Section 22 protection extends to guarantee enforcement, barring suit and execution against a sick company without Board consent.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 was applied to bar continuation of suit and execution proceedings for recovery and enforcement of a guarantee where reference concerning the principal industrial company was pending before the BIFR. The protection was treated as extending not only to the sick company but also to proceedings against its guarantor when the decree arose from the guaranteed loan or advance. Prior consent of the Board was required before such proceedings could continue, and the pendency of an application to set aside an ex parte decree did not remove the statutory embargo.

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Issues: Whether proceedings in the suit and execution petition were required to be stayed under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 against the sick company as well as its guarantor.

Analysis: Section 22 bars continuation of proceedings for recovery, execution, distress, and enforcement of security or guarantee where an inquiry or reference concerning an industrial company is pending, except with the consent of the Board. The provision was construed to extend protection not only to the sick industrial company but also to a suit or execution proceeding seeking enforcement of a guarantee given in respect of its loan or advance. Since the principal borrower was under reference before the BIFR and the decree sought to be executed was founded on the guarantee, continuation of the suit or execution without prior consent of the Board was impermissible. The pending application to set aside the ex parte decree did not alter the statutory embargo.

Conclusion: The proceedings in the suit and in the execution petition were liable to be stayed until permission of the Board was obtained, and the applications under section 22 were allowed.

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