National Textile Corporation ... vs Shri Ramesh Chander Puri
2002 Latest Caselaw 722 Del

JUDGMENT

R.C. Jain, J.

1. This civil revision is directed against the order of the learned Additional District Judge dated 23.1.02 bywhich an application under Section 22 of theSick Industrial Companies (Special Provisions) Act, 1985 (in short `the Act') filed on behalf of the petitioner-defendant No.2-Corporation challenging the maintainability ofthe suit filed by the respondent has been dismissed.

2. Briefly, the relevant facts are that the respondent-herein filed asuit for ejectment and recovery of a sum of Rs.4,35,000/- against the petitioner. During the proceedings of the suit, the petitioner filed an application under Section 22 of theAct stating therein that the petitioner-Company hasbeen declared a sick company under the provisions of Section 16 of the Act and further proceedings are pending before the BIFR under Section 17 of the Act and therefore the suit filed by the respondent was not maintainable and cannot be proceeded further in view of the statutory bar created under Section 22 of the Actas the respondent had not taken any permission from the BIFR before filing the suit. The application wasopposed on behalf ofthe respondent-plaintiff thereby controverting the pleasof the petitioner-defendant and the pleadings that suit for ejectment and for recovery of mesne profits was not barred under the provisions of Section 22 of the Act. Thetrial court on a consideration of the matter and more particularly relying upon Supreme Court decision in the case of Deputy Commercial Tax Officer & Ors VS. CorromandalPharmaceuticals & others decision of this court in the case of Cement Corporationof India Vs. Smt.Manohar Bhasin reported in 1999 VI AD (Delhi) 398 held that thesuit for eviction was not liable to be stayed and further that there was no document on record to showthat any scheme has been sanctioned and the dues in the nature of arrears of rent, damages and mesne profits is part of the scheme for rehabilitation and accordingly dismissed the application.

I have heard Mr.Satish Kumar learned counsel forthe petitioner and Shri Arun Mohan, senior advocate appearingon behalf of the respondent. Learned counsel for the respondent at the very outset urged thisCourt to dismiss the present petition on thegroundthat the petition is an abuse of the process ofthe Court because on an earlier petition filed by the petitioner-Corporation, this Court in the case of National Textile Corporation Vs.Smt.Kamla Sharma 66 (1997) DLT 22, has categorically held that theprovisions of Section 22 is no hurdle in the way of suit for possession. He also sought support from a later judgment of this Court in the case of Sirmor Sudburg Auto Ltd.Vs. Kuldip Singh Lamba wherein the Court on a consideration of the matter held that a suit for recovery of arrears of rent, damages andmesne profits is a suit for the recovery of money within the meaning of the expression as inserted by the 1993 Amendment Act. In as much as a decree for recovery of arrears of rent, damages and mesne profits would result in financial liability cast on the defendant and such a suit would attract the applicability of Section 22(1) of the Act. However, a suit for ejectment is not covered bythe said provision of lawand can be maintained. This authority, in my view, supports the contention of the petitioner rather than the respondent. Reliance was then placed on the Supreme Court decision in the case of Gujrat Steel Tube Co.Ltd. Vs. Virchandbhai B.Shah & Ors wherein the Court considered thequestion of maintainability/stay of an eviction petition on the ground of non-payment of rent and held as under :-

"Section 22 no doubt, inter alia, states that notwithstandingany other law no suit for recovery of money shall lie or proceeded with except with the consent of the Board, but as we look at it the filing of an eviction petition on ground of non-payment of rent cannot be regardedas filing of a suitfor recovery of money. If a tenant does not pay the rent, then the protection which is given by the Rent Control Act against his eviction is taken away and withthe non-payment of rent order of eviction may be passed.It may be possible that in view of the provisions of Section 22, the trial Court may not be in a position to pass a decree for the payment of rent but whenan application under Section 11(4) is filed, the trial Court in effect gives an opportunity to the tenant to paythe rentfailing which the consequences provided for in the sub-section would follow. Anapplication under Section 11(4), or under any other similar provision, cannot, in our opinion, be regarded asbeing akin to a suitfor recovery of money."

Learned counsel for the petitioner has not disputed the legalpreposition that the plaintiff-respondent is entitled to maintain a suit for ejectment, but his contention is that the suit for recovery of Rs.4,35,000/- towards mesne profits/damages etc is not maintainable in view of the provisions of Section 22(1) of the Act as it stands after amendment. He relied upona Supreme Court decision in the case of Real Value Appliances Ltd. Vs. Canara Bank & Others . In that case the Hon'ble Supreme Court considered the scope of various provisionscontained in Chapter III of the Act. With regard to the applicability of Section 22 of the Act, it was stated that the legal proceedings, contract etc are liable to be suspendedwhere an inquiry under Section 16 is pending or any scheme under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 is pending before the Appellate Authority (AAIFR).

Having consideredthe rival contentions putforth on behalf of the parties and the admitted position that the petitioner-Company has been declared a sick company under the provisions of Section 16 of the Act and further proceedings are pending before the BIFR under section 17 of the Act and the legal position emerging from the above referred decisions of the Supreme Court and this Court, this Court is of the considered opinionthat while the provisions of Section 22(1) of the Act are not attracted to a suit or proceedings seeking the ejectment or recovery of possession of the premises but the provisions of the said Section would come into play once a claim is made in a suit for the recovery of money. In the case in hand beside seeking the possession of the demised premises, the respondent has sought recovery of a sum of Rs.4,35,000/- which relief on the face of the above factual and legal position is barred. Inthe result, this petition succeeds and is partly allowed and the impugned order so far it has dismissed the application under Section 22 of the Act forthe relief of ejectment/possession of the demised premises is upheld, but so far as it has declined to suspend the proceedings with regard to the relief of recovery of a sum of Rs.4,35,000/- towards mesne profits is liable to be set aside and the application of the petitioner to this extent will be deemed to have been allowed. It will be open for the respondent to pursue his suit so far as the relief ofejectment is concerned. The contention of the learned counsel forthe plaintiff-respondent that the suit in regard to recovery of the said amount may also be allowed to be proceeded withand the respondent-plaintiff is prepared to give an undertaking that hewill not execute the money decree so passed, cannot be accepted in view of the embargo placed by Section 22(1) of the Actin regard to the very maintainability of a suit forrecovery of money. The revision petition stands disposed of accordingly.

CM also stands disposed of.