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Judgment
Goda Raghuram, J.—The petitioners - M/s. Andhra Scientific Company Limited, Machilipatnam represented by its Managing Director (for short ''the company''), a Director and two shareholders of the company seek a declaration that the letter of the 2nd respondent dated 20-9-1991 is invalid and for a consequential direction to the respondents to pay the balance residuary amount to the petitioner-company.
By a letter dated 22-7-1991, the company addressed the Government of India, Ministry of Law and Company Affairs seeking payment of residual compensation amounts under the provisions of the Andhra Scientific Company Limited (Acquisition and Transfer of Undertakings) Act, 1982 (for short ''the 1982 Act'') (Central Act No. 71 of 1982): In the said communication, the petitioner company specifically claimed the compensation amounts due to them under Sections 7 and 8 of the 1982 Act, asserting that after all the liabilities u/s 21 read with the Schedule to the 1982 Act are met, an, amount over Rs. 1,00,00,000/- was left with the Commissioner of Payments and u/s 23 of the 1982 Act, the Commissioner of Payments was obligated to pay these amounts to the company. The letter also states, that instead of making payment to the company, the Commissioner of Payments made over the residual amount to the "Government Company" viz., M/s. Bharat Electronics Limited, the 3rd respondent herein. In response to this letter, the 2nd respondent by the letter dated 20-9-1991, impugned herein, stated that the Commissioner of Payments appointed under the provisions of the 1982 Act had completed his work on 31st March, 1990 and that the office of the Commissioner of Payments has already been wound up and as the matter is quasi-judicial in nature, the Government cannot intervene and if the petitioners so desire, they may make a claim before the appropriate Court of law.
Chronology of events leading to the lis :
The company was registered in the year 1937 under the Indian Companies Act, 1913 with the registered office at Machilipatnam, Krishna District. The company was engaged in the manufacture and production of various types of scientific instruments. As is apparent from the statement of objects and reasons accompanying the 1982 Act, from a small beginning, M/s. Andhra Scientific Company Limited had gone on to be the largest private sector undertaking in the field of scientific instruments. After an initial period of exponential growth, since 1965-66 however there was a decline in the production of the company and it stated incurring losses. On the basis of recommendations of certain Governmental companies and in recognition of the fact that the company had a body of talented and dedicated scientists and engineers, its management was taken over by the Central Government u/s 18AA of the Industries (Development and Regulation) Act, 1951 (for short ''the 1951 Act'') in June, 1972. This was done with a view to securing proper management of the undertakings so as to subserve the public purpose for which the products of the company were Fund of utility. Initially, the take over of the company was for five years upto 26-6-1971, the period was thereafter extended from time to time and continued till 26-12-1981.
While under such management, under the provisions of the 1951 Act, the Central Government was advancing some amounts as loans to the company which were inadequate. The company was facing acute shortage of liquid funds for its working capital requirements. Funds were also found required for the modernisation of plant and machinery which was however not possible in view of the company being a private company. On an assessment of the overall requirements and for public purposes and in public interest, the Andhra Pradesh Scientific Company Limited (Acquisition and Transfer of Undertakings) Act, 1982 was enacted by the Parliament in the 33rd year of our Republic.
The Preamble to the 1982 Act clearly specifies that it is an Act to provide for acquisition and transfer of the undertakings of the Andhra Scientific Company with a view to securing proper management of such undertakings as to subserve the interest of the general public by ensuring continuity of production of scientific instruments which are vital to the needs of the country and for matters connected therewith or incidental thereto. This enactment provides for payment of certain amounts to the Commissioner of Payments constituted under Chapter VI of the 1982 Act for eventual disbursement of the amounts in the manner envisaged in Sections 19 to 23 of the 1982 Act. Section 19 prescribes the priorities in which that amounts paid by the Government of India to the Commissioner of Payments, should be disbursed among the categories specified in the schedule to the 1982 Act. Section 23 directs the Commissioner of Payments, if there is balance left out of the moneys paid to him in relation to the undertakings of the company, after meeting the liabilities as specified in the schedule, to disburse sough balance to the company.
The petitioners interpret the text and structure of the 1982 Act, to signal an obligation of the Commissioner of Payments and a concomitant right of the company to receive such residual amounts in terms of Section 23 of the 1982 Act and urge that the expression "Company" u/s 23 would mean the 1st petitioner Company. The respondents, in particular, the Union of India both in the Ministry of Industries and the Minister of Defence as also the Government Company contend to the contrary that it is the Government Company-the 3rd respondent herein, that is entitled to such residual amounts after all the liabilities under the Schedule to the 1982 Act are met.
It is the province of this Court to interpret the provisions of the 1982 Act to adjudicate upon disputation whether one or the other of the aforesaid contentions accords with the spirit of the 1982 Act as reflected in the phraseology employed in it.
The core grievance of the petitioners is that none of the amount either for the transfer and divestiture of the undertakings of the company u/s 7 of the 1982 Act or the payments for deprivation of the managerial rights qua Section 8(1) of the 1982 Act or the amounts due u/s 8(2) of the 1982 Act payable on account of the retrospective operation of the provisions of Sections 3,4 and 5 of the 1982 Act, have been paid to the company. The other grievance is that the Commissioner of Payments has made the payments to various claimants without any notice to the company in violation of provisions of the 1982 Act.
Analysis of the provisions of the 1982 Act:
The legislative power of the Parliament is traceable to Entry 42 of the Concurrent List "Acquisition and Requisition of Property" read with Entry 44 of List I.
Scheme of the 1982 Act:
Chapter I contains to sections -Section 1 sets out the title of the 1982 Act and the date from which the provisions of the 1982 Act, would come into force. Section 2 enumerates definitions of the expressions used in the 1982 Act. u/s 2(a) the appointed date is to mean the First day of July 1981. Section 2(c) defines "Company" to mean the Andhra Scientific Company Limited (the 1st petitioner herein). Section 2(h) defines "Government Company" to mean the Government company in which the undertakings of the company are directed to vest under Sub-section (1) of Section 6. Section 2(1) states that words and expressions undefined in this Act, but defined in the Companies Act, 1956, shall have the meanings, respectively, assigned to them in the later Act.
Chapter II sets out provisions comprised in Sections 3 to 6. Section 3 ordains that on the appointed day (1-7-1981) the undertakings of the company and the right, title and interest of the company in relation to its undertakings shall, qua the 1982 Act, stand transferred to and vest in the Central Government. Section 4 sets out the general effect of the vestiture ordained in Section 3 dilation on which is not necessary for the case on hand. Section 5 enacts a declaration that the company, whose undertakings have been taken over and vested in the Central Government, shall be liable for certain liabilities incurred prior to the appointed day as specified in the said provision. Section 6(1) inheres in the Central Government the power by a notification, to direct vesting of the undertakings of the company in a Government Company, such vesting to be effectuated in the manner specified in such notification. Section 6(2) sets out house keeping provisions to effectuate the purposes of vestiture.
Chapter III contains two Sections 7 and 8. Section 7 contains a clear and unequivocal declaration that in view of the transfer to and vesting in, the Central Government, u/s 3, of the undertakings of the company and the right, title and interest of the company in relation to its undertakings, there shall be given by the Central Government to the Company in cash and in the manner specified in Chapter VI, an amount of Rs. 2,24,10,000/-. Section 8, also in Chapter III, enumerates the other payments to be made to the company of which Section 8(1) sets out the payments to be made for the deprivation of the company of the management and the undertakings u/s 18AA of the 1951 Act and Section 8(2) sets out the payments on account of the retrospective operation of the provisions of Sections 3, 4 and 5 of the 1982 Act. Section 8(3) states that the amounts specified in Section 7 and the amounts determined in accordance with the provisions of Sub-sections (1) and (2) of Section 8, shall carry simple interest @ 4% PA for the period commencing on the appointed day and ending on the date on which payment of such amounts is made by the Central Government to the Commissioner. Section 8(4) declares that the amounts determined u/s 8(1) to (3) shall be given by the Central Government to the company in addition to the amounts mentioned in Section 7. Section 8(5) declares that the liabilities of the company in relation to its undertakings which have vested in the Central Government u/s 3 shall be discharged from the amounts referred to in Section 7 and also from the amounts determined under Sub-sections (1) to (3) of Section 8, in accordance with the rights and interests of the creditors of the Company.
Chapter IV contains provisions in the nature of house keeping provisions to effectuate the management of the undertakings taken over and vesting in the Government of India. Chapter V sets out provisions with regard to employees of the company, Provident Fund and other funds payable to such employees. The provisions in Chapters IV to V are not germane to the issues arising in this writ petition.
Section 15 occurring in Chapter VI requires the Central Government to appoint a Commissioner of Payments for the purpose of disbursing the amounts payable to the company under Sections 7 and 8. Sub-section (2) of Section 15 enables the Central Government to appoint such other persons as it thinks fit to assist the Commissioner and empowers the Commissioner to delegate the functions inhering in him to such other person or persons. Section 15(4) enacts that the salaries and allowances of the Commissioner and other persons appointed u/s 15 shall be defrayed from the Consolidated Fund of India.
Section 16 also occurring in Chapter VI mandates that the Central Government shall, within 30 days from the specified date [the specified date being 19-12-1985 vide Gazette of India Extraordinary dated 19-12-1985], pay in cash to the Commissioner of Payments, for payment to the company, the amount equal to the amounts specified in Sections 7 and 8. Section 16(2) ordains that a deposit account shall be opened by the Central Government in favour of the Commissioner of Payments in the Public Account of India and every amount paid under the 1982 Act to the Commissioner shall be deposited by the Commissioner to the credit of the said deposit account, the said deposit account to be operated by the Commissioner. The provisions of Section 16 elucidate and effectuate the purposes of the substantive provisions of the 1982 Act. These purposes are reinforced by the provisions of Section 16(4), which state that the interest accruing on the amount standing to the credit of the deposit account, referred to in Sub-section (2), shall ensure to the benefit of the company.
Section 17 refers to the power and entitlement of the Central Government or the Government Company in respect of transitional and post-takeover period matters in relation to the amounts payable to the company in relation to the undertakings taken over or to be paid in respect of such taken over undertakings. These provisions being not relevant to the disposition of this lis are not dilated upon.
Section 8 also occurring in Chapter VI states that every person having a claim against the company with regard to any of the matters specified in the Schedule, pertaining to any undertaking owned by it shall prefer such claim before the Commissioner within thirty days from the specified date. The proviso empowers the Commissioner to consider such claims beyond the period specified, in his rational discretion. Section 19 enacts the priority of claims referred to in Section 8, the priorities being enumerated in Sub-sections (a) to (c). Sections 20 and 21 are in the nature of procedural prescriptions to enable consideration of the claims, their adjudication and disposition.
Section 21(4) specifically obligates the Commissioner to afford an opportunity to the company of refuting a claim before admitting or rejecting the claim in whole or in part. This provision is relevant in the context of the petitioners challenge and complaint that no such opportunity has been afforded to the petitioner before the disposition of the claims, by the Commissioner (vide para 8 of the affidavit filed in support of the writ petition).
Section 21(4) has been legislatively designed to enable the Commissioner to make a rational assessment of the validity of any claim. This legislative prescription is intended to afford a fair opportunity to the so company as to enable it to preserve the residual amounts (that would enure to it) as also to assist the Commissioner in prudently and rationally disbursing the amounts while adjudicating upon the claims asserted u/s 8. This specific provision has been ignored either inadvertently or by design, by the Commissioner in failing to afford an opportunity to the company, an opportunity to refute any claim made before adjudicating upon it. This is a subversion of the legislative mandate.
Section 21(7) provides an appellate remedy to a claimant against the decision of the Commissioner, to the Principal civil Court of original jurisdiction within the local limits of whose jurisdiction the Registered Office of the company is situate. The provision to Sub-section (7) to Section 21 however states that when a sitting Judge of the High Court is appointed to be the Commissioner of Payments, the appeal, shall lie to the High Court having territorial jurisdiction over the Registered Office of the company and that such appeal shall be heard and disposed of by atleast a Division Bench of the High Court. Section 22 sets out the provisions with regard to disbursement of money by the Commissioner and the effect of such disbursement on the liability of the Company qua the claim.
Sections 23 and 24 being relevant are extracted in extenso as under:
"23. Disbursement of amounts to the Company :--(1) If, out of the moneys paid to him, in relation to the undertakings of the Company, there is a balance left after meeting the liabilities as specified in the Schedule, the Commissioner shall disburse such balance to the company, .
(2) Where the possession of any machinery, equipment or other property has vested in the Central Government or a Government Company under this Act, but such machinery, equipment or other property does not belong to the Company, it shall be lawful for the Central Government or the Government Company to continue to possess such machinery or equipment or other property on the same terms and conditions under which they were possessed by the company immediately before the appointed day.
Undisbursed or unclaimed amount to be deposit with the general revenue account :--Any money paid to the Commissioner which remains undisbursed or unclaimed on the date immediately preceding the date on which the office of the Commissioner is finally wound up, shall be transferred by the Commissioner, before his office is finally wound up, to the general revenue account of the Central Government; but a claim to any money so transferred may be preferred to the Central Government by the person entitled to such payment and shall be dealt with as if such transfer had not been made, and the order, if any, for the payment of the claim being treated as an order for the refund of revenue."
Sections 26 to 31 are general provisions intended to effectuate the purposes of the 1982 Act including Section 31, which empowers making of rules by the Central Government. Section 25 enacts a non obstante provision conferring overriding efficacy to the provisions of the 1982 Act qua any existing law or any decree or order of any Court, Tribunal or other authority.
The schedule to the 1982 Act sets out the order of priority in the discharge of liabilities of the company. The priorities are categorized into "post take over management" and "pre take over management" period liabilities of the company and generically while post takeover management liabilities are accorded primacy over the pre take over management period liabilities inter se priorities are also accorded in each of these generic categories, (vide Section 19).
Analysis of the contentions of the disputants vis-a-vis the provisions of the 1982 Act:
On a holistic analysis and a true and fair construction of the provisions of the 1982 Act, the inference is irresistible is that the amounts specified and deducible from the provisions of Sections 7 and 8 are intended as compensation for the taking over of the undertakings of the Andhra Scientific Company Limited as also for the deprivation of the managerial interests of such company during the period the management was resumed u/s 18AA of the 1951 Act and for such deprivations as are inherent in the retrospective operation of Sections 3, 4 and 5 of the 1982 Act. These amounts are legislatively designed to immunise the 1982 Act from any challenge under those provisions of the Constitution which have been judicially interpreted to inhere in the owners of property, be they individuals or juristic entities, a constitutional right to compensation for deprivation of property.
The role of the Government Company is for a singular purpose viz., to manage the post takeover affairs of the undertakings of the company. The identification of the Government Company is left to the discretion of the Central Government and the 3rd respondent has been identified, by a notification u/s 6 of the 1982 Act, as the Government Company, for the purpose of managing the affairs and undertakings taken over u/s 3 of the 1982 Act. A close analysis of the provisions set-out in Chapter VI of the 1982 Act read in the context of the legislative presents in Chapter III leaves no manner of doubt that after disbursements are made in the order of priorities set out in Sections 8 and 19 read with the Schedule to the 1982 Act, any balance amounts from out of the amounts payable by the Central Government under Sections 7 and 8, shall have to be disbursed by the Commissioner of Payments to the Company. No accepted and recognised principle of interpretation of statutes applied to any or all of the provisions of the 1982 Act, permits an inference that such balance amounts are to be disbursed to the 3rd respondent, the Government Company. The balance amounts left after meant the liabilities as specified in the Schedule to the 1982 Act, are to be disbursed to the Company which is defined in Section 2(c) of the 1982 Act to be the Andhra Scientific Company Limited-the 1st petitioner herein [Section 23(1)]. It is further to be noticed that the company is not a claimant within the meaning of Section 8 read with the Schedule to the 1982 Act. It is the statutory obligation of the Commissioner to disburse the balance amount to the company.
In the above legislative environment, I now proceed to consider the contentions of the respondents 1 to 3.
It is significant to note that the Under Secretary (BHEL) in the Ministry of Defence has filed a counter affidavit on behalf of respondents 1 and 2, while the Additional General Manager of BHEL has filed a counter affidavit on behalf of the 3rd respondent. Be that as it may.
It is the case of the respondents 1 and 2 that after the appointed date under the 1982 Act i.e., 1-7-1981 the undertakings of the company and the right, title and interest of the company in relation to its undertakings has stood transferred to and have vested in the Central Government and that thereafter such undertakings and assets have been vested in the 3rd respondent and that on such vesting there is no Andhra Scientific Company Limited or any Managing Director or shareholders of such company. Lest it may be doubted that such an extravagant contention could have been urged on behalf of the respondents 1 and 2, I would extract the averments in the counter affidavits of respondents t and 2, in specie.
"in view of the stipulation there shall not be any Andhra Scientific Company Limited or Managing Director to it or shareholders thereto could exist. The petitioners have no locus standi for filing the writ petition of a non-existent company after 1-7-1981."
Let us examine this contention of the respondents 1 and 2 vis-a-vis the frame work of the 1982. Act. There is nothing in the provisions of the 1982 Act which, either expressly or by any necessary implication or by any process of interpretation recognised in law, permits an inference that the Andhra Scientific Company Limited has "been brought to an end by the operation of the 1982 Act. The 1982 Act merely takes over the undertakings and assets of the Andhra Scientific Company Limited to the extent specified in the 1982 Act.
Section 3 of the 1982 Act enacts the declaration that on the appointed date the undertakings of the company and the right, title and interest of the company in relation to its undertakings shall by virtue of the provisions of the 1982 Act stand transferred to and vest in the Central Government. Section 4(1) sets out the general effect of vesting and defines the expression "undertakings of the company" in an inclusive manner. Sub-sections (2) to (4) set-out the effect of vesting in respect of various legal obligations that the company had in relation to its undertakings prior to vesting.
The acquisition and transfer of undertakings brought about by the provisions of the 1982 Act, are not the first of its kind. Similar provisions occur in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (for short ''the 1970 Act''), whereunder and whereby undertakings of 14 private banks were taken over and vested in corresponding new banks that are specified in the First Schedule to the 1970 Act. To the extent relevant to the case on hand the only point of distinction is that while corresponding new banks were created by the provisions of the 1970 Act vide Section 3 thereof, in the present case the acquired and taken over undertakings of the company vest in the 3rd respondent by virtue of a notification by the 1st respondent in terms of Section 6 of the 1982 Act. Section 4 of the 1970 Act also enacts the transfer of the undertakings of the existing banks and vestiture of the same in the corresponding new banks, while Section 5 thereof sets-out the general effect of vesting. The provisions of Sections 4 and 5 of the 1970 Act are, to the extent relevant and material for the issues involved in this writ petition, In pan materia the provisions of Sections 3 and 4 of the 1982 Act. While Section 6 of the 1970 Act specifies that every existing bank shall be given by the Central Government such compensation in respect of the transfer u/s 4 to the corresponding new bank of the undertakings of the existing bank, as specified against each such bank in the II Schedule, Section 7 of the 1982 Act specifies the amount that shall be given by the Central Government to the company in cash and in the manner specified in Chapter VI. Other amounts to be given to the said company are specified in Section 8.
Similar provisions are also found in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (for short ''the 1980 Act'') whereunder undertakings of six private banks have been acquired and transferred to corresponding new banks, the corresponding new banks having been created u/s 3 of the 1980 Act. Other provisions with regard to acquisition and vesting, the general effect of vesting and the compensation to be paid to the existing banks are ipsisima verba the provisions of 1970 Act. To the extent warranted and relevant, the 1982 Act has incorporated, in all material particulars, the legal environment obtaining under the 1970 and 1980 Acts.
The Company is a company registered under the Companies Act, 1956. The Companies Act contains specific and detailed, substantive and procedural prescriptions for the winding up of a company. It is not the case of any of the parties in this lis that the company has been wound up under the provisions of the Companies Act, 1956. Such is not the case pleaded and it is not even faintly urged by any of the Counsel appearing for respondents 1 to 3 that the company has been wound up in terms of the Companies Act, 1956. Since it is the Parliament which has enacted the 1982 Act, it was competent to bring to an end, the corporate existence of the company by specific provisions made in the 1982 Act. Had such provisions been made, possibly, such provisions would have prevailed over the substantive and procedural prescriptions of the Companies Act 1956 and would have brought about the extinction of the company. There is nothing expressly or by necessary implication apparent from the provisions of the 1982 Act that permits even an extravagant claim that the company has been extinguished by and under provisions of the 1982 Act. The corporate entity brought into existence under the provisions of the Companies Act, l956, does not evaporate by the mere desire of the respondents. It is clear from the text, structure and architecture of the 1982 Act that while retaining the corporate existence of the company, its assets and undertakings as delineated in Sections 3 and 4 alone been acquired and have vested initially in the Government of India and thereafter in the 3rd respondent by virtue of a notification u/s 6 of the 1982 Act. This extravagant claim of respondents 1 to 6 is thus stated to be rejected.
The other contention of the respondents 1 to 3 requires to be examined. Respondents 1 to 3 contend that it is the 3rd respondent that is entitled to the balance of the amounts left after meeting the liabilities specified in the 1982 Act, out of the compensation paid under Sections 7 and 8 of the 1982 Act. The relevant averments in the counter affidavit filed on behalf of the respondents 1 and 2, are extracted below.
"Therefore, the crediting of the residuary amount after settling the claims by the Commissioner of Payments as per the provisions of the Act to M/s. Bharat Electronics Limited is legally correct They only were the claimants after 1-7-1981 before the Commissioner of Payments and all the claims including the petitioner''s claims were rightfully discharged by the Commissioner of Payments during the tenure of his office.
In regard to para 5 of the affidavit it is submitted that the present WP is not legally valid as the petitioners could have claimed their dues before the Commissioner of Payments and if aggrieved of his orders/ awards, if any, they have a remedy to appeal before the Appellate Authority i.e., District Court, Krishna, where some aggrieved Institutions/Persons had preferred their appeals.
Insofar as para 6 of the affidavit is concerned, it is submitted that the Commissioner had legally credited the amount to the BHEL in whose favour, right, title and interest of the Andhra Scientific Company was transferred u/s 3 of ASCO Limited., (Acquisition and Transfer of Undertakings) Act with effect from 1-7-1981. Therefore, the petitioners should have no claim about the residuary amount."
Having regard to the specific stand of respondents 3 and 2 the inference is irresistible that these contentions have been urged even without a perusal of the provisions of the 1982 Act. Firstly respondents 1 and 2 appear to entertain a wholly unfounded impression, borne possibly out of flights of imagination, that the company has ceased to exist with the enactment of the 1982 Act. There is seen no material foundation for such hallucination.
The respondents presume that the Company is also a claimant in terms of Section 8. It is clear from the provisions of Sections 18 to 22 that only persons, institutions or authorities having an interest in respect of any of the six categories of claims enumerated in the Schedule to the 1982 Act, are to be treated as claimants and are required to submit a claim to the Commissioner of Payments. The company is not a claimant within the meaning of the 1982 Act. It is the principal beneficiary to whom the compensation is directed, but after satisfying the liabilities set out in the order of priorities and to the individuals and institutions enumerated in the provisions of Sections 18 to 22 read with the Schedule to the 1982 Act, This inference is obligated by the legislative phraseology employed in Section 23 which mandates that any balance amount left out of the amounts paid by the Government of India under Sections 7 and 8 in relation to the acquisition and divesture of the undertakings of the company, after meeting the liabilities as specified in the Schedule to the Act, shall be disbursed by the Commissioner of Payments to the Company. The company is not required to submit any claim to the Commissioner of Payments. It is entitled qua the statutory imprimatur in Section 23 of the 1982 Act to such balance of amounts and it is the statutory obligation of the Commissioner of Payments to make payment of such balance amount to the company. The company, not being a claimant cannot prefer an appeal u/s 21(7) either.
The assertion of the respondents 1 and 2 that the balance amount has rightly been claimed and paid to the 3rd respondent by the Commissioner of Payments and that the company ought to have made a claim if it was so desirous, to the Commissioner of Payments, analysed in the aforementioned statutory context is seen to be wholly misconceived and woolly.
The 3rd respondent reiterates the stand of the respondents 1 and 2. For the reasons already recorded and in the analysis above, the contentions of the 3rd respondent are clearly misconceived and are rejected.
The 3rd respondent has also not been constituted as a successor to the Commissioner of Payments either under the 1982 Act or by any notification by the Government of India. There is nothing in the 1982 Act which permits the 3rd respondent to appoint itself as the receiver of the residuary amounts. No provision in the 1982 Act has been pointed out to this Court, which entitles the 3rd respondent to receive the remaining corpus of the payments made by the Government of India under the 1982 Act either as representing the residuary amount or as a transient measure as a keeper of the said amount for the purpose of disbursal to the claimants u/s 8. The Commissioner of Payments and the 3rd respondent are thus seen to have engendered a scheme, inconsistent with and contrary to the provisions of the 1982 Act, to vest in the 3rd respondent the balance amounts payable to the company u/s 23 of the 1982 Act. This scheme was pursued to its fulfilment by denying an opportunity to the company the 1st petitioner herein, of refuting the incredible claim of the 3rd respondent to the balance amount - an amount that is mandated u/s 21(4) of the 1982 Act.
Respondents 1 and 2 also assay a further justification of the payment of the balance amounts to the 3rd respondent by the Commissioner of Payments, by stating that the 3rd respondent had earlier deposited the amount of Rs. 224 lakhs through the Central Government in favour of the Commissioner of Payments for clearing the liabilities. This procedure followed, if true, has no sanctity or sanction under the 1982 Act. The 1982 Act obligates the Government of India to make the payment and if the monies have been made available by the 3rd respondent to the Government of India for whatever reason, that singular fact by itself would not, in law, entitle to 3rd respondent to claim the balance amounts nor would it entitle the 3rd respondent to step into the shoes of company. By advancing such amounts, as it is stated to have done, the 3rd respondent would not be entitled to constitute itself into a successor to the Commissioner of Payments. The 1982 Act neither recognises nor sanctifies any such strange conduct on the part of the respondents. The provisions of the 1982 Act are clear and umabiguous. The 1982 Act recognises the need for continuance of the Commissioner of Payments till disbursement of claims in their entirety. In fact Section 15(4) of the 1982 Act ordains that the salary and allowances of the Commissioner of Payments and other persons appointed u/s 15, shall be defrayed out of the Consolidate Fund of India. On a holistic analysis of the provisions of the 1982 Act, there appears no excuse, leave alone a justification for the 3rd respondent to have made a claim u/s 23, for the balance amount, for the Commissioner of Payments to have paid such residuary amounts to the 3rd respondent or for the Commissioner to have wound itself up even before the disbursal of the claims was effectuated in its entirety.
The 3rd respondent has also filed a counter-affidavit, which is a reiteration of the stand of the respondents 1 and 2. Significantly at para 7 of the counter-affidavit the 3rd respondent states that for transfer and vesting of the undertaking, the 3rd respondents herein deposited the amounts specified under Sections 7 and 8 of the 1982 Act towards payment of liabilities specified in the Schedule to the 1982 Act. Why and how it did so not clear. This conduct of the 3rd respondent is incomprehensible qua the provisions and architecture of the 1982 Act. To this extent there is a discordance between the stand of 3rd respondent on the one hand and the stand of respondents 1 and 2 on the other. Respondents 1 and 2 contend that the amount of Rs. 224 lakhs was made available by the 3rd respondent and deposited by the Government of India to Commissioner of Payments. In para 7 of the counter-affidavit the 3rd would however, though equivocally, contend that it is the 3rd respondent, which has deposited the amount. Be that as it may, the amounts are required to be paid to the Commissioner of Payments by the Government of India under Sections 7 and 8. The phraseology employed in Sections 7 and 8 admits of no equivocation nor leaves scope for any creative interpretive intervention. u/s 16(2) of the 1982 Act the amounts shall be paid by the Government of India in favour of the Commissioner of Payments by way of opening a desposit account in the Public Account of India, wherein all amounts paid under the 1982 Act to the Commissioner of Payments shall be deposited by the Commissioner to the credit of the said deposit account and the said deposit account shall be operated by the Commissioner of Payments. There is no role for payment of any amount by the 3rd respondent to the Commissioner of Payments under the provisions of the 1982 Act. In fact Section 24 of the 1982 Act specifically enacts that any unclaimed or undisbursed amounts, shall be transferred by the Commissioner of Payments to the general revenue account of the Central Government.
If the 3rd respondent has, on its own volition, made payments to the Government of India for the purposes of payment to the Commissioner of Payments, then the 3rd respondent may be at liberty to pursue its remedies for recovery of the said amount from the Government of India in accordance with law. The conduct of the 3rd respondent, inconsistent with the provisions of the 1982 Act, however, does not clothe the 3rd respondent with any entitlement in law to receive the balance amounts which are to be paid to the company by the Commissioner of Payments u/s 23 of the 1982 Act. The 3rd respondent unequivocally admits that an application was made on its behalf to the Commissioner of Payments seeking payment of the undisbursed amounts u/s 23(1) of the 1982 Act. It is clearly stated in para 10 of the counter-affidavit of the 3rd respondent that the said respondent having become the owner of the company by virtue of several provisions of the 1982 Act, the undisbursed amounts out the amounts in relation to the undertakings of the company had to be paid to it. It is not clear from this averment whether the 3rd respondent claims to have become the successor to the corporate entity of the company or the current inheritor of the undertakings of the company taken over and vested in it, under the provisions of the 1982 Act.
Be that as it may. As it is one of the contentions at the Bar that the 3rd respondent steps into the shoes of the Andhra Scientific Company Limited by virtue of the provisions of the 1982 Act, this Court is called upon to deal with the said contention.
This Court has already noticed the provisions of the 1982 Act. On a true and fair construction of the provisions of the 1982 Act, it is required to be held that the 3rd respondent''s claim to be the successor of the company in respect of the residuary amounts payable to Andhra Scientific Company Limited u/s 23(1) of the 1982 Act, is a contention that has no support whatsoever in the provisions of the 1982 Act, a contention that is fundamentally misconceived and proceeds from no informed interpretation of the 1982 Act. It is a contention that is stated to be rejected.
The fact, however, remains that the Commissioner of Payments was too ready to accept the claim urged on behalf of the 3rd respondent and make over the residuary amounts to the 3rd respondent. This is apparent from the pleadings on behalf of the respondents 1 and 2. This amount the 3rd respondent is not entitled to retain. It never had the entitlement to receive either, but for the misconceived interpretation of the provisions of the 1982 Act by the Commissioner of Payments, a misconception engendered by the vacuous claim of the 3rd respondent purportedly u/s 23(1) of the 1982 Act.
Having received the said amount, the 3rd respondent seeks to continue its control thereon by urging that the writ petition is misconceived as the company has ceased to exist by the operation of the 1982 Act. It is also orally urged that the dependent of the affidavit filed in support of the writ petition is over-aged to be entitled to continue as the Managing Director of a Company, that a Managing Director could not have continued beyond a particular period, that it is not demonstrated as to whether any general meeting of the company was held or the company is actively in existence. There is nothing asserted in the pleadings (in its counter-affidavit) entitling the 3rd respondent to urge all these contentions whose adjudicative disposition requires a factual foundation and analysis. This Court is in the above circumstances disinclined to pronounce upon these contentions.
There is one other aspect that requires to be noticed, viz., if the contention of the respondents 1 to 3 is to be countenanced as representing the correct interpretation of the provisions of the 1982 Act, then the 1982 Act would be a piece of legislation which would have acquired and taken over the undertakings of the company without providing for any compensation, whatsoever, even an illusory amount, to the company. Such a piece of legislation would not have survived a challenge to its conformity with the constitutional mandate. For the plurality of reasons viz., that the construction of the provisions of the 1982 Act by the respondents is inconsistent with the text and structure of the 1982 Act and that such construction would render the 1982 Act unconstitutional per se the contention urged on behalf of the respondents 1 to 3 requires to be rejected and is accordingly rejected.
From the foregoing analysis, the inference is irresistible, that the contentions of respondents 1 and 2 - the Central Government and the 3rd respondent an instrumentality of the Government of India, proceed from an ignorance of the constitutional and statutory environment in general and the provisions of the 1982 Act in particular. Ignorance of the law cannot be legitimate source of entitlement for the 3rd respondent, to the balance amount that is payable to the company u/s 23 of the 1982 Act. No other legal source for such entitlement is discernible.
Conclusion:
As a consequence of the aforesaid analysis, I declare as follows:
(1) Under the provisions of the 1982 Act the Commissioner of Payments is obligated to entertain, adjudicate and disburse the claims urged under Sections 18 to 22 read with the Schedule to the 1982 Act from out of the amounts payable to the company as made, available to the Commissioner of Payments. After these liabilities are met, the balance amount available is obligated to be disbursed by the Commissioner of Payments to the Company, which as defined in the 1982 Act, is the Andhra Scientific Company Limited.
(2) The 3rd respondent is not entitled either to make a claim or to be paid any amounts whatsoever out of the payments made available to the Commissioner of Payments under Sections 7 and 8 of the 1982 Act, except and insofar as the 3rd respondent urges a claim, if any, in terms of Sections 18 to 22 read with the Schedule to the Act. Any claim made by the 3rd respondent u/s 23 and any disbursement made by the Commissioner of Payments to the 3rd respondent in respect of such claim is ultra vires the provisions of the 1982 Act, illegal and inoperative.
(3) As the 3rd respondent has made such a claim in contravention of the clear provisions of the 1982 Act, without a scintilla of justification under the provisions of the said Act and has illegally appropriated the amounts, the 3rd respondent shall forthwith repay all the amounts paid to it by the Commissioner of Payments, together with interest @ 15% p.a. calculated from the date of receipt of such amounts from the Commissioner till the date of repayment.
(4) Such amount with interest thereon, as directed shall be credited by the 3rd respondent into an account to be opened by the 1st respondent in any nationalised bank for the purpose of making disbursements under Sections 18 to 23 of the 1982 Act.
(5) The 1st respondent shall forthwith issue a notification u/s 15 of the 1982 Act appointing a Commissioner of Payments duly directing the said Commissioner of Payments to take up and complete the functions inhering in such Commissioner of Payments under the provisions of the 1982 Act including payment of all the liabilities, if any, under the provisions of Sections 18 to 22 and thereafter to make payment of the balance amount to the Andhra Scientific Company Limited as required u/s 23 of the 1982 Act from out of the funds paid by the 3rd respondent as directed above. Before making payments in respect of any claims under Sections 18 to 22, the Commissioner of Payments appointed u/s 15, shall afford an opportunity to the company of refuting the claim, as required u/s 21(4) of the 1982 Act, in respect of such claims.
The writ petition is allowed as above. Having regard to the wholly unsustainable stands taken by the respondents 1 to 3, the writ petition is allowed with costs quantified at Rs. 20,000/- (Rupees Twenty thousand only) payable by the respondents 1 to 3, of which Rs. 10,000/- shall be paid to the 1st petitioner-Company and the other Rs. 10,000/- shall be paid to the credit of the Andhra Pradesh State Legal Services Authority, High Court Buildings, Hyderabad.
The writ petition is allowed with costs as directed above.