Sick industrial company protection bars financial corporation recovery action under section 29 during pending rehabilitation proceedings.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 was construed broadly to stay coercive recovery measures while proceedings under the Act are pending, including inquiry, scheme consideration, or appeal. Action under section 29 of the State Financial Corporations Act, 1951, although taken directly by the corporation, was treated as a coercive recovery step that could frustrate the revival process and therefore remains barred unless the Board or Appellate Authority consents.

---

---

Issues: Whether the bar under section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 prohibits action under section 29 of the State Financial Corporations Act, 1951 for taking over management or possession and enforcing recovery against a company in respect of which proceedings under the 1985 Act are pending.

Analysis: The two enactments were held to be special statutes operating in different fields, but the 1985 Act was held to govern the situation once an industrial company is under inquiry, scheme consideration, or appeal under sections 16, 17 and 25. The expression "proceedings" in section 22(1) was construed broadly in light of the object of the legislation, so as to cover coercive measures analogous to execution or distress. Action under section 29 of the 1951 Act, though initiated by the Corporation itself and not through a court, was treated as a coercive recovery measure that would defeat the revival process if permitted during the pendency of proceedings under the 1985 Act.

Conclusion: Section 22(1) bars recourse to section 29 of the State Financial Corporations Act, 1951 during the pendency of proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 unless the consent of the Board or Appellate Authority is obtained, and the appellant succeeded.

Ratio Decidendi: The term "proceedings" in section 22(1) of the 1985 Act includes coercive recovery action by a financial corporation under section 29 of the 1951 Act, because the revival-oriented scheme of the 1985 Act requires such actions to remain frozen until the competent authority permits them.

---