ITEM NO.1(PH)            Court No.6               SECTION IVA

           S U P R E M E   C O U R T   O F   I N D I A                          RECORD OF PROCEEDINGS                      Petition(s) for Special Leave to Appeal (Civil) No(s).12148-12149/2007

(From the judgment and order dated 28.07.2005  SHREE SAJJAN MILLS LTD.& ORS.                        Petitioner(s)

                     VERSUS

MUNICIPAL CORPORATION,RATLAM                         Respondent(s)

(With appln(s) for c/delay in filing SLP and prayer for interim relief and office report ))

Date: 28/04/2009  These Petitions were called on for hearing today.

CORAM :         HON'BLE MR. JUSTICE ALTAMAS KABIR         HON'BLE DR. JUSTICE CYRIAC JOSEPH  

For Petitioner(s)                      Mrs.B.Sunita Rao,Adv.

For Respondent(s) Mr. H.K. Puri,Adv. Ms. Priya Puri,Adv.

          UPON hearing counsel the Court made the following                                O R D E R

                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)

O R D E R

          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  

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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  

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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   

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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  

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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.

                                  .....................J.                                                    ( ALTAMAS KABIR )             

     .....................J.          ( CYRIAC JOSEPH )

New Delhi, April 28,2009.