TaxTMI 
TaxTMI 
1996 (1) TMI 343
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....100 each and 10,000, 12 per cent. redeemable/cumulative/preference shares of Rs. 100 each. The main objects of the company are to take over, promote, establish, etc., any business of preparation and sale of alum and its products and other by-products as contained in the memorandum of association. The petitioner supplied bearings as per the requirement of the respondent-company and the last order was on May 14, 1993. There is a running account in respect of the transactions between the petitioner and the respondent-company. As on March 31, 1993, the respondent-company confirmed the balance of Rs. 1,82,856.61. However, still the balance has to be paid. Since the balance was not paid by the respondent-company, statutory notice under sections 4....
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....ering the merits of the case, it is now to be decided, whether the application has to be entertained in view of the provisions of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short "the Act"). For the purpose of appreciation of the case, it is necessary to refer to section 22 of the Act, which is extracted below: "22. Suspension of legal proceedings, contracts, etc.-(i) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the C....
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....section 22(1) of the Act, the recovery is without jurisdiction and the application shall not lie, except with the consent of the Board (BIFR) established under the Act. The Supreme Court observed that in the light of the steps taken by the Board under sections 16 and 17 of the Act no proceedings for execution, distress or the like proceedings against any of the properties of the company shall lie or be proceeded further, except with the consent of the Board. Indeed, there would be automatic suspension of such proceedings against the company's properties. As soon as inquiry under section 16 is ordered by the Board, various proceedings set out under sub-section (1) of section 22 of the Act would be deemed to have been suspended. The Supreme C....
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....e consent of the Appellate Authority. If the proceedings can continue with the consent of the Board or consent of the Appellate Authority or in the event of the conditions precedent prescribed under section 22(1) of the Act ceasing to exist, there is no reason as to why the pending winding-up petitions must necessarily abate or must necessarily be dismissed. Section 31 of the Act provides that certain pending proceedings shall not abate where the receiver or the official liquidator was already appointed before the commencement of the Act. The section cannot be reasonably pressed into service for the purpose of making a submission to the effect that in all other cases the proceedings abate when the operative part of section 22 of the Act can....
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.... the Act, by the BIFR, the pending proceedings shall not be proceeded with. Therefore, this section has got two limbs. As far as the latter limb of the section is concerned, as to whether the proceedings can be proceeded with, when the matter was admitted by the BIFR, it is now made clear that they stand suspended until the proceedings are cleared by the BIFR. But, however, in the former case, it is sought to be contended that the application itself does not lie. Learned counsel for the petitioner submits that pendency of the proceedings before the BIFR was only made known to the petitioner, when the winding-up application has been filed, and therefore, it is entitled to continue the proceedings de hors the pendency of the proceedings befo....