The court ruled that upon registration with BIFR, all winding-up proceedings must be suspended, and the Board retains limited powers for rehabilitation actions even after appointing a provisional liquidator.

1.Leave under R.19(3) of the Company Court Rules, 1989 granted to the applicants to take out a Judge' Summons in terms of draft Judge' Summons handed in. By consent, made returnable forthwith.

2. The petitioners have filed the petition for winding up against the Company. By order of this Court dated 13th November, 1998 the Official Liquidator was appointed as Provisional Liquidator. By the present application, the Company has moved this Court to stay the order dated 13th November, 1998 admitting the Company Petition and appointing the Official liquidator as the Provisional Liquidator till the disposal of Reference under BIFR. By a further prayer clause (b), the Company has prayed that the Official Liquidator be restrained from taking further steps as per the order of this Court dated 13th November, 1998 without obtaining any prior permission from BIFR.

3. A few facts need be stated.
Petition for winding up was filed in this Court on 18th May, 1998. According to the Company, the accounts were made upon 15th October, 1998. The company found that their net worth had eroded by more than 50% and consequently at a Board meeting held on 3rd November, 1998 passed a resolution to move the BIFR under the provisions of SIC (SP) Act, 1985. It is the case of the Company that thereafter they sent the papers to their Counsel at Delhi for lodging the application. They received the papers from their Counsel on 11th November, 1998. The application was signed by the Chairman and Managing Director on 12th November, 1998. The papers were thereafter sent to the Advocate at Delhi on 18th November, 1998 and the application was lodged with BIFR on 19th November, 1998. The said application was registered with BIFR on 1st December, 1998. A communication to that effect dated 1st December, 1998 was sent to the Company, a copy of which has been annexed to the affidavit dated 12th December, 1998 of the Shri Surendera Kumar Seth, Constituted Attorney and the Vice - President of the Company. Pursuant to the order of this Court an additional affidavit was filed on 16th January, 1999. In the said affidavit, it is clarified that the papers were lodged with BIFR on 19th November, 1998 by their advocate though the reference is dated 12th November, 1998. This Court admitted the petition on 13th November, 1998 and appointed a provisional liquidator by the very same order.

4. On behalf of the Company, it is contended that by virtue of the proceedings being registered with the BIFR on 1st December, 1998 all further proceedings in the Company Petition must stand suspended and / or stayed.
On behalf of the petitioners it is contended that once a provisional liquidator was appointed by order of this Court on 13th November, 1998 the Board of Directors could have taken no steps to pass the Resolution to refer the matter to BIFR. It is secondly contended that the Company suppressed the facts from this Court as also BIFR, in as much as this Court was not informed on 13th November, 1998 that the Company had approached the BIFR as also in the form it was not mentioned that a Liquidator had been appointed. Learned counsel points out that in respect of another sister company, when the petition came up for admission on the very same day, in view of registration of the case under SIC (SP) Act, 1985 this Court stayed all further proceedings against the said Company. In the light of that and in view of the suppression of material facts before this Court it is contended that the order of the BIFR is non est and / or should be ignored and the provisional liquidator should be allowed to formally take over possession of the assets of the Company.

5. With thi