TMI Blog2001 (10) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... e and hypothecation of immovable/movable properties which had been mortgaged/hypothecated in favour of respondent No. 1 as the trustees of the debenture-holders. A notice of motion was filed by respondent No. 1 in the said, suit and by an order dated 14-2-2001, the Court Receiver was appointed in respect of the immovable properties of the appellant and was also given power to take physical possession of the properties and, if required, to take them forcibly. An appeal was filed from this order and by consent, the order of the learned single Judge was modified vide order dated 26-2-2001. By this order passed in appeal, certain plants and immovable properties of the appellant were excluded from the order of the learned single Judge. The Receiver was to take only formal possession of the plants which were excluded, without dispossessing the appellant. The royalty was to be fixed at the time of confirmation of the ad-interim order. The Receiver visited the appellant's mill premises on 13th and 14th March 2001, but he could not take possession of the plant and other assets of the appellant. On 16-3-2001, the Receiver took possession of two units of the appellant, viz., Rayon Plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in R. D. V. Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd., , held that the Legislature could confer upon the relief undertaking immunity effective within the bounds of the State and not beyond the State of Gujarat. In that view of the matter, the learned Judge dismissed Chamber Summons No. 365 of 2001 while making Chamber Summons No. 361 of 2001 absolute. 5. Mr. Dwarkadas, learned counsel appearing for the appellants, fairly conceded that in view of the Full Bench decision of this Court in Hatimbhai Hasanally's case (supra), he does not wish to press the prayer for revocation of the leave at this stage. Mr. Dwarkadas, however, strenuously contended that the learned single Judge has completely misconstrued the provisions, the objects and scheme of the Act. The learned counsel submitted that when the order dated 26-2-2001 was passed by this Court, the notification issued under the Act had not come into force. He submitted that the learned Judge ought to have taken into account the change which was brought about by the notification issued under Section 3 of the Act. According to Mr. Dwarkadas, the immunity granted under the Act applies even against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings to which any loan, guarantee or other financial assistance has been provided by the State Government. Section 3 expressly declares that on issuance of a notification thereunder, the specified industrial undertaking shall be conducted to serve as a measure of preventing unemployment or of unemployment relief and the undertaking shall accordingly be deemed to be a relief undertaking for the purpose of this Act. Sub-section (2) of Section 3 says that a notification under Section 3(1) shall have effect for such period not exceeding 12 months as may be specified in the notification. It is, however, renewable for a like period from time to time so, however, that all the periods in the aggregate do not exceed five years. 8. Section 4(1) is relevant for our purpose and may be set out in full:-- 4. Power 'to prescribe industrial relations and other facilities temporarily for relief undertakings. -- (1) Notwithstanding any law, usage, custom, contract, instrument, decree, order, award, submission, settlement, order or other provision whatsoever, the State Government may, by notification in the Official Gazette, direct that - (a) in relation to any relief undertaking and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make law in respect of suit or proceedings pending in Court outside the State of Gujarat. The argument of Ms Iyer is two fold: firstly, that Section 4(1)(a)(iv) cannot have the effect of suspending the enforcement of any decree or order passed by the court in Mumbai and, therefore, bar contained in the Act does not come into play. Secondly, that the Court Receiver having been appointed prior to the issuance of the notification under Section 3, the bar under Section 4(1)(a)(iv) is not attracted. We are unable to accept the submission of the learned counsel. In K. S. D, V. Finance Co. 's case, the question before the Supreme Court was whether the notification issued under the Act has the effect of suspending the proceedings in the Bombay High Court. In that case, a summary suit was filed against the respondent therein in the High Court for recovery of money. In the written statement, the defendant submitted that the receipt contained the endorsement subject to Anand jurisdiction and, as such, Bombay High Court had no jurisdiction to entertain the suit. The learned single Judge held that the Bombay High Court had jurisdiction to try the suit as the suit was based on postdated ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State of Gujarat, but it cannot extend that immunity beyond its bounds. By way of illustration, it cannot say that the sales/purchases effected by the relief undertaking in another State shall not be liable to sales tax under the law of that other State. It cannot prevent the other State from levying and realising (by proceeding, if necessary, against the properties and assets of the undertaking situate outside the State of Gujarat) the tax due from the relief undertaking in respect of the sales and purchases effected in that State. Similarly, it cannot say that the properties of the relief undertaking situated in other States shall not be liable to property tax. Nor can it say that those properties cannot be proceeded against the realisation of amounts due from the relief undertaking to third parties in pursuance of decrees/orders made by courts outside the State of Gujarat. It is true that such proceedings, may ultimately affect the relief undertaking adversely; they may also tend to defeat the objective underlying the Act and the notification. But that cannot be helped: That is the limitation of power. It is probably, for this reason that Parliament has enacted the Sick Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded from time to time by subsequent orders. The respondent, therein filed a summary suit in the Bombay High Court and the suit was decreed. The respondent got the decree transferred for execution to the District Judge, Ujjain, and then applied for execution of the decree. The appellant resisted the execution by pleading that since it was a relief undertaking under the Act, the benefits thereunder were available at the time the objection was filed and that the decree could not be executed against the undertaking, in view of the bar contained in Section 5 of the said Act. The respondent admitted that the appellant was a relief undertaking. However, it was contended that the District Judge had no jurisdiction to entertain any objection to the execution of the decree validly passed by the Bombay High Court. The Execution Court, it was contended, could not go behind the decree and the decree mandated execution on its terms. The contention of the respondent was accepted by the District Judge and the revision filed against the said order was dismissed by the Madhya Pradesh High Court. The matter was then carried to the Supreme Court. The question before the Supreme Court was whether proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and goods will be attached. The workers will be rendered jobless. In this case, this unit is said to employ nearly 2,000 workers. The creditors will not be in a more advantageous position either. If liquidation proceedings are initiated, the creditors will get only pro-ratafrom the sale proceeding of the assets, if creditors are permitted to proceed against the assets and the products of the undertaking, that would be detrimental to the heavy investment made by the State and other financial institutions. The concent of the Government in enacting this law is thus in the interest of the large number of workmen employed in these undertakings and in the revival, if possible, of sick unit. It is to protect them and not to render them unemployed that such relief undertakings are financed by the State. 13. Now coining to the facts of the present case, the Receiver was appointed by the Bombay High Court when the notification was not issued. The Receiver had gone to the premises to take possession on 13th and 14th March 2001 but he could not obtain possession. By the time the Receiver again visited the premises, the notification had been issued by the State of Gujarat under Section 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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