Statutory moratorium on recovery proceedings against sick industrial company assets continues unless the Board consents

A statutory moratorium applies to coercive recovery steps against a sick industrial company's assets once an inquiry under section 16 is ordered or a rehabilitation scheme is under consideration or implementation. Execution, distress and similar proceedings are automatically suspended, so creditors cannot continue property tax or allied recovery measures without the Board's consent or the appellate authority's permission. The creditor's claim is not extinguished; it is deferred within the special sickness-rehabilitation framework, which places coercive asset recovery under the Board's control.

---

---

Issues: Whether recovery proceedings for property tax and allied dues could be continued against the properties of a sick industrial company without the consent of the Board under the special statute.

Analysis: The special enactment was held to create an automatic statutory suspension of proceedings for execution, distress or the like against the properties of an industrial company once an inquiry under section 16 was ordered or a scheme under section 17 was in contemplation or implementation. The proceedings listed in the provision were treated as incapable of continuation except with the consent of the Board or the appellate authority, and the remedy of the creditor was held to be postponed rather than extinguished. The Court also noted that the statutory scheme for inquiry, declaration of sickness, preparation of a rehabilitation scheme, and appointment of an operating agency showed that coercive recovery from the company's assets could not proceed independently of the Board's control.

Conclusion: Recovery proceedings against the sick industrial company's properties could not be pursued without the Board's consent.

Ratio Decidendi: Once inquiry under section 16 is ordered in relation to a sick industrial company, proceedings for execution, distress or similar coercive recovery against its properties stand automatically suspended and may proceed only with the consent of the Board.

---