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

U.P. State Sugar Corporation Ltd, appellant herein, is a company registered under the provisions of the Companies Act, 1956, It is owned and controlled by the State Government. In the year 1971, U.P. Sugar Undertakings (Acquisition) Ordinance, 1971 (U.P. Ordinance 13 of 1971) was issued which was replaced by U.P. Sugar Undertaking (Acquisition) Act, 1971 (for short the Act). The objects of the Act as given in the Statement of Objects and Reasons are asowners of certain sugar mills of the State or their lessees had created serious problems for the cane-growers and labour which created an adverse impact on the general economy of the areas, where those mills were situate. The only solution of these problems was for the State Government to take immediate steps to acquire with a view to renovating those and rehabilitating mills or carry out improvement therein.2. Accordingly, a legislation was prepared to acquire such mills, which provided for acquisition of properties and assets pertaining to those mills and for payment of compensation for the same and for the replacement of the dues of cane-growers, labourers and of the Government out of the amount or compensation and for other connected and incidental matters.3. To prepare the mills for crushing before the next crushing season, the usual annual repairs (which are carried out during off season) had to be carried out well in time and since the time available was short, immediate action was called for. As both the Houses of the State Legislature were not in session, the Governor promulgated the Uttar Pradesh Sugar Undertakings (Acquisition) Ordinance, 1971 on July 3, 1971.4. The State Government have since decide that the dues of cane-growers and labourers should be given higher priority than the State Governments taxes and other unsecured dues.Both the writ petitions were taken up for hearing together and disposed of by a common order. Writ Petition No. 2292 of 1983 was allowed in part. Out of the three properties the possession of which was admittedly taken over by the appellant, the High Court held that the House No. 54/14 Canal Range, Kanpur could not vest in the Corporation as it housed the registered office of the Company. Its possession could also be not transferred to the Corporation Even if some sugar was stored in that building as alleged by the appellant it would not in any manner affect the dispute on merits. So far as other two properties, namely, the car and the land appurtenant to the factory which was being used immediately before the acquired date for the purposes of parking of cane carts and trolleys etc. it was held that the same were being used for the purposes of factory and, therefore, the appellant could retain possession of those properties. In so far as other items were concerned the case of the appellant was that those items had neither vested in the appellant nor their possession had been taken. The High Court concluded that those items naturally would be in possession of the Receiver appointed by the State and accordingly directed the Receiver to give back the possession of those properties to respondent No. 1.10. Aggrieved against the judgment of the High Court the appellant has filed the present appeals. The only controversy raised in these appeals in regarding House No. 54/14 Canal Range, Kanpur.

Court's reasoning:
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.