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General Manager, Kaleeswarar Mills Vs. Savani Transport Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectCriminal
CourtChennai High Court
Decided On
Judge
Reported in1975CriLJ1615
AppellantGeneral Manager, Kaleeswarar Mills
RespondentSavani Transport Pvt. Ltd.
Excerpt:
.....mills, representing the tamil nadu textile corporation which is in management of only the sick textile undertaking. 10. on behalf of the respondent, however, it has been contended that under section 5(4) of the act, legal proceedings before any court are to be taken by the custodian or custodian-general on the instruction of the central government and section 11(2) of the act duly empowers the general manager to effectively represent the company. 11. section 11(2) does not certainly empower the general manager of the undertaking to effectively represent the textile company which owns the undertaking. and custodian of the kaleeswarar mills, coimbatore, will be the first accused in the case is clearly not sustainable and it is therefore set aside, as the said general manager..........in respect of the goods as they bad not paid for the same and since under section 4(1) of the sick textile undertakings act, 1972, the whole assets vest with the present management, the present management have to account for the goods received op credit and pay for the same and cannot take advantage without paying for the same and are equally liable to account and for payment towards the goods in their hands now and as such substitution for the accused-company was justified as they are the custodian of the property now and he ordered the present management to be the first accused in the case.2. it is contended now in this revision proceedings that the aforesaid order of the learned magistrate and the abovesaid findings of his are erroneous and illegal.3. the respondent filed a.....
Judgment:
ORDER

Paul, J.

1. The revision petition has been preferred against the order of the learned Additional First Class Magistrate, Coimbatore, passed in C. M, P. 1133 of 1978 dismissing that petition filed by the General Manager of the Kaleeswarar Mills, Coimbatore, representing the Tamil Nadu Textile Corporation Ltd. and Custodian of the Kaleeswarar Mills, Coimbatore for suitable orders exonerating him from the criminal proceedings by the respondent as he was not competent to represent the first accused company. The learned Additional First Class Magistrate while dismissing that petition has observed that since the private complaint preferred against tie Kaleeswarar Mills by the Savani Transport Pvt. Ltd. the respondent herein, was for certain offences committed it regard to certain goods entrusted to the Kaleeswarar Mills Ltd., and even now the goods formed part of fee assets of the pre-sent management, namely, the General Manager of the Kaleeswarar Mills representing the Tamil Nadu Textile Corporation Ltd. is equally culpable for the cheating and misappropriation in respect of the goods as they bad not paid for the same and since under Section 4(1) of the Sick Textile Undertakings Act, 1972, the whole assets vest with the present management, the present management have to account for the goods received op credit and pay for the same and cannot take advantage without Paying for the same and are equally liable to account and for payment towards the goods in their hands now and as such substitution for the accused-company was justified as they are the custodian of the property now and he ordered the present management to be the first accused in the case.

2. It is contended now in this revision proceedings that the aforesaid order of the learned Magistrate and the abovesaid findings of his are erroneous and illegal.

3. The respondent filed a private complaint before the Additional First Class Magistrate, Coimbatore against the Kaleeswarar Mills Ltd. and its directors accused 2 to 9 alleging offences under Sections 403, 405, 420 and 112 I. P. C. It is alleged in the complaint that under L. A. 55 and 56 dated 3-1-1971 Messrs. Pannalal Hiralal and Co., Akola, consigned 50 bales of cotton 1007 quality through the complainant with an intimation to deliver the same to the first accused against payment of all goods by the first accused through bankers and the goods were sent by the complainant through one of their agents in lorry No. MDS 5283 and the first accused toot delivery of the goods from the lorry transport but without paying for the same and without the complainant's knowledge or consent, and subsequently when a demand was made by the lorry driver to the first accused company for payment of or redelivery of the goods, the first accused sent 22 bales of 1007 quality and 25 bales of TRT cotton bearing press mark M4-71 Zoda cotton of Tirupur of inferior quality. It also appears that C. M. P. 95/73 was also filed by the respondent requesting the court to amend the cause title and description of the first accused by incorporating after the name of the first accused in words 'represented by the Authorised Controller, Tamilnadu Textile Corporation.'

4. The question Is whether the revision petitioner is the representative of the first accused company and as such should be impleaded in the aforesaid case as representing the first accused company.

5. The Sick Textile Undertakings (Taking over of Management) Act, 1972, came into force on 23-12-1972. It is an Act 'to provide for the taking over in the public interest of the management of sick textile undertakings pending nationalisation of such undertakings for the expeditious rehabilitation of such undertakings so that that rehabilitation may subserve the interest of the general body by the augmentation of the production and distribution, at fair prices, of cheaper varieties of cloth, and for matters connected therewith or incidental thereto,' as the preamble of the Act shows. It must be noted that the Act is 'to provide for the taking over of the management of sick textile undertaking'. These words need particular emphasis in view of the contentions of both the parties in this proceeding. The word 'owner' in relation to a textile undertaking is defined in Section 2 (c) of the Act as meaning the company, individual, body of individuals or firm by which it is owned. The term 'textile Company' as defined in Section 2 (f) of the Act means a company specified in the third column of the First Schedule as owning the textile undertaking specified in the corresponding entry in the second column of that schedule. The term textile undertaking' as defined in Section 2 (g) means an undertaking engaged in the manufacture of textiles and to which the provisions of' the Factories Act, 1948, apply.

6. Now, in the first Schedule, the Kaleeswarar Mills, A-Unit, Coimbatore, has been mentioned as item No. 18 in column (1) and is noted as a sick textile undertaking in column (2), In column (3) the owner of that sick textile undertaking is mentioned as the Kaleeswarar Mills Ltd., Coimbatore, namely, the first accused herein. The private complaint preferred by the first respondent is against the Kaleswarar Mills Ltd., Coimbatore, who are the owners of the sick textile undertaking, the Kaleeswarar Mills, A Unit, Coimbatore. Now, the Act deals only with the management of sick textile undertakings and Section 4 of the Act says that the management of the sick textile undertakings would vest in the Central Government on the appointed day. In effect by this statute the management of the textile undertaking in question is taken away from the hands or the textile company which owns the textile undertaking, it should however be noted that the Act does not take over the textile company itself, nor does the textile company cease to exist by reason of the passing of this statute. In fact, the textile company, namely, the Kaleeswarar Mills Ltd., continues to exist and its directors are still managing the affairs of the company. Neither the Central Government nor the Custodian appointed by the Central Government for the management of the sick textile undertaking has anything to do with the textile company which owns the sick undertaking. But Section 4(3) of the Act runs as follows-

The sick textile undertaking shall be deemed to include all assets, rights, powers, authorities and privileges of the textile company, in relation to the said sick textile undertaking, and all property, moveable and immoveable, including lands, buildings, workshops, stores, instruments, machinery, automobiles and other vehicles and goods under production or in transit, cash balances, reserve fund, investments and all other rights and interest in, or arising out of, such property as were, immediately before the appointed day, in the ownership, possession, power or control of the textile company, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto.

7. Section 4(4) runs as follows : 'Any contract, whether express or implied, or other arrangement (whether under any statute or otherwise) in so far as it relates to the management of the business and affairs of the sick undertaking, and in force immediately before the appointed day, or any order made by any court in so far as it relates to the management of the business and affairs of the sick textile undertaking and in force immediately before the appointed day, shall be deemed to have terminated on the appointed day'.

8. Section, 4(5) states that all per sons in whom the management of the business and affairs of the sick textile undertaking vests immediately before the appointed day, shall, as from that day, cease to be so vested. These provisions have been made for the purposes of enabling the textile undertaking to be managed by the Central Government through a custodian and to that extent the powers of the directors of the textile company would be restricted in accordance with these provisions, Section 5 also makes it clear that the Central Government may appoint an individual or a Government company as the Custodian of a sick textile undertaking for the purpose of taking over the management of such undertaking. Section 5(3) says that on the appointment of a Custodian, the charge of the management of the sick textile undertaking shall vest in such Custodian and all persons in charge of the management of such undertaking immediately before such appointment shall cease to be in charge of such management and shall be bound to deliver to the Custodian all assets, books of account, registers or other documents in their custody relating to the sick textile undertaking. Section 6 of the Act says that the owner of every textile undertaking shall be given by the Central Government an amount, in cash, for vesting in it, under Sub-section (1) or Sub-section (2) as the case may be, of Section 4, the management of the sick textile undertaking of such company. It is, therefore, abundantly clear that by reason of. the various provisions of this Act, only the management of the sick textile undertakings has been taken over leaving intact the textile company which owns the undertaking and the affairs of the textile company are left to be managed by the directorate of the company subject to certain restrictions which have been imposed under Sections 4(3) and 4(4), 4(8) and Section 7 for the effective management of the sick textile undertaking under the provisions of the Act.

9. Now, the offence alleged is not against the textile undertaking of which the management now vests in the Central Government represented by the revision petitioner, but the textile company of which accused 2 to 9 are directors. The General Manager of the Kaleeswarar Mills which is the textile undertaking representing the Tamil Nadu Corporation, can only represent the textile undertaking and not the textile company which owns that textile undertaking. Therefore when the complaint is against the first accused which is the textile company, the persons who could effectively represent the textile company are the directors of it and not the General Manager of the Kaleeswarar Mills, representing the Tamil Nadu Textile Corporation which is in management of only the sick textile undertaking.

10. On behalf of the respondent, however, it has been contended that under Section 5(4) of the Act, legal proceedings before any court are to be taken by the Custodian or Custodian-General on the instruction of the Central Government and Section 11(2) of the Act duly empowers the General Manager to effectively represent the company. But then Section 5(4) merely states that the Central Government may issue such directions (including directions as to initiating, defending or continuing any legal proceedings before any court, tribunal or other authority) to the Custodian or Custodian-General as to his or its powers and duties as the Central Government deems desirable and the Custodian or the Custodian-General may apply to the Central Government at any time for instructions as to the manner in which the Custodian shall conduct the management of the undertaking of the company or in relation to any matter arising in the course of such management. Therefore it is only in the reference to the management of the undertaking that the Central Government may issue such directions with regard to initiating, defending or continuing any legal proceedings.

11. Section 11(2) does not certainly empower the General Manager of the undertaking to effectively represent the textile Company which owns the undertaking. Therefore, the order of the learned Additional First Class Magistrate directing that the present management, namely, the General Manager of the Kaleeswarar Mills, Coimbatore, representing the Tamil Nadu Textile Corporation Ltd. and Custodian of the Kaleeswarar Mills, Coimbatore, will be the first accused in the case is clearly not sustainable and it is therefore set aside, as the said General Manager cannot represent the textile company against which the criminal complaint has been lodged. This criminal revision petition is allowed accordingly.


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