BIFR inquiry protection bars recovery proceedings unless consent is obtained, even before any sanctioned rehabilitation scheme exists.

During the pendency of a BIFR inquiry, recovery proceedings of the kind covered by section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 cannot proceed without BIFR consent. The statutory bar is meant to protect rehabilitation efforts and applies even where no sanctioned scheme has yet been framed. A contrary Supreme Court ruling was distinguished because it concerned dues already covered by a sanctioned scheme. The recovery action was therefore held to be hit by section 22, subject to the Board's power to grant consent for appropriate proceedings.

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Issues: Whether recovery proceedings against the petitioner-company could be sustained when an inquiry before the BIFR was pending and no sanctioned scheme had yet been framed under the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 stays legal proceedings of the specified nature during the pendency of inquiry under sections 16 and 17, subject to the consent of the Board. The embargo is intended to prevent impediment to rehabilitation or implementation of a sanctioned scheme. The earlier Supreme Court ruling relied on by the Revenue was distinguished because it dealt with dues covered by a sanctioned scheme, whereas in the present case no scheme had yet been framed and the BIFR inquiry was still pending. In that situation, the recovery action could not be justified on the footing that section 22 was inapplicable merely because the taxes were not included in any scheme.

Conclusion: The recovery proceedings were held to be hit by the statutory bar under section 22, subject to the BIFR's power to grant consent for appropriate action.

Ratio Decidendi: During the pendency of a BIFR inquiry, recovery proceedings of the kind covered by section 22 cannot proceed without BIFR consent, and the pendency of no sanctioned scheme does not by itself remove that statutory protection.

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