Statutory restraint on asset disposal must stay within section 22A limits; unchallenged findings cannot be disturbed.

A statutory board's power under section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985 extends only to a sick industrial company and only within the limits fixed by the provision; it cannot compel a non-sick company to maintain status quo or refrain from alienating assets. The restraint directions issued against a company that had purchased the Kota units under a sanctioned scheme were therefore beyond jurisdiction. The document also states that findings in favour of a second respondent, which were not challenged in the writ petition, should not have been disturbed by the High Court. Unchallenged exonerating findings must be left intact unless directly put in issue.

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Issues: (i) Whether the Board for Industrial and Financial Reconstruction could direct a company that was not a sick industrial company to maintain status quo and refrain from alienating assets under section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985; (ii) whether the High Court could set aside findings in favour of the second respondent that were not challenged in the writ petition.

Issue (i): Whether the Board for Industrial and Financial Reconstruction could direct a company that was not a sick industrial company to maintain status quo and refrain from alienating assets under section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Section 22A authorises a direction against disposal of assets only in relation to a sick industrial company and only within the period specified by the provision. The first respondent had purchased the Kota units under the sanctioned scheme and was not itself a sick industrial company. The directions issued by the Board requiring status quo and restraining transfer of assets therefore exceeded the statutory power conferred by section 22A.

Conclusion: The Board had no competence to issue the impugned directions against the non-sick company, and the High Court was correct on this issue.

Issue (ii): Whether the High Court could set aside findings in favour of the second respondent that were not challenged in the writ petition.

Analysis: The appellate authority had recorded findings that the second respondent had no liability in respect of the sold Kota units. Those findings were not assailed in the writ petition filed before the High Court. The High Court nevertheless disturbed the entire order without segregating or preserving the unchallenged findings.

Conclusion: The High Court ought not to have interfered with the unchallenged findings in favour of the second respondent.

Final Conclusion: The restraint orders against the first respondent were unsustainable, while the findings exonerating the second respondent from liability in respect of the Kota units were wrongly disturbed; accordingly, the connected appeals were disposed of with mixed results.

Ratio Decidendi: A statutory board can exercise a restraint on disposal of assets only within the limits expressly imposed by the enabling provision, and a court should not unsettle findings that were not put in issue before it.

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