Suspension of coercive recovery under sick company law bars municipal attachment and auction while reference or appeal remains pending.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends coercive recovery steps, including execution, distress, attachment and auction, against the properties of an industrial company while a reference under section 16 is pending, a scheme under section 17 is under preparation or implementation, or an appeal under section 25 is pending, unless prior consent is obtained from the competent authority. On the stated facts, municipal property tax recovery measures were initiated during the pendency of the reference and later the appeal, so the recovery action was treated as barred and the impugned notices were liable to be set aside.

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Issues: Whether recovery proceedings by attachment and auction for municipal property tax could continue during the pendency of a reference and appeal under the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 bars proceedings for execution, distress or the like against the properties of an industrial company when an inquiry under section 16 is pending, a scheme under section 17 is under preparation or implementation, or an appeal under section 25 is pending, unless consent is obtained from the Board or Appellate Authority. The protection is broad and operates to suspend coercive recovery steps. On the facts, the attachment and auction notices were issued while the reference was pending and, later, while the appeal before the Appellate Authority was pending. The same principle applied to the municipal recovery action.

Conclusion: The recovery proceedings were not maintainable during the pendency of the reference and appeal, and the impugned notices were liable to be set aside.

Final Conclusion: Coercive recovery against the petitioner's property could not proceed while the statutory proceedings under the sick industrial companies regime remained pending, and the municipal authority was left free to act only after the appellate decision.

Ratio Decidendi: Pendency of a reference under section 16 or an appeal under section 25 of the Sick Industrial Companies (Special Provisions) Act, 1985 triggers automatic suspension of coercive recovery proceedings against the company's properties under section 22 unless consent of the competent authority is obtained.

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