Rehabilitation powers under sick company law can override arbitral awards and injunctions to preserve sale proceeds.

Section 22(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 empowers the Board to suspend the operation of contracts, arbitral awards and related rights and liabilities when needed for implementation of a rehabilitation scheme. The provision is designed to prevent enforcement steps from defeating revival of the sick company, and the Act's overriding effect ensures that its remedial framework prevails in rehabilitation proceedings. An arbitral award, even if enforceable as a decree subject to challenge, and injunctive orders do not prevent the Board from permitting sale of the company's shares and directing that the proceeds be separately preserved for further directions.

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Issues: Whether, in proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985, the Board could permit sale of the petitioner-company's shares and direct the sale proceeds to be preserved despite pending arbitral award and injunctive orders, in exercise of its powers under section 22(3) read with the overriding scheme of the Act.

Analysis: Section 22(3) empowers the Board, for the purpose of due implementation of a rehabilitation scheme, to suspend the operation of contracts, awards, and other instruments, and also to suspend the rights and liabilities arising therefrom. The provision is meant to facilitate rehabilitation of the sick industrial company and to prevent recovery or enforcement steps from defeating that object. An arbitral award, though enforceable as a decree subject to challenge under the Arbitration and Conciliation Act, 1996, does not place the award-holder above the statutory regime under the Sick Industrial Companies (Special Provisions) Act, 1985. The Act also confers overriding effect to ensure that its remedial mechanism prevails where rehabilitation is in issue.

Conclusion: The Board had power to permit the sale and to require the proceeds to be kept separately subject to further directions, and the arbitral award and injunctive orders did not bar such course.

Final Conclusion: The petitioner obtained relief to proceed with the share sale, while the sale proceeds were safeguarded for possible distribution under the Board's directions after hearing the creditors.

Ratio Decidendi: The Board's rehabilitative powers under section 22(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 override competing enforcement measures, including arbitral awards and injunctive orders, where necessary to preserve assets and implement rehabilitation.

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