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The Sick Ind. Companies (Special

Provisions) Act 1985
(Not applicable to sick S.S.I units &
Trading Cos.)

1)Securing the timely detection of sick and

permanently sick cos.
2)Speedy determination by a Board of
Experts of preventive, remedial measures.
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Sick Industrial Co.

Ind. Co. ( Co. registered for not less

than 5 years ) which has at the end of
any financial year accumulated losses
equal to or exceeding its entire net
worth.
Engaged in manufacturing / processing
activity employing – 50 – workers or
more.
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Net Worth:- Paid up capital + Free Reserves

credited out of profits + share premium
Does not include reserve created out of
revaluation of assets, write back of
depreciation provisions & amalgamation.

Operating Agency:- Any public financial

institution, State level institution, scheduled
bank or any other person specified as its agency
by the Board.
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Board:- B.I.F.R.- Board for Industrial & Financial

Reconstruction.
Board has quasi – judicial powers.

Reference of Sickness to Board

1)Board of directors of Co. within -60- days from the
date of finalisation of audited accounts.
2)(a) Central or State Govt. (b) RBI (c ) Public
Financial Institution (d) State Level Institution (d)
State Level Institution (e) Scheduled Bank (f)
Secured creditors or any other creditors may make
reference . Reference is made in Form ‘A’.
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Powers of Board :- 1)To order rehabilitation 2) To

order winding – up.

Ineligible cases:- Shipping Cos., SSI units, service

units such as hotels etc.

Effect of Reference
No legal action / recovery action can be instituted
against Co. & guarantors. All pending cases against
borrowers / guarantor are suspended during pendency
of reference. Limitation suspended for period reference
is pending with B.I.F.R. After permission from B.I.F.R.
legal procedure can be initiated / continued.
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Operating Agency:- When B.I.F.R. decides about

sickness – appoints operating agency – normally a
Bank or F.I.
A sick Ind. Co. comes out of purview of B.I.F.R.
1)When B.I.F.R. confirms opinion that Co. shall be
wind up.
2)When net worth of the company becomes positive. If
a secured creditor takes any steps for enforcement of
security interest under Sec. 13(4) of SARFAESI Act
2002 (Securitisation & Reconstruction of Financial
Assets & Enforcement of Security Interest Act 2002),
the reference made to B.I.F.R. is abated.
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Mr.B.J.Ved