Final BIFR recommendation controls winding up, barring later promoter rehabilitation proposals in company proceedings.

The Sick Industrial Companies (Special Provisions) Act, 1985 gives the BIFR's winding-up recommendation overriding effect, and once that recommendation is not challenged in the prescribed manner and attains finality, the Company Judge cannot reopen rehabilitation in company proceedings. Section 20(2) is framed in mandatory terms and requires the High Court to proceed with winding up on the basis of the Board's opinion. A later promoter rehabilitation package cannot displace the final statutory recommendation or delay winding up indefinitely, and authorities on ordinary winding-up petitions did not apply to this statutory scheme.

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Issues: Whether, in winding up proceedings initiated on the recommendation of the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985, the promoters could still seek consideration of a rehabilitation package before the Company Judge, and whether the Company Judge was bound to proceed with winding up once the BIFR recommendation had attained finality.

Analysis: The statutory scheme of the Sick Industrial Companies (Special Provisions) Act, 1985 gives the Act overriding effect, provides for reference of a sick company to the BIFR, suspends proceedings during inquiry, and empowers the BIFR to recommend winding up where rehabilitation is not feasible. Such a recommendation is appealable to the AAIFR, and thereafter can be questioned only in writ jurisdiction. Once the BIFR recommendation is not challenged in the prescribed manner and attains finality, the Company Judge has no jurisdiction to reopen the issue in company proceedings. Section 20(2) uses mandatory language and obliges the High Court to wind up the company on the basis of the Board's opinion. A later rehabilitation proposal by the promoters cannot be used to circumvent the binding recommendation or to stall winding up indefinitely. The reliance placed on decisions dealing with ordinary creditors' winding up petitions or with appeals disposed of in limine did not assist the appellant, because those authorities did not govern a winding up ordered on the statutory recommendation of the BIFR.

Conclusion: The Company Judge was rightly held to be bound by the final BIFR recommendation and was justified in refusing to sanction the rehabilitation package and in directing continuation of the winding up proceedings.

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