Mandatory statutory consent survives interim orders and retrospective nationalisation can invalidate a post-appointed-day sale.

An interim order allowing liquidation proceedings to continue does not dispense with a mandatory statutory requirement of prior Central Government consent, and "winding up" is construed broadly to cover liquidation proceedings. The commentary further explains that the Sick Textile Undertakings (Nationalisation) Act, 1974 operates retrospectively from the appointed day, so the legal fiction in section 2(1)(a), read with section 35, must be given full effect. On that basis, a sale ordered after the appointed day without the required consent is treated as void in law and incapable of producing legal effect.

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Issues: (i) Whether the interim order of the Court permitting liquidation proceedings to continue dispensed with the statutory requirement of obtaining the Central Government's consent under section 8(1) of the Sick Textile Undertakings (Taking Over of Management) Act, 1972; (ii) Whether the sale ordered after the appointed day was void in view of section 35 and section 2(1)(a) of the Sick Textile Undertakings (Nationalisation) Act, 1974.

Issue (i): Whether the interim order of the Court permitting liquidation proceedings to continue dispensed with the statutory requirement of obtaining the Central Government's consent under section 8(1) of the Sick Textile Undertakings (Taking Over of Management) Act, 1972.

Analysis: The interim order merely allowed the liquidation proceedings to continue in accordance with law and did not suspend the operation of the statute. The statutory requirement of prior consent remained binding, and continuation of the proceedings could only take place subject to compliance with that condition. The expression "winding up" was construed broadly so as to include proceedings in liquidation and to prevent defeat of the legislative object.

Conclusion: The statutory consent requirement continued to apply, and the sale could not be justified on the basis of the interim order.

Issue (ii): Whether the sale ordered after the appointed day was void in view of section 35 and section 2(1)(a) of the Sick Textile Undertakings (Nationalisation) Act, 1974.

Analysis: The Nationalisation Act was given retrospective effect from the appointed day, and the legal fiction created by section 2(1)(a) had to be carried to its logical conclusion. On that footing, proceedings taken after the appointed day concerning the sick textile undertaking could not proceed without Central Government consent. The statutory fiction, read with section 35, nullified the sale ordered by the Company Judge.

Conclusion: The sale was void in law and incapable of sustaining any legal effect.

Final Conclusion: The sale directed in the liquidation proceedings was annulled, the High Court's order was set aside, and the appeal succeeded.

Ratio Decidendi: A court order permitting proceedings to continue does not override a mandatory statutory condition, and a retrospective statute creating a legal fiction must be given full effect so as to invalidate proceedings or sales that would be impermissible under the statute.

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