UCO BANK versus NATIONAL TEXTILE CORPORATION LTD. & ANR.

Citation: [2020] 4 S.C.R. 692 · Decided: 05-03-2020 · Supreme Court of India · Bench: R. BANUMATHI · Disposal: Case Partly allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 4 S.C.R.
UCO BANK
v.
NATIONAL TEXTILE CORPORATION LTD. & ANR.
(Civil Appeal No. 2046 of 2020)
MARCH 05, 2020
[R. BANUMATHI, A. S. BOPANNA
AND HRISHIKESH ROY, JJ.]
Textile Undertakings (Nationalisation) Act, 1995 – As per
appellant-Bank, Shree Sitaram Mills Ltd. was taken over by
respondent no.1 & nationalised w.e.f. 01.04.1994 – It enjoyed credit
facilities with the appellant – Respondent no.2-Ministry was
guarantor in respect of said credit facilities – Appellant filed recovery
suit against respondent no.1 – Transferred to Debts Recovery
Tribunal – Recovery certificate issued – However, recovery
proceedings were adjourned sine die – Appellant submitted claim
with Commissioner of Payment – Received Rs.1,59,82,634/- against
claim of Rs.1,05,35,86,783.47/- – Meanwhile, Govt. of India issued
O.M dated 22.01.2004 for settlement of commercial disputes between
Public Sector Enterprises inter se; Public Sector Enterprises and
Govt. Dept. through Permanent Machinery of Arbitrators (PMA) –
Appellant requested initiation of arbitration with Union of India/
respondent no.2 – Sought recovery of balance sum from respondent
no.1 and Shree Sitaram Mills Ltd. – By notice dated 17.10.2011,
Arbitrator appointed under PMA directed the appellant, respondent
no.1 & Shree Sitaram Mills Ltd. to submit statements of claim and
counter reply – Respondent no.1 filed application for cessation of
arbitral proceedings – Rejected by Arbitrator, PMA – Respondent
no.1 filed writ petition assailing aforesaid notice and challenging
jurisdiction of the Arbitrator – Dismissed – Filed LPA – Allowed –
Held: Present examination is limited to the aspect relating to forum
– Claim initially made by the appellant is against Shree Sitaram
Mills Ltd. – Respondent no.1 is disputing the liability for the same
by bringing about a distinction since the take-over was only of
Shree Sitaram Mills (which was a part of Shree Sitaram Mills Ltd.)
and not of Shree Sitaram Mills Ltd. – Thus, an adjudication on that
aspect cannot be considered as a dispute involving only the two
[2020] 4 S.C.R. 692
692
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public sector establishments as contemplated under the O.M –
Question of liability could neither have been decided in writ
proceedings nor in this appeal – Impugned judgment to the extent it
quashed notice dated 17.10.2011 warrants no interference –
However, the conclusion that the respondents are not liable for the
amount claimed by the appellant is set aside – Question of liability
and the manner of recovery to be considered by appropriate forum
– Textile Undertaking (Take-over of Management) Act, 1983 –
Recovery of Debts Due To Banks and Financial Institutions Act,
1993.
Partly allowing the appeal, the Court
HELD: 1.1 Since the present examination is limited to the
aspect relating to forum and when it is seen that the claim initially
made by the appellant is against the Shree Sitaram Mills Ltd. and
the Respondent No.1 is disputing the liability for the same by
bringing about a distinction since the take-over was only of Shree
Sitaram Mills and not of Shree Sitaram Mills Ltd., an adjudication
on that aspect to be made cannot be considered as a dispute as
involving only the two public sector establishments as
contemplated under the Official Memorandum referred to above.
The appellant had originally instituted the recovery proceedings
against Shree Sitaram Mills Ltd. by filing Suit No.3961/1988 which
was thereafter transferred to the Debts Recovery Tribunal I,
Mumbai in O.A. No.2526/1999. The said proceeding had
concluded by issue of Recovery Certificate dated 05.08.2004
against the other defendants except defendant Nos.3 (a to c)
regarding which an appeal in DRTA Appeal No.271/2005 is pending
before the Debts Recovery Appellate Tribunal, Mumbai. The said
appeal is against the judgment and decree dated 29.03.2005. In
the recovery proceedings pursuant to the decree, if in the
meanwhile certain change of status relating to the judgment
debtor has taken place as in the instant case, namely, the take-
over of Shree Sitaram Mills which was a part of Shree Sitaram
Mills Ltd. is to be taken note. Upon consideration of evidence
adduced by the parties it has to be determined in that light as to
whether the Respondent No.1 Corporation has in fact inherited
such liability making themselves liable for the decree in existence
or on the other hand if such liability has remained and subsisted
with Shree Sitaram Mills Ltd. It

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