In the High Court of Judicature at Madras Dated: 24.08.2009 Coram: The Honourable Mr.Justice M.CHOCKALINGAM and The Honourable Mr.Justice R.SUBBIAH Original Side Appeal No.239 of 2009 and M.P.No.1 of 2009 The Secretary, Revenue Department, Government of Tamil Nadu, Fort St.George, Chennai. ..Appellant ..vs.. 1. The Official Liquidator, High Court, Madras, as the Liquidator of M/s.Mettur Textiles Industries Limited (in liquidation). 2. Central Bank of India, 14-15, Variety Hall Road, Coimbatore-641 001. 3. R.Muthusamy, President, Mettur Beardsell, CITU Thozhilalar Sangam, No.36/107B, Thangammapuri Pattinam, Mettur Dam 636 402, Salem District. (Amended as per Order dated 12.11.2008 made in C.A.1884/2008) 4. The Mettur Textile Trade Unions Joint Action Committee represented by its President K.Kandasamy, K.Block, No.39 Salem Camp, Mettur Dam 636 456. (Amended as per Order dated 12.11.2008 made in C.A.2574/2008). ..Respondents https://hcservices.ecourts.gov.in/hcservices/ Original Side Appeal filed under Order XXXVI Rule 1 of Original Side Rules read with Clause 15 of Letters Patent, against the order dated 12.11.2008 passed by a learned single Judge of this Court in C.A.No.3013 of 2007 in C.P.No.125 of 1988. For Appellant : Mr.S.Veeraraghavan, Additional.Advocate General III, assisted by Mrs.Bhavani Subburayan, Spl.G.P.(C.S.) For Respondents : The Official Liquidator for R1 Mr.S.Kothandaraman for R2 Mr.N.G.R.Prasad for M/s.Row & Reddy for R3 Mr.R.Subramaniam for R4 JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.,) Challenge is made to the Order of a learned single Judge of this Court dated 12.11.2008 made in Company Application No.3013 of 2007 in Company Petition No.125 of 1988. 2. The Court heard the learned Additional Advocate General and also the learned counsel for the respondents. 3. The appeal, at the instance of the Revenue Department, Government of Tamil Nadu, has arisen under the following circumstances; An extent of 242.05 acres of land was granted to the Company in liquidation, as per G.O.Ms.No.360, Public Works Department (Irrigation) dated 23.02.1937, for a total value of Rs.90,000/-. The alienation was conditional with a right to resume. The said land was surveyed and fixed as 278.83 acres. As per the terms and conditions of the alienation, the Government could resume the land wholly or in part, if the land was required for public purpose or for conducting mining operations and in the event of such resumption or acquisition of land for any reason, the compensation payable for the lands should not exceed the amount paid by the grantee or their value at the time of resumption or acquisition whatever was less. Out of the said extent of 278.83 acres of land held by the company, an extent of 209.08 acres was acquired by the Government from the company under the Land Acquisition Act, 1894, for the establishment of Industrial Estate for Chemical Industries, Developed Plots Estate, other industries, etc. An extent of 25 acres was, however, ordered to be reserved for allotment to the company if they come up with a concrete https://hcservices.ecourts.gov.in/hcservices/ proposal to utilise the said 25 acres. Compensation was paid at the rate of Rs.87.37 per acre. The company filed an appeal before the Sub Court, Salem, seeking enhancement of compensation. The Sub Court, Salem, awarded enhanced compensation at the rate of Rs.4,000/- per acre. Challenging the same, the State filed an appeal before this Court. After acquisition of 209.08 acres, the remaining extent left with the company was only 69.75 acres. In the year 1971, Mettur Beardsell Company approached the Government with a compromise proposal, requesting to order, (i) outright assignment of 67.83 acres then in their possession to enable them to improve their title over the land; (ii) to grant outright assignment of an additional extent of 25 acres of land lying immediately adjoining their factory site and to the east of it; and (iii) to agree to the cost being recovered from the company for the total extent of 92.83 acres mentioned in item No.(i) and (ii) above at the rate of Rs.200/- per acre. The Government examined the said request and by G.O.Ms.No.49, Industries Department, dated 11.01.1972, directed that the total extent of 92.83 acres be assigned to Mettur Beardsell Company Limited at the rate of Rs.200/- per acre. The Government also approved the draft assignment deed and the draft memorandum of compromise to be executed with the company. The draft modification deed was also approved by the Government in September, 1975 and sent to the Collector, Salem District, for necessary action. Following the same, the appeal filed by the State was withdrawn and the same was dismissed as settled out of Court. 4. The said company went into liquidation and was ordered to be wound up by an order of this Court dated 02.07.1993 in C.P.No.125 of 1988. The Liquidator had taken possession of the land, pursuant to the orders of this Court, for settling the claims of the creditors. The Official Liquidator, in his letter dated 10.12.2007, addressed to the Secretary to Government, Revenue Department, informing that he has filed C.A.No.3013 of 2007 in C.P.No.125 of 1988, for sale of the land and building and other structures belonged to the company, in liquidation. Under such circumstances, the Government raised its objections on the ground that the Government could resume the land since there was a breach of the conditions, as found in the assignment. Those objections were negatived by the learned single Judge. Under such circumstances, the State has broughtforth this appeal. https://hcservices.ecourts.gov.in/hcservices/ 5. The learned Additional Advocate General, inter alia, would submit that the company was granted an extent of 242.05 acres of land in the G.O.referred to dated 23.02.1937 for a total value of Rs.90,000/-; that the alienation was conditional with a right to resume; that subsequently, the land was surveyed and fixed as 278.83 acres; that out of the said measurement, 209.08 acres was required by the Government from the company under the Land Acquisition Act; that the Company came forward with the request for additional extent of 25 acres and the Government has also reserved for allotment of 25 acres to the company if they come up with concrete proposal to utilise the 25 acres; that compensation has been paid at Rs.87.37 per acre; that the company filed an appeal for enhancement of compensation and in which, the same was also enhanced to Rs.4,000/- per acre; that the appeal was filed before this Court by the State; that while the appeal was pending, the assignee company came forward with a proposal; that the same was also considered and directed that the extent of 92.83 acres of land be assigned to M/s.Beardcell Company Limited for their industrial purposes at Rs.200/- per acre; that the draft assignment deed and also a memorandum of compromise were approved and that under such circumstances, the appeal was withdrawn and the same was dismissed as settled out of court. 6. Pointing out clauses 15 and 17 of the assignment deed, the learned Additional Advocate General would submit that the land should be used for the construction and operation of a textile mill or other mills and for carrying any related activities, which the assignee was empowered to carry on and in the event of breach of the condition in clause 15, the land was liable to be resumed and taken back by the assignor on repayment to the assignee, the amount of Rs.12,639.70 or the estimated market value of the lands at the time of resumption; that in the instant case, the Government can resume the land if the conditions found in the assignment deed were either not fulfilled or the purpose for which the lands were assigned did not exist; that the assigned company was not the absolute owner of the property and that on this score alone, the company application filed by the Official Liquidator for disposal of the land held by the Government, in order to discharge the liabilities of the company, should have been dismissed. 7. Added further the learned Additional Advocate General that it remains to be stated that the lands in acquisition were conditionally assigned to Mettur Beardcell Company Limited on 11.01.1972; that the Government had proposed to invoke condition No.4 of the G.O.dated 23.02.1937 and resume the land in question, by paying the sum; that the assignee company cannot use the land assigned for any other purpose; that it cannot be forgotten that the said land is under assignment by the Government and hence, there could not be any sale by the Court for the purpose of satisfying the claim of the creditors; that as per the agreement, whenever there was a breach of https://hcservices.ecourts.gov.in/hcservices/ conditions, the land would revest with the Government and hence, the Government had decided to pay the said amount at the time of resumption; that Clause No.4 as well as 15 and 16 of assignment deed have to be strictly construed; that if done so, the entitlement of the company, in liquidation, cannot run beyond what was assigned; that the company was in liquidation since 2003 and hence, the Government did not issue any notice; that the absence of any such notice from the Government, would not mean violation of terms of assignment, entitling the Official Liquidator to sell the same as the property of the company, in liquidation; that the company, in liquidation, had no right or interest in the property to claim the same and that under such circumstances, the contentions made by the State should have been accepted by the learned single Judge and the application made by the Official Liquidator should have been dismissed. 8. The Court heard the learned counsel for the respondents, who reiterated the contentions, which were putforth before the learned single Judge, in their sincere attempt of sustaining the order. 9. The Court has paid its anxious consideration on the submissions made by the learned counsel on either side and has considered all the available materials. 10. Considerably, an extent of 242.05 acres of land was assigned by G.O.Ms.No.360, Public Works Department (Irrigation) dated 23.02.1937 to M/s.W.A.Beardcell ad Company Limited, Madras, on payment of consideration of the full value of Rs.90,000/-. A reading of clauses (1) and (2) of the said G.O.would clearly indicate that the land and building should be used for the purpose of a textile factory and the business connected therewith and the Government could resume the land and the buildings, wholly or in part, in the event of the land and building being used for the purposes unconnected with the grant or for infringement of any of the conditions of the grant. The assignment deed did not stipulate any particular period and when it was surveyed, it was found as 278.83. Out of the said total area, the Government took acquisition proceedings under the Land Acquisition Act, 1894 in respect of 209.08 acres. The company came forward with a request to allot 25 acres of land additionally. In so far as the acquisition lands to the extent of 209.08 acres, the Government fixed the compensation at the rate of Rs.87.37 per acre. Aggrieved over the fixation of compensation, the company filed an appeal before the Sub Court, Salem, seeking enhancement of compensation. The Sub Court enhanced the compensation at the rate of Rs.4,000/- per acre. Not satisfied with the same, the State took an appeal before this Court. Pending the same, the company came with a compromise proposal stating that the outright assignment of 67.83 acres then in their possession to enable the company to improve their title over the land and also to grant outright assignment of an https://hcservices.ecourts.gov.in/hcservices/ additional extent of 25 acres of land lying immediately adjoining their factory. This compromise proposal was approved and accepted by the Government. A memorandum of compromise was prepared and the same was also produced before the Court, following which, the appeal filed by the State was not pressed and the same was dismissed as settled out of Court. While the matter stood thus, the company was ordered to be wound up in C.P.No.125 of 1988. The Official Liquidator, who took possession of all the assets of the company, made C.A.No.3013 of 2007 for bringing the property including the land in possession for sale. At that stage, the Government had raised objections on the ground that the grant itself was made for particular purpose, the same cannot be a subject matter of sale by this Court for the purpose of satisfying the claim of the creditors. When once the purpose of assignment was violated, the property cannot be an asset of the company, in liquidation, and for breach of the conditions, the assignment stood cancelled and the Government, in exercise of its rights, can resume the land. The Court is afraid whether these contentions could be accepted. A subsequent assignment was made to M/s.Beardcell Company Private Limited, by a document dated 03.10.1972. It is not the case of the Government that from the date of assignment, the company had not fulfilled its obligation of constructing a textile mill or quarters for the workers. Admittedly, they have been done and pursuant to the assignment, the company was running its operation. Even the document dated 3rd October, 1972, would clearly indicate that the rights under the assignment were transferable and hereditable. If it was noticed by the State that there was violation of any of the conditions, a notice should be given to the assignee within a period of six months. Admittedly, no such notice was served upon the assignee company at any point of time. Even a very reading would clearly indicate that so long as the subsistence of the mortgage in respect of the property, the resumption rights cannot be exercised by the Government. 11. It remains to be stated that an extent of 242.05 acres of land was the subject matter of acquisition proceedings, which were actually acquired by the State, fixing the compensation amount per acre. Not satisfied with the amount of compensation, the company made a claim petition before the Sub Court, Salem and the rate of compensation was enhanced to Rs.4,000/- per acre. Aggrieved over the same, the State took up an appeal before this Court. Pending appeal, the said compromise was entered into and G.O.Ms.No.49, Industries Department, dated 11.01.1972 came to be passed. If really the company was not the owner and the Government retained the ownership of the property, that too, when it found the contravention and violation of the conditions imposed in the original assignment, it could have either cancelled the assignment and resumed possession of the land, or at least, issued notice. On the contrary, the Government has taken 209.08 acres of the land by way of acquisition and paid compensation also, which would clearly indicate the https://hcservices.ecourts.gov.in/hcservices/ recognition of the title of the company over the land. Some of the workers employed in the company filed W.P.No.35411 of 2007. In the said Public Interest Litigation, the Collector, Salem District, has filed a detailed counter, in which, no whisper about the violation of the conditions; on the contrary, it was categorically averred that the lands so assigned were the properties of the assignee. The further contention that there was a breach of conditions also cannot be accepted. In the agreement dated 03.10.1972 between the Government and M/s.Beardcell Company Private Limited, the Government can resume the land in whole or in part, if the same was required for the public purpose or for conducting mining operations and in the event of resumption, compensation was payable. Under the compromise entered into in the year 1972, the consideration was fixed at Rs.12,639.70 and was paid by the assignee to the assignor. A reading of the compromise would indicate that 92.83 acres of land was assigned to hold the same freely alienable and hereditable, without any further consent of the assignor's subject to the terms and conditions. A reading of the same would clearly indicate that the resumption of land by the Government is possible if there was a breach of the condition in clause (2). If there was a failure to pay the ground rent, it has nothing to do with clause(1), whereby the absolute alienable right is granted. As a result of the compromise between the parties and having adjusted the price in the compensation payable to the company on the basis of the land acquisition proceedings and having granted the rights to the company which are clearly mentioned as alienable and hereditable rights, the Government cannot now be allowed to state that there was a breach of condition and that the land continued to be vested with the State and they can resume the same. It is not the case of the State that there was any arrears of rent. Even to invoke the clause that there was a breach of condition, the Government, though decades passed, did not issue any notice at all. Under such circumstances, the learned single Judge was perfectly correct in rejecting the contentions putforth by the State and the Court is unable to see any merit in the arguments advanced by the learned Additional Advocate General and hence, the order passed by the learned single Judge has got to be sustained. Accordingly, the appeal fails and is dismissed. No costs. Consequently, connected M.P.is closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar gl https://hcservices.ecourts.gov.in/hcservices/ To 1.The Sub-Assistant Registrar, Original Side, High court, Madras-104. 1 cc To Mr.S.Kothandaraman, Advocate, SR.40989 1 cc To M/s.Row & Reddy, Advocate, SR.40990 1 cc To Mr.R.Subramaniam , Advocate, SR.41483 Judgment in O.S.A.No.239 of 2009 ksk(co) pmk.3.9.2009 https://hcservices.ecourts.gov.in/hcservices/