Supreme Court of India
U.P. STATE SUGAR & CANE DEVELOPMENT LTD.versusRAZA BULAND SUGAR CO.LTD. AND ORS
- Citation
- 2009 INSC 547
- Decided
- 17 April 2009
- Disposal
- Disposed off
- Bench
- ARIJIT PASAYAT
Holding
For lands the company must prove cultivation or grove use; for buildings the corporation must prove factory use, and the shops, nursery land and playground lands are covered by the scheduled undertaking.
Summary
The case concerned the interpretation of clause (vi) of Section 2(h) of the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971, which defines a "scheduled undertaking" to include certain lands and buildings. Raza Buland Sugar Co. sought a declaration that several properties listed in its plaint were not covered by this definition and claimed possession of them. The Supreme Court held that the burden of proof for land lies on the company to show it was used for cultivation or as grove land, while the burden for buildings lies on the corporation to prove they were used for factory purposes. Evidence showed that the shops on Nainital Road, the nursery lands and the playground lands were acquired with company funds after the Act came into force and thus fall within the definition of scheduled undertaking. Consequently, the corporation's appeal succeeded on those properties and the plaintiffs' appeal was dismissed. The appeals were disposed of accordingly.
Issues considered
- Whether the lands and buildings specified in the plaint fall within the definition of "scheduled undertaking" under Section 2(h)(vi) of the U.P. Sugar Undertakings (Acquisition) Act, 1971.
- Who bears the burden of proof for establishing that land is excluded (cultivation/grove) or that buildings are excluded (factory use) from the scheduled undertaking.
- Whether the suit is barred by res judicata or Section 34 of the Specific Relief Act, 1963.
Legislation cited
Subjects
scheduled undertakingburden of proofland acquisitionsugar industryspecific reliefres judicatastatutory interpretationproperty law
Judgment
[2009] 6 S.C.R. 571
U.P. STATE SUGAR & CANE DEVELOPMENT LTD. A
v.
RAZA BULAND SUGAR CO.LTD. AND ORS.
(Civil Appeal Nos. 2176-2177 of 2002)
APRIL 17, 2009
8
[DR. ARIJIT PASAYAT, P.SATHASIVAM AND DR.
I MUKUNDAKAM SHARMA, JJ.]
UTTAR PRADESH SUGAR UNDERTAKINGS
(ACQUISITION) ACT, 1971: C
ss.2(h)(vi) and 3 - 'Scheduled underlaking' - Acquisition
of Sugar Undertaking - 'Lands' and Buildings' - Suit for
· declaration that certain properties were not covered by
expression 'Scheduled underlaking' - Held: As regards lands, D
burden is on the Company to establish that lands or any
specified parl of it were held or occupied for the purpose of
cultivation or it was grove land - In respect of buildings, the
burden is on the Corporation to establish that the buildings
were held or occupied for purpose of factory - Shops
constructed out of the funds of the Sugar Underlaking after E
its acquisition, were covered by definition of 'scheduled
undertaking' - Evidence - Burden of proof - Sugar
Underlaking (Taking over of Management) Act, 1978.
The plaintiff Sugar Company (respondent no. 1 in
F
C.A.No.2176 of 2002) on coming into force of the U.P.
Sugar Undertakings (Acquisition) Act, 1971 and the
Sugar Undertaking (Taking Over of Management) Act,
1978, filed a suit against the U.P. State Sugar Corporation
( predecessor-in-interest of the appellant) and others for
possession and permanent injunction restraining the G -
defendants from interfering with the possession and
management of affairs and business and assets of the
registered office of the Company as detailed in para 10
of the plaint, and for declaration that the properties
571 H
572 SUPREME COURT REPORTS [2009] 6 S.C.R.
A mentioned in para 10 of the plaint were not covered by
the definition of 'scheduled undertaking' as provided in
s.2(h) of the 1971 Act. The trial court decreed the suit in
part. In the cross appeals, the High Court dismissed the
suit in respect of the property mentioned at Item 3 in para
B 10, namely, Maize Colony including quarters and land
appurtenant thereto, and decreed the suit in respect of
the properties at Item Nos. 4 and 6 in para 10 of the plaint, \
namely, 'shops at Nainital Road along with land of
playground' and 'Nursery land' etc.
C Disposing of the appeals, the Court
HELD:1.1 Section 2(h) of the U.P. Sugar Undertakings
(Acquisition) Act, 1971 makes the position clear that the
Act intends to keep intact the identity of the company. It
is only the scheduled undertaking as defined u/s 2(h) of
D the Act, that vets in the Corporation u/s 3 of the Act.
Therefore, the real controversy is in regard to
interpretation of clause (vi) of s.2(h) of the Act which
relates to land and buildings of the Company which have
been acquired under the Act Clause (vi) can be divided
E into two parts i.e. (i) land and (ii) buildings. [Para 5) [580-
B-D]
1.2. The definition in respect of land contemplates
that every kind of la.nd shall stand vested u/s 3 of the Act
F except such lands which are held or occupied for the
purpose of cultivation and grove land of the company
whose land has been acquired. The burden of proof is
upon the company to establish that the lands or any
specified parts of it were held or occupied for the purpose
of cultivation or it was grove land, because it is the
G company which has the knowledge about the nature of
user of the land in its occupation. This can be established
by evidence. It is required to be established that the land
was held or occupied for the purpose of cultivation and
grove land. If the company fails to prove that aspect, the
H land vests in the Corporation u/s 3 of the Act and be
-· U.P. STATE SUGAR & CANE DEVELOPMENT LTD. v. RAZA 573
BULAND SUGAR CO.LTD. AND ORS.
~
deemed to have been transferred to the Corporation. A
[Para 6] [580-G-H; 581-A-B]
2.1. In respect of buildings the burden of proof was
on the Corporation to establish that the buildings were
held or occupied for the purpose of factory. The
description of buildings under clause (vi) of s.2(h) is not B
in the same language as in respect of lands. While
I
defining lands the words used are "other than" but in
respect of buildings such words are missing and,
therefore, the Corporation has to lead evidence to prove
that the buildings held or occupied by the company were c
used for the purpose of factory and obviously the burden
is on the person who claims exclusion. [Para 7] (581-B-
D]
New Satgram Engineering Woks and Anr. v. Union of
D
-India AIR 1981 SC 124 and Mis Ooypack System Pvt. Ltd.
• v. Union of India and Ors. AIR 1988 SC 782, referred to.
2.2. So far as the shops are concerned in respect of
which relief has been granted to the plaintiff, it is noted
that they came into existence after construction in 1974 E
i.e. subsequent to 1971. It has also come in evidence that
the properties have· been purchased and acquired out of
the fund of the company. The trial court categorically held
that there was no evidence to show that any other
business was being carried on there. It was brought on
F
record that the Sugar Undertaking was held by the
plaintiffs from July 1971 to January 1979 on behalf of the
Corporation. Therefore, the shops on Nainital Road were
constructed out of the funds of the Sugar Undertaking
and since the cash was converted into immovable
G
)
properties, those shops were clearly covered by the
definition of scheduled undertaking. Therefore, the·
appeals filed by the Corporation succeeds in respect of
properties of Nursery lands, shop at Nainital Road, and
play ground lands. (Para 10 and 11] (582-C-F]
H
574 SUPREME COURT REPORTS [2009] 6 S.C.R. .
A Case Law Reference:
AIR 1981 SC 124 referred to para 8
AIR 1988 SC 782 referred to para 8
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
B 2176-2177 of 2002.
From the Judgment & Order dated 27.09.2000 of the High
Court of Judicature at Allahabad in First Appeal No. 949 of 88
and 265 of 1989.
c WITH
C.A. Nos. 2178-2179/2002.
Shobha Dikshit, Dinesh Dwivedi, Pradeep Misra, Manoj
Kumar Sharma and ,P .N. Gupta for the Appearing Parties.
D The Judgment of the Court was delivered by
DR. ARIJIT PASAYAT, J. 1, These appeals arise out of a
common judgment of the Allahabad High Court dismissing the
two appeals, one by U.P. State Sugar Corporation Ltd. and
other by Raja Buland Sugar Co. ~td. and Ors. The cross
E appeals were filed against the judgment and decree passed
by the trial Court on 18.8.1988 partly decreeing the suit in
respect of certain properties involved in the suit while
dismissing the suit in relation to other properties ..
F 2. The defendants-Corporation filed First Appeal No.265/
1989 against part of the decree whereby First Appeal 949/
1988 was filed by the plaintiffs-Raza Buland Sugar Co. Ltd.
whereby part of the decree dismissing the suit was challenged.
3. The factual background in a nutshell is as follows:
G Prior to 1946 there were two independent companies
namely, Raja Sugar Company and Buland Sugar Company. M/
s Govan Bros. were its Managing Agents. In the year 1946 the
Dalmias purchased it from M/s Govan Brothers. Both the
companiE)s were amalgamated in the year 1957 and one
H company under the name of Raza Buland Sugar Company Ltd.
U.P. STATE SUGAR & CANE DEVELOPMENT LTD. v. RAZA 575
BULAND SUGAR CO.LTD. AND ORS. [DR. ARIJlT PASAYAT, J.]
came into existence. In the year 1968 Jhunjhunwalas purchased A
the company from Dalmias. On coming into force of the U.P.
Sugar Undertakings Acquisition Ordinance (in short the
'Ordinance') later on became Act no.33 of 1971 (hereinafter
referred to as the 'Act'). The plaintiffs filed a Writ Petition
No.4130 of 1971 challenging the validity of the Ordinance. The B
High Court stayed the operation of the Ordinance on 5.7.1971
and also directed restoration of the status quo ante on
J 2.7.1971. In the year 1978, the Sugar Undertakings (Taking
Over of Management) f.ct, 1978 (in short the 'Taking Over Act')
came into force. It provided for appointment of Authorized c
Controller to manage the sugar factories. The possession of
the undertakings was taken over by the Authorized Controller
on 30th October, 1979. The Central Government rescinded the
aforesaid order w.e.f. 1.11.1979. The authorized controller
delivered the possession of the undertaking to the Collector,
0
Rampur on 2.1 i .1979. The High Court dismissed the writ ·
petition filed by the plaintiffs on 3.5.1979. Suit No.28 of 1979
was filed by the plaintiffs against the defendants i.e.
(Corporation and others) for permanent injunction restraining
them from interfering in .any manner in the possession and E
management of affairs and business and assets of the
registered office of the company as detailed in para 10 of the
plaint and further sought declaration that the properties
mentioned in para 10 of the plaint are outside the purview of
the Ordinance and the Act and defendants Nos. 4 and 5 were
not entitled to the possession of those properties.
Plaintiffs during the pendency of the suit got the plaint
amended by adding the relief that if the court comes to the
conclusion that the defendants were in possession of all or any
of the items mentioned in para 10 of the plaint, a decree for G
possession be passed in favour of the plaintiffs. The suit was
based on the allegations that the properties mentioned in para
10 of the plaint are not covered by the definition of 'scheduled
undertaking' as defined in clause (h) of Section 2 of the Act. It
was alleged that the plaintiffs were entitled to take possession H
576 SUPREME COURT REPORTS [2009] 6 S.C.R.
A of such property which is not covered by the expression
·scheduled undertaking'.
The stand of the defendants in the written statement was
that all the properties mentioned in para 10 of the plaint are
covered by the expression ·scheduled undertaking'. It took the
B further plea that the suit was barred by res judicata as the writ
petition filed by the plaintiffs was dismissed by the High Court
and the suit was barred by section 34 of the Specific Relief Act,
1963 (in short the 'Specific Relief Act') as the plaintiffs have
not sought for other consequential relief in the suit. The trial
C Court framed various issues. It held that the properties
mentioned at Item Nos.3 and 6 in para 10 are not covered by
the expression 'scheduled undertaking' and therefore passed
the decree for possession of such properties against the
defendants. It was held that the suit was not barred by Section
D 34 of the Specific Relief Act and the suit was accordingly
decreed partly. As noted above, both the plaintiffs and
defendants filed appeals.
The High Court was of the view that the only question was
whether the properties in dispute as specified in para 10 of the
E plaint stand vested in the Corporation in accordance with
Sections 3 and 2(h) of the Act. The High Court partly allowed
both the appeals. It was held that the suit in respect of Maize
colony referred to in para 10 of the plaint as Item No.3 stood
dismissed. The first appeal was partly allowed in respect of
F shops at Nainital Road alongwith land appurtenant to it as
referred to in para 10 of the plaint. The suit was decreed for
possession in respect of properties mentioned at Item Nos. 4
and 6 in para 10 of the plaint. In both the appeals the issues
relates to the question as to which items in para 10 of the plaint
G are covered by the Act. For appreciating that question para 10
needs to be quoted in full:
"10. That M/s Raza Buland Sugar Co. Ltd. have following
assets and business other than the Sugar Undertaking.
H 1. Jai Bhawan and land appurtenant thereto.
---l
U.P. STATE SUGAR & CANE DEVELOPMENT LTD. v. RAZA 577
.. BULAND SUGAR CO.LTD. AND ORS. [DR. ARIJIT PASAYAT, J.]
2. Hari Bhawan and land appurtenant thereto. A
3. Maize colony including quarters and land
appurtenant thereto.
4. Shops at Nainital Road alongwith land of
playgrounds. B
5. Buland factory building including godowns residential
accommodation and carbide buildings and lands
' appurtenant thereto.
6. Nursery land, equipments and livestock, crops etc. c
7. Electrical installations, typewriter, furniture, fittings
calculations and other things belonging to the registered
office of the company as per the balance sheet of the
company of the year 1978.
D
• 8. The managerial set up of Plaintiff No. 1 and its
subsidiary company including its Secretary's residence
Bungalow No. 2 and Administrative Manager's residence
No. R.A.-1, situated near the Central Office, Civil Lines,
Rampur and also the offices of Director, Secretary and
Administrative Manager and share department situated in E
'-·
the Central Office, Civil Lines, Rampur.
9. Residential quarters alongwith land appurtenant thereto
situated in Govan. Colony, Rampur rented to outsiders who
are not connected with the scheduled undertaking. F
10. Light railway land and equipment like locomotives,
trollies, rails and other material which are in the use of
sugar undertaking since a long time.
11. Temple land including construction thereof situated on
G
' Nainital Road, Civil Lines, Rampur.
12. Sagar Building land situated at Civil Lines, Rampur."
4. The relevant provisions of the statute are Sections 2(h)
and 3. They read as follows:
H
578 SUPREME COURT REPORTS [2009] 6 S.C.R.
A "2. (h} 'scheduled undertaking' means 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 the Schedule, and
comprises--
B (iJ all plant, machinery and other equipment (including
milling plant, boiling house equipment, other sugar
machinery, cane unloading equipment and power plant),
weighbridges, cranes, chimneys, turbines and boilers
(including the foundations, ·superstructure and roofing
c thereof) pertaining to that factory;
(ii) any engineering workshop, including machinery and
equipment thereof;
(iii) any chemical laboratory including any apparatus and
D equipment thereof;
(iv) any motor or other vehicle or locomotive, or railway
sidings pertaining to that factory;
(v) any dispensary or hospital or community or welfare
·E centre exclusively for the benefit of workmen and other
persons employed in that factory;
(vi) all lands (other than lands held or occupied for
purposes of cultivation and grovelands} and buildings held
or occupied for purposes of that factory (including buildings
F pertaining to any of the properties and assets hereinbefore
specified and guest houses and residences of directors,
managerial personnel, staff and workmer, or of any other
person as lessee or licer1see, and any storehouses,
molasses tanks, roads, bridges, drains, culverts, tubewells,
G water storage or distribution system and other civil
engineering works) including any leasehold interest therein;
(vii) all limestone quarries pertaining to that factory,
including any mining lease relating thereto;
H
U.P. STATE SUGAR & CANE DEVELOPMENT LTD. v. RAZA 579
BULAND SUGAR CO.LTD. AND ORS. [DR. ARIJIT PASAYAT, J.]
(viii) all electrical installations (including any plant or A
equipment for the generation or transmission of energy),
telephone equipment, furniture and fixtures pertaining to
that factory or to any property or asset hereinbefore
specified;
(ix) all tools, spare parts and stores pertaining to that B
factory;
(x) all firearms for the use of watch and ward staff
' erl'!ployed in that factory;
(xi) all maps, plans, sections, drawings and designs C
pertaining to that factory;
(xii) all sugarcane, sugar in the process of manufacture or
production and stocks of sugar and molasses and all
bagasse and pressmud;
D
(xiii) all books.of account, registers and other documents
pertaining to the factory or to any property or asset
hereinbefore specified, but does not include cash-in-hand,
cash at bank, advances towards any income or other tax,
investments and book debts, or rights, liabilities and E
obligations respecting any other contract;"
n3, Vesting - On the appointed day, every scheduled
undertaking shall, by virtue of this Act, stand and be
deemed to have sfood transferred to and vest and be
deemed to have vested in the Corporation free from any F
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;
G
Provided that any such debt, mortgage, charge or
other encumbrance or lien, trust or similar obligation shall
attach to the compensation referred to in Section 7, in
accordance with the provisions of that section, in
substitution for the undertaking;
H
580 SUPREME COURT REPORTS [2009] 6 S.C.R.
1
A Provided further that a debt, mortgage, charge or
other encumbrance or lien, trust or similar obligation
created after the scheduled undertaking or any property or
asset comprised therein had been attached, or a receiver
appointed over it, in any proceedings for realization of any
B tax or cess or other dues recoverable as arrears of
revenue shall be void as against all claims for dues
recoverable as arrears of revenue."
5. On a bare reading of Section 2(h) the position is clear '
that .the Act intends to keep in tact the identity of the company.
C It is only the scheduled undertaking as defined under Section
2(h} of the Act. It vests in the Corporation under Section 3 of
the Act. Therefore, as noted above, the real controversy is in
regard to interpretation of clause (vi) of Section 2(h) of the Act
which relates to land and buildings of the company which have
D been acquired under the Act. Clause (vi) can be divided into
two parts i.e. (i) land and (ii) buildings. The same reads as
follows: '
"(1) all lands other than the lands held or occupied for
the purpose of cultivation and grove lands.
E
(2) Buildings - held or occupied of that factory including
buildings pertaining to any of the properties and
assets hereinbefore specified, and guest houses
and residences of directors, managerial personnel,
F staff and workers or of any other person as lessee
or licensee and any store houses, molasses, tanks,
roads, bridges, drains, culverts, tube-wells, water
storage or distribution system and other civil
engineering works including any leasehold interest
therein."
G
6. The definition in respect of land contemplates that every
kind of land shall stand vested under section 3 of the Act except
such lands which are held or occupied for the purpose of
cultivation and grove land of the company whose land has been
H acquired. The burden of proof is upon the company to establish
U.P. STATE SUGAR & CANE DEVELOPMENT LTD. v. RAZ.A 581
BULAND SUGAR CO.LTD. AND ORS. [DR. ARIJIT PASAYAT, J.]
•
that the lands or any specified part of it were held or occupied A
_ for the purpose of cultivation or it was grove land because it is
the company which has the knowledge about the nature of user
of the land which was in its occupation. This can be established
by evidence. It is required to be established that the Ian.cl was
held or occupied for the purpose of cultivation and grove land. B
If the company fails to prove that aspect, the land vests in the
Corporation under Section 3 of the Act and be deemed to have
• been transferred to the Corporation.
.' 7. In respect of buildings the burden of proof was on tne
c
Corporation to establish that th·e buildings were held or occupied
for the purpose of factory. The description ·of buildings under
clause (vi) of Section 2(h) is not in the same language as in
respect of lands. While defining_ lands the words used are "other
than" but in respect of buildings such words are missing and
therefore the Corporation has to lead the evidence to prove that D
the buildings held or occupied by the company were used for
the purpose of factory and obviously the burden is on the person
who claims exclusion.
8. In New Satgram Engineering Works and Anr. v. Union
of India (AIR 1981 SC 124) this Court held that the difference E
in the language between the two expressions "used
substantially'' and "solely used" was obvious. It was emphasized
that the user must be seen on the date of vesting. It was further
... made clear that the workshop or building constructed initially
for the purpose of coal mine cannot by itself being diverted to F
other purpose and ceased to belong to the mines. It was noted
that what is of the essence is whether the workshop or the
•.. building originally formed a part and parcel. The subsequent
user may not be very material. In Mis Doypack System Pvt.
Ltd. v. Union of India and Ors. (AIR 1988 SC 782) this Court G
> explained the meaning of phrases "pertaining to" and "in
relation to" and "arising out of'. It was clarified that these
expressions used in the deeming provisions are used in the
expansive sense. It was observed as follows:
H
582 SUPREME COURT REPORTS [2009] 6 S.C.R.
••
A "The words "pertaining to" and "in relation to" have
the same wide meaning and have been used
interchangeably for among other reasons which may
include avoidance of repetition of the same phrase in the
same clause or sentence, a method followed in good
B drafting. The word "pertain" is synonymous with the word
"relate". The expression "in relation to" (so also "pertaining
to") is a very broad expression which presupposes
l
another subject matter."
'
9. In the insta~t.~~se, only PW-1 was examined by the
C plaintiffs whose evidence does not in any way help the plaintiffs.
10. So far as the shops are concerned in respect of which
relief has been granted to the plaintiffs, it is noted that they came ·
into existence after cunstruction in 1974 i.e. subsequent to
1971. It has also come in evidence that the properties have
J
0
been purchased and acquired out of the fund of the company.
The trial Court categorically held that there was no evidence to
show that any other business was being carried on there. In Writ
Petition No.315of1980 it was brought on record that the Sugar
Undertaking was held by the plaintiffs from July 1971 to January
E 1979 on behalf of the Corporation. Hence, the shops on Nainital
Road were constructed out of the funds of the Sugar
Undertaking and since the cash was converted into immovable •.
properties, those shops were clearly covered by the definition
of scheduled undertaking.
F
11. Above being the position, the appeals filed by the
Corporation succeed in respect of the properties i.e. Nursery
lands, shops at Nainital Road and play ground lands, while the
appeals filed by the plaintiffs-Raza Buland Sugar Co. Ltd. stand
G dismissed.
R.P. Appeals disposed of.
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