The Singareni Collieries Company Limited vs Union of India (UOI) and Others

N.Y. Hanumanthappa, J.—For the purpose of this appeal the rank of the parties is referred to as were in the writ petition.

The Union of India filed Writ Petition No. 7272 of 1982 before this court to quash the order passed by the District Judge, Warangal in C.M.A.No. 33 of 1980 dated 9-2-1982 allowing in part the claim made by the first respondent Singareni Collieries Company Limited, Kothagudem and set aside the order passed by the Assistant Commissioner of Payments, Coimbatore, Tamilnadu the fourth respondent who by his order dated 30-5-1980 allowed claim of the first respondent for Rs. 15,099-63 paise.

Azamjahi Mills Limited, Warangal is a Public Limited Company situated in State of Andhra Pradesh. The Singareni Collieries Company Limited, Kothagudem, is also a Public Limited Company which was supplying coal to the Azamjahi Mills as and when the Mill used to place orders for supply of coal on credit basis. Both the mill and the company were maintaining accounts. The Mill used to make payment to the company in lumpsum as and when it was able to mobilise funds. Many mills in the country like the mill in question became sick. The mill in question was taken over by the Union of India with effect from 31-3-1974 in view of coming into force of Industries (Development and Regulation) Act 1951 hereinafter referred to as Act of 1951. The mill in question was also nationalised in view of coming into force of Sick Textile Undertakings (Nationalisation) Act 1974 hereinafter referred to as Act 57 of 1974, and compensation of Rs. 93 lakhs and odd was fixed.

The Singareni Collieries Company the first respondent laid a claim for Rs. 17 lakhs towards the cost and interest on the coal before the Commissioner of Payments. The claim that was made by the Company was taken up for consideration by the Commissioner of Payments. Evidence was let in on behalf of both contesting parties. After full enquiry the Comissioner allowed the claim for Rs. 15,099-63 being the value of the coal for post-taking period while he disallowed the rest of the claim on the ground that the rest of the claim amount pertains to the transactions undertaken between the company and the mill during pre-taking-over period. Aggrieved by the order of the second respondent the first respondent Singareni Collieries Company preferred appeal before the District Judge, Warangal in C.M.A. 33/1980. The Learned District Judge, Warangal by his order dated 9-2-1982 reversed the order passed by the Commissioner of Payments and taking into consideration the accounts existed between the company and the mill as spoken to by the Accounts Officer of the mill who spoke that as per account books of mill balance arrived at Rs. 13,14,180-20, ordered that the first respondent the Singareni Colleries Company was entitled for the said amount.

Aggrieved by the order of the learned District Judge, Warangal the Union of India filed Writ Petition No. 7272/82 before this Court. The learned single Judge, after going through the order of the District Judge and after hearing arguments advanced on both sides observed that because of the agreement reached between the company and the mill (regarding) the liability the placing of liability on the Union of India as incorrect, and on the other hand the finding given by the Commissioner for Payments a just one and proper one. In other words the findings of the learned Single Judge are that the transaction relates to pre-taking-over management period and the Company is not entitled the claim the amount for the said period from the petitioner. Aggrieved by the same the present writ appeal is filed by the Singareni Collieries Company.

The learned counsel appearing for the company contended that the learned single Judge committed a mistake in holding that the company is not entitled to claim the amount as ordered by the learned District Judge. When the accounts maintained by the Company and the mill are not disputed by both sides namely the company and the mill to hold that the transaction in question relates to pre-taking over period and thus company is not entitled to claim the amount for the said pre-taking over period is quite incorrect. His further argument is that the learned single Judge committed mistake in not noticing that both the agency of the company and the mill reached an agreement as to the correctness of the accounts showing the mill''s liability to the company as on 1-5-1971. He further contended that the learned single Judge also committed mistake in accepting the findings of the Commissioner of Payments and finding fault with the findings of the learned District Judge. According to him the categorical claim of the Company falls under Schedule II. If this was taken into consideration the finding would have been that the clam of the company a just one. Thus he argued that the appeal be allowed and the order of the learned single Judge be set aside and in turn the order of the learned District Judge be confirmed.

As an answer to this the standing counsel for the Union of India contended that the contentions raised by the learned counsel for the company have no substance. According to him the learned single Judge as well as the Payment Commissioner took into consideration the relevant provisions of the Acts, namely the effect of both Act of 1951 and Act 57 of 1974 and reached correct conclusion that the transaction that took place between the company and the mill relate to period of pre-taking-over of management and hence the Union of India is not liable to pay. He contended that findings of the learned single Judge are correct and hence the Central Government is not liable to pay any amount to the company except the amount as ordered by the Commissioner of Payments.

In order to know whether the company is entitled to claim as ordered by the learned District Judge or for the amount as allowed by the Commissioner of Payments it is appropriate to refer some of the provisions of the Act 57 of 1974.

The Act 57 of 1974 is enacted to provide for the acquisition and transfer of the sick textile undertakings and the right, title and interest of the owners in respect of the sick textile undertakings, specified in the First Schedule with a view to reorganizing and rehabilitating such sick textile undertakings so as to subserve the interests of the general public by augmentation of the production and distribution at fair prices, of different varieties of cloth and yarn and for matters connected therewith or incidental thereto. The word ''owner'' has been defined u/s 2(h) of Act 57 of 1974 which reads as follows :

"Owner", when used in relation to a sick textile undertaking means any person or firm who or which is, immediately before the appointed day, the immediate proprietor or lessee or occupier of the sick textile undertaking or any part thereof and in the case of a textile company which is being wound up or the business whereof is being carried on by a liquidator or receiver, includes such liquidator or receiver and also includes any agent or manager of such owner but does not include any person or body of persons authorised under the Industries (Development and Regulation) Act 1951 or the Sick Textile Undertakings (Taking over of Management) Act 1972 to take over the management of the whole or any part of the sick textile undertaking".

Section 3 of the Act 57 of 1974 deals about the acquisition of the mill and the rights of the owners in respect of such sick textile undertakings. Section 4 deals about what will be consequences of acquisition and nationalisation. As far as the scope of this section is concerned there is no dispute by both sides. Section 5 of the Act 1974 deals about the owner''s liability which is extracted hereunder:

5(1) "Every liability other than the liability specified in sub-section (2) of the owner of a sick textile undertaking, in respect of any period prior to the appointed day shall be the liability of such owner and shall be enforceable against him and not against the Central Government or the National Textile Corporation.

5 (2) Any liability arising in respect of :-

(a) loans, advanced by the Central Government or a State Government, or both, to a sick textile undertaking (together with interest due thereon) after the management of such undertaking had been taken over by the Central Government

(b) amounts advanced to a sick textile undertaking (after the management of such undertaking had been taken over by the Central Government) by the National Textile Corporation or by a State Textile corporation, or by both together with interest due thereon.

(c) wages, salaries and other dues of employees of the sick textile undertaking, in respect of any period after the management of such undertaking had been taken over by the Central Government, shall, on and from the appointed day, be the liability of the Central Government and shall be discharged, for and on behalf of that Government by the National Textile Corporation as and when repayment of such loans or amounts becomes due and payable".

Section 27 of the Act 57 of 1974 deals about the assumption of liability which is also extracted hereunder:

"27(1) Where any liability of the owner of a sick textile undertaking arising out of any item specified in category I of the second schedule is not discharged fully by the Commissioner out of the amount paid to him under this Act the Commissioner shall intimate in writing to the Central Government that extent of the liability which remains undischarged and that liability shall be assumed by the Central Government.

(2) The Central Government may by order direct the National Textile Corporation to take over any liability assumed by the Government under sub-section (1) and on receipt of such direction, it shall be the duty of the National Textile Corporation to discharge such liability".

Lastly Section 30 of the Act 57 of 1974 speaks about the liability of the National Textile Corporation. Its application to discharge the debt or liability or other promises would arise only when the acts of the Sick Industries have been ratified by the Corporation subsequent to coming into force of Act of 1974 and not otherwise.

After giving our careful thought both to the factual position and effect of certain provisions of Act of 1974 we are of the firm view that the order passed by the learned single Judge upholding the order of the Commissioner and setting aside the order passed by the learned District Judge is quite correct and does not warrant any interference. If the Company feels that mill was actually due in any sum it is a question to be established by the Company against the mill either before the Commissioner of Payments or any other appropriate forum. All other contentions available to the learned counsel for the Company are kept open. In case the Company makes any claim before some other authority or court against the mill for recovery of the debt other than Rs. 15,000/- and odd as ordered by the Commissioner of Payments, it is made clear such a Court or Authority shall decide the said claim on the evidence made available uninfluenced by the observations made by us in this writ appeal.

In our view the liability of the Union of India will arise only in respect of the pre-taking (sic. post-taking) over period and liability if any in respect of post-taking (sic. pre-taking) over period is only when it has knowledge and approval and ratified by the National Textile Corporation and not otherwise.

It is submitted that during the pendency of this writ appeal, pursuant to the interim orders of this court the Union of India deposited a sum of Rs. 4,07,090/- and subsequently the said interim order was vacated. This court also issued a cheque in favour of Union of India and somehow they did not 45 encash and thus the cheque became stale. However the amount still lies with the Court. If that is so, it is open for the Union of India to make a request to the Registrar of this High Court to refund that amount on its surrendering the cheque that was earlier issued,

With the observations and directions as indicated above, the writ appeal is disposed of. No costs.