Sick industrial company protection unavailable without statutory reference; winding up upheld where no viable revival scheme existed.

Protection under the Sick Industrial Companies (Special Provisions) Act, 1985 was unavailable because the statutory reference mechanism had not been invoked: no reference under section 15(1) had been made and no inquiry under section 16 was pending, so the Act did not bar or defer the winding up proceedings. The court treated the language in section 15(2) as permissive, not mandatory, and held that the bank was not obliged to approach the Board before seeking winding up. The winding up order was upheld because the company had substantial liabilities, had ceased business for want of funds, and placed no viable rehabilitation or revival scheme before the court.

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Issues: (i) Whether the Sick Industrial Companies (Special Provisions) Act, 1985 applied so as to bar or defer the winding up proceedings; (ii) Whether the order directing winding up of the company required interference.

Issue (i): Whether the Sick Industrial Companies (Special Provisions) Act, 1985 applied so as to bar or defer the winding up proceedings.

Analysis: The company may have answered the description of an industrial company, but the statutory machinery for invoking the special protection of the Act had not been set in motion. A reference under section 15(1) had not been made by the board of directors, and no inquiry under section 16 was pending. The expression used in section 15(2) was treated as permissive, not mandatory, so the bank was not bound to move the Board before seeking winding up. The other provisions relied upon did not assist the company once section 15(1) was never invoked.

Conclusion: The Act was not attracted to the company or to the winding up proceedings, and the plea based on the Act failed.

Issue (ii): Whether the order directing winding up of the company required interference.

Analysis: The company had accumulated substantial liabilities, had ceased to carry on business for want of funds, could not generate finances from other sources, and had placed no viable rehabilitation scheme before the court. In the absence of any workable proposal for revival, continued existence would only increase its liabilities. The grounds based on possible local employment impact and the cited precedents were not made out on the facts.

Conclusion: The winding up order was upheld and no interference was called for.

Final Conclusion: The appeal was rejected and the winding up order remained undisturbed.

Ratio Decidendi: Protection under the special sickness legislation is unavailable unless the statutory reference mechanism is invoked, and where a company is unable to meet its debts and has no viable revival scheme, winding up is justified.

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