Section 22(1) bars coercive recovery against a sick industrial company, including garnishee orders, without Board consent.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends coercive recovery proceedings against a declared sick industrial company while a rehabilitation scheme is under preparation or consideration, unless the Board consents. A mere tax demand is not barred, but recovery steps such as garnishee orders and notices threatening recovery as arrears of land revenue fall within the statutory embargo. In this context, sales tax recovery action against the sick company could not proceed without Board approval.

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Issues: Whether section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 barred coercive recovery steps, including garnishee orders and threat of recovery as arrears of land revenue, for sales tax dues against a sick industrial company.

Analysis: A reference had been made under section 15(1) of the Act and the Board had declared the company sick under section 3(1)(o), while a rehabilitation scheme was under preparation or consideration under section 17. In that situation, section 22(1) operates to suspend proceedings for execution, distress or the like against the properties of the industrial company except with the consent of the Board. Mere raising of a demand is not prohibited, but notices warning coercive recovery and garnishee orders directing banks not to pay amounts to the company and to credit them towards sales tax dues are recovery measures falling within the statutory embargo.

Conclusion: The coercive recovery action was barred by section 22(1) and could not proceed without the Board's consent.

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