Strict compliance with settlement scheme timelines governs tax relief, while assessment is separate from recovery in company-law proceedings.

A concessionary settlement scheme requiring deposit of the settlement amount within a specified time was held to call for strict compliance, because the scheme itself linked timely payment with issuance of the settlement certificate and other conditions. The time-limit was therefore mandatory, and rejection of the settlement applications for delayed deposit was justified. Tax assessment proceedings were treated as distinct from coercive recovery: section 446 of the Companies Act, 1956 did not bar assessment or require prior leave for it, while recovery of assessed tax remained subject to permission of the Company Court or the appellate forum in pending liquidation or sick-company proceedings. Once the sick-company reference was rejected, section 22 protection ceased.

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Issues: (i) Whether the time-limit for depositing the settlement amount under the 2001 settlement scheme was mandatory; (ii) whether assessment and recovery of tax were barred by section 446 of the Companies Act, 1956 or section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Issue (i): Whether the time-limit for depositing the settlement amount under the 2001 settlement scheme was mandatory.

Analysis: The scheme prescribed a specific time for deposit after communication of the settlement amount and also linked issuance of the settlement certificate to compliance with the scheme conditions, including withdrawal of pending departmental proceedings. Where a statutory benefit is made conditional upon compliance with prescribed requirements and consequences of non-compliance are built into the scheme itself, the condition cannot be treated as directory. The principle of strict adherence to the terms of a concessionary scheme applied.

Conclusion: The time-limit was mandatory and the rejection of the settlement applications for non-deposit within time was justified.

Issue (ii): Whether assessment and recovery of tax were barred by section 446 of the Companies Act, 1956 or section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Assessment proceedings for computation of tax are distinct from coercive recovery proceedings. Section 446 does not bar the commencement of assessment proceedings, and prior leave of the Company Court is not required for such assessment. At the same time, recovery of assessed tax must yield to the control of the Company Court or the appellate authority where liquidation or sick industrial company proceedings are pending. Once the reference under the sick industrial companies law stood rejected, the protective umbrella of section 22 was no longer available.

Conclusion: Assessment was not barred, but recovery could proceed only with permission of the Company Court or the appellate authority, as the case may be.

Final Conclusion: The petition succeeded only to the extent of restraining recovery of tax without prior permission in the pending company-law proceedings, while the challenge to the settlement rejection and the bar against assessment failed.

Ratio Decidendi: A statutory concessionary scheme must be complied with strictly, and assessment of tax is distinct from recovery so that winding-up or sick-company protection does not bar assessment, though recovery remains subject to leave or supervision of the competent company-law forum.

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