High Court · 2009

In the High Court of Judicature at MadrasDated: 24.08.2009Coram:The Honourable Mr.Justice M.CHOCKALINGAMandThe Honourable Mr.Justice R.SUBBIAHOriginal Side Appeal No.239 of 2009and M.P.No.1 of 2009The Secretary,Revenue Department,Government of Tamil Nadu,Fort St.George, Chennai. ..Appellant..vs..1. The Official Liquidator, High Court, Madras, as the Liquidator of M/s.Mettur Textiles Industries Limited (in liquidation).2. Central Bank of India, 14-15, Variety Hall Road, Coimbatore-641 001.3. R.Muthusamy, President, Mettur Beardsell, CITU Thozhilalar Sangam, No.36/107B, Thangammapuri Pattinam, Mettur Dam 636 402, Salem District. (Amended as per Order dated 12.11.2008 made in C.A.1884/2008)4. The Mettur Textile Trade Unions Joint Action Committee represented by its President K.Kandasamy, K.Block, No.39 Salem Camp, Mettur Dam 636 456. (Amended as per Order dated 12.11.2008 made in C.A.2574/2008). ..Respondents https://hcservices.ecourts.gov.in/hcservices/ Original Side Appeal filed under Order XXXVI Rule 1 of OriginalSide Rules read with Clause 15 of Letters Patent, against the orderdated 12.11.2008 passed by a learned single Judge of this Court inC.A.No.3013 of 2007 in C.P.No.125 of 1988.For Appellant : Mr.S.Veeraraghavan, Additional.Advocate General III, assisted by Mrs.Bhavani Subburayan, Spl.G.P.(C.S.)For Respondents : The Official Liquidator for R1 Mr.S.Kothandaraman for R2 Mr.N.G.R.Prasad for M/s.Row & Reddy for R3 Mr.R.Subramaniam for R4JUDGMENT(Judgment of the Court was delivered by M.CHOCKALINGAM, J.,)Challenge is made to the Order of a learned single Judge of thisCourt dated 12.11.2008 made in Company Application No.3013 of 2007 inCompany Petition No.125 of 1988.2. The Court heard the learned Additional Advocate General andalso the learned counsel for the respondents.3. The appeal, at the instance of the Revenue Department,Government of Tamil Nadu, has arisen under the followingcircumstances;An extent of 242.05 acres of land was granted to the Company inliquidation, as per G.O.Ms.No.360, Public Works Department(Irrigation) dated 23.02.1937, for a total value of Rs.90,000/-. Thealienation was conditional with a right to resume. The said land wassurveyed and fixed as 278.83 acres. As per the terms and conditionsof the alienation, the Government could resume the land wholly or inpart, if the land was required for public purpose or for conductingmining operations and in the event of such resumption or acquisitionof land for any reason, the compensation payable for the lands shouldnot exceed the amount paid by the grantee or their value at the timeof resumption or acquisition whatever was less. Out of the saidextent of 278.83 acres of land held by the company, an extent of209.08 acres was acquired by the Government from the company underthe Land Acquisition Act, 1894, for the establishment of IndustrialEstate for Chemical Industries, Developed Plots Estate, otherindustries, etc. An extent of 25 acres was, however, ordered to bereserved for allotment to the company if they come up with a concrete https://hcservices.ecourts.gov.in/hcservices/ proposal to utilise the said 25 acres. Compensation was paid at therate of Rs.87.37 per acre. The company filed an appeal before theSub Court, Salem, seeking enhancement of compensation. The SubCourt, Salem, awarded enhanced compensation at the rate of Rs.4,000/-per acre. Challenging the same, the State filed an appeal beforethis Court. After acquisition of 209.08 acres, the remaining extentleft with the company was only 69.75 acres. In the year 1971, MetturBeardsell Company approached the Government with a compromiseproposal, requesting to order, (i) outright assignment of 67.83 acres then in theirpossession to enable them to improve their title over theland;(ii) to grant outright assignment of an additionalextent of 25 acres of land lying immediately adjoiningtheir factory site and to the east of it; and(iii) to agree to the cost being recovered from thecompany for the total extent of 92.83 acres mentioned initem No.(i) and (ii) above at the rate of Rs.200/- peracre. The Government examined the said request and by G.O.Ms.No.49,Industries Department, dated 11.01.1972, directed that the totalextent of 92.83 acres be assigned to Mettur Beardsell CompanyLimited at the rate of Rs.200/- per acre. The Government alsoapproved the draft assignment deed and the draft memorandum ofcompromise to be executed with the company. The draft modificationdeed was also approved by the Government in September, 1975 and sentto the Collector, Salem District, for necessary action. Followingthe same, the appeal filed by the State was withdrawn and the samewas dismissed as settled out of Court. 4. The said company went into liquidation and was ordered to bewound up by an order of this Court dated 02.07.1993 in C.P.No.125 of1988. The Liquidator had taken possession of the land, pursuant tothe orders of this Court, for settling the claims of the creditors.The Official Liquidator, in his letter dated 10.12.2007, addressed tothe Secretary to Government, Revenue Department, informing that hehas filed C.A.No.3013 of 2007 in C.P.No.125 of 1988, for sale of theland and building and other structures belonged to the company, inliquidation. Under such circumstances, the Government raised itsobjections on the ground that the Government could resume the landsince there was a breach of the conditions, as found in theassignment. Those objections were negatived by the learned singleJudge. Under such circumstances, the State has broughtforth thisappeal. https://hcservices.ecourts.gov.in/hcservices/

5. The learned Additional Advocate General, inter alia, wouldsubmit that the company was granted an extent of 242.05 acres of landin the G.O.referred to dated 23.02.1937 for a total value ofRs.90,000/-; that the alienation was conditional with a right toresume; that subsequently, the land was surveyed and fixed as 278.83acres; that out of the said measurement, 209.08 acres was required bythe Government from the company under the Land Acquisition Act; thatthe Company came forward with the request for additional extent of 25acres and the Government has also reserved for allotment of 25 acresto the company if they come up with concrete proposal to utilise the25 acres; that compensation has been paid at Rs.87.37 per acre; thatthe company filed an appeal for enhancement of compensation and inwhich, the same was also enhanced to Rs.4,000/- per acre; that theappeal was filed before this Court by the State; that while theappeal was pending, the assignee company came forward with aproposal; that the same was also considered and directed that theextent of 92.83 acres of land be assigned to M/s.Beardcell CompanyLimited for their industrial purposes at Rs.200/- per acre; that thedraft assignment deed and also a memorandum of compromise wereapproved and that under such circumstances, the appeal was withdrawnand the same was dismissed as settled out of court. 6. Pointing out clauses 15 and 17 of the assignment deed, thelearned Additional Advocate General would submit that the land shouldbe used for the construction and operation of a textile mill or othermills and for carrying any related activities, which the assignee wasempowered to carry on and in the event of breach of the condition inclause 15, the land was liable to be resumed and taken back by theassignor on repayment to the assignee, the amount of Rs.12,639.70 orthe estimated market value of the lands at the time of resumption;that in the instant case, the Government can resume the land if theconditions found in the assignment deed were either not fulfilled orthe purpose for which the lands were assigned did not exist; that theassigned company was not the absolute owner of the property and thaton this score alone, the company application filed by the OfficialLiquidator for disposal of the land held by the Government, in orderto discharge the liabilities of the company, should have beendismissed.7. Added further the learned Additional Advocate General that itremains to be stated that the lands in acquisition were conditionallyassigned to Mettur Beardcell Company Limited on 11.01.1972; that theGovernment had proposed to invoke condition No.4 of the G.O.dated23.02.1937 and resume the land in question, by paying the sum; thatthe assignee company cannot use the land assigned for any otherpurpose; that it cannot be forgotten that the said land is underassignment by the Government and hence, there could not be any saleby the Court for the purpose of satisfying the claim of thecreditors; that as per the agreement, whenever there was a breach of https://hcservices.ecourts.gov.in/hcservices/ conditions, the land would revest with the Government and hence, theGovernment had decided to pay the said amount at the time ofresumption; that Clause No.4 as well as 15 and 16 of assignment deedhave to be strictly construed; that if done so, the entitlement ofthe company, in liquidation, cannot run beyond what was assigned;that the company was in liquidation since 2003 and hence, theGovernment did not issue any notice; that the absence of any suchnotice from the Government, would not mean violation of terms ofassignment, entitling the Official Liquidator to sell the same as theproperty of the company, in liquidation; that the company, inliquidation, had no right or interest in the property to claim thesame and that under such circumstances, the contentions made by theState should have been accepted by the learned single Judge and theapplication made by the Official Liquidator should have beendismissed.8. The Court heard the learned counsel for the respondents, whoreiterated the contentions, which were putforth before the learnedsingle Judge, in their sincere attempt of sustaining the order.9. The Court has paid its anxious consideration on thesubmissions made by the learned counsel on either side and hasconsidered all the available materials.10. Considerably, an extent of 242.05 acres of land was assignedby G.O.Ms.No.360, Public Works Department (Irrigation) dated23.02.1937 to M/s.W.A.Beardcell ad Company Limited, Madras, onpayment of consideration of the full value of Rs.90,000/-. A readingof clauses (1) and (2) of the said G.O.would clearly indicate thatthe land and building should be used for the purpose of a textilefactory and the business connected therewith and the Government couldresume the land and the buildings, wholly or in part, in the event ofthe land and building being used for the purposes unconnected withthe grant or for infringement of any of the conditions of the grant.The assignment deed did not stipulate any particular period and whenit was surveyed, it was found as 278.83. Out of the said total area,the Government took acquisition proceedings under the LandAcquisition Act, 1894 in respect of 209.08 acres. The company cameforward with a request to allot 25 acres of land additionally. In sofar as the acquisition lands to the extent of 209.08 acres, theGovernment fixed the compensation at the rate of Rs.87.37 per acre.Aggrieved over the fixation of compensation, the company filed anappeal before the Sub Court, Salem, seeking enhancement ofcompensation. The Sub Court enhanced the compensation at the rate ofRs.4,000/- per acre. Not satisfied with the same, the State took anappeal before this Court. Pending the same, the company came with acompromise proposal stating that the outright assignment of 67.83acres then in their possession to enable the company to improve theirtitle over the land and also to grant outright assignment of an https://hcservices.ecourts.gov.in/hcservices/ additional extent of 25 acres of land lying immediately adjoiningtheir factory. This compromise proposal was approved and accepted bythe Government. A memorandum of compromise was prepared and the samewas also produced before the Court, following which, the appeal filedby the State was not pressed and the same was dismissed as settledout of Court. While the matter stood thus, the company was orderedto be wound up in C.P.No.125 of 1988. The Official Liquidator, whotook possession of all the assets of the company, made C.A.No.3013 of2007 for bringing the property including the land in possession forsale. At that stage, the Government had raised objections on theground that the grant itself was made for particular purpose, thesame cannot be a subject matter of sale by this Court for the purposeof satisfying the claim of the creditors. When once the purpose ofassignment was violated, the property cannot be an asset of thecompany, in liquidation, and for breach of the conditions, theassignment stood cancelled and the Government, in exercise of itsrights, can resume the land. The Court is afraid whether thesecontentions could be accepted. A subsequent assignment was made toM/s.Beardcell Company Private Limited, by a document dated03.10.1972. It is not the case of the Government that from the dateof assignment, the company had not fulfilled its obligation ofconstructing a textile mill or quarters for the workers. Admittedly,they have been done and pursuant to the assignment, the company wasrunning its operation. Even the document dated 3rd October, 1972,would clearly indicate that the rights under the assignment weretransferable and hereditable. If it was noticed by the State thatthere was violation of any of the conditions, a notice should begiven to the assignee within a period of six months. Admittedly, nosuch notice was served upon the assignee company at any point oftime. Even a very reading would clearly indicate that so long as thesubsistence of the mortgage in respect of the property, theresumption rights cannot be exercised by the Government. 11. It remains to be stated that an extent of 242.05 acres ofland was the subject matter of acquisition proceedings, which wereactually acquired by the State, fixing the compensation amount peracre. Not satisfied with the amount of compensation, the companymade a claim petition before the Sub Court, Salem and the rate ofcompensation was enhanced to Rs.4,000/- per acre. Aggrieved over thesame, the State took up an appeal before this Court. Pending appeal,the said compromise was entered into and G.O.Ms.No.49, IndustriesDepartment, dated 11.01.1972 came to be passed. If really thecompany was not the owner and the Government retained the ownershipof the property, that too, when it found the contravention andviolation of the conditions imposed in the original assignment, itcould have either cancelled the assignment and resumed possession ofthe land, or at least, issued notice. On the contrary, theGovernment has taken 209.08 acres of the land by way of acquisitionand paid compensation also, which would clearly indicate the https://hcservices.ecourts.gov.in/hcservices/ recognition of the title of the company over the land. Some of theworkers employed in the company filed W.P.No.35411 of 2007. In thesaid Public Interest Litigation, the Collector, Salem District, hasfiled a detailed counter, in which, no whisper about the violationof the conditions; on the contrary, it was categorically averred thatthe lands so assigned were the properties of the assignee. Thefurther contention that there was a breach of conditions also cannotbe accepted. In the agreement dated 03.10.1972 between the Governmentand M/s.Beardcell Company Private Limited, the Government can resumethe land in whole or in part, if the same was required for the publicpurpose or for conducting mining operations and in the event ofresumption, compensation was payable. Under the compromise enteredinto in the year 1972, the consideration was fixed at Rs.12,639.70and was paid by the assignee to the assignor. A reading of thecompromise would indicate that 92.83 acres of land was assigned tohold the same freely alienable and hereditable, without any furtherconsent of the assignor's subject to the terms and conditions. Areading of the same would clearly indicate that the resumption ofland by the Government is possible if there was a breach of thecondition in clause (2). If there was a failure to pay the groundrent, it has nothing to do with clause(1), whereby the absolutealienable right is granted. As a result of the compromise betweenthe parties and having adjusted the price in the compensation payableto the company on the basis of the land acquisition proceedings andhaving granted the rights to the company which are clearly mentionedas alienable and hereditable rights, the Government cannot now beallowed to state that there was a breach of condition and that theland continued to be vested with the State and they can resume thesame. It is not the case of the State that there was any arrears ofrent. Even to invoke the clause that there was a breach of condition,the Government, though decades passed, did not issue any notice atall. Under such circumstances, the learned single Judge was perfectlycorrect in rejecting the contentions putforth by the State and theCourt is unable to see any merit in the arguments advanced by thelearned Additional Advocate General and hence, the order passed bythe learned single Judge has got to be sustained.Accordingly, the appeal fails and is dismissed. No costs.Consequently, connected M.P.is closed.Sd/Asst.Registrar/true copy/Sub Asst.Registrargl https://hcservices.ecourts.gov.in/hcservices/ To1.The Sub-Assistant Registrar,Original Side,High court, Madras-104.1 cc To Mr.S.Kothandaraman, Advocate, SR.409891 cc To M/s.Row & Reddy, Advocate, SR.409901 cc To Mr.R.Subramaniam , Advocate, SR.41483Judgment in O.S.A.No.239 of 2009ksk(co)pmk.3.9.2009