LexM.D., BHORUKA TEXTILES LTD. versus M/S KASHMIRI RICE INDUSTRIES
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""- [2009] 9 S.C.R. 463 M.D., BHORUKA TEXTILES LTD. A v. M/S KASHMIR! RICE INDUSTRIES (Civil Appeal No.3603 of 2009) MAY 15, 2009 B -~ [S.8. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.] ~ SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1.985: Section 22 - Applicability of - Ouster of jurisdiction of c Civil Court - Trial Court held that since n5J final order passed by Bf FR mere reference would not suffice and s.22 does not .... apply - Appeal thereagainst dismissed by High Court - On appeal, Held: Reference having been made before filing of D .It the suit, the receipt of reference is the starting point of enquiry - If the Civil Court's jurJ.;diction was ousted, any judgment rendered by it would be coram non judis - Such judgment becomes a nullity - Impugned judgment set aside - Civil Court to transfer the deposit of the decretal amount to BIFR E - If no scheme has been finalized, BIFR to expedite the same - It should also take into consideration the decree passed by -l- the Trial Court. y Tata Motors Ltd. Vs. Pharmaceutical Products of India Ltd. & Anr. (2008) 7 SCC 619; Kiran Singh & Ors. Vs. F Chaman Paswan & Ors. AIR 1954 SC 340; Chief Engineer, Hyde/ Project vs. Ravinder Nath (2008) 2 SCC 350 and Mantoo Sarkar vs. Oriental Insurance Co. Ltd. & Ors. (2009) · ; 2 sec 244, relied on. 1 G - CIVIL APPELLATE JURISDICT_ION : Civil Appeal No. 3603 of 2009. From the Judgment & Order dated 29.01.2008 of the High 463 H 464 SUPREME COURT REPORTS [2009) 9 S,C.R. .x A Court of Karnataka at Bangalore in R.F.A. No, 982 of 2007. R.S. Hegde (for P.P, Sin9n) for the Appellants. Ka$hi Vi$hweshwar (for A. Sumathi) for the Respondents. 6 Tfle Jud~ment of the Court was delivered by ;. s.a. $1NtiA, .J, 1. ~eave 9r€lnted. ),_ 2. This appeal is directed against a judgment and order c dated 29.1.2008 passed by the Hi9h Court of Karnataka at Bangalore in RFA No.982 of 2007 whereby and whereunder judgment and decree dated 21.12.2006 passed by the Civil Jµdge, Senior Division, decreeing the suit being OS No.728 of 2002 filed by the respondent was affirmed. I- D 3. A partnership firm known as M/s. Kashmiri Rice J, Industries has its place of business at HangaL The said firm entered into a contract for supply -of paddy husk with the appellant. Inter alia, on the premise that appellant herein, despite supply of the agreed quantity of paddy husk, failed and/ E or neglected to pay the price therefor, the respondent filed a suit for recovery of a sum of Rs.2,61,696/- in the Court of Civil Judge, Hangal. 4- One of the contentions raj$ed PY the appellant in the said .,. F suit was that as the appellant-co·mpany has become a sick industry within the meaning of the provisions of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, 'the Act') and a reference having been made to the Board of Industrial and Financial Reconstruction (BIFR) in terms of the provisions of the Act, the suit was not maintainable. i.. G I' The learned Trial Judge, inter alia, framed the following ~ issue: "Do defendants prove that suit is also hit by Section 22 of H Industrial Companies (Special Provisions) Act as ' • M.D., BHORUKA TEXTILES LTD. v. KASHMIR! RICE 465 '>( INDUSTRIES [S.B. SINHA, J.] contended in Para 7 of W.S. Preliminary issue?" A From a perusal of the judgment, it appears that no argument was advanced before the learned Trial Judge on the said issue. However, it was opined that Section 22 of the Act provides for suspension of the proceedings and in view of the , B A fact that no final order has been passed by the BIFR declaring ~ the appellant as a sick industry, mere reference would ngt suffice. A finding of fact furthermore was arrived at that the transaction in question being subsequent to the reference, Section 22 of the Act would have no application. c 4. An appeal preferred thereagainst has been dismissed by the High Court by reason of the impugned order. The High · Court, although noticed issue No.3, did not record any positive ... finding thereupon . k. D 5. Mr. R.S. Hegde, learned counsel appearing on behalf of the appell3nt, would urge that the learned Trial Judge as also . the High Court committed a serious error insofar as they entered into a wrong finding of fact that the transaction in question is subsequent to the reference. It was furthermore E contended that a plain reading of Section 22 of
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