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Issues: Whether the suit for recovery was barred by section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 on the ground that proceedings under the Act were pending and whether the appellant had shown that the respondent's claim was included in the scheme before the Board for Industrial and Financial Reconstruction.
Analysis: Section 22 bars recovery proceedings where an inquiry under section 16 is pending, a scheme is under preparation or implementation, or an appeal under section 25 is pending, but the protection is intended to prevent interference with the implementation of the rehabilitation process. The statutory bar is not available merely because SICA proceedings or an appeal are pending. The party seeking shelter under section 22 must show that the liability asserted in the suit is covered by or included in the scheme placed before the Board. No material was produced to establish that the respondent's claim was reflected in any sanctioned or proposed scheme.
Conclusion: The plea of statutory bar under section 22 failed. The recovery suit was maintainable and the appeal was dismissed, which is against the appellant and in favour of the respondent.
Ratio Decidendi: Section 22 of SICA protects a sick company from recovery or coercive proceedings only when the claim sought to be enforced is shown to be covered by the rehabilitation scheme or otherwise falls within the statutory embargo.
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