ORDER
P.K. Desai, Member (J)
1. The appellants, a company incorporated under the Companies Act, as a Government of India Undertaking, has preferred the present appeal against the Order-in-Appeal No. PPM-1005/B-I-564/86, dated 17-12-1986 passed by the Collector of Central Excise (Appeals), Bombay, confirming the Order-in-Original No. V(19) 18-240 & 250 to 253/91/4130/I, dated 30-5-1985 passed by the A.C. of Central Excise Div. F-l, Bombay adjusting the sum of Rs. 85,071.83 payable to two Textile Undertakings, namely the Finlay Mills and the Gold Mohur Mills, both of Bombay, against the confirmed demand of Rs. 1,91,381.80 on those two undertakings.
2. The factual position, material for the purpose of the present appeals are, that formerly both the aforesaid Textile Undertakings were functioning as independent units under their own management, and during that period, they had became entitled to get certain refund, which was later worked out at Rs. 85,071.83 and were also held liable to pay the excise dues of Rs. 1,91,381.80 for which the demand was raised and confirmed. Both the undertakings, however, subsequent to such entitlement for the refund and liability to pay the excise dues, were however, taken over by the Central Government, under the provisions of Textile Undertaking (Taking Over of Management) Act, 1983 (hereinafter referred to as “The Take Over Act, 1983) and were given over to the present appellants, for due management of the same, with effect from the appointed day. The refund amount, as indicated above, though had became due and payable prior to taking over of the same, was actually sanctioned subsequent to their being taken over by the appellant. While sanctioning the refund, the Assistant Collector, in exercise of his powers under Section 11 of the
Central Excises and Salt Act, 1944, however, adjusted the said amount against the confirmed demands against the said Undertakings. The appellants objected to such adjustments and filed an appeal before the Collector (Appeals) pleading that by virtue of the provisions of the Take Over Act, 1983, on and from the appointed day, the entire property including amounts payable to those undertakings got vested in them and as such they were entitled to get the refund amounts, and that they were not liable for the amounts payable by those undertakings and as such the demand confirmed could not be recovered from them. Plea was raised that by adjusting the amount payable as refund against the due from the said firm, there was a virtual enforcement of demand on the appellant, which was statutorily not permissible. Pleading that the provisions of Section 11 of the CESA, 1944, could not stand attracted, the appellants prayed for setting aside the order of adjustment, and for payment of the refund amount to them. The Collector (Appeals) has, vide order referred to above, however negatived the said contention and has confirmed the adjustment.
3. Mr. M.N. Acharya, the General Manager of the appellants, reiterating the same plea as raised before the first appellate authority, drew our attention to the provisions of Section 3 and specifically to the provisions of Sub-sections (1), (2) and (7) of the Take Over Act, 1983 and submitted that statutorily, they were entitled to recover all the amounts payable to the Taken Over Undertakings, irrespective of whether the amount related to the period prior to the take over by the appellants, with no corresponding liability to pay the debts for that period. He relied upon observations made to that effect by the High Court at Bombay, in The National Textile Corporation v. Shramik Janta Union (Writ Petition No. 2179 of 1986 decided on 31-8-1990), and submitted that the Collector (Appeals), has, in the case of Tata Mills (Order No. 383/90, dated 2-4-1990) also set aside the order for such adjustment, where the facts were identical to those here. He also submitted that the Take Over Act, 1983, beings a specific legislation in relation to a specific class, prevailed over the generic legislation and provisions of the CESA, 1944.
4. Shri C.P. Arya, the Ld. SDR, on the other hand, while supporting the orders of the authorities below, contended that both the debt and dues were for a period prior to the taking over of the units, and as such the appellants could have no objection for the adjustments, which the provisions of Section 11 of CESA, 1944, has expressly permitted. He also referred to and relied upon the order of the Single Member of this Tribunal No. 2196-2198 of 1990 dated 24-12-1990, where such adjustment is held as permissible, on the ground that both the debt and dues being for the period prior to taking over of the units, were permissible.
5. With no dispute as to the factual position that both the refund and the demand relate to the period prior to the taking over of these units by the appellants, the short question that arises for our determination is whether the statutory provisions of Take Over Act, 1983, provides for investing the right to recover the dues to the taken over unit, in the appellant, with no corresponding liability to pay the debts of such units and if yes, whether those provisions could affect, the statutory Provisions of Section 11 of the CESA, 1944.
6. Examining first the issue relating to the over-riding effect of the Take Over Act, 1983, over the provisions of CESA, 1944, both the Acts are Central Legislation, CESA, 1944, being a general law applicable to all the manufacturers, whereas the Take Over Act, 1983 providing the special provisions, in relation to a specified class of manufacturers. As per the general rules for interpretation of statute, specific legislation would prevail over the generic legislation, and therefore if, on examination of the statutory provisions of the Take Over Act, some conflicting provisions appear to be existing there, those incorporated in the specific legislation should prevail.
7. The main thrust of the appellant, is on the provision of Section 3 of the Take Over Act, 1983, where emphasis is laid on Sub-sections (1), (2) and (7). The relevant provisions read as under :-
“3(1) On and from the appointed day, the management of all the textile undertakings shall vest in the Central Government.
(2) The textile undertaking shall be deemed to include all assets, rights, lease holds, powers, authorities and privileges of the textile company in relation to the said textile undertaking and all property movable and immovable, including lands, buildings, workshops, projects, stores, spares, instruments, machinery, equipment, automobiles and other vehicles, and goods under production or in transit cash balances, reserve fund, investments and booklets and all other rights and interests in or arising out of such property as were, immediately before the appointed day, in the ownership, whether within or outside India and all books of account, register and all other documents of whatever nature relating thereto.”
“(7) For the removal of doubts, it is hereby declared that any liability incurred by a textile company in relation to the textile undertaking before the appointed day shall be enforceable against the concerned textile company and not against the Central Government or the Custodian.”
By virtue of Sub-section (1), the management of the Textile Undertaking would stand vested in the Central Government. The appellants are the custodian appointed by the Central Government for the management, and as such, the management vests in them from the appointed day. What would include in the word “Textile Undertaking” has been specified in Sub-section (2), where amongst others, “all other rights and interest arising out of such property” also stand included. Reading the provisions of Sub-section (2) in entirety, with specific emphasis on the sentence quoted hereinabove, it becomes clear that the appellants, by virtue of the said provisions read conjointly with the provisions of Sub-section (1) also reproduced above, have acquired statutory right to receive all the dues to the said undertaking, even when they have accrued to such undertakings before the taking over by the appellants, but had remained unpaid till the appointed day. Simultaneously examining the provisions of Sub-section (7), a specific declaration is made that no liability incurred by the Textile Undertaking before the appointed day, shall be enforceable against the Central Government or the custodian. The provision made is so clear and unambiguous that no deliberations are called for to understand what is intended thereby. The liability to pay the excise duty, obviously falls within the ambit of this provision.
8. In order to gain support to their plea, the appellants have produced a copy of the opinion, allegedly given by the Ministry of Law, in relation to legal position of liabilities and receipts of refunds by custodian of Textile Undertakings, where the following conclusion is drawn :
“It is thus clear that all actionable claims and other receivables of the Textile Company immediately vest in the custodian from the appointed day viz. 18-10-1983. Therefore, although under Section 11 sums recoverable by the Government can be recovered by adjustment of properties belonging to the same entity, an exception is carved out under Section 3(7) of the Take Over Act (which is an over-riding Act) by which although the assets vest, the liabilities are not taken over by the Custodian and continue to remain with the Textile Company which is divested of its assets. Hence the assets now being in the hands of the Custodian are not liable to be attached or used for purpose of recovery of pre-takeover dues. Hence the refund claims would be recoverable by the Custodian, but the dues cannot be recovered from the Custodian or by way of attachment of their assets.”
The opinion as given, practically provides a complete answer to the issue raised for our determination. It may however be observed that the authenticity of the opinion is not established inasmuch as, there is no indication available from the copy furnished in the paper book, that the aforesaid opinion is of the Ministry of Law, and as such, we may accept the same with caution. But even examining the statutory provisions in their true perspective, the opinion given appears to have been correctly formulated, and be it as it may, the same conclusion flows from the statutory provisions of the Take Over Act, 1983.
9. The appellants have also cited the adjudication proceedings in relation to the Tata Mills, where similar adjustment was confirmed at the adjudication stage, but the adjustment was held as not permissible, in Order-in-Appeal No. SKM-383/90, dated 2-4-1990 of the Collector of Central Excise (Appeals), Bombay. The facts and issue involved are identical to those here. Though the order of Collector (Appeals) has no binding effect, the same may carry some pursuasive value to indicate that even the authorities below, have at a later stage, resorted to the same interpretation, as is now canvassed by the appellants.
10. The Bombay High Court also, has, in National Textile Corporation v. Shramik Janta Union (supra), while examining the provision of Section 3(7) of the Take Over Act, held as under :
“The Scheme of the Act, therefore, appears to be that the undertakings whose management is taken over are not to be hampered by any past liabilities which may have been incurred. If decrees and orders or awards which have been obtained in connection with such past liabilities are enforced against the properties of the textile undertakings whose management is taken over, the entire Act will become infructuous.”
11. Reliance is sought to be placed on the Order Nos. 2196-2198/90-WRB, dated 24-12-1990 of the Single Member (where one of us sat as a Single Member) where such adjustment has been held as permissible. From the discussion made thereunder, it appears that the issue was not projected from the angle as is now done, and also the view expressed by the Bombay High Court was not made available. However, now that the legal position is clear, and when provisions of Sub-section (1), (2) and (7) of Section 3 of the Take Over Act, 1983 are read in conjunction, it has to be concluded that the earlier view based on the general principles of appropriation of dues against the debts, cannot be sustained in view of specific provision to the contrary made in the statutory enactment, and are meant to be applied to a specified class of manufacturers.
12. To reiterate, refund sanctioned is payable to the custodian, since the same is being paid after the appointed day, whereas the recovery of confirmed demand, being for the period prior to the date of taking over, is not enforceable against the custodian, and the effect of the adjustment as ordered would tantamount to enforcing the demand against the custodian by refusing to pay the refund amount and appropriating the same against the dues. As discussed earlier, the same is not permissible.
13. In the result, the appeal is allowed. Order of adjustment of refund payable against confirmed demand is set aside. The Respondents are directed to pay the sanctioned refund amount to the appellants.
R. Jayaraman, Member (T)
14. I have the privilege of perusing the order recorded by my Learned Brother Shri P.K. Desai. It is a fact that the full text of the Take Over Act, the Bombay High Court judgment and the Law Ministry’s opinion were not placed before me, when I considered similar appeals sitting as a Single Member. There the arguments were restricted to Section 3(7) of the Take Over Act vis-a-vis Section 11 of the Central Excises and Salt Act. It was held by me that so long as refunds were payable to Textile Companies, having been initiated by those Textile Companies before take over and liabilities to the Department have also arisen during the period before take over of Textile Companies, the amounts of refunds are adjustable towards those liabilities.
15. Now, before the Bench, the complete text of the Take Over Act and the Bombay High Court judgment on the question of recovery of liabilities of the erstwhile Textile Companies from the Textile Undertaking of the Government after taking over, are made available. After perusing these, I have no reason to differ from the view now taken by my Learned Brother. I concur with the same and hold that appeals are to be allowed.