Section 22 bar under sick company law does not cover transportation charges; arbitral award for operational expenses stands.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not extend to arbitral proceedings for recovery of transportation charges incurred for bamboo used in the industrial unit's operations, because the claim did not arise from a loan, advance, security, or guarantee. The rehabilitation purpose of the Act does not justify barring recovery of work-related or essential operational expenses such as transportation, rent, wages, or electricity charges. On that basis, no consent of the Board for Industrial and Financial Reconstruction was required, and the arbitral award was not liable to be set aside under section 34 of the Arbitration and Conciliation Act, 1996.

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Issues: Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred the arbitral proceedings and the award for unpaid transportation charges, and whether the award could be set aside under section 34 of the Arbitration and Conciliation Act, 1996.

Analysis: Section 22 suspends proceedings for winding up, execution, and suits for recovery of money in respect of loans, advances, securities, or guarantees against a sick industrial company. The liability in question arose from transportation charges for bamboo used in the running of the industrial unit, not from a loan or advance. The object of the sick industrial companies legislation is rehabilitation of the undertaking, and the bar cannot be extended so broadly as to defeat claims for work done or essential operational expenses. Authorities concerning rent, wages, electricity charges, and other claims not based on loan or advance support this interpretation. On that footing, the arbitral award was not hit by section 22 and no consent of the Board for Industrial and Financial Reconstruction was required.

Conclusion: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 did not bar the arbitral award or the proceedings for recovery of transportation charges, and the challenge to the award failed.

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