Sick industrial company law overrides sale-agreement claims, and asset transfers may be restrained to protect rehabilitation schemes.

The special statute governing sick industrial companies prevails over the Transfer of Property Act, 1882, and an agreement for sale coupled with possession under part performance does not create title or an interest capable of defeating that statutory control. The Board for Industrial and Financial Reconstruction may also restrain or suspend transfer of land and require prior approval where the land is a major asset needed for the rehabilitation scheme, because Sections 22(1), 22(3) and 22A are construed to protect formulation and implementation of revival measures from asset dissipation. The Board's protective directions were therefore within jurisdiction.

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Issues: (i) whether the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 override the provisions of the Transfer of Property Act, 1882 in relation to an agreement for sale and possession said to have been given in part performance; (ii) whether the Board for Industrial and Financial Reconstruction had jurisdiction to restrain or suspend the transfer of land and require prior approval for its sale where the land formed an important asset for implementation of the rehabilitation scheme.

Issue (i): whether the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 override the provisions of the Transfer of Property Act, 1882 in relation to an agreement for sale and possession said to have been given in part performance.

Analysis: The special statute governing sick industrial companies was held to be a self-contained code with overriding force. The contract for sale under Section 54 of the Transfer of Property Act, 1882 does not by itself create any interest in immovable property, and Section 53A confers only a limited shield against the transferor and does not vest title in the proposed transferee. Accordingly, the alleged contractual or possessory rights could not displace the statutory control exercised under the special enactment.

Conclusion: The provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 prevail over the Transfer of Property Act, 1882, and the agreement for sale did not create an enforceable title interest defeating the statutory restraints.

Issue (ii): whether the Board for Industrial and Financial Reconstruction had jurisdiction to restrain or suspend the transfer of land and require prior approval for its sale where the land formed an important asset for implementation of the rehabilitation scheme.

Analysis: Sections 22(1), 22(3) and 22A were construed broadly to protect the formulation and implementation of the revival scheme from interference and to prevent dissipation of assets. The land was a major asset and sale proceeds were integral to the restructuring package. The Board was therefore competent to direct that the sale could not be completed without its approval and to suspend the operation of the arrangements to the extent necessary for the scheme.

Conclusion: The Board had jurisdiction to issue the impugned restraint and suspension directions, and the order restoring the Board's directions was upheld.

Final Conclusion: The statutory regime for rehabilitation of a sick industrial company was held to control the asset-transfer arrangement, and the appeals failed because the Board's protective orders were within jurisdiction and consistent with the revival scheme.

Ratio Decidendi: In proceedings under the sick industrial companies legislation, the Board may suspend or regulate pre-existing contractual arrangements and restrain disposal of assets where such action is necessary for formulation or implementation of the rehabilitation scheme, and an agreement for sale does not by itself create title or an interest capable of overriding that statutory control.

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