NATIONAL TEXTILE CORPORATION AND ANOTHER versus STATE OF MAHARASHTRA AND OTHERS

NATIOC\AL TEXTILE CORPORATION AND ANOTHER

STATE OF MAHARASHTRA AND OTHERS

April 12, 1977

[A. C. GUPTA AND P. S. KAILASAM, JJ.]

Sick Te.tt£le Undertakings (Nationalisation) Act, 1914-Inc1anbra11ce-Meani11g of-"A'otificatjon issued under Land A'cquisition Act-If an incurn-brance.

The Stat...-: Government issued two notifications under ss. 4 and 6 of the Land Acquisition Act seeking to acquire certain land belonging to textile mill. When the Letters Patent Appeal of the Textile mil! was pending before the High Court the mill was taken over by the Central Government and later the appeJlant \vas substituted for the original appellant.

By virtue of s. 3 of the Sick Textile Undertakings (Nationalisation) Act, 1974 the management of every sick textile mill vested absolutely_ in the Central ·Government and later in the appellant. Section 4(2) of the Act provides that all property which vested in the Central Government shall, by force of such vesting, be freed and discharged from trust, obligation, mortgage, charge, lien and all otlier incu111brances affecting it and any attachment, injunction or decree or order of a:iy court restricting the use of such property in any manner shall be deemed to have been withdrawn. The appellants• contention that by reason of s. 4(2) the t\\'0 notifications must be held to have become ineffective because the .section provides that all property vested in the Central Government shall be free from all incumbrailces affecting it was rejected by the High Court.

Dismisstni; the appeal to this Court,

HELD : The High Court was right in its view that the notification& issued under ss. 4 and 6 of the Land Acquisition Act were not incumbrances and could not be held ~v have become inoperative on the land vesting in the Central. Government, [528 BJ

1. The te.:.-m "incumbrance" has not been defined in the Act, The dictionary meaning given to incumbrance is claim, lien or liability attached to property. An incu.mbrance in. this sense has to. b~ liability "attached to property", burden or liability that runs with the land. The notifications issued under the Land Acquis'.tion Act are not burden or liability attached to the property. f528 Bl

2, .. 'Incumbrance" in the context of s. 4(2) means some burden or liability attached to the property like mortgage, charge, lien.etc. That this is so would appear from the words "all other_ incumbrances affecting it". Having said that the vesting '~·ill be free from tfust etc., sub-s. (2) goes on to add that "any attachment, injunction or· decree .... shall be deemed to be withdra\\-n" upon vesting. If "incumbrance" meant any kind of fetter, any attachment, injunction or decree or order restricting use of the propert}' \\'ould be· included in "all other incumbra~ces" and it would have be!n quite unnecessary to mention them separately. This means that fetters on the property like attachment injunction or decree o:· order of any court restricting the use of the propertY which are deemed to have been withdrawn upon the property vesting in the Central Govern-ment are not really incumbrances within the meaning of the word as used in s, 4(2). [528 E-G]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 309 of 1976. Appeal by Special Leave from the Judgment and Order dated the 22nd January, 1975 of the Bombay Fli~h Court in Appeal No. 106 of 1969 in Misc. Petition No. 320 of 1964. 7-S02SC!n7

I. N. Shroff and H. S. Parihar for the Appellanfs.

M. N, Shroff for Respondents 1 and 2.

V. P. Raman, Addi. Sol. Gen!, K. J. John and Shri Narain for Respondent No. 3.

The Judgment of the Court was delivered by

GUPTA, J. Ahmedabad Jupiter Spinning Weaving and Manufac-turing O:>mpany Limited was the owner of 5\100 Sq. yds of land torm-ing part of its mill premises at Lower Pare! in Bombay which was sought to be acquired by the Maharashtra Government for municipal ~chool. Notifications under sections 4 and 6 were issued on June 19, 1961 and May 29, 1964 respectively. The company filed peti-tion in the Bombay High Court challenging the validity of the notifica-tions on several grounds. single Judge of the High Court having dismissed the writ petition on August 11, 1969 the company preferred letters patent appeal. During the pendency of the appeal, the management of the company was taken over by the Central Govern-ment on October 8, 1972 under the Industries (Development and Regulation) Act, 1951. On September 21, 1974 an ordinance called the Sick Textile Undertakings (Nationalisation) Ordinance, 1974 was promulgated by virtue of which the textile undertaking of the company the management of which had been taken over by the Central Govern-ment, vested absolutely in the Central Government with effect from the "appointed day", which was April 1, 1974, and immediately thereafter stood transferred and vested in the National Textile Corporation. The Ordinance was later replaced by the Sick Textile Undertakings (Nation-alisation) Act, 1974 (hereinafter referred to as Sick Textile Act). Sections 3 and 4 of the Act are as follows :

Acquisition of rights of owners in respect of sick textile undertakings.

"3. (1) On the appointed day, eYery sick textile under-taking and the right, title and interest of the owner in rela-tion to every such sick textile undertakings shall stand trans-ferred to, and shall vest absolutely in, the Central Govern-ment.

(2) Every sick textile undertaking which stands vested in the Central Government by virtue of sub-section ( 1) shall, immediately after it has so vested, stand transferred to, and vested in, the National Textile Corporation.

General effect of vesting

4. ( 1) The sick textile undertaking referred to in sec-tion 2 shall be deemed to include all assets, rights, lease-holds, powers, authorities and t?rivileges and . all_ property, movable and immovable, includm~ lands, buildings, work-shops stores instruments, machinery and equipment, cash balan~es cash on hand, reserve funds, investments and book debts and all other rights and }nterests in, or arising o~t of, such property as were immediately before the appomted

NATIONAL TEXTILE CORP. v. MAHARASHTRA (Gupta, J.) 527

day in the ownership, possession, power or control of the owner of the sick textile undertaking, whether within or outside India, aud all books of account, registers and all other documents of whatever nature relating thereto and shall aclso be deemed to include the liabilities and obligations specified in sub-section (2) of section 5.

(2) All property as aforesaid which have vested in the Central Government under sub'section ( 1) of section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of any court res!ricting the use of such pro-perty in any manner shall be deemed to have been with-drawn."

The other sub-sections of section 4 are not relevant for the pre~e11t purpose.

The National Textile Corporation applied to the High Court for being substituted in place of the original appellant in the letters patent appeal which was pending and th<_! application was allowed. The main contention on behalf of the substituted appellant in the High Court was that the two notifications under sections 4 and 6 of the Land Acquisition Act must be held to have become ineffective in view of section 4(2) of the Sick Textile Act which provides that all property which vests in the Central Government under section 3 (1) does so free from all "incumbrances affecting it." The High Court dismissed the appeal holding that the notifications under the l..and Acquisition Act were not incumbrances within the meaning of sec-lion 4(2) of the Sick Textile Act. In the appeal before us filed with special leave obtained from this Court, the National Textile Corpora-tion questions the correctness of the view taken by the High Court.

Thus the only question for determination in the appeal is whether the notifications issued under the Land Acquisition Act are incum-brances within the meaning of the word as used in section 4( l) .,f the Sick Textile Act. Section 3 and the first two sub-sections of sec-tion 4 of the Sick Textile Act are the only provisions relevant in this context. Section 3 provides that on the appointed day every .sick textile undertaking shall vest absolutely in the Central Government, and then in the National Textile Corporation. Sub-section (1) of section 4 states that the undertakings vesting in the Central Government under section 3 shall be deemed to include all assets, rights and interests in the ownership, possession or control of the owners of such undertakings immediately before the appointed day. Sub-section, (2) of section 4 provides that all property vesting in the Central Government under section 3 shall, "by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumbrances affecting it, and any attachment, injun-ction or decree or order of any court restricting the use of such property in any manner shall be deemed to have been withdrawn".

Counsel for the appellant argues that sub-section (2) of section 4 is intended to vest the sick textile undertakings in the Central Goven1-

ment free from all fetters, and the notifications issued under the Land Acquisition Act wh!ch had the effect of freezing the price of the land were fetters falling m the category of "other incumbrances" mentioned in section 4(2) of the Sick Textile Act. The term 'incumbrance' has not been defined in the Act. In Wharton's Law lexicon incumbrance is described as being claim, lien or liability, attached to property. This is the sense in which the term is ordinarily used. An iqcum-brance in this sense has to be liability "attached to property"• it must be burden or liability that runs with the land, as the High Court has held. But notification issued by the Government under the Land Acquisition Act ~ not burden or liability that is attached to the property. The sovereign right of the State _to take proceedings for the acquisition of any land for public purpose is similar to its tight to impose tax on the land which is "paramount to the . ownership over the land and outside it". [see The Collector of Bombay v. Nusserwanj,i Rattanji.Mistri & others (1955] 1 SC R 1311 (at 1323). Under sub-section (2) of section 4 of the Sick Textile Act all property which have vested in the Central Government under section 3 ( 1) shall be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumorances affecting it, and any attachment, injunction or decree or order of any court restricting the use of such property shall be deemed to have been withdrawn. Counsel for the r~spondent, State of Maharashtra, submits that the term incumbrance should take colour from the different kinds of burden on the land specified in section 4(2) preceding the words 'all other incumbrances"; it is ai:gued that incumbrance in the context means some burden or liability that is attached to the property, like mortgage, charge, . lien etc. That t11is is so would also appear from what follows the words "all other incumbrances affecting it". Having said that the ves!ffig will be free from trust, obligation, mortgage, charge, lien and · all other incumbrances affecting it, sub-section (2) goes on to add that. "any attachment, injm1ction or decree or order of any court restricting the use of such property in any manner shall be deemed to have been withdrawn" upon vesting. If the appellant's construction of the provision were correct. and incumbrance meant any kind of fetter, any attachlnent, injunction or decree or order restricting the use of the property would be included in "all other incumbrances" and it would have i>een· quite unnecessary to mention them separately. This makes it clear that fetters on the property like attachment, injunction or decree or order of any court restricting tlie use of the property which are deemed to have been withdrawn upon the prooerty vesting in the Central Government are not reallv incumbrRnces within the meaning of the word as used in sub-section (2) of section 4. We therefore agree With the High Court that the notifications i.ssued under sections 4 and 6 of the Land Acquisition Act are not incumbrances and cannot be held to have become inoperath-e on the land in question vesting in t'te Central Government.

Tlle appeal is dismissed but in the circumstances of tbe case with-H cu.~ nny order as to cost.