Case: U.P. State Sugar &amp; Cane Development Ltd Vs. Raza Buland Sugar Co. Ltd.

encumbrance or lien, trust or similar obligation (excepting any lien or other obligation) in respect of any advance on the security of any sugar stock or other stock-in-trade) attaching to the undertaking;Provided that any such debt, mortgage, charge or other encumbrance or lien, trust or similar obligation shall attach to the compensation referred to in Section 7, in accordance with the provisions of that section, in substitution for the undertaking;Provided further that a debt, mortgage, charge or other encumbrance or lien, trust or similar obligation created after the scheduled undertaking or any property or asset comprised therein had been attached, or a receiver appointed over it, in any proceedings for realization of any tax or cess or other dues recoverable as arrears of revenue shall be void as against all claims for dues recoverable as arrears of revenue." 6. On a bare reading of Section 2(h) the position is clear that the Act intends to keep in tact the identity of the company. It is only the scheduled undertaking as defined under Section 2(h) of the Act. It vests in the Corporation under Section 3 of the Act. Therefore, as noted above, the real controversy is in regard to interpretation of clause (vi) of Section 2(h) of the Act which relates to land and buildings of the company which have been acquired under the Act. Clause (vi) can be divided into two parts i.e. (i) land and (ii) buildings. The same reads as follows: "(1) all lands other than the lands held or occupied for the purpose of cultivation and grove lands.(2) Buildings - held or occupied 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 workers 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." 7. The definition in respect of land contemplates that every kind of land shall stand vested under section 3 of the Act except such lands which are held or occupied for the purpose of cultivation and grove land of the company whose land has been acquired. The burden of proof is upon the company to establish that the lands or any specified part of it were held or occupied for the purpose of cultivation or it was grove land because it is the company which has the knowledge about the nature of user of the land which was in its occupation. This can be established by evidence. It is required to be established that the land was held or occupied for the purpose of cultivation and grove land. If the company fails to prove that aspect, the land vests in the Corporation under Section 3 of the Act and be deemed to have been transferred to the Corporation. 8. In respect of buildings the burden of proof was on the Corporation to establish that the buildings were held or occupied for the purpose of factory. The description of buildings under clause (vi) of Section 2(h) is not in the same language as in respect of lands. While defining lands the words used are "other than" but in respect of buildings such words are missing and therefore the Corporation has to lead the evidence to prove that the buildings held or occupied by the company were used for the purpose of factory and obviously the burden is on the person who claims exclusion. 9. In New Satgram Engineering Works and Anr. v. Union of India (AIR 1981 SC 124 ) this Court held that the difference in the language between the two expressions "used substantially" and "solely used" was obvious. It was emphasized that the user must be seen on the date of vesting. It was further made clear that the workshop or building constructed initially for the purpose of coal mine cannot by itself being diverted to other purpose and ceased to belong to the mines. It was noted that what is of the essence is whether the workshop or the building originally formed a part and parcel. The subsequent user may not be very material. In M/s Doypack System Pvt. Ltd. v. Union of India and Ors. (AIR 1988 SC 782 ) this Court explained the meaning of phrases "pertaining to" and "in relation to" and "arising out of". It was clarified that these expressions used in the deeming provisions are used in the expansive sense. It was observed as follows: "The words "pertaining to" and "in relation to" have the same wide meaning and have been used interchangeably for among other reasons which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word "pertain" is synonymous with the word "relate". The expression "in relation to" (so also "pertaining to") is a very broad expression which presupposes another subject matter." 10. In the instant case, only PW-1 was examined by the plaintiffs whose evidence does not in any way help the plaintiffs. 11. So far as the shops are concerned in respect of which relief has been granted to the plaintiffs, it is noted that they came into existence after construction in 1974 i.e. subsequent to 1971. It has also come in evidence that the properties have been purchased and acquired out of the fund of the company. The trial Court categorically held that there was no evidence to show that any other business was being carried on there. In Writ Petition No.315 of 1980 it was brought on record that the Sugar Undertaking was held by the plaintiffs from July 1971 to January 1979 on behalf of the Corporation. Hence, the shops on Nainital Road were constructed out of the funds of the Sugar Undertaking and since the cash was converted into immovable properties, those shops were clearly covered by the definition of scheduled undertaking. 12.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]In respect of buildings the burden of proof was on the Corporation to establish that the buildings were held or occupied for the purpose of factory. The description of buildings under clause (vi) of Section 2(h) is not in the same language as in respect of lands. While defining lands the words used are "other than" but in respect of buildings such words are missing and therefore the Corporation has to lead the evidence to prove that the buildings held or occupied by the company were used for the purpose of factory and obviously the burden is on the person who claims exclusion.So far as the shops are concerned in respect of which relief has been granted to the plaintiffs, it is noted that they came into existence after construction in 1974 i.e. subsequent to 1971. It has also come in evidence that the properties have been purchased and acquired out of the fund of the company. The trial Court categorically held that there was no evidence to show that any other business was being carried on there. In Writ Petition No.315 of 1980 it was brought on record that the Sugar Undertaking was held by the plaintiffs from July 1971 to January 1979 on behalf of the Corporation. Hence, the shops on Nainital Road were constructed out of the funds of the Sugar Undertaking and since the cash was converted into immovable properties, those shops were clearly covered by the definition of scheduled