Sick industrial company status ends when surplus assets remain, so the BIFR rehabilitation regime cannot continue.

A company that no longer satisfies the statutory definition of a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985 falls outside the BIFR revival regime, and the rehabilitation scheme cannot continue to operate on that basis. Where substantial acquisition compensation leaves a surplus after liabilities are met, the company ceases to be "sick" on the facts then existing. Collateral management disputes not arising from the order under challenge are not to be decided in those appeals and must be left to an appropriate proceeding. The wider shareholder controversy was therefore left open, while the temporary working arrangement was permitted to continue.

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Issues: Whether the respondent company continued to be a sick industrial company so as to attract the Sick Industrial Companies (Special Provisions) Act, 1985 and the BIFR rehabilitation scheme, and whether the connected disputes regarding management required adjudication in these appeals.

Analysis: The company had received substantial acquisition compensation and the parties were ad idem that, after meeting liabilities, a surplus would remain. On that basis, the company no longer satisfied the statutory definition of a sick industrial company under Section 3(o) of the Sick Industrial Companies (Special Provisions) Act, 1985. Once the company had moved out of sickness and the rehabilitation scheme had not yet been implemented, the controversy over SICA's applicability became academic. The connected management disputes did not arise from the order under challenge and were also inappropriate for determination in the appeals.

Conclusion: The company was held to be outside the ambit of a sick industrial company, so SICA did not continue to apply. The larger controversy was left open for decision in an appropriate proceeding, and the management arrangement was left to continue as a temporary working arrangement.

Final Conclusion: The appeals were disposed of without a merits adjudication on the wider shareholder and management disputes, while the immediate conclusion was that the statutory revival regime no longer applied on the facts then existing.

Ratio Decidendi: Where the material facts show that the company has ceased to satisfy the statutory definition of a sick industrial company, the BIFR revival jurisdiction and the corresponding rehabilitation scheme cannot continue to operate, and collateral disputes not arising from the order under appeal are not to be decided in the proceeding.

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