The directions to the cash strapped company - that has had creditors and flat purchasers who have not yet obtained their flats knocking at its doors - came in two petitions that challenged the state government's notification under section 3 and 4 of the Bombay Relief Undertakings (Special Provisions) Act, 1958.

The petitioners, Malathy Karunakaran, who had paid Rs 3.9 lakh towards the purchase of a flat in Lok Sarita at Andheri (E) in May 1996, and Eternit Everest Ltd to which Lok owed Rs 38 crore, through their advocates, Sumedha Rao and Virendra Tulzapurkar had alleged that the notification was``ultra vires'' of the Act, since the Act could be invoked only to fend off unemployment. Both the petitions were today admitted.

While Karunakaran had initiated a suit in 1999 seeking her money back, Eternit had started an arbitration proceeding to get its dues. However, in both these cases, the company was able to furnish the state government's notification, thereby staying any claim of any creditor for a period of a year, the pendency of the notification.

The two petitioners had then moved the Chief's bench challenging the notification. In their order today, the bench directed that the suit, the notices of motion and the arbitration proceedings could continue, but no order on these matters could be implemented, ``except with the leave of this court''.

Similarly, while the company had given an undertaking to the state government that no liabilities would be incurred and no assets would be disposed off except to pay off creditors, the court further directed that no such move would be taken by thecompany, without seeking the leave of the Chief's bench. It also directed that creditors are free under ``special circumstances'' to move this court for getting their dues.

The company has been asked to submit a list of its assets within a week to the court while the government has been directed to give the inspection of all the records it took into consideration before putting out the notification. The case will now come up on November 29.

The matter - that was being followed anxiously by scores of flat purchasers, whose dreams have not yet been fulfilled by the housing company - was heard in detail by the bench, to the exclusion of all matters yesterday. In fact, the bench had submitted the counsels for the company and the state government to some heavy duty grilling when the Chief Justice pointed out that the only consideration before the government, was a manufacturing unit that made cement bricks needed for the building industry. ``It has to be considered that were it not for the unit, you would nothave got the protection,'' said the Chief Justice to the counsels.

Both, the Chief Justice and Justice S H Kapadia after going through the list of employees furnished by the company, pointed out that only 30 of the 179 workers shown, belonged to the manufacturing unit, and around 60 to 70 on the list were of the managerial and supervisory posts.

``Surely when a notification is to be issued, the government's principal objective would be to ensure there is no unemployment, and keep in mind the protection for the workers,'' said the Chief Justice. ``A vice president earning Rs 60,000 is not to be considered when a notification seeking relief is issued,'' remarked Justice Kapadia.

However, special counsel for the state, Jai Chinai was forceful in his defense. ``Even if one excludes the managerial posts, it is not anyone's case that there are no workers involved at all. Here is a company that builds bricks for the building industry, that has many contract workers dependent on it, and projects all across thestate all of which may be affected,'' Chinai argued.

Kumar Desai, counsel for the company admitted that Lok was facing a liquidity crunch, but stressed that it was on the verge of completing many of its projects.