TAMILNADU TEXTILE CORPORATION LTD Vs. SOUTH INDIAN BANK LTD

JUDGEMENT

(1.) THE 1st respondent Bank filed suit in the Sub-Court, Sivaganga, and decree was passed by the Sub-Court. Decree was passed against the borrower respondents 2 to 4 in the appeal. When the Execution Petition (EP) was filed, the appellant was added as a party in the EP. THE appellant happened to be added as a party in the EP when the EP was filed since the Textile Mill was taken over by the Tamilnadu Textile Corporation Ltd., as per the Tamil Nadu Act No. 81 of 1986. After formation of DRTs the matter which was pending in Civil Court was transferred to DRT-II, Chennai and DRT-II, Chennai, issued a Recovery Certificate under Section 31-A of the RDDB&FI Act, 1993 in accordance with the decree passed by the Civil Court. In the Recovery Certificate issued by the DRT-II, Chennai, the Tamilnadu Textile Corporation is the 5th respondent but was not at all a party to the decree passed by the Civil Court. As the Company was taken over by the Tamilnadu Textile Corporation Ltd., the Tamilnadu Textile Corporation Ltd. was added as the 5th respondent in the Recovery Certificate and the 5th respondent has preferred this appeal as appellant against the issuance of Recovery Certificate by the DRT-II, Chennai. THE main contention raised by the appellant in this appeal is that no decree was passed against this appellant by the Civil Court and the appellant cannot be held responsible for the debt of the erstwhile owner. THE appellant further contends that under Section 6 of Act 81/86, the appellant Corporation is not liable for the erstwhile owner's debt and Section 20 of the Act provides for procedure to make claim against the erstwhile owner and the respondent may claim before the Commissioner of Payments beyond the time under Section 20 of the Act and the Commissioner of Payments also rejected the claim and the Writ Petition challenging the order of the Commissioner was also dismissed and so the Recovery Certificate holding the appellant liable to pay the pre-takeover dues is liable to be set aside.

(2.) Counsel for the appellant submitted that under the provisions of the Act 81/86, the appellant cannot be held liable for the debt incurred by the erstwhile owner. Counsel for respondents 3 and 4 submitted that even though the appellant is not a party in the decree, the appellant was added as a party in the EP filed before the Civil Court and the matter with regard to the status of the appellant was not decided in the EP before the Civil Court and the matter with regard to the right of the appellant ought to have been decided in the EP before the Civil Court and as it was not decided in the Civil Court, the EP filed against the appellant is maintainable and the right of the appellant cannot be decided in this Forum. After the EP was filed and while it was pending before the Civil Court, because of the formation of DRTs the EP was transferred to DRT-II, Chennai, and DRT-II, Chennai, issued a Recovery Certificate under the provisions of RDDB&FI Act. So, the matter with regard to the right and status of the appellant has to be decided only in this Forum. As the appellant was a party in that EP, after transfer, DRT-II, Chennai, issued a Recovery Certificate as against the appellant also and the matter with regard to the right and status of that appellant was not decided before the PO, DRT-II, because the right of PO, DRT-II was only to issue Recovery Certificate as per the previous proceedings. The appellant is not a party to the decree and as he was added as a party in the EP, which EP was transferred to DRT-II, Chennai, the DRT-II issued a Recovery Certificate as against this appellant also. Challenging that Recovery Certificate issued by DRT-II alone the appellant has preferred this appeal. So, this matter has to be agitated and decided only in this Forum and that has been decided now in this appeal. So the arguments advanced by the Counsel for R-3 and R-4 that since the EP was not challenged in the Civil Court that stands good and the right of the appellant which has been ordered as aparty in the EP cannot be decided in this Forum, do not hold good. I find no force in the arguments advanced by the Counsel for R-3 and R-4 and accordingly I reject the contention raised by the Counsel for R-3 and R-4.

(3.) SO, date was fixed as 10.8.1987. SO, it is evident from the GO that the claim date was fixed as 10.8.1987. The claim ought to have been preferred within 30 days from that date i.e. on or before 10.9.1987. The proviso further provides for an extended period of 30 days from the date and even if applying the extended period, the last date for filing the claim was on 10.10.1987. The respondent-Bank preferred the claim on 28.9.1987 within the further grace period of 30 days.