Section 22 protection under sick company law does not bar winding up for debt incurred after a rehabilitation scheme.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 protects implementation of a sanctioned rehabilitation scheme and does not extend to liabilities outside the scheme. Where the debt arose after the BIFR-sanctioned scheme, statutory protection did not bar proceedings against the company. On that basis, winding up proceedings based on subsequent indebtedness were maintainable, and BIFR consent was not required for their continuation.

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Issues: Whether winding up proceedings against a company should be stayed under the Sick Industrial Companies (Special Provisions) Act, 1985 when the debt relied on arose after the BIFR-sanctioned rehabilitation scheme.

Analysis: The bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 is intended to protect implementation of a sanctioned rehabilitation scheme and does not extend to liabilities not covered by the scheme. Where the debt is incurred after the sanction of the scheme, the statutory protection does not prevent action against the debtor company. On that basis, the company seeking winding up was not required to obtain BIFR consent for proceedings based on subsequent indebtedness.

Conclusion: The plea for stay was rejected and the winding up proceedings were held to be maintainable because the liability arose after the rehabilitation scheme.

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