TATA DAVY LTD. ETC. versus STATE OF ORISSA AND ORS.

Citation: [1997] SUPP. 3 S.C.R. 232 · Decided: 04-08-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
TATA DAVY LTD. ETC. 
v. 
STATE OF ORISSA AND ORS. 
AUGUST 4, 1977 
B 
[S.P. BHARUCHA AND V.N. KHARE, JJ.] 
Sick Industrial Companies (Special Provisions) Act, 1985 : 
Section 15/16 and 22 (l)!Orissa Sales Tax Act, 1947; Section 13-
C A-Sick Industry-Arrears of Sales Tax-Recovery of-Consent of 
Board-Creditors' remedy-High Court held there could be no protection from 
attachment-On appeal, held no coercive recovery of arrear of sales tax 
without obtaining consent of the Board-Creditors' remedy is protected for 
period of deferment and such period is excluded in computing the period of 
limitation. 
D 
E 
Constitution of India, 1950: Article 39/Entry 52 of List I/Entry 54 of . 
List II of Seventh Schedule-Held, Central Act does not impair or interfere 
with the rights of States to legislate in respect of sales tax under Entry 54 of 
List II. 
Words & Phrases : 
':Any other Law"-Meaning of-Section 22( 1) of Sick Industrial Com-
panies (Special Provisions) Act, 1985. 
F 
The appellant was declared a sick company under the Sick Com· 
panies (Special Provisions) Act, 1985 (Central Act). On a reference under 
S.15 of the Act, an inquiry under s.16 was made and a scheme for In-
dustrial and Financial Reconstruction was sanctioned by the Board. The 
appellant was in arrears of sales tax. Recovery of the arrears was sought 
G to be made by attachment of the appellant's property under Section 13-A 
of the Orissa Sales Tax Act (State Act). 
The appellant intervened in a writ petition in which the High Court 
was considering the question whether steps taken for recovery of sales tax 
und~:- s.13-A of the State Act were in the nature of proceedings by way of 
H execution, distress or the like contemplated by s.22(1) of the Central Act. 
232 
[ 
TATADAVYLTD.v. STATE 
233 
The High Court held that Section 22(1) of the Central Act would not A 
protect the properties of Industrial Companies from being proceeded 
against in exercise of the power under s.13-A of the State Act. An appeal 
made in the High Court to review its decision in the light of Vallabh Glass 
Works Ltd. & Ors. [1990] 1 SCR 966, was rejected. Hence the present 
appeals. 
It was contended on behalf of the appellant that this Court had dealt 
with proceedings for recovery of dues under a State Act and had come. to 
the conclusion that Section 22(1) of the Central Act would apply. 
B 
The contention of the respondents was that Section 22(1) of the C 
Central Act should be so read as not to interfere with the exclusive powers 
of the State to legislate under Entry 54 of List II of the Seventh Schedule 
of the Constitution in respect of sales tax. It was further contended that 
the words 'any other law' in s.22(1) of the Central Act must be so read as 
to exclude all laws on List II subjects. 
D 
Allowing the appeal, this Court 
HELD : 1. Arrears of taxes and the like due from Sick Industrial 
Companies that satisfy the conditions set out in Section 22(1) of the 
Central Act cannot be recovered by coercive process unless the Board gives E 
its consent. [237-B] 
2. The Central Act is enacted under Entry 52 of List I of the Seventh 
Schedule. Entry 52 empowers Parliament to legislate in respect of In-
dustries, the control of which by the Union is declared by Parliament by 
law to be in public interest. The Central Act does not impair or interfere F 
with the rights of the States to legislate with respect to sales tax under 
Entry 54 of List II of the Seventh Schedule. [237-C; E] 
3. Section 22 of the Central Act requires all creditors seeking to 
recover their dues from Sick Industrial Companies in respect of whom an G 
inquiry under s.16 is pending or a scheme is under preparation or con-
sideration or has been sanctioned to obtain the consent of the Board to 
such recovery. If such consent is not secured and recovery is deferred, the 
creditors' remedy is protected for the period of deferment is, by reason of 
sub- section (5) of Section 22, excluded in the computation of the period 
of limitation. The words "any other law" in Section 22, therefore, cannot bt H 
234 
SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R. 
A read as to exclude all laws on List II subjects. [237-E-F; 236-H; 237-A] 
Gram Panchayat and Anr. v. Shri. Va/labh Glass Works Limited & Ors., 
[1990) 1 SCR 966; relied on. 
Deputy Commercial Tax Officer & Ors. v. C01Toma11dal Plzannaceuti-
B ca ls & Ors., [1997) 2 Scale 640, distinguished. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1354 of 
1991. 
Fro
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