BIFR reference bars winding-up adjudication while preserving creditors' participation rights and liberty to revive proceedings later.

A pending reference before the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 prevents substantive winding-up adjudication under the Companies Act, 1956 when section 22 applies. The court noted that although the petitions were based on inability to pay debts, they could not proceed on merits while the company remained under BIFR inquiry. It also recognised that creditors may be permitted to participate in the BIFR proceedings so their financial claims are considered, and their right to revive or file fresh winding-up proceedings may be preserved if the reference is rejected.

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Issues: Whether the winding-up petitions could proceed in view of the pending reference before the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985, and whether the creditors could be permitted to participate in the inquiry before the BIFR with liberty to renew the winding-up petition if the reference was rejected.

Analysis: The petitions were founded on the ground of inability to pay debts under section 433(e) of the Companies Act, 1956, but the respondent-company had already been referred to the BIFR under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985. In view of section 22 of that Act, the winding-up proceedings could not be allowed to go forward on merits at that stage. At the same time, the Court held that there was no legal impediment to safeguarding the creditors' interests by permitting them to participate in the inquiry before the BIFR, since the inquiry would cover the financial position of the company and its liabilities. The Court also reserved the petitioners' right to revive or file fresh winding-up proceedings if the reference before the BIFR failed.

Conclusion: The winding-up petitions were not adjudicated on merits and were disposed of with liberty to the petitioners to participate in the BIFR inquiry and to renew the petition if the reference was rejected.

Final Conclusion: The decision preserves the creditors' procedural remedies while deferring substantive consideration of winding-up until the statutory sick-company proceedings conclude.

Ratio Decidendi: When a company is subject to a pending BIFR reference, section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 bars substantive winding-up adjudication, but the Court may protect creditors by permitting participation in the BIFR inquiry and reserving liberty to revive the petition later.

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