BIFR winding up recommendation is not binding where later financial recovery shows the company has become viable again.

A BIFR recommendation for winding up under the Sick Industrial Companies (Special Provisions) Act, 1985 was treated as non-binding on the Company Court. The court examined the company's audited balance sheet, the Official Liquidator's report, the bank's affidavit showing dues were satisfied, and the absence of creditor or employee claims after notice. It also noted that pending proceedings remained maintainable under the 2016 Transfer of Pending Proceedings Rules. Because the company's financial position had improved, assets exceeded liabilities, and the original basis for winding up no longer existed, the winding up proceedings were dropped.

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Issues: Whether winding up proceedings initiated on the BIFR's recommendation under Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 should be dropped in view of the company's later financial improvement.

Analysis: The proceedings had remained pending for a long period, and the Court considered the material on record, including the company's audited balance sheet, the Official Liquidator's report, the bank's affidavit showing satisfaction of dues, and the absence of claims from creditors or employees despite publication and notice. The Court also noted that Rule 5(2) of the Companies (Transfer of Pending Proceedings) Rules, 2016 preserved the maintainability of the proceedings, but the BIFR's recommendation was not conclusive or binding on the Company Court. In view of the company's improved financial position, assets exceeding liabilities, and the pendency and success of arbitration claims, the Court found that the original basis for recommending winding up no longer subsisted.

Conclusion: The winding up proceedings were liable to be dropped and were dropped.

Ratio Decidendi: A BIFR recommendation under Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 is not binding on the Company Court, and winding up may be declined where the company's subsequent financial position shows viability and the grounds for winding up no longer exist.

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