The central legal point established in the judgment is the statutory bar under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, which requires permission from the Board for execution proceedings against a sick company.

VINOD K. SHARMA, J. (ORAL) - The petitioner company has invoked the jurisdiction of this Court under Article 227 of the Constitution of India, to challenge the order dated 4.3.2006, passed by the learned Motor Accident Claims Tribunal, Rohtak (hereinafter referred to as “the Tribunal”) dismissing an application moved by the petitioner, under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as “the Act”).

2. The learned Tribunal awarded compensation to the claimants, jointly and severally against the driver, and the petitioner, being owner of the Tata Sumo, which had met with an accident.

3. In view of registration of the petitioner as sick Mill with the Board for Industrial and Financial Reconstruction, the petitioner sought stay of execution proceedings by invoking Section 22 of the Act. Section 22 of the Act reads as under :-

“22. Suspension of legal proceedings, contracts, etc. -(1) Where in respect of an industrial company, an inquiry 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 or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 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.

(2) Where the management of the sick industrial company is taken over or changed, in pursuance of any scheme sanctioned under section 18, notwithstanding anything contained in the Companies Act, 1956 or any other law or in the memorandum and articles of association of such company or any instrument having effect under the said Act or other law-

(a) it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company;

(b) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the Board.

(3) Where an inquiry under section 16 is pending or any scheme referred to in section 17 is under preparation or during the period of consideration of any scheme under section 18 or where any such such scheme is sanctioned thereunder, for due implementation of the scheme, the Board may by order declare with respect to the sick industrial company concerned that the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force, to which such sick industrial company is a party or which may be applicable to such sick industrial company immediately before the date of such order, shall remain suspended or that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable with such adaptations and in such manner as may be specified by the Board:

Provided that such declaration shall not be made for a period exceeding two years which may be extended by one year at a time so, however, that the total period shall not exceed seven years in the aggregate.

(4) Any declaration made under subsection (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 or any other law, the memorandum and articles