National Textile Corpn. (DR & P) Ltd.v. Bank of Rajasthan (S.C.) BS137852
SUPREME COURT OF INDIA

Before:- Dr. Arijit Pasayat and P. Sathasivam, JJ.

Civil Appeal 721 of 2008.and (Arising out of SLP (C) No. 20337 of 2005) and Civil Appeal No. 720 of 2008. (Arising out of SLP (C) No.7681 of 2006) D/d. 28.1.2008.

National Textile Corpn. (DR & P) Ltd. - Petitioner

Versus

Bank of Rajasthan & Ors. - Respondent

Sick Textile Undertaking Nationalisation Act, 1974, Sections 3, 4, 5 and 11 - Sick textile Undertaking - Vested in Central Government - Liability of owner in terms of Section 3 - Matter remitted to High Court to decide in the light of what has been stated in State Bank of Indore's case.

[Paras 8, 9 and 11]

Cases Referred :-

State Bank of Indore v. Commissioner of Payment, 2004(11) SCC 516.

National Textile Coprn. (Guj.) Ltd. v. State Bank of India, (2006(7) SCC 542.

JUDGMENT

Dr. Arijit Pasayat, J. - SLP ( C) No. 20337 of 2006

1. Leave granted.

2. Challenge in this appeal is to the judgment of Learned Single Judge of the Rajasthan High Court at Jaipur Bench dismissing this Civil Writ Petition filed by the appellant.

3. Background facts in a nutshell are as follows:

4. The order was challenged before the Rajasthan High Court. The controversy was restricted to the question of payment subsequent to 31.3.1974. The order was unsuccessfully challenged before the High Court and this Court. The Commissioner passed an award for an amount of about Rs. 16.70 lakhs. Again an appeal was preferred before the District Judge wherein their stand was that the Commissioner had not calculated the amount of interest as per the earlier directions of the District Judge and the interest was to be calculated on the basis of six monthly rest. The District Judge allowed the appeal and again sent the matter back to the Commissioner. A revision was filed before the High Court on the ground that the District Judge had erred in awarding interest after 1.4.1974 on the liability of the erstwhile owner overlooking the position of law as contained in Sections 3, 4, 5 and 11. A transfer petition was filed before this Court with a request to stay further proceedings in different High Courts as common points were urged.

5. This Court by order dated 15.3.2004 directed the High Court to follow the decision of this Court in Civil Appeal No.2314 of 2000 and connected matters. An application was filed by one of the respondents in TP Nos.155-58 of 2004. This court clarified that the matters pending in the High Court would await the decision in which the issues arising for decision are the same or similar to those involved in Civil Appeal No. 2314 of 2000 on 21.7.2005. The High Court dismissed the writ petition as noted above. It was of the view that the matters agitated before the High Court have already been concluded by the High Court.

6. In support of the appeal, Mr. G.E. Vahanvati, learned Solicitor General, submitted that unfortunately there was no appearance before the High Court because of some mis-understanding. In any event the decisions of this Court in State Bank of Indore v. Commissioner of Payment & Ors.[2004(11) SCC 516] and in National Textile Coprn. (Guj.) Ltd. v. State Bank of India & Ors. [2006 (7) SCC 542] have not been taken note of.

7. Learned counsel for the respondent No.1-Bank on the other hand submitted that the issue had attained finality and therefore the High Court was justified in dismissing the writ petition.

8. In State Bank of Indore v. Commissioner of Payment & Ors.[2004 (11) SCC 516] the Bank had filed the appeal before this Court. It was inter alia observed in the said case as follows:

(See Sections 21, 22, 23 and 27)

Order of priorities for the discharge of liabilities in respect of a sick textile undertaking PART A

Post-Takeover Management Period

Category I

Category II

Thus, the heading of the Second Schedule provides priorities for the discharge of liabilities . The term liability as stated above would include interest. It would include a loan. It would also include credits availed of. It would include revenue, taxes, cesses, rates and other dues. However, the payment in priority is for a loan. The distinction in language makes it very clear that what was to be paid in priority was only the amount of the loan i.e. the principal amount and not the interest amount due thereon. Of course, payments towards interest would remain liabilities. But for recovery of that the remedy would be to proceed against the owner/surety.

It is thus clear that the interest amounts are not to be paid in priority under the provisions of this Act. In this view, strictly speaking, even interest up to 31-3-1974 was not payable in priority. However, as the respondents have not come up in appeal we see no reason to interfere with that portion of the impugned judgment which directs payments of interest up to 31-3-1974. "

9. Again in National Textile Coprn. (Guj.) Ltd. v. State Bank of India & Ors. (2006(7) SCC 542) after referring to State Bank of Indore s case (supra) this Court observed as follows :

10. We find that there was no appearance before the High Court and, therefore, the relevance and applicability of the two decisions presently relied upon had not been considered.

11. We, therefore, set aside the impugned order and remit the matter to the High Court to hear the matter afresh and decide the matter in the light of what has been stated in State Bank of Indore s case (supra) and State Bank of India s case (supra). It is made clear that the parties shall be permitted to place materials in support of their respective stand. SLP(C) No.7681 of 2006

12. Leave granted.

So far as this appeal is concerned, the matter has been remanded to the Commissioner by the impugned order of the Bombay High Court at Nagpur Bench. It is needless to highlight that the Commissioner while deciding the issues afresh shall keep in view the decisions in State Bank of Indore s case (supra) and State Bank of India s case (supra).

13. Both the appeals are accordingly disposed of. No costs.

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