1991 (8) TMI 269 - HC - Companies Law

Powers of Central Government to assume management or control of an industrial undertaking in certain cases, Effect of notified order under section 18A

Summary

Issues Involved:
1. Authority of Nikus Kumar Sarkar to represent Defendant No. 1 company.
2. Interpretation of the provisions of the Industries (Development and Regulation) Act, 1951.
3. Impact of the Inchek Tyres Limited and the National Rubber Manufacturers Limited (Nationalisation) Act, 1984.
4. Competence of one defendant to challenge the written statement filed by another defendant.

Detailed Analysis:

1. Authority of Nikus Kumar Sarkar to Represent Defendant No. 1 Company:
The primary issue was whether Nikus Kumar Sarkar had the authority to represent Defendant No. 1 company and sign the vakalatnama and verify the written statement on its behalf. The appellant argued that, despite the Central Government taking over the management of the two undertakings of the company, the company itself continued to exist as a separate entity. Therefore, Sarkar, who described himself as the company secretary, had no authority to act on behalf of the company. The court found that the management of the company itself had not been taken over by the Central Government, and thus, Sarkar was not competent to represent the company.

2. Interpretation of the Provisions of the Industries (Development and Regulation) Act, 1951:
The court examined the different expressions used in the Act, such as "industrial undertaking which is a company," "industrial undertaking owned by a company," and "industrial undertaking being a company." The court concluded that these expressions were used deliberately to differentiate between industrial undertakings that are companies themselves and those owned by companies. The court held that the management of the company itself was not taken over by the Central Government, only the management of its undertakings.

3. Impact of the Inchek Tyres Limited and the National Rubber Manufacturers Limited (Nationalisation) Act, 1984:
The court analyzed the provisions of the Nationalisation Act, which provided for the transfer of the undertakings of the company to the Central Government. The court noted that the Act made a clear distinction between the undertakings of the company and the company itself. The court held that the company continued to exist separately from its undertakings, which were taken over by the Central Government. Consequently, the pending litigation concerning the company's properties could be continued against the Central Government or the new Government company, but the company itself retained its separate legal existence.

4. Competence of One Defendant to Challenge the Written Statement Filed by Another Defendant:
Mr. Datta argued that one defendant could not legally challenge the written statement filed by another defendant. The court did not address this issue directly, as it was not the central question in this case. The primary focus was on whether Sarkar was authorized to represent the company, which the court found he was not.

Conclusion:
The appeal was allowed, and the vakalatnama executed by Nikus Kumar Sarkar and the written statement verified by him were ordered to be taken off the file. The court held that the National Rubber Manufacturers Ltd. continued to have a separate existence despite the take-over of its undertakings by the Central Government. The court concluded that the management of the company itself had not been taken over, and therefore, Sarkar was not competent to act on behalf of the company.