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TMI Blog2004 (12) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Company incorporated under the Companies Act, 1956, and Himachal Pradesh Financial Corporation ("HPFC" for short) respondent No. 8, advanced a loan of Rs. 32.2 lakhs and Rs. 30 lakhs, respectively, to M/s. Unit Techno Cylinders (P.) Ltd. ("first company" for short). The first company defaulted in the payment of dues to the HPSIDC and HPFC. After protracted correspondence and notice, the hypothecated/mortgaged assets of the first company were taken over by the HPSIDC on February 24, 1995. Immediately thereafter, offers for the sale of assets of the first company were invited by the HPSIDC. This action of the HPSIDC was challenged by the first company by Writ Petition No. 119 of 1995 in this Court. A Division Bench of this Court by orders dated August 29, 1995 (C.W.P. No. 119 of 1995), took note of the fact that the unit of the first company was taken over by the HPSIDC and consequent to the advertisement issued for inviting buyers for the purchase of this unit, two offers were received. The highest offer was of Rs. 48,00,000. The first company brought a better buyer M/s. Fardays Engineering Private Limited ("second company" for short). The second company offered Rs. 85,00,000 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were taken over by the HPSIDC, have preferred a claim amounting to Rs. 5,60,137 on account of their dues payable by the first company pursuant to the award made by the Labour Court and that now the workers have requested for a recovery certificate under section 33C(1) of the Industrial Disputes Act, 1947. The Labour Commissioner also informed the HPSIDC that M/s. Fardays Engineering had paid Rs. 1,01,00,000 in terms of the orders in Civil Writ Petition No. 119 of 1995 in respect of all pending liabilities and, therefore, the amount due to the workers is recoverable from the HPSIDC. The HPSIDC wrote back to the Labour Commissioner informing that a one-time settlement was reached with the first company and the keys, pursuant to the one-time settlement in terms of the orders of this Court in Civil Writ Petition No. 119 of 1995, were handed over to Mr. Ashok Sharma Nabhewala, counsel for the first company and all properties lying at that unit were handed over back to the first company. The petitioner in the fact situation did not take over the assets and never made any sale of the assets of the first company to the second company. It was also pleaded that only hypothecated assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the first company to satisfy the award of the Labour Court. 11. Heard Mr. Ajay Kumar, learned counsel for the HPSIDC. Mr. Ashok Chaudhary, learned Additional Advocate General for respondent Nos. 1 to 4, Mr. Rahul Mahajan, advocate for respondent No. 7 workers union and Mr. Kuldip Singh, learned senior advocate for the HPFC. 12. As noticed earlier, it is the admitted position that the HPSIDC took over the assets of the first company on February 24, 1995, and thereafter offers were invited for the sale of the assets of the first company. This action of the HPSIDC was challenged by the first company in this Court in Civil Writ Petition No. 119 of 1995. A Division Bench of this Court by order dated August 29, 1995, disposing of the writ petition, directed the payment of Rs. 101 lakhs by the second company towards the liability of the first company for all past liabilities of the HPSIDC and HPFC. The Division Bench also directed the handing over of the unit, which was taken over by the HPSIDC, back to the first company through its counsel Mr. Ashok Sharma Nabhewala. This unit was accordingly handed over to Mr. Ashok Sharma Nabhewala, advocate, counsel for the first company ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the second company for past liabilities of the first company, the unit was handed over back to the first company. 16. In this view of the factual matrix, in my view, HPSIDC cannot be said to be either the successor or assign of the first company. The reason is not far to seek. The action of the HPSIDC in taking over the assets was not approved by a Division Bench of this Court and those assets were handed over back to the first company on payment of Rs. 101 lakhs towards all past liabilities of the HPSIDC and HPFC. It is so clear from the orders of the Division Bench. The Division Bench observed that counsel for the HPSIDC accepted one-time settlement if the amount was paid in one go, i.e., within a period of one month and the court, considering the liability of the first company towards the HPSIDC and HPFC, settled payment of Rs. 101 lakhs for the past liabilities. The expression, "past liability" here in view of the averments in the writ petition (119 of 1995) was only towards the past liability of the first company towards the HPSIDC and HPFC. The expression "past liability" cannot be stretched to the liabilities towards other creditors of the first company or wages to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporation "to be a trustee" of the debtor or person claiming title through him. The role of the corporation while taking over the assets under section 29 of the Act is to exercise their power in good faith in selling the property of the debtor as an ordinary prudent man would exercise in the management of his own affairs to preserve and protect his own estate, to pass a valid title to a purchaser and to secure as maximum price as possible to liquidate the liabilities of the debtor. 21. The question whether the HPSIDC would be a transferee in respect of the unit of the first company while taking over the assets of that unit would indeed depend upon whether the HPSIDC is transferee of that business, the answer cannot but be No. The HPSIDC while taking over the assets under section 29 merely acted to secure their debts from the first company. The HPSIDC by no stretch can be said to be a transferee of the business and therefore cannot be called successor of the first company. 22. In my view in taking over of the possession of assets of a defaulter loanee, under section 29 of the State Financial Corporations Act, the owner always retain the right of ownership of the property. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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