Special sick-company approvals can limit company-law remedies, and ad-interim restraint needs balance of convenience and irreparable injury.

Pending BIFR proceedings under the sick-company regime may override ordinary company-law remedies, but they do not automatically make a petition under Sections 397 and 398 non-maintainable. The petitioners were required to seek BIFR approval before further prosecution of the company petition. On interim relief, a prima facie case alone was insufficient: ad-interim restraint against the proposed Vile Parle property transaction was declined because the balance of convenience was not in favour of restraint and irreparable injury was not shown, especially where the transaction already remained subject to supervisory approvals.

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Issues: (i) Whether the company petition under Sections 397 and 398 of the Companies Act, 1956 was barred or rendered non-maintainable because of the pending BIFR proceedings under the Sick Industrial Companies (Special Provisions) Act. (ii) Whether the petitioners were entitled to ad-interim restraint orders against the proposed transaction concerning the Vile Parle property.

Issue (i): Whether the company petition under Sections 397 and 398 of the Companies Act, 1956 was barred or rendered non-maintainable because of the pending BIFR proceedings under the Sick Industrial Companies (Special Provisions) Act.

Analysis: The pending BIFR proceedings and the Supreme Court restraint orders meant that the proposed sale or development arrangement relating to the subject property could not be implemented without the approval of the competent fora. The statutory position under the special sick-company regime was treated as overriding the general company-law remedy, but the existence of such proceedings did not justify outright dismissal of the petition at that stage. The proper course was for the petitioners to obtain permission from BIFR for further prosecution of the petition.

Conclusion: The petition was not dismissed as non-maintainable; the petitioners were directed to seek BIFR approval before proceeding further.

Issue (ii): Whether the petitioners were entitled to ad-interim restraint orders against the proposed transaction concerning the Vile Parle property.

Analysis: The Court found a prima facie case, but held that ad-interim relief required more than a prima facie showing. On the material then available, the balance of convenience was not in favour of granting interim restraint because the proposed arrangement was already subject to approval of BIFR and the Supreme Court, and no irreparable prejudice was shown to the petitioners. In these circumstances, granting ad-interim restraint was considered inappropriate.

Conclusion: Ad-interim injunction was declined.

Final Conclusion: The petition was allowed to continue, but no interim restraint was granted and the parties were left to proceed in accordance with the supervisory approvals already required in the pending proceedings.

Ratio Decidendi: Where a proposed corporate transaction is already subject to approval by special statutory fora, ad-interim injunction will not be granted merely on a prima facie case unless balance of convenience and irreparable injury are also established; the special sick-company regime may require prior permission before further prosecution of the company petition.

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