Sick company protection bars coercive tax recovery until Board consent is obtained under the insolvency framework.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 bars coercive recovery proceedings against the properties of a sick industrial company while an enquiry under Section 16 is pending, a scheme is under preparation or consideration, or a sanctioned scheme is under implementation, unless the Board grants consent. The protection extends to recovery of sales tax arrears, so the State's power to levy tax remains intact but recovery is stayed until statutory approval is obtained. The creditor's remedy is suspended, not extinguished, and the suspension period is excluded for limitation purposes.

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Issues: Whether arrears of sales tax due from a sick industrial company could be recovered by coercive proceedings without the consent of the Board under the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: Section 22(1) bars proceedings for execution, distress, or the like against the properties of a sick industrial company when an enquiry under Section 16 is pending, a scheme is under preparation or consideration, or a sanctioned scheme is under implementation, unless the Board grants consent. The protection extends to recovery of tax dues as well, and the creditor's remedy is only suspended, not destroyed. The provision is intended to preserve the viability of the sick company while safeguarding limitation by excluding the period of suspension. The State's power to levy sales tax is not taken away, but recovery against the sick company is stayed until the statutory consent is obtained.

Conclusion: The arrears of sales tax could not be recovered from the appellants without first obtaining the Board's consent, and the issue was answered in favour of the assessee.

Final Conclusion: The appeals succeeded, and the recovery steps based on the sales tax dues were set aside because Section 22(1) operated as a bar to coercive recovery absent the Board's approval.

Ratio Decidendi: When the conditions of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 are satisfied, coercive recovery proceedings, including recovery of tax arrears, cannot be pursued against the properties of the sick industrial company without the Board's consent.

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