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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether attachment of the properties of a company declared sick under the Sick Industrial Companies (Special Provisions) Act, 1985 could be made for recovery of excise duty during pendency of inquiry and preparation of a rehabilitation scheme.
Analysis: Section 22 of the Act bars proceedings for execution, distress or the like against the properties of a sick industrial company when an inquiry under Section 16 is pending or a scheme under Section 17 is under preparation, consideration or implementation, unless the Board or Appellate Authority consents. The protection operates to preserve the company's assets while rehabilitation proceedings are pending. The Court applied the settled position that coercive recovery steps cannot be taken against the assets of the sick company during the protected period, and distinguished the revenue's reliance on authority suggesting that only scheme-covered dues may be protected, since in the present case no scheme had yet been sanctioned.
Conclusion: The attachment of the petitioner's properties was impermissible and was quashed; recovery steps could be taken only in accordance with law and after obtaining permission from the Board.
Final Conclusion: The writ petition succeeded, and the impugned attachment proceedings were set aside on the ground that statutory protection under Section 22 prevented coercive recovery against the sick company's assets at that stage.
Ratio Decidendi: During pendency of inquiry or preparation of a rehabilitation scheme under the Sick Industrial Companies (Special Provisions) Act, 1985, coercive recovery by way of attachment, execution or distress against the assets of the sick industrial company cannot proceed without Board consent.
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