JUDGMENT B.N. KIRPAL, J. This is an application under section 391(6) and section 443 of the Companies Act read with rule 9 of the Companies (Court) Rules, 1959, wherein it is stated that the sales tax authorities should be restrained from levying penalty and charging interest. The petitioner-company, inter alia, carried on the business of distribution of cars. The business apparently resulted in huge losses with the result that it owes lakh of rupees to various creditors. On account of the inability of the petitioner to pay its debts a winding-up petition, being C.P. No. 50 of 1970 (Bank of Madura v. Byford Ltd.), has been filed in this Court which is still pending in this Court. During the pendency of the winding-up proceedings the petitioner has filed an application being C.A. No. 126 of 1980 being an application under section 391 of the Companies Act. By the said application C.A. No. 126 of 1980 it is proposed that there should be a scheme of arrangement between the company and its creditors. The salient feature of the said scheme is that all the secured as well as the unsecured creditors will be paid in toto over the next ten years. It is, however, proposed in the scheme that no penalty or interest should be levied or imposed under the various enactments including the Sales Tax Act. It appears that the assessment proceedings for a number of years under the Delhi Sales Tax Act are pending against the petitioner-company. The petitioner apprehends that apart from the levy of sales tax by the assessment orders the sales tax department is also likely to impose penalties as well as charge interest under section 27 of the Delhi Sales Tax Act. In the present application for stay it has been stated that the petitioner-company apprehends that heavy penalties would be imposed in order to punish the petitioner-company and also because a scheme of arrangement has been proposed by it. It is also averred in the present application that the Commissioner of Sales Tax has issued instructions that a very harsh view of the non-compliance of different provisions of the Sales Tax Act should be taken against the petitioner. It is also averred in the present application that the Commissioner of Sales Tax has issued instructions that a very harsh view of the non-compliance of different provisions of the Sales Tax Act should be taken against the petitioner. It is lastly stated that the burden of penalties would be very heavy and, if the penalties are permitted to be imposed and the interest charged, then the aforesaid scheme of arrangement would be in serious jeopardy. In the reply filed on behalf of the sales tax department, a preliminary, objection has been taken, to the effect, that this Court has no jurisdiction to stay the proceedings contemplated under the Delhi Sales Tax Act, which is a self-contained code. It is further contended on behalf of the respondents that correct statements have not been made in the application and that previously also there were defaults committed by the petitioner-company and, therefore, the question of levying any penalty in order to punish the petitioner for filing the application under section 391 is wholly incorrect. It is also contended that the court has no jurisdiction to stay the imposition of interest and furthermore on the facts and circumstances of the case and looking at the past conduct of the petitioner, who is a habitual defaulter, the stay should not be granted. The first question which arises for consideration is as to whether this Court has jurisdiction to stay the assessment proceedings and proceedings for the levy of penalty and interest. The contention of Mr. Chawla is that the Sales Tax Act is a self-contained code. It is contended that the word "proceedings" which is referred in sub-section (6) of section 391 of the Companies Act does not contemplate proceedings under the Sales Tax Act. Mr. Chawla has relied on Tika Ram and Sons v. Commissioner of Income-tax ([1964] 51 I.T.R. 403; 34 Comp. Cas. 151.) and contended that when the assessment against the company is still pending and no demand is raised, the department is not the creditor and neither section 391 nor section 446 is applicable to the department. In my opinion, even if the ratio of the said decision is correct, the said decision will not apply to the present case. Cas. 151.) and contended that when the assessment against the company is still pending and no demand is raised, the department is not the creditor and neither section 391 nor section 446 is applicable to the department. In my opinion, even if the ratio of the said decision is correct, the said decision will not apply to the present case. It is not disputed that the assessments for past few years have been made against the petitioner and it is further not disputed that the department has to take large sum of money by way of tax from the petitioner-company. It is obvious, therefore, that the department is a creditor of the petitioner-company. The petitioner is a registered dealer. There is an obligation under the Act on the petitioner to pay the admitted amount of tax to the department. This payment has to be made by the petitioner along with his return and it is not necessary that he should wait for the assessment to be completed. The amount of tax which is admittedly due thus becomes payable according to the provisions of the Act. Inasmuch as the petitioner did not pay the admitted amount of tax the sales tax department immediately became a creditor in respect thereof. This is another reason as to why the aforesaid decision relied upon by the learned counsel has no application, which decision was delivered with respect to the provisions of the Income-tax Act. Mr. Chawla then relied upon the Supreme Court decision in the case of S. V. Kondaskar v. V. M. Deshpande ([1972] 83 I.T.R. 685 (S.C.); 42 Comp. Cas. 168 (S.C.).). The question which arose in that case was as to whether the Income-tax Officer was obliged to take the permission of the winding-up court before initiating proceedings for issue of notices under section 148 of the Income-tax Act, 1961. The contention on behalf of the appellant therein was that by virtue of the provisions of section 446(1) such proceedings could not be initiated without the prior approval of the court. Dealing with this contention the Supreme Court held that it was not necessary for the Income-tax Officer to take the prior approval of the court under section 446 of the Act. Dealing with this contention the Supreme Court held that it was not necessary for the Income-tax Officer to take the prior approval of the court under section 446 of the Act. In this connection the Supreme Court observed as follows (page 698) : "While holding these assessment proceedings the Income-tax Officer does not, in our view, perform the functions of a court as contemplated by section 446(2) of the Act. Looking at the legislative history and the scheme of the Indian Companies Act, particularly the language of section 446 read as a whole, it appears to us that the expression 'other legal proceedings' in sub-section (1) and the expression 'legal proceeding in sub-section (2) convey the same sense and the proceedings in both the sub-sections must be such as can appropriately be dealt with by the winding-up court. The Income-tax Act is, in our opinion, a complete code and it is particularly so with respect to the assessment and reassessment of income-tax with which alone we are concerned in the present case. The fact that after the amount of tax payable by an assessee has been determined or quantified its realisation from a company in liquidation is governed by the Act because the income-tax payable also being a debt has to rank pari passu with other debts due from the company does not mean that the assessment proceedings for computing the amount of tax must be held to be such other legal proceedings as can only be started or continued with the leave of the liquidation court under section 446 of the Act." The aforesaid decision, to my mind, does not apply to the present case. The present application is under section 391(6) of the Act and not under section 448. The reading of the aforesaid passage of the Supreme Court judgment shows that their Lordships had held that the provisions of section 446(1) and (2) are of same sense. It cannot be helped but noticed that the expression "legal proceeding" does not occur in sub-section (2) of section 446 but it occurs only in sub-section (1). The Supreme Court held that the expression "legal proceedings" stated to be occurring in sub-section (2) means the same thing as the expression "other legal proceeding" in sub-section (1). In sub-section (6) of section 391, however, the expression "legal proceeding" does not occur. The said sub-section reads as follows : "391. The Supreme Court held that the expression "legal proceedings" stated to be occurring in sub-section (2) means the same thing as the expression "other legal proceeding" in sub-section (1). In sub-section (6) of section 391, however, the expression "legal proceeding" does not occur. The said sub-section reads as follows : "391. (6) The court may, at any time after an application has been made to it under this section, stay the commencement or continuation of any suit or proceeding against the company on such terms as the court thinks fit, until the application is finally disposed of." The scope of sections 446 and 391 is different. The proceedings contemplated by section 446 are those proceedings which are capable of being transferred to the winding-up court as is contemplated by sub-section (3) of section 446. It is for this reason that a somewhat narrower meaning has to be given to the word "proceeding" in section 446 as not including those proceedings which cannot possibly be transferred to the winding-up court. The assessment under the Income-tax and the Sales Tax Acts can only be conducted by the officers under those Acts and not by the winding-up court. The word "proceeding" in section 391(6), however, does not suffer from any such limitation. I am not persuaded to give a narrow meaning to the word "proceeding" in section 391(6), so as to exclude proceedings under different special Acts. I am, therefore, of the view that the court has jurisdiction under section 391(6) to stay the proceeding under the taxation laws also. The next question which comes for consideration is as to whether in fact the stay prayed for should be granted. The assessment to sales tax is made under section 23 of the Delhi Sales Tax Act. There is no prayer in the application for the stay of the assessment proceedings. In this view of the matter the question of my ordering any stay of the assessment does not arise. The petitioner has prayed for the stay of the penalty proceedings. The contention on behalf of the respondents is that there is a time-limit within which the assessment proceedings have to be completed. It is further contended that notice for the imposition of penalty has to be issued under form ST-13 which is the same form in which notice for assessment is also issued under section 23. The contention on behalf of the respondents is that there is a time-limit within which the assessment proceedings have to be completed. It is further contended that notice for the imposition of penalty has to be issued under form ST-13 which is the same form in which notice for assessment is also issued under section 23. The perusal of the Act, however, shows that penalty is dealt with and levied under the provisions of sections 55, 56 and 57 of the Act. The penalty is not levied under section 23 of the Act. To my mind there is a limitation for the passing of the assessment order under section 23 of the Act, but there is no limitation for the imposition of penalty under sections 55, 56 and 57 of the Act. The proceedings for penalty under these provisions can be taken and completed independently of the proceedings for assessment. If the penalty proceedings are, therefore, stayed and stay is subsequently vacated the respondents would be entitled to levy the penalty. As already noticed hereinabove, in the application under section 391 (C.A. No. 126 of 1980), one of the clauses is that no penalty shall be levied under the Sales Tax Act. The clause of this scheme would be completely frustrated if I now at this stage do not grant stay of the passing of the order of penalty. It is true that some of the allegations which have been made by the petitioner against the respondent in the application are not quite correct. This, however, should not in any way prejudice the interest of the general body of the creditors. It will be seen that the company owes over 60 lakhs of rupees to two nationalised banks. The only hope of the creditors being able to get back some of the money due to them is by the company being able to do some business and generate profits. The likelihood of the company being able to do so may be jeopardised if additional demand by way of penalty is permitted to be raised at this stage before the creditors have had an occasion to consider the scheme. I would accordingly be inclined to stay proceedings for the levy of any penalty with regard to any assessment years ending prior to 1st April, 1980. With regard to interest the position is slightly different. Mr. I would accordingly be inclined to stay proceedings for the levy of any penalty with regard to any assessment years ending prior to 1st April, 1980. With regard to interest the position is slightly different. Mr. Chawla is quite correct in contending, and in fact that is the provision of the law as provided by section 27(3), second proviso, that the stay of the recovery of tax does not mean that the assessee would not be liable to pay interest on the amount of tax due. The levy of interest is automatic. In fact no order is contemplated to be passed under section 26. The interest is calculated in accordance with the statutory provisions. The court can, however, stay the recovery of the interest. For the reasons that I have stated for the penalty, I would, therefore, be inclined to stay the recovery of the interest which may be payable by the petitioner. During the course of hearing the counsel for the petitioner stated that a proposal has been proposed by the company to the sales tax department. Under the said proposal the petitioner intends to pay Rs. 50,000 p.m. in order to clear up the past arrears and is also willing to undertake to pay the future demands. I would accordingly make it a condition of the stay that the petitioner shall pay with effect from 31st March, 1981, the first instalment of Rs. 50,000 and thereafter every month Rs. 50,000 would be paid by the last date of each month towards the liquidation of the earlier dues. In addition thereto, the petitioner shall pay the current liability within 15 days of the realisation of the sales tax from its customers on the sale of cars. I accordingly dispose of the application in the aforesaid terms. It is made clear that if the condition for the granting of the stay is not complied with by the petitioner the stay granted shall stand automatically vacated. The parties to bear their own costs. Ordered accordingly.