Case: U.P.State Sugar Corporation Vs. Burhwal Sugar Mills Co. Ltd.

equipment and power plant), weight bridges, cranes, chimneys turbines and boilers (including the foundations, superstructure and roofing thereof pertaining to that factory;(ii) any engineering workshop, including machinery and equipment thereof;(iii) any chemical laboratory including any apparatus and equipment thereof;(iv) any motor or other vehicle or locomotive or railway sidings pertaining to that factory;(v) any dispensary or hospital or community or welfare centre exclusively for the benefit of workmen and other persons employed in that factory;(vi) all land (other than lands held or occupied for purposes of cultivation and grove lands) and buildings held or occupied for purposes of that factory (including buildings pertaining to any of the properties and assets hereinbefore specified and guest houses and residences of Directors, managerial personnel, staff and workmen or of any other person as lessee or licensee, and any store houses, molasses, tanks, roads, bridges, drains, culverts, tube wells, water storage or distribution system and other civil engineering works) including any leasehold interest therein;(vii) all limestone quarries pertaining to that factory, including any mining lease relating thereto;(viii) all electrical installations including any plant or equipment for the generation or transmission of energy, telephone equipment, furniture and fixtures pertaining to that factory or to any property or asset herein before specified;(ix) all tools, spare parts and stores pertaining to that factory;(x) all fire arms for the use of watch and ward staff employed in that factory;(xi) all maps, plans, sections, drawings and designs pertaining to that factory;(xii) All sugarcane, sugar in the process of manufacture for production and stocks of sugar and molasses and all bagasse and pressmud;(xiii) all books of account, registers and other documents pertaining to the factory or to any property or asset hereinbefore specified, but does not include cash-in-hand, cash at Bank] advances towards any income or other tax, investments and books, debts or rights, liabilities and obligations respecting any other contract." 13. A perusal of the above provision shows that generally all machines, tools, plants and other equipment which were being used for manufacturing sugar were acquired including the workshops, chemical laboratories, vehicles, dispensaries, hospitals, community or welfare centre exclusively used for the benefit of the workmen and other persons employed in the factory. Limestone queries, electrical installations, tools, spare parts and stores pertaining to that factory were also acquired. Under sub-clause (vi) all lands and buildings held or occupied for the purposes of that factory, guest houses and residences of directors, managerial personnel, staff and workmen or of any other person were also taken over. 14. The intention of the Legislature is clear that the land and buildings which were connected with or were in use for the purposes of the factory would be covered by clause (vi) of section 2 (h). Admittedly, the registered office of the respondent company was located at House No. 54/14 Canal Range, Kanpur. There is no material on the record to show the premises in question were being used or occupied for the storage of sugar. Similarly, there is no material on record to show that the house in question was being used as a guest house or for the residence of a Director of the factory. Respondent No. 1 is a registered company and is running a sugar factory at Barabanki with its registered office in House No. 54/14 Canal Range, Kanpur. Under the Act it is the factory along with its properties which were connected with or were in use for the purposes of the factory which were acquired and not the properties and assets of the company running that factory. The Act specifically differentiates between a company owning a sugar undertaking and the sugar undertaking itself. The Company is much wider entity as against the undertaking which is only one of the assets of the company. The Legislature deliberately did not touch the company and acquired only the undertaking as per the objects of the Legislature. registered office of the company is located in House No. 54/14 Canal Range, Kanpur which is owned and possessed by the company and is not a part of the Schedule Undertaking and, therefore, the same could not vest in the State. Handing over of its possession by the Receiver to the appellant was illegal and contrary to the provisions of the Act.15. Under the U.P. Sugarcane (Purchase Tax) Act 1961 the tax is levied and is payable on the manufactured sugar by a sugar factory before the sugar can be taken out from the factory campus except when it is kept in a godown situated outside the factory campus and is approved as such by the assessing authority. Section 3A of this Act reads: "Payment of tax before removal of sugar factory:- (1) No owner of a factory shall remove, or cause to be removed any sugar produced in the factory on or after the first day of October, 1971, hereinafter referred to as the said date, either for consumption, or for sale or for manufacture of any other commodity in or outside the factory. Until he had paid towards the tax levied under Section 3 a sum specified under sub-section (2) sub-section (3) or sub-section (4) as the case may beProvided that such sugar may be deposited without payment of any such sum in a godown or other place of storage approved by the assessing authority and where it is so deposited it shall not be removed therefrom until the sum as aforesaid has been paid..." 16. The building in question at Kanpur or any part of a it was never approved or used as a godown of the factory under the above said provisions. The plea taken by the respondent that the premises in question was being used as a godown to store the sugar is therefore not sustainable. As pointed out earlier, there is no material on record to show that the premises in dispute were being used as a residence of a Director or a guest house. The plea raised by the appellant to this effect is also rejected. 17.

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

Explanation:
1[ds]The intention of the Legislature is clear that the land and buildings which were connected with or were in use for the purposes of the factory would be covered by clause (vi) of section 2 (h). Admittedly, the registered office of the respondent company was located at House No. 54/14 Canal Range, Kanpur. There is no material on the record to show the premises in question were being used or occupied for the storage of sugar. Similarly, there is no material on record to show that the house in question was being used as a guest house or for the residence of a Director of the factory. Respondent No. 1 is a registered company and is running a sugar factory at Barabanki with its registered office in House No. 54/14 Canal Range,The building in question at Kanpur or any part of a it was never approved or used as a godown of the factory under the above said provisions. The plea taken by the respondent that the premises in question was being used as a godown to store the sugar is therefore not sustainable. As pointed out earlier, there is no material on record to show that the premises in dispute were being used as a residence of a Director or a guest house. The plea raised by the appellant to this effect is also rejected.