Protection against coercive excise recovery during pending sickness proceedings under industrial rehabilitation law

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 protects a sick industrial company from coercive recovery of central excise and similar dues while reference proceedings before the BIFR or AAIFR remain pending. In that situation, arrears cannot be enforced by coercive process unless the Board grants consent, and the protection is confined to the demand period covered by the pending reference. The stated result was that coercive recovery of the excise demand during the pendency of the proceedings was not permissible, and the company was entitled to statutory protection.

---

---

Issues: Whether coercive recovery proceedings for central excise duty could be taken against a sick industrial company while proceedings before the Board for Industrial and Financial Reconstruction and the Appellate Authority for Industrial and Financial Reconstruction were pending under the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: The protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 applies to recovery of dues where the company is a sick industrial company and proceedings under the Act are pending. In such circumstances, arrears of taxes and similar dues cannot be recovered by coercive process unless the Board grants consent. The direction is confined to the demand relating to the period for which the reference is pending.

Conclusion: Coercive recovery of the excise demand was not permissible during the pendency of the proceedings under the Act, and the petitioner was entitled to protection.

---