BIFR asset restraint and interim workmen payment: disposal blocked pending consent, with payment character left for determination.

During revival proceedings for a sick industrial company, directions requiring BIFR consent before any sale of machinery or other assets operated as a restraint on disposal of assets under section 22A, to prevent dissipation before a scheme was decided. The company could not sell its assets at that stage and had to obtain BIFR consent within the pending revival process. The amount lying with BIFR was permitted to be released to the workmen as an interim disbursement, while the character of the payment, whether wages or part of a voluntary retirement package, remained for BIFR to ermine. A separate disputed amount for 29 workmen was also kept back.

---

---

Issues: (i) Whether the mill company could be permitted to dispose of its machinery and other assets while revival proceedings were pending before the BIFR. (ii) Whether the amount lying with the BIFR could be released to the workmen and, if so, whether it had to be treated as wages or as part of a voluntary retirement package.

Issue (i): Whether the mill company could be permitted to dispose of its machinery and other assets while revival proceedings were pending before the BIFR.

Analysis: The pending proceedings before the BIFR included steps under section 17(3) and section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985, and the BIFR had also recorded that the company should seek its consent before any sale of assets. These directions were treated as referable to section 22A, which empowers the Board to restrain disposal of assets during preparation or consideration of a scheme. The object of the statutory scheme was to prevent dissipation of assets before the BIFR reached a decision, since otherwise restoration of the earlier position could become impossible.

Conclusion: The machinery and assets could not be allowed to be disposed of at that stage, and the company was required to seek BIFR consent in the pending revival process.

Issue (ii): Whether the amount lying with the BIFR could be released to the workmen and, if so, whether it had to be treated as wages or as part of a voluntary retirement package.

Analysis: The parties were not opposed to release of the amount itself, but differed only on its nomenclature. The amount could therefore be transferred and disbursed to the workmen as an interim arrangement, while leaving the character of the payment to be determined by the BIFR in the pending proceedings. The Court also accepted a separate holdback for the disputed claim relating to 29 workmen.

Conclusion: The amount was directed to be released to the workmen as an ad hoc payment, subject to the BIFR's final decision on whether it would count as wages or under the voluntary retirement arrangement.

Final Conclusion: The motions succeeded in part: asset disposal was restrained pending BIFR consent, while the available funds were ordered to be distributed to the workmen on an interim basis, with the final character of the payment left to the BIFR.

Ratio Decidendi: During the preparation or consideration of a revival scheme for a sick industrial company, BIFR directions that effectively require its consent before disposal of assets operate as a restraint under section 22A, and interim disbursement to workmen may be ordered where the parties are otherwise not opposed to release of the funds.

---