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Madhya Pradesh High Court · body

1988 DIGILAW 133 (MP)

Bank of Baroda v. Chaddha and Company

1988-07-07

S.K.DUBEY

body1988
JUDGMENT : ( 1. ) THIS is a revision under Section 115 of the Code of Civil Procedure arising out of the order dated April 17, 1988, passed by the learned VIth Additional Judge, to the Court of the District Judge, Indore, in Civil Suit No. 148-A of 1984 whereby the plaintiff/applicants suit for recovery of Rs. 6,17,829. 95 against Chadha and Co. and others has been stayed under the provisions of Section 6 of the Textile Undertakings (Taking Over of Management) Act, 1983, Act No. 40 of 1983 (for short, "the Act" ). ( 2. ) THE main contention of Shri A. K. Chitale, learned counsel appearing for the applicant/plaintiff-bank, is that the suit was filed against respondent No. 7, Sitaram Mills Co. Ltd. , the borrower, for realisation of the loan amount advanced by the bank and others were impleaded as necessary parties to the suit making them jointly and severally liable. The management of this mill was taken over by the Central Government under Section 3 of the Act. After taking over the management, a custodian under Section 4 of the Act was appointed on October 18, 1980, for the purpose of carrying on the management of the undertaking. After taking over the management and appointment of custodian, no notification under Section 6 (1) of the Act by the Central Government of making certain declarations in relation to the said undertaking which vested in the Central Government the suspending operation of contracts, assurances of property, etc. , was made, and unless such a notification is there, the suit of the plaintiff-bank for realisation of the amount could not have been stayed. For stay of suits or contracts or assurances of property, etc. , it is necessary in the interest of general public, with a view to prevent any fall in the volume of production of the undertaking, to issue a notification declaring that the operation of all or any of the contracts, assurances, etc. , shall remain suspended as provided in Section 6 of the Act. Section 6 of the Act reads as under : "6. , shall remain suspended as provided in Section 6 of the Act. Section 6 of the Act reads as under : "6. Power of the Central Government to make certain declarations in relation to certain textile undertakings.-- (1) The Central Government may, if satisfied, in relation to any of the textile undertakings or any part thereof, the management of which has vested in it under this Act, that it is necessary so to do in the interests of the general public with a view to preventing any fall in the volume of production of such undertaking, by notification, declare that,- (a) all or any of the enactments specified in the Second Schedule shall not apply or shall apply with such adaptations, whether by way of modification, addition or omission (which: does not, however, affect the policy of the said enactments) to such, undertaking as may be specified in such notification, or (b) the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force (to which such textile undertaking or the textile company owning such undertaking is a party or which may be applicable to such textile undertaking or textile company) immediately before the date of issue of the notification shall remain suspended or that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain suspended or shall be enforceable subject to such adaptations and in such manner as may be specified in the notification. (2) The notification made under Sub-section (1) shall remain in force, in the first instance, for a period of one year but the duration of such notification may be extended from time to time by a further notification by a period not exceeding one year at a time : Provided that no such notification shall, in any case, remain in force after the expiry of three years from the commencement of this Act. (3) Any notification made under Sub-section (1) shall have effect notwithstanding anything to the contrary contained in any other law, agreement or instrument or any decree or order of a court, tribunal, officer or other authority or in any submission, settlement or standing order. (3) Any notification made under Sub-section (1) shall have effect notwithstanding anything to the contrary contained in any other law, agreement or instrument or any decree or order of a court, tribunal, officer or other authority or in any submission, settlement or standing order. (4) Where by virtue of a notification under Clause (b) of Sub-section (1), any right, privilege, obligation or liability remains suspended or is enforceable subject to the adaptations and in the manner specified in the notification, all proceedings relating thereto pending before any court, tribunal, officer or other authority shall accordingly remain stayed or be subject to such adaptations, as the case may be, so however, on the notification ceasing to have effect - (a) such right, privilege, obligation or liability shall be enforceable as if the notification had never been made ; (b) any proceeding so remaining stayed shall be proceeded with subject to the provisions of any law which may be then in force, from the stage which had been reached when the proceeding became stayed. (5) In computing the period of limitation for the enforcement of any right, privilege, obligation or liability referred to in Clause (b) of Sub-section (1), the period during which, it or the remedy for the enforcement thereof remained suspended shall be excluded. " ( 3. ) THE suit was filed on March 24, 1982, for recovery of the amount. The custodian so appointed for respondent No. 7, appeared and was defending the suit. In the suit, an objection was raised by their application dated 27th July, 1985, by the present respondents Nos. 1, 2, 3 and 6 for stay of the suit under Section 6 of the Act. It is noteworthy that the custodian or respondent No. 7 did not raise any such objection. ( 4. ) AFTER hearing the parties, the trial court stayed the suit under Section 6 of the Act. Against this order, this revision has been preferred. ( 5. ) SHRI Chitale, who appeared for the plaintiff-bank, and Shri R. R. Waghmare, who appeared for respondents Nos. 1, 2, 3 and 6, who raised the objection before the trial court at the outset, said that as no notification was issued under Section 6 (1) of the Act which is a necessary condition for stay of the suit, the suit could not have been stayed ; in fact, respondents Nos. 1, 2, 3 and 6, who raised the objection before the trial court at the outset, said that as no notification was issued under Section 6 (1) of the Act which is a necessary condition for stay of the suit, the suit could not have been stayed ; in fact, respondents Nos. 1, 2, 3 and 6 laboured in misconception of law. No one appeared before this court for respondent No. 7, i. e. , for the undertaking. Vide order dated July 1, 1988, this court passed an order to the effect that as respondents Nos. 5 and 7 were ex parte before the trial court, such notices are not necessary and the case was ordered as ripe for hearing. ( 6. ) AFTER hearing counsel, I am of the opinion that the order of the trial court is based on a misconception of law. According to the provisions of Section 6 of the Act, it is necessary that a notification must be issued by the appropriate Government under the said provisions for suspension of contracts, etc. No such notification has been issued or published in the Gazette. This having not been done up to this time, the suit could not have been stayed. Moreover, in Section 6, there is a limitation provided that, after the issue of the notification, the notification shall remain in force, in the first instance, for a period of one year but the duration of such notification can be extended from time to time by a further notification by a period not exceeding one year at a time, provided that no such notification in any case shall remain in force after the expiry of three years from the commencement of the Act. Admittedly, no notification was issued in this case and, hence, the question of applicability of Section 6 of the Act does not arise and the suit filed by the plaintiff-bank, under the garb of Section 6 of the Act, cannot be stayed. ( 7. ) IN the circumstances, the revision is allowed. The order of the trial court is set aside and the trial court is directed to proceed with the suit in accordance with law. There shall be no order as to costs.