2006 (4) TMI 267 - HC - Companies Law

Summary

Issues:
1. Creditor's winding up petition filed without permission from the Board for Industrial and Financial Reconstruction.
2. Applicability of section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
3. Dismissal of the company petition with liberty to apply for permission or await conclusion of proceedings.

Analysis:
1. The judgment addresses a creditor's winding up petition filed without obtaining permission from the Board for Industrial and Financial Reconstruction. The company in question had been declared a sick industrial company, and a scheme for rehabilitation was sanctioned by the Board under the Sick Industrial Companies (Special Provisions) Act, 1965. However, due to non-implementation of the scheme, the Board ordered the winding up of the company, leading to the filing of the winding up petition. The court noted that as per section 22(1) of the Act, the bar on filing a company petition is applicable once a reference is received under section 15(1), except with the Board's permission. Since the petitioner did not seek such permission, the winding up petition was deemed not maintainable.

2. The judgment delves into the applicability of section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, which prohibits the filing or continuation of a company petition without the Board's approval during the pendency of proceedings before the Board for Industrial and Financial Reconstruction. The court emphasized that the period of limitation remains suspended under section 22(5) while such proceedings are ongoing, highlighting the importance of adhering to the statutory provisions and seeking necessary permissions before initiating winding up proceedings.

3. Finally, the court dismissed the company petition but granted the petitioner company the liberty to either apply to the Board for Industrial and Financial Reconstruction for permission to file a company petition or await the conclusion of the ongoing proceedings under the Act of 1985. This decision underscores the significance of following due process and obtaining requisite approvals when initiating winding up actions against sick industrial companies, ensuring compliance with the legal framework and safeguarding the interests of all stakeholders involved in the rehabilitation and winding up processes.