State-run firm fined Rs.50,000 for frivolous plea

NEW DELHI - The Delhi High Court Monday imposed a fine of Rs.50,000 on public sector National Textile Corporation Limited for filing a frivolous petition.

The court told the company to recover the fine amount from the salaries of delinquent officials who pursued the case against an eviction order issued by a trial court against its unit.

“Frivolous litigation clogs the wheels of justice, making it difficult for courts to provide easy and speedy justice to the genuine litigants,” said Justice V.B. Gupta while dismissing the petition.

“Public sector undertakings (PSUs) should not indulge in mindless litigation and unnecessarily waste the time and public exchequer’s money,” he said.

“It is also due to the fact that PSUs, though having large number of legal personnel under their employment, do not examine the cases properly and force poor litigants to approach the court,” Justice Gupta said.

“A strong message is required to be sent to those litigants who are in the habit of challenging each and every order of the trial court even if the same is based on sound reasoning and also to those litigants who go on filing frivolous applications one after another,” the court said.

The company filed a suit against an eviction order passed by a trial court in March this year.

The company was based at Scope Complex in Lodhi Road for more than 20 years. The owner of the property got an eviction order from the trial court after the company failed to pay his dues.

In March 2010, the company filed an application for suspension of legal proceedings for eviction pending against it on the ground that it was a sick company.

It cited provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and said in its suit that the property owner should be asked to obtain prior consent of the Board for Industrial and Financial Reconstruction (BIFR) before proceeding in the matter.

Rejecting the contention, the court said: “Interestingly, in the written statement no such plea was taken. Now without amending the written statement, the petitioner cannot take a new and altogether different plea in the application in question.”

Counsel for the company contended that the purport of the SICA was to protect a sick company from legal proceedings which would foist any additional financial liability upon it and imperil the rehabilitation process.

But the court rejected the arguments on the ground that the suit filed by property owner was for recovery of rent and arrears, and not limited to eviction.

“The PSUs spend more money on contesting cases than the amount they might have to pay with regard to the premises which have been taken on rent by them. In addition there to, precious time, effort and other resources go down the drain in vain,” the court said.

“The PSUs are possibly an apt example of being penny wise, pound foolish,” the court said.