Section 22 suspension bars coercive asset restraints once BIFR reference is registered; relief must be sought from the Board.

Once a reference is registered before the Board for Industrial and Financial Reconstruction, the inquiry under section 16(1) is treated as commenced for section 22 purposes, and the statutory bar against coercive proceedings operates immediately. The provision is intended to preserve the assets and status quo of the sick industrial company so that rehabilitation is not frustrated. A court should not grant directions restraining disposal of assets or creation of third-party interests where that relief would interfere with the suspended regime. Any protective order concerning assets should be sought from the Board under section 22A.

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Issues: Whether, after registration of a reference before the Board for Industrial and Financial Reconstruction, the Court could grant directions restraining the sick company from disposing of assets or creating third-party interests despite the bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Once the reference stood registered, the inquiry under section 16(1) was deemed to have commenced for the purposes of section 22, and the statutory prohibition against proceedings for winding up and other coercive action came into operation immediately. The object of section 22 is to preserve the assets and status quo of the sick industrial company so that the reference and rehabilitation process before the Board is not impeded. The relief sought by the petitioners would amount to coercive interference in a matter governed by the statutory suspension, and the appropriate course lay in approaching the Board under section 22A for any protective order regarding assets.

Conclusion: The application for directions was not maintainable in view of section 22 and was rejected.

Final Conclusion: Statutory suspension under the sick industrial companies regime prevailed, and the Court declined to issue the requested restraint against disposal of assets.

Ratio Decidendi: Upon registration of a reference and commencement of inquiry for the purposes of section 22, the statutory bar operates immediately, and a court should not pass coercive or protective directions affecting the sick company's assets where the Act provides recourse to the Board.

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