Winding up petitions during BIFR proceedings require Board permission before they can be maintained under the sick company regime.

A creditor's winding up petition could not be instituted or proceeded with while rehabilitation proceedings were pending before the Board for Industrial and Financial Reconstruction for a sick industrial company. The statutory scheme under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, read with the bar in Section 22(1), required the Board's sanction before any such petition could be maintained. As no permission had been sought, the petition was held not maintainable. Section 22(5) was also noted for its effect on limitation during the pendency of proceedings under the Act.

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Issues: Whether a creditor's winding up petition could be maintained during the pendency of proceedings before the Board for Industrial and Financial Reconstruction without obtaining the Board's permission.

Analysis: The company had been registered as a sick industrial company and rehabilitation proceedings were pending before the Board for Industrial and Financial Reconstruction. The statutory scheme under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, together with the bar under Section 22(1), was applied to hold that once the reference is received, a fresh winding up petition cannot be instituted or proceeded with except with the Board's sanction. The record showed no application by the petitioner for permission to move the company petition. The court also noted the effect of Section 22(5) on limitation during the pendency of proceedings.

Conclusion: The winding up petition was not maintainable and was dismissed at that stage, with liberty to seek permission from the Board or await conclusion of the proceedings under the Act.

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