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High Court Of Madhya Pradesh
G. P. Singh, C. J. and C. P. Sen, J.
NATIONAL TEXTILE CORPORATION (M.P.) LTD., BHOPAL - Appellant
Versus
M.P.ELECTRICITY BOARD, JABALPUR - Respondents
Misc. Petn. 550 Of 1975
Decided On : 08/31/1979
ELECTRICITY ACT, 1910 - SECTION 24 - SICK TEXTILE UNDERTAKINGS (NATIONALISATION) ACT, 1974 - SECTIONS 3, 4, 5, 27, 30 - NATIONAL TEXTILE CORPORATION ACT, 1968 - SECTION 18 - ELECTRICITY DUES - LIABILITY - VESTING - RATIFICATION OF CONTRACTS - EFFECT - DISCONTINUANCE OF SUPPLY - LEGALITY.
Fact of the Case:
The National Textile Corporation (Petitioner), a subsidiary of the National Textile Corporation Ltd., managed six textile undertakings that were nationalized under the Sick Textile Undertakings (Nationalisation) Act, 1974 (the Act). The Madhya Pradesh Electricity Board (Respondent) demanded electricity dues for periods prior to the nationalization date and threatened to disconnect the high-tension electricity supply to the undertakings.
Finding of the Court:
The Court held that the liabilities of the owners of the textile undertakings, except those specified in Sections 5(2) and 27 of the Act, did not vest in and could not be enforced against the Central Government or the National Textile Corporation. The ratification of contracts by the National Textile Corporation under Section 30 of the Act did not make the Corporation liable for pre-appointed day liabilities under the contracts.
Issues: 1. Whether the liabilities of the owners of the textile undertakings vested in the Central Government or the National Textile Corporation under the Act? 2. Whether the ratification of contracts by the National Textile Corporation under Section 30 of the Act made the Corporation liable for pre-appointed day liabilities under the contracts? 3. Whether the Respondent was entitled to demand pre-appointed day dues from the Petitioner and discontinue the supply of electricity?
Ratio Decidendi: 1. The Court interpreted Sections 3, 4, and 5 of the Act and held that the general effect of vesting was to vest in the Central Government only the assets, rights, and interests of the owner and not the liabilities and obligations of the owner, except those specified in Section 5(2). 2. The Court interpreted Section 30 of the Act and held that the effect of ratification by the National Textile Corporation was to continue the contract even after the expiry of 180 days from the date of the Presidential assent. It did not make the Corporation liable from the date of inception of the contract but only from the date of ratification. 3. The Court held that the Respondent was not entitled to demand pre-appointed day dues from the Petitioner and discontinue the supply of electricity because the pre-appointed day dues were not liabilities that could be enforced against the Central Government or the National Textile Corporation under the Act.
Final Decision: The petition was allowed, and the Respondent was prohibited from disconnecting the supply of high-tension electricity to the Petitioner for non-payment of dues for any period prior to the appointed day.
( 1 ) THE Petitioner National Textile Corporation (M. P.) Ltd. is a Government company registered under the Companies Act, 1956. The petitioner is a subsidiary of the National Textile Corporation Ltd. , also a Government Company registered under the Companies Act. The petitioner manages a number of textile undertakings including the following; (1) Indore Malwa United Mills, indore, (2) Swadeshi Cotton and Flour Mills, Indore, (3) Burhanpur Tapti Mills, burhanpur, (4) Hira Mills. Ujjain, (5) New Bhopal Textiles, Bhopal, and (6)Bengal Nagpur Cotton Mills, Rajnandgaon. These textile undertakings before nationalisation were owned by a number of Companies, hereinafter referred to as the owners. The names of the owners are given in para 6 of the petition. The aforesaid undertakings immediately before nationalisation were under the management either of the Authorised Controller appointed by the Government of India under Section 18 of the Industries (Development and Regulation) Act, 1951 or the Custodian appointed under the Sick Textile Undertakings (Taking over of Management) Act, 1972. These undertakings were nationalised with effect from 1st April 1974 by the Sick Textile Undertakings (Nationalisation)Ordinance, 1974 which was repealed and replaced by the Sick Textile undertakings (Nationalisation) Act, 1974, hereinafter referred to as the Act. The m. P. Electricity Board, which is respondent in this petition, demanded from the petitioner the electricity dues in respect of periods prior to the appointed day and threatened to disconnect the supply of high tension electricity of the aforesaid undertakings. The petitioner then filed this petition praying for issuance of a writ, direction or order to restrain the respondent from disconnecting the high tension electricity supply to the petitioner in respect of the six textile undertakings and other consequential reliefs.
( 2 ) THE petitioner contends that under the scheme of the Act, only the right, title and interest of the owners in the aforesaid undertakings vested in the petitioner and that there was no vesting of the liabilities of the owners existing on the appointed day in the petitioner and therefore the respondent is not entitled to claim the electricity dues for any period prior to the appointed day from the petitioner under the threat to disconnect the supply of electric energy.
( 3 ) IT is necessary first to refer to certain provisions of the Act. 'appointed day' under the Act is defined in Section 2 (1) (a) to mean 1st April 1974. Section 2 (j) defines 'sick textile undertaking' to mean a textile undertaking specified in the First Sch. the management of which has before the appointed day been taken over by the Central Government under the Industries (Development and regulation) Act, 1951, or as the case may be, vested in the Central government under the Sick Textile Undertakings (Taking Over of Management)Act, 1972. All the six undertakings with which we are concerned in this petition are specified in the First Schedule. Section 3 (1) provides that on the appointed day, every sick textile undertaking and the right, title and interest of the owner in relation to every such sick textile undertaking shall stand transferred to, and shall vest absolutely in, the Central Government. Section 3 (2) further provides that every sick textile undertaking which stands vested in the Central government by virtue of Section 3 (1) shall immediately after it has so vested, stand transferred to and vested in the National Textile Corporation. The general effect of vesting is provided for in Section 4 of the Act. The material provision is section 4 (1) which reads as follows: "4 (1) The sick textile undertaking referred to in Section 3 shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, cash balance, cash on ha
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