Ravani, J.
1. Petitioner No. 1 is an existing company registered under the Companies Act, 1956, and petitioners Nos. 2 to 4 were managing directors of petitioner No. 1-company. The petitioner-company runs a textile mill. In respect of sales of the petitioner-company, sales tax liability for the period commencing from December, 1986, to June, 1987, had arisen and an amount of Rs. 1,84,220 had fallen due and payable by the company. Quarterly returns were filed by the company but the amount has not been paid by it. Therefore, under the provisions of rule 78 of the Gujarat Sales Tax Rules, 1970, the petitioner is sought to be prosecuted for the offence of not complying with the provisions of rule 31 of the aforesaid rules (in the petition wrongly translated as section of the Rules). Therefore, the Commissioner of Sales Tax, exercising the power conferred upon him under the provisions of section 27(6) of the Gujarat Sales Tax Act, 1969, read with rule 79 of the aforesaid Rules, sanctioned the prosecution against the petitioner-company. The order of sanction of prosecution dated July 12, 1988, is produced at annexure `C' to the petition.
2. The petitioners pray that the aforesaid order produced at annexure `C' to the petition be quashed and set aside. Reliance is placed on section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. The relevant part of the section is produced in para 2.8 of the petition. The section provides for suspension of legal proceedings, contracts, etc., in the cases of industrial companies in respect of which an enquiry under section 16 and under section 17 is pending or an appeal under section 25 of the said Act is pending. In the instant case, there is no dispute with regard to the fact that an appeal being Appeal No. 16 of 1989 against the order of refusal to sanction a scheme passed by the Board is pending before the appellate authority. (These facts are given at the Bar and are not referred to in the petition. However, the facts are not controverted by the other side.) The relevant part of the section which is required to be considered reads as follows:
'.....no proceedings for the winding up of the industrial company or for execution distrees or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded further except with the consent of the Board or, as the case may be, the appellate authority.'
3. The aforesaid provisions clearly show that the section does not take within its sweep the criminal prosecution against the company. This stands to reason. The amount of sales tax is recovered by the dealer from the purchaser. The dealer is required to make payment thereof to the appropriate Government within the stipulated time. Meanwhile, the dealer holds the amount not as the owner of the same but he is holding it in trust for being passed over to the Government. This money does not belong to the dealer nor does it belong to the members of this company or the directors of the company. Therefore, when any criminal proceedings is instituted on account of non-payment of such amount, it cannot be said that the proceeding is for the winding up of the industrial company or for execution distress or the like against the properties of the industrial company. Therefore, the provisions of section 22 of the Act would not come in the way of launching a criminal prosecution under the provisions of the Gujarat Sales Tax Act, 1969, where it is shown that the amount of sales tax dues have not been paid by the dealer.
4. It may also be noted that the criminal prosecution is not against the property of the company. It is against the company itself. What is prohibited under section 22 of the Act is the proceedings of winding up of the company or for execution, distress or the like against any of the properties of the industrial company. These are not proceedings for winding up or any proceedings against the property of the company. It may be, that, after the prosecution is over and ultimately if fine is imposed upon the company, the question may arise as to whether and how the amount of fine imposed is to be recovered from the company. At that stage, if the fine is sought to be recovered from the property of the company, the aforesaid provisions may become relevant and may be invoked. However, we do not express any firm opinion on this point.
5. By order annexure `C' dated July 12, 1988, all that has been done is to sanction the prosecution under the provisions of rule 79 of the Rules. The provisions of section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, does not prohibit the sanctioning of the prosecution. If it is assumed that the criminal prosecution as contemplated is covered by the provisions of section 22(1) of the Act, even then, the challenge to the order annexure `C' on the basis of the provisions of section 22(1) cannot be sustained. Be it noted that there is no total embargo on the proceedings mentioned in the section against the company and its property. Such proceedings can be section against the company and its property. Such proceedings can be launched with the consent of the Board or the appellate authority, as the case may be. Therefore, even for taking the consent of the Board or that of the appellate authority, the Commissioner is required to sanction the prosecution. What is barred is initiation of the proceedings or further proceedings thereof. Sanctioning of the prosecution by the Commissioner of Sales Tax is stage prior to the initiation of the criminal prosecution. There is no prohibition in the provisions of section 22(1) as far as the sanction of the prosecution is concerned. Therefore, the challenge to the order passed by the Commissioner of Sales Tax on the basis of the provisions of section 22(1) of the Act cannot be sustained. Be it noted that there is no total embargo on the proceedings mentioned in the section against the company and its property. Such proceedings can be launched with the consent of the Board or the appellate authority, as the case may be. Therefore, even for taking the consent of the Board or that of the appellate authority, the Commissioner is required to sanction the prosecution. What is barred is initiation of the proceedings of further proceedings thereof. Sanctioning of the prosecution by the Commissioner of Sales Tax is stage prior to the initiation of the criminal prosecution. There is no prohibition in the provisions of section 22(1) as far as the sanction of the prosecution is concerned. Therefore, the challenge to the order passed by the Commissioner of Sales Tax on the basis of the provisions of section 22(1) of the Act cannot be sustained.
6. Learned counsel for the petitioners had relied upon a decision of the Division Bench of this High Court in the case of Testeels Ltd. v. Radhaben Ranchhodlal Charitable Trust, AIR 1988 Guj 213; [1989] 66 Comp Cas 555. In his submission, the phrase 'no proceedings for winding up of the industrial company or for execution distress or the like' would take within its sweep the criminal proceedings also. The aforesaid decision does not help the petitioner. In that case, the question was whether the winding-up proceedings already started should be kept in abeyance or dismissed. The court held that the winding-up proceedings already started need not be kept in abeyance and pending and that they can be dismissed. The aforesaid decision does not even refer to the criminal proceedings started or to be started. In fact, no such question was there before the court. Therefore, the aforesaid decision does not help the petitioner at all.
7. Learned, counsel for the petitioners submits that the sanction to prosecute is a pre-condition as provided under rule 79 of the Rules. The sanction to prosecute is granted only against the company. There is no sanction for prosecution against petitioners Nos. 2 to 4 who were the managing directors of the company. Therefore, in his submission, the prosecution should not be permitted to be launched and the department should be restrained from launching prosecution against petitioners Nos.2 to 4. As to whether the sanction for prosecution against petitioners No.2 to 4 is valid or not is a mixed question of fact and law. Such a question can be raised before the court before which the criminal prosecution is launched. In a petition under article 226/227 of the Constitution of India, we do not propose to examine this question.
8. In the above view of the matter, there is no substance in this petition. Hence, rejected. Notice discharged. Ad interim relief granted earlier stands vacated. The request to continue the ad interim relief for some more time is rejected.