Singhvi, J.
1. These appeals are directed against order dated 8-3-2001, passed by the learned company judge in the Company Application Nos. 542 of 1999 and 11 of 2001 vide which he declared that in view of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 ('the Act'), the court cannot take further proceedings in Company Petition No. 108 of 1997 and rejected the appellants' prayer to modify orders dated 25-7-1997, 5-9-1997 and 3-10-1997.
2. The facts of the case are that on a petition filed by the respondent under Section 433 read with Section 434 of the Companies Act, 1956, which was registered as the Company Petition No. 108 of 1997, for winding up of the appellant, the learned company judge ordered issuance of notice on 25-7-1997 and restrained it from alienating the assets of the company except in regular course of business. After service of notice, the learned company judge passed order dated 5-9-1997, vide which he modified the ex parte interim order and gave liberty to the appellant to sell the assets and properties of the company with the permission of the IDBI subject to the condition that out of the sale proceeds, a sum of Rs. 1 crore shall be kept by the monitoring bank, i.e., State Bank of Patiala, till further orders. On 3-10-1997, the learned company judge took notice of the statement made by the appellant's counsel that out of the principal amount of Rs. 75 lakhs, a sum of Rs. 29 lakhs had already been paid and the remaining amount would be paid within two months or earlier to that and requested for adjournment. The learned company judge accepted his request and adjourned the case with a direction for filing written statement. Thereafter, the appellant is said to have paid Rs. 46 lakhs to the respondent and the dispute regarding the rate of interest is pending before the Civil Court at Rajpura.
3. During the pendency of the winding-up petition, the appellant made a reference under Section 15 of the 1985 Act. The Board for Industrial and Financial Reconstruction ('BIFR') entertained the reference, and initiated enquiry under Section 16 of the 1985 Act. By taking advantage of this, the appellant filed an application under Section 22 for staying the proceedings of Company Petition No. 108 of 1997. The same was registered as Company Application No. 542 of 1999. It filed another application under Section 151 of the Code of Civil Procedure, 1908, read with Rule 9 of the Companies (Court) Rules, 1959, for modification of orders dated 25-7-1997, 5-9-1997 and 3-10-1997 and also for dismissal of Company Petition No. 108 of 1997 as having become infructuous. The second application was registered as Company Application No. 11 of 2001.
4. After hearing the parties, the learned company judge declared that in view of the embargo contained in Section 22 of the 1985 Act, no further proceedings can be taken in the winding up petition and disposed of both the applications with the following observations :
'A perusal of the above, reveals that in case of a pending proceeding inter alia before the company court under the provisions of the Companies Act, 1956, after initiation of enquiry under Section 16, the matter is not to be proceeded with further. In terms of the provisions of Section 22, proceedings in this case are adjourned sine dieto await the determination by the BIFR in respect of the pending proceedings, in order to comply with the mandate of Section 22, namely, not to proceed with the matter further. The decision relied upon by the learned counsel for the appellant is wholly irrelevant in so far as the present controversy is concerned.
This order shall also dispose of C.A. No. 11 of 2001 filed by the applicant. In the aforesaid application, the claim of the petitioner as narrated during the course of arguments is that orders dated 25-7-1997/5-9-1997, passed by this court in C.A. No. 231 of 1997 in C.P, No. 108 of 1997 should be modified, in order to grant liberty to the applicant to dispose of the properties in question, primarily on the basis of the submission that the entire principal amount has allegedly been paid by the applicant to the petitioner.
In view of Section 22, extracted above, it is not open to this court to proceed any further with this matter. It is the opinion of this court that it is not within the purview of this court to modify the aforesaid orders while the matter is pending before the BIFR. Admittedly, proceedings before the BIFR had started on 12-7-1999, when a reference was registered under Section 15 by the BIFR.'
5. The learned counsel for the appellant vehemently, argued that in view of Section 22, the learned company judge was obliged not only to adjourn 'the proceedings of the winding-up petition but also to suspend the operation of the interim orders passed on 25-7-1997, 5-9-1997 and 3-10-1997, which had been passed before entertaining of reference made under Section 15 of the 1985 Act. He relied on the decision of the Supreme Court in Real Value Appliance Ltd. v. Canara Bank [1998] 93 Comp. Cas. 26, 16 SCL 445 and Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd. [2000] 101 Comp. Cas. 284. He further submitted that instead of adjourning the proceedings of the winding-up petition sine die to await determination by the BIFR in respect of pending proceedings, the learned company judge should have simply suspended further proceedings of the main petition as also the interim orders passed earlier.
6. The learned counsel for the respondent supported the impugned order and argued that the learned company judge did not commit any illegality by declining the appellants prayer for suspending the operation of the interim orders so as to entitle the appellant to dispose of the property.
We have given serious thought to the respective arguments. In our opinion, the appeals are liable to be dismissed because the order, under appeal, does not suffer from any legal error. A reading of Section 22 which has been extracted in the order of the learned company judge shows that once the court finds that an enquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation, no proceedings for 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 guarantee in respect of any loans or advance granted to the industrial company) can be instituted or proceeded with further, except with the consent of the board or, as the case may be, the appellate authority. The embargo contained in Section 22 is unequivocal and complete.
7. A recapitulation of the facts of these cases shows that during the pendency of the winding up petition, the BIFR entertained the reference made by the appellant-company and started enquiry under Section 16 of the 1985 Act. Therefore, the learned company judge had no option but to stay the proceedings on the winding-up petition and this is precisely what he has done by passing the impugned order and we do not find any valid reason to take a different view.
8. The argument of the learned counsel that instead of adjourning the proceedings of the company petition sine die the learned company judge should have suspended the proceedings of the petition along with interim orders passed in 1997 appears attractive but lacks merit and deserves to be rejected because Section 22 of the 1985 Act did not leave any discretion with the company judge except to adjourn the proceedings of the winding up petition to await the final decision of the BIFR.
9. We also do not find any substance in the argument of the learned counsel that the learned company judge should have modified interim orders dated 5-9-1997 and 3-10-1997, or at least directed that their operation will remain suspended. In our considered view, the learned company judge could not have passed any order on the merits of the interim directions given by his predecessor.
No other point has been argued.
10. For the reasons mentioned above, the appeals are dismissed. However, it is clarified that dismissal of the appeals shall not preclude the appellant from raising legal permissible objections in any other proceeding which may be pending before the learned company judge or elsewhere.