Section 22 sick company protection applies on registration of a reference, suspending pending winding up proceedings.

Registration of a reference under section 16(1) of the Sick Industrial Companies (Special Provisions) Act was treated as prima facie proof that an inquiry under section 16 was pending, and therefore attracted the protective bar under section 22(1). The statutory scheme was read as suspending further winding up action against a sick industrial company while the Board's inquiry and subsequent measures were ongoing. On that basis, pending winding up petitions could not proceed further and were closed, subject to the possibility of revival if the Board later permitted it.

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Issues: (i) Whether registration of a reference by the Board for Industrial and Financial Reconstruction under section 16(1) of the Sick Industrial Companies (Special Provisions) Act attracted the bar under section 22. (ii) What was the effect of section 22 on the pending winding up petitions.

Issue (i): Whether registration of a reference by the Board for Industrial and Financial Reconstruction under section 16(1) of the Sick Industrial Companies (Special Provisions) Act attracted the bar under section 22.

Analysis: The scheme of the Act showed that a reference under section 15 and its registration under section 16(1) formed part of the inquiry process for determining sickness and for taking further measures under sections 17 to 20. Section 22(1) was intended to operate where an inquiry under section 16 was pending, and the registration of a reference was treated as prima facie proof that such inquiry was pending. The court also noted the overriding and protective structure of the Act and the implied exclusion of ordinary winding up proceedings once the statutory process had commenced.

Conclusion: The registration of a reference under section 16(1) attracted section 22 and the bar became applicable.

Issue (ii): What was the effect of section 22 on the pending winding up petitions.

Analysis: Section 22(1) suspended further progress of winding up proceedings against the sick industrial company unless the Board consented. At the same time, the court considered the hardship to creditors and observed that the petitioners could seek appropriate relief from the Board and could also apply for revival if later permissible. In light of the statutory scheme, the winding up petitions could not proceed further and were therefore closed.

Conclusion: The winding up petitions were closed, with liberty to seek revival if the Board later permitted it.

Final Conclusion: The Act was held to bar further prosecution of the winding up petitions once the reference was registered, and the proceedings were brought to a close subject to the statutory mechanism under the Board.

Ratio Decidendi: Registration of a reference under section 16(1) of the Sick Industrial Companies (Special Provisions) Act is sufficient to show that an inquiry under section 16 is pending, thereby triggering the statutory suspension of winding up proceedings under section 22(1).

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