Case: National Textile Corporation Vs. S State of Maharashtra

( 2 ) THE few facts giving rise to the filing of Misc. Petition No. 320 of 1964 may be stated. The originalThe Ahmedabad Jupiter Spg. Wvg. andmfg. Co. Ltd. , owned the land in question as a part of the Mill premises situate at Parel Bombay. By a notification datedissued under section 4 of the Land Acquisition Act the State Government notified that the said land admeasuring 5900 sq vds. was likely to be needed for public purpose viz. for a Municipal School and Play Ground and it was notified that if the government was satisfied that the said land was needed for the aforesaid purpose, the final notification to that effect under Section 6 of the Land acquisition Act would be published in due course and the Deputy Collector of bombay was appointed as an Officer to perform the functions of the Collector under Section 5a of the said Act in respect of the said land. objections were invited and the original petitionerCompany lodged its objections and after a hearing was given a report was submitted by the Deputy Collector to the State government and on a consideration of the report and after being satisfied that the said land was needed to be acquired at the public expense of the Bombay municipal Corporation for the public purpose mentioned above the State government issued a notification under Section 6 of the Act onand the Special Land Acquisition Officer (7), Bombay was appointed under Section 3 (c) of the said Act to perform the functions of a Collector for all proceedings thereafter to be taken in respect of the said land. The schedule to the notification gave particulars of the land in respect whereof the same was issued and also stated the public purpose for which the said land was being acquired viz. for Municipal School and Play Ground Notice under S. 9 of the Act was issued onand served upon the original petitioner64 the originalfiled Misc. Petition No. 320 of 1964 challenging the said acquisition. The acquisition was challenged on two grounds: (1) that the procedure of direct negotiation under Section 90 of the bombay Municipal Corporation Act had not been followed in the case and therefore the action taken under Section 91 of that Act was bad and (2) that the impugned notification had been issued mala fide inasmuch as the area which was sought to be acquired was far in excess and beyond the reasonable requirements of a Municipal School and play ground. The learned Judge negatived both the grounds on which the acquisition was sought to be challenged before him. Relying upon an unreported judgment delivered onin Misc. Petition No. 132 of 1965 he took the view that negotiations for acquisition of land by private agreement were not a condition precedent to the exercise of powers conferred upon the State Government Under Section 4 of the land Acquisition Act. It may be stated that this view taken by the learned single judges in these aforesaid two Misc. Petitions has been upheld by the Supreme court in the case of Ambalal Purshottam v. Ahmedabad Municipal Corporation reported in. On the other question as to whether the area which was sought to be acquired was far in excess of reasonable needs of a municipal School and play ground, he took the view again relying upon the two supreme Courtsin the case of Smt. Somawanti v. State of punjab reported in and the other in the case of Raja Anand brahma Shah v. State of Uttar Pradesh reported in that unless thewas in apposition to point out that this acquisition, which it is said was far in excess of the real need, was being done under colurable exercise of power or was malafide, the petitionercompany could not succeed in their heir challenge to the impugned notification. He further took the view that the question whether the land that was sought to be required was really needed or not or was far in excess of the real need or not was the matter which the Government had to decide which the Government had to decide before issuing the notification under Section 6 of the Act and that therefore unless it was shown that the area which was sought to be acquired was so excessive as to lead the Court to come to a conclusion that the proposed acquisition constituted a colourable exercise of power or was mala fide, the petitionerCompany could not succeed before him and on he facts of the case he further took the view that thehad failed to establish that the area sought to be acquired was so much far in excess of the real need as to constitute the purported acquisition mala fide. An application was made on behalf of the petitionerCompany before the learned Judge at a subsequent stage of hearing for permission to lead oral evidence to establish their contention that the area sought to be acquired was far in excess of the real need of the Corporation for a Municipal School and play ground. Since the application was made at a late stage the learned Judge rejected that application. On the materials that were placed before him he took the view that the petitionerscompany had failed to establish its case. He therefore, dismissed the petition with costs. It is this order passed by the learned Judge that is challenged in the he present appeal before3 ) IT appears that since the textile undertaking of the original petitioner company had become a sick textile undertaking, onthe management thereof had been taken over by the Central Government under the industries (Development and Regulation) Act. 1951. On 21st September, 1974, an Ordinance called the Sick Textile Undertakings (Nationalisation) Ordinance , 1974 was promulgated where under with effect from the appointed day i. e. 1st April 1974 the sick textile undertaking of the petitionercompany became vested in the Central Government and immediately it further stood transferred and vested in the National Textile Corporation. On. 21st December 1974 and underSubsection (2) of Section1 of the said Act the provisions of Section 32 and 33 of the said Act came into force at once, that is to say , on the date when the enactment was brought on the Statute Boom and the remaining provision of the Act were declared to have come into force on 1st April 1974 and the ordinance was repealed. In view of Section 3 of the said Act the National Textile corporation made an application to us for being substituted in place of the original appellant in this appeal and the Corporation also sought permission to amend the petition by incorporating certain additional grounds on which it wanted to challenge the purported acquisition. That application was granted and that is how the National Textile Corporation appears as the appellant before us in the appeal.

Court's reasoning:
l for the appellant has strongly relied upon the expression shall vest absolutely in occurring in Section 3 (1) of the said Act and has further relied uponsubsection (2) of Section4 for the purpose of contending that the land has so vested in the Central Government freed from liability of being acquired under the provisions of the Land AcquisitionAct. There is no doubt that the expression "shall vest absolutely in" has been used. in(1) of Section 3. But that itself will not show that the land in question had vested in the Central Government free from liability of being acquired under the provisions of the Land Acquisition Act in other words, it is essential that the notifications in question must amount to or fall within the phrase all other encumbrances occurring insubsec (2) of Section 4and unless the notifications do fall within the purview of that expression occurring insubsec (2) of Section 4the contention of Mr. Dalal cannot obviously beION (2) of Section 4 of the Act consists of two parts; the first part provides that all property of sick textile undertaking as has been referred to in section 4 (1) shall by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other encumbrances affecting it, the second part provides that any attachment, injunction or decree or order of any Court restricting the use of such property in any manner shall be deemed to have been withdrawn. A close analysis of the first part shows two things: first that general words viz. all other encumbrances follow specific words such as any trust obligation, mortgage, charge, lien" and secondly the specific words that precede the general words speak of types of encumbrances occurring in the first part of(2) will have to be construed ejusdem generis and as such the said phrase will include only such encumbrances that partake the nature of the types of encumbrances specified earlier. Thusthe question is whether the notification under Section 4 and Section 6 of the Land acquisition Act create such an encumbrance on the property which partakes the nature of any trust, obligation, mortgage, charge or lienIn other words, the encumbrance must be of such a nature that upon enforcement thereof the liability thereunder is satisfied that is to say the liability to meet beneficial interest under a trust or the liability arising under an obligation or a mortgage or charge or lien is satisfied and we do not think that by reason of issuance of the notifications in question any encumbrance of this nature is created on the property in question. The notifications under Section 4 and 6 of the Land acquisition Act do not create any liability which is required to be satisfied from out of the property to which the said notifications relate and therefore, in our view, the notifications cannot be regarded as creating any encumbrance falling within the phrase all other encumbrances occurring insubsection (2) ofsection 4. It is true that by reason of the notifications the land in question is subjected to the liability of being compulsorily acquired under the provisions of the Land Acquisition Act but that is not the liability contemplated by the phrase all other encumbrances occurring insubsection (2) ofSection 4/ In our view, the matter cannot fall under the second part of(2 ). It is true that by reason of the notifications the right to use the property after making improvements therein is to a limited extent affected in view of clause seventhly of Section 24 of the Land Acquisition Act. but the restriction on the use of the property in that manner is not the restriction on the sue thereof by reasons of any direction of the Court in the nature of attachment injunction, decree or order. In this view of the matter, it is difficult to accept Mr. Dalals contention that the land in question has vested in the Central Government or the National textile Corporation freed from the effect of the two notifications issued under section 4 and Section 6 of the Land Acquisition Act by reason of Section 3 read with Section 4 (2) of the Act 57 of0 ) MR. Dalal , however, urged that the phrase all other encumbrances occurring in Section 4 (2) of the said Act ought not to be construed by adopting the doctrine of ejusdem generis and if it was not so contoured the phrase would have a wider meaning and the notifications in question should be regarded as creating an encumbrance in falling within Section 4 (2) of the Act.We are not inclined to accept this submission of Mr. Dalal, for both the requirements are satisfied for applying the rule of ejusdem generis but even if the phrase all other incumbrances occurring insubsection (2) ofSection 4 were to be given a wide meaning by not confining it to types of encumbrances indicated earlier, still it is difficult to accept contention of Mr. Dalla that the notifications in question constitute or create an encumbrance on the land in11 ) THERE is yet another aspect of the matter which will have a bearing on the question under consideration. The sole object or the intention of making provision likesubsection (2) ofSection 4 of the Act appears to be that all property of the sick textile undertaking should vest in the Central Government freed and discharged from encumbrances. In other words, whatever encumbrances that might be subsisting on the property should no longer bind the Central Government or the Textile Corporation which should be free to deal with it thereafter as it likes and if that be the real object or intention ofsubsection (2) of4. then clearly the liability of being acquired that gets attached to the land by reason of the issuance of the notifications under the land Acquisition Act was never intended to be covered by the expression all other incumbrances occurring insubsection (2) ofSection 4. Assuming that this land got vested in the Central Government and thereafter in the National textile Corporation under Section 3 read with Section 4 (2) freed from the aforesaid burden or liability of being acquired. it was not disputed before us by mr. Dalal that it was open to the appropriate Government immediately thereafter to acquire that very land by issuing fresh notifications under Section 4 and Section 6 of the Land Acquisition Act and we do not see any hurdle in the appropriate Government acquiring the very land after the same got so vested in the National Textile Corporation under Section 3 of the Act. If, therefore, after the property had vested in the national Textile Corporation the same could be acquired by appropriate Government we fall to understand as to what purpose could be achieved by holding that the earlier notifications issued under the Land acquisition Act created an encumbrance which the National Textile Corporation got rid of underSubsection (2) of Section4 of the Act No. 57 of 1974. Looking at the question from his angle, we are of the view that the phrase all other incumbrances occurring insubsection (2) ofSection 4 cannot include any such burden or liability to which the land is subjected by reason of issuance of notification under Section 4 or Section 6 of the Land Acquisition12 ) IN this view of the matter it is clear to us that the provisions of Section 4 (2)of the Act cannot be availed of by the appellant before us for the purpose of contending that the Notifications in question in ceased to be effective qua the land in question and, therefore , the contention of Mr. Dalla must13 ) AS regards the other contention we do not agree that the learned Judge was in error in rejecting the applications of the original petitioner to lead oral evidence in support of its case that the purported acquisition was by way of colourable exercise of power or mala fide. Initially an application was made for permission to lead oral evidence in support of that plea onbut the type of evidence that was offered at that time was the evidence that the offered at that time was the evidence of an expert which would have been in the nature of opinion evidence. The learned Judge, therefore , by his order dateddeclined to give permission to the original petitioner to lead that type of evidence. Admittedly even that type of evidence was not ready with the original petitioner and an adjournment was sought which was refused. Thereafter, the hearing of the case proceeded and at the conclusion of the hearing the petitioner desired to have a further opportunity to settle the matter with the municipal authorities and therefore the learned Judge reserved his judgment with a view to give the petitioner time to negotiate a settlement. When the matter was placed on board for judgment onanother application was made seeking permission to lead oral evidence of persons who would depose to the area required by Municipal schools constructed during the relevant period between the two notifications i. e. between 1961 and 1964 in order to show that having regard to such area which was regarded as sufficient the present case was one of colourable exercise of power. The learned Judge rejected that application as in his view the hearing the case the had been concluded and he had reserved the judgment only to enable the petitioner to negotiate a settlement with the municipal authorities which it is desired to do and as such the petitioner was not entitled to make a second request for leading oral evidence. The learned Judge has also noted in his judgment that this type of case had not been even made out by the petitioner in the petition showing the area occupied by municipal schools during the relevant period i. e. between 1961 and 1964. He, therefore, rejected that request and proceeded to deliver his judgment. In the circumstances mentioned by the learned Judge we do not think that he was wrongly rejected the prayer made he has wrongly rejected the prayer made by the original petitioner to lead oral evidence in the case. In the absence of any material on record the learned Judge took the view that the petitioner had failed to establish that it was a case of colourable exercise of power and or that the purported acquisition was mala fide and we are of the view that the finding of the learned Judge in that behalf is correct.