Statutory suspension of winding up under sick company law prevents coercive action while appeal remains pending.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends winding up and other coercive proceedings against a sick industrial company while an inquiry, scheme consideration, or appeal is pending, unless consent is obtained from the competent statutory authority. The provision is construed broadly to preserve the Act's revival and rehabilitation objective and to prevent steps that would defeat the statutory process. Because the winding up order was made before the Board had finally determined the matter and while the appeal remained pending, it was barred by section 22 and could not stand. The company court was required to await the appellate decision, subject to the limited protective conditions regarding possession and management.

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Issues: Whether the winding up order could be sustained when a reference under the Sick Industrial Companies (Special Provisions) Act, 1985 was pending before the Board for Industrial and Financial Reconstruction and an appeal against the Board's opinion was pending before the Appellate Authority for Industrial and Financial Reconstruction.

Analysis: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 gives statutory protection to a sick industrial company during the pendency of an inquiry, scheme consideration, or appeal under the Act. The provision is to be construed broadly so that winding up and other coercive steps remain suspended unless the competent authority grants consent. The object of the special enactment is revival and rehabilitation of the sick unit, and coercive proceedings that would frustrate that objective cannot continue while the statutory process is alive. On the facts, the winding up order was passed before the Board had finally determined the matter and while the statutory appeal remained pending.

Conclusion: The winding up order was barred by section 22 and could not stand.

Final Conclusion: The appeal succeeded, the winding up order was set aside, and the company court was directed to await the final decision of the appellate authority while the limited protective conditions regarding possession and management were maintained.

Ratio Decidendi: During the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985, section 22 suspends winding up proceedings and other coercive actions against the sick industrial company unless consent is obtained from the competent statutory authority.

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