Case: Vishnu Mahadeo Pendse  Vs. The Rajen Textile Mills Private Limited And Another

2. The facts giving rise to these appeals are briefly these. The lands of Survey Nos. 181 and 182A, owned by Vishnu Mahadeo Pendse, and the lands of Survey Nos. 176, 179A and 179B owned by Parashram Mahadeo Pendse, situate within the municipal limits of Barsi in district Sholapur were leased out by the owners to Barsi Spinning and Weaving Mills Ltd. (hereinafter referred to as Barsi Mills); Both leases were for a period of 99 years with effect from January 1, 1943. On an application of a creditor of the Barsi Mills, the High Court of Bombay made a winding up order on November 10, 1953. On October 5, 1954 all the assets of Barsi Mills including their tenancy rights in the said lands were sold by auction and purchased by one K. N. Madhwani. At the request of the auction purchasers the liquidator executed a conveyance of the lands in favour of the respondent Rajen Textile Mills (P) Ltd. (hereinafter referred to as the respondent Mills) on August 9, 1955. Sometime in 1957 the appellants started proceedings in the Court of the Mamlatdar under Section 31 of the Bombay Tenancy and Agricultural lands Act, 1948 (hereinafter referred to as the 1948 Act) for possession on the ground that they required the lands for personal cultivation. The Mamlatdar dismissed the application for possession on the view that the respondents were trespassers and as such that court had no jurisdiction. Then in 1961 the appellants instituted Suits Nos. 15 and 16 of 1961, out of which these appeals arise, in the Court of the Civil Judge, Senior Division at Sholapur, for recovery of possession of the lands and for several other incidental reliefs. The case made in the plaints was (1) that the leasehold rights of Barsi Mills in the lands were personal rights and not capable of being transferred by a liquidator in winding up proceedings, (2) that the auction sale and the conveyance in favour of the respondent Mills were contrary to the provisions of Sections 27 and 28 of the 1948 Act and therefore invalid, and (3) that the auction purchaser not being an agriculturist, the auction sale and the subsequent conveyance were void under Section 63 of the 1948 Act. The trial Court decreed the suit on the view that the auction sale and the conveyance contravened the provisions of Section 27, 28 and 63 of the 1948 Act. The respondents preferred appeals to the Bombay High Court challenging the decision of the trial Court; the High Court allowed the appeals and dismissed the suits. The High Court was of the view that (1) there was no term in the lease prohibiting Barsi Mills from transferring their leasehold rights nor was there any law prohibiting such transfers, and (2) the lands in dispute were held on lease for the benefit of an industrial undertaking, namely Barsi Mills, within the meaning of Section 88(1)(b) of the 1948 Act; Section 88 specifies the lands and areas to which the 1948 Act did not apply.

Court's reasoning:
Therefore, when Section 88(1)(b) speaks of lands held on lease for the benefit of an industrial or commercial undertaking it means lands used for agricultural purposes held on lease by an industrial or commercial undertaking. Section 88(1)(b) excluded inter alia the application of Section 27, 28 and 63 of the Act to lands used for agricultural purposes if such lands are held by an industrial or commercial undertaking as lessee. Thus it is plain that lands used for agricultural purposes by an industrial or commercial undertaking are directly covered by Section 88(1) (b). It is not necessary to refer to the proviso to section 43C which was inserted in the principal Act by the Amending Act XIII of 1956. The auction sale and the conveyance having taken place long before the proviso was engrafted cannot be affected by it.