ORDER
D.V. Shylendra Kumar, J.
1. These two writ petitions are filed by the State Bank of India, a commercial banking company established under the State Bank of India Act, essentially under Article 227 of the Constitution of India being aggrieved by the orders passed by the Commissioner of Payments functioning under the Sick Textile Undertakings (Nationalisation) Act, 1974 (hereinafter referred to as 'the Act', for short) and the orders passed by the Court of City Civil Judge, Bangalore, functioning as an Appellate Authority within the meaning of Section 23(7) of the Act.
2. The writ petitioner-Bank is common in both the petitions, though these petitions arise out of two different claim petitions which had been presented before the Commissioner as a claim under Section 20 of the Act in respect of two different sick textile undertakings. The Commissioner having entertained the claim in part and having disallowed a part of the claim in each of the claim applications, the petitioner was in appeal before the Civil Court. These appeals having been dismissed, the petitioner has come up before this Court invoking the jurisdiction under Articles 226 and 227 of the Constitution of India.
3. The questions that fall for consideration in these two writ petitions being similar, particularly having regard to the arguments addressed by the learned Counsel for the petitioner and tne legal points raised, both petitions are being disposed off by this common order.
4. I have heard Sri Urval N. Ramanand, learned Counsel appearing for the petitioner-Bank in both petitions and Sri S. Naganand appearing for third respondent-National Textile Corporation and the learned Additional Central Government Standing Counsel appearing for the fourth respondent-Union of India in both the petitions. I shall come to the elaborate submissions made by the learned Counsels appearing in these petitions after indicating a few facts in the background which has given rise to these petitions.
5. M/s. Mysore Spinning and Manufacturing Mills, Bangalore and Minerva Mills Limited, Magadi Road, Bangalore are two textile mills with which the petitioner-Bank had transactions from a very long period. The petitioner-Bank had advanced large sums of money to these textile mills, but unfortunately the textile mills became sick.
6. As a large number of textile mills had fallen sick throughout the country, the Central Government had assumed management of as many as 57 such textile undertakings under the provisions of the Industries (Development and Regulation) Act, 1951 and the management of another 46 textile undertakings was taken over by the Central Government under the Sick Textile Undertakings (Taking over of Management) Act, 1972. Subsequently under the Sick Textile Undertakings (Nationalisation) Ordinance, 1974, these mills were acquired by the Central Government under the provisions of this Act as from the appointed date, i.e., as on 1-4-1974 under Section 3 of the Act. The sick textile undertakings which were taken over by the Central Government under this Act stood transferred and vested in the National Textiles Corporation, a Government Company, which had been registered under the Companies Act.
7. The Act also provided for discharging certain liabilities which had been incurred prior to the appointed day. The erstwhile owners of the sick textile undertakings were to be compensated by making payment in cash, of the amount and in the manner specified in Chapter VI of the Act. The scheme of the Act was that the amount of compensation payable to the owner was deposited by the Central Government with the Commissioner of Payments, before whom persons having any claim against the sick textile mills which were nationalised, could put forth their claim within thirty days from the specified date. The Act itself categorised claims into Category-I, Category-II, Category-Ill and Category-IV and priority was also fixed in that order. The Second Schedule to the Act not only indicated the order of priorities for discharging the liabilities of a sick textile undertaking, but also divided them into two parts, as Part A comprising of claims for the 'post-takeover management period' and Part B comprising of claims referable to 'pre-takeover of the management period'.
8. The significance of 'post-takeover management period' and 'pre-takeover management period' in making a distinction is that whereas the owners of the textile mills were in total control and management of the undertakings earlier, after the taking over of the management of the mills by the Central Government either under the Industries (Development and Regulation) Act, 1951 or under Sick Textile Undertakings (Taking over of Management) Act, 1972, subsequent to such takeover of management, the cick textile mills were being managed by the National Textile Corporation or other agency of the Government and during the interregnum between such assumption of management by the Central Government and the actual nationalisation under the present Act, the erstwhile owners were not in control and management of the undertaking. A perusal of the scheme of the Act for payment by the Commissioner of Payments and the categorisation indicating the priority of claims, points out that the liabilities incurred by the textile undertaking subsequent to the assumption of management by the Central Government under any one of the Acts indicated above, was sought to be given preference for discharging the same, as against the liabilities that had been incurred by the textile undertaking before such assumption of management by the Central Government.
9. The Commissioner of Payments in fact was holding monies due and payable to the erstwhile owners and was in fact making a rateable distribution of the amount to the various claimants coming up before him in accordance with the scheme of the Act while making such payments to them and after satisfying such claims, the balance amount was being handed over to the erstwhile owners of the textile undertakings.
10. The petitioner-Bank was a claimant before the Commissioner in respect of the two sick textile undertakings that had been nationalised under the Act, namely, the Mysore Spinning and Manufacturing Mills in respect of which mill the Bank had put forth their Claim and from which arises W.P. No. 36492 of 2000 and the Minerva Mills Limited, from which arises W.P. No. 36493 of 2000. The claim of the petitioner-Bank in respect of the amounts payable to the erstwhile owners of M/s. Mysore Spinning and Manufacturing Mills and in deposit with the Commissioner of Payments was registered as claim Case No. 4010/Mys/77. The total claim amount by the bank was for Rs. 3,36,53,628.95P. The Commissioner of Payments held an enquiry in regard to this claim, accorded opportunity to the petitioner-Bank to place material before the Commissioner, heard its Counsel and passed an order on the same indicating that out of this amount, while a sum of Rs. 43,95,031.41P. could be classified as falling under Category-I(a) being a 'post-takeover liability' of the owner and in respect of which claim there was material on record and the claim amount having been verified from the books of accounts of the claimant Bank as well as from the books available at the textile undertaking. A sum of Rs. 1,30,27,126.90P. was relegated to Category-IV being the 'pre-takeover liability' of the owners. The Commissioner also rejected the balance amount for Rs. 1,62,31,470.64P. being a liability that had arisen subsequent to 31-3-1974 i.e., after the appointed date in respect of which the erstwhile owners were not liable.
11. In respect of the claim under Category-I, the Commissioner also found that a sum of Rs. 42,48,826/- could be allowed to the petitioner-claimant on pro rata basis as there were other claimants also, whose claims fell under Category-I and indicated that the balance of Rs. 1,46,205.41P. is to be the liability assumed by Central Government under Section 27(1) of the Act.
12. The Commissioner, for the purpose of categorising the claim of the petitioner, relied upon the information and material placed by the petitioner themselves which are reflected as under in the course of his order:
Sl.No.
A/c.No.
Descriptionof Account and Date
limitsanctioned
Outstanding as on
18-10-1971
31-3-1974
1.
50022(A/c. 1)
Cash Credit A/c. Hypothecationof goods, book debts and assets (15-1-1931)
18,00,000.00
12,00,000.00
12,00,000.00
2.
50023-A (A/c. 3)
Clean cash credit (6-2-1958)
7,00,000.00
--
--
3.
50023 (A/c. 2)
Cash credit Hypothecation of goods(22-4-1960)
56,00,000.00
56,00,000.00
56,00,000.00
4.
50024 (A/c.5)
Cash credit Hypothecation of goods(25-8-1961)
12,00,000.00
12,00,000.00
12,00,000.00
5.
50023-B(A/c. 4)
Clean cash credit (7-6-1963)
40,00,000.00
--
--
6.
50026(A/c. 7)
Clean cash credit (6-7-1963)
20,00,000.00
27,83,319.01
34,88,816.84
7.
50025 (A/c. 6)
Cash credit Hypothecationof goods (12-12-1963)
15,00,000.00
15,00,000.00
15,38,310.06
8.
50049
Cash credit Pledge of stocks (6-3-1973)
85,00,000.00
--
24,78,078.36
9.
50048
Cash credit Hypothecationof goods (26-3-1973)
30,00,000.00
--
19,16 ,953.05
Total
2,83,00,000.00
1,22,83,319.01
1,74,22,158.31
13. The Commissioner also indicated that while the total amount available for distribution was a sum of Rs. 1,28,81,730/-, the total admitted claims under Category-I themselves totalled Rs. 1,33,25,001.42P. and as such the amount was required to be distributed on pro rata basis amongst the various claims of various categories and the balance to be assumed by the Central Government under Section 27(1) of the Act. This portion is extracted from the order of the Commissioner as under.-
Sl.No.Claim Case No... /MYS/77Name of claimant partyAmount awarded under Category-IAmount allowed on pro rata basisLiability to be assumed byCentral Government under Section 27(1)
1.3069The Karnataka Small-Scale Industries Corporation Limited,Bangalore
44,284.5042,811.401,473.102.3679M/s. Maharashtra State Co-operative Marketing Federation Limited,Bombay
13,95,110.7113,48,700.2046,410.513.3870The New India Assurance Company
2,90,449.672,80,787.609,662.074.4010State Bank of India, Bangalore
43,95,031.4142,48,826.001,46,205.415.4014The Mysore Spg. and Mfs. Mills, Unit NTC (APKK&M;)Ltd.,Bangalore72,00,125.1369,60,604.802,39,520.33
Total1,33,25,001.421,28,81,730.004,43,271.42
14. Insofar as the claim of the petitioner in respect of the liabilities and dues arising out of transactions with Minerva Mills is concerned, the Commissioner registered their claim as Claim Case No. 2484 of 1977. The claim amount was for Rs. 1,24,41,266.99P. which was the liability as on 31-3-1977 as per the claimants.
15. The Commissioner, on facts found that the actual amount which was shown to be outstanding and due to the petitioner-Bank from the textile undertaking as on 31-3-1974 was a sum of Rs. 79,03,952.18P. The Commissioner found some difficulty to admit this entire amount of Rs. 79,03,952.18P. as monies due as on 31-3-1974 as Category-I claim inasmuch as the amounts which were outstanding in the corresponding books of accounts of the textile undertaking and as had been acknowledged by M/s. National Textiles Corporation who had taken over the management and as on 31-3-1974 i.e., immediately prior to the appointed date was only for a sum of Rs. 16,48,594.40P.
16. The Commissioner, in the circumstances, could not straightaway categorise the entire amount of Rs. 79,03,952.18P. as a claim under Category-I. However, as the petitioner-Bank had sought for some more time to prove their claim by producing necessary material, the Commissioner kept apart this amount provisionally from out of the compensation amount available with him payable to the erstwhile owners and the claim towards the balance was obviously rejected. However, as the total amount available for distribution was only Rs. 1,14,32,440/- and there was another claim under Category-I, the Commissioner made pro rata distribution and a sum of Rs. 77,58,878.37P. is the amount reserved on pro rata basis.
17. The petitioner, being dissatisfied by these two orders of the Commissioner of Payments, had preferred appeals before the Court of City Civil Judge, Bangalore in Miscellaneous Appeal No. 14 of 1988 referable claim in respect of Mysore Spinning and Manufacturing Mills Limited in W.P. No. 36492 of 2000 and Mis. A. No. 251 of 1997 in respect of its claim in the Minerva Mill's case out of which arises W.P. No. 36493 of 2000.
18. The petitioner, it appears, had filed applications in both appeals praying for permission to produce additional documents and to receive them as additional evidence.
19. It is the submission of the learned Counsel for the petitioners that such applications had been filed in both the appeals and the applications in fact had been allowed as per orders dated 18-8-1992 passed in these appeals. However, the grievance of the petitioner is that notwithstanding allowing of such application for production of additional evidence, the learned Civil Judge has dismissed the appeal even without referring to any of the additional documents that had been permitted to be produced by the petitioner in both appeals. The present writ petitions are filed praying for setting aside the orders and for granting relief to the petitioner.
20. The learned Counsel for the petitioner has made the following submissions for consideration.
21. The learned Counsel, in the first instance has sought for setting aside the order passed by the learned City Civil Judge in appeals and for remanding the matter to the learned Civil Judge for a proper consideration of the appeals before that Court in the light of the additional material that had been placed before the Court on allowing the application for production of additional evidence in the two appeals.
22. I have examined the submission of the learned Counsel for the petitioner in both these petitions in detail, but I notice that it is not necessary for acceding to this request of the petitioner due to the following reasons.
23. The present proceedings are essentially one falling within the scope of judicial review of quasi-judicial orders passed by statutory functionaries. The petition is essentially one to be considered under Article 227 of the Constitution of India. In the first instance, the Court is not exercising the appellate jurisdiction. Secondly and more importantly, having regard to the nature of proceedings that took place before the Commissioner of Payments, the scope of an appeal before the Civil Court is confined to effecting corrections on legal aspects or even on factual aspects which have been erroneously decided on the available material. The Commissioner of Payments is essentially in the position of a trustee holding the money belonging and payable to the erstwhile owners and for rateable distribution of the same amongst the creditors of such owners and for discharging such debts of the erstwhile owner from out of the funds payable to the owner. In a proceeding of this nature, the Commissioner holds an enquiry in general, examines the claims of various creditors based on the material placed by them before the Commissioner and apportions the amounts on such classification of the category of the claim to which the claim falls. The Commissioner, being required to make a rateable distribution of the amount available with him, the matter cannot be considered as a lis in the nature of adversary litigation between the claimants, vis-a-vis, the erstwhile owner or even against the other claimants. All claimants are given equal opportunity to put forth their case and place material in support of the same. Once the Commissioner, based on the available material, reaches a conclusion and distributes or apportions the amount with him, the matter comes to an end at that stage. In a situation of this nature, there is no question of any of the claimants improving their position, vis-a-vis, other claims or for getting a higher compensation from the amount with the Commissioner, by producing additional material either at a later stage or before the Appellate Forum. The petitioner having had an opportunity and having not made use of the same, the question of giving such an opportunity before the Appellate Forum does not arise and the question of the Appellate Forum considering such additional material at the appellate stage also does not arise. Though the learned Civil Judge hearing the appeals had allowed the applications for production of additional material, it is of no significance in law or can be of any benefit to the peti-tioner. The appeal was not one which arises out of a suit as a result of any adversarial litigation between the two contesting parties. As such, non-consideration of such additional material is of no consequence as it does not affect the outcome of these appeals. Accordingly, I am of the view that the request for remanding the matter to the Appellate Authority cannot be acceded to.
24. Learned Counsel for the appellant has also submitted that the whole purpose of production of such additional material before the Appellate Forum was to prove that even the claims which had been relegated to Category-IV could have been categorised as Category-I claim in which event the balance not satisfied from out of the funds available , with the Commissioner of Payments, should have been assumed for satisfaction by the Central Government. Learned Counsel for the petitioner submits that there was considerable correspondence between the National Textile Corporation and the Bank and there was also negotiations that were going on which would indicate that the State Government also had assured the Bank that they will stand guarantee for the loans outstanding against the textile undertakings. I have already noticed that the Commissioner had given ample opportunity to the petitioner-Bank to prove their claim before the Commissioner. In fact, the Commissioner has taken into account such contentions or material given before it to find that the Bank did not produce any clinching evidence to indicate that either the National Textile Corporation had acknowledged any of the pleas taken for liabilities as forming part of the present liability nor was there any agreement or undertaking by the State Government guaranteeing the loans. In the absence of such material, the Commissioner had rightly rejected the stand of the Bank that these amounts are also required to be categorised as amounts referable to the liabilities incurred subsequent to the taking over of the management by the Central Government and also should have been categorised as Category-I claim. I find no error at all either in the order of the Commissioner or the appellate orders.
25. The main submission urged on behalf of the petitioner-Bank by its learned Counsel is that the Commissioner as well as the Civil Court erred in not accepting, even on the material placed before the Commissioner that the amount which had been rejected or which has been relegated to Category-IV claims and which form part of the petitioner-Bank's claims should have been classified as only Category-I type of claim and even if the amount available with the Commissioner was not sufficient to meet this entire claim, the balance should have been directed to be assumed by the Central Government for discharge later. The submission of the learned Counsel in this regard is that even on the existing material it was obvious that the National Textile Corporation which was in the management of sick textile undertaking that had been taken over earlier, had assured the petitioner-Bank that they would treat the earlier outstandings which were due even before such takeover, as 'current debts' in which event, it would amount to a liability incurred subsequent to the takeover of the management and as a conse-quence, the amount would qualify as a claim falling under Category-I of the Second Schedule to the Act.
26. The learned Counsel further submits that the third respondent-National Textiles Corporation had by their conduct and as is evidenced in some of the letters, had held out such an assurance though it might not have resulted in a firm commitment in the form of an agreement or as an undertaking given by them to so treat the earlier loans, in view of the principles of estoppel and by applying the doctrine of promissory estoppel, the National Textile Corporation and the Union of India are not entitled to contend to the contrary and as such the Central Government should have assumed such liabilities also under Section 27 of the Act. In support of the said submission, the learned Counsel has placed reliance on two decisions of the Supreme Court in Delhi Cloth and General Mills Limited v. Union of India, : [1988]1SCR383 and Dai-Ichi Karkaria Limited v. Union of India and Ors., : 2000ECR429(SC)
27. There is no dispute that the doctrine of promissory estoppel is a well-established and accepted doctrine which can be called in aid if the facts and circumstances justify the application of the doctrine and relief extended to a disadvantaged person to the extent permissible in law. But the problem arises if there is no scope for the application of the doctrine and having regard to the context of the proceedings.
28. The basic fallacy in the submission of the learned Counsel for the petitioner-Bank is that it proceeds on the premise that the issue arises in the context of a Us between the petitioner-Bank and the respondent-National Textiles Corporation and Union of India. Unfortunately for the petitioner it is not so. The origin of the controversy as has been noticed earlier, is in the context of a claim application before the Commissioner of Payments made under Section 20 of the Act. The Commissioner is strictly guided by the provisions of the Act. The appointed date under the Act is 1st April, 1974 and on and after this date, the assets and liabilities of a sick textile undertaking stands transferred and vests in the Central Government and through it with the National Textiles Corporation. The consequence of such vesting is indicated in Section 4 of the Act, which, inter alia has provided for the manner of transfer of rights and liabilities including the assets and other intangible rights. Section 4(1), 4(2) and 4(4) of the Act read as under.-
'4(1) The sick textile undertaking referred to in Section 3 shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores, instruments, machinery and equipment, cash balances, cash on hand, reserve funds, investments and book debts and all other rights and interests in, or arising out of, such property as were immediately before the appointed day in the ownership, possession, power or control of the owner of the sick textile undertaking, whether within oroutside India, and all books of account, registers and all other documents of whatever nature relating thereto and shall also be deemed to include the liabilities and obligations specified in subsection (2) of Section 5.
(2) All property as aforesaid which have vested in the Central Government under Sub-section (1) of Section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of any Court restricting the use of such property in any manner shall be deemed to have been withdrawn.
(4) Every mortgagee of any property which has vested under this Act in the Central Government and every person holding any charge, lien or other interest in or in relation to any such property shall give, within such time and in such manner as may be prescribed, an intimation to the Commissioner of such mortgage, charge, lien or other interest'.
29. Section 5 of the Act also indicates the extent of the liability of a owner in respect of pre-takeover liabilities and it indicates that any liability arising on and after the takeover of the management by the Central Government or the National Textiles Corporation and incurred by them shall, on and from the appointed date, is made the responsibility of the Central Government. Except to this extent, all other liabilities prior to the appointed date is made the liability of the erstwhile owners.
30. A reading of Section 5 makes it very clear that after the appointed date, the owners are not liable in respect of any liability incurred by the textile undertaking. It is also very clear that the Commissioner of Payments has no right or authority under the Act to entertain or deal with such claims arising out of the liabilities incurred by the undertaking subsequent to the appointed date. In view of this legal position, the Commissioner of Payments is perfectly justified in rejecting the claims put forth by the Bank in respect of dues and liabilities that have arisen subsequent to the appointed date i.e., subsequent to 1-4-1974. There cannot be any two opinions about this legal position. The petitioners cannot make a grievance of the rejection of their claim for the period subsequent to 1-4-1974.
31. This leaves me to examine the correctness of the order insofar as the liability which has been incurred before the appointed date. Even here, the liabilities are classified as those incurred prior to the date of takeover of the management and those incurred during the interregnum of takeover of the management by the Central Government and the appointed day.
32. The amount of compensation payable to the owners of these sick textile undertakings nationalised under the Act is with reference to the assets of such an undertaking and naturally the liabilities as on that date are also the liabilities of the owners who receive the compensationamount. However, for the purpose of discharging the liabilities that had been incurred prior to the appointed date, the Act provides for depositing the amount by the Central Government with the Commissioner of Payments as provided under Section 18 of the Act and contemplates applications to be made by persons having claim against the owners of the erstwhile undertaking within the stipulated time/before the date as provided under Section 20 of the Act. Section 21 provides for classification of claims into different categories and priority of payments in settling the claims. Section 22 provides for an enquiry by the Commissioner in respect of the claims. Section 23 provides for admitting or rejecting claims on examination of material placed by the claimants in such enquiry. It also provides for an appeal under Section 23(7) of the Act for a claimant who may not be satisfied with the order of the Commissioner. Section 24 provides for payment of monies with the Commissioner if such claims, after which payment, the same constitutes as a valid discharge of the liabilities in respect of a owner. If any surplus amount is left after payment of such claim, the same has to be disbursed to the owner of such sick textile undertaking by the Commissioner as provided under Section 25 of the Act. Section 27 makes an assumption in respect of a part of the undischarged liability falling under Category-I of the Second Schedule and to the extent of such undischarged liability, the Commissioner is required to issue an intimation in writing to the Central Government indicating the extent of the liability which remains undischarged and the Act mandates the Central Government to assume the undischarged liability. Of course, the Central Government may in turn direct the National Textile Corporation to takeover such liability and thereafter the National Textile Corporation has to discharge such liability. The submission of the learned Counsel for the petitioner-Bank is that the entire claim should have been treated as Category-I claim, the undischarged portion of the claim should have been assumed by the Central Government and in turn discharged by the National Textile Corporation. The learned Counsel submits that as the Commissioner has not given such intimation, it is open to this Court even now to quash the order of the Commissioner and the Appellate Authority and to direct the Central Government to assume such liability and in turn make the National Textile Corporation answerable for discharging the liability. In essence, the relief sought for is for issue of a writ in the nature of certiorari in the first instance and thereafter a writ in the nature of mandamus to direct the Central Government and National Textile Corporation to make payment of the claim of the petitioner as though it is a liability assumed under Section 27 of the Act. The relief in effect is one for issue of a writ in the nature of a certiorarified mandamus.
33. A writ of certiorari can no doubt be issued if the orders passed by the administrative or quasi-judicial authority suffers from any illegality or is in contravention of statutory provisions. In the course of the discussion above, I have indicated that the order passed by the Commissioner of Payments does not suffer from any infirmity or illegality at all, much less, in contravention of any of the provisions of the Act under which he functions. Issuing a writ in the nature of certiorari for quashing such anorder does not arise. The prayer to quash the appellate order passed by the learned Civil Judge is also to be rejected inasmuch as the Appellate Authority could only have corrected the order if there was any error in the order passed by the original authority. The order passed by the original authority being accurate in law and in conformity with the provisions of the Act, there was absolutely no scope for interference in appeals and appeals have been rightly dismissed. It is of no significance in law as even after the application for production of additional evidence is allowed by the appellate forum, that such material has not been considered. I have already indicated my reasons for the same in the discussion supra.
34. Insofar as the prayer for issue of a mandamus is concerned, a writ of mandamus can be issued only when the seeker has a legal right, statutory or otherwise, and such right is infringed by the wrongful denial of the right or by the inaction of the concerned authority. Neither is the situation in the present cases. The only right if at all the petitioner had in the present context was for consideration of their claim under Section 20 and in accordance with the provisions of the Act. That having been done by the Commissioner and an order as per the provisions of the Act having been passed, there is nothing further that is required to be done or performed by the Commissioner. No legal right or statutory right of the petitioners has been infringed. There is no scope for issue of a writ in the nature of mandamus. As a consequence, the petitioner is not entitled to any of the reliefs sought for in these petitions.
35. These writ petitions have no merit and are dismissed. Rule discharged. In the circumstances, parties are left to bear their own costs.