Winding-up of sick industrial companies turns on a full-record assessment of viability, rehabilitation failure, and creditor interests.

A High Court noted that, in a winding-up reference under the Sick Industrial Companies (Special Provisions) Act, 1985, the Board must assess whether the sick company can improve its net worth within a reasonable time, is likely to become viable, and whether winding up is just and equitable on the full record. The court emphasised that repeated rehabilitation attempts, long pendency, failure of revival schemes, mounting secured creditor dues, and the absence of a viable finance-backed proposal are relevant to that assessment. It also stated that continued operation and payment of workers' wages cannot by themselves justify indefinite delay in creditor recovery. On the material considered, the opinions recommending winding up were treated as free from illegality or arbitrariness.

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Issues: Whether the opinion of the Board for Industrial and Financial Reconstruction and its affirmation by the appellate authority, recommending winding up of the sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985, was valid and whether the High Court should accept that opinion or remand the matter for reconsideration of the just and equitable requirement.

Analysis: The statutory scheme requires the Board, after inquiry and consideration of relevant facts, to form an opinion on whether the sick industrial company is unable to make its net worth exceed accumulated losses within a reasonable time, is not likely to become viable in future, and whether it is just and equitable that it should be wound up. The Court held that the expression "just and equitable" is not an empty formality and must be assessed in the context of the entire record, including the long pendency before the Board, repeated opportunities for rehabilitation, failure of revival schemes, the mounting dues of secured creditors, and the absence of any viable proposal with finance fully tied up. The Court further held that the company's continued operation and payment of workers' wages could not, by themselves, outweigh the claims of secured creditors or justify indefinite postponement of recovery of public funds. On the material before it, the Court found no illegality, arbitrariness, or non-application of mind in the opinions of the Board and the appellate authority, and it declined to remit the matter for fresh consideration.

Conclusion: The opinion recommending winding up was upheld, and the challenge to the Board's and appellate authority's orders failed.

Final Conclusion: The special civil applications were dismissed, while the company petition was admitted and directed to proceed in accordance with the winding-up process, with interim protective directions as to payment and advertisement.

Ratio Decidendi: In a winding-up reference under the Sick Industrial Companies (Special Provisions) Act, 1985, the High Court will uphold the Board's opinion where the statutory conditions are satisfied on a fair assessment of the entire record, repeated rehabilitation attempts have failed, and the balance of justice favours creditor recovery over an indefinite continuation of an unviable sick unit.

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