Prior consent for recovery against sick industrial companies is mandatory before garnishee proceedings can continue under the statutory bar.

Recovery of sales tax arrears from a sick industrial company could not proceed through garnishee or similar distress proceedings without the prior consent of the Board for Industrial and Financial Reconstruction under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The company had already been declared sick and a rehabilitation scheme was in place, so the statutory bar continued to apply despite the earlier conditional stay having lapsed for non-compliance. Because the recovery notices were not shown to have been preceded by the required consent, the garnishee proceedings were invalid and were set aside. Fresh recovery action was left open, subject to compliance with the statutory requirement.

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Issues: Whether recovery of sales tax arrears from a sick industrial company could proceed by garnishee notice without prior consent of the Board for Industrial and Financial Reconstruction under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: The company had been declared sick and a rehabilitation scheme had been framed. Although a conditional stay earlier granted by the High Court had stood vacated for non-compliance, the legal position remained that recovery measures against the properties of a sick industrial company could not be taken by way of distress or like proceedings without the Board's prior consent. The recovery notices issued in the form of garnishee proceedings were not shown to have been preceded by such consent. The absence of communication regarding consent did not alter the statutory requirement.

Conclusion: The garnishee notices were invalid and were set aside for want of prior consent of the Board. The recovery of arrears could be pursued afresh in accordance with law after complying with section 22.

Final Conclusion: The proceedings for recovery were held unenforceable in their present form against the sick industrial company, but the revenue was left free to initiate fresh recovery action in compliance with the statutory requirement.

Ratio Decidendi: Recovery or distress proceedings against a sick industrial company cannot be taken without the prior consent of the Board under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

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