BIFR's exclusive jurisdiction bars civil court declarations, recovery suits, and unauthorised asset transfers during statutory control.

A company placed before the BIFR remains under the Board's exclusive supervisory jurisdiction until revival or winding up, so the Civil Court cannot declare that it has ceased to be sick or that the Board has lost jurisdiction on alleged supervening facts. Proceedings for recovery of money against such a company are barred during the statutory period unless the Board consents, and the company's asserted financial improvement does not lift that bar. Any transfer of company property without the Board's leave is subject to the Board's scrutiny, including the need for notice to the transferee and examination of necessity, adequacy of price and consequential relief.

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Issues: (i) Whether the Civil Court had jurisdiction to declare that the company had ceased to be a sick industrial company and that the Board for Industrial and Financial Reconstruction had lost jurisdiction; (ii) whether the suit for recovery of money could proceed without the consent of the Board under the Act; (iii) whether the sale of company property effected without the Board's leave could be sustained.

Issue (i): Whether the Civil Court had jurisdiction to declare that the company had ceased to be a sick industrial company and that the Board for Industrial and Financial Reconstruction had lost jurisdiction.

Analysis: The Act was held to be a complete code conferring exclusive supervisory control on the Board over a sick industrial company from the stage of registration of reference until revival or winding up. The power to determine whether the company had ceased to be sick, including on account of a positive net worth, lay only with the Board. In view of the express bar under the Act, the Civil Court could not examine the correctness of the balance sheet or decide that the Board had lost jurisdiction on supervening facts.

Conclusion: The Civil Court lacked jurisdiction to grant the declaration sought, and the injunction founded on that view was unsustainable; the issue was decided in favour of the appellant.

Issue (ii): Whether the suit for recovery of money could proceed without the consent of the Board under the Act.

Analysis: Section 22(1) bars proceedings for recovery of money against the industrial company during the relevant statutory period unless the Board grants consent. The suit had been instituted while the matter was still under the Board's control and without such consent. The bar operated notwithstanding the company's asserted improved financial position, because the question of cessation of sickness remained within the Board's exclusive domain.

Conclusion: The recovery claim could not proceed without the Board's express consent; this issue was decided in favour of the appellant.

Issue (iii): Whether the sale of company property effected without the Board's leave could be sustained.

Analysis: Since the company remained under the Board's jurisdiction, disposal of a substantial asset without the Board's permission was treated as questionable. The matter required assessment by the Board after notice to the transferee, including whether the sale was necessary, whether the price obtained was adequate, and what consequential relief, if any, should follow.

Conclusion: The sale was not finally upheld and the issue was remitted to the Board for consideration; this issue was decided in favour of the appellant only to the extent that the sale was held subject to the Board's scrutiny.

Final Conclusion: The appeal was allowed, the High Court's order was set aside, the Civil Court's declaration and injunction were quashed, and the Board was left to decide whether the company had in fact ceased to be sick and to deal with the impugned asset transfer in accordance with the Act.

Ratio Decidendi: Once a company is before the Board under the Act, questions whether it has ceased to be sick, whether its net worth has turned positive, and whether statutory proceedings affecting it may continue are matters within the Board's exclusive jurisdiction, and the Civil Court's jurisdiction is barred by the Act.

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