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Issues: Whether the Board for Industrial and Financial Reconstruction could proceed with a reference under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 despite pendency of winding up proceedings or appointment of an official liquidator under the Companies Act, 1956.
Analysis: The winding up order and appointment of an official liquidator do not terminate the jurisdiction of the rehabilitation machinery under the Sick Industrial Companies (Special Provisions) Act, 1985. The statutory scheme contemplates revival and rehabilitation of sick industrial companies, and the filing or pendency of winding up proceedings does not by itself render a reference under section 15 non-maintainable. Appointment of an official liquidator is directed to preservation of assets and does not oust the power of the Board for Industrial and Financial Reconstruction to examine sickness and proceed in accordance with law. The Board of Directors retains residuary powers for the benefit of the company, including steps towards rehabilitation.
Conclusion: The reference under section 15 was maintainable and the Board for Industrial and Financial Reconstruction and the Appellate Authority for Industrial and Financial Reconstruction were wrong in declining jurisdiction.
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