Statutory bar on coercive recovery against sick industrial companies prevented enforcement of tax and utility dues without consent.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 bars execution, distress and similar coercive recovery measures against the assets of a sick industrial company while an inquiry under section 16 is pending or a scheme under section 17 is under preparation or consideration, unless consent is obtained from the competent board or appellate authority. The Court treated recovery steps for sales tax dues and water charges as coercive proceedings within that bar. It held that the dues could not be enforced without prior consent, and the impugned recovery orders were unsustainable.

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Issues: Whether recovery proceedings for sales tax dues and water charges could be continued against a company declared sick under the Sick Industrial Companies (Special Provisions) Act, 1985 without obtaining consent of the Board for Industrial and Financial Reconstruction.

Analysis: Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 creates a statutory bar against proceedings for execution, distress or the like against the properties of a sick industrial company while an inquiry under section 16 is pending or a scheme under section 17 is under preparation or consideration, unless the Board or the appellate authority grants consent. The provision operates notwithstanding any other law, and the remedy is only suspended, not extinguished, with limitation excluded during the suspension period under section 22(5). Applying the settled principles governing sick companies, the Court held that the impugned recovery steps taken by the commercial tax authority and the public works authority were coercive measures against the assets of the company and could not proceed without BIFR approval.

Conclusion: The respondents could not enforce the dues by distress or recovery proceedings without obtaining consent from BIFR, and the impugned orders were unsustainable.

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