Case: State Bank of Indore Vs. Commissioner of Payments &amp; Others

3. The appellants filed claim before the Commissioner. The claims were not just for the loans amount but also for interest on such loans. The Commissioner disallowed claims for loans given prior to the date Management was taken over. The Commissioner allowed claims only for loans given during the period the Management was taken over and upto the appointed day.4. The appellants filed appeals before the District Court. The District Court held that all amounts payable upto the appointed day fell in the Category I. The District Court however disallowed interest after 1st of April, 1974. The High Court has by the impugned judgment upheld the order of the District Court.5. The respondents have not come in appeal.

Reasoning: 7. A glance at the provisions of the Act, extracted hereinabove, shows that by virtue of Section 3 the right, title and interest of the owner in sick textile undertakings stands transferred to and vests in the Central Government. Section 4 provides for the effect of such vesting. It shows that the liability, which vests in the Central Government, is only liability specified under(2) of Section 5. This position is further clarified by Section 5(1) which states that except for liabilities mentioned in(2) of Section 5 all other liabilities would continue to be the liabilities of the owner of the sick textile undertakings and shall be enforceable against the owner and not against the Central Government or the National Textile Corporation. Thus by virtue of Section 5(1) the remedy for recovery of any liability is against the owner. Undoubtedly, the word liability would include not just the loan amounts but also the amounts due by way of interest of such loan amounts.8.(2) of Section 5 specifies which the liabilities are taken over by the Central Government.(2)(a) talks of loans advanced by Central Government or State Government. Thus, the Legislature is now making a distinction between the termsWhen the termis used it is specified that the loans would bewith interest dueThe same clarification can be found even in5(2)(b). This indicates the intention of the Legislature. Thus even though the termincludes liability for the interest amounts also, the termdoes not include the interest amount unless specified otherwise in the Act. This position is fortified by Section 9 wherein on the amounts paid to the owner interest at the rate of 4% is also payable. Thus, where the Legislature wanted to specify that certain amounts would carry interest it has done so specifically.It is thus clear that the interest amounts are not to be paid in priority under the provisions of this Act.