Case Note & Summary
The plaintiffs, Pramerica Asset Managers Pvt. Ltd. and others, filed two summary suits against Deccan Chronicle Holdings Ltd. for recovery of Rs. 25 crores each, based on written contracts for commercial papers and a letter of confirmation. The defendant applied for reference under SICA, but BIFR declined registration. The defendant appealed to AAIFR, which was pending. The defendant argued that under Section 22 of SICA, the suits could not proceed. The court held that since BIFR had not registered the reference, the company was not a sick industrial company, and the pendency of an appeal did not attract Section 22. The court also found that the defendant had no triable issues and granted summary judgment in favor of the plaintiffs with interest at 18% per annum.
Headnote
A) Sick Industrial Companies Act - Suspension of Legal Proceedings - Section 22 SICA - The court considered whether the pendency of an appeal before AAIFR against BIFR's order declining registration of a reference under Section 15(1) of SICA suspends recovery suits. Held that since BIFR had declined registration, the company is not a 'sick industrial company' and Section 22 does not apply; the mere pendency of an appeal does not revive the bar. (Paras 1-10)
B) Summary Suit - Order 37 CPC - Leave to Defend - The court examined whether the defendant had raised triable issues entitling it to unconditional leave to defend. Held that the defendant's contentions regarding SICA bar and other defences were not bona fide and did not raise any triable issue; thus, the plaintiffs were entitled to summary judgment. (Paras 11-15)
Issue of Consideration
Whether the pendency of an appeal before AAIFR against BIFR's order declining registration of a reference under SICA operates to suspend the present summary suits for recovery of money under Section 22 of SICA.
Final Decision
The court allowed the summonses for judgment and decreed the suits in favor of the plaintiffs with interest at 18% per annum from the date of filing until realization.
Law Points
- Section 22 of SICA does not bar recovery suits where BIFR has declined registration
- pendency of appeal before AAIFR does not automatically suspend proceedings
- summary suit under Order 37 CPC can be decreed if defendant fails to show triable issues
Case Details
2016 LawText (BOM) (02) 39
Summons for Judgment No. 32 of 2013 in Summary Suit No. 280 of 2013 and Summons for Judgment No. 71 of 2013 in Summary Suit No. 804 of 2013
Mr. Rohan Rajadhyaksha with Shahen Pradhan, Ms. Khursheed Vazifdar i/b. J. Sagar Associates for Plaintiffs; Mr. Rohan Cama with Sapana Rachure, Ashish Pyasi and Ms. Ekta Tripathi i/b. Dhir & Dhir Associates for Defendant
Pramerica Asset Managers Pvt. Ltd. & Ors.
Deccan Chronicle Holdings Ltd.
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Nature of Litigation
Summary suits for recovery of money based on written contracts for commercial papers and a letter of confirmation.
Remedy Sought
Decree for Rs. 25 crores each with interest at 18% per annum.
Filing Reason
Non-payment of maturity proceeds of commercial papers and dishonour of cheques.
Previous Decisions
BIFR declined registration of defendant's reference under SICA; appeals to Secretary and Chairman BIFR dismissed; writ petition pending before Delhi High Court; appeal before AAIFR pending.
Issues
Whether the pendency of an appeal before AAIFR against BIFR's order declining registration suspends the present suits under Section 22 of SICA.
Whether the defendant is entitled to leave to defend the summary suits.
Submissions/Arguments
Plaintiffs argued that BIFR having declined registration, the company is not a sick industrial company and Section 22 does not apply.
Defendant argued that the pendency of appeal before AAIFR attracts Section 22 and the suits cannot proceed without AAIFR's consent.
Ratio Decidendi
Section 22 of SICA applies only after a reference is registered by BIFR; mere pendency of an appeal against an order declining registration does not attract the bar. The defendant failed to raise any triable issue, hence summary judgment is warranted.
Judgment Excerpts
These two summonses for judgment are taken out in two summary suits each praying for a decree in the sum of Rs.25 crores along with interest at the rate of 18% per annum.
By an order dated 24 April 2014, the Board for Industrial and Financial Reconstruction (‘BIFR’) declined to register the Defendant’s reference.
It is the case of the Defendant that by virtue of pendency of this appeal, under the provisions of Section 22 of SICA, the present suits, which are for recovery of money, ought not to be proceeded with except with the consent of AAIFR.
Procedural History
Plaintiffs filed summary suits in 2013. Defendant applied for SICA reference; BIFR declined registration on 24 April 2014. Defendant appealed to AAIFR (pending). Defendant also filed writ petition in Delhi High Court. Summonses for judgment filed; court first considered the SICA bar issue.
Acts & Sections
- Sick Industrial Companies (Special Provisions) Act, 1985: Section 15(1), Section 22
- Board for Industrial and Financial Reconstruction Regulations, 1987: Regulation 19, Regulation 19(8)(1), Regulation 19(8)(2)
