LexKSL & INDUSTRIES LTD. versus MIS ARIHANT THREADS LTD. & ORS.
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[2008] 12 S.C.R. 702 A KSL & INDUSTRIES LTD. '\. v. MIS ARI HANT THREADS LTD. & ORS. (Civil Appeal No. 5225 of 2008) · B AUGUST 25, 2008 [C.K. THAKKER AND ALTAMAS KABIR, JJ.] ~·' Recovery of Debts Due to Banks and Financial Institutions Act, 1993; Ss. 19, 20, 30, 34(1) & (2)/Sick Industrial c Companies (Special Provisions) Act, 1985; s. 22: Joint Venture Company - Recovery of Joan from company by Industrial Development Bank of India - Debt Recovery Tribunal passed ex-parte final order in favour of IDBI - Fixation of reserve price of property of the Company - D Challenged by the company by filing appeal No.52 of 2004 - Auction of movable and immovable property - Appellant was declared highest and successful bidder- Company filing an application in the· pending appeal for setting aside ex- parte final order-Auction purchaser filing an application for E imp/eadment- ORT allowed appeal No. 5212004 setting aside auction sale subject to fulfilling of certain conditions by the company with regard to payment of amount, interest etc. - Challenging the conditions imposed by ORT Company filing an appeal and cross appeal filed by auction purchaser- DRAT F allowed the appeal of the appellant confirming the auction sale in his favour after depositing the sale price - Challenge ,....---. to - Allowed by the High Court on ground that s.22 of Sick Industries Companies (Special) Provisions)Act, 1985 is a complete bar to recovery proceedings against sick companies· G as the Company in question was declared sick company by BIFR - Correctness of. Held: Per C.K. Thakker, J: ~-C Conclusion arrived at by High Court that tl'1e proceedings H 702 > KSL & INDUSTRIES LTD. v. MIS ARI HANT THREADS LTD. & ORS. 703 were barred under S.22 of the SICA not well-founded - S.22 A of SICA has two parts which bars initiation of any proceedings for winding up of the company or execution etc. against any property of the Company/appointment of receiver and also filing of money suit for recovery of/enforcing of any security against the Company without the consent of the Board/ a Appellate authority - RDDB Act was enacted in 1993 when SICA 1985 was very much in force - Both the Statutes employ non-obstante clause ~ Applying the tests laid down by Supreme Court, the provisions of 1993 Act should be given priority over 1985 Act - It must be presumed that legislature c intentionally inserted non-obstante clause ins. 34(1) of 1993 Act though it was there in the 1985 Act so as to ensure expeditious recovery of debts due to Banks/Financial institutions - Moreover, s.34(2) of 1993 Act declares that the provisions of the Act are in addition and not in derogation of 0 other enactment - Hence, in case of conflict, RODD Act 1993 will prevaii over SICA 1985 so far as recovery of public revenue is concerned - High Court erred in applying ' provisions of s. 22 of SICA -Hence, the matter remitted to High Court for decisions afresh. E Held: Per Altamas Kabir, J.: Sub-section(1) of s. 34 of RDDB Act, 1993 clearly provides that the provisions of the Act/Rules made thereunder would be in addition to and not in derogation of certain statutes including SICA - Thus, while the 1993 Act would have an F overriding effect over other enactments - Provisions under 1993 Act would be supplemental to those of SICA - Hence, if the situation in a case is covered by the provisions of SICA then view taken by the· High Court would have to be upheld else impugned judgment would have to be set aside - In the G instant case, final order passed by ORT directing the company to pay dues to IDBI remained unchallenged since neither an appeal under s. 20 of 1993 Act was filed nor an application for setting aside the sale under Rule 60 of the Income Tax Act, 1961 filed, thus order of ORT attained finality - Company H "I 704 SUPREME COURT REPORTS [2008] 12 S.C.R. > ~_. A filed second Reference before BIFR after order confirming the auction sale in favour of auction purchaser was passed by DRAT - Later, company was declared to be a sick company by~BIFR - Thus, provisions under s. 22 of SICA invoked by the company after recovery proceedings had been concluded B in favour of auction purchaser - Steps taken by the company were far from bonafides and only armed at stalling the auction ;~ sale - Even no attempt made by the company to secure a bid higher than the auction purchaser - Hence, High Court erred in applying
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