THE NATIONAL TEXTILE CORPORATION LTD v. NARESHKUMAR BADRIKUMAR JAGAD & Ors.

HELD: 1.

In the instant case, no reference had ever been made by the appellant to the effect of the provisions of the Textile Undertakings .(Nationalisation) Act, 1995 E before the trial court while filing the written submissions; neither any issue was framed; nor arguments had been advanced in regard to the same; this issue was not agitated either before the appellate court or revisional court. Before this Court, an application was filed to urge additional grounds regarding the application of the Act 1995 without seeking amendm.ent to the pleadings (WS). [Para 6] [489-G-H; 490-A] F

1.

Ple.adings and particulars are necessary to enable the court to decide the rights of the parties in the G trial. Therefore, the pleadings are more of help to the court in narrowing the controversy involved and to inform the parties concerned to the question in issue, so that the parties may adduce appropriate evidence on the said issue. It is a settled legal proposition that "as a rule relief H 476 SUPREME COURT .REPORTS [2011) 14 (ADDL) S.C.R. A not founded on the. pleadings should not be granted". A decision of a case cannot be based on grounds outside the pleadings of the parties. The pleadings and issues are to ascertain the real dispute between the parties to narrow the area of conflict and to see just where the two B sides differ. [Para 7) [490-B-C]

1.

A party has to take proper pleadings and prove the same by adducing sufficient evidence. No evidence can be permitted to be adduced on a issue unless factual foundation has been laid down in respect of the same. A C new plea cannot be taken in respect of any factual controversy whatsoever, however, a new ground raising a pure legal issue for which no inquiry/proof is required can be permitted to be raised by the court at any stage of the proceedings. [Para 13, 14) [491-G-H; 492-A-B] D F Mis. Trojan & Co. v. RM N.N. Nagappa Chettiar AIR 1953 SC 235:1953 SCR 780; State of Maharashtra v. Mis. Hindustan Construction Company Ltd. AIR 2010 SC 1299: 2010 (4) SCR 46; Ka/yan Singh Chauhan v. C.P. Joshi AIR E 2011 SC 1127: 2011 SCR 216; Ram Sarup Gupta (dead) by L.Rs. v. Bishun Narain Inter College & Ors. AIR 1987 SC 1242: 1987 (2) SCR 805; Bachhaj Nahar v. Nilima Manda/ & Ors. AIR 2009 SC 1103: 2008 (14) SCR 621; Kashi Nath (Dead) through L.Rs. V. Jaganath (2003) 8 sec 740: 2003 (5) Suppl. SCR 202; Biswanath Agarwal/a v. Sabitri Bera & Ors. (2009) 15 SCC 693: 2009 (12) SCR 459; Syed and Company & Ors. v. State of Jammu &Kashmir & Ors. ·1995 Supp (4) SCC 422: Chinta Lingam & Ors. v. The Govt.· of India & Ors. AIR 1971 SC 474: 1971 (2) SCR 871; J. Jermons v. Aliammal & Ors (1999) 7 SCC 382: 1999 (1) G Suppl. SCR 467; Mis Sanghvi Reconditioners Pvt. Ltd. v. Union of India & Ors AIR 2010 SC 1089: 2010 (2) SCR 352 and Greater Mohali Area Development Autflority & Ors. v. Manju Jain & Ors., AIR 2010 SC 3817: 2010 (10) SCR 134 - relied on. H NATIONAL TEXTILE CORPORATION LTD. v. NARESHKUMAR 477 BADRIKUMAR JAGAD

2.1. The Government loosely means the body of A persons authorized to administer the affairs of, or to govern, a State. It commands and its ~ecision becomes binding upon the members of the society. Government includes, both the Central Government as well as the State Government. The government is impersonal in B character having three independent functionaries as its branches. It performs regal and sovereign functions, which are not alienable to any other person, e:g. defence, security, currency etc. Government means a group of people responsible for governing the country. It consists c of the activities, methods and principles involved in governing a country or other political unit. [Para 15] [492- D-F]

2.2. The Government is a body that governs and exercises control by issuing directions and is not D governed by any other agency. It is a body politic that formulates policies and the laws by which a civil society is controlled. It is a political concept formulated to rule the nation. It is not a profit and loss establishment. Government Department means something purely E fundamental, i.e. relating to a particular government or t-o the practice of governing a country. It has different Wings. However, the expression 'Government' may be required to be interpreted in the context used in a particular Statute. The expression denotes the Executive and not F the Legislature. [Para15] [492-G-H; 493-A-C]

2.3. To perform the functions, the Government has its various departments and to facilitate its working, the Government itself may be divided into various Sections. G To carry out the commercial activities by the State, the Corporations have been established by enactment of Statutes and the "power to charter Corporations is incidental to or in aid of Governmental functions. " Such Corporations would ex-hypothesis be agencies of the H 478 SUPREME COURT REPORTS (2011) 14 (ADDL.) S.C.R. A Government. [Para 16] (493-D-~] 8

2.

Banks and Financial institutions carrying out financial transactions, are independent to do business ·· subject to the regulatory laws made by the legislature. They are not under the direct executive control of the government. They are profit and loss earning organisations coupled with all connected financial and economic activities. They are a body corporate with a limitect role to play and do not "govern" people as C understood by governance. [Para 17] (493-G-H] State of Rajasthan & Anr. v. Sripal Jain AIR 1963 SC 1323: 1964 SCR 742; Pashupati Nath Sukut v. Nern Chandra Jain & Ors. AIR 1984 SC 399: 1984 (1) SCR 939; R.S. Nayak v. A.R. Antulay AIR 1984 SC 684: 1984 (2) SCR D 495; V. S. Mallimath v. Union of India & Anr. AIR 2001 SC 1455: 2001 (2) SCR 567; Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanshi & Anr. AIR 1975 SC 1331: 1975 (3) SCR 619; Ramana Dayaram Sheffy v. The International Airport Authority of India & Ors. AIR 1979 SC 1628: 1979 (3) E SCR 1014 and Federal Bank Ltd. v. Sagar Thomas & Ors. AIR 2003 SC 4325: 2003 (4) Suppl. SCR 121- relied on. State of Punjab & Ors. v. Raja Ram & Ors. AIR 1981 SC 1694: 1981 (2) SCR 712; The State of Bihar v. The Union of India & Anr., AIR 1970 SC 1446: 1970 (2) SCR 522; S.S. F Dhanoa v. Municipal Corporation Delhi & Ors., AIR 1981 SC 1395: 1981 (3) SCR 864; K Jayamohan v. State of Kera/a & Anr., (1997) 5 SCC 170: 1996 (7) Suppl. SCR 201; Hindustan Steel Works Construction Ltd. v. State of Kera/a & Ors., AIR 1997 SC 2275: 1997 (3) SCR 919; Mohd. Hadi G Raja v. State of Bihar & Anr., AIR 1998 SC 1945: 1998 (3) SCR 22; State through Narcotics Control Bureau v. Ku/want Singh AIR 2003 SC 1599: 2003 (1) SCR 995 - referred to.

3.1. In view of the provisions of Section 230 of the H Indian Contract Act 1872, an agent is not liable for the, NATIONAL TEXTILE CORPORATION LTD. v. NARESHKUMAR 4 79 BADRIKUMAR JAGAD acts of a disclosed principal subject to a contract to the A contrary. Where the relationship of principal and agent is established the agent cannot be sued when the principal has. been disclosed. A suit does not lie against an agent where the principal is known or has been disclosed. [Para 21] [495-G-H; 496-A-B] B

3.2. The appellant may be called 'agency' or 'instrumentality' of the Central Government for a limited . purpose, namely to label it to be the "State" within the ambit of Article 12 of the Constitution. However, even by C stretch of imagination, the appellant cannot be held to be an 'agent' of the Central Government as defined under Section 182 of the Contract Act. Evidently the appellant is neither the government nor the department of the government, but a Government Company. Appellant cannot identify itself with the Central Government. It D cannot be said that appellant is merely an agent of the Central Government for the simple reason that rights vested in the appellant stood crystallised after being transferred by the Central Government. Appellant is being controlled by the provisions of the Act 1995 and not by E the C_entral Government. Whereas an agent is merely an extended hand of the principal and cannot claim independent rights. [Para 21, 22] [496-B-F] Prem Nath Motors Ltd. v. Anurag Mittal AIR 2009 SC F 569; Vivek Automobiles Ltd. v. Indian Inc. (2009) 17 SCC 657; Pradeep Kumar Biswas v. Indian Institute of Chemical . Biology & Ors. (2002) 5 SCC 111: 2002 (3) SCR 100; Food Corporation of India v. Municipal Committee, Jalalabad & Anr., AIR 1999 SC 2573; A.K. Bindal & Anr. v. Union of India G & Ors. (2003) 5 SCC 163 and Southern Roadways Ltd., Madurai v. S.M. Krishnan AIR 1990 SC 673: 1989 (1) Sµppl. SCR 410 - relied on~ Mis. Electronics Corporation of India Ltd., etc. etc. v. Secretary, Revenue Department, Government of Andhra H 480 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.