LexMAHARASHTRA STATE TEXTILE CORPORATION LTD. versus THE OFFICIAL LIQUIDATOR AND ORS.
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• 499 MAHARASHTRA STATE TEXTILE CORPORATION LTD. v. THE OFFICIAL LIQUIDATOR AND ORS. January 4, 1978 (S. MURTAZA FAZAL ALI AND JASWANT SINGH, JJ.] Sick Textile Undertakings (Taking over of Managen1ent) Act, 1972- S. 8, Scope of-Construction of the words "winding up" occurring in Sec. 8- .Sick Textile Undertakings (Nationalisation) Act, 1974 S. 35, rlw S. 2(l)(a), Scope of-Effect of tile interini order of this Court dt. 28-9-1973 explained. The appellant M.S.T.C. had taken a lease of the original company known "1S R. B. Bansilal Abhir Chand Spinning and Weaving Mills (P) Ltd., .Hinganghat (Maharashtra). The said company was ordered to be \Vound up by an order dated 1-10-1965 and an official Liquidator was appointed. -On 3-2-1967, a lease for the running of the mill was taken by the government of Maharashtra which was handed over to the appellant for running the mill on behalf of the state. At the. time of taking over, the appellant did not take .possession of all materials which it considered unnecessary as it did not \Vant Lo pay higher compensation. Consequently several items \\'ere segregated and handed over to the official Liquidator. Un 31-12-1972 the SiCk Textile Undertakings (Taking over of ~1anagement) Act, 1972 was passed and was -given retrospective operation \V.e.f .. 31-10-1972 the date of-its earlier ordinance: In January 1973, a Writ Petition was filed in this Court challengipg the cons- titutional validity of the Management Act of 1972 and \vhile the Writ Petition was pending an interim order dated 28-9-1973 was passed viz.; "Upon hearing ·counsel, the Court directed that the maintenance of status quo shall continue pending disposal of the Writ Petition except that the liquidation proceedings will go on, but there will be no distribution of money amongst creditors or contributors until further orders." On 16-11-73 meetings were held before the -Official liquidator to consider the effect of the interim order and ultimately the official liquidator, with the. concurrence of the representatives of the erstwhile directors of the Company, decided that the assets of the company n1ay be .realised "by the official liquidator. On 19-4-74 the official Liquidator reported to the court for granting permission for sale of certain moveable such as furniture duplicating machines and machinery scrap etc. on which the company .court directed notice to the Additional Government Pleader. On 30-4-1974, the appellant appeared and wanted time for filing objections but no objections were filed and the con1pany judge by its order dated 25-6-1974 directed the official liquidator to sell the said assets and realise the price thereon. On 28-6-1974, certain directors were sought by the official liquidator for npproving the proposed purchasers which \Vas granted and the items were sold for Rs. 72,501/-. On 3-7-1974 the court accepted the offer of respondents 2 and 3 .. and nine days later, the court granted permission for removal of the mate- rials by the purchasers, but because of some labour troubles, the materials could not be taken physical possession of by the purchasers. The Division Bench of the Bombay High Court dismissed the appeal filed by the appellant against the order of the court directing the sale of the articles on. the ground 1hat as this court by virtue of its interim order dt. 28-9-1973 had authorised ihe sale of the articles, the court \Vas fully justified in ordering the sale of these articles. · Allowing the appeal by special leave, the Court, HELD : 1. The High Court. has not properly construed the interim order <Jf -this Court and Vi'as under an erroneous impression of law that this Court by its interim order had in fact authorised the sale which in law is invalid. [503-BJ A B c E F G 2. The interpretation put upon the interim order by the High Court is not H correct. The order of this Court di_recting the' maintenance of status quo did not impliedly amount to suspension of the provisions of the Management Act. [503-DJ 500 SUPREME COURT REPORTS [J 978] 2 S.C.R. A 3. Though S. 8(1) of the Management Act does not place an absolute · embargo on the continuance of the proceedings for the winding up of a teJCtile company, it imposes an important condition for the continuance of the pro- ceedings, namely, that the consent of the Central Government should be obtained. [503F] B 4. When this Court pass
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