BIFR moratorium under sickness law bars winding up and settlement enforcement once the reference is registered.

Once a sick industrial company's reference is registered before the BIFR, the protective moratorium under sections 22 and 23 of the Sick Industrial Companies (Special Provisions) Act, 1985 applies and bars winding up proceedings and coercive recovery steps. A settlement that may otherwise be enforceable like a decree cannot be executed through company proceedings so as to defeat the statutory stay. The rehabilitation objective of the sickness law prevails over equitable claims or execution powers, and recovery of the settled amount must await leave of the BIFR. The note therefore treats statutory protection under the sickness regime as overriding enforcement of the settlement pending rehabilitation.

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Issues: Whether the winding up proceedings and the enforcement of the settlement amount were stayed by the operation of section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 after the respondent-company's reference was registered before the Board for Industrial and Financial Reconstruction.

Analysis: The respondent-company's reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 was registered on 15 September 2006, whereupon the protective umbrella under sections 22 and 23 became available. The settlement arrived at between the parties, even if capable of being treated as enforceable like a decree, could not be enforced in winding up proceedings so as to override the statutory bar created by section 22(1). The object of the sickness legislation is rehabilitation, and the court declined to bypass that mandate on equitable considerations or by relying on the company court's execution powers.

Conclusion: The winding up proceedings could not be continued and the plea to permit recovery of the settled amount was rejected; the respondent-company was left at liberty to seek leave of the BIFR for execution of the settlement.

Final Conclusion: Statutory protection under the sickness law prevailed over enforcement of the settlement, and the proceedings were held to be subject to the BIFR-moratorium regime pending rehabilitation.

Ratio Decidendi: Once a sick industrial company's reference is registered under the rehabilitation statute, the statutory stay under section 22(1) overrides coercive recovery and winding up action, including enforcement of a settlement that may otherwise be executable as a decree.

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