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Issues: (i) Whether a reference under the Sick Industrial Companies (Special Provisions) Act, 1985, made after a winding up order had already been passed, could operate to stay or suspend the winding up proceedings; (ii) Whether the order granting stay of the winding up proceeding was sustainable in the facts of the case.
Issue (i): Whether a reference under the Sick Industrial Companies (Special Provisions) Act, 1985, made after a winding up order had already been passed, could operate to stay or suspend the winding up proceedings.
Analysis: The statutory scheme under Sections 15 to 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 was considered as a revival-oriented framework applicable when the company remained in existence and the Board for Industrial and Financial Reconstruction was seized of the matter before the winding up order. The Court distinguished earlier authorities on the basis that in the present case the winding up order had already been made long before the reference was registered. Once the winding up order was passed, the company court had already disposed of the lis on that issue and became functus officio on the question of whether the company should be wound up. The later reference could not nullify or suspend that completed judicial act, and an interpretation that allowed a post-winding up reference to derail the liquidation process would create an incongruous and superfluous result inconsistent with the statutory structure.
Conclusion: A post-winding up reference under the Sick Industrial Companies (Special Provisions) Act, 1985 could not operate to stay or suspend the winding up proceedings in the present case.
Issue (ii): Whether the order granting stay of the winding up proceeding was sustainable in the facts of the case.
Analysis: The materials showed repeated unsuccessful attempts to stall the winding up and the sale process, followed by the belated invocation of the sick company regime after the winding up order had already been made. The Court held that the conduct of the company and those representing it disclosed deliberate suppression and an attempt to forestall the liquidation process. Since the reference was not pending when the winding up order was passed, and since the company court had already dealt with revival attempts earlier, the stay order proceeded on an erroneous premise and could not be sustained.
Conclusion: The order granting stay of the winding up proceeding was unsustainable and liable to be set aside.
Final Conclusion: The appeal was allowed, the impugned order granting stay was set aside, and the winding up process was permitted to continue.
Ratio Decidendi: A reference under the sick company legislation cannot undo or suspend a winding up order already passed, and the revival regime under that statute operates only within its intended field of pre-liquidation seisin or subsisting reference.
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