1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.910 OF 2008 Ganesh Benzoplast Ltd. .. Petitioner Versus Assistant Registrar Coop. Societies Ltd. & Ors. .. Respondents Mr.A.Y.Sakhare, Senior Advocate with Mr.Simil Purohit with Ms.Kejal Rasputra i/b.Little & Co. for petitioner Mr.P.K.Dhakephalkar, Senior Advocate with Prasad Lad & Ravi Goyenka i/b. M/s.Goyenka Law Associates for respondent No.4 Mr.R.M.Patne, A.G.P. for respondent Nos.1 to 3 Mr.K.P.Jain with Ketan Chotani for respondent Nos. 5 to 8 CORAM : S.C.DHARMADHIKARI, J. DATE : 22nd February 2008 P.C. . This writ petition under Article 226 and 2 227 of the Constitution of India is directed against the order passed by the Divisional Joint Registrar, Coop.Societies in Revision Application No.463 of 2007 rejecting the same. This revision application, copy of which is annexed as Annexure E prays prays for the following reliefs:- "(c)(ii) The respondents be ordered to hand over possession of flat No.102, at While Rose Coop.Housing Society Ltd. J.B.Nagar, Andheri (East), Mumbai 400 059 to applicant Nos. 3 and 4." 2. Petitioners are the original applicants to the said revision application. 3. Respondent Nos. 1 and 3 before me are formal parties and no reliefs are claimed against them. Respondent No.4 is a Coop.Bank whereas respondent No. 5 is company and respondent Nos.6 to 8 are its Directors. It is not disputed that 3 respondent No.5 is the principal borrower and respondent Nos. 6 to 8 as Directors of respondent No.5 (principal borrower), guaranteed the dues of respondent No.5 under certain facilities. Facilities granted by respondent No.4 to respondent No.5 need not be referred inasmuch as it is undisputed that the repayment could not be made by the principal borrower of the dues of respondent No.4 and that is how it proceeded to apply for recovery certificate. The Recovery certificate was granted by the Assistant Registrar on 30th December 2004. It is undisputed before me that the present petitioners are parties to the proceedings before the Assistant Registrar. 4. It is necessary to state that petitioner Nos. 1 and 2 are companies. It is pointed out that these companies are sick industrial companies and proceedings against them are pending before the B.I.F.R. Petitioner Nos. 3 4 to 5 are the directors of petitioner Nos. 1 and 2. 5. Insofar as petitioners are concerned, their role is, that the petitioner No.1 executed a counter guarantee to secure dues of respondent No.5. Petitioner Nos. 3 to 5 gave their personal guarantees as counter guarantees in favour of respondent No.4 and 5. The terms of guarantee read thus:- ". WHEREAS M/s.Ankul Silk Mills Pvt.Ltd. has applied to the Greater Bombay Coop.Bank Ltd. for opening irrevocable documentary credit for financing purchases of raw material by M/s.Ganesh Benzoplast Ltd. from M/s.Reliance Industries Ltd. to the tune of Rs.100 lakhs (One Crore)" ". WHEREAS the Greater Bombay 5 Coop.Bank Ltd. has agreed to open irrevocable documentary credit from time to time to the tune of Rs.100 lakhs (Rs. One Crore only)" ". Now M/s.Ganesh Benzoplast Ltd. is required to execute counter guarantee alongwith personal guarantee/security of its three directors for above arrangement" ". Now M/s.Ganesh Benzoplast Ltd. and its directors, Shri Shankarmal Pillani S/o.Shri Ghanshyamdas Pillani, Shri Ramesh Pillani S/o.Shri Shankarmal Pillani and Shri Ramakant Pillani S/o. Shri Shankarmal Pillani execute the Counter guarantee in favour of the Greater Bombay Coop.Bank Ltd. and M/s.Ankur Silk Mills Pvt.Ltd. on following terms and conditions:- 6 (1) M/s.Ganesh Benzoplast Ltd. will pay the bill amount of M/s.Reliance Industries Ltd. within 90 days from the date of bill to either M/s.Ankur Silk Mills Pvt.Ltd. or directly to the Greater Bombay Coop.Bank Ltd. under advise to M/s.Ankur Silk Mills Pvt.Ltd. (2) M/s.Ganesh Benzoplast Ltd. undertake to reimburse M/s.Ankur Silk Mills Pvt.Ltd. any interest, bank charges or any other sum charged by the Greater Bombay Coop.Bank Ltd. on any overdue payment; (3) M/s.Ganesh Benzoplast Ltd. will keep M/s.Ankur Silk Mills Pvt.Ltd. indemnified against any recovery proceeding launched by the Greater Bombay Coop.Bank Ltd. for non payment of bill 7 amount, as stated in para No.1 and interest, bank charges or any kind of damages claimed by the bank; (4) Shri Shankarmal Pillani S/o.Shri Ghanshyamdas Pillani, Shri Ramesh Pillani S/o.Shri Shankarmal Pillani and Shri Ramakant Pillani S/o.Shankarmal Pillani hereby jointly and severally execute their personal guarantee for due compliance by M/s.Ganesh Benzoplast Ltd. whatever is stated in para 1 to 3. As a token of their personal guarantee as stated above they are offering security as per schedule attached which can be forwarded by M/s.Ankur Silk Mills Pvt.Ltd. as and when required by the Greater Bombay Coop.Bank Ltd." 6. It is undisputed before me that Flat No.102 on First floor of a building known as 8 White Roze, J.B.Nagar, Andheri, Mumbai (attached premises) belongs to the petitioner Nos. 3 and 4 (Ramesh and Ramakant Pilani). 7. The revision application after narrating the above facts proceeds to allege that in execution of the recovery certificate, the Special Recovery Officer, issued demand notice on the petitioners and called upon them to make payment along with interest of the dues of respondent No.4. Since that was not complied with, he issued a notice before attachment dated 23rd November 2005 and the same was pasted on Flat No.102. The attachment notice states that the attached premises would be sold in execution of the Recovery Certificate. The attachment of Janakalyan Sahakari Bank Ltd. (another creditor) is also referred to. After narrating the facts relating to the attachment insofar as the material portion in the revision application is concerned, in para 7 it is stated that B.I.F.R. 9 reference in respect of petitioner Nos. 1 and 2 are pending. It is stated that the recovery proceedings which are initiated against these companies by respondent No.4 bank cannot proceed in the light of the bar under section 22 of the Sick Industrial Companies (Special Provisions) Act. (for short SICA). However, that stand of petitioners does not seem to be acceptable to respondent No.4 and correspondence went on between Advocates of the petitioners and respondent No.4. It is at that stage that the petitioners set out the attempt to sell the flat and forcible possession thereof. It is in such circumstances that the Revisional Authority was approached for staying any further recovery/execution proceedings against the applicants (petitioners or any of their properties) till the B.I.F.R. case No.104 of 2005 and 289 of 2004 is disposed of. The attachment with regard to Flat No.102 and jewellery and moveable properties was also 10 challenged. 8. This revision application was admittedly filed without complying with Section 154(2A) of the M.C.S.Act. Although, detailed arguments have been canvassed by Mr.Sakhare learned Senior Counsel appearing for petitioners with regard to the applicability of section 154(2A) of the M.C.S.Act to the subject revisional proceedings, I am of the view that assuming without admitting that these provisions apply, yet, on merits, order of Revisional Authority, requires no interference under Article 226 and 227 of the Constitution. 9. In the above circumstances, it is not necessary to consider the contention of Mr.Sakhare with regard to the applicability of section 22 of SICA to the properties of petitioner No.1 and 2. The contentions are noted herein. The first contention of Mr.Sakhare 11 appearing for petitioner is that the proceedings are under section 101 of the M.C.S. Act. The Revision Application was filed by the companies as well as the directors which are before B.I.F.R. These companies had given a counter guarantee which incorporates personal counter guarantee of the Directors of petitioner Nos. 1 and 2 as well. He submits that all of them are parties before the Assistant Registrar in proceedings under section 101 of the M.C.S. Act. He submits that recovery proceedings are for recovery of dues of the respondent No.4 bank which have been arising out of facilities granted to respondent No.5, the principal borrower. He submits that respondent No.5’s dues are secured by guarantees of their directors. He submits that respondent No.5 is not before B.I.F.R. nor is a sick industrial company within the meaning of the said term under SICA. However, counter guarantors viz., petitioner Nos. 1 and 2 being before B.I.F.R., section 22 of SICA would apply 12 qua them right from the time the recovery proceedings before the Assistant Registrar till the execution of the same. He submits that section 101 speaks of recovery of arrears and dues to coop.banks. Thus, recovery proceedings are, quasi judicial, to say the least. An enquiry is contemplated into the quantum of the arrears of liabilities. Such an enquiry partakes the character of a suit or in any event proceedings within the meaning of section 22 of SICA. Further, section 101 will have to be read with Rules 156 and 107. All these provisions read together would indicate that atleast to the extent of recovery proceedings contemplated by Rule 156 read with Rule 107, section 22 would be attracted, more so, against petitioner Nos. 1 and 2. He has relied upon the common parlance meaning of the term "Inquiry" appearing in section 101 and contended that attachment is not contemplated by this provision. It may not be a long drawn process but it is equivalent to a 13 suit. In such circumstances, when the petitioner Nos. 1 and 2 who are before B.I.F.R. are sought to be proceeded against, then, section 22 would apply. In such circumstances, the law laid down by the Supreme Court in the case of Patheja Patheja Patheja would be squarely applicable. The same being distinguished by another Bench of the Supreme Court would have no bearing insofar as subject petition. That apart, the judgement in the case of Patheja so also the latter two judge bench decision of the Supreme Court in the case of Zenith Steel Tubes & Industries Ltd. & Anr. Vs. SICOM Limited reported in (2008) 1 S.C.C. 533, has been now considered by another two judge bench and noticing the difference between the two division bench decisions and observations, the two judge bench decision which is latest in point of time has requested the Hon’ble Chief Justice of India to constitute a larger bench to resolve the controversy. In these circumstances, this Court should not proceed on the basis that the 14 latter two judge bench decision of the Supreme Court distinguishing the earlier two judge bench decision in Patheja’s case would bind this Court. 10. In support of the contentions reproduced above Mr.Sakhare relies upon the following decisions:- "(1) Zenith Steel Tubes & Industries Ltd. Vs. SICOM Ltd. (2008) 1 S.C.C. 533 (2) Maharashtra Tubes Ltd. Vs. State Industrial & Investment Corporation of Maharashtra Ltd. & Anr. (1993) 2 S.C.C. 144 (3) Morgan Securities & Credit (P) Ltd. Vs. Modi Rubber Ltd., (2006) 12 S.C.C. 642" (4) M/s.Patheja Bros. Forgings and Stamping and Anr. Vs. I.C.I.C.I. (A.I.R. 2000 S.C. 2553) (5) Vasant Jobanputra Vs. Bank of India Staff Sampada Coop.Housing Society Ltd. (2004) 4 Mh.L.J. 1093; (6) Kailash Nath Agarwal & Ors. Vs. Pradeshiya Industries and Inv.Corpo.U.P. (A.I.R. 2003 S.C. 1886) 11. On the other hand, Mr.Dhakephalkar, 15 learned Senior Counsel appearing for respondent No.4, Coop.Bank submits that the recovery proceedings are now final. During the course of recovery proceedings, no application was filed by the petitioner Nos. 1 and 2 to claim protection under section 22. The protection was not claimed till the execution proceedings commenced. Now, what has been sought to be done by the respondent No.4 is to refer to section 156(e) of the Act read with Rule 107, both of which speak of execution of the recovery certificate in the mode prescribed therein. It is at that stage and when the attachment was of the individual properties of Directors of petitioner Nos. 1 and 2 and when these are not subject matter of proceedings before B.I.F.R., then, no protection can be claimed of section 22. In other words, Mr.Dhakephalkar’s submission is that respondent No.5 is the borrower company which is not before B.I.F.R. Petitioner Nos. 1 and 2 have given counter guarantee and they are before B.I.F.R. 16 Their properties are not being proceeded against and attached in execution of recovery certificate. Flat No.102 is admittedly an individual property of a guarantor who has given individual guarantee in furtherence of the counter guarantee/corporate guarantee. By a far fetched process and misreading of section 22 they cannot claim any protection. Their properties clearly stand outside the purview of this decision and therefore order passed by the Divisional Joint Registrar does not require an interference. The view taken is in consonance with section 22. That view has also found favour with the learned Judge of this Court who had at interim stage rejected identical submissions. Mr.Dhakephalkar was at pains to point out that the prayers in the revision application, are read with the guarantees, copies of which are annexed to the petition, then, the extent of the liabilities of the petitioner would become clear. In such circumstances and even otherwise this is 17 not a fit case for this Court to exercise its writ jurisdiction. 23. With the able assistance of the learned Senior Counsel for both sides, I have perused the writ petition and annexures thereto. I have perused the revision application and the impugned order. I have also perused Rules 156 and 107. I have also perused section 22 of SICA and the judgements relied upon. 24. Upon a plain reading of section 22 it is apparent that a industrial company is dealt with under sub-section 1. Hence, other sub-sections of section 22 need not be referred to. "Industrial company" is defined in section 3(1)(e) to mean a company which owns one or more industrial undertaking. The term "Industrial undertaking" is defined in section 3(1)(f). What is provided by Chapter II is constitution of Board of Industrial Finance and Reconstruction 18 (BIFR) and the Appellate Bench. 25. Chapter III is entitled as "Reference, Enquiries and Schemes." Chapter III is the chapter in which section 15 falls and it speaks of reference to Board. Reference is to be made by an industrial company when it becomes sick. Section 16 contemplates enquiry into working of sick industrial companies by BIFR to determine whether it is sick and what is to be done with regard thereto is provided by section 17 which is entitled as "Powers of Board to make suitable order on completion of Enquiry". Section 18 speaks of preparation and sanction of scheme whereas section 19 deals with rehabilitation by giving financial assistance and section 19A deals with proceeding for continuing operation during enquiry. Section 20 speaks of winding up of sick industrial company whereas section 21 provides for operating agency to prepare complete inventory etc. of sick company. 19 26. Then comes section 22 wherein reference is made to sections 16 and 17 and further proceedings under section 25, all of which are in respect of industrial company which approaches the Board or Appellate Authority for taking any steps in the nature specified in sub-section 1. The argument before the section was amended in 1994 was that a suit for recovery of money or for enforcement of any security against industrial company was not within the purview of this provision. Consequently, such proceedings could have been maintained or proceeded with without consent of the B.I.F.R./A.A.I.F.R. The Legislature stepped in and provided that suit for recovery of money or for enforcement of any security against industrial company or for guarantee in respect of loans or advances granted to the industrial company are also covered and they cannot lie or be proceeded with except with consent of Board or the Appellate Authority. 20 27. I have perused the revision application and prayers therein. Admittedly, attachment is in respect of Flat No.102 which is the personal property of the Director of the petitioner No.1. Even if language of section 22(1) is stretched to cover the properties of petitioner Nos. 1 and 2 which are before the Board, yet, by such a process one cannot include the personal properties of the Directors of the petitioner before me. The prayers in the revision application so also the substantive paras must be read in the backdrop of the counter guarantee. So read, there is much substance in the contention of Mr.Dhakephalkar that section 22(1) would have no application. These are private properties of the Directors of two companies which are before B.I.F.R. These companies have counter guaranteed the dues of respondent No.4. Admittedly, companies’ properties are not covered by the attachment notice or the revision 21 application. 28. This being admitted factual position any larger question or issue as posed before the Supreme Court need not be examined in the facts and circumstances of this case. Upon plain reading of the counter guarantee, its terms and contents of the revision application, it is apparent to me that what is put in issue is the attachment of the flat belonging to the Director who has given individual guarantee. It is in such circumstances that I declined to decide the applicability of section 22 to the properties of petitioner Nos. 1 and 2 which may be attached in future. As and when they are sought to be proceeded against, whether Bar under section 22(1) of the SICA applies or not can be examined. Any longer issue or controversy need be gone into in the peculiar facts of this case. Assuming that the revision application could have been entertained without complying with section 22 154(2)(a) of the Act, yet, the conclusion reached cannot be said to be perverse or vitiated by any error apparent so as to call for interference in my writ jurisdiction. Petition is devoid of any merits and is accordingly dismissed. 29. Mr.Sakhare at this stage prays that the petitioner would like to consider their position in law so also whether they should take any further steps so as to avoid sale of properties. For this purpose, he prays that the sale may be stayed for six weeks. Mr.Dhakephalkar learned Senior Counsel appearing for respondent No.4 strongly opposes this and submits that since no payment is forthcoming, steps taken pursuant to the attachment need not be stayed. 30. However, the learned Senior Advocate for respondent No.4 states that the bank will not go ahead and sell the property for 12 weeks from today and that is sufficient protection according 23 to him. In the light of this statement, no stay orders are necessary. 31. It is also clarified at this stage that this Court’s disinclination to interfere with the revisional order would not in any manner prejudice or prevent the petitioner Nos. 1 and 2 from initiating appropriate proceedings either to challenge the recovery certificate or attachment and sale of their properties in future and all contentions therein including applicability of section 22 of SICA are kept open. (S.C.Dharmadhikari, J)