C.W.P No.19430 of 2008 1 In the High Court of Punjab and Haryana, Chandigarh. C.W.P No.19430 of 2008 Date of Decision: 09.12.2008 Unin of India and another ....Petitioners. Versus Additional District Judge and others ....Respondents. Coram:- Hon'ble Mr.Justice J.S. Khehar Hon'ble Ms. Justice Nirmaljit Kaur Present: Mr. Arvind Kashyap, Advocate for the petitioners. ... J.S. Khehar, J. (Oral). In order to substantiate his claim, learned counsel for the petitioners, has in the first instance, placed reliance on Section 3 of the Sick Textile Undertakings (Nationalisation) Act, 1974 (hereinafter referred to as the Sick Textile Act). On the basis of Section 3 of the aforesaid Act, it is the contention of the learned counsel for the petitioners, that with effect from the appointed date, every sick textile undertaking shall be deemed to have been vested absolutely in the Central government. In so far as, the present controversy is concerned, it is acknowledged by the learned counsel for the petitioners, that the date of vesting of the industry, under reference, in the Central government, is 31.10.1972. Despite the vesting of the industry, under reference, in the C.W.P No.19430 of 2008 2 Central government under the mandate of Section 3 of the Sick Textile Act on 31.10.1972, its actual takeover came about on 6.4.1976. The issue in the present controversy is in respect of the income derived by the sick industry, under reference, during the period between 31.10.1972 and 6.4.1976. The petitioner i.e. the Central government seeks the exclusive right to the aforesaid income under Section 10 of the Sick Textile Act. Section 10 of the Sick Textile Act is being extracted hereunder: -- “10. Accounts to be rendered by the owners of sick textile undertakings: -- (1) , Where in pursuance of any decree, order or an injunction of a Court or otherwise, the central government or the custodian was prevented from taking over the management of any sick textile undertaking, the owners of such sick textile undertaking shall, (a) in the case of an undertaking into management of which was subsequently taken over by the central government at any time before the date on which the Ordinance was promulgated within sixty days from such date; or (b) in the case of any other sick textile undertaking, the management of which could not be taken over by the central government before the date on which the ordinance was promulgated, within sixty days from such date. render accounts in relation to the period commencing on the date of the notified order under the Industries (Development and Regulation) Act , 1951, or as the case may be, on the date of commencement of the sick textile undertaking (Taking Over of Management) Act, 1972, and ending on the date on which C.W.P No.19430 of 2008 3 the management of the sick textile undertakings was taken over by the Central Government or the Custodian, as the case may be, with regard to the-- (i) assets, and stores of the sick textile undertaking acquired or sold during the set period; (ii) textile sold or despatched during the second period; and (iii) income derived by the owner from the sick textile undertaking during the said period. (2) If on examination of the accounts referred to in sub-section (1), any income is found to have been derived by the owner from the sick textile undertaking during the period referred to in that sub-section, such income shall be recoverable by the Central government from the amount payable under Section 8 to the owner of such sick textile undertaking and the debt due to the Central government on this account shall rank as an unsecured debt.” Having perused Section 10 of the Sick Textile Act, we are satisfied that the same pertains only to the rendering of accounts by the owners of the sick textile undertakings, and the acknowledgement that the income of the Sick Textile Undertaking from the date when it was declared sick (in the present case 31.10.1972) till the date of its actual takeover (in the present case 6.4.1974) shall be treated as an unsecured debt due to the Central government. We are also satisfied, that Section 10 of the Sick Textile Act does not envisage the recovery of the aforesaid income. As noticed hereinabove, the aforesaid income is merely defined as an unsecured debt due to the Central government. C.W.P No.19430 of 2008 4 In view of our conclusions hereinabove, no recovery can be claimed by the Central government i.e. the petitioner before this Court in the present writ petition under Section 10 of the Sick Textile Act. We required the learned counsel for the petitioners to invite our attention to the provisions under which recovery could be made, as was envisaged under the provisions of the Sick Textile Act. In furtherance thereof, and on perusal of the said Act, we are satisfied that Sections 20 and 21 of the Sick Textile Act, are the only provisions whereunder a claim can be made in respect of the income or assets of the sick textile undertaking. Under Section 20 of the Sick Textile Act, claims can be made at the hands of the creditors. The priority in which the aforesaid claims have to be disbursed is, however, determined under Section 21 of the Sick Textile Act. Section 21 of the Sick Textile Act refers to the Second Schedule for the determination of the priorities, and also, mandates the manner in which the aforestated priorities are to be given effect to. Having collectively perused Sections 20, 21 and the Second Schedule of the Sick Textile Act, we are of the view that the claim of income derived by the sick textile undertaking, in the present case, during the period from 31.10.1972 to 6.4.1976 has to be determined in terms of the mandate of Sections 20 and 21 read with the Second Schedule of the Sick Textile Act. This is exactly what has been sought to be done in the impugned orders dated 26.3.2008 (Annexures P-6 and P-7). Sections 20 and 21 of the Sick Textile Act are being extracted hereunder:- “20. Claim to be made to the Commissioner: -- Every person having a claim against the owner of a sick textile undertaking shall prefer such claim before the Commissioner within 30 days C.W.P No.19430 of 2008 5 from the specified date. Provided that if the Commissioner is satisfied that the claimant was prevented by sufficient cause from preferring the claim within the said period of 30 days he may entertain the claim within a further period of thirty days, but not thereafter. 21. Priority of Claims: -- The claims arising out of the matters specified in the Second Schedule shall have priorities. In accordance with the following principles, namely: -- (a) Category I will have precedence over all other categories, and Category II will have precedence over Category III and so on, (b) The claims specified in each of the categories except Category IV shall rank equally and he paid in full, but if the amount is insufficient to meet such claims in full, they shall abate in equal proportions, and be paid accordingly, (c) The liabilities specified in Category IV shall be discharged, subject to the priorities specified in this section, in accordance with the terms of the secured loans and the priority inter se of such loans, and (d) The question of payment of a liability with regard to a matter specified in a lower category shall arise only if a surplus is left after meeting all the liabilities specified in the immediate higher category." It is inconceivable to envisage the disbursement of claim but for the procedure laid down in Sections 20 and 21 of the Sick Textile Act. C.W.P No.19430 of 2008 6 In view of the conclusions drawn hereinabove, we are satisfied that no interference is called for in the impugned orders. Dismissed. ( J.S. Khehar ) Judge ( Nirmaljit Kaur ) Judge. 09.12.2008 sk.