Section 22 protection for sick companies applies only when liability is admitted or covered by a rehabilitation scheme.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 stays recovery proceedings only when the statutory preconditions are met and the debt is shown to be included in a pending or sanctioned rehabilitation scheme. Where the defendant cannot show the current status of the BIFR reference or any formulated scheme, the protection is unavailable. A disputed written statement and a later affidavit that does not amount to an unambiguous admission do not establish admitted liability, especially where debit notes and account reconciliation remain contested. In that situation, adjournment sine die of the recovery suit is not warranted.

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Issues: Whether the proceedings for recovery of money against a sick industrial company were liable to be adjourned sine die under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 in the absence of admitted liability or inclusion of the debt in any rehabilitation scheme.

Analysis: Section 22(1) bars continuation of recovery proceedings only where the statutory preconditions are attracted and the claim is shown to have been reckoned in, or covered by, a pending or sanctioned rehabilitation scheme. The defendant remained unable to show the present status of the BIFR reference or that any rehabilitation scheme had been formulated. The claim was also not admitted: the written statement denied liability, and the later affidavit did not amount to an unambiguous admission because it was coupled with a dispute regarding debit notes and reconciliation of accounts. In these circumstances, the recovery suit could not be treated as barred merely because the defendant was a sick company.

Conclusion: The application for adjournment sine die under Section 22(1) was not maintainable and was rejected.

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