Section 22 suspension does not bar defamation damages claims against a sick industrial company.

Section 22 of the Sick Industrial Companies Act, 1985 is to be construed strictly and protects proceedings only where they directly affect a sick industrial company's assets, contractual liabilities, or implementation of a revival scheme. A tort claim for defamation stands on a different footing from recovery of contractual dues or enforcement of security. Damages sought for defamation are compensatory in nature and do not amount to a proceeding for recovery of money within the statutory suspension. Accordingly, a civil suit for defamation damages against a sick industrial company is not barred by section 22, and suspension of the proceedings is unavailable.

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Issues: Whether a suit for damages based on defamation, filed against a sick industrial company, is barred by the suspension of proceedings under section 22 of the Sick Industrial Companies Act, 1985.

Analysis: Section 22 was enacted to protect the revival process of a sick industrial company by suspending proceedings that would erode its assets or impede implementation of a scheme. The provision, though containing a non obstante clause, is not absolute and must be construed strictly. Its protection extends to proceedings that have a direct bearing on the company's assets, liabilities arising from contracts, or similar matters falling within the statutory scheme. A suit founded on tortious liability stands on a different footing from a claim arising out of contract or enforcement of security. Damages claimed for defamation are compensatory in nature and do not amount to a proceeding for recovery of money within the protective sweep of section 22.

Conclusion: The suit for defamation damages is not barred by section 22 and the petitioner is not entitled to suspension of the civil proceedings.

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