Section 22 protection under SICA does not extend to post-reference trade debts incurred in ordinary business.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 was confined to protecting implementation of a rehabilitation scheme and preventing recovery action only where the debt formed part of, or would interfere with, that scheme. Fresh liabilities incurred in the ordinary course of business after registration of the BIFR reference were treated as independent post-reference transactions outside the statutory bar. The absence of a framed scheme did not expand section 22 to cover unpaid price claims for such later supplies. The winding-up petition for recovery of the post-reference debt was therefore maintainable.

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Issues: Whether the protection under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred winding-up proceedings in respect of debts arising from purchases made after the reference was registered with the BIFR and before any scheme was framed.

Analysis: The petition concerned unpaid price of goods supplied after the reference had been registered. The Court held that section 22 is intended to protect the implementation of a rehabilitation scheme and to prevent recovery action only where the debt forms part of, or would interfere with, the scheme. Transactions entered into after registration of the reference, by which the company consciously incurred fresh liabilities in the ordinary course of business, were treated as independent transactions outside the protection of section 22. The absence of a framed scheme did not extend the statutory bar to such post-reference debts, since the purpose of the provision is to preserve the scheme and not to shield every subsequent commercial liability.

Conclusion: Section 22 did not protect the respondent-company against recovery of the unpaid price for post-reference supplies, and the winding-up petition was maintainable.

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