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SUPREME COURT OF INDIA
S. MURTAZA FAZAL ALI AND JASWANT SINGH, JJ.
Maharashtra State Textile Corporation Ltd., Appellant
Versus
The Official Liquidator and others, Respondents.
Civil Appeal No. 777 of 1975.
Decided on 4-1-1978.
Advocates appeared
Mr. S. N. Kacker, Sol. Gen. of India Mr. T. V. S. N. Chari, for Appellant, M/s. M. K. D. Namboodiry, S. V. Deshpande and S. Balakrishnan Advocate for No. 1 and Mr. P. R. Mridul, Sr. Advocate (Mr. Shiv Pujan Singh. Advocates with him) (for Nos. 2 & 3) for Respondents.
Management Act – Section 8 - Sick Textile Undertakings Act 1974 – possession for land - challenging the constitutionality –Lead evidence - At the time of taking over the appellant M. S. T. C. did not take possession of all the materials which it considered unnecessary as it did not want to pay higher compensation. Consequently several items were segregated and handed over to the O. L. but the rest of the assets were taken over by the appellant M. S. T. C. Some times in 1971 the Official Liquidator sold 16 lots of store items, out of which three lots were not taken delivery of by the purchasers M/s Akash Traders who had to pay Rs. 67,000/-. We would like to mention here that we are not concerned with this item of three lots in the instant case and the equities of the same will have to be worked out between the purchasers and the Official Liquidator - Shall lie in any Court or be continued whether by or under the supervision of any Court or voluntarily, except with the consent of the Central Government – Held, If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it - Statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs - These observations were quoted with approval by this Court in the case of Mr. Boucher Pierre Audre v. Supdt., Central Jail, Tihar, New Delhi AIR 1975 SC 164 where Bhagwati, J. speaking for the Court observed as follows - It is now well settled law that where a legal fiction is created, full effect must be given to it and it should be carried to its logical conclusion - In view of the decision of this Court it is manifest that even though the Nationalisation Act may have come into force on a latter date the statutory fiction contained in the Act must be fully given effect to by the Court even if the effect of the same is to nullify an order passed prior to the passing of the Act. For these reasons, therefore, we are clearly of the opinion that the express provisions of S. 35 clearly voided the sale which took place under orders of the Company Judge after the Act would be deemed to have come into force - Thus whichever way we look at this case the position is clear that the order by which the articles were sold was void in law and completely destitute of any legal effect. The interim order passed by this Court on 28-9-1973 could not have had the effect of authorising the sale which was void under the statute. For these reasons, therefore, the obsevations of the High Court while interpreting the interim order of this Court which may be extracted thus - Appeal allowed
JUDGMENT
FAZAL ALI, J.:— This appeal by special leave turns upon the interpretation of an interim order passed by this Court on 28th September, 1973 in a Writ Petition challenging the validity of the Sick Textile Undertakings (Taking Over of Management) Act, 1972 as also the impact of the Sick Textile Undertakings (Nationalisation) Act, 1974 on the proceedings taken in this case both before and after the passing of the interm order by this Court.
2. For short we shall refer to the appellant Maharashtra State Textile Corporation as M. S. T. C., the Official Liquidator as O. L., the Sick Textile Undertakings (Taking Over of Management) Act of 1972 as the Management Act and in case of the Ordinance which had preceded that Act as the Management Ordinance. The Sick Textile Undertakings (Nationalisation) Act 1974 will be referred to as the Nationalisation Act.
3. The point involved lies within a very narrow compass and the High Court appears to have travelled unnecessarily into the wealth of details regarding the history of the proceedings and has entered into meticulous details regarding the provisions of the Act concerned although for the purposes of this case it was necessary to refer only to a few provisions of the Management Act and the Nationalisation Act.
4. In order to appreciate the point in controversy in the instant case it may be necessary to give brief survey of the facts leading up to the impugned order. The appellant M. S. T. C. had taken a lease of the original company known as R. B. Bansilal Abhir Chand Spinning and Weaving Mills (P) Ltd. Hinganghat (Maharashtra). By an order D/- 1-10-1965 the said company was ordered to be wound up and an Official Liquidator of the company was appointed. On 3rd February, 1967 a lease for the running of the mill was taken by the Government of Maharashtra which was handed over to M. S. T. C. for running the mill on behalf of the State. At the time of taking over the appellant M. S. T. C. did not take possession of all the materials which it considered unnecessary as it did not want to pay higher compensation. Consequently several items were segregated and handed over to the O. L. but the rest of the assets were taken over by the appellant M. S. T. C. Some times in 1971 the Official Liquidator sold 16 lots of store items, out of which three lots were not taken delivery of by the purchasers M/s Akash Traders who had to pay Rs. 67,000/-. We would like to mention here that we are not concerned with this item of three lots in the instant case and the equities of the same will have to be worked out between the purchasers and the Official Liquidator.
5. On 31-10-1972 the Management Ordinance was promulgated by the President of India which was followed by the Management Act which was passed on 31-12-1972, and was given retrospective operation with effect from 31-10-1972. In January, 1973 a writ petition was filed in this Court challenging the constitutionality of the Management Act and while the writ petition was pending an interim order dated 28-9-1972 was passed in the following terms:
"Upon hearing counsel, the Court directed that maintenance of status quo shall continue pending disposal of the Writ Petition except that the liquidation proceedings will go on, but there will be no distribution of money amongst the creditors or contributors until further orders".
6. On 16-11-1973 meetings were held before the Official Liquidator to consider the effect of the interim order and ultimately the Official Liquidator with the concurrence of the respresentatives of the erstwhile directors of the company decided that the assets of the company may be realised by the Official Liquidator. It was further decided that the three lots of which delivery was not taken by M/s Akash Traders should be sold. In pursuance of this decision the Official Liquidator reported to the court for permission to sell the three lots and the court granted the said permission as a result of which the said three lots were sold on 14-
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