2001 (11) TMI 911 - HC - Companies Law

Summary

Issues:
1. Interpretation of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
2. Validity of the order passed by the learned company judge regarding the winding-up petition.
3. Consideration of the reference made to the Board for Industrial and Financial Reconstruction (BIFR) under the 1985 Act.
4. Applicability of the Supreme Court decisions in similar cases.
5. Discretion of the company judge in modifying or suspending interim orders.

Analysis:

Issue 1: Interpretation of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985
The judgment revolves around the interpretation of section 22 of the Act, which prohibits further proceedings in a winding-up petition if an enquiry under section 16 is pending or a scheme under section 17 is under consideration. The court found the embargo in section 22 to be clear and absolute, leaving no room for discretion.

Issue 2: Validity of the order passed by the learned company judge
The learned company judge's order to adjourn the winding-up petition proceedings due to the BIFR's enquiry under section 16 was deemed appropriate and in compliance with the Act. The court upheld the order, stating that the judge had no option but to stay the proceedings as per the Act's provisions.

Issue 3: Consideration of the BIFR reference
The judgment highlights that once the BIFR initiated an enquiry under section 16 during the winding-up petition, the company judge was obligated to await the final decision of the BIFR. This requirement was seen as necessary under the Act, and the judge's decision to adjourn the proceedings was deemed correct.

Issue 4: Applicability of Supreme Court decisions
The arguments based on Supreme Court decisions in Real Value Appliance Ltd. v. Canara Bank and Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. were considered but ultimately rejected. The court found the order under appeal to be legally sound and in accordance with the provisions of the Act.

Issue 5: Discretion of the company judge in modifying or suspending interim orders
The judgment clarified that the company judge had no authority to modify or suspend the interim orders passed earlier. The judge's role was limited to adjourning the proceedings as mandated by the Act, and any alteration of previous orders was deemed beyond the court's purview.

In conclusion, the appeals were dismissed, affirming the validity of the order passed by the learned company judge. The judgment emphasized the strict adherence to the provisions of the Act, particularly section 22, in matters concerning winding-up petitions and BIFR references.