Punjab Wakf Board vs Surjit Singh & Ors

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. OF 2009 (Arising out of SLP(C) Nos. 12148-12149/07) SHREE SAJJAN MILLS LTD. & ORS. ...APPELLANT(S) Versus MUNICIPAL CORPORATION, RATLAM ..RESPONDENT (S) ORDER Leave granted.

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 -2- 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 -3- 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 31 st 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.

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.