JUDGMENT
P.R. Raman, J.
1. This writ petition is filed by the petitioner seeking for the following reliefs :
(a) issue a writ of certiorari or other appropriate writ, order or direction, calling for the records leading to Exts. P6, P7 and P8 and quash the same;
(b) stay all further proceedings pursuant to Exts. P6, P7 and P8 pending disposal of the writ petition;
and;
(c) pass such other order or direction as this Hon’ble Court may deem fit and proper in the circumstances of the case.
2. Ext. P6 is a notice issued under Section 226(3) of the IT Act, 1961, demanding an amount of Rs. 38,50,000 from out of the amount, if any, payable by the Federal Bank to the petitioner. The Federal Bank is the tenant in occupation of the building owned by the petitioner. Exts. P7 and P8 are similar notices issued to other respondents/tenants. The contention of the petitioner is that it is a sick industry registered under the provisions of Sick Industrial Companies (Special Provisions) Act and an appeal from the order passed by the BIFR under the SICA is pending before the appellate authority. In view of the pendency of the appeal, it is contended that there is a clear bar for proceeding to recover any amount by the first respondent herein in view of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The said provision is extracted hereunder for the purpose of convenience :
“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 Section 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 and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the appellate authority.”
3. Learned senior standing counsel for income-tax, Sri P.K. Ravindranatha Menon, contended that recovery of any amount due under IT Act or WT Act cannot be a distress proceeding coming within the ambit of Section 22 of the said Act. In this connection, it has to be noticed that not only a distress proceeding but also no execution or the like against any of the properties of the industrial company shall lie except with the consent of the Board or, as the case may be, by the appellate authority.
4. Admittedly, the present proceedings as per Exts. P6 to P8 are initiated for realisation of the amount in execution of the order of assessment, passed by the respondent. In this connection, the apex Court in Grama Panchayat v. Shiee Vallabh Glass Works Ltd. (1990) 2 SCC 440 considered the question as to whether Grama Panchayat tax will come within the ambit of the aforesaid provision and held that the Grama Panchayat is not entitled to recover any property tax and other amounts due from the company by initiating coercive proceedings under Section 129 of the Bombay Village Panchayat Act, without consent of the Board. Hence, I am unable to accept the contention raised by the respondent that only distress proceedings stand suspended by Section 22. The language of the section is widely couched to take in any proceeding for execution for realisation of the amount due from the company in respect of which any proceedings are pending before the appellate authority. Going by the scheme of the Act, it can be seen that when a matter is referred to the Board under the provisions of the ‘SICA’ it is for the specially constituted Tribunal to consider whether the industry could be revived and whether any scheme should be prepared and to prepare a scheme, if viable. With that object in mind, until consideration of the matter the legislature has thought it fit to stay further proceedings in any execution, distress or the like, as otherwise, the very object sought to be achieved by the said Act will be defeated. Therefore, it is obligatory to the first respondent to apply for necessary consent from the appellate authority before taking any execution proceedings for realising the amount due to them. It has to be noticed that by virtue of Section 22 itself, there is a statutory stay of the execution proceedings and if any party ignoring the said provisions in spite of notice of pendency of such proceedings, proceed to recover the amount in execution or distress, then as per Section 33 of the Act, he is also liable for penal consequences. Thus, the provisions contained in Section 22 are mandatory as the violation of the provision will visit with penal consequences. In these circumstances, the proper course open to the first respondent is to approach the appellate authority under the Act and obtain consent before proceeding to realise any amount in execution of the order passed under the IT Act or the WT Act as the case may be.
5. The writ petition is, therefore, allowed. There will be a direction to the first respondent not to proceed against the petitioner without consent being obtained so long as proceedings in appeal are pending under the Act. Proceedings pursuant to Exts. P6, P7 and P8 shall stand deferred until such consent is obtained.