Case: State Of U.P Vs. M/S Lakshmi Sugar &amp; Oil Mills Ltd

The respondent-Lakshmi Sugar and Oil Mills Limited established a sugar factory in District Hardoi of the State of Uttar Pradesh as early as in the year 1933. Several such sugar mills having gone sick in the State of Uttar Pradesh, the State legislature enacted what is known as Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971. Twelve private sugar manufacturing units in the State of Uttar Pradesh were acquired by the State Government under the said Act and vested in the appellant-Corporation so as to revive such sick mills and, thereby, protect the interest of cane growers in the State. Section 3 of the Act, inter alia, provided that "on the appointed day, every scheduled undertaking shall, by virtue of this Act, stand and be deemed to have stood transferred and vested in the Corporation free from any debt, mortgage charge or other 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." The expression "scheduled undertaking" was defined in Section 2(h) of the Act, inter alia, to mean an undertaking engaged in the manufacture or production of sugar by means of vacuum pans and with the aid of mechanical power in a factory specified in any of the Schedules to the Act and comprising plants, machinery and other equipments and assets enumerated thereunder.4. The respondent-sugar factory, it is common ground, figured at Item- 7 of the Second Schedule to the Act and, therefore, stood vested in the appellant-Corporation with effect from 28th October, 1984, the date appointed for vesting of undertakings specified in the said schedule in terms of notification dated 27th October, 1984. Possession of the respondent-Sugar Mill was taken over by District Magistrate, Hardoi on 28th October, 1984 and handed over to the appellant-Corporation.5. Consolidation proceedings appear to have started in Village Nanakganj Grunt, Pargana Gopamau, Tehsil and District Hardoi sometime in June, 1986 and a mutation in respect of land held by the respondent-Company and situated at Dheer Maholia passed by the SDO, Sadar, Hardoi on 14th February, 1987. A similar order of mutation was passed for another parcel of land situated at Nagheta by the SDO, Sadar, Hardoi on 19th February, 1987. In regard to the third parcel of land situate in village Nanakganj Trust, the appellant-Corporation acting through its General Manager addressed a letter dated 26th August, 1992 to the Consolidation Officer, Hardoi requesting him to record the name of the appellant-Corporation in place of the respondent-Company. The letter pointed out that the said parcel of land had been acquired by the State Government and stood vested in the appellant-Corporation with effect from 28th October 1984 under the provisions of the U.P. Sugar Undertakings (Acquisition) Act, 1971 read with the Amendment Act of 1985.6. The Consolidation Officer registered the request as Case No.9760 and initiated proceedings in which he issued notices to the respondent-M/s Lakshmi Sugar Mills at its registered office. The respondent-Company remained unrepresented even after the notice was pasted in public places and announcement by beat of drum regarding the proceedings. The Consolidation Officer eventually passed an order on 2nd September, 1992 directing that land measuring 122.4.0 Bighas in Khata No.132 in CH 23, shall be shown in the ownership of the appellant-Corporation in place of the respondent-company.7. Against the order passed by the Consolidation Officer the respondent-company appealed to the Settlement Officer, Consolidation, Hardoi who dismissed the same by his Order dated 24th January, 1997. The respondent-Company then preferred a revision before the District Consolidation Director/Collector, Hardoi who concurred with the view taken by the officers below and dismissed the Revision Petition on 6th December, 2006.8. Aggrieved by the orders passed by the Consolidation authorities, the respondent-Company preferred Writ Petition No.187 (Consolidation) of 2007 before the Lucknow Bench of the High Court of Allahabad. By its order dated 30th April, 2010 impugned in these appeals, the High Court has allowed Writ Petition No.187 (Consolidation) of 2007 and quashed the orders passed by the Consolidation authorities with the directions to which we have made a reference in the beginning of this judgment.

Court's reasoning:
16. It is evident not only from a plain reading of Section 2(h) (supra) but also the interpretation placed upon the same by this Court that grovelands and lands held for cultivation are excluded from the definition of undertaking. But all other lands and buildings if held or occupied for the purpose of the sugar factory would comprise the undertaking and would upon acquisition vest in thenoticed earlier it is not the case of the respondent-company that although the land was non-agricultural and although the same was held and occupied for industrial purposes, the industrial purpose for which it was held by the company was un-related to the sugar factory. No such plea having been raised or urged at any stage, the subject land has been rightly taken as vested in the Corporation. The land in question is situate in the immediate vicinity of the sugar factory. The fact situation is thus completely different from that of Burwal Sugar Mills case (supra) where the registered office of the company sought to be taken over was in Kanpur while the sugar factory was itself at Baragaon. Distance between the factory and the asset held by the company may not be a true test for determining whether the same is a part of the undertaking but in the absence of any evidence, showing cultivation, the close proximity of the land to the factory is a strong circumstance that cannot be ignored.21. In the circumstance, therefore, we find it difficult to uphold the order passed by the High Court not only because the High Court acted as if it was sitting in appeal over the findings of fact recorded by the authorities below but also because the High Court failed to notice that the land was exempted from the Ceiling Act on the ground of being used for industrial purpose which in the context of the present case meant that it was used for the purpose of sugar factory.