and sister concern of JD No. 1 (hereinafter referred to as 'the JD No. 2). The decree holder also handed over a sum of Rs. 2,03,44,800/- as interest free security to JD No. 1 and a sum of Rs. 87,93,200/- as interest free security deposit to JD No. 2. This lease and maintenance agreements were terminated vide notice dated 12.12.1999 by the decree holder, with effect from 14.3.2000. However, as the JDs did not come forward to take possession of the premises and did not return the security money either, the decree holder filed Suit No. 762/2000 in this Court against the JDs and certain other persons to deliver back the premises to JDs and for return of its security deposit. On 20.5.2000 order was passed by a learned Single Judged of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition for execution of the decree passed by the learned Single Judge. In the execution petition notice was issued to the JDs. JD No. 1 on receiving the notice, moved an application for stay of the proceedings stating that since the matter was pending before the AAIFR, there was a bar under Section 22 of the SICA in so far as continuation of proceedings in the execution petition is concerned. 7. Allowing this application, the learned Single Judge has vide impugned judgment dated 15.9.2003, stayed the execution proceedings. It is this order which is the subject-matter of challenge in this appeal and the question which need consideration has already been delineated in the opening para of the judgment. 8. We heard the learned Counsel for the appellant. Mr. R.K. Sharma, Advocate, appeared for the respondent Nos. 6 and 7 and submitted that the respondent Nos. 6 and 7 were only proforma respondents and, Therefore, he had nothing to argue. Mr. Harpreet Singh Popli, Advocate, who was appearing for the respondent Nos. 1 to 5 submitted that his clients had taken the file from him and in spite of various letters written, the counsel had not received any response. He, in fact, wanted dischar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided on merits. He submitted that when the plea was specifically raised, but the Division Bench still proceeded to decide the appeal on merits, it would imply rejection of the plea based on Section 22(1) of the SICA. Therefore, constructive res judicata would apply, more so when the JDs approbated the judgment of the Division Bench by not filing any further appeal. Apart from other judgments, he referred to the judgment of the Division Bench of this Court reported in 90(2001)DLT89 to support this plea. (b) Second argument, which was raised, was that bar of Section 22 of the SICA, would not apply as the money in question, which was given by the decree holder to the JD Nos. 1 and 2 was the security deposit. It was trust money kept with the JD Nos. 1 and 2, which these JDs were under a legal obligation to refund on the termination of the tenancy and on handing over the possession of the tenanted premises back to them. Such money could not be treated as property of the JD No1 and Section 22 would have no application, which puts a bar on the proceedings against any of the properties of industrial company. 11. We are of the opinion that the appeal warrants to be allowed on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are proceedings whereby recovery of dues is sought to be made by, way of execution, distress or similar process against the property of the company. Proceedings for eviction instituted by a landlord against a tenant who happens to be a sick industrial company, cannot, in our opinion, be regarded as falling in this category. 13. We are also unable to agree with the contention of the learned Counsel for the appellant company that the leasehold interest of the appellant company in premises leased out to it is property for the purpose of Section 22(1). It is no doubt true that leasehold interest of the lessee in the premises leased out to him is property which can be transferred and the said interest can also be attached and sold by way of execution in satisfaction of a decree against a lessee. In that sense, it can be said that the leasehold interest of a company is its property. But the question is whether the same is true in respect of the interest of a company which is in occupation of the premises as a statutory tenant by virtue of the protection conferred by the relevant rent law because in the instant case on the date of reference to the Board the proceedings for eviction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icon to find the meaning of 'Security'. It would be worthwhile to reproduce the detailed discussion contained in the said judgment on this aspect: 6. The language of Section 22(1) of the Act is clear. It bars execution against the property of the company . The security deposit made by the decree-holder for due performance of the contract entered into with the company cannot by any stretch of imagination be held to be the property of the company especially when it has been set apart in the form of a fixed deposit by the company in its name. As per Oxford Shorter English Dictionary the meaning of deposit is something laid up in a place, or committed to the charge of a person for safe-keeping . The person with whom such deposit is made is known as 'depository'. He is a person with whom anything is lodged in trust; a trustee; one to whom anything is committed or confided. In Law, a bailee of personal property to be kept for the bailor without recompense. In Law Lexicon by P.R. Aiyar edited by Justice Y.V. Chandrachud, the word 'deposit' is defined : Thing stored or entrusted for safe-keeping , an act by which a person receives the thing of another person, with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no dearth of instances where unscrupulous companies had misused this provision by manipulating sickness to ward off legitimate claims of creditors. Therefore, it requires both caution and circumspection to extend protection of Section 22(1) to such companies. 10. In the present case it is not disputed that the amount was deposited by the decree holder with the judgment-debtor company as security deposit for performance of the contract and after adjudication by the arbitrator appointed under the Arbitration and Conciliation Act, 1996, the amount of security deposit which was set apart in a fixed deposit, is to be refunded to the decree-holder after deduction of certain amount. This security deposit was not the property of the industrial company but it is the property of the decree-holder being held in trust by the judgment-debtor company and, Therefore, it cannot invoke Section 22(1) of the Act in this case and refuse refund of the deposit. In this context the observations of the Division Bench referred above become very pertinent. In all fairness the judgment-debtor should not refuse to refund the security deposit. The chances of the revival of the company are likely to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posit by the depositor is not a sum lent to the company but is a sum deposited with the company to be held in trust by the company till the time of maturity. It is not a loan in the strict sense of the term. Therefore, any claim for return of a deposit made with the company cannot be termed as a suit for recovery of money due. Section 22(1) prohibiting as it does the taking up of certain proceedings against the company, without the consent of the Board, which proceedings in the natural course of things can be resorted to against the company without any reservation whatsoever by the person or persons interested, it goes without saying that the prohibitions contained in Section 22(1) do not lent themselves to any liberal interpretation. The said provisions must be interpreted in a limited sense and cannot be said to cover situations where there really is no element of execution, distress or the like against any property owned by the industrial company. Interpreting the term no suit for recovery of money thus, we find that it certainly would not cover a simple claim made by depositors for the return of their deposits after maturity. As held by the apex court in the decision, supra, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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