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2008 Supreme(Guj) 512
IN THE HIGH COURT OF GUJARAT
K.A. PUJ, J.
The State of Gujarat - Applicant
Versus
Official Liquidator of Gujarat State Textile Corporation Ltd. & Anr. - Respondents
Company Application No. 562 of 2007 In Company Petition No. 250 of 1996 With Company Application No. 77 of 2008
Decided On : 05-03-2008
For the Applicant :S.N. Shelat, Sr. Counsel With M.G. Nagarkar, Advocates.
For the Respondents:Official Liquidator With Nitin K. Mehta, Advocate, D.S. Vasavada, Advocate.
Headnote:
Industries (Development and Regulation) Act, 1951 - Companies Act, 1956 - Sections 457 and 475 -Applicant in both these matters is that GSTC Ltd., ( in liquidation) is a company duly registered and incorporated under provisions of Companies Act, 1956, which was incorporated vide Certificate of incorporation - Company was wholly owned by State Government and main objectives for which GSTC was incorporated are inter alia to take over and run as an unemployment relief or otherwise any textile mill in Gujarat State, which is closed or likely to be closed or has gone into liquidation or otherwise and to manage and control any textile mill in Gujarat which may be taken over by the Government of India under the Industries (Development and Regulation) Act, 1951 and management of which may be entrusted to Company, and to run textile mills taken over by Central Government on payment of reserve price or on reconstruction under provisions of the Cotton Textile Companies ( Management of undertaking and Liquidation or Reconstruction) Act, 1967 and entrusted to GSTC for management, and to lend money to textile mill or Guarantee Loans secured by textile mills for scheduled Banks, Industrial Finance Corporation, Industrial Development Bank or any other Financial Institution for all or any one or more of the purpose of working finance, rehabilitation, expansion or modernisation etc - Held, no inhibition on the jurisdiction of this Court to entertain, decide and grant relief in these two applications preferred by the State Government being a secured creditor and sole contributory - Applications are certainly with respect to exercise or proposed exercise of any of the powers by the Liquidator under Section 457(1) or (2) of Act - Official Liquidator is, therefore, directed to hand over possession of the properties in question of Priyalaxmi Mill, Vadodara as well as Monogram Mill to State Government as State Government is only secured creditor and sole shareholder/contributory of the Company in liquidation - Court is further taking note of the fact that purpose for which the possession of the land is claimed by the State Government is also public purpose as on the land of Priyalaxmi Mill, Vadodara, State Government has decided to develop the Information Technology Park whereas on the land of Monogram Mill, Ahmedabad, the State Government has decided to establish a health center - So far as surplus fund available with the Official Liquidator in GSTC Account is concerned, the Official Liquidator was earlier directed by this Court to return the amount of the funds available with him till this date - As per say of the State Government the Official Liquidator is having funds of more than Rs. 60 crores as on today in GSTC account. A part of the said funds may be retained by him for discharging the liabilities or to meet with any exigency that may arise in future. The balance amount shall have to be handed over to the State Government and the appropriate order in this regard will be passed after submission of accounts before the Court under separate report - Directions issued - Applications Disposed of
JUDGMENT :
K.A. Puj, J.
Since common issue is involved in both these Company Applications they are heard together and are being disposed of by this common judgment and order.
2. Both these Company Applications are filed by State of Gujarat through the Secretary, Industries & Mines Department, Sachivalay, Gandhinagar.
3. Company Application No.562 of 2007 is in relation to Priyalaxmi Mills, Vadodara a unit of Gujarat State Textile Corporation (in liquidation) and Company Application No.77 of 2008 is in relation to Monogram Mills, Ahmedabad a unit Gujarat State Textile Corporation ( in liquidation). The common prayers are made in both these applications. The applicant - State of Gujarat has prayed for appropriate order or direction directing the Official Liquidator attached to this Court to transfer and hand over all immovable assets and properties belonging to and owned by GSTC in respect of its units, namely, Priyalaxmi Mills, Vadodara, particularly land admeasuring 64192 Sq.Mtrs., bearing City Survey No.586 and 609 and all immovable assets and properties belonging to and owned by the GSTC in respect of the unit, viz. Monogram Mills Rakhial Char Rasta, Ahmedabad City, including land admeasuring about 1,47,034 Sq.Mtrs., to the applicant State Government free from all encumbrances, liabilities and charges under Section 457(1) (e) of the Companies Act, 1956. The applicant - State of Gujarat has also prayed for the appropriate direction and/or order directing the Official Liquidator to give set off against the amount already paid by the Government which the Official Liquidator owes to the State Government to the tune of Rs. 826.79 crores for discharging the liabilities towards all the dues of the Gujarat State Textile Corporation (in liquidation).
4. In Company Application No.562 of 2007 an affidavit is filed by Shri Rajesh Kantilal Shah - Dy. Secretary to the Government of Gujarat in Industries & Mines Department, Gandhinagar, in support of judge's summons whereas in Company Application No.77 of 2008 an affidavit is filed by Shri Kanubhai Atmaram Patel - Under Secretary, Government of Gujarat to the Industries & Mines Department, Gandhinagar, in support of judge's summons.
5. The case of the applicant - State Government in both these matters is that the GSTC Ltd., ( in liquidation) is a company duly registered and incorporated under the provisions of the Companies Act, 1956, which was incorporated vide Certificate of incorporation No.1546/68 dated 30.11.1968. This Company was wholly owned by the State Government and the main objectives for which the GSTC was incorporated are inter alia to take over and run as an unemployment relief or otherwise any textile mill in Gujarat State, which is closed or likely to be closed or has gone into liquidation or otherwise and to manage and control any textile mill in Gujarat which may be taken over by the Government of India under the Industries (Development and Regulation) Act, 1951 and the management of which may be entrusted to the Company, and to run textile mills taken over by the Central Government on payment of the reserve price or on reconstruction under the provisions of the Cotton Textile Companies ( Management of undertaking and Liquidation or Reconstruction) Act, 1967 and entrusted to the GSTC for management, and to lend money to textile mill or Guarantee Loans secured by textile mills for scheduled Banks, Industrial Finance Corporation, Industrial Development Bank or any other Financial Institution for all or any one or more of the purpose of working finance, rehabilitation, expansion or modernisation etc.
6. At the relevant time, there were 17 textile mills of GSTC as per the Annual Report & Accounts for the year 1994-95. On account of stringent crisis in the textile industry in the whole of the State of Gujarat and other relevant regions, GSTC could not do well and, therefore, GS
