Sick industrial company status fails where the factory is closed, no workers remain, and the statutory reference is not maintainable.

A company could not qualify as a sick industrial company under the amended section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 unless it was an industrial company registered for at least five years and, at the end of a financial year, had accumulated losses equal to or exceeding its entire net worth. Because the factory had been closed after 31 March 1993 and no workers were employed during the relevant preceding twelve months, the company did not satisfy the statutory character of an industrial company owning an industrial undertaking or a factory. Prior declined references were also treated as never having been made, so the third reference was not maintainable.

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Issues: Whether the first petitioner company was a sick industrial company within the meaning of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 on the date of the third reference and whether the reference under section 15 was maintainable.

Analysis: The amended definition of a sick industrial company required an industrial company registered for not less than five years which, at the end of a financial year, had accumulated losses equal to or exceeding its entire net worth. The Court noted that after 31 March 1993 the factory had been closed and no workers were employed during the relevant preceding twelve months before the third reference dated 11 September 1995. In the absence of workers and manufacturing activity, the company could not satisfy the statutory requirements of an industrial company owning an industrial undertaking or of a factory within the relevant statutory meaning. The earlier orders declining registration of the first and second references had also not been challenged, and once a reference is declined it is treated as not having been made.

Conclusion: The company was not a sick industrial company on 11 September 1995 and the reference was not maintainable.

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