Commissioner Of Payments vs Kishni Devi
2010 Latest Caselaw 681 Del

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*          IN THE HIGH COURT OF DELHI AT NEW DELHI
5.

+                             W.P.(C) No. 8337 of 2002


 COMMISSIONER OF PAYMENTS                          ..... Petitioner
                  Through: Mr. Jaswinder Singh, Advocate.

                              versus


 SMT. KISHNI DEVI & ORS.                           ..... Respondents
                     Through: Respondent No.2 in person.


 CORAM:
 HON'BLE DR. JUSTICE S.MURALIDHAR

                                  ORDER

%                                 08.02.2010

           1. Whether the Reporters of local papers may
              be allowed to see the judgment?                      Yes

           2. To be referred to Reporter or not?                    Yes

           3. Whether the judgment should be reported in the
              Digest?                                               Yes

W.P.(C) No. 8337 of 2002 & CM Nos. 9016 of 2006 & 16397 of 2007 (for stay)

1. This petition depicts the plight of two small investors who meticulously

saved their hard earned money after toil of several years and decided to place

it in the form of fixed deposits with a company, only to be left in the lurch and

unable to recover the amounts even four decades thereafter.

2. Respondent No.2 Ganga Dutt Gupta was a labourer who decided to place

his savings out of his hard earned wages in fixed deposits (FDs) in the names

of his wife Respondent No.2 Smt. Kishni Devi and himself with Ajudhia W.P.(C) No. 8337 of 2002 page 1 of 10 Textile Mills Ltd. („ATML‟) nearly four decades ago. By today‟s standards

these may be moderate sums but for Kishni Devi and Ganga Dutt Gupta they

constituted their entire life‟s savings. As far as Kishni Devi is concerned, the

first FD dated 28th April 1970 was for the principal amount of Rs.6,500. The

second dated 7th January 1971 was for the principal amount of Rs.3,136/- and

the third dated 3rd February 1971 was for the principal amount of Rs.2,500.

Ganga Dutt Gupta‟s two FDs were dated 19th November 1970 for the

principal amount of Rs.6,000/- and 3rd February 1971 for the principal amount

of Rs.5,000. The five FDs were to mature exactly one year after their

respective dates. They were to be repaid with 12 % simple interest per annum.

Little did Kishni Devi and Ganga Dutt Gupta realize that their troubles had

just about begun.

3. Unknown to them ATML was sinking and had to be rescued by the central

government. By a notification dated 7th June 1971 issued under Section 18 A

of the Industries (Development and Regulation) Act, 1971 (ID&R Act)

ATML was taken over by the central government. Later it was nationalized

under the Sick Textile Undertakings (Nationalisation) Act, 1974 („STUN

Act‟). Under Section 17 of the STUN Act a Commissioner of Payments

(„Commissioner‟) was appointed by the Central Government for settling the

claims of creditors and depositors of ATML.

4. Kishni Devi and Ganga Dutt Gupta presented their claims before the

Commissioner under Section 20 of the STUN Act. More than ten years after

they had placed their deposits with ATML, on 4th September 1981 the

Commissioner disallowed their claims. He placed their claims under category

W.P.(C) No. 8337 of 2002 page 2 of 10 VI (b) of the Second Schedule to the STUN Act, i.e. under the category „any

other dues‟. It was held that since the compensation amount in respect of the

ATML had already been exhausted by meeting the liability under the higher

category I, and therefore the Commissioner was "precluded from examining

the claims of any lower category under Section 22(1) of the STUN Act."

5. Aggrieved by the aforementioned order of the Commissioner, Kishni Devi

and Ganga Dutt Gupta filed RCA Nos. 116 and 117 of 1981 in the court of

the Additional District Judge („ADJ‟). This remedy is provided under Section

23 (7) of the STUN Act. In his judgment dated 1st June 1983 , the ADJ noted

that in terms of Section 18A of the ID&R Act, the Central Government had

authorised the National Textile Corporation of Delhi („NTC‟) which was

designated as „Authorised Controller‟ to take over the management of the

whole of ATML. In terms of Section 5(1) STUN Act "all the liabilities of the

said Undertaking/Mill prior to 1st April 1974 less liability falling under

Section 5(2) was that of the owner for which separate funds have been

awarded to the owner under Sections 8 & 9 of the Act." It was held that after

the date of that notification i.e. 7th June 1971 the owner cannot said to have

incurred any liability and that any liability would therefore be under Section

5(2) of the Act which would be that of the Central Government.

Consequently, the amounts payable to the owner under Sections 8 and 9 of the

Act and placed at the disposal of the Commissioner under Section 18 of the

Act could not be appropriated towards Part A of the Second Schedule

liability. In other words, no post-take-over management period liability could

be adjusted against the compensation awarded to the owner. Consequently,

the learned ADJ found that the Commissioner erred in holding that since the

W.P.(C) No. 8337 of 2002 page 3 of 10 funds for meeting the liabilities under Part A of the Second Schedule had

been exhausted the claims of Kishni Devi and Ganga Dutt Gupta could not be

entertained. The learned ADJ set aside the orders passed by the Commissioner

and asked him to reconsider the claims of Kishni Devi and Ganga Dutt Gupta.

The NTC filed a review petition before the ADJ. That was dismissed on 5 th

November 1985.

6. When the claims cases went back to the Commissioner, Ganga Dutt Gupta

himself appeared on behalf of his wife and himself. In two virtually non-

speaking orders dated 18th June 1986 the Commissioner Payments merely

reiterated what had been already stated by his predecessor on 4th September

1981 without at all referring to the ADJ‟s judgment dated 1 st June 1983 which

held the earlier order of the Commissioner to be untenable in law.

7. By now 15 years had passed and for Kishni Devi and Ganga Dutt Gupta the

end of the litigation was nowhere in sight. They went back to the learned ADJ

with two appeals. For the second time by a judgment dated 8 th September

2000, the learned ADJ allowed their appeals. Fortunately, this time they were

not sent back to the Commissioner. The learned ADJ held that the liability of

the Central Government continued since it arose after the company in

question had been taken over on 7th June 1971. The learned ADJ rightly

characterised the order of the Commissioner as being "mechanical, non-

speaking and without any reasons whatsoever and thus being untenable."

After discussing in detail the provisions of the STUN Act it was held that

"post-take-over management period liability could not be adjusted by the

Commissioner against the compensation awarded to the owner." Resultantly

W.P.(C) No. 8337 of 2002 page 4 of 10 a decree was awarded in favour of Kishni Devi for the principal sum of

Rs.12136/- plus interest up to 31st March 1977 amounting to Rs.9,222/- with

the agreed rate of interest at 12% per annum simple interest till its realisation.

Ganga Dutt Gupta was awarded the principal sum of Rs.11,000/- plus interest

up to 31st March 1977 amounting to Rs.8290/- with agreed rate of interest at

12% per annum till its realisation. It was held that since Ganga Dutt Gupta‟s

hard earned wages as labourer, which he then placed in the FDs, were

withheld for no fault of his for more than two decades, costs would follow the

event.

8. One would have thought that the Commissioner representing the Central

Government would have gracefully accepted the above judgment coming as it

did three decades after Kishni Devi and Ganga Dutt Gupta had placed their

moneys as FDs with ATML. However that was not to be.

9. When the central government remained unmoved and refused to honour the

two decrees in their favour, Kishni Devi and Ganga Dutt Gupta followed the

due process of law, and filed two execution petitions on 20th September 2002

in the court of the learned ADJ. On 11th October 2002 an order was passed in

both these execution petitions holding that "the disbursement/execution of the

order is within the competence of the Commissioner of Payments under

Sections 24 and 25" of the STUN Act. The execution petitions were therefore

returned against receipt to the Petitioners for presenting before the

Commissioner under the STUN Act "for payments of the amounts in question

to the Petitioners." A copy of the order was also directed to be sent to the

Commissioner. For Ganga Dutt Gupta and Kishni Devi this was the 22nd year

W.P.(C) No. 8337 of 2002 page 5 of 10 of waiting without the moneys being returned to them. It must be remembered

that they had fought two rounds of litigation and ultimately succeeded in

establishing that their claims were legitimate and were required to be

honoured by the Central Government.

10. The Commissioner filed the present writ petition in this Court on 19 th

December 2002 challenging the decrees passed by the learned ADJ more than

two years after they had been passed. The Commissioner contended under

Section 21 STUN Act, the claims in the Second Schedule would have to abide

by the principle that "a liability with regard to a matter specified in a lower

category shall arise only if a surplus is left after meeting all the liabilities

specified in the immediately higher category." Further under Section 22(1)

the Commissioner was required to "arrange the claims in the order of priority

specified in the Second Schedule and examine the same in accordance with

the said order." It was submitted that since all the funds had been exhausted

in meeting the Category I liabilities, there was no occasion to examine any

other category. It was claimed that the order passed by the Commissioner

was "legally unimpeachable and should not have been disturbed by the

learned ADJ in appeal." By an order dated 20th December 2002, this court

stayed the decrees.

11. It must be mentioned here that the petitioner allowed this writ petition to

be dismissed in default for non-prosecution on 14th September 2006. In the

application for restoration of application, the petitioner did not file process

fees for nearly two years. Thereafter Kishni Devi and Ganga Dutt Gupta were

served and again dragged back to this Court. While restoring the writ petition

W.P.(C) No. 8337 of 2002 page 6 of 10 by a separate order passed today, this Court has directed the petitoner to pay

Kishni Devi and Ganga Dutt Gupta costs of Rs.10,000/- each within a period

of four weeks.

12. Counsel for the petitioner urged that the court should go by the letter of

the law, i.e. the STUN Act and hold that no liability attached to the central

government once the compensation amount recoverable from the

nationalization exercise was exhausted in meeting the liabilities of the

"higher" categories of creditors.

13. In other words, this court is asked to uphold, as a matter of principle, the

government‟s perception that despite it nationalizing a company, if the funds

recoverable from the sale of the assets of that company are not adequate to

meet its liabilities, in the order arranged by the Commissioner, then it is just

too bad for the small investors and depositors. Even if the principal amounts

owing to the small investors are just a little over Rs. 23,000 and the

government has lost twice in the courts in a period of three decades, the

government will refuse to pay by proclaiming that the letter of the law must

be upheld at all costs. The small investors like Kishni Devi and Ganga Dutt

Gupta should rest content with their paper decrees which are non-encashable

at the government‟s door.

14. On the questions of law raised, this Court finds absolutely no error having

been committed by the two learned ADJs who by their separate but

concurring opinions, first in 1986 and thereafter in 2000, held that the claims

of Respondents 1 and 2 were admissible and had to be honoured by the

W.P.(C) No. 8337 of 2002 page 7 of 10 Central Government. Relying on Section 5 (2) of the STUN Act the two

ADJs held that if the ATML‟s erstwhile owner‟s funds and the funds from the

sale of its assets were inadequate to meet all the liabilities, then the central

government stepped into the shoes of the debtor for liabilities that accrued

after the „appointed day‟ i.e. 7th June 1971. This court finds nothing perverse

in this reasoning. After the FDs matured Kishni Devi and Ganga Dutt Gupta

approached ATML for repayment only to be told that it was being run as a

relief undertaking since 7th June 1971 and that by a notification dated 1st

February 1973 the liabilities of ATML prior to the takeover stood frozen upto

17th February 1974. Thus neither payment nor renewals were permissible at

that stage. No claim against ATML was admissible during this period. The

liability therefore became operational only thereafter during the post-takeover

period for which in terms of Section 5 (2) STUN Act the central government

would be liable. This is a possible view to take and as explained hereinafter a

plausible view in the facts and circumstances of the case.

15. Howsoever neat and important the questions of law might be in a case like

this, the harsh reality is that two small investors have not been able to recover

from the central government their hard-earned life savings for nearly four

decades. And for absolutely no fault of theirs. And that too after successfully

fighting the government in court battles twice over for three decades. The

Central Government cannot hide behind a statute that permitted it to take over

the company in question and wash its hands off stating that in its ordering the

priorities of claims, once the funds recovered from the owner of ATML and

from the sale of ATML‟s assets stood exhausted in settling the "higher"

claims, the claims of „lower‟ categories like Kishni Devi and Ganga Dutt

W.P.(C) No. 8337 of 2002 page 8 of 10 Gupta get wiped out by law. As a principle of law, as an instrument of social

and economic justice ordained by the Constitution, this is simply

unacceptable.

16. It is unfortunate that instead of repaying their principal sums of Rs. 12,136

and Rs. 11,000/- together with interest owing to them for over four decades,

the Central Government dragged Respondents 1 and 2 into further litigation.

Compared to what the central government has spent so far on this litigation,

the money owed by it to Kishni Devi and Ganga Dutt Gupta does not justify

its engaging them in vexatious litigation for over three decades.

17. Today when Respondent No.2 Ganga Dutt Gupta appeared in this Court,

he appeared shrivelled by the long years of waiting for justice, worn out by

litigation fatigue, and weighed down by the unbearable burden of a vexatious

case so mercilessly imposed on him by the mighty Central Government. It

was a pathetic sight to behold and signified the failure of the legal system to

render timely justice to the weakest among our citizenry. It is the duty of a

Constitutional court in a situation like this to ensure that the law is not

operated to mete out injustice to a citizen.

18. This petition is accordingly dismissed with costs of Rs.15,000/- each to be

paid to Respondents 1 and 2 by the Central Government within a period of

four weeks from today. Failure to pay costs within the time granted will

attract penal costs of Rs. 20,000 each. The applications are disposed of.

19. Certified copies of this order, and the order passed to day in CM Nos.

W.P.(C) No. 8337 of 2002 page 9 of 10 16395 and 16396 of 2007, be sent for compliance to the Commissioner of

Payments and the Secretary of the concerned Ministry under which the

Commissioner functions within seven days.

20. Certified copies of the two orders be also sent forthwith to the Secretary,

Delhi Legal Services Authority (DLSA) with a direction that the Secretary

will contact Kishni Devi and Ganga Dutt Gupta and give them all possible

assistance to pursue the matter further with the Central Government and

recover the amounts due to them under the decrees of the ADJs and the costs

awarded to them by this Court both in this petition and in the application for

restoration of the writ petition. A complete set of the papers in the case be

also delivered to the Secretary DLSA to enable the follow-up. If the Central

Government defaults in complying with any of the directions, the DLSA will

assist Kishni Devi and Ganga Dutt Gupta in filing appropriate proceedings

for further directions.

                                                       S. MURALIDHAR, J
FEBRUARY 08, 2010
dn




W.P.(C) No. 8337 of 2002                                            page 10 of 10