Summary
SICA Section 22(1) did not suspend this suit merely determining disputed contractual liability: the required interference with rehabilitation and threat to assets was absent, unlike coercive execution. The decree was therefore valid. Statutory interest at 24% with monthly compounding was upheld, but the company’s BIFR sickness period, 6 November 1992 to 27 June 2013, was excluded. Payment was required within four weeks, failing which 36% interest with monthly compounding would accrue.
Issues
- Whether SICA suspended a suit adjudicating disputed, unadmitted contractual dues.
- Whether the decree was void for lack of jurisdiction.
- Whether 24% compound interest applied throughout the BIFR sickness period.
- Whether the supplier had to use the Facilitation Council rather than a civil suit.
Provisions considered
- Section 22(1), Sick Industrial Companies (Special Provisions) Act, 1985Suspension required the prescribed BIFR/AAIFR stage, a covered proceeding, and threat to assets/interference with rehabilitation. Mere adjudication here differed from coercive execution. (¶¶ 62, 64, 65, 67, 83, 84, 85, 86, 87, 97, 98, 99, 123, 124)
- Sections 19, 26 and 32, Sick Industrial Companies (Special Provisions) Act, 1985The judgment distinguished the jurisdictional exclusion in Section 26 from Section 22’s temporary suspension and harmonised rehabilitation protections with delayed-payment legislation. (¶¶ 104, 116, 117, 125, 136, 137, 138, 140, 141)
- Sections 3, 4, 5, 6 and 10, Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993The applicable historical scheme supported 24% interest with monthly compounding and allowed civil recovery as well as an alternative Council route, subject here to exclusion of the sickness period. (¶¶ 111, 112, 113, 114, 115, 120, 121, 122, 137, 141, 142, 143, 144)
Held
- Section 22(1) protection requires three cumulative aspects: the specified stage of statutory proceedings, a proceeding within its covered classes, and an effect threatening assets and interfering with formulation, consideration, finalisation or implementation of rehabilitation. It does not give absolute immunity from every legal proceeding. (¶¶ 64, 65, 67, 83, 84, 85, 86, 87, 97)
- The recovery suit concerned determination of disputed dues from contractual deductions and did not itself threaten assets or impede revival. Its adjudication was therefore permissible and the decree was not coram non judice. Execution, by contrast, was suspended during the protected period absent requisite permission. (¶¶ 98, 99, 101, 102, 123, 124, 142(I))
- Section 26 excludes civil jurisdiction over matters entrusted to BIFR or AAIFR; Section 22 instead temporarily suspends specified proceedings and permits statutory leave. Adjudication of contested contractual liability belongs to civil courts or arbitral tribunals, rather than BIFR. Bhoruka Textiles must be read in its facts and with Raheja Universal. (¶¶ 103, 104)
- The Facilitation Council route was an additional option, not a mandatory substitute for a civil suit. Moreover, the provisions establishing those Councils were introduced after this suit was filed. Choosing the civil court did not defeat statutory interest entitlement. (¶¶ 120, 121, 122)
- The historical 1993 Act supported the High Court’s 24% rate with monthly compounding. Harmonising its protective purpose with SICA’s rehabilitation object, the Court excluded interest for 6 November 1992 through 27 June 2013, when FCIL was sick and before BIFR. The exclusion concerned accrual of interest as well as the distinction between adjudication and recovery. (¶¶ 113, 115, 125, 126, 127, 128, 130, 131, 132, 136, 140, 141, 142(II), 143)
- The High Court decree was otherwise upheld. The final amount determined under the modified decree must be paid within four weeks of the judgment; default attracts 36% per annum with monthly compounding. Each party bears its own costs. (¶¶ 143, 144, 145, 146)
Result
Appeals disposed of: decree upheld with BIFR sickness period excluded from interest; 24% monthly-compounded interest otherwise maintained. Payment within four weeks, failing which 36% monthly-compounded interest accrues; own costs.