TaxTMI 
TaxTMI 
TaxTMI 
2007 (9) TMI 411
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....ustrial Companies Act, 1985 (for short 'the Act'), with a prayer to suspend all further proceedings in the suit. It was pleaded that the petitioner had become a sick industrial company and that the proceedings were initiated under the Act, before the Board of Industrial and Financial Re-construction (BIFR). Placing reliance upon section 22 of the Act, it was urged that no proceedings for recovery of amount against a company, declared as sick industry, can be maintained or proceeded with, in view of the prohibition contained in it. The application was opposed by the respondents. Through its order, dated 14-8-2007, the trial Court dismissed the I.A. Hence, this Civil Revision Petition. 3. Learned counsel for the petitioner submits that the p....
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.... 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 Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the en....
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....o such sick industrial company immediately before the date of such order, shall remain suspended or that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as may be specified by the Board : Provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate. (4) Any declaration made under sub-section (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other....
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....oned in the section. Sub-section (3) thereof further elaborates the purport of the proceedings that are either prohibited or suspended under the section. They are the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force, to which such sick industrial company is a party or which are applicable to it immediately before the date of the order, that may be passed by the BIFR or the appellate authority. The provision to sub-section (3) stipulates the duration of the orders, that can be passed in this regard. 7. The object underlying section 22 of the Act is obvious and clear. The recognition of an entity as a sick industrial company would entail in formulation of several schemes in the....
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....on-payment of rent, or breach of other conditions, were held not covered by the protection under section 22(1) (See Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association AIR 1992 SC 1439). 9. The issuance of a cheque by a company and the consequences of the cheque being not honoured, would certainly have a direct bearing, vis-a-vis the assets thereof. In B. Mohan Krishna v. Union of India [1996] 86 Comp. Cas. 487 (AP) and Raghunath Cotton & Oil Products Ltd. v. Ramarao Cotton Co. [1999] 95 Comp. Cas. 852 (AP), it was held that such proceedings cannot be brought under the umbrella of section 22(1) of the Act. Proceedings instituted by the financiers of the vehicles purchased by the Sick Company were also held not protected u....