Gujarat Tractor Corpn. Ltd. vs Union of India

Rajesh Balia, J.—This petition is preferred by the Gujarat Tractor Corpn. Ltd. The petitioner is a Government company, Hindustan Tractors Ltd., and was taken over by the Central Government under the provisions of the Hindustan Tractors Ltd. (Acquisition and Transfer of Undertakings) Act, 1978. With effect from the appointed day, i.e., 1-4-1978, the undertaking of the company, namely, the Hindustan Tractors Ltd., and its right, title and interest in relation to its undertakings stood transferred and vested in the Central Government u/s 3 of the Act. As per the provisions of section 4 of the Act, the whole assets, rights, leaseholds, powers, authorities and privileges, and all the property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, bank balances, cash balances, cash on hand, reserve funds, investments and book debts and all other rights and interests in, or arising out of, such property as were immediately before the appointed day in the ownership, possession, power or control of the company, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto, etc., vested in the Central Government free from all encumbrances and discharged from any trust, obligation, mortgage, charge, lien or otherwise. Under the provisions of section 5 of the Act, every liability, other than the liability specified in the other provisions of the Act in respect of any period prior to the appointed day, remained the liability of the company and was not enforceable against the Central Government or the State Government or against the Government company, petitioner in the present case, in which the undertaking of the Hindustan Tractors Co. was directed to be vested u/s 7 of the Act. This petition has been directed in relation to the order of the ITO, Circle I, Ward-A, Baroda, dated 16-12-1980, relating to the assessment year 1978-79 by which it ordered refund of Rs. 4,15,408 for that year. However, it was also ordered that the aforesaid refund amount be adjusted against the liability of the earlier order of assessment relating to the assessment years 1976-77 and 1977-78. The petitioner-corporation having noticed through the auditor''s note that the amount of refund which became due after the undertaking of the company vested in it, was not liable to be adjusted against the dues of the company which related to the date prior to the appointed day. It, therefore, approached the Commissioner for reviewing the order u/s 264 of the Act. The Commissioner, Baroda, by taking into consideration the past history of the assessee-company about late filing of returns or not responding to notices u/s 154 of the Act timely, refused to condone the delay and entertain the revision. Hence, the petitioner approached this Court.

The petitioner is a public undertaking and discharging its functions under a statute in respect of the undertakings vested in it by the order of the Central Government. Its obligation to discharge liabilities relating to the period prior to the appointed day incurred by the company to which the undertaking was earlier belonging, is governed by the statute and the mere fact of some delay in approaching the Commissioner for giving effect to the statutory provisions should not have been a ground for the Commissioner to refuse to entertain the application on the merits, particularly when such refusal would have meant defeating the provisions of the Act.

In view of the facts and in the circumstances as aforesaid, we are of the opinion that the provisions of the Act are clear enough that no part of the liability in respect of any period prior to the appointed day, which is not excluded under sub-section (2) of section 5 of the Act, can be enforced against the Central Government or the State Government or the Government company in which the undertaking in question was vested u/s 7 of the Act. This is clear from the bare reading of the aforesaid provisions which are quoted as below: 5(2). Any liability arising in respect of-

(a) loans advanced by the Central Government or the State Government, or both, to the company (together with interest due thereon), on or after the date of taking over;

(b) loans advanced by a bank to the company (together with interest due thereon), on or after the date of taking over (but excluding loans advanced, on or after such date, by a bank to the company to the extent such loans have been utilised by the company for the repayment of, or the payment of interest on, secured loans advanced to the company by a bank at any time before such date);

(c) loans advanced by the Industrial Reconstruction Corporation of India Limited to the company (together with interest due thereon) on or after the date of taking over;

(d) wages, salaries and other dues of employees of the company and the dues on account of any deduction made from wages and salaries and other dues of employees, relating to any period commencing on and from the date of taking over;

(e) any debt incurred by the company during any period commencing on and from the date of taking over, not being a debt falling under clause (a), clause (b), clause (c) or clause (d) or specified in category I of the Schedule,

shall, on and from the appointed day, be the liability of the Central Government, or the State Government, or the Government company aforesaid and shall be discharged by the Central Government or the State Government or the Government company aforesaid as and when repayment of such loans becomes due or as and when such wages, salaries and other dues and debts become due and payable.

We, in the circumstances, deem it just and proper to quash the order at Annexure ''H'' and direct the Commissioner of income tax, Baroda, to examine the case of the petitioner on the merits keeping in view the aforesaid observations. Rule is, accordingly, made absolute with no order as to costs.