Sick industrial company protection: winding-up petition filed without prior Board consent was held not maintainable.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 bars winding-up proceedings against a sick industrial company while an inquiry under section 16 is pending or a scheme under section 17 is under preparation, consideration or implementation, unless the Board grants consent. Where the company had already been declared sick before the winding-up petition was filed, prior consent of the Board was mandatory. The provision operates as a protective statutory scheme that postpones creditor remedies rather than extinguishing them, so a petition filed without such consent was not maintainable and had to be dismissed.

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Issues: Whether a winding-up petition filed against a company declared sick by the Board under the Sick Industrial Companies (Special Provisions) Act, 1985, without prior consent of the Board, is maintainable.

Analysis: Section 22(1) creates a clear bar against the institution or continuation of winding-up proceedings where an inquiry under section 16 is pending or a scheme under section 17 is under preparation, consideration, or implementation, unless the Board grants consent. The expression "shall lie or be proceeded with further" distinguishes between proceedings instituted after the reference and proceedings already pending when the reference is made. Where the company was already declared a sick industrial company before the petition was filed, prior consent of the Board was mandatory. The provision was treated as a protective statutory scheme postponing creditor remedies, not extinguishing them, and the authorities relied upon supported dismissal where no consent had been obtained.

Conclusion: The winding-up petition filed without prior consent of the Board was not maintainable and was liable to be dismissed.

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