IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN WEDNESDAY, THE 26TH MAY 2010 / 5TH JYAISHTA 1932 RFA.No. 194 of 2006() -------------------------------- OS.618/2005 of II ADDL.SUB COURT,ERNAKULAM .................... APPELLANT/PLAINTIFF: ---------------------------------- THE FACT MANAGERIAL STAFF HOUSE CONSTRUCTION CO-OPERATIVE SOCIETY LTD.NO.E.243, SANTHINANGAR ANNEXE, RAJAGIRI P.O., SOUTH KALAMASSERY-683 104, REPRESENTED BY ITS SECRETARY M.K. PARAMESWARANKUTTY MENON. BY ADV. SRI.P.SANTHALINGAM, SENIOR ADVOCATE SRI.S.SHARAN RESPONDENT(S): DEFENDANTS: ------------------------------------------------ 1. SUDASRSAN CLAY AND CERAMICS LTD., (OLD STANDARD POTTERIES COMPANY) SUDARSAN BUILDINGS, CHAKKORATHKULAM, CALICUT-673 011. 2. T. MURUGAN, DIRECTOR, SUDARSAN CLAY AND CERAMICS LTD., (OLD STANDARD POTTERIES COMPANY), SUDARSAN BUILDINGS, CHAKKORATHKULAM, CALICUT-673 011. 3. SHRI.M. VELAYUDHAN, MANAGING DIRECTOR, SUDARSAN TRADING COMPANY, 14/27, WHITES ROAD, SUDARSAN BUILDING, RAYAPETA, CHENNAI-600 014. 4. SHONEY SANIL, DIRECTOR, SUDARSAN CLAY AND CERAMICS LTD., 3RD FLOOR, NORTH SQUARE, PARAMARA ROAD, COCHIN-18. R.F.A. NO.194/2006 5. SAFE CARE ASSOCIATES, 3RD FLOOR, NORTH SQUARE, PARAMARA ROAD, COCHIN-18. 6. T.S. SANIL, PARTNER, SAFE CARE ASSOCIATES, 3RD FLOOR, NORTH SQUARE, PARAMARA ROAD, COCHIN-18. 7. T.P. MURALEEDHARAN (DIRECTOR), SUDARSAN CLAY AND CERAMICS LTD., AND CHIEF EXECUTIVE, SAFE CARE ASSOCIATES, 3RD FLOOR, NORTH SQUARE, PARAMARA ROAD, COCHIN-18. ADV. SRI.E.K.NANDAKUMAR R2 BY ADVS. SRI.K.PADMANABHAN R3 BY SRI.K.P.DANDAPANI, SENIOR ADVOCATE R4 BY ADVS. SRI. P.J.ANTONY JOSEPH MARIADAS R5 & R6 BY SRI.R.PADMARAJ, SRI.K.M.VIKAS. THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 26/05/2010, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: tss THOTTATHIL B.RADHAKRISHNAN & S.S.SATHEESACHANDRAN, JJ. ------------------------------------------- R.F.A.No.194 OF 2006 ------------------------------------------- Dated this the 26th day of May, 2010 JUDGMENT Thottathil B.Radhakrishnan, J. 1.This appeal is by the plaintiff which is a society registered under the Kerala Co-operative Societies Act, 1969, hereinafter referred to as the 'KCS Act”, for short. 2.Sudarsan Clay & Ceramics Ltd., hereinafter, the 'company', for short, was involved in proceedings before the BIFR and AAIFR under the Sick Industrial Companies (Special Provisions) Act, 1985, hereinafter, 'SICA', for short. The BIFR had enquired into the affairs of the company in terms of SICA. It concluded that the company is sick. Proceedings followed and ultimately, at one point of time, BIFR came to the conclusion that different schemes which were sought to be pushed through did not actually effectuate rehabilitation RFA.194/06 2 of the company and ultimately the schemes having failed, it proposed to issue winding up notice (WUN). A show cause notice was issued in that regard. The company showed cause. BIFR was not satisfied. It took final decision to make a reference to the competent High Court in terms of the Companies Act. A bunch of appeals were carried before the AAIFR against that decision. 3.In the interregnum, the society entered into an agreement for purchase of some lands of the company. The first among the agreements between the society and the company was on 7.7.2004. When that stood yet to be performed, another agreement for sale was entered into. 4.The society filed O.S.No.618/05 before the Sub Court, Ernakulam seeking specific performance of the agreement for sale. This appeal arises from that suit. The plaint contains clear averments to the effect that proceedings in relation to the company are pending with BIFR. The plaintiff has RFA.194/06 3 pleaded that the agreement entered into was with a sick company and that in terms of proceedings of BIFR, the company had to make certain payments. Obviously therefore, the said statements in the plaint made it categorically appear that the plaint was barred in terms of Sub-section 1 of Section 22 of SICA. The company took the plea that the suit is hit by the provisions in Sections 22 and 26 of SICA and the learned Subordinate Judge, after hearing the parties on that issue, held that the suit is not maintainable in view of section 26 of SICA. Challenging that judgment and decree, the society has filed this appeal. 5.We may record that W.P(C).17143/07 filed by the appellant herein and W.P(C).17155/07 filed by the association of the members of the appellant society were also heard today and disposed of by a separate judgment. 6.Heard Senior Adv.Sri.P.Santhalingam for the society, Sri.Dayananda Prabhu for its members and Senior advocates RFA.194/06 4 Sri.L.Nageshwara Rao and Sri.A.M.Shafeeque for the company. 7.In so far as this RFA is concerned, we are of the view that the court below ought not to have decided the question of maintainability of the suit with reference to Section 26 of SICA. Sub-section 1 of Section 22 of SICA stood staring at the society requiring it to institute a suit against the company involved in the SICA proceedings, only after obtaining leave of BIFR. This is the clear provision in Section 22(1) of SICA, which, among other things, states that no suit for recovery of money or for enforcement of any security against the industrial company shall lie except with the consent of the BIFR or AAIFR as the case may be. Obviously therefore, the society's suit could not have been instituted without the leave of BIFR. This is not because Section 26 of SICA is a bar to a suit, but since the bar under Section 22(1) is to the very institution of the suit and therefore, in our considered view, the society could have filed RFA.194/06 5 a suit by instituting a plaint, if at all, only after obtaining the consent of the BIFR in terms of the provisions in section 22 (1) of SICA. The plaint ought to have been hence rejected in terms of Order 7 Rule 11 (d) of C.P.C. For the aforesaid reasons, we set aside the decree and judgment impugned in this RFA and remit the case for re- consideration to enable the court below to reject the plaint. This process would also enable the plaintiff society to get refund of the court fee paid by it. We are also of the view that the institution of the suit and the RFA in hand were bonafide. On account of this order of remand, the court fee paid on this appeal is ordered to be refunded to the appellant. Sd/- THOTTATHIL B.RADHAKRISHNAN, Judge. Sd/- S.S.SATHEESACHANDRAN, Judge. kkb.