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Issues:
- Winding up of a company declared as a sick industrial company under the Sick Industrial Companies (Special Provisions) Act, 1985. - Jurisdiction of the court in winding up proceedings when the Board for Industrial and Financial Reconstruction (BIFR) is involved. - Compliance with the provisions of the Act regarding the revival or winding up of a sick industrial company. - Validity of continuing winding up proceedings without the consent of the BIFR. - Effect of prior court orders in light of subsequent proceedings before the BIFR. Analysis: The High Court of Andhra Pradesh considered twelve company petitions filed by creditors of a company seeking winding up due to its inability to pay debts. The respondent company was declared a sick industrial company by the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, 1985. The Act aims to facilitate the revival and rehabilitation of sick industrial companies through expert intervention and financial assistance from various entities, emphasizing national economic interests. The Act provides a comprehensive framework for dealing with sick industrial companies, including the BIFR's authority to determine revival feasibility and sanction schemes for rehabilitation. If the BIFR deems it just and equitable, it can recommend winding up to the High Court. Section 22 of the Act restricts winding up proceedings during BIFR inquiries, scheme preparation, or implementation without the Board's consent. In this case, the BIFR was actively involved in devising a revival scheme for the respondent company, barring the court from proceeding with winding up without the Board's approval. The court emphasized that compliance with the Act's provisions is crucial in matters concerning sick industrial companies. Notably, the court highlighted the need for the petitioners to seek the Board's consent before pursuing winding up proceedings. The judgment underscored the Act's self-contained nature, requiring adherence to its procedures and restrictions on court intervention without the BIFR's involvement. Addressing prior court orders appointing a receiver before BIFR proceedings, the court clarified that such orders do not bind parties once BIFR actions commence. The judgment emphasized the Act's procedural requirements and the significance of following statutory procedures in cases involving sick industrial companies. Citing a Gujarat High Court decision, the judgment reinforced the dismissal of winding up proceedings initiated against a sick industrial company without indefinite adjournment, aligning with the Act's provisions. The court dismissed the company petitions, subject to revival upon the BIFR's recommendation for winding up, with each party bearing its costs. In conclusion, the judgment underscores the Act's primacy in dealing with sick industrial companies, emphasizing adherence to statutory procedures, the BIFR's pivotal role, and the limitations on court intervention without the Board's consent.
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