FERTILIZER CORPORATION OF INDIA LIMITED & ORS. [APPELLANTS]  Vs.

M/S COROMANDAL SACKS PRIVATE LIMITED  [RESPONDENT]

CIVIL APPEAL NOS. 5366-5367 OF 2024

(2JB, J.B. Pardiwala and Sandeep Mehta JJ., delivered by J. B. PARDIWALA, J.)

Facts: The present appeals arise from the impugned common judgment and order dated 10.06.2022 (“impugned judgment”) passed by the High Court of Telangana at Hyderabad partly allowing the Appeal Suit No. 808 of 2002 and Appeal Suit No. 913 of 2004 respectively preferred by the original defendants and the original plaintiff respectively against the judgment and decree dated 19.09.2001 passed by the Senior Civil Judge, Peddapalli in O.S. No. 37 of 1996 decreeing the suit partly in favour of the original plaintiff.

Issue: Whether the suspension of legal proceedings as envisaged under Section 22(1) of the 1985 Act would extend to a civil suit for recovery of money even if the debt sought to be proved in the plaint has not been admitted by the sick industrial company?

Arguments on behalf of counsel for appellant:

Ms. Malvika Trivedi, the learned senior counsel appearing on behalf of the original defendants submitted that the 1985 Act overrides the 1993 Act as the same was enacted in the larger public interest by the Parliament with a view to secure the directive specified under Article 39 of the Constitution. It was further submitted that the 1993 Act having been enacted to provide for and regulate the payment of interest on delayed payments to the small-scale industries, does not envisage a situation where an industrial undertaking becomes sick and requires a scheme for its revival.

Arguments on behalf of counsel for respondent:

Mr. Sundeep Pothina, the learned counsel appearing on behalf of the original plaintiff submitted at the outset that Section 22 of the 1985 Act is not applicable to the instant case as neither the debt came to be acknowledged, nor the name of the creditor company figured before the BIFR. Since, in the case on hand, the original defendants did not include the liability of the original plaintiff in their list of liabilities in accordance with Section 21(a)(i) of the 1985 Act nor in their book of accounts under Section 21(a)(ii) of the 1985 Act nor did it include the original plaintiff company in the list of creditors under Section 21(b) of the 1985 Act at the time of reference or thereafter, the jurisdictional bar available under Section 22 of the 1985 Act cannot be said to be applicable to the suit instituted by the original plaintiff.

Held: The court disposed off the present appeal and held that, “The suit instituted by the original plaintiff before the trial court was not hit by the embargo envisaged under Section 22(1) of the 1985 Act. Thus, the decree awarded in favour of the original plaintiff by the trial court and modified by the High Court, cannot be said to be coram nonjudice. and the High Court committed no error in awarding 24% interest to the original plaintiff on its dues as per the provisions of the 1993 Act.”