Regular Second Appeal No. 949 of 1990 (O&M) -1- IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH Regular Second Appeal No. 949 of 1990 (O&M) Date of Decision : January 20, 2009 National Textile Corporation (a unit of which is Kharar Textile Mills, Kharar) through its General Manager. .......... Petitioner Versus Shiv Kumar Gupta (dead though his L.Rs.) ...... Respondent CORAM : HON'BLE MR. JUSTICE VINOD K. SHARMA Present : Mr. H.N. Mehtani, advocate for the appellant. Mr. R.K. Chhibbar Sr. Advocate with Mr. Anand Chhibbar, Advocate for the respondent. **** VINOD K. SHARMA, J. CM No. 5205-C of 2007 This is an application under Order 41 Rule 27 of the Code of Civil Procedure read with Section 151 of the Code of Civil Procedure for allowing additional evidence by permitting the appellant to produce jamabandies for the years 1974-75, 1979-80, 1984-85, 1989-90, 1994-95 and 1999-2000 as Ex. A-1 to Ex.A-6 along with the annual report of the Panipat Woolen & General Mills Compan2y Limited for the year 1970-71 Regular Second Appeal No. 949 of 1990 (O&M) -2- as Ex. A-7 by way of additional evidence. The applicant-appellant claims that order dated 24.3.1990 passed by the learned Additional District Judge, Ropar is under challenge in the RSA vide which the judgment and decree passed by the learned trial Court has been ordered to be set aside and suit for injunction filed by Sh.S.K.Gupta, has been decreed. It is pleaded in the application that the land was in possession of Kharar Textile Mill, Kharar which was owned by Panipat Woolen & General Mills Company Limited. The management of which was taken over and nationalized under the provisions of the Sick Textile Undertakings ( Nationalization) Act, 1974 and possession was handed over to the National Textile Corporation i.e. the appellant. The applicant-appellant prays that the jamabandies Ex.A-1 to Ex.A-6 are, therefore, necessary for this Court to pronounce judgment on the matter in dispute. It is prayed that the annual report of Panipat Woollen & General Mills Company Limited produced as Ex. A-7 would be material for adjudication of the case to show that the property in dispute was in fact in possession of the Kharar Textile Mills. The notice of the application was given. However, non- applicant chose not to file any reply to the application. Thus, the averments made in the application remained uncontroverted. Even otherwise also the documents are copies of the revenue record which are necessary for just and proper adjudication of the case. Regular Second Appeal No. 949 of 1990 (O&M) -3- Consequently, this application is allowed. Ex.A-1 to A.-7 are allowed to be produced by way of additional evidence. Regular Second Appeal No. 949 of 1990 The National Textile Corporation by way of present regular second appeal has challenged the judgment and decree passed by the learned Addl. District Judge, Ropar dismissing the suit filed by the appellant-plaintiff by reversing the judgment of the learned trial Court. The plaintiff-appellant filed a suit for permanent injunction restraining the defendant-respondent from interfering in the peaceful possession of the plaintiff over the land measuring 39K-5Ms situated in the area of village Khanpur and from cutting and removing the trees standing in that land. It was pleaded by the plaintiff appellant that the land in dispute was earlier owned by Panipat Woollen and General Mills Company Ltd. (hereinafter referred to as 'company') and it was in possession of Kharar Textile Mills. Various types of trees were standing in the land and the said land was in possession of Kharar Textile Mills which was unit of the Company. The Kharar Textile Mills was taken over by the Central Government under the provisions of Sick Textiles Undertaking (Nationalization ) Act, 1974 (hereinafter referred to as “the Act”). All assets of Kharar Textile Mills including moveable and immovable properties stood vested in the Central Government. It was claimed that defendant- Regular Second Appeal No. 949 of 1990 (O&M) -4- respondent it had got no right to cut and remove the standing trees in the land. The suit was contested by the defendant-respondent on the ground that the land was owned by Panipat Woollen and General Mills Ltd. The land in dispute was never in possession of Kharar Textile Mills and it was only part of the land. It was claimed that trees and land is the property of the company and not Kharar Textile Mills, since the company was not taken over by the Central Government it continue to be owner in possession of the land in dispute. It was claimed that inventory to the property acquired was prepared on 25.6.1972 and the land in dispute was not included in that inventory meaning thereby the land was not taken over by the Central Government. On the pleadings of the parties, following issues were framed :- “1. Whether the plaintiff is entitled to the injunction as prayed for ? OPP 2. Whether the suit land is owned and possessed by the Panipat Woollen Mills and he vested in the Central Government ? OPD 3. Whether the suit is liable to be stayed under Section 1 CPC ? OPD 4. Whether the suit is beyond limitation ? OPD 5. Relief.” Regular Second Appeal No. 949 of 1990 (O&M) -5- Issues No.1 & 2 were decided in favour of the appellant- plaintiff and it was held that the land in dispute vested in the Central Government by virtue of Sick Textiles Undertaking (Nationalization ) Act, 1974 and it was held that defendant had no right to cut the trees and decreed the suit. The respondent-defendant preferred an appeal along with an application for condonation of delay. The application was allowed and the delay in filing the appeal was condoned. The learned lower appellate Court came to the conclusion that the learned trial Court has misinterpreted the provisions of the Act to hold that the property vests in the Central Government. A finding was recorded by the learned lower appellate Court that the land in dispute was never vested in the Central Government under the Act. It was claimed that it was only the management and the property of Kharar Textile Mills which vested in the Central Government. The land was not part of the Kharar Textile Mills nor the land having been used for any purpose servient to working of the mill and, therefore, the suit for permanent injunction was not maintainable. The Court held that in the garb of present suit the plaintiff- appellant was seeking a declaration that the land belonged to the plaintiff- appellant because the said relief could not be claimed in view of Section 38 of the Act which bars adjudication after expiry of two years. The learned lower appellate Court held that there was no document brought on record to show that the land was part of sick unit which was taken over by the Central Regular Second Appeal No. 949 of 1990 (O&M) -6- Government. It was observed that in the plaint land was shown to have been owned by the company and not by the Kharar Textile Mills and that the Kharar Textile Mill was only in possession of the Textile Mill as one of the units of the company. The Court observed that in the jamabandi entries Ex. D-2 it was shown that the land was owned by Panipat Woollen and General Mills Company Ltd. and was in possession of M/s Textile Industries, Kharar. The Court observed that the word “land', 'building' and 'assets' in Section 4 of the Act include only those lands and buildings which are owned by the Sick Mill which has been taken over. At no point of time, the land in dispute was owned by Kharar Textile Mill. The Court ignored the mutation sanctioned on 18.3.1987 by holding that the said mutation was sanctioned after lapse of 13 years and could not confer title on the plaintiff- appellant. The reliance was placed on Section 38 of the Act to record a finding that if there was any difficulty to give effect to the provisions the same was to be got removed by the Central Government within a period of two years from passing of the Act and accordingly dismissed the suit by accepting the appeal. The learned lower appellate Court also observed that entries No. 54 and 76 in the First Schedule to Textile Undertaking (Nationalization) Act, 1974 includes only Kharar Textile Mill and Panipat Woollen Mills, Kharar and not Panipat Woollen & General Mills Company Limited, which is owner of the land in dispute. Mr. H.N. Mehtani, learned counsel for the plaintiff-appellant Regular Second Appeal No. 949 of 1990 (O&M) -7- contends that the following substantial question of law arise for consideration in this appeal :- “Whether the judgment and decree passed by the learned lower appellate Court is outcome of misreading of the provisions of (Nationalization) Act, 1974.” In support of his contention Mr. H.N. Mehtani, learned counsel appearing on behalf of the appellant referred to Sections 2(e), 2(h), 2(j) and 2(n) along with the schedule attached to the Act especially items 54 & 76 of the Act which are reproduced below for ready reference :- “ xx xx xx xx xx xx xx xx xx xx (2e) “National Textile Corporation” means the National Textile Corporation limited, formed and registered under the Companies Act, 1956; xx xx xx xx xx 2(h) “owner', when used in relation to a sick textile undertaking, means any person or firm who or which is, immediately before the appointed day, the immediate proprietor or lessee or occupier of the sick textile undertaking or any part thereof, and in the case of a textile company which is being wound up or the business whereof is being carried on by a liquidator or receiver, includes such liquidator or receiver, and also includes any agent or manager or such owner but does not Regular Second Appeal No. 949 of 1990 (O&M) -8- include any person or body of persons authorised under the Industries (Development and Regulation) Act, 1951, or the Sick Textile Undertakings (Taking Over of Management) Act, 1972, to take over the management of the whole or any part of the sick textile undertaking; xx xx xx xx xx 2(j) “sick textile undertaking” means a textile undertaking, specified in the First Schedule, the management of which has, before the appointed day, been taken over by the Central Government under the Industries (Development and Regulation ) Act, 1951, or as the case may be, vested in the Central Government under the Sick Textile Undertakings (Taking Over of Management) Act, 1972; xx xx xx xx xx xx xx xx xx xx 2(n) “textile company” means a company specified in column (3) of the First Schedule as owning the textile undertaking specified to the corresponding entry in column (2) of that Schedule. xx xx xx xx xx” Items 54 & 76 of the First Schedule of the Act : Regular Second Appeal No. 949 of 1990 (O&M) -9- SI. No Name of the undertaking Name of the owner Amount xx xx xx xx xx xx xx xx 54 Kharar Textile Mills, Kharar, near Chandigarh The Panipat Woollen and General Mills Company Limited, Kharar, near Chndigarh. 12,89,000 xx xx xx xx xx xx xx xx 76 Panipat Woollen Mills, Kharar, near Chandigarh The Panipat Woollen and General Mills Company Limited, Kharar, near Chndigarh. 6,40,000 xx xx xx xx Reference was also made to Sections 3 & 4 of the Sick Textile Undertakings (Nationalisation) Act, 1974 , which are reproduced below for ready reference :- “3. Acquisition of rights of owners in respect of sick textile undertakings.- s(1) On the appointed day, every sick textile undertaking and the right, title and interest of the owner in relation to every such sick textile undertaking shall stand transferred to, and shall vest absolutely in, the Central Government. (2) Every sick textile undertaking which stands vested in the Central Government by virtue of sub-section (1) shall immediately after it has so vested, stand transferred to, and vested in, the National Textile Corporation. 4. General effect of vesting.- (1) The sick textile undertaking referred to in section 3 shall be deemed to include all assets, rights, lease-holds, powers authorities and privilege and all property, movable and immovable, including lands, Regular Second Appeal No. 949 of 1990 (O&M) -10- buildings, workshops, stores, instruments, machinery and equipment, cash balances, cash on hand, reserve funds, investments and book debts and all other rights and interests in, or arising out of, such property as were immediately before the appointed day in the ownership, possession, power or control of the owner of the sick textile undertaking, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto and shall also be deemed to include the liabilities and obligations specified in sub-section (2) of section 5. (2) All property as aforesaid which have vested in the Central Government under sub-section (1) of section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other encumbrances affecting it and any attachment, injunction or decree or order of any court restricting the use of such property in any manner shall be deemed to have been withdrawn. (3) Where any licence or other instrument in relation to a sick textile undertaking had been granted at any time before the date on which the Ordinance was promulgated, to an owner by the Central Government or a State Government or any other authority, the National Textile Corporation shall, on and from such date be deemed to be substituted in such licence or other instrument in place of the owner referred to therein as if such licence or other instrument for the remainder of the period for which the owner would have held such licence or the sick textile undertaking under such other instrument. (4) Every mortgagee of any property which has vested under this Act in the Central Government and every person Regular Second Appeal No. 949 of 1990 (O&M) -11- holding any charge, lien or other interest in or in relation to any such property shall give, within such time and in such manner as may, be prescribed, an intimidation to the Commissioner or such mortgage, charge, lien or other interest. (5) For the removal, of doubts, it is hereby declared that the mortgagee of any property referred in sub-section (2) or any other person holding any charge, lien or other interest in, or in relation to, any such property shall be entitled to claim, in accordance with his rights and interests, payment of mortgage money or other dues, in whole or in part, out of the amount specified in relation to such property in the First Schedule, but no such mortgage, charge, lien or other interest shall be enforceable against any property which has vested in the Central Government. (6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any matter specified in sub-section (2) of section 5 in respect of the sick textile undertaking, instituted or preferred by or against the textile company, is pending, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the sick textile undertaking or of anything contained in this Act but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the National Textile Corporation. (7) Any person, who, on the date on which the Ordinance was promulgated, was in possession of, or had under his custody or control, the whole or any part of any sick textile undertaking referred to in section 3, the management of which could not be taken over by the Central Government by reason of any decree, order or injunction of any Court or otherwise, Regular Second Appeal No. 949 of 1990 (O&M) -12- shall deliver forthwith the possession of such undertaking or part and all books of account, registers and all other documents of whatever nature relating to such undertaking or part to the Central Government or the National Textile Corporation or such other person as the Central Government or the National Textile Corporation, as the case may be, may specify in this behalf.” The learned counsel for the appellant also referred to the jamabandi for the year 1984-85 and placed on record as Ex. P-2 showing that the land in dispute was in possession of Textile Mills, Kharar i.e. the unit of the Company. The reference was also made to Ex.A-1 produced on record by way of additional evidence in this Court i.e. the jamabandi for the year 1974-75, jamabandi for the year 1979-80, jamabandi for the year 1984-85 wherein the Company has been shown to be owner of the property in dispute and possession has been shown to be that of M/s Textile Industry at Kharar as Gair Marusi. The reference was also made to the jamabandi for the year 1989-90 wherein the appellant was shown to be the owner of M/s Textile Industry, Kharar as Gair Marusi. The similar entry was carried in the jamabandi for the year 1994-95 and 1999-2000 i.e. Ex. A-1 to Ex. A-6, on record. The learned counsel for the appellant by referring to the definition of owner as given in Section 2(h) contended that the word 'owner' when used in relation to a sick textile undertaking, would include any Regular Second Appeal No. 949 of 1990 (O&M) -13- person or firm or which is immediately before the appointed day the proprietor, lessee or occupier of the sick textile undertaking or any part thereof and, thus, contended that even occupier would come within the definition of owner. The contention of the learned counsel for the appellant, therefore, was that the learned lower appellate Court was not correct in law in coming to the conclusion that the property belonging to the company was not taken over though the same was said to be in occupation of the Kharar Textile Mills. The learned counsel for the appellant also referred to section 3 of the Act to contended that the rights of owner in respect to textile undertaking stood transferred to the Central Government and thereafter to the National Textile Corporation by law. The learned counsel for the appellant also referred to Item 54 in Schedule I of the Act, wherein the name of undertaking is shown to be Kharar Textile Mills, Kharar near Chandigarh and the ownership is shown to be that of the Panipat Woollen and General Mills Company Limited, Kharar, near Chandigarh. Even in column 76, the possession was shown to be that of Panipat Woollen Mills, Kharar, near Chandigarh and the ownership was shown to be that of the Panipat Woollen and General Mills Company Limited, Kharar, near Chandigarh. The learned counsel for the appellant contended that the reading of Section 4 would show that all properties not only under the ownership but also which was in possession, power of control of owner of Regular Second Appeal No. 949 of 1990 (O&M) -14- sick textile undertaking would vests in the Central Government. Thus, the documentary evidence produced on record i.e. the jamabandi Ex. P-2 jamabandi for the year 1984-85 would show that the land in dispute was in possession of Textile Mills, Kharar, which did not have any independent entity and, therefore, once it was shown to be in possession of the Sick Textile Mills, the same was to vest in the appellant and, thus, the defendant had no right in the property. The contention of the learned counsel for the appellant is that the judgment and decree passed by the learned lower appellate Court is on the face of it is perverse and outcome of misreading of the provisions of the Act and, therefore, the substantial question of law as framed deserves to be decided in favour of the appellant. In view of the contentions raised, it has to be held that the land in dispute vested in the Central Government/ appellant in view of the provisions of Sections 3 & 4 of the Sick Textile Undertakings (Taking Over of Management) Act, 1972. This view finds support from the judgment of the Hon'ble Supreme Court in the case of National Textile Corporation Ltd. and others, etc., appellants v. Sitaram Mills Ltd. and others, etc. Resondents AIR 1986 Supreme Court 1234 wherein the Hon'ble Supreme Court was pleased to lay down as under :- “Where in respect of surplus lands forming part of precincts of the textile mill which was taken over, it was Regular Second Appeal No. 949 of 1990 (O&M) -15- claimed that the Real Estate Division of the Company carried on real estate business in those lands but it was found that there was no transfer of title to the lands and the so-called Real Estate Division had no capital assets of its own and the proceeds of sale of surplus lands or industrial galas constructed thereon were all ploughed back into the textile business to pay off the debts and there was no separate account of the Real Estate Division and the schedules relating to the fixed assets in the balance sheets of the Company made no distinction between land belonging to the textile undertaking and land belonging to the Real Estate Division, sales of the surplus lands or of industrial galas constructed thereon did not constitute an adventure in the nature of trade but were in substance and essence utilisation of the capital assets of the Company for the purpose of running the textile undertaking. Consequently, conclusion was irresistible that the lands in question constituted an asset in relation to the textile undertaking and vested in the State on takeover, Judgment D/-13-6-1983 of Bombay HC Reserved.” As also in view of the judgment of the Hon'ble Supreme Court in the case of Vidarbha Mills Berar Limited and another Petitioners v. Union of India and others, respondents AIR 1987 Supreme Court 478 wherein the Hon'ble Supreme Court has been pleased to lay down as under :- “The question raised in this case is whether the properties which were excluded from the lease granted by the company to the Government in 1966 could also be taken over as part of the 'Sick Textile Undertakings”. Regular Second Appeal No. 949 of 1990 (O&M) -16- The submission of the learned counsel for the petitioner was that the very exclusion of the properties from the lease was an indication that these properties were not necessary for the running of the Mill and that they were not used in connection with the Undertaking, at any rate from 1966. There is no substance in the submission. There is no dispute that the property is the property of the Textile Undertaking. Once it is found to be the property of the Textile Undertaking there is no scope from the provisions of S. 4(1) read with S. 4(3) of the 'Sick Textile Undertakings' (Taking Over of Management) Act. The Writ Petition is, therefore, dismissed.” Mr. R.K. Chhiber, learned senior counsel for the respondent supported the judgment and decree passed by the learned lower appellate Court by asserting that the reading of Section 3 of the Act would show that it is only the rights of owner in respect of Sick Textile Undertaking which stood vested in the Central Government or the appellant, but in absence of ownership right of the Sick Textile Undertaking, it could not vest in the appellant as claimed. The contention of the learned senior counsel for the respondent is that the learned lower appellate Court rightly observed that it was assets and rights of the Sick Textile Undertaking which vests in National Textile Mill and once the land in dispute did not form the assets as disclosed in the winding of proceedings. The learned lower appellate Court was justified in dismissing the suit filed by the plaintiff- appellant. Regular Second Appeal No. 949 of 1990 (O&M) -17- The learned senior counsel for