STATE BANK OF INDIA Vs. EDWARD TEXTILE MILLS

JUDGEMENT

(1.) This is an appeal form an order passed by the Assistant Commissioner of Payments under the provisions of the Sick Textile Undertakings (Nationalisation) Act, 1974.

(2.) Prior to April 1, 1974, the appellants, State Bank of India, had entered into a cash credit arrangement with Edwad Textile Mills Ltd. and had advanced various amounts to Edward Textile Mills ltd. which were repayable with interest. Under the Sick Textile Undertakings (Nationalisation) Act, 1974, the undertakings, inter alia, of Edward Textile Mills Ltd. was taken over and became vested in the National Textile Corporation with effect from April 1, 1974. Under section 5 of the said Act, "every liability, other than the liability specified in sub-section (2) of the owner of a sick textile undertaking, in respect of any period prior to the appointed day, shall be the liability of such owner and shall be enforceable against him and not against the Central Government or National Textile Corporation. "Sub-section (2) of section 5 of the said Act is not relevant for the purpose of the present appeal. The "appointed day" referred to in section 5 was April 1, 1974. As a result of this provision, every liability incurred by the owner of a sick textile undertaking prior to April 1, 1974, remained the liability of such owner as was enforceable against him and not against the Central Government or the National Textile Corporation. Sub-section 3 of section 5 made this position abundantly clear by providing that no liability of this nature shall be enforceable against the Central Government or the National Textile Corporation.

(3.) Under section 8 of the said Act, "the owner of every sick textile undertaking shall be given by the Central Government, in cash and in the manner specified in Chapter VI, for the transfer to, and vesting in it,... of such sick textile undertaking and the right, title and interest of the owner in relation to such sick textile undertaking, an amount equal to the amount specified against it in the corresponding entry in column (4) of the First Schedule." The amount so payable as compensation to Edward Textile Mills Ltd. was Rs. 66,28,000 (which has now increased to Rs. 72,87,452 with the accrual of interest on it as provided under section 9, sub-section 2 of the said Act).