AI Structured Summary
Not yet generated for this judgment
Judgment
K. Raviraja Pandian, J.—The writ petition in W.P. Nos. 17247 of 1998 is filed seeking for the relief of issuance of writ of certiorarified
mandamus to call for the records of the first respondent in R.C.Pd1 No. 4/98/A4 dated 8.9.1998, quash the same and forbear the respondents
from initiating distress proceedings against the petitioner company declared as �Sick Industry� by the Board for Industrial and Financial
Reconstruction (hereinafter referred to as �BIFR�).
The writ petition in W.P. Nos. 4477 of 2001 is filed seeking for the relief of issuance of writ of certiorarified mandamus to call for the records of
the first respondent, culminating to the impugned distraint order dated 2.2.2001 initiating distress recovery proceedings for recovery of Rs.
22,94,080/- towards the Urban Land tax for the period from fasli 1405 to fasli 1410, quash the same and direct the respondents, to forbear from
initiating distress proceedings against the petitioner company declared as �Sick Industry� by the BIFR.
The petitioner is a company assessed to urban land tax by the proceedings of the Tahsildar, Ambattur dated 8.9.1998 for a sum of Rs.
1,38,816/- in respect of fasli 1407 and for a sum of Rs. 3,38,816/- for the fasli year 1408 i.e., Rs. 4,77,632/- in total and by order dated
2.2.2001, the Zonal Deputy Tahisldar, Ambattur Taluk initiated distraint revenue recovery proceedings for recovery of a sum of Rs. 22,94,080/-
in respect of the faslies 1405 to 1410 i.e., including the above said amount of Rs. 4,77,632/-.
It is the case of the petitioner in both the writ petitions that in as much as the petitioner Company was declared as a sick industry by the BIFR,
New Delhi by order dated 7.7.1998 under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to
as ""the Act""), wherein the Government of Tamil Nadu is also a party and the said proceedings are now pending before the BIFR, the recovery
proceedings cannot be initiated in view of Section 22 of the Act.
It is an admitted case of either side that the BIFR formulated a scheme for the rehabilitation of the petitioner Company and the same is under
implementation and the petitioner company is reviving gradually.
Whether the respondent State Government can recover the urban land tax from the petitioner without obtaining prior permission from the BIFR,
when the sanctioned scheme is under implementation u/s 22 of the Act, is the question involved in these writ petitions. The question is no more res
integra as the Supreme Court in the case of The Gram Panchayat and another Vs. Shree Vallabh Glass Works Ltd. and others, , while considering
the scope of Section 22 of the Act, has held that it might be against the principles of equity if the creditors are not allowed to recover their dues
from the company, but such creditors may approach the Board for permission to proceed against the company for the recovery of their
dues/outstandings/overdues or arrears by whatever name it is called. The Board at its discretion may accord its approval for proceeding against the
company. If the approval is not granted, the remedy is not extinguished. It is only postponed. Sub-section (5) of Section 22 provides for exclusion
of the period during which the remedy is suspended while computing the period of limitation for recovering the dues.
Subsequently, the Supreme Court in the case of Tata Davy Ltd. Vs. State of Orissa and Others, , has also re-affirmed the above judgment of
the Supreme Court. Hence, the demand, which is impugned in these writ petitions, cannot be allowed to be proceeded further without the prior
permission of the BIFR for recovery of the amount from the petitioner company for which a sanctioned scheme is under implementation.
Hence, the writ petitions are allowed. However, there is no order as to costs.