Case: Custodian Of Textile Undertaking,Bombay Vs. Hall &amp; Anderson Ltd

to the said mill was not a part of the textile undertaking. However, this Court came to the conclusion that as a result of modernization resulted in a formation of mill of a much smaller size, the land had become surplus. It was lying vacant. It was not in dispute that the surplus land was under the ownership of the textile undertaking. It was in fact the land on which the different division of the old mill had been functioning. Thus, this Court held that the land was an integral part of the textile undertaking. In the instant case, position is otherwise. The textile mill has been under the ownership of M/s Hall & Anderson at Calcutta. 12. In M/s Doypack Systems Pvt. Ltd. v. Union of India & Ors., AIR 1988 SC 782 , this Court while interpreting the provisions of Section 3 of the Swadeshi Cotton Mills (Acquisition and Transfer of Undertaking) Act, 1986, observed that the provisions of such a statute require broad and liberal interpretation in consonance and conformity with the principles enshrined in Articles 39B and 39C of the Constitution. In the said case, the issue was whether shares purchased using funds of the textile company could be held to be covered under the terms of said provision. The ratio of the said case has no application in the present case, as, admittedly, in that case the shares in question had been purchased from the funds of the textile company. In the instant case, the fact situation is the other way around. M/s Shree Madhusudan Mills Ltd., Bombay, had been purchased using funds generated from the premises at Calcutta. 13. We have gone through the provisions of the Act 1995. Section 8 thereof, provides for payment of amount to owners of textile undertaking: "8. Payment of amount to owners of textile undertakings - The owner of every textile undertaking shall be given by the Central Government, in cash and in the manner specified in Chapter VI, for the transfer to, and vesting in, it, under sub-section (1) of section 3, of such textile undertaking and the right, title and interest of the owner in relation to such textile undertaking, an amount equal to the amount specified against it in the corresponding entry in column (4) of the First Schedule."However, the column (4) of the First Schedule, so far as the present textile industry is concerned, reads as under:Sl.No.Name of the textile undertakingName of the ownerAmount No. (in rupees)(1) (2) (3) (4)11. Shree Madhusudan Pandurang Budhkar BombayMills, Shree Madhusudan Marg, Mills Ltd., 31, Chowringhee Road,Calcutta – 162,70,85,000From the above, it is evident that what has been acquired is the property at Bombay. Column 3 makes it clear that it was under the ownership of M/s Shree Madhusudan Mills Ltd., Calcutta, and after the property acquired at Bombay, a sum of Rs.2,70,85,000/- had been paid as compensation. No compensation has been paid for the premises at Calcutta." 14. The relevant part of the judgment in Sitaram Mills (supra) reads as under: "The High Court completely ignored the fact that all the assets of the company were held in relation to the textile business. The company required all its real estate in the nineteenth century when it was formed for carrying on textile business and, admittedly, no new assets had been acquired by it thereafter.........Even for determining the total compensation to be paid on nationalization, the Task Force takes values into account the total surplus lands of the company and does not exclude any land belonging to the so-called Real Estate Division......" Therefore, it is evident that in the said case, the land appurtenant to the textile undertaking and belonging to it, was converted into real estate and even on nationalisation, for the purpose of determining the compensation, the said land had been included in the assets. In the instant case, a contrary picture emerges as explained hereinabove. More so, the chart quoted from the Act, does not show that for determining the compensation, premises property at Calcutta had also been included. As the premises in Calcutta does not form part of or has been appurtenant to the textile industry, the judgment in M/s Doypack Systems Pvt. Ltd. (supra) is also distinguishable. 15. This Court in Minerva Mills Ltd. v. Union of India, AIR 1986 SC 2030 , dealt with judgment of this Court in Sitaram Mills (supra) and held as under: "25. The learned Counsel for the petitioners has placed reliance upon an observation of this Court in National Textile Corpn. Ltd. v. Sitaram Mills Ltd. The question that was involved in that case was whether surplus land in the precinct of the taken-over undertaking was an asset in relation to the undertaking. It was observed: (SCC p. 133 bottom) "The test is whether it was held for the benefit of, and utilised for, the textile mill". Relying upon this observation, it is contended by the learned Counsel for the petitioners that as the vacant land, in the instant case, has not been utilised for the undertaking, it is not an asset of the undertaking. We do not think that in Sitaram Mills case this Court really meant to lay down a proposition that in order that a piece of land be considered as the asset of the textile undertaking, it must be held for the benefit of and utilised for the undertaking in question. Can it be said that a piece of land which is held for the benefit of but not utilised for the textile undertaking, as in the instant case, is not an asset of the undertaking? The answer must be in the negative. In Sitaram Milks case that observation was made in the context of facts of that case, namely, that the surplus land was held for the benefit of and also utilised for the textile undertaking." (Emphasis added) 16. In view of the above, we do not see any cogent reason not to concur with the view expressed by the High Court.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]the respondent initially started the business of selling various goods and articles from the departmental store operating from the premises under the name and style of M/s Hall & Anderson. The Company purchased the textile mill in Bombay on 12.6.1950 and commenced the additional business of manufacturing and selling cotton textile. The departmental store continued its business upto 1976. Subsequent thereto, the building was developed as an income yielding asset and as such started the business of letting out various portions of the said building to different business organizations. The total area of the premises is about 4 acres and on an area of 345 sq. ft. the registered office of the company is situated. The business of textile mill remained completely separate from the premises business of letting out. They had not been interconnected and the premises business has no connection with running the textile undertakings. The accounts of the property business were separately and independently maintained. Staff engaged in the property business were also not connected. They had no concern with the working of the textile mill, except the Secretary of the Company, as he had to be the same person in view of the requirement of the provisions of Companies Act, 1961. No amount for the textile mill business had ever been borrowed from any financial institution or utilized for its running. Profit and Loss accounts of both the business have been prepared separately in spite of amalgamation since 1970. The books of account had been maintained for both the business separately. The premises had been mortgaged with the Central Bank of India, Bombay by deposit of title deeds with a view to secure advance granted by the Central Bank of India to the Company for the purpose of running the textile mill, but it stood only as a security. It has not become an integral part of the textile industries or had any nexus or relation with the working of textile mill. In the counter affidavit, reference has been made to the report of the Committee that disposal of immovable property of the Company, i.e., premises would provide substantial amount for making the undertaking viable within a few years provided, the said premises was sold. Further reference had been made to the observations made by the task force under the terms of reference that Company would be viable with the sale ofdo not see any cogent reason not to concur with the view expressed by the High Court.