A Division Bench of the Supreme Court was recently split on the question of enforcing decrees against the Orissa government, which had taken over the assets of a company with its liabilities. Since the two judges held opposite views, the matter has to go before a larger Bench with an odd number of judges.
The issue arose when the assets of the Charge Chrome division of the Orissa Mining Corpo-ration was taken over by the Orissa government by an Ordinance. Before that, a suit, filed by Ashok Transport Agency and others was pending against the firm.
The transport company had obtained a decree against the company, which was now with the state government. The problem was whether the government would be liable to fulfil the decree of the court against the company, especially when it was not heard in the suit.
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The Orissa government argued before the civil court that the decree could not be executed against it because it was not a party to the suit. The court rejected the argument, and the government lost its appeal before the Orissa High Court.
In the Supreme Court, it argued again that it was not liable to comply with the decree because it was not heard in the suit and the Ordinance came much later.
Justice M B Shah held the government should have been brought on record of the case for continuing the suit. The government does not become a party automatically on the issue of the takeover Ordinance. The opposite party, which wants the government to join the case, must apply for bringing it as the successor of the company in the business interest.
Justice Shah went further and stated that even if the state government had not moved an application for setting aside the decree of the civil court, or filed an appeal, that would not mean that the ex parte decree passed against it would be binding on the government as the decree was passed after devolution of interest and not prior to it.
While Justice Shah allowed the appeal of the state government, Justice B N Agrawal dismissed it. He said: