SPONGE IRON INDIA LTD Vs. NEELIMA STEELS LTD

JUDGEMENT

(1.) DURING the pendency of several petitions for winding up of the respective companies on the ground that they are unable to pay its debts (in none of which any receiver or official liquidator is appointed), it has been brought to the notice of the court that a reference under Chapter III of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "the Act"), has been registered in respect of each of the respondent companies under section 16 (1) of the Act by the Board for Industrial and Financial Reconstruction ("the BIFR", in short), and the matters were adjourned on more than one occasions awaiting further steps, to be taken in view of section 22 of the Act. Counsel for the petitioners in some of the cases contended that the mere registrations of a reference under section 16 (1) will not attract the applicability of 22 of the Act Counsel for the petitioners in some of the cases contended that the mere registration of a reference under section 16 (1) will not attract the applicability of section 22 of the Act and and, therefor, the company petitions may be proceeded with. As a common question as to the effect of section 22 of the Act is involved, I have heard several counsel for the petitioners and also counsel for the respondent companies who have appeared. They have also addressed arguments on the action to be taken by the court in the event section 22 is held applicable. The points that arise for consideration are :