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Issues: (i) Whether proceedings in the suit were liable to be stayed under Section 446 of the Companies Act, 1956 on the ground that a winding up order and provisional liquidator had come into operation. (ii) Whether the suit proceedings were liable to be stayed under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 in respect of the leased equipment.
Issue (i): Whether proceedings in the suit were liable to be stayed under Section 446 of the Companies Act, 1956 on the ground that a winding up order and provisional liquidator had come into operation.
Analysis: Section 446 is attracted only when a winding up order has been made or a provisional liquidator has been appointed, so that pending proceedings against the company cannot continue without leave of the company court. The order relied upon was conditional, and the time for deposit had been extended by mutual consent before the condition for operation of the winding up order could be triggered. On that basis, the winding up order never became operative and no provisional liquidator came into office.
Conclusion: The requirements of Section 446 were not satisfied, and no stay of the suit proceedings was warranted. The application was dismissed against the applicant.
Issue (ii): Whether the suit proceedings were liable to be stayed under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 in respect of the leased equipment.
Analysis: Section 22 applies only where the proceedings relate to the property of the industrial company. The equipment in question was under a lease agreement under which ownership remained with the lessor. Leasehold arrangements of this nature do not convert the lessor's property into property of the sick industrial company. The proceedings therefore did not concern the company's property within the meaning of the provision.
Conclusion: Section 22 was inapplicable, and the request for stay was rejected. The application was dismissed.
Final Conclusion: Both stay applications failed because neither the company-law bar under Section 446 nor the SICA bar under Section 22 was attracted on the facts, leaving the suit proceedings to continue.
Ratio Decidendi: Section 446 of the Companies Act, 1956 operates only when the winding up order or provisional liquidator is actually in force, and Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 applies only to proceedings against the property of the sick industrial company.
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