TMI Blog2012 (4) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... eparation or consideration or a sanctioned scheme is under implementation or an appeal is pending, no proceedings, as stated in section 22 of the Act for execution, distress or the like, shall be proceeded with except with the consent of the Board or as the appellate authority. What is contemplated by section 22(1) of the Act is only a previous consent of the Board for the proceedings to be initiated against a sick company. It is not an absolute bar. Appeal dismissed. - Writ Petition No. 10662 of 2012 - - - Dated:- 16-4-2012 - RAO V.V.S. AND KRISHNA MOHAN REDDY G, JJ. For the Appellant : CH. Pushyam Kiran For the Respondents : The Government Pleader for Commercial Taxes and B. Venkatadri, Special Standing Counsel for Commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Assets and Enforcement of Security Interest Act, 2002 ( the SARFAESI Act or the Act ) raising demand for ₹ 78,25,00,864 as of September, 2004. ARCIL also approached the District Magistrate under section 14 of the SARFAESI Act for taking possession and an order was passed on January 20, 2005. The petitioner assailed the recovery proceedings by ARCIL before the DRT, Hyderabad by filing S.A. No. 15 of 2005. In view of section 22 of the SICA, DRT allowed the appeal against which ARCIL filed appeals before the Debts Recovery Appellate Tribunal (DRAT), Chennai. On February 10, 2005 DRAT passed orders staying the order of DRT. The petitioner then filed W.P. Nos. 6831 and 6832 of 2005 before this court. They were allowed and remanded d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SICA bars any recovery proceedings including recovery of sales tax arrears by the first respondent; the consent of BIFR was not taken before issuing the impugned notice of attachment; and that the first respondent acted arbitrarily in invoking section 27 of the RR Act. The counsel referred to Tata Davy Ltd. v. State of Orissa [1998] 111 STC 462 (SC); [1998] 93 Comp Cas 1 (SC); [1997] 6 SCC 669; AIR 1998 SC 2928, Deputy Commercial Tax Officer v. Corromandal Pharmaceuticals [1997] 105 STC 327 (SC); [1997] 89 Comp Cas 1 (SC); [1997] 10 SCC 649; AIR 1997 SC 2027 and Raheja Universal Limited v. NRC Limited [2012] 4 SCC 148. The Special Counsel for Commercial Taxes would submit that section 22 of the SICA only bars initiation of proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed similar first charge in favour of the Government in the recovery of sales tax arrears. The provisions were unsuccessfully challenged before the respective High Courts which upheld the provisions. In Central Bank of India [2009] 21 VST 505 (SC); [2010] 153 Comp Cas 497 (SC); [2009] 4 SCC 94, the Supreme Court considered the appeals by special leave. Whether these provisions creating first charge on the property of the dealer liable to pay sales tax, etc., are inconsistent with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act); and the bank dues have primacy; and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to as, the Act ). 2. While the Board is yet to consider this matter for determining the sickness of the company, it has now been intimated by the Asset Reconstruction Company (India) Limited (ARCIL) vide their letter dated January 24, 2005 that upon failure of the company to comply with the notice issued by them under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), they have taken over the possession of the movable and immovable assets of the company on January 22, 2005 under section 13(4) of the SARFAESI. 3. Keeping in view the above position, the Board cannot proceed further in the matter under the Act and the reference of the company pending be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is disposed of, it will result in a state of affairs enabling the assessee to retain the amounts due to the State for no reason and indefinitely; the Revenue will have to obtain consent of the Board or as the appellate authority even for realising the legitimate amounts due to it and withheld by the assessee, unreasonably. There may be similar instances where the petitioner/assessee collects amounts due to the Revenue or others and is yet enabled to keep it back with itself unreasonably for a long time if the immunity under section 22(1) of the Act operates absolutely. According to the Revenue the bar under section 22(1) of the Act should not lead to such an undesirable state of affairs; and so the section should be understood or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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