Negative net worth and sickness status justified waiver of pre-deposit, stay of recovery, and restoration of the appeal.

Negative net worth, supported by a Chartered Accountant's certificate and a BIFR declaration of sickness, established that the company qualified as a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985. On that basis, the company was treated as entitled to waiver of pre-deposit and stay of recovery, and the appeal was restored for decision on merits.

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Issues: Whether the appellant company, having been declared a sick unit with negative net worth, was entitled to waiver of pre-deposit, stay of recovery, and restoration of the appeal.

Analysis: The company was declared sick by the BIFR, and a Chartered Accountant's certificate showed negative net worth. Under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985, a sick industrial company is one whose accumulated losses equal or exceed its net worth and which has suffered cash losses. On the material placed, the condition of negative net worth stood established.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery, and the earlier dismissal order was liable to be set aside with restoration of the appeal.

Ratio Decidendi: Where a company is shown to be a sick industrial company with negative net worth, pre-deposit may be waived and the appeal restored for decision on merits.

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