Special sick-company law overrides general company law; pending winding-up proceedings are stayed, not abated, during rehabilitation process.

The Sick Industrial Companies (Special Provisions) Act, 1985 was treated as a special, later statute governing detection, revival and rehabilitation of sick industrial companies, and its non obstante clauses in sections 22(1) and 32(1) were held to prevail over the general winding-up and distribution regime under the Companies Act, 1956, including section 529A. Pending winding-up proceedings were held not to abate on initiation of inquiry, scheme or appeal proceedings under the special Act; they are only stayed during the statutory process and may be revived or continued with permission after that process concludes.

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Issues: (i) Whether the Sick Industrial Companies (Special Provisions) Act, 1985 prevails over the Companies Act, 1956 in case of inconsistency and whether the non obstante clauses in sections 22(1) and 32(1) override section 529A of the Companies Act, 1956; (ii) Whether a winding up petition stands abated on initiation of proceedings under sections 16, 17 or 18, or during pendency of an appeal under section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985, or is only to be stayed.

Issue (i): Whether the Sick Industrial Companies (Special Provisions) Act, 1985 prevails over the Companies Act, 1956 in case of inconsistency and whether the non obstante clauses in sections 22(1) and 32(1) override section 529A of the Companies Act, 1956.

Analysis: The special enactment was held to be designed for detection, revival and rehabilitation of sick industrial companies, whereas the Companies Act provisions relied upon dealt generally with winding up and distribution of assets. On that basis, the special statute was treated as operating in a different and overriding field. The later non obstante clauses in sections 22(1) and 32(1) were held to prevail over the earlier non obstante clause in section 529A because the special Act was both later in point of time and specific in subject matter.

Conclusion: The Sick Industrial Companies (Special Provisions) Act, 1985 prevails over the Companies Act, 1956, and the non obstante clauses in sections 22(1) and 32(1) override section 529A of the Companies Act, 1956.

Issue (ii): Whether a winding up petition stands abated on initiation of proceedings under sections 16, 17 or 18, or during pendency of an appeal under section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985, or is only to be stayed.

Analysis: The court distinguished between an embargo on proceeding further and automatic abatement. It held that the statutory language does not compel dismissal of already pending winding up proceedings as dead proceedings. The proper construction is that such proceedings are frozen during the pendency of the statutory inquiry, scheme, or appeal, and may be continued or revived only with the permission of the Board or after conclusion of the proceedings under the special Act.

Conclusion: A winding up petition does not abate on initiation of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985, or during pendency of an appeal under section 25, and it is only to remain stayed and consigned to record.

Final Conclusion: The petition was not extinguished by reason of the sick company proceedings, but its further progress was suspended until the statutory process under the special enactment concluded or permission for revival was obtained.

Ratio Decidendi: Inconsistency between the Companies Act and the Sick Industrial Companies (Special Provisions) Act, 1985 is resolved in favour of the special, later statute, and pendency of proceedings under that Act merely suspends, rather than abates, pending winding up proceedings.

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