Winding up proceedings do not automatically bar BIFR jurisdiction over a sick company reference under the rehabilitation statute.

Pendency of a winding up petition, a winding up order, or appointment of an official liquidator under the Companies Act, 1956 does not by itself bar the Board for Industrial and Financial Reconstruction from entertaining a reference under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985. The winding up process preserves assets, while the special statute is aimed at revival and rehabilitation of sick industrial companies. Even after liquidation, the board retains residuary powers for the company's benefit, including steps towards rehabilitation, and the reference must be examined once registered with the company heard before a final decision. The reference remained maintainable, and declining jurisdiction was incorrect.

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Issues: Whether the pendency of a winding up petition, the passing of a winding up order, or the appointment of an official liquidator under the Companies Act, 1956 barred the Board for Industrial and Financial Reconstruction from entertaining and proceeding with a reference under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: The controlling principle was drawn from the Supreme Court's exposition that a winding up order does not terminate the company's existence or extinguish the powers of its board for all purposes. The winding up process is intended to protect and preserve assets, whereas the special statute is directed to revival and rehabilitation of sick industrial companies. Even after appointment of an official liquidator, the board retains residuary powers for the benefit of the company, including steps towards rehabilitation. The mere existence of winding up proceedings or appointment of a liquidator therefore does not, by itself, destroy the statutory jurisdiction of the specialised board to examine a properly made reference. The statutory scheme also requires an enquiry once the reference is registered, and the company must be heard before any final decision is taken under the special enactment.

Conclusion: The reference under Section 15 remained maintainable and the Board for Industrial and Financial Reconstruction, as well as the Appellate Authority, were wrong in declining jurisdiction.

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