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TMI Blog1985 (4) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities on the basis of which the applications for winding up have been made stand suspended as a result of the two notifications. At this stage, it would be proper to refer to the two notifications. The first notification is dated August 4, 1984, and is made in exercise of the powers conferred by section 3 of the Act. By that notification, the State Government has declared thus: "...that the said industrial undertaking, namely, the Tirupur Cotton Spinning and Weaving Mills Ltd., Tirupur, shall, for a period of one year with effect on and from August 4, 1984, till August 3, 1985, be a relief undertaking for purposes of the said Act". On the same day, the Government has issued another notification under section 4 of the Act, which read as follows: "No. II(2)/IND/4432( e )/84: In exercise of the powers conferred by clauses ( a ) and ( b ) of section 4 of the Tamil Nadu Relief Undertakings (Special Provisions) Act, 1969 (Tamil Nadu Act No. 21 of 1969), the Governor of Tamil Nadu hereby directs that in relation to the relief undertaking, namely, Tirupur Cotton Spinning and Weaving Mills Ltd.: ( a )the Industrial Disputes Act, 1947 (Central Act No. XIV of 1947), shall apply wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll open to the company to apprise the Government of the impracticable situation and request the Government to grant the relief without any condition attached thereto. In these three appeals, the appellant-company has challenged the the order of the learned single judge. We may make it clear at the outset that the appellant-company has not challenged the validity of any part of the notifications. But the argument on behalf of the appellant-company is that it is only recently in March, 1985, that a Government nominee has been appointed to the board of directors and the company would now comply with the requirements of the notification which requires that the relief undertaking shall enter into a written agreement with the creditors, whose dues would stand frozen by virtue of the notification (under section 4 of the Act), for discharging their dues in instalments to be mutually agreed upon and pay the creditors in such instalments without default. The argument of learned counsel for the appellant-company appears to be that while the company does not dispute that it will enter into the agreement as contemplated by the notification with the creditors, the notification cannot be so con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( b )that all or any of the contracts, assurances of property, agree ments, settlements, awards, standing orders or other instruments in force, to which any relief undertaking is a party or which may be applicable to any relief undertaking, immediately before the date with effect on and from which the relief undertaking was declared a relief under taking, shall be suspended in operation or that all or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall be suspended or be enforceable with such modifications and in such manner as may be specified in such notification" . In so far as clause ( a ) of section 4 is concerned, the power which the State Government can exercise is the power to make certain enactments in the Schedule inapplicable to the relief undertaking or those enactments can be made applicable with such adaptations whether by way of modification, addition or omission, as may be specified in the notification. When we come to clause ( b ) of section 4 of the Act, the power of the State Government appears to be three-fold. In the first part of clause( b ), the power of the Government is to totally suspend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early directed that all contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force on August 4, 1984, shall be suspended with effect from August 4, 1984. We are not concerned with the first proviso in the notification. When we come to the second proviso and especially condition (2) of the second proviso of the notification, the notification is made subject to the conditions specified in clause (2). As already pointed out, condition No. (2) requires the relief undertaking to enter into a written agreement with the creditors, whose dues have been frozen by virtue of the notification, for discharging their dues in instalments. These instalments have to be mutually agreed upon and once these instalments are mutually agreed upon, then the relief undertaking has to pay the creditors in such instalments without default. The question which falls for consideration is whether for the failure of the relief undertaking to enter into an agreement with the creditors, the protection given in the first part in clause ( b ) of the notification cannot at all be availed of. Now, undoubtedly, as a matter of fact, the relief undertaking has not ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The recital that the dues have been frozen means that even according to the State Government, the substantive part in clause ( b ) of the notification has the effect of freezing the liabilities of the relief undertaking. Now, either the liabilities are frozen or they are not frozen. Liabilities cannot be sail to be frozen and at the same time required to be discharged which would mean that they are not frozen. When clause ( b ) of the second proviso in the notification requires with reference to the frozen liabilities that the relief undertaking shall make an arrangement for payment by instalments to be mutually agreed upon, then the liabilities cannot be said to be frozen. Requiring payment to be made in respect of a liability which is frozen will be inconsistent with the main part of the notification which provides for a total temporary suspension of all contracts, etc. Now, undoubtedly, the State Government has stated that the notification is subject to the conditions in the proviso. But if the condition virtually takes away the very protection which is given by the first part of the notification in clause ( b ), then the substantive part must prevail and not the condition. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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