Case: State Of West Bengal  Vs. Vishnunarayan And Associates P.Ltd

The management of the Undertaking of the Company namely the Great Eastern Hotel Ltd. was taken over by the State Government by invoking the provisions of the Great Eastern Hotel (Taking over of Management) Act, 1975. Subsequently, by the Great Eastern Hotel (Acquisition of Undertaking) Act, 1980 (for short the "Act of 1980"), the Undertaking of the Company i.e. the Great Eastern Hotel was taken over by the Government. The Government transferred the undertaking of the Company to the Great Eastern Hotel Authority (for short Hotel Authority), which was set up under Section 5 of the Act of 1980 except the lands and the building. On December 12, 1994, according to the direction of the State Government, the Great Eastern Hotel Authority issued a circular to various occupants of the premises of the hotel giving them an opportunity to establish if they had any right to remain in occupation but there was no response. On June 28, 1997, as the occupants failed to deliver possession, the representative of the Government went to the hotel premises and gave oral notice to the occupants to deliver possession. They were also informed that possession if not delivered, would be taken over by force. On June 29, 1997 the State Government removed the occupants from the hotel premises and took possession with the help of police.3. Some of the occupants of the hotel who were evicted by use of force are respondents in all these appeals. It is the undisputed case of the parties that the respondents were tenants of shops, offices and go-downs in the hotel under the erstwhile company and were in occupation of their respective portions. The respondents filed Writ Petitions before the High Court challenging the action of the Government in dispossessing them by force and prayed for restoration of possession claiming that they were lawful tenants having been inducted by the previous owners and even after coming into force of the Act of 1980, the Hotel Authority had dealt with them as tenants by accepting rent and that there was no lawful termination of their tenancy. It was also pleaded that such action of eviction by force with the help of police resorted to by the appellants lacked legal authority and was illegal, further it was also in violation of the principle of natural justice as the respondents were not given an opportunity of showing cause against their eviction.4. On behalf of the appellant-State, writ petitions were resisted before the High Court, inter alia, on the followingthat the tenancy of the respondents stood automatically terminated under the Act of 1980 and2. that under the provisions of the said Act they were legally bound to deliver possession of the suit premises to the State Government and on their failure to do so, they could be evicted by force by invoking the provisions of West Bengal Government Premises (Tenancy Regulation) Act, 1976 (hereinafter referred to as the "Act of 1976").It was also pleaded that as the suit premises were required for public purpose, so the government could resort to use of force for evicting the respondents.6. To appreciate the contention raised before us, it would be necessary to extract the definition of the expression "undertaking" in clause (f) of Section 2, Section 3 and 4 of the Act of2: Definitions. In this Act, unless the context otherwise requires,-(a) to (e) ...............(f) "undertaking of the company" means the properties, both movable and immovable, cash balances, reserve funds and other assets of the company including lands, buildings, machineries, plants, furniture, equipments, stores and any other property which may be in the ownership, possession, custody or control of the company in relation to its undertaking immediately before the appointed day and all books of accounts, registers and other documents of whatever nature relating thereto.Section 3: Acquisition of the undertaking of the company(1) On and from the appointed day, the undertaking of the company shall, by virtue of this Act, stand transferred to, and vest absolutely in the State Government.(2) Upon the vesting of the undertaking of the company in the State Government under sub-section (1), the State Government may, for efficient management and administration thereof, provide by notification for the transfer of the undertaking of the company (save the lands and buildings forming part thereof) to, and vesting thereof in, the Hotel Authority with effect from such date as may be specified in the notification.(3) The State Government may allow the lands and buildings mentioned in sub-section (2) to be used by Hotel authority for the purpose of giving effect to this Act on such terms and conditions as may be provided by notification with effect from the date of issue of the notification under sub-section (2).Section 4: General effect of vesting:(1) The undertaking of the company which has vested in the State Government under sub-section (1) of Section 3, shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, change, lien and all other encumbrances affecting it, and any attachment, injunction or decree or order of any court or tribunal restricting the use of the whole or any part of the undertaking of the company in any manner shall be deemed to have been withdrawn.(2) Any contract, whether express or implied, or other arrangement, whether under any statute or other wise, in so far as it relates to the affairs of the company in relation to its undertaking and in force immediately before the appointed day shall be deemed to have terminated on the appointed day.(3) Where any license or other instrument in relation to the undertaking of the company had been granted at any time before the appointed day to the company by the Central Government of the State Government or any other authority, the State Government shall, on and from the appointed day, be deemed to be substituted in such license or other instrument in place of the company referred to therein as if such license or other instrument had been granted to it.(4) On and from the date of transfer of the undertaking of the company to, and vesting thereof in, the Hotel Authority, that Authority shall be deemed to be substituted in the license or other instrument referred to in sub-section (3) in place of the State Government as if such license on other instrument had been granted to the Hotel Authority.(5) Any liability incurred by the company (including the liability, if any, arising in respect of any loans or amounts advanced by the State Government to the company together with interest thereon) after the management of the undertaking of the company had been taken over by the State Government shall, on and from the appointed day, be the liability of the State Government and shall, on and from the date specified in the notification under sub-section (2) of section 3, stand transferred to, and shall vest in, the Hotel Authority.(6) If, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any matter or business in respect of the undertaking of the company, instituted or preferred by or against the company, is pending, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertaking of the company or of anything contained in this Act and the suit, appeal or other proceeding may be continued, proceeded with and enforced by or against the State Government and on and from the date specified in the notification under sub-section (2) of section 3, the Hotel Authority.(7) Any person in possession or custody or control of the whole or any part of the undertaking of the company on the date immediately before the appointed day shall, on the appointed day, deliver the possession of such undertaking f the company or part thereof to the State Government or to such person as may be specified by the State Government in this behalf.(8) The State Government may take, or cause to be taken, such steps as it considers necessary for securing the possession of the undertaking of the company which has vested in the State Government under sub-section (1) of Section 3.The High Court rejected the contention that the eviction of the respondents was carried out for a public purpose as the respondents were dispossessed for improvement of the hotel, which was purely a commercial venture and, therefore, there was no element of public interest. The High Court also held that the Act of 1980 does not provide for use of force for eviction of tenants in the hotel premises and this Act is a self contained one. According to the High Court the Act of 1976 applies in respect of only residential properties of the government and cannot be used for eviction of the respondents by force us the premises were used for non-residential purpose.

Court's reasoning:
Though under sub-section (1) of Section 4 of the Act of 1980, the undertaking vested in the State Government free from any trust, obligation, mortgage, change lien and all other encumbrances, we are unable to agree with the learned Additional Solicitor General that under the said sub-section (1) the relationship of landlord and tenant in the case in hand was put to an end inasmuch as the tenancy could not be treated as trust, obligation, mortgage and change, etc. as stated in the said sub-section. In regard to sub-section (2) which provides that any "contract" in relation to the undertaking shall be deemed to have terminated on the appointed day, on the same analogy, we hold that by this deeming provision does not relate to the relationship of landlord and tenant which could not be said to have come to an end. Consequently, we find no force in the submission of Mr. Mukul Rohtagi and we hold that even after taking over the undertaking by virtue of the Act of 1980, the relationship of the landlord and the tenant continued and in place of the erstwhile company, the State Government stepped into the shoes ofManagement of the hotel was handed over to the Hotel Authority. The said Authority also accepted rents from the respondents and on December 12, 1994 on a direction by the State Government, the said Authority issued a circular to the respondents asking them to establish their rights, if any. As mentioned earlier, Mr. Mukul Rohtagi has submitted that as there was no transfer of lands and buildings to the Hotel Authority, the acceptance of rent by the said Authority would not bind the Government. We are unable to accept the contention as in our opinion the Authority acted on behalf of the government both while accepting rent and also issuing notices to the respondents. The premises in question are located within the hotel premises and on handing over the Management to the Authority, it acted on behalf of themake it clear that we are not expressing any opinion whether such steps may include action under the Act of 1976 or any other law in force in the State of West Bengal. We are of the opinion that the action of the appellants by removing the respondents from the premises in question with the help of police in destructive of the basic principle of rule ofstand has been taken by Mr. Rohtagi that powers given to the government and its officials by sub-section (8) of Section 4 of the Act of 1980 is akin to Section 47 of the Land Acquisition Act of 1894. Under Section 16, collector can take possession after the award is made and under Section 17, possession can be taken after notice under sub-section (1) of Section 9 of the Act of 1980 is issued. For taking the possession of the land from the landowner, in our view Section 47 cannot be invoked. As on June 28, 1997, the representative of the government gave oral notice of the respondents to deliver possession, Mr. Mukul Rohtagi has contended that the respondents had sufficient notice. We are unable to accept the contention inasmuch as direction was given to vacate the premises in question without any opportunity be showhold that the action of the State Government cannot be justified in law and accordingly we uphold the impugned judgment of the High Court.