Cochin Malabar Estates and Industries Ltd. vs Overseas Latex (P) Ltd.

J.B. Koshy, J.—This petition filed sunder Ss. 433 and 439 of the Companies Act, 1956 for winding up of the first respondent company. At the time when the petition was filed, scheme for rehabilitation was sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) on 27.2.1997, as BIFR declared the company as a sick industrial company within the meaning of S. 3(1)(o) of the Act by proceeding dated 25.3.1996. BIFR notified failure of the scheme sanctioned on 27.2.1997 and operating agency was directed for new proposal by proceeding dated 7.3.2000 and it is still under consideration. When company petition was filed, scheme sanctioned was under implementation as can be seen from Annexures I to II in R.P.No. 303/2000. BIFR has confirmed that proceedings are still pending.

S. 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ''the Act'') states as follows:

"22(1). Where in respect of an industrial company, an inquiry under S. 16 is pending or any scheme referred to under S. 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under S. 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 enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority."

At the time when claim petition was filed, no consent of BIFR was obtained as provided under S. 22(1) of the Act. Therefore, this proceedings filed without the consent of BIFR will not lie. [See Tarun Shah Vs. Perfect Thread Mills Limited, and High Temp. Chemicals Pvt. Ltd. v. Satya Steel Strips Pvt. Ltd. 1993 72 CompCas. 447 AP. If there was no bar under S. 22(1) at the time of filing of the company petition, proceeding need only be suspended. But, here, at the time of filing of the company petition itself, bar under S. 22(1) would apply as scheme sanctioned by the BIFR was under implementation. Therefore, this proceedings will not lie (not maintainable) in view of the clear provisions of S. 22(1) of the Act. I also note that under S. 20 of the Act, BIFR is given power to form an opinion for winding up of the company and forward the same to the High Court in accordance with the provisions of the Companies Act. So, without prejudice to the right of the petitioner in approaching the BIFR or filing the petition after bar under S. 22(1) is lifted, this company petition is dismissed.