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Issues: (i) Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 applied to the pending winding up proceedings and interim applications. (ii) Whether the winding up petition and judge's summonses were liable to be dismissed or treated as abated, or only suspended and kept in abeyance. (iii) Whether the ad interim injunction orders were automatically suspended or required modification.
Issue (i): Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 applied to the pending winding up proceedings and interim applications.
Analysis: The company had been declared a sick industrial company and the Board was seized of the matter under sections 15 to 18 of the Act. The statutory scheme contemplated inquiry, possible preparation of a rehabilitation scheme, and wide powers in the Board to consider measures including sale of assets. Section 22, which suspends winding up proceedings during the pendency of the statutory process, was held to be attracted even though the scheme was still under preparation at the instance of the company and not yet under implementation by an operating agency.
Conclusion: Section 22 applied and protected the company from further coercive winding up steps without the requisite consent.
Issue (ii): Whether the winding up petition and judge's summonses were liable to be dismissed or treated as abated, or only suspended and kept in abeyance.
Analysis: The language and purpose of section 22 indicated suspension, not extinction, of the proceedings. The marginal note and the operative part of the provision showed that the proceedings could revive with consent of the Board or the appellate authority, or when the statutory conditions ceased to exist. Section 31 did not compel a contrary result. The petition therefore remained on the file but could not proceed further during the statutory bar.
Conclusion: The winding up petition and judge's summonses were not dismissed or abated, but stood suspended and adjourned sine die, subject to revival in accordance with law.
Issue (iii): Whether the ad interim injunction orders were automatically suspended or required modification.
Analysis: The earlier injunctions did not lapse automatically merely because the final hearing was stayed by section 22. At the same time, the orders had to be harmonised with the Board's statutory functions under the Act. The company could deal with assets only with prior leave of the Board, and the Board's consideration, sanction, or implementation of a scheme was not to be obstructed by the court's injunctions. Further, if a sanctioned scheme authorising sale of properties came into force, the injunctions would cease.
Conclusion: The ad interim orders were modified, not vacated, and were to continue subject to the stated limitations and the supremacy of the Board's statutory process.
Final Conclusion: The statutory sickness regime prevailed over the pending winding up proceedings, which were kept in suspension rather than terminated, while the interim restraints were adjusted to allow the rehabilitation process to proceed under the Board's control.
Ratio Decidendi: Where an industrial company is under inquiry or scheme consideration under the sick industrial companies statute, section 22 suspends pending winding up proceedings rather than causing dismissal or abatement, and interim court orders must yield to the Board's statutory rehabilitation powers.
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