SHREE CHAMUNDI MOPEDS LTD. versus CHURCH OF SOUTH INDIA TRUST ASSN. CSI CINOD SECRETARIAT, MADRAS

Citation: [1992] 2 S.C.R. 999 · Decided: 29-04-1992 · Supreme Court of India · Bench: M.M. PUNCHHI · Disposal: Dismissed
Cited by 6 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

SHREE CHAMUNDI MOPEDS LTD. 
v. 
CHURCH OF SOUTH INDIA TRUST ASSN. CSI CINOD 
SECRETARIAT, MADRAS 
APRIL 29, 1992 
[N.M. KASLIWAL, M.M. PUNCHHI AND S.C. AGRAWAL, JJ.] 
Sick Industrial Companies (Special Provisions) Act, )985-Section 
22(1)-Eviction proceedings against sick industrial company under Section 
A 
B 
21, Kamataka Rent Control Act, 1961-Wliether eviction proceedings to be C 
suspended. 
Sick Industrial Companies (Special provisions) Act, 1985-Section 
22( 1 )-Interest of sick industrial company, a tenant under the Kamataka Rent 
Control Act whether property. 
Sick Industrial Companies (Special Provisions) Act, 1985-Section 
22( 1 )-Object and purpose and legislative intention of. 
The appellant-company took the premises of the respondent No.1 on 
a monthly rent of Rs. 21,159. The company committed default in payment 
D 
of rent. The respondents issued a legal notice asking the appellant com- . E 
pany to pay the rent dues. The company replied that the outstanding rent 
d~es would be paid as soon as it would receive the developmental loan 
from the Government. 
When the amount was not paid, the respondents issued a notice to 
the company under section 434 of the Companies Act. Thereafter a petition 
was filed under section 433 of the Act in the High Court of Kamataka for 
winding up of the company. 
F 
Meanwhile, on 12.12.1988, the appellant-company filed a reference 
under section 15(1) of the Sick Industrial Companies (Special Provisions) G 
A~t before the Board of Industrial and Financial Reconstruction claiming 
that it became a sick industrial company. 
The Board held that the company had become economically and 
commercially non-viable due to its accumulated losses and liabilities and 
it was to be wound up. Giving one more opportunity to the promoters, the H 
999 
1000 
SUPREME COURT REPORTS 
[1992] 2 S.C.R. 
A 
Board further held that if no acceptable rehabili~on scheme was received 
within one month, then the Board would forward its opinion to wind up 
the Company to the High Court. 
The appellant-company filed an appeal before the Appellate 
Authority for Industrial and Financial Reconstruction against the order 
B of the Board. Its appeal was dismissed by the Appellate Authority. Against 
the Order of the Appellate Authority the company filed a writ petition 
(W.P.(C) No. 94/91) in the High Court of Delhi. 
The High Court stayed the operation of the order of the Appellate 
c Authority. 
(When the present case was before this Court, the writ petition was 
pending and the stay order was operative). 
After the dismissal of the appeal by the Appellate Authority, the 
D Single Judge of the Karnataka Hi~ Court took up the petition filed by the 
respondents under section 433 of the Companies Act for winding up of the 
company and the same was allowed holding that pendency of the writ 
petition in the High Court of Delhi and the stay of operation of the order 
of the Appellate Authority did not stand in the way of the Court. 
E 
The appellant-company's appeal before the Division Bench of the 
Karnataka High Cburt was dismissed. Against the said order of th~ 
Division Bench of the High Court the appellant, by special leave, filed CA 
No. 126 of 1992. 
F 
On 26.2.1988, before the Additional Small Cause Court, the 
landlord-respondents filed an eviction petition under Section 21(1) of the 
Kamataka Rent Control Act, 1961 on the ground that the tenant-appel-
lant-company was a defaulter in the payment of rent; that as on 31.3.1987, 
the arrears of rent was Rs. 2,45,534 and that the company's cheque for a 
G sum of Rs. 50,000 when presented for encashment, was dishonoured. 
The appeJlant-company moved an application under section 151, 
read With section 22 or the Sick Industrial Companies (Special Provisions) 
Act, 1985 for stay of the eviction proceedings on the ground that the 
company was declared a sick industrial company by the Board and a 
H 
scheme under Section 16 of the Act was under preparation. 
-
~ 
y 
I 
~ 
't 
-
-
I 
' 
CHAMUNDI MOPEDS v. CHURCH S.l.T.A 
1001 
The trial court rejected the tenant-company's application holding A 
that section 22 of the Act had no application inasmuch as proceedings insti· 
toted by the landlord for recovery of possession of the premises, of which a 
sick industrial company was a tenant, was not included among the proceed-
ings which were required to be suspended under section 22(1) of the Act. 
The trial court allowed the eviction petition of the landlord- respon~
Excerpt shown. Read the full judgment & AI analysis in Lexace.