Bombay High Court
Union Of India vs Vijay Manufacturing Co. Pvt. Ltd. And ... on 24 October, 1974
JUDGMENT R.P. Bhatt, J.
1. This is a company application made section 18FA of the Industries(Development and Regulation) Act, 1951, hereinafter referred to as "the said Act") for granting permission to the applicants, who are the Union of India, to appoint any person or body of persons to take over the management of the industrial undertaking of respondent No. 1 at Badnera and pass necessary incidental orders for handing over procession thereof to the authorised person.
2. The short facts are that Vijay Manufacturing Co. Pvt. Ltd. is in liquidation pursuits to an order of winding up passed by this court on 7th September, 1973, and the official liquidator of this court is appointed the liquidator of the said company. The Union of India thereafter made an application, being Company Application No. 143/73, under section 15A of the said Act for obtaining necessary leave of this court to make investigations into the possibility of restarting the said industrial undertaking of respondent No. 1 in the interest of the general public and particularly in the interest of production of cotton textiles. By an order dated 7th January, 1947, this application was granted.
3. The applicants, the Union of India, have now come to this court under the provisions of section 18FA of the said Act for the reliefs mentioned above. Mr. Dalal, on behalf of the applicants, has stated that on an investigation made under section 15A of the said Act, by a body of persons headed by Mr. D. B. Dasgupta as chairman, a report has been made in April, 1947, inter, alia, recommending that the Governments should initiate action for getting the said undertaking at Badnera into production and that on this report the Central Governments has after due consideration of the whole matter opined that there are possibilities of restarting the said industrial undertaking. In the affidavit dated 19th July, 1974, made in support of this application, it is stated that the Central Government is of the opinion that the restarting of the industrial undertaking is essential and should be done at the earliest to maintain and increase further production of textile goods which are essential and needed by the general public and that the said industrial undertaking should be run and restarted. In the same affidavit dated 19th July, 1974, made on behalf of the applicants in the support of this application, it is further stated that the restarting of the mill in view of the increased unemployment would be a boon to the workers and other people dependent on them. In the light of this opinion and circumstances, the applicants have prayed that the management of the industrial undertaking may be handed over to the authorised persons.
4. Mr. R. A. Kapadia, who appears for respondents Nos. 4 and 5 and one M. N. Savani, has contended that such an application does not lie as a company application and the applicants should be directed to follow the appropriate procedure of taking out a notice of motion or filing a petition. On the merits, it is his contention that even after an opinion is formed by the Central Governments it is in the discretion of the court whether to pass or not to pass an order under section 18FA of the said Act even though such a report has been made and an opinion formed by Government. It is his contention that it is in the discretion of the High Court, on the facts and the circumstances of each case, to decide whether an order should be able passed under section 18FA of the said Act. It is his contention that M. N. Savani has already submitted a scheme for recognisation or arrangement of the said company under Company Petition No. 54/1974 and it would be feasible that a scheme as mentioned in Company Petition No. 54/1974 may be found workable by the court and in that case it would be fulfill to pass am order under section 18FA of the said Act to have the undertaking run by a person authorised by the Central Government. He contended that the expression "the High Court shall make an order empowering the Central Government to authorise any person or a body of persons to take over management" in section 18FA, sub-clause (2) of the said Act, must construed as "may make an order" and that it is in the discretion of the High Court whether to pass an order under section 18FA of the said Act, sub-clause (2) of the said Act, although an application is made under section 18FA of the said Act. In my opinion, the expression "shall" as used in section 18FA, sub-clause (2), is mandatory and the court is bound to pass an order directing the handing over of the industrial undertaking to the authorised persons in the manner provided in section 18FA of the said Act, once it has been brought to the notice of the High Court that an opinion has been formed by the Government and an application made, but the same is restricted to a period not exceeding 5 years. However, if further extension after 5 years applied for, then under the proviso to sub-section (2) of section 18FA of the said Act a discretion is given to the High Court whether to extend the period and permit the authorised person to continue to manage the industrial undertaking or to exercise functions or control in relation to the concerned undertakings. In the proviso the expression used is "the High Court may make an order permitting the authorised person to continue to manage the industrial undertaking". Mr. Kapadia contended that if the expression "shall" in section 18FA may suffer from vice of being declared ultra vires under the Constitution. In this application no constitutional challenge to the vires of section 18FA has been made or argued and the court is only giving full effect to the provision of law as is to be found in section 18FA of the said Act.
5. In so far as the preliminary contention of Mr. Kapadia is concerned, I am of the opinion that even assuming that the applicants were not entitled to file the application even then this court was competent to pass an order on an independent application to be made to this court. It is a matter not of substance but only of form and does not in way affect the jurisdiction or powers of this court to pass orders on such applications. There is, therefore, no substance in the preliminary contention.
6. The affidavit of Shri M. N. Maoralwar, Director in the Office of the Textile Commissioner, in support of the application specifically states that such an opinion as is required under section 18FA has been formed by the Central Government and there is a possibility of restarting an industrial undertaking, viz., the industrial undertaking of respondent No. 1 at Badnera, and this bound to make an order under sub-clause (2) of the said section 18FA.
7. I, therefore, make the judges summons absolute in terms of prayers (a) and (b) of the application and order granting permission to the appoint any person or body of persons to take over the management of the industrial undertaking of respondent No. 1 at Badnera for a period not exceeding 5 years and direct the official liquidator to hand over the management of this undertaking to the authorised person in the manner provided for in section 18FA of the said Act. The official liquidator before handing over possession of the undertaking shall make a complete inventory of all the assets and liabilities of this industrial undertaking and deliver a copy thereof to the authorised person. I further direct the official liquidator that before handing over such possession by him to the authorised person he must receive all the costs, charges and expenses (except in regard to any proceedings that he might have taken as an official liquidator) incurred by him as the official liquidator till the date he hands over such possession.
8. There will be no order as to costs of this application.
9. In view of the order made in the application there will be no order in Company Petition No. 54/1974 including no order as to costs.