Takeover of industrial undertaking does not extinguish company's separate legal existence, and unauthorised representation is invalid.
Where a statute provides for takeover of an industrial undertaking owned by a company, the undertaking is not automatically treated as the company itself unless the legislation clearly so states. The provisions of the Industries (Development and Regulation) Act, 1951 and the Nationalisation Act, 1984 distinguished between the undertaking and the company, showing that only the undertaking and related liabilities were transferred while the company continued as a separate legal entity. On that basis, the company's management was not taken over as a whole, and an officer appointed for the undertaking could not represent the company in litigation. Nikus Kumar Sarkar was therefore not competent to execute the vakalatnama or verify the written statement on behalf of the company.
Issues: (i) Whether the takeover provisions relating to the industrial undertakings of a company resulted in takeover of the company itself and extinguished its separate legal existence; (ii) whether Nikus Kumar Sarkar was competent to execute the vakalatnama and verify the written statement on behalf of the company.
Issue (i): Whether the takeover provisions relating to the industrial undertakings of a company resulted in takeover of the company itself and extinguished its separate legal existence.
Analysis: The statutory scheme distinguished between an industrial undertaking which is itself a company and an industrial undertaking owned by a company. The expressions used in sections 18B and 18E of the Industries (Development and Regulation) Act, 1951, were treated as deliberately different and not interchangeable. The Nationalisation Act, 1984 also drew a clear distinction between the undertakings and the company, especially in sections 3, 4(6) and 5, showing that only the undertakings and related liabilities were transferred or dealt with, while the company continued to exist as a separate entity.
Conclusion: The company did not cease to exist and its management was not taken over as a whole.
Issue (ii): Whether Nikus Kumar Sarkar was competent to execute the vakalatnama and verify the written statement on behalf of the company.
Analysis: Since the management of the company itself had not been transferred to the Central Government, neither the Central Government nor the authorised persons appointed for the undertakings could represent the company in the suit. The earlier reasoning that treated the undertaking as identical with the company was rejected, and the Full Bench observations relied upon below were held to support, rather than negate, the distinction between a company and its undertaking.
Conclusion: Nikus Kumar Sarkar was not competent to represent the company, and the vakalatnama and written statement filed by him were liable to be taken off the file.
Final Conclusion: The appeal succeeded, the impugned order was set aside to the extent necessary, and the company's separate legal existence and inability of the authorised persons to represent it in the suit were affirmed.
Ratio Decidendi: Where a statute authorises takeover of an industrial undertaking owned by a company, the undertaking does not automatically become the company itself unless the statute clearly so provides; the company retains its separate legal existence and can be represented only by a person duly authorised by it.
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