CUSTODIAN OF TEXTILES UNDERTAKING, BOMBAY v. HALL & ANDERPQN LTD & Ors.

out on rent. In 1989, because of strike by workers of A textile mills, several mills suffered losses and It became difficult to run the business and therefore, the Government after having due deliberations with Reserve Bank of India and other authorities first came with the Ordlnanc.e and later on replaced It by the Textile 8 Undertakings (Taking over of Management) Act, 1983. Respondent no.1 filed writ petition before the High Court challenging the provisions of the 1983 Act whereupon an injunction was granted by the High Court C restraining the appellant from interfering with the bank accounts relating to the property business as, well as textile undertaking business. Meanwhile, the Textile Undertaking Nationalisation Act, 1995 came into existence and the mills stood acquired and M/s Shree D Madhusudan Mills Ltd. was renamed as M/s Hall & Anderson on 11.2.1999. The High Court, ultimately, allowed the said writ petition holding that the premises in question was by no means related to the textile undertakings and therefore, E it could not be part and parcel of textile undertakings and not covered by the said 1983 or the 1995 Act. The appellant, therefore, filed the instant appeal. Dismissing the appeal, the Court F HELD:1.1. From the factual matrix of the case, it is evident that the respondent initially started the business of selling various goods and articles from the departmental store operating from the premises in question (situated at Calcutta) under the name and style G of M/s Hai: & A'1derson. The Company purchased the textile mill in bombay on 12.6.1950 and commenced the additional business of manufacturing and selling cotton textile. The departmental store continued its business H 136 SUPREME COURT REPORTS [2011) 2 S.C.R. A upto 1976. Subsequent thereto, the building was developed as an income yielding asset and as such started the business of letting out various portions of the said building to different business organizations. The total area of the premises is about 4 acres and on an area B of 345 sq. ft. the registered office of the company is situated. The business of textile mill remained completely separate from the premises business of letting out. They had not been interconnected and the premises business has no connection with running the textile undertakings. c The accounts of the property business were separately and independently maintained. Staff engaged in the property business were also not connected. They had no concern. with the working of the textile mill, except the Secretary of the Company, as he had to be the same person in view of the requirement of the proyisioni:. .A Companies Act, 1961. No amount for the textile mill business had ever been borrowed from any financial institution or utilized for its running. Profit and Loss accounts of both the business have been prepared separately in spite of amalgamation since 1970. The E books of account had been maintained for both the business separately. The premises had been mortgaged with the Central Bank of India, Bombay by deposit of title deeds with a view to secure advance granted by the Central Bank of India to the Company for the purpose of F running the textile mill, but it stood only as a security. It had not become an integral part of the textile industries or had any nexus or relation with the working of textile mill. [Para 10) [141-D-H; 142-A-D] 0

1.2. The textile mill had been under the ownership of Mis Hall & Anderson at Calcutta. Mis Shree Madhusudan Mills Ltd., Bombay, had been purchased using funds generated from the premises at Calcutta. Section 8 of the Textile Undertaking Nationalisation Act, 1995 provides for G H CUSTODIAN OF TEXTILES UNDERTAKING, BOMBAY137 v. HALL & ANDERSON LTD. payment of amount to owners of textile undertaking by A the Central Government, in cash and in the manner specified in Chapter VI, for the transfer to, and vesting in, it, under sub-section (1) of section 3, of such textile undertaking and the right, title and interest of the owner in relation to such textile undertaking, an amount equal B to the amount specified against it in the corresponding entry in column (4) of the First Schedule. So far as the present textile industry is concerned, it is evident from column (4) of the First Schedule, that what has been acquired is the property at Bombay. Column 3 of the First c Schedule makes it clear that it was under the ownership of Mis Shree Madhusudan Mills Ltd., Calcutta, and after the property acquired at Bombay, a sum of Rs.2,70,85,0001- had been paid as compensation. No compensation was paid for the premises at Calcutta. The D quoted chart does not show that for determining the compensation, premises property at Calcutta had also been included. The premises in Calcutta did not form part of the textile industry nor was it appurtenant thereto. In view of the above, there is no cogent reason not to E concur with the view expressed by the High Court. [Paras 12 to 15 & 17) [143-F; 144-B-E; 145-A-B; F-G; 146-G]