BIFR-referred winding up proceedings survived SICA repeal, and failure of rehabilitation justified liquidation.

The Kerala HC held that repeal of SICA did not terminate pending BIFR-referred winding up matters, because the repealing statute and the saving framework preserved such proceedings and the amended Companies (Transfer of Pending Proceedings) Rules, 2016 could not displace the continuation clause in Rule 5(2). It further found that the company should be wound up because rehabilitation efforts had failed, no viable fresh revival scheme was pending, and the record showed that continued existence was not sustainable. The winding up reference was therefore allowed and the company directed to be liquidated.

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Issues: (i) Whether the High Court retained jurisdiction to continue and decide winding up proceedings referred by the BIFR after repeal of SICA and the amendment to the Companies (Transfer of Pending Proceedings) Rules, 2016. (ii) Whether the company should be wound up on the basis of the BIFR opinion and the materials on record.

Issue (i): Whether the High Court retained jurisdiction to continue and decide winding up proceedings referred by the BIFR after repeal of SICA and the amendment to the Companies (Transfer of Pending Proceedings) Rules, 2016.

Analysis: The repeal of SICA did not extinguish pending matters already referred by the BIFR because the repeal was subject to the saving provision in the repealing statute and the general saving principles under the General Clauses Act. The Court held that the amended transfer rules could not be read as obliterating Rule 5(2), which specifically preserved High Court disposal of BIFR-referred winding up matters where no appeal was pending. Applying a purposive construction, the Court treated the amendment as affecting only Rule 5(1) and not the continuation clause in Rule 5(2).

Conclusion: The High Court retained jurisdiction to proceed with the pending BIFR-referred winding up petition.

Issue (ii): Whether the company should be wound up on the basis of the BIFR opinion and the materials on record.

Analysis: The BIFR had formed an opinion under the sick industrial company regime that the company ought to be wound up after rehabilitation efforts failed. The record showed that the revival attempts had not succeeded, no viable fresh revival scheme was before the Court, and the person actively pursuing revival had died. In these circumstances, the Court found that continued existence of the company was not sustainable and that winding up was the only viable course.

Conclusion: The company was ordered to be wound up.

Final Conclusion: The winding up reference was allowed, the company was directed to be liquidated, and the connected applications were closed.

Ratio Decidendi: Where a BIFR-referred winding up matter is saved by the repealing and transitional provisions, the High Court may continue the proceeding, and if rehabilitation has failed with no viable revival scheme surviving, winding up must follow under the statutory framework.

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