CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2009
(Arising out of SLP(C) Nos. 12148-12149/07)
Versus
Leave granted.
This appeal is directed against the judgment and order dated 28th July,
2005, passed by the Madhya Pradesh High Court at Indore in M.A.No.2275/2004 and
also against the order dated 11th January, 2007, passed in M.C.C.No.1194/2005.
The petitioner herein applied to the Board of Industrial and Finance
Reconstruction (BIFR) under the Sick, Industrial Companies (Special Provisions)
Act, 1985, hereinafter referred to as `SICA' for being registered as a sick company
and it was so registered on 21st November, 1989. It appears that a recommendation
was made by the BIFR for winding up of the company, but in appeal before the
Appellate Authority for Industrial and Financial Reconstruction (AAIFR), a scheme
for revival of the company was framed on 29th November, 1995. Pursuant to the
scheme, an Assets Sale Committee was constituted which invited tenders for sale of
surplus land belonging to the appellant company. The respondent-Corporation also
participated in the auction and was found to be the highest bidder in respect of
the plots tendered for sale. Under the terms and conditions of the sale, the highest
bidder was required to deposit 20% of the purchase price within thirty days from the
date of the auction and the remaining balance in two subsequent stages. At the very
initial stage, the Corporation failed to deposit 20% of the purchase price within the
stipulated time and, accordingly, the aforesaid Committee cancelled the offer and
forfeited the earnest money which had been deposited by the Corporation for
participating in the auction. Such cancellation and forfeiture was effected as far
back as in 1998.
Subsequently, in 2001, the Corporation filed a Suit for recovery of the
earnest money. Before the Civil Court, an application was filed by the appellant-
Company under Sections 9 and 151 of the Code of Civil Procedure read with
Section 26 of `SICA' objecting to the jurisdiction of the court to entertain the suit.
The application was considered by the learned District Judge, Ratlam, Madhya
Pradesh, before whom the suit was pending. Accepting the submissions made on
behalf of the Corporation, the learned District Judge came to the finding that in view
of Section 26 of SICA, the Civil Court had no jurisdiction to try any suit relating to
sick units against the proceedings of the Board and was of the view that the Plaint
should be returned to the plaintiff under Order 7 Rule 10 CPC. However, on the
request made on
behalf of the plaintiff, an order was made for return of the plaint for presentation
before the appropriate forum, including the Board, under the provisions of Order
VII Rule 10-A C.P.C.
Aggrieved by the order of the learned District Judge, dated 31st August, 2004, the respondent Corporation filed Misc.Appeal No.2275/2004. The High Court
considered the effect of Section 26 of the Sick Industrial Companies (Special
Provisions) Act, 1985 and held that the transaction between the Corporation and the
Company was outside the purview both of the BIFR and the AAIFR, and that the
same did not affect the implementation of the scheme. The High Court, accordingly,
allowed the appeal and set aside the order of the learned District Judge and
remanded the same to the learned District Judge to dispose of the suit on merits.
The said order of the High Court has been challenged in the present Special Leave
Petition.
Ms. Sunita Rao, learned Advocate for the appellant, tried to impress upon
us that the sale, which was sought to be effected by the Assets Sale Committee,
constituted a part of the process of implementation of the scheme and, accordingly,
under Section 26 of SICA, appropriate relief should have been sought for before the
Board and that the High Court had erred in holding otherwise.
Ms. Rao submitted that the sale being part of the scheme for revival of the
company, only the BIFR or the
AAIFR have jurisdiction to decide the question as to whether the earnest money
had been rightly forfeited or not. Ms. Rao relied on the decision of this Court in the
case of Jay Engineering Works Ltd. Vs. Industry Facilitation Council & Anr., 2006
(8) SCC677 in support of her submissions.
On the other hand, Ms.Priya Puri, learned Advocate, appearing for the
respondent-Corporation, submitted that the sale transaction may have been effected
towards the implementation of the scheme, but the question as to whether the earnest
money deposited by the Corporation was liable to be forfeited or not was not an issue which fell for the determination of the BIFR or the AAIFR under the aforesaid
Act and that the same was an issue of a purely civil nature to be decided by the Civil
Court. She submitted that no interference was called for with the judgment and
order of the High Court.
Having considered the submissions made on behalf of the respective parties,
we are unable to agree with Ms.Rao that the forfeiture of the earnest money in
respect of the sale transaction was part of the process for implementation of the
scheme as such. The provisions of Sections 15 to 19 of the SICA provide for the
BIFR to frame a scheme for revival of the company declared sick and, in that
connection, it has authority to decide all matters with regard to such a scheme. It is
in that context that Section 26 has to be read:
“26. Bar of jurisdiction.--- No order passed or proposal
made under this Act shall be
appealable except as provided therein and no civil court shall have
jurisdiction in respect of any matter which the Appellate Authority or
the Board is empowered by, or under, this Act to determine and no
injunction shall be granted by any court or other authority in respect
of any action taken or to be taken in pursuance of any power
conferred by or under this Act.”
We agree with the view expressed by the High Court that the forfeiture of
the earnest money by the Assets Sale Committee could not have been the subject
matter of a dispute within the meaning of Section 26 which either BIFR or AAIFR
has the jurisdiction to determine. Accordingly,
we see no reason to interfere with the judgment and order of the High Court
impugned in this appeal. The appeal is, therefore, dismissed. Consequently, the
order dated 11th January, 2007, rejecting the application filed on behalf of the
Corporation for recalling the order by the appellant company, does not call for any
interference.
New Delhi, April 28,2009.