The Supreme Court of India has held that after a reference is registered by the Board for Industrial and Financial Reconstruction (BIFR), all throughout the subsequent stages, BIFR has complete supervisory control over the affairs of such company till it is revived or the decision to wind up such company is taken.
The Apex Court rejected the plea that since the net worth of the company had become positive, the BIFR had lost jurisdiction over the company. It was held that the ambit of such control includes determination of measures to achieve revival of the sick company; to check whether by such measures revival is being achieved; and the power to decide at any stage subsequent to registration of reference under Section 16 of Sick Industrial Companies (Special Provisions) Act 1985 (SICA) whether such company has ceased to be sick company. It was held that cessation of the status as a sick company can be under Section 17(1) of SICA or as a result of scheme for revival and that determination of such issue, is in the exclusive domain of BIFR.
The Supreme Court here, in the case of Ghanshyam Sarda v. Shiv Shankar Trading Company further observed that any submission or assertion by anyone including the company that by certain developments the company has revived itself and/or that its net worth since the stage of registration having become positive no such scheme for revival needs to be undertaken, can only be dealt with by the BIFR. It was also held that only upon the satisfaction of BIFR that a sick company is no longer sick, such company could be said to have ceased to be amenable to its supervisory control under SICA.