TaxTMI 
TaxTMI 
2011 (1) TMI 1590
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndant required wooden crates for packaging of its scooters meant for the purpose of export. On account of the said crates having been supplied by the Plaintiff, it was alleged that the Defendant on account of non-payment of various bills starting from 26.11.2005 to 31.01.2006 owed a sum of Rs. 24,83,409.27. In respect of the aforesaid amount, the Plaintiff filed a suit along with the interest @ 24% per annum because of the default on the part of the Defendant to clear the payment within 45 days for which the credit was given to the Defendant. The interest component which was calculated was to the tune of Rs. 15,39,714.20 starting from 01.04.2006 till the filing of the present suit i.e. 31.10.2008 and that is how a sum of Rs. 44,05,803.47 was claimed. 3. The Defendant filed its written statement and contested the claim of the Plaintiff. The preliminary objection was raised regarding the maintainability of the plaint itself on the ground that the Defendant was a sick company and the present suit could not be proceeded. The jurisdiction of the Court was also challenged as it was alleged that the Court in Kanpur has the exclusive jurisdiction. On merits, the Defendant denied the liabi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avit dated 01.05.2010 of Mr. D. R. Dogra wherein a statement of accounts of M/s Shree Shyam Packaging Industries, the proprietary concern of the Plaintiff, as on 31.03.2006 has been enclosed. It has been stated that in the statement Defendant is shown to have been owing a sum of Rs. 21,70,490.88 to the Plaintiff as on 31.03.2006 and this was supported by the auditor's certificate annexed along with the affidavit. However, it was contended that the said statement shows that the debit notes which were duly issued by the Defendant, have not been considered by the Plaintiff. It has also been alleged that there was a difference in the opening balance as on 01.04.2005 reflected in the accounts of the two parties and this was on account of certain bills not taken into account in the statement. It is alleged that once the statement of accounts is reconciled then the Plaintiff could apply to the BIFR and claim the amount due and payable to him as an unsecured creditor. It has also been contended that the Plaintiff has not refuted the contention of the Defendant with regard to the averments made in the affidavit. 8. I have heard the learned Counsel for the parties and perused the record....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sel for the Plaintiff that the Defendant has taken the plea that while calculating this amount as an outstanding amount, the Plaintiff has not taken into account various debit notes which were issued by the Defendant, and therefore, the accounts need to be reconciled. So indirectly the admission which is purported to have been made by the Defendant is withdrawn by the said Defendant or it could at its best, be a conditional admission of its liability which is no admission in eyes of law. In the absence of unambiguous admission by the Defendant, it will not be feasible to stay the proceedings of the present suit. 10. I have carefully considered the submissions of the respective sides and have also gone through the record as well as through the judgments referred to by the learned Counsel. Before dealing with the facts of the case, it would be worthwhile to reproduce the Section 3(1)(o) of the Act which defines the sick company and the Section 22 of The Industrial Companies (Special Provisions) Act,1985. Section 3(1)(o) sick industrial company" means an industrial company (being a company registered for not less than five years) which has at the end of any financial year accu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is essentially to protect the sick companies against the proceedings for winding up or for execution or distress or for enforcement of any security or guarantee against the said company on account of the fact that the company in question is a sick company and is already under consideration of an appropriate forum that is BIFR or AAIFR as to whether it be restored back to its financial health so as to make it a viable functioning unit or whether it should be wound up for the good. Section 22 of the Act has been enacted by the legislature also with a view to prevent any strain on the resources of the already scarce resources of the sick company or from creating any obligation or impediment in restoring it back to its normal health. 13. It is in this backdrop of aforesaid object of Section 22 of the Act that the Courts have come to the rescue of the sick company to restrain recovery proceeding on account of various statutory liabilities like sale tax, income tax, octroi, house tax and other liabilities, sought to be affected against the sick company. 14. The Division Bench of our own High Court in case titled Intercraft Limited v. Cosmique Global and Anr. in W.P.(C) No. 8803/2009 d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be proved in the Plaint has not been admitted 16. Obviously the Division Bench have echoed observation of the Apex Court in Dy. Commercial Tax Officer v. Corromandal Pharmaceuticals AIR 1997 SC 2027 wherein the following observations were made Any step for execution, distress or the like against the properties of the industrial company other of similar as steps should not be pursued which will cause delay or impediment in the implementation of the sanctioned scheme. In order to safeguard such state of affairs, an embargo or bar is placed under Section 22 of the Act against any step for execution, distress or the like or other similar proceedings against the company without the consent of the Board or, as the case may be, the appellate authority. The language of Section 22 of the Act is certainly wide. But, in the totality of the circumstances, the safeguard is only against the impediment, that is likely to be caused in the implementation of the scheme. If that be so, only the liability or amounts covered by the scheme will be taken in, by Section 22 of the Act. So, we are of the view that though the language of Section 22 of the Act is of wide import regarding suspension of lega....
X X X X Extracts X X X X
X X X X Extracts X X X X
....no order as to cost. 17. Thus, the aforesaid judgments clearly lays down that the proceedings of a recovery simplictor need not be stayed unless and until the amount sought to be recovered by the Defendant is reckoned or taken into consideration in the rehabilitation scheme before BIFR. The judgment of Corromandal case (supra) has been referred to in the application by the Defendant but in my view on account of the observations quoted above, it does not support the case of the Defendant. 18. It may be pertinent here to refer to some of the judgments which find mention in the application of the Defendant for staying the proceedings. The judgments of Apex Court in Jay Engineering Works Ltd. v. Industry Facilitation Council AIR 2006 SC 3252, Gram Panchayat v. Shree Vallabh Glass Works Ltd. AIR 1990 SC 1017, Real Value Appliances Ltd. v. Canara Bank AIR 1998 SC 2064 have been considered by the Division Bench of this Court in Saketh's case (supra) and despite this, it has affirmed the principles of law laid down in Corromandal's case (supra) and therefore, these judgments are of no help to the Defendant. 19. Some of the other judgments which have been relied upon by the Plain....