Case: Associated Building Company Limited and Others Vs. Union of India and Others

M.L. PENDSE, J.The Associated Building Co. Ltd.-petitioner No. 1 is the owner of building known as `Bombay House situate at Homi Mody Street, Fort, Bombay. The Tata Mills Limited-petitioner No. 5 is a public limited company engaged in manufacture of cotton textiles and yarn. The petitioner Nos. 2 to 4 are also public limited companies engaged in variety of businesses. The textile undertaking of Tata Mills Limited is located at Dr. Ambedkar Road, Dadar, Bombay. The petitioner No1 had permitted the Tata Mills Limited and petitioner Nos. 2 to 4 to use the part or portion of Bombay House as a registered office. The petitioner Nos. 2 to 5 were collectively known as Tata Textiles. The petitioners claim that specific space or area was not delineated or demarcated for use of Tata Mills Limited in the Bombay House premises and the arrangement was a fluid and flexible one depending upon business needs and exigencies and the changing conditions and circumstances. The petitioner No. 1 used to recover amount of compensation from Tata Textiles and the amount payable was contributed by petitioner Nos. 2 to 5 and the share of Tata Mills Limited came to approximately Rs.468.30 per month. The petitioners claim that with effect from April 1982, Tata Mills Limited ceased to make any payment for the use of the space in Bombay House and the amount payable by Tata Mills Limited was contributed by petitioner Nos. 2 to 4. The petitioners claim that Tata Mills Limited was permitted to use the space in Bombay House gratuitously and Tata Mills Limited had no right whatsoever to continue to remain in any part or portion of Bombay House. The petitioners further claim that Tata Mills Limited shifted the office with effect from January 2, 1984 from Bombay House to Army and Navy Building, Fort, Bombay.2.On October 18, 1983, the President of India promulgated the Textile Undertakings (Taking Over of Management) Ordinance, 1983 and the Ordinance provided that the management of 13 textile undertakings, pending the nationalisation, shall vest in the Central Government. Tata Mills Limited was one of the undertaking set out in the Ordinance. The Ordinance inter-alia provided that on and from the appointed day, i.e. the day on which the Ordinance came into force, the management of textile undertakings named in the first schedule shall vest in the Central Government. The Ordinance was subsequently replaced by the Textile Undertakings (Taking Over of Management) Act, 1983 and the Act is virtually identical with the Ordinance. The statement of objects and reasons for enactment of legislation provides that by reason of mismanagement of the affairs of undertakings, their financial condition became wholly unsatisfactory even before the commencement in January 1982 of the textile strike in Bombay and the condition further deteriorated after the strike was enforced. Certain public financial institutions had advanced large sums of money to the companies owning the undertakings and further investment of very large sums of money was found to be necessary for reorganising and rehabilitating the said undertakings and thereby to protect the interest of the workmen employed therein and to augment the production and distribution at fair price of different varieties of cloth and yarn so as to subserve the interests of general public. The statement of objects further recites that once the basic decision of nationalisation was taken, a genuine apprehension arose that unless the management of the concerned undertakings was taken over on immediate basis, there might be large scale frittering away of assets which would be detrimental to the public interest. In pursuance of the Ordinance, the management of 13 mills was taken over on October 19, 1983. Section 4 of the Act provides for appointment of Custodian of the textile undertakings for the purpose of carrying on the management of such undertakings on behalf of the Central Government and National Textile Corporation was appointed as custodian while respondent No. 3 as Additional Custodian. The respondent No. 4 is authorised representative of the Custodian.3.On January 16, 1984, the respondent Nos. 2 to 4 addressed a letter to Tata Mills setting out that the Additional Custodian had appointed and authorised Shri M.N. Acharya, the bearer of the letter to take immediate possession and control of Tata Mills Office at Bombay House together with all fixtures, furnitures, instruments, machines, equipments, automobiles and other vehicles and all goods on or about the said premises. The Tata Mills Limited sent a reply on January 18, 1984 pointing out that the entire Bombay House belongs to the Associated Building Co. Ltd. and Tata Mills Limited was permitted to use part of the Bombay House premises without allotting any specific part or portion and since October 1982 Tata Millls Limited was in occupation gratuitously and the same could be demonstrated with reference to the records of the company. The Tata Mills Limited then pointed out that the company has no right, title or interest whatsoever in the Bombay House or any part thereof of which possession could be handed over to the representative of the Custodian. The Associated Building Company Ltd. also addressed a letter to the Custodian on January 18, 1984 confirming the claim made by Tata Mills Limited. Apprehending that the Custodian might take forcible possession of portion of the Bombay House, the petitioners filed the present petition under Article 226 of the Constitution seeking writ of mandamus prohibiting the respondents from taking any action to take over possession or control of any area of Bombay House.4.Shri Palkhiwalla, learned Counsel appearing on behalf of the petitioners, submitted that Tata Mills Limited was granted a licence to an undivided and undemarcated portion of Bombay House, and the licence is gratuitous since July, 1982 as Tata Mills Limited did not pay any amount for the facilities enjoyed. The learned Counsel urged that the licence never crystalised into a right and consequently the provisions of section 3(2) of the Act are not attracted and the Custodian cannot seek possession of any portion of Bombay House. The learned Counsel also pointed out that letter dated January 16, 1984 do not refer to any specific portion of which possession will be taken and therefore the letter is entirely defective and it is not permissible for Custodian to take possession of any particular portion. Shri Kapadia, learned Counsel appearing on behalf of the respondents on the other hand, submitted that the petitioners have not disclosed true facts because the occupation of Tata Mills Limited of portion of Bombay House was obviously as tenants protected under the provisions of Bombay Rent Act. Shri Kapadia submitted that Tata Mills Limited was occupying the premises of Bombay House in the capacity as tenant and the right of a tenant to hold the premises vest in the Custodian. The learned Counsel further submitted that the true reading of sub-section (2) of section 3 of the Act makes it clear that all assets, rights, powers, authorities and privileges shall be deemed to form part of the textile undertaking and the right to occupy the part of the Bombay House is covered. In view of the rival submissions, short question which falls for determination is whether the occupation of undivided and undemarcated portion of Bombay House by Tata Mills Limited amounts to right, power, authority or privilege so as to vest the said right in the Custodian.5.The petitioners have specifically claimed in para of the petition that specific space or area was not delineated or demarcated for use of Tata Mills Limited in Bombay House premises. The petitioners have also claimed that from July, 1982 Tata Mills Limited ceased to make payment of Rs.468.30 p.m. which was earlier contributed for occupation of the space. The petitioners have specifically stated that Tata Mills Limited was gratuitously permitted to continue use of the space and Tata Mills Limited does not have any right in law to continue or to remain in use of any portion of Bombay House. In answer to the specific pleadings on behalf of the respondents, return sworn on September 22, 1992 by Virendra Ambalal Inamdar, Secretary of respondent No. 3 is filed. In para 5 of the return, it is claimed that Tata Mills Limited was in occupation of premises in Bombay House as tenant. The Secretary stated that he is not aware and do not admit that specific area was not demarcated for use of Tata Mills Limited. The return then claims that petitioner No.1 was in fact collecting rent (falsely claimed to be compensation by the petitioners) of sum of Rs.468.30 p.m. and thus Tata Mills Limited were obviously tenant of the premises at Bombay House. Relying on these averments in para 5, Shri Kapadia urged that occupation of Tata Mills Limited was/as a tenant and that right squarely vests in the Custodian. It is impossible to accede to the submission. The respondents could not produce any document or any material to indicate that Tata Mills Limited was occupying portion of the Bombay House as lessees. We repeatedly enquired from the learned Counsel for the respondents as to whether there is any document to indicate that the occupation was as a lessee and the learned counsel fairly stated that there is none. In these circumstances, it is futile to claim that Tata Mills Limited was occupying the portion of Bombay House as tenant merely because the return so claims. Both Tata Mills Limited and petitioner No. 1 who were the owners of Bombay House have stated immediately on receipt of the letter that occupation of Tata Mills Limited was gratuitous and Tata Mills Limited had no legal right to remain in occupation. It is, therefore, obvious that the first contention of Shri Kapadia that Tata Mills Limited was in occupation as lessees and right vested in Custodian is required to be turned down.6.Shri Kapadia then submitted that the expression `Textile Undertaking is defined under section 2(d) of the Act and it means an undertaking specified in the second column of the first schedule. The learned Counsel then referred to provisions of sub-section (2) of section 3 which reads as under :-"(2) The textile undertaking shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges of the textile company in relation to the said textile undertaking and all property, movable and immovable, including lands, buildings, workshops, projects, stores, spares, instruments, machinery, equipments, automobiles and other vehicles and goods under production or in transit, cash balances, reserve funds, investments and booklets 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 textile company whether within or outside India and all books of account, registers and all other documents of whatever nature relating thereto."It was contended that the textile undertaking shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges of the textile company in relation to the said textile undertaking. Relying on this part of the sub-section, Shri Kapadia submitted that even assuming that Tata Mills Limited was occupying a portion of the Bombay House in the capacity as a licensee then even that right to occupy the premises vest in the Custodian. It is not possible to accede to the submission of the learned Counsel. Chapter VI of Indian Easements Act, 1882 deals with subject of licences and section 52 provides that where one person grants to another, a right to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in the property, then the right is called a licence. Section 56 provides that a licence cannot be transferred by the licensee or exercised by his servants or agents. Section 62 provides that the licence is deemed to be revoked where the licence is granted to the licensee for holding a particular office, employment or character, and such office, employment or character ceases to exist. It is well settled that the licence granted is a personal right and is neither heritable nor transferable. Shri Kapadia did not dispute that the licence is not transferable by act of parties but urged that licence can be transferred by operation of law. It is not possible to accede to the submission of the learned Counsel. Sub-section (2) of section 3 provides that the `Textile Undertaking shall be deemed to include rights of the textile company in relation to the textile undertaking and the expression `right must be construed as an enforceable right. It hardly requires to be stated that a transferee of licensee cannot enforce the right to remain in possession as a licensee and not being an enforceable right, the licence cannot be construed as a right to attract the provisions of sub-section (2) of section 3 of the Act. The licence granted by petitioner No. 1 is in the nature of permission to occupy a portion of the Bombay House, and that too, gratuitously. It is impossible to accede to the claim that the permission granted amounts to a right as contemplated by sub-section (2) of section 3 and therefore the Custodian has right to occupy portion of Bombay House.Shri Kapadia submitted that if it is found that the right of occupation of a licensee is not an enforceable right and therefore sub-section (2) of section 3 is not attracted, then it should be held that Tata Mills Limited had a power, authority and privilege to occupy portion of the Bombay House and therefore the Custodian can take over the portion of Bombay House under sub-section (2) of section 3. The submission is devoid of any merit. Once it is found that Tata Mills Limited had no enforceable right, then it is futile to suggest that Tata Mills Limited had a power, authority and privilege as contemplated by sub-section (2) of section 3 and therefore the Custodian can take over possession of Bombay House. Shri Kapadia then submitted that sub-section (2) also provides that the expression `Undertaking includes all properties, movable and immovable, including lands, buildings etc. and the right to occupy portion of Bombay House is an asset which vests in the Custodian. The submission has no merit because in case the contention of the respondents that occupation of portion of Bombay House gratuitously is an enforceable right is not correct, then such occupation cannot be construed as an asset of Tata Mills Limited. In our judgment, the provisions of sub-section (2) of section 3 are not atrracted and consequently, the letter written by respondents on January 16, 1984 demanding possession of undemarcated and unspecified portion of Bombay House was wholly without authority.7.Shri Kapadia referred to decision of Supreme Court reported in A.I.R. 1980 S.C. 1234, (National Textile Corporation Ltd. and others v. Sitaram Mills Ltd. and others), and observations to the following effect:-"The legislation was clearly in furtherance of the Directive Principles of State Policy in Article 39(b) and (c) of the Constitution. In interpreting such a piece of legislation, the courts cannot adopt a doctrinaire or pedantic approach. It is a well known rule of construction that in dealing with such a beneficent piece of legislation, the courts ought to adopt a construction which would subserve and carry out the purpose and object of the Act rather than defeat it."The principles laid down by the Supreme Court are well settled and there cannot be any debate that while considering a beneficent piece of legislation, the courts should adopt the liberal construction. A reference was also made to the decision reported in (1988) 1 Company Law Journal 225 (S.C.), (Doypack Systems Private Limited v. Union of India and others), to point out that the expression in relation to must be construed widely. In our judgment, the reference to the decision is not appropriate. The provisions of sub-section (2) of section 3 are wide in its ambit but it would certainly not include an unenforceable right. For example, if a person hands over his car to the textile mill for gratuitous use then it cannot be claimed that the car is an asset of the undertaking or the user of a car is a right vested in the undertaking and consequently it is open for the Custodian to take possession of the car.

Decision reasoning: 1[ds]It is impossible to accede to the submission. The respondents could not produce any document or any material to indicate that Tata Mills Limited was occupying portion of the Bombay House as lessees. We repeatedly enquired from the learned Counsel for the respondents as to whether there is any document to indicate that the occupation was as a lessee and the learned counsel fairly stated that there is none. In these circumstances, it is futile to claim that Tata Mills Limited was occupying the portion of Bombay House as tenant merely because the return so claims. Both Tata Mills Limited and petitioner No. 1 who were the owners of Bombay House have stated immediately on receipt of the letter that occupation of Tata Mills Limited was gratuitous and Tata Mills Limited had no legal right to remain in occupation. It is, therefore, obvious that the first contention of Shri Kapadia that Tata Mills Limited was in occupation as lessees and right vested in Custodian is required to be turnedis not possible to accede to the submission of the learned Counsel. Chapter VI of Indian Easements Act, 1882 deals with subject of licences and section 52 provides that where one person grants to another, a right to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement or an interest in the property, then the right is called a licence. Section 56 provides that a licence cannot be transferred by the licensee or exercised by his servants or agents. Section 62 provides that the licence is deemed to be revoked where the licence is granted to the licensee for holding a particular office, employment or character, and such office, employment or character ceases to exist. It is well settled that the licence granted is a personal right and is neither heritable nor transferable. Shri Kapadia did not dispute that the licence is not transferable by act of parties but urged that licence can be transferred by operation of law. It is not possible to accede to the submission of the learned Counsel.) of section3 provides that the `Textile Undertaking shall be deemed to include rights of the textile company in relation to the textile undertaking and the expression `right must be construed as an enforceable right. It hardly requires to be stated that a transferee of licensee cannot enforce the right to remain in possession as a licensee and not being an enforceable right, the licence cannot be construed as a right to attract the provisions of) of section3 of the Act. The licence granted by petitioner No. 1 is in the nature of permission to occupy a portion of the Bombay House, and that too, gratuitously. It is impossible to accede to the claim that the permission granted amounts to a right as contemplated by) of section3 and therefore the Custodian has right to occupy portion of Bombaysubmission is devoid of any merit. Once it is found that Tata Mills Limited had no enforceable right, then it is futile to suggest that Tata Mills Limited had a power, authority and privilege as contemplated by) of section3 and therefore the Custodian can take over possession of Bombay House. Shri Kapadia then submitted that(2) also provides that the expression `Undertaking includes all properties, movable and immovable, including lands, buildings etc. and the right to occupy portion of Bombay House is an asset which vests in the Custodian. The submission has no merit because in case the contention of the respondents that occupation of portion of Bombay House gratuitously is an enforceable right is not correct, then such occupation cannot be construed as an asset of Tata Mills Limited. In our judgment, the provisions of) of section3 are not atrracted and consequently, the letter written by respondents on January 16, 1984 demanding possession of undemarcated and unspecified portion of Bombay House was wholly withoutprinciples laid down by the Supreme Court are well settled and there cannot be any debate that while considering a beneficent piece of legislation, the courts should adopt the liberal construction. A reference was also made to the decision reported in (1988) 1 Company Law Journal 225  (S.C.), (Doypack Systems Private Limited v. Union of India and others), to point out that the expression in relation to must be construed widely. In our judgment, the reference to the decision is not appropriate. The provisions of) of section3 are wide in its ambit but it would certainly not include an unenforceable right. For example, if a person hands over his car to the textile mill for gratuitous use then it cannot be claimed that the car is an asset of the undertaking or the user of a car is a right vested in the undertaking and consequently it is open for the Custodian to take possession of the car.