2001 (5) TMI 57 - HC - Customs

Summary

Issues:
1. Entitlement to protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1955.
2. Interpretation of distress or execution proceedings under Section 142 of the Customs Act, 1962.

Analysis:
1. The judgment primarily dealt with the issue of whether the petitioner, declared sick, is entitled to protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1955. The petitioner argued that the impugned notice issued under Section 142 of the Customs Act, demanding payment, was a step for recovery of alleged dues through distress proceedings. The petitioner relied on a judgment categorizing distress and execution proceedings. The respondent contended that the company cannot claim protection under Section 22 as the application before the BIFR had been entertained. The court analyzed the facts and concluded that until the rehabilitation scheme is prepared, the petitioner is entitled to protection under Section 22, as no assets can be dealt with without BIFR's leave. The court upheld the petitioner's contention, directing the respondents to seek BIFR's leave before proceeding further.

2. The second issue revolved around the interpretation of distress or execution proceedings under Section 142 of the Customs Act. The court examined the purpose and object of the Act, specifically Section 142, which outlines measures for recovery of sums due to the government. The court noted that the notice under this section initiates recovery proceedings, akin to distress proceedings, satisfying the test laid down by a previous judgment. The court highlighted the provisions allowing deduction of amounts and recovery through detaining and selling goods, indicating a coercive measure for recovery. Ultimately, the court concluded that the notice under Section 142 can be treated as a distress proceeding, justifying the petitioner's entitlement to protection under Section 22 in light of the BIFR's order appointing an Operating Agency for scheme preparation.

In summary, the judgment clarified the petitioner's entitlement to protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, emphasizing the need for BIFR's approval before any recovery proceedings. Additionally, it interpreted the notice under Section 142 of the Customs Act as a distress proceeding, supporting the petitioner's claim for protection under Section 22.