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Civil Appeal (arising out of SLP (C) NO. 15736/1997) is filed by the workmen (Engineering Kamgar Sangh) against the order dated 8.8.1997 passed by the Division Bench in winding up proceedings confirming the order of the Single Judge appointing provisional Liquidator. They are supporting the appellant company.

That is how these three appeals have arisen and have come before us. The appellant company had, after taking some adjournments before the Division Bench in the Company Appeal

- which was filed against the order of the learned Single Judge appointing provisional liquidator - submitted a reference before the Board for Industrial and Financial Reconstruction (hereinafter called the `BIFR') on 17.7.1997 under the Sick Industrial Companies (Special Provision) Act, 1985 (hereinafter called the `Act'). The said reference was registered 24.7.1997 as Case No.97 of 1997. The point raised in these appeals is that once the reference was registered by the BIFR on 24.7.1997, the Division Bench of the High Court ought not to have passed orders on 8.8.1997 vacating the interim stay granted by it on 24.12.1996 and ought not to have confirmed the order of the learned Company Judge dated 18.10.1996 appointing provisional liquidator, in view of the mandate of section 22 of the Act. Likewise, it is argued that the order of another Division Bench dated 28.7.1997 appointing a Receiver in the interlocutory appeal arising out of the Civil Suit is also had in view of section 22 of the Act.

We may state that the order of the High Court in proceedings arising out of suit - appointing Receiver on 28.7.1997 was stayed by this Court on 5.8.1997 in SLP 14327/1997. Similarly the order of the High Court, in proceedings arising out of winding up proceedings, dated 8.8.1997 vacating the stay and confirming the Company Judges order appointing provisional Liquidator was stayed on 12.8.1997 in SLP 14750/1997 and it was further ordered that the provisional Liquidator shall not take any further steps.

At this stage, it is necessary to refer to the conduct of the Company, already adverted to, which came up for severe criticism by the High Court of Bombay in its order dated 8.8.1997. What happened was that after securing a stay order from the Division Bench on 20.12.1996 - in respect of the order of the learned Single Judge appointing a provisional Liquidator, - the Company obtained adjournments before the Division Bench on 4.11.1996, 2.12.1996, 9.12.1996, 18.12.1996, 20.12.1996. On 20.12.1996 the case was adjourned to 22.7.1997 when an affidavit was filed - without disclosing that the Company had approached the BIFR on 17.7.1997 - and the matter was got adjourned to 29.7.1997 and again to 8.8.1997. The factum of registration of the reference by the BIFR on 24.7.97 was not disclosed to the High Court till 8.8.1997. The Bench, therefore, rightly criticised the conduct of the appellant for not disclosing these facts to the High Court before 8.8.1997. Further, in the High Court the Company was opposing the appointment of provisional Liquidator on the plea that it was a viable unit but when it approached the BIFR, it was claiming that it was a sick industry. These contradictory pleas also came up for adverse comment by the High Court. The Bench referred to section 22 and section 16 of the Act and felt that the mere registration of the reference under Section 15 did not amount to "pendency of any inquiry" under Section 16 and that, therefore, section 22 was not attracted and, therefore, the Bench was well within its powers in vacating the stay and confirming the appointment of provisional liquidator or in appointing a Receiver. In that context, the Bombay High Court followed a decision of a Division Bench of the Calcutta High Court in Bengal Lamps Ltd. vs. Furmanite Nicco Limited [1991 (72) Com. Cases 146 (Cal.)] in preference to the Judgments of other High Courts which had taken a contrary view. The Bench then gave several findings to the effect that the Company had indulged in various "irregularities" or "misconduct" in its accounting procedures etc. with a view to show that it was a viable unit and to show that it was not liable to be wound up. Having enumerated the alleged financial irregularities as pointed by the Bank and the suppression of facts, the High Court in its order dated 8.8.1997 vacated the stay order dated 20.12.1996 and confirmed the appointment of provisional Liquidator. It also issued a contempt notice to the officers of the Company.