Sick Industrial companies act (SICA) was enacted mainly to provide a solution to the problem of dealing with multiple agencies in order to attempt revival of sick industries.
Section 3 of the Act defines Sick Industrial company.
SICA has provided for the establishment of Board for Industrial and Financial Reconstruction (BIFR). The body is responsible for administering SICA and is vested with the powers and duties for implementing the same.
BIFR can grant relief to sick companies which are wide ranging and even inconsistent with the relevant applicable laws and regulations.
For getting these benefits, scheme has to be filed with the BIFR. This scheme for revival can prescribe various modes of restructuring.
BIFR scheme may provide for financial assistance by way of loans advances or guarantees or reliefs or concessions or sacrifices from various banks or financial institutions.
Winding Up of Sick Industrial undertaking
After making inquiry BIFR is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable and that the company is not likely to become viable in future and that it is just and equitable that the company should be wound up it may record and forward its opinion to the concerned High Court.
Suspension of legal proceedings
When an inquiry or scheme is pending or a sanctioned scheme is under implementation or an appeal is pending then irrespective anything contained in the Companies Act, 1956, any other law, memorandum and articles of association or no proceedings for the winding up of the industrial company or for execution distress against any of the properties or for the appointment of a receiver and no suit for the recovery of money or for the enforcement of any security in respect of any loans or advance granted to the industrial company shall lie or be proceeded only with the consent of BIFR or appellate authority.