Section 22 protection for sick industrial companies bars recovery action during rehabilitation and sustains interim injunction relief.

A sick industrial company under rehabilitation was protected by the statutory bar in Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, because an operating agency had been appointed to conduct a viability study and prepare a rehabilitation scheme. On that footing, the respondents' recovery action was suspended, and the proper course for them was to approach the Board for Industrial and Financial Reconstruction if they wished to pursue recovery or demand. The interim injunction therefore remained justified, and there was no ground to vacate it.

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Issues: Whether the petitioners, having been declared a sick industrial company and subjected to a rehabilitation process, were protected by the statutory bar under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 against the respondents' recovery claim, and whether the interim injunction should be vacated.

Analysis: The company had already been declared a sick industrial company, an operating agency had been appointed to conduct a techno-economic viability study and prepare a rehabilitation scheme, and Section 22 of the Act came into operation. Once that statutory protection applied, any recovery action of the nature sought by the respondents stood suspended, and the proper course for the respondents was to approach the Board for Industrial and Financial Reconstruction if they wished to pursue recovery or demand.

Conclusion: The respondents' recovery action was held to be barred by Section 22, and there was no ground to vacate the interim injunction. The injunction was made absolute and the petitioners' application was allowed.

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