Statutory stay in winding up and residuary board powers preserve BIFR reference despite provisional liquidation and alleged suppression.

On registration of a reference under the sickness-revival law, the statutory stay applies immediately to all further winding-up proceedings, including incidental steps by the official liquidator to take possession, so those steps cannot continue. A provisional liquidator's appointment does not extinguish all powers of the board; residuary powers necessary for rehabilitation remain with the board, so it may validly move the BIFR unless lawfully divested. Alleged suppression of facts does not make the reference non est; the proper course is to seek recall or other relief before the forum concerned.

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Issues: (i) Whether the board of directors could move the BIFR after appointment of a provisional liquidator. (ii) Whether alleged suppression of facts rendered the BIFR reference non est. (iii) Whether taking possession by the official liquidator was merely an administrative act and could proceed despite registration of the BIFR reference.

Issue (i): Whether the board of directors could move the BIFR after appointment of a provisional liquidator.

Analysis: Appointment of a provisional liquidator does not extinguish every power of the board. The powers not assumed by the liquidator remain with the board as residuary powers. Since rehabilitation of a sick company is not a function of the official liquidator, the initiative to make a reference under the sick industrial companies legislation falls within the board's surviving authority. The statutory scheme also contemplates that pending winding up proceedings do not prevent resort to the sickness-revival mechanism where the board remains in existence.

Conclusion: The board of directors could validly move the BIFR notwithstanding appointment of a provisional liquidator.

Issue (ii): Whether alleged suppression of facts rendered the BIFR reference non est.

Analysis: The existence of suppression, even if assumed, does not nullify registration of the reference before the BIFR. The proper remedy is to seek recall or other appropriate relief before the forum concerned. The reference cannot be treated as a nullity merely because material facts were allegedly not disclosed to the High Court or the BIFR.

Conclusion: The BIFR reference was not non est on the ground of suppression of facts.

Issue (iii): Whether taking possession by the official liquidator was merely an administrative act and could proceed despite registration of the BIFR reference.

Analysis: Once the reference is registered, the statutory embargo on further proceedings applies immediately. The bar is not confined to adjudicatory steps alone but extends to all proceedings in winding up. Acts incidental to continuation of winding up, including steps by the official liquidator to take possession, are not outside the suspension. The legislative object is to freeze proceedings so that revival or rehabilitation can be considered without further coercive steps.

Conclusion: The official liquidator could not proceed to take possession after registration of the BIFR reference.

Final Conclusion: Further proceedings in the winding up matter stood stayed under the sickness-revival legislation, and the company obtained protection from continuation of the provisional-liquidation process until the BIFR proceedings were concluded or otherwise lawfully displaced.

Ratio Decidendi: On registration of a reference under the sick industrial companies law, the statutory stay operates immediately against all further winding up proceedings, and the board retains residuary powers necessary to pursue rehabilitation unless those powers are expressly taken away by law.

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