FERTILIZER CORPORATION OF INDIA LIMITED & ORS. versus M/S COROMANDAL SACKS PRIVATE LIMITED

FERTILIZER CORPORATION OF INDIA LIMITED & ORS. versus M/S COROMANDAL SACKS PRIVATE LIMITED

The Court held that the suit for recovery instituted by the original plaintiff was not hit by the embargo under Section 22(1) SICA 1985 because, although BIFR proceedings were pending, the suit was a simple adjudicatory action to determine disputed contractual liability and did not threaten the assets or interfere with formulation or implementation of the rehabilitation scheme; therefore the decree is not coram non-judice. The High Court was correct to award 24% p.a. compound interest under the 1993 Act, but the period during which the defendant company was a sick company under SICA (06.11.1992 to 27.06.2013) is excluded for purposes of interest calculation. Interest is to be calculated...

Parties
Original Defendant: Fertilizer Corporation of India Limited & Ors.; Original Plaintiff: M/s Coromandal Sacks Private Limited
Jurisdiction
India
Judgment Date
26 April 2024
Procedural Posture
Civil Appeal / Appeal From High Court Judgment and Order Dated 10.06.2022
Outcome
Appeals disposed of
Legal Topics
Suspension of Legal Proceedings Under S.22(1) SICA 1985, Coram Non Judice, Compound Interest Under 1993 Act, Harmonious Construction, Mischief Rule, Ejusdem Generis
Sick Industrial Companies (special Provisions) Act, 1985 Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 Civil Procedure Statutory Interpretation Suspension of Legal Proceedings Under S.22(1) SICA 1985 Coram Non Judice Compound Interest Under 1993 Act Harmonious Construction +2 more

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Parties

Fertilizer Corporation of India Limited & Ors.

Original Defendant

M/s Coromandal Sacks Private Limited

Original Plaintiff

Procedural Posture

Civil Appeal / Appeal From High Court Judgment and Order Dated 10.06.2022

Legal Issues

  1. 1 Whether suspension of legal proceedings under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 extends to a civil suit for recovery of money when the debt claimed was not admitted by the sick company and whether a decree in favour of the plaintiff would be coram non-judice
  2. 2 Whether the High Court was correct in granting 24% p.a. compound interest (monthly compounding) on the principal decretal amount under the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 and the period for which such interest is payable

Ratio Decidendi

The Court held that the suit for recovery instituted by the original plaintiff was not hit by the embargo under Section 22(1) SICA 1985 because, although BIFR proceedings were pending, the suit was a simple adjudicatory action to determine disputed contractual liability and did not threaten the assets or interfere with formulation or implementation of the rehabilitation scheme; therefore the decree is not coram non-judice. The High Court was correct to award 24% p.a. compound interest under the 1993 Act, but the period during which the defendant company was a sick company under SICA (06.11.1992 to 27.06.2013) is excluded for purposes of interest calculation. Interest is to be calculated...

Court Disposition

Appeals disposed of

Orders

  • Impugned High Court judgment and order dated 10.06.2022 is upheld subject to modification: the period 06.11.1992 to 27.06.2013 is excluded from computation of interest under the 1993 Act
  • Interest to be calculated at 24% per annum with monthly compounding on amounts due, excluding period during which the defendant company was a sick company under the 1985 Act (06.11.1992 to 27.06.2013)