TaxTMI 
TaxTMI 
2008 (7) TMI 860
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....as a "sick company" and also for effecting rehabilitation. It is stated that the BIFR by an order dated May 9, 2001, has declared the petitioner-company as a "sick company" and appointed IDBI as its operational agency as per section 17(3) of the SICA, to examine the viability of settlement of the scheme as a rehabilitatory measure. There was also an order passed under section 22A of the SICA, restraining the petitioner's-company from disposing of any assets without getting consent from the BIFR. In respect of the due regarding the sales tax amount payable, which is to the extent of Rs. 5,05,30,050, the respondent in W.P. (MD) No. 1522 of 2004, viz., the Commercial Tax Officer-II, Palani, has issued a distraint order by exercising the powers under section 8 of the Tamil Nadu Revenue Recovery Act, 1864. Likewise, in respect of the due amount of Rs. 49,34,032 regarding drawing of water from Amaravathi river, after obtaining due permission from the Public Works Department, the respondent in W.P. (MD) No. 1523 of 2004, viz., the Executive Engineer, Public Works Department, has issued an impugned order dated May 20, 2004, directing the petitioner-company to pay Rs. 49,34,032, bein....
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....ntained in the Companies Act, 1956 (1 of 1956), or any other law or in the memorandum and articles of association of such company or any instrument having effect under the said Act or other law- (a) it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company; (b) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the Board. (3) Where an inquiry under section 16 is pending or any scheme referred to in section 17 is under preparation or during the period of consideration of any scheme under section 18 or where any such scheme is sanctioned thereunder, for due implementation of the scheme, the Board may by order declare with respect to the sick industrial company concerned that the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force, to which such sick industrial company is a party or which may be applicable to such sick industrial company immediately before the date of such order, shall remain suspended or that all or any of the....
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....e in List II, entry 54 of the Seventh Schedule to the Constitution of India, is an exclusive power of the State, and therefore, the term used under section 22(1) of the SICA "any other law" should exclude the power of the State Government in recovery of the tax amount, has rejected the said contentions and ultimately held that under section 22(1) of the SICA, which is a Central Act, unless and until the permission is obtained from the BIFR, no coercive steps to be taken against the sick industries in respect of recovery of arrears of tax. The honourable Supreme Court in Tata Davy Ltd. v. State of Orissa [1998] 111 STC 462; [1998] 93 Comp Cas 1; [1997] 7 JT 216, has held as follows (page 465 of 111 STC): "10. Learned counsel for the respondents submitted that section 22(1) of the Central Act should be so read as not to interfere with the exclusive power of the States to legislate under entry 54 of List II of the Seventh Schedule to the Constitution in respect of sales tax. In his submission, the words 'any other law' in section 22(1) of the Central Act must be so read as to exclude all laws on List II subjects, for Parliament must be assumed to know its limitations. Learn....
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....rehabilitatory measures. In view of the said matter, the Supreme Court has ultimately held that such proceedings can be continued only with the approval and consent of the BIFR. The relevant portion is as follows (pages 43 and 44 of 86 STC): "7. Section 22(1) provides that in case the enquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration by the Board or any appeal under section 25 is pending, then certain proceedings against the sick industrial company are to be suspended or presumed to be suspended. The nature of the proceedings which are automatically suspended are: (1) Winding up of the industrial company, (2) Proceedings for execution, distress or the like against the properties of sick industrial company, and (3) Proceedings for the appointment of a receiver. The proceedings in respect of these matters could, however, be continued against the sick industrial company with the consent or approval of the Board or of the appellate authority, as the case may be. 8 and 9 . . . 10.. In the light of the steps taken by the Board under sections 16 and 17 of the Act, no proceedings for execution, distress or the ....