Maintainability of company scheme petitions during a pending BIFR reference remains unsettled pending Division Bench review.

During a pending reference before the Board for Industrial and Financial Reconstruction, the maintainability of a company petition for sanction of a scheme of arrangement or compromise under sections 391 and 394 of the Companies Act, 1956 was examined in light of SICA's overriding provisions. The later Supreme Court view treating SICA as a special statute and complete code was said to weaken earlier co-ordinate Bench decisions treating the remedies as supplementary. Because of that conflict, the preliminary objection on maintainability was considered substantial and the jurisdictional question was directed to be placed before the Chief Justice for reference to a Division Bench, with the scheme's merits left open.

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Issues: (i) Whether, during the pendency of a reference before the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985, a company can maintain a petition under sections 391 and 394 of the Companies Act, 1956 for sanction of a scheme of arrangement or compromise; (ii) whether the company court can entertain such a petition while the SICA reference is pending.

Issue (i): Whether, during the pendency of a reference before the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985, a company can maintain a petition under sections 391 and 394 of the Companies Act, 1956 for sanction of a scheme of arrangement or compromise.

Analysis: The competing line of authority was examined in the light of the scheme of the Sick Industrial Companies (Special Provisions) Act, 1985, its non obstante provisions, and the Supreme Court's later exposition that the Act is a special statute and a complete code in itself. The Court held that the observations in the later Supreme Court decision substantially undermined the view that the two enactments operate in the same field as supplementary remedies. The Court also noted that the question of judicial discipline required reconsideration of the earlier co-ordinate Bench decisions that had taken a contrary view.

Conclusion: The preliminary objection was found to have substance, and the maintainability of the petition under sections 391 and 394 of the Companies Act, 1956 during the pendency of the SICA reference could not be finally rejected at this stage.

Issue (ii): Whether the company court can entertain such a petition while the SICA reference is pending.

Analysis: In view of the conflict between earlier co-ordinate Bench decisions and the later Supreme Court pronouncements, the Court considered it inappropriate to proceed further on the merits of the scheme without an authoritative resolution of the jurisdictional question. The Court therefore directed that the issue be placed before the Hon'ble Chief Justice for reference to a Division Bench, and kept the merits of the scheme open.

Conclusion: The Court declined to decide the merits of the scheme and left the jurisdictional question for determination by a Division Bench.

Final Conclusion: The proceedings were not finally adjudicated on the merits, and the jurisdictional issue was sent for authoritative consideration before a Division Bench while the scheme itself remained open.

Ratio Decidendi: Where the special statute governing sick industrial companies contains overriding provisions and the Supreme Court has treated it as a complete code, the maintainability of a parallel company-court scheme petition during a pending BIFR reference requires authoritative reconsideration before further merits-based adjudication.

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