Mukul Mudgal, J.:— This petition has been filed by the petitioner under section 9 of the Arbitration and Conciliation Act, 1996. The petitioner has prayed that interim orders be passed restraining the respondents from selling, parting with possession or transferring the waste heat recovery system equipment, leased by the petitioner to the respondents and has further sought relief due to the defaults of the respondents in repayment of lease rentals and, therefore, sought permission for the receiver to be appointed by this court to take over the possession of the said equipment which was given on lease to the respondents under lease agreement dated March 24, 1993. This application has been resisted by the respondents/lessees by stating in their reply that the appointment of a receiver is hit by the provisions of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the “said Act”).

2. Learned counsel for the petitioner has relied upon a judgment of the learned single judge of this court in Credit Capital Finance Corporation v. Foremost Industries Ltd., [1996] 87 Comp Cas 251; AIR 1996 Delhi 310. Construing the judgment of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, [1992] 75 Comp Cas 440 (SC), the learned single judge of this court held (page 255):

“This provision shows that it is attracted only when the proceeding's are with respect to any of the properties of the industrial company. In the present case, the leased equipment cannot be said to be the property of the company. The lease agreement between the parties shows that the ownership of the equipment-subject-matter of lease throughout remains with the lessor, in the present case the plaintiff. When the ownership of the equipment subject-matter of the lease agreement remains vested with the plaintiff, it cannot be said that the present proceedings relate to property of the industrial company.”

3. The learned single judge further held as follows (page 255):

“In taking this view, I find support from a decision of the Supreme Court in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, [1992] 75 Comp Cas 440; (1992) 3 SCC 1 : AIR 1992 SC 1439. This was a case of lease of a property in favour of a company which was under the SICA. It was held that leasehold rights in a property cannot be said to be a property of the sick industrial company. The application is dismissed.”

4. Learned counsel for the petitioner has further relied upon a judgment of the learned single judge of this court in GE Capital Transportation Financial Services Ltd. v. Dee Pharma Ltd., [1998] 76 DLT 273; [1999] 96 Comp Cas 192 to contend that in case of ownership of machinery which vested with the financial company by which the equipment has been leased out, the provisions of section 22 would not apply because such provisions only apply to the property of the lessee company and the equipment which was leased could not be said to be the property of the company. The learned single judge has after construing the clauses of the lease of the equipment held as follows (page 196):

“A perusal of these clauses shows that the ownership of the machinery vested with the petitioner through possession of the same was with the respondent. Merely putting the possession of the machinery at the disposal of the respondent by no stretch of imagination would mean that the ownership of the property vested in the respondent-company. Since the respondent-company is not the owner of the machinery in question, therefore, mere registering of the case by the BIFR would not disentitle this court to pass an order as prayed for by the petitioner because the property does not belong to the respondent-company. In this regard, I am supported by the decision of this court in the case of Credit Capital Finance Corporation v. Foremost Industries Ltd., [1996] 87 Comp Cas 251. In that case, the plaintiff had entered into an agreement of lease of certain equipment in favour of the defendant-company and filed a petition under section 20 of the Arbitration Act for appointment of an arbitrator. Receiver was appointed in respect of the leased equipment. The defendant-company filed two applications—one was a petition under section 446 of the, Companies Act and the second was an application contending that under section 22 of the SICA receiver could not have been appointed. This court after interpreting section 22 of the SICA came to the conclusion that the provisions of section 22 would be attracted only when the proceedings were in respect of any of the properties-of the industrial company. Since ownership of the equipment subject-matter of lease throughout remained with the petitioner in that case, therefore, appointment of receiver was upheld because section 22 was not attracted.”

5. Learned counsel for the petitioner has submitted that these observations which were upheld by the learned Division Bench in Company Appeal No. 29 of 1998 by the order dated October 9, 1998, apply with full force to the facts of the present case. The petitioner has also relied upon the judgment of the learned single judge in the case of Kotak Mahendra Finance Ltd. v. Deve Paints Ltd., AIR 1997 Bom 401, to contend that section 22 would not apply to the facts of the present case. The Bombay High Court held that financed vehicles which are not owned by the sick company do not fall within the purview of section 22. The learned single judge held as follows (page 404):

“The answerable question, therefore, is whether the properties which are not owned by the sick industrial undertaking’, are covered under section 22(1) of the Act of 1985? If the finance company resorts to recovery of its properties, viz., its vehicles which have been given on lease to the lessee company, it cannot be said that it is property of lessee company (sick industrial undertakings) or it is covered under section 22(1) or such recourse can be equated with the kind of proceedings contemplated under section 22(1). The expression ‘against the properties’ occurring in section 22(1) is not without significance because it implies that action of winding up or for execution, distress or such like proceeding's must be against the property of the sick industrial company. It is true that by the Sick Industrial Companies (Special Provisions) Amendment Act, 1993, section 22(1) was amended and, ‘and no suit for the recovery of money or for the instrument of any security, against the industrial company or guarantee in respect of any loans or advances granted to the industrial company’ was inserted after, ‘no proceeding's for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of receiver in respect thereof, but the said amendment cannot be of any help to the lessee company because as observed above, so far as finance company is concerned it has not filed any suit against the lessee company for recovery of money against the industrial company or for enforcement of any security against the lessee company for enforcement of guarantee in respect of any loans given to the lessee company or for any advance granted to the lessee company.”

6. The bar contemplated by the relevant portion of section 22 of the Act reads as under:

“… no proceeding's for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof.”

7. Thus even section 22 of the Act in terms refers only to the properties of the company. The plea of the respondents, if accepted would defeat the very purpose of leasing out the equipment by the petitioner as the leased equipment was purchased initially by the petitioner-company from its own funds and was then leased out to the respondent-company. Such a construction would affect unfairly the rights of a company which the owner of the leased equipment. Such a construction is, therefore, not warranted as the lessee company would in such an event not merely deprive the lessor company from receiving the instalments due, but also deprive it from taking steps to secure/possess its own equipment in respect of which the sick company has defaulted in making the payments.

8. In similar circumstances in the case of Jindal Menthol and Investments Ltd. v. Prakash Industries Ltd. (O.M.P No. 323 of 1999, dated 8-5-2000), this court has already appointed a receiver by the judgment dated May 8, 2000.

9. In this view of the matter, I am satisfied that the ownership of the leased equipment in the present case in accordance with the agreement between the parties clearly remained with the petitioner financing company. The provisions of section 22 would, therefore, not apply to the facts of the present case. The other objection raised by the respondents that the equipment is immovable property is fallacious as the equipment was leased out as movable property. The respondent having affixed it to the ground would not make it immovable property. In any event the lease period having expired on March 23, 1998, the said objection does not survive. In this view of the matter, the appointment of the receiver to secure the leased equipment cannot be resisted by the respondents and it is, therefore, directed that the receiver will take possession of the said leased equipment. The receiver would be free to store/use the equipment at his discretion. Counsel for the petitioner has informed me that the arbitration proceedings in this case are already going on before the arbitrator, Mr. Ved Jain. Arbitrator to give his award preferably within four months from today.

10. The petition is thus disposed of accordingly.