Judgment

K. JAGANNATHA SHETTY, J.:-The petitioners seek leave to appeal against the decision of the Bombay High Court in Writ Petition No. 6108/87 quashing the proceedings for recovery of property tax and other expenses due from the first respondent company.

2. The matter arises in this way: For the purpose of prevention and revival of sick industries, the Central Government has enacted the Act called "The Sick Industrial Companies (Special Provisions) Act, 1985 (The Act). The Act extends to the whole of India including the State of Jammu and Kashmir. It came into force (except Ss. 15 to 34) with effect from 15 May, 1987. The Act covers only sick industrial companies or industrial companies which have the potential to become sick. The Act empowers the Central Government to establish a Board to be known as the Board for Industrial & Financial Reconstruction to exercise the jurisdiction and powers, and discharge the functions and duties imposed under the Act.

3. The first respondent-company Messrs. Shree Vallabh Glass Works Ltd. has been declared to be a sick industrial company  within the meaning of clause (o) of subsection (1) of S. 3 of the Act. Sick Industrial Company means an industrial company being a company registered for not less than seven years which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year.

4. The first petitioner is the Gram Panchayat, Salwad and second petitioner is the Chairman of the Gram Panchayat. The petitioners initiated coercive proceedings under S.29 of the Bombay Village Panchayat Act to recover a sum of Rs. 9,47,5391 - stated to be the property tax and other amounts due from the company. Challenging that proceedings, the Company moved the High Court by way of writ petition under Art. 226 of the Constitution claiming protection provided under S. 22 of the Act. The High Court has accepted the writ petition and destrained the petitioners from recovering the said amount without the consent of the Board.

5. The question is whether the Panchayat could not recover the amount due to it from out of the properties of the sick industrial company without the consent of the Board?

6. Section 22 provides, as far as material, as follows:

"Section 22 - Suspension of Legal Proceedings, contracts, etc.

(1) Where in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under S. 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956, or any other law or the memorandum and articles of association of the Industrial Company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a Receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.

22(2) to 22(4) - xxx xxx xxx

22(5) - In computing the period of limitation for the enforcement of any right, privilege, obligation or liability, the period during which it or the remedy for the enforcement thereof remains suspended under this section shall be excluded."

7. Section 22(1) provides that in case the enquiry under S. 16 is pending or any scheme referred to under S. 17 is under preparation or consideration by the Board or any appeal under S. 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, distr