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Mangalam Ammal and ors. Vs. Swadeshi Cotton Mills Co., Ltd., by Its Mill Secretary and Principal Officer, K.P. Agarwal and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1980)2MLJ246
AppellantMangalam Ammal and ors.
RespondentSwadeshi Cotton Mills Co., Ltd., by Its Mill Secretary and Principal Officer, K.P. Agarwal and anr.
Excerpt:
- .....the taking over of the management of an industrial undertaking(d) the person or body of persons authorised under section 18-a to take over the management shall take all such steps as may be necessary to take into his or their custody or control all the property, effects and actionable claims to which the industrial undertaking is or appears to be entitled and all the property and effects of the industrial undertaking shall be deemed to be in the custody of the persons or, as the case may be, the body of persons, as from the date of the notified order, and(e) the persons, if any, authorised under section 18-a to take over the management of an industrial undertaking which is a company shall be for all purposes the directors of the industrial undertaking duly constituted under.....
Judgment:
ORDER

S. Suryamurthy, J.

1. This revision petition has been filed against the order of the learned First Additional Subordinate Judge of Pondicherry, rejecting the contention of the defendants, who are the petitioners before me, that the suit is not maintainable in law, because the second plaintiff, who has taken over the liabilities and assets of the first plaintiff by reason of an order dated 13th April, 1978 issued by the Government of India and published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (1) of Section 18-A of the Industries (Development and Regulation) Act, 1951, has not been authorised to continue pending suits. By the notification aforesaid the Government of India, in exercise of the powers conferred by Clause (a) of Sub-section (1) of Section 18-A of the Act has authorised the National Textile Corporation Limited (here-in after referred to as the Authorised Person) to take over the management of the whole of the industrial undertaking referred to in the order, among which is the Swadeshi Cotton Mills Company Limited, Pondicherry, subject to the condition that the authorised person shall comply with the directions issued from time to time by the Central Government and shall hold office for a period of five years from : the date of the publication of the order in the official gazette. By reason of Section 18-B of the Act-

(1) On the issue of a notified order under Section 18-A authorising the taking over of the management of an industrial undertaking

(d) the person or body of persons authorised under Section 18-A to take over the management shall take all such steps as may be necessary to take into his or their custody or control all the property, effects and actionable claims to which the industrial undertaking is or appears to be entitled and all the property and effects of the industrial undertaking shall be deemed to be in the custody of the persons or, as the case may be, the body of persons, as from the date of the notified order, and

(e) the persons, if any, authorised under Section 18-A to take over the management of an industrial undertaking which is a company shall be for all purposes the directors of the industrial undertaking duly constituted under the Indian Companies Act, 1931, and shall alone be entitled to exercise all the powers of the directors of the industrial undertaking, whether such powers are derived from the said Act or from the memorandum or articles of association of the industrial undertaking or from any other -source.

(2) Subject to the other provisions contained in this Act and to the control of the Central Government, the person or body of persons authorised to take over the management of an industrial undertaking shall take such steps as may be necessary for the purpose of efficiently managing the business of the industrial undertaking and shall exercise such other powers and have such other duties as may be prescribed.

3. By reason of Section 18-B (1) of the Act, all persons in charge of the management, including persons holding office as managers or directors of the industrial undertaking immediately before the issue of the notified order, shall be deemed to have vacated their office as such. By reason of this provision the former directors, including the managing director, if any, ceased to exercise any power in regard to the management of the first plaintiff company and therefore cannot continue the suit. The second plaintiff, who is represented by the Chief Executive Officer, has taken over the entire company and is vested with power to continue the suit, because it is an actionable claim, and the right to sue has been specifically vested in the second plaintiff.

4. In the circumstances, there is no substance in the contention raised by the defendants/ petitioners. The civil revision petition is therefore dismissed.


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