Full Judgment Text
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PETITIONER:
STATE OF PUNJAB
Vs.
RESPONDENT:
SARDAR SEWA SINGH GILL & ORS.
DATE OF JUDGMENT:
27/10/1969
BENCH:
ACT:
Agreement between State and promoters of company-
Construction of-Land given to company to revert to State in
case of winding up of company-Machinery etc. to be removed
by company with 24 months of notice-Requirements of valid
notice under 4th proviso to cl. 6(a) of Agreement.
HEADNOTE:
Respondent No. 1 was granted certain land in Patiala State
in 1946 for the purpose of promoting a company for the
manufacture of Banaspatighee. After he had paid the costs
of the land. possession of the said land was given to
respondent No. 1 on November 17, 1946. On February 12, 1947
a promoting company was formed. There was an Agreement
between the Patiala State and the promoting company. The
third proviso to cl. 6(a) of the Agreement laid down inter
alia that if the proposed company was wound.up the land
granted to it would revert to Patiala State. On such
reversion compensation would be paid by the State. The
fourth proviso to cl. 6(a) further laid down that in the
above case the land would be delivered to Patiala State by
the proposed company within a reasonable time and the
company would be under an obligation to remove its machinery
etc. from such land within 24 months after a notice had been
given in this regard by the State. If it was not removed
within the notice period or a further period of 6 months
which the State could allow the machinery etc. would become
the property of the State. The proposed company (respondent
No. 2 herein) was incorporated on May 27, 1948 but it never
went into production. In 1951 respondent no. I filed a
petition for the winding up of the company, in the name of
the company. Two provisional liquidators were appointed,
but the petition was dismissed as incompetent. Thereafter
in, 1955 on a petition by certain shareholders an order for
winding up of the company was passed by the High Court. The
voluntary liquidators resigned and the Bank of Patiala as
Official Liquidator entered into possession of the company’s
property and auctioned the same in 1959. Considering a
claim by respondent No. 1 to the land a Single Judge of the
High Court held that the land had vested in the company and
respondent no. I was not entitled to it. The Division
Bench held that the land belonged to the State but -the
company would continue in possession till a valid notice was
given in terms of the 4th proviso to cl. 6(a) of the
Agreement. In appeal before this Court the State urged that
the notice given by the Director of Industries to the
provisional liquidators on August 14, 1952 was legally
sufficient.
HELD : The title to the land had already vested in the State
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Government under the third proviso to cl. 6(a) of the
Agreement because of the order of winding up of the company
made by the High Court. There was nothing in the Agreement
to ’show that the company was entitled to be in
of the property even after the title had vested in the State
Government. The 4th proviso only said that if the company
did not deliver possession within reasonable time and if any
machinery plant, buildings or structures remained on the
land the title to these also would vest in the State
Government if the company did -not remove the struc-
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tures or the machinery within 24 months from the date of the
notice. In the circumstances of the case it must be held
that the notice given by the Director of Industries dated
August 14, 1952 satisfied the requirements ’of the fourth
proviso to cl. 6(a) of the Agreement. The notice period
having expired, the State was entitled to possession of the
land. [17 B-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION Civil Appeal No. 1434 of
1967.
Appeal from the judgment and order dated May 8, 1964 of the
Punjab High Court in Letters Patent Appeals Nos. 230-304 of
1962.
V. C. Mahajan and R. N. Sachthey, for the appellant.
Harbans Singh, for respondent No. 2.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought by certificate from the
judgment of the Punjab High Court dated May 8, 1964 in
L.P.A. Nos. 230/304 of 1962.
Sardar Sewa Singh Gill (respondent no. 1) wanted to promote
a company for the manufacture of Banaspati and for that
purpose he -approached the Maharaja of Patiala for, certain
concessions and grant of land at Doraha. Subsequently by an
order of the ijlis-i-khas dated October 29, 1946 it was
decided to give to Sardar Sewa Singh Gill a plot of land
measuring about 96,700 sq. yds. at Doraha. This plot of
land wag to be made over to him on payment of the costs of
the land. Certain undertakings were given by the respondent
no. 1. Possession of the land was handed over to respondent
no. 1 on November 17, 1946 vide Ex. P.W. 1/1, report no.
96. On February 4, 1947 an agreement Ex. C.W. 13 was
entered into between Sewa Santokh Brothers (P) Ltd., arid
the Patiala State for grant of certain concessions for the
establishment of the ghee factory. The ghee factory that
was to be established was styled as the Patiala Banaspati
and Allied Products Co. Ltd., (hereinafter referred to as
the Company). Clause 6 of the agreement states :
"The Patiala State agrees to give the proposed Company the
following among other facilities :
(a) The Patiala State shall provide for the
proposed company land upto 100 acres at Doraha
as required by the company. In respect of
such portion of the land as the Government
property it shall be made available at such
concessional rates as may be fixed by the
Minister in charge of Development and in
regard to such portion as may have to be
acquired for the Company from private owners,
such cost shall be paid
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to the State as may be assessed under the.
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provisions of the Patiala Land Acquisition
Act, 1995 Bk. Besides the above 100 acres as
required for the factory site and the factory
farm, another 25 acres of land will be
acquired under the said Act for the brick
kilns at a suitable site near the factory
area.
Provided firstly, that the Patiala State shall
protect and indemnify the proposed Company
against any claims or actions arising out of
the acquisition of the land or the
construction of the factory of the proposed
Company thereon.
Provided secondly, that if the Mill of the
proposed Company is not erected on the land
provided, within two years after the receipt
of vegetable ghee machinery against orders to
be placed by the proposed Company which period
shall in case of Force Majeure be reasonably
extended, the land will revert to the Patiala
State, in which case the proposed Company
shall be reimbursed with the full cost of
acquisition paid by it.
Provided thirdly, that in the case of winding
up of the proposed Company or before that the
land or any part thereof not required by the
proposed Company shall revert to the Patiala
State, who shall pay therefor a price
equivalent to the original value of the land
within 12 months less such reasonable
compensation as may be assessed by the
Minister in charge Development for damages
done to the said land by the proposed Company
in consequence of the removal of machinery,
buildings, materials etc.
Provided fourthly, that if, as soon as the
Company is free to hand over the possession of
such land, the same is not delivered by,the
proposed Company to the Patiala State within
reasonable time after it is no longer required
for the said purpose, and there shall remain
in or upon the said land any machinery,
plant, building, structure stores and
other works, erections and conveniences,
the same shall, if not removed by the proposed
Company within 24 calendar months, after
notice in writing requiring their removal be
given to the proposed Company by the Minister
in charge Develop-
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ment be deemed to become the property of the
Patiala State, and may be sold or disposed of
for the benefit of the Patiala State, in such
manner as they shall deem fit without
liability. to pay any compensation or to
account to the proposed company in respect
thereof. Provided, however, that the said
period of 24 months may be extension is
necessary."
State, in case they are satisfied that such an
extention is necessary."
On February 12, 1947 Messrs Sewa Santokh Brothers was
incorporated and on May 27, 1948 the Company was incorpo-
rated. On April 20, 1948 prospectus of the Company as filed
with the Registrar of Joint Stock Company, Patiala and on
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July 21, 1948 certificate for the commencement of business
was granted to the Company. Admittedly the Company never
went into production or ever erected the factory. On
December 24, 1951 a petition for the winding up of the
Company was filed by S. Sewa Singh Gill in the name of the
Company. On February 26, 1952 two provisional liquidators
of the Company were appointed namely S. Kartar Singh Kawatra
and R. N. Sanghi. This petition was, however, dismissed on
October 13, 1952 on the ground that it was not competent.
On October 28, 1954 13 shareholders filed a petition for
compulsory winding up of the Company and on 21st October
1955 an order for the compulsory winding up of the Company
was passed by the PEPSU High Court. On the passing of this
order the voluntary liquidators resigned and the Bank of
Patiala was appointed as the Official Liquidator. The Bank
of Patiala took over possession of the property of the
Company and on August 13, 1959 auctioned its machinery.
Various claim petitions were filed including L.M. 106 of
1957 and L.M. 32 of 1952 wherein, respondent no. 1 claimed
various sums on account of expenses incurred including the
land at Doraha. The petitions were heard by Mahajan, J. who
by his order dated May 26, 1962 disallowed the claim of res-
pondent no. 1 to the land but held that the land remained
vested in the respondent Company till such time as State
exercised its rights under the agreement of February 4,
1947. Against the judgment of the learned Single Judge the
State of Punjab filed L.P.A. 304 of 1962 and respondent no.
1 filed L.P.A. 230 of 1962. The appeals were heard by Dulat
and Pandit, JJ. who on May 8, 1964 allowed the appeal of the
State to the extent that the land in dispute belonged to the
State but its possession would remain with the Company till
a valid notice was given by the State.
In support of this appeal it was contended on behalf of the
State of Punjab that the High Court was in error in holding
that
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the first notice given by the Director of Industries to the
provisional liquidators was not legally sufficient and the
respondent no. 2 was not bound to give possession to the
State unless a fresh notice was given. In our opinion the
argument put forward on behalf of the appellant is well-
founded and ’must be accepted as correct. In the first
place it is obvious that the title to the land has already
vested in the State Government under the third proviso to
cl. 6(a) of the Agreement because of the order of winding up
of the Company made by the High Court. There is nothing in
the agreement to suggest that the Company was entitled to be
in possession of the property even after its title had
vested in the State Government. The 4th proviso only states
that if the Company does not deliver possession within
reasonable time and if any machinery, plant, buildings or
structures remain on the land the title to these also will
vest in the State Government if the Company does not remove
the structures or the machinery within 24 months from date
of the notice. In the circumstances of the case we are of
opinion that the respondents were given sufficient notice by
the letter of the Director of Industries dated August 14,
1952. That notice satisfies the requirements of the fourth
proviso of cl. 6(a) of the Agreement and the State is
entitled to take possession of the land and other properties
located therein within two years from date of that notice.
It is necessary to state that according to P.W. 4 Jaswant
Singh the buildings on the site are in an area of one bigha,
the structure was pucca but temporary. It is the admitted
case that the machinery has been sold by auction more than
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seven years back and only grass grows on the land. The
evidence of Tarachand R. W. 1 also shows that a greater part
of the land is barren and the machinery and other valuable
properties had already been removed. Counsel on behalf of
respondent no. 2 prayed that some further time may be given
before the State takes possession of the properties. We
consider that a further period of six months’ time will be
sufficient.
For these reasons’ we hold that the order of the Division
Bench May 8, 1964 should be modified and the respondents
should be directed to hand over possession of the land in
dispute to the State of Punjab within six months from this
date. We accordingly allow this appeal. But there will be
no order as to costs.
G.C.
Appeal allowed.
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