BIFR reference bar on winding up proceedings prevents parallel company liquidation action during pendency of sickness proceedings.

A pending reference before the BIFR triggers the statutory bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, preventing a winding up petition under the Companies Act, 1956 from being proceeded with. The creditor must participate in the BIFR proceedings and await the outcome of the reference rather than pursue winding up action in parallel. The document also notes that prolonged pendency can prejudice creditors, so the BIFR should decide such references expeditiously and in accordance with law.

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Issues: Whether a winding up petition under section 433(e) of the Companies Act, 1956 could be proceeded with when a reference under sections 15 and 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 was pending before the BIFR, in view of the bar under section 22 of that Act.

Analysis: A pending reference before the BIFR attracts the statutory bar under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 against proceeding with winding up action. In such a situation, the creditor's proper course is to participate in the BIFR proceedings and await the result of the reference. The Court also noted that prolonged pendency of such references causes hardship to creditors and therefore directed the BIFR to decide the reference expeditiously in accordance with law.

Conclusion: The winding up petition was not maintainable and could not be proceeded with during the pendency of the BIFR reference. The petitioner was left to pursue its remedies before the BIFR, and the matter was disposed of with a direction for early decision of the reference.

Final Conclusion: The statutory bar under the sick industrial companies regime prevented winding up proceedings from continuing while the BIFR reference remained pending, so the creditor had to seek relief in the BIFR process instead.

Ratio Decidendi: Where a reference under sections 15 and 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 is pending, section 22 operates as a bar to winding up proceedings under the Companies Act, 1956.

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