Mandatory bar on winding up during pending appeal under SICA and conditional abatement of reference under secured creditor action.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 is described as imposing a mandatory bar on winding up proceedings while an appeal under section 25 is pending, so the company court cannot pass a winding up order until the appeal is finally disposed of or consent is obtained. The text also notes that abatement under the third proviso to section 15(1) is conditional and depends on satisfaction of the statutory requirements, including creditor action meeting the prescribed value threshold and a final determination of that issue. Mere initiation of secured creditor measures, especially where challenged and stayed, does not by itself make abatement conclusive.

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Issues: (i) Whether the pendency of an appeal under section 25 of the Sick Industrial Companies (Special Provisions) Act 1985 barred the company court from proceeding with and passing an order of winding up under section 22 of that Act. (ii) Whether the abatement of a reference under the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act 1985 was complete and final merely because secured creditors had initiated measures under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, notwithstanding challenge and interim stay.

Issue (i): Whether the pendency of an appeal under section 25 of the Sick Industrial Companies (Special Provisions) Act 1985 barred the company court from proceeding with and passing an order of winding up under section 22 of that Act.

Analysis: Section 22 creates a mandatory statutory embargo on winding up proceedings where an inquiry, scheme process, or an appeal under section 25 is pending. The language is absolute and prohibits not only continuation of the winding up proceedings but also the passing of a winding up order, unless consent of the Board or appellate authority is obtained. Since the appeal against the BIFR order was pending, the statutory bar continued to operate.

Conclusion: The winding up order could not validly be passed during the pendency of the appeal, and the company court lacked jurisdiction.

Issue (ii): Whether the abatement of a reference under the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act 1985 was complete and final merely because secured creditors had initiated measures under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, notwithstanding challenge and interim stay.

Analysis: The proviso operates only when the statutory conditions are satisfied, including action by secured creditors representing not less than three-fourths in value of the outstanding secured debt. Abatement is therefore conditional and requires a considered finding by the Board on the existence of those conditions. Where the debtor challenges the action and an interim stay is operating, mere initiation of measures does not by itself establish final abatement. The appellate challenge keeps the matter alive, and the legal consequence of abatement cannot be treated as conclusively settled until the statutory issue attains finality.

Conclusion: Abatement could not be treated as conclusively completed so as to validate the winding up order passed meanwhile.

Final Conclusion: The statutory scheme protected the company from winding up proceedings while the appeal was pending, and the impugned winding up order was without jurisdiction and liable to be set aside.

Ratio Decidendi: Where a special statute imposes a mandatory bar against winding up during the pendency of an appeal, the company court cannot proceed with winding up until the appeal is finally disposed of, and a conditional abatement under another provision takes effect only upon satisfaction and final determination of the prescribed statutory conditions.

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