Takeover liability and writ limits: disputed liability must be decided on evidence by the recovery forum
A disputed takeover-liability question involving whether liabilities transferred with the textile undertaking could not be conclusively determined on writ materials alone, because the issue required factual examination of the extent of takeover, the status of the original company, secured assets, and possible guarantor liability. The adverse finding that the respondent had no liability was therefore set aside, and recovery was left to the competent forum for decision on evidence. The challenge to the Permanent Machinery of Arbitrators proceedings was not accepted, and the arbitral notice remained undisturbed.
Issues: (i) Whether the Permanent Machinery of Arbitrators could be invoked for adjudication of the dispute between the parties. (ii) Whether the question of liability of the respondent for the dues claimed by the appellant could be conclusively decided in the writ proceedings and whether that finding should stand.
Issue (i): Whether the Permanent Machinery of Arbitrators could be invoked for adjudication of the dispute between the parties.
Analysis: The dispute raised a serious controversy on the very liability of the respondent, including whether only the textile undertaking was taken over or whether the liabilities also stood transferred. In such a situation, the matter was not a simple inter se dispute between two public sector entities covered by the office memorandum constituting the PMA mechanism. The Court held that the proper course was examination in the recovery proceedings before the appropriate forum, where evidence and materials could be considered.
Conclusion: The challenge to the PMA proceedings was not accepted, and the quashing of the arbitral notice was left undisturbed.
Issue (ii): Whether the question of liability of the respondent for the dues claimed by the appellant could be conclusively decided in the writ proceedings and whether that finding should stand.
Analysis: The Court held that the liability issue required factual examination as to the nature and extent of takeover, the status of the original company, the whereabouts of the secured assets, and the possible liability of the guarantor. Such questions could not be finally determined in writ proceedings or in the appeal on the materials then before the Court. The finding of no liability was therefore beyond the proper scope of the proceedings and was liable to be set aside.
Conclusion: The finding that the respondent was not liable was set aside, and the issue of liability and recovery was left open to be decided by the appropriate recovery forum.
Final Conclusion: The appeal succeeded only in part. The restraint on the PMA proceedings remained, but the adverse finding on liability was vacated and the recovery forum was directed to determine the matter independently in accordance with law.
Ratio Decidendi: A disputed question of takeover liability involving factual issues as to the extent of transfer and the subsistence of the original obligor cannot be conclusively determined in writ proceedings and must be left to the competent recovery forum for adjudication on evidence.
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