C.W.P No.19430 of 2008 1
In the High Court of Punjab and Haryana, Chandigarh.
C.W.P No.19430 of 2008
Date of Decision: 09.12.2008
Unin of India and another
....Petitioners.
Versus
Additional District Judge and others
....Respondents.
Coram:- Hon'ble Mr.Justice J.S. Khehar
Hon'ble Ms. Justice Nirmaljit Kaur
Present: Mr. Arvind Kashyap, Advocate
for the petitioners.
...
J.S. Khehar, J. (Oral).
In order to substantiate his claim, learned counsel for the
petitioners, has in the first instance, placed reliance on Section 3 of the Sick
Textile Undertakings (Nationalisation) Act, 1974 (hereinafter referred to as
the Sick Textile Act). On the basis of Section 3 of the aforesaid Act, it is
the contention of the learned counsel for the petitioners, that with effect
from the appointed date, every sick textile undertaking shall be deemed to
have been vested absolutely in the Central government. In so far as, the
present controversy is concerned, it is acknowledged by the learned counsel
for the petitioners, that the date of vesting of the industry, under reference,
in the Central government, is 31.10.1972.
Despite the vesting of the industry, under reference, in the
C.W.P No.19430 of 2008 2
Central government under the mandate of Section 3 of the Sick Textile Act
on 31.10.1972, its actual takeover came about on 6.4.1976. The issue in the
present controversy is in respect of the income derived by the sick industry,
under reference, during the period between 31.10.1972 and 6.4.1976. The
petitioner i.e. the Central government seeks the exclusive right to the
aforesaid income under Section 10 of the Sick Textile Act. Section 10 of
the Sick Textile Act is being extracted hereunder: —
“10. Accounts to be rendered by the owners of sick textile
undertakings: — (1) , Where in pursuance of any decree, order
or an injunction of a Court or otherwise, the central government
or the custodian was prevented from taking over the
management of any sick textile undertaking, the owners of such
sick textile undertaking shall,
(a) in the case of an undertaking into management of which was
subsequently taken over by the central government at any time
before the date on which the Ordinance was promulgated
within sixty days from such date; or
(b) in the case of any other sick textile undertaking, the
management of which could not be taken over by the central
government before the date on which the ordinance was
promulgated, within sixty days from such date.
render accounts in relation to the period commencing on the
date of the notified order under the Industries (Development
and Regulation) Act , 1951, or as the case may be, on the date
of commencement of the sick textile undertaking (Taking Over
of Management) Act, 1972, and ending on the date on which
C.W.P No.19430 of 2008 3the management of the sick textile undertakings was taken over
by the Central Government or the Custodian, as the case may
be, with regard to the–
(i) assets, and stores of the sick textile undertaking acquired or
sold during the set period;
(ii) textile sold or despatched during the second period; and
(iii) income derived by the owner from the sick textile
undertaking during the said period.
(2) If on examination of the accounts referred to in sub-section
(1), any income is found to have been derived by the owner
from the sick textile undertaking during the period referred to
in that sub-section, such income shall be recoverable by the
Central government from the amount payable under Section 8
to the owner of such sick textile undertaking and the debt due
to the Central government on this account shall rank as an
unsecured debt.”
Having perused Section 10 of the Sick Textile Act, we are satisfied that the
same pertains only to the rendering of accounts by the owners of the sick
textile undertakings, and the acknowledgement that the income of the Sick
Textile Undertaking from the date when it was declared sick (in the present
case 31.10.1972) till the date of its actual takeover (in the present case
6.4.1974) shall be treated as an unsecured debt due to the Central
government. We are also satisfied, that Section 10 of the Sick Textile Act
does not envisage the recovery of the aforesaid income. As noticed
hereinabove, the aforesaid income is merely defined as an unsecured debt
due to the Central government.
C.W.P No.19430 of 2008 4
In view of our conclusions hereinabove, no recovery can be
claimed by the Central government i.e. the petitioner before this Court in the
present writ petition under Section 10 of the Sick Textile Act. We required
the learned counsel for the petitioners to invite our attention to the
provisions under which recovery could be made, as was envisaged under the
provisions of the Sick Textile Act. In furtherance thereof, and on perusal of
the said Act, we are satisfied that Sections 20 and 21 of the Sick Textile
Act, are the only provisions whereunder a claim can be made in respect of
the income or assets of the sick textile undertaking. Under Section 20 of the
Sick Textile Act, claims can be made at the hands of the creditors. The
priority in which the aforesaid claims have to be disbursed is, however,
determined under Section 21 of the Sick Textile Act. Section 21 of the Sick
Textile Act refers to the Second Schedule for the determination of the
priorities, and also, mandates the manner in which the aforestated priorities
are to be given effect to.
Having collectively perused Sections 20, 21 and the Second
Schedule of the Sick Textile Act, we are of the view that the claim of
income derived by the sick textile undertaking, in the present case, during
the period from 31.10.1972 to 6.4.1976 has to be determined in terms of the
mandate of Sections 20 and 21 read with the Second Schedule of the Sick
Textile Act. This is exactly what has been sought to be done in the
impugned orders dated 26.3.2008 (Annexures P-6 and P-7). Sections 20
and 21 of the Sick Textile Act are being extracted hereunder:-
“20. Claim to be made to the Commissioner: — Every person
having a claim against the owner of a sick textile undertaking
shall prefer such claim before the Commissioner within 30 days
C.W.P No.19430 of 2008 5from the specified date.
Provided that if the Commissioner is satisfied that the
claimant was prevented by sufficient cause from preferring the
claim within the said period of 30 days he may entertain the
claim within a further period of thirty days, but not thereafter.
21. Priority of Claims: — The claims arising out of the matters
specified in the Second Schedule shall have priorities. In
accordance with the following principles, namely: —
(a) Category I will have precedence over all other categories,
and Category II will have precedence over Category III and so
on,
(b) The claims specified in each of the categories except
Category IV shall rank equally and he paid in full, but if the
amount is insufficient to meet such claims in full, they shall
abate in equal proportions, and be paid accordingly,
(c) The liabilities specified in Category IV shall be discharged,
subject to the priorities specified in this section, in accordance
with the terms of the secured loans and the priority inter se of
such loans, and
(d) The question of payment of a liability with regard to a
matter specified in a lower category shall arise only if a surplus
is left after meeting all the liabilities specified in the immediate
higher category.”
It is inconceivable to envisage the disbursement of claim but for the
procedure laid down in Sections 20 and 21 of the Sick Textile Act.
C.W.P No.19430 of 2008 6
In view of the conclusions drawn hereinabove, we are satisfied
that no interference is called for in the impugned orders.
Dismissed.
( J.S. Khehar )
Judge
( Nirmaljit Kaur )
Judge.
09.12.2008
sk.