Scheme of arrangement petitions remain maintainable, but company court power yields to the sick company rehabilitation regime.

A petition for sanction of a scheme of arrangement under Sections 391 and 394 of the Companies Act, 1956 may be entertained even where a reference under Section 15 of the Sick Industrial Companies (Special Provisions) Act is pending before BIFR or AAIFR, because the company court's jurisdiction is not wholly excluded. The special sick company regime prevails where there is overlap, and the Companies Act power must yield to any rehabilitation process or scheme under that statute. Proceedings under the Companies Act may continue only to the extent they do not conflict with the special statutory framework.

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Issues: Whether a petition for sanction of a scheme of arrangement under Sections 391 and 394 of the Companies Act, 1956 is maintainable when a reference of the company under Section 15 of the Sick Industrial Companies (Special Provisions) Act is pending before the BIFR or AAIFR.

Analysis: The pending reference under the special sick company legislation was treated as sufficient to attract the statutory framework governing sick industrial companies. The Court relied on the principle that the special enactment prevails over the general company law where both operate in the same field, while also noting that the company court's jurisdiction is not completely extinguished. It held that proceedings under the Companies Act may continue only so long as they do not conflict with any rehabilitation process or scheme under the special statute, and that the wider power under the Companies Act remains subject to the special regime.

Conclusion: The petition under Sections 391 and 394 of the Companies Act, 1956 was held maintainable despite the pending reference under the special sick company law, but the company court's exercise of power was held subject to that statute and any scheme framed under it.

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