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Issues:
1. Stay of further proceedings in a company petition under the Companies Act, 1956. 2. Interpretation of the Sick Industrial Companies (Special Provisions) Act, 1985. 3. Effect of registration of a reference with the Board for Industrial and Financial Reconstruction. 4. Application of sections 15, 16, 17, and 22 of the Sick Industrial Companies Act. 5. Legal implications of pending inquiry before the Board on winding up proceedings. 6. Precedents related to the stay of proceedings based on the registration of a reference with the Board. Analysis: The judgment deals with an application for a stay of further proceedings in a company petition filed under the Companies Act, 1956. The respondent company, claiming to be a sick industrial company under the Sick Industrial Companies Act, sought a stay based on a reference made to the Board for Industrial and Financial Reconstruction. The petitioner contested the application, arguing that mere registration of the reference does not suspend legal proceedings unless an inquiry is initiated under the Act. The court examined the provisions of the Sick Industrial Companies Act, emphasizing that the registration of a reference with the Board signifies the commencement of an inquiry. It highlighted the steps required to be taken by the Board under sections 15, 16, and 17 of the Act, leading to the preparation of schemes under section 18. The court clarified that the pendency of an inquiry before the Board, as indicated by the registration of the reference, warrants a stay of winding up proceedings under section 22 of the Act. Citing relevant case laws, the judgment reinforced the importance of the Board's role in determining the status of a sick industrial company and the consequent impact on legal proceedings. It referred to a previous Division Bench decision that upheld the stay of proceedings based on the registration of a reference with the Board, aligning with the principles established by higher courts. Ultimately, the court allowed the application for a stay of further proceedings in the company petition, directing the parties to seek the Board's consent to proceed or explore alternative legal remedies. The judgment underscored the mandatory nature of the provisions under the Sick Industrial Companies Act, emphasizing the need to respect the Board's jurisdiction in matters concerning sick industrial units.
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