Section 22 sick company protection does not bar criminal prosecution for non-payment of sales tax dues.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 was confined to winding-up, execution, distress, and similar proceedings against a company's property, and did not extend to criminal prosecution for failure to pay sales tax collected from purchasers and due to the Government. Sanction for prosecution was only a pre-initiation step and was not itself a barred proceeding under section 22. The court therefore held that neither sanction nor initiation of criminal prosecution for statutory tax default was prohibited, and the challenge to the sanction order failed.

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Issues: Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred sanction or launch of criminal prosecution for non-payment of sales tax dues under the Gujarat Sales Tax Act, 1969.

Analysis: Section 22 protects an industrial company from winding-up proceedings, execution, distress, or similar proceedings against its properties, and from further proceedings of that kind without the requisite consent. The provision does not extend to criminal prosecution for failure to pay sales tax collected from purchasers and payable to the Government. Sanction of prosecution is only a step prior to initiation of criminal proceedings and is not itself a barred proceeding under section 22. The restraint in section 22 also does not apply to prosecution as such, because the proceeding is against the company and not against its property. The contention based on the cited decision was rejected because that case did not involve criminal prosecution.

Conclusion: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar sanction or initiation of criminal prosecution for non-payment of sales tax dues, and the challenge to the sanction order failed.

Ratio Decidendi: Protection under section 22 is confined to winding-up, execution, distress, or similar proceedings against the company's property and does not extend to sanction or initiation of criminal prosecution for statutory tax default.

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