Sick company protection does not block criminal investigation into alleged forgery and cheating by directors.

The protective scheme under the Sick Industrial Companies (Special Provisions) Act, 1985 did not bar police investigation into allegations of forgery, fabrication and cheating against a managing director. The Act's suspension, civil bar and overriding effect were confined to proceedings against the sick company and matters connected with inquiry, rehabilitation or winding up; they did not insulate directors or other personnel from criminal liability for independent offences under the IPC. The pendency of proceedings before the BIFR therefore did not oust police jurisdiction, and the criminal complaint alleging forged share certificates remained outside the Act's protection. The writ petition failed and the investigation was permitted to proceed.

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Issues: Whether the protection under the Sick Industrial Companies (Special Provisions) Act, 1985 barred police investigation into the criminal complaint alleging forgery, fabrication and cheating by the managing director and whether the pendency of proceedings before the Board for Industrial and Financial Reconstruction deprived the police of jurisdiction to investigate.

Analysis: The special scheme under the Act concerns inquiry, rehabilitation and winding up of a sick industrial company, and the suspension contemplated by the Act operates in relation to proceedings against the company and civil actions. The provisions dealing with repayment or restoration of money or property, bar of civil jurisdiction and overriding effect do not extend to insulating directors or managing personnel from criminal liability for alleged offences committed in their personal capacity. The Act also contains penal provisions for violations of the Act, scheme or orders, but that does not exclude investigation of independent offences under the Indian Penal Code. A criminal complaint alleging forgery of share certificates and related cheating therefore remains outside the protective ambit of the Act.

Conclusion: The protection under the Act was not available to stop the criminal investigation, and the police had jurisdiction to proceed with the complaint.

Final Conclusion: The writ petition failed because the statutory regime governing sick industrial companies did not bar criminal investigation for alleged offences by the petitioner.

Ratio Decidendi: The protective provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 do not bar criminal prosecution or investigation for offences allegedly committed by directors or managing personnel; they are confined to proceedings relating to the sick company and the implementation of the statutory scheme.

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