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of <h1>Board's Decision Binding for Winding Up; RDB Act Prevails in Debt Recovery</h1> <h3>Modistone Ltd., In re</h3> The court ruled that under the Sick Industrial Companies (Special Provisions) Act, once the Board decides a company should be wound up, the High Court ... Suspension of legal proceedings Issues:1. Interpretation of provisions under the Sick Industrial Companies (Special Provisions) Act, 1985 and the Companies Act regarding winding up of a company.2. Jurisdiction conflict between the Recovery of Debts due to Banks and Financial Institutions Act and the Companies Act.Issue 1: Interpretation of Provisions under the Acts:The judgment addressed the interpretation of the Sick Industrial Companies (Special Provisions) Act, 1985 and the Companies Act concerning the winding up of a company. It highlighted that once the Board under the SICSP Act forms an opinion that a company should be wound up, the High Court is obligated to pass an order for winding up without following the usual procedure under the Companies Act. The judgment emphasized that the opinion of the Board is binding on the court, and the court must proceed based on the material considered by the Board. The court clarified that the SICSP Act is a special act, and the Companies Act is a general act, with the provisions of the former being binding on the company court.Issue 2: Jurisdiction Conflict with the Recovery of Debts due to Banks and Financial Institutions Act:The judgment also discussed a jurisdictional conflict between the Recovery of Debts due to Banks and Financial Institutions Act and the Companies Act. It referred to a case involving the Allahabad Bank and the Canara Bank, where the Supreme Court held that the RDB Act's provisions are exclusive in matters of debt recovery due to banks and financial institutions. The judgment emphasized that the RDB Act's procedures take precedence over certain sections of the Companies Act, and the Company Court has no authority to interfere in matters falling under the RDB Act. The judgment highlighted that the RDB Act's provisions regarding debt recovery and priorities among creditors override the relevant sections of the Companies Act.In conclusion, the judgment provided a detailed analysis of the interpretation of provisions under the SICSP Act and the Companies Act regarding the winding up of a company. It also addressed a jurisdictional conflict between the RDB Act and the Companies Act, emphasizing the exclusive jurisdiction of the RDB Act in matters of debt recovery due to banks and financial institutions.
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