Narrow reading of SICA suspension clause: matured deposit repayment was not barred despite BIFR proceedings.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 was construed narrowly and held not to bar directions for repayment of matured deposits under section 58A(9) of the Companies Act, 1956. The court treated a matured deposit as distinct from a loan or a suit for money recovery, and held that depositors' claims for return of their money did not fall within the statutory suspension meant to protect the company in BIFR proceedings. On that basis, the direction requiring repayment was upheld and the appeal was liable to be rejected.

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Issues: Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred directions for repayment of matured deposits under section 58A(9) of the Companies Act, 1956 when the company was before the BIFR.

Analysis: The company was under BIFR proceedings and sought shelter under the statutory suspension contained in section 22(1). The dispute concerned whether claims by depositors for return of their deposits could be treated as proceedings of the kind protected by the bar. The order under challenge was examined in the light of the BIFR proceedings, the absence of any stay, and the need to protect depositors. The governing principle applied was that a deposit is not a loan in the strict sense and a claim for return of a matured deposit is not to be treated as a suit for recovery of money so as to attract an expansive reading of section 22(1).

Conclusion: Section 22 did not prevent the direction to repay the deposits, and the appeal was liable to be rejected.

Ratio Decidendi: The statutory embargo under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 must be construed narrowly and does not extend to proceedings for return of matured deposits.

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