Supreme Court - Daily Orders
The State Of Madhya Pradesh vs M/S. Binod Mills Co. Pvt. Ltd. Official ... on 27 February, 2019
Bench: Rohinton Fali Nariman, Sanjay Kishan Kaul
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2373 OF 2019
(Arising out of SLP (C)No. 27539 of 2017)
THE STATE OF MADHYA PRADESH Appellant(s)
VERSUS
M/S. BINOD MILLS CO. PVT. LTD.
THROUGH OFFICIAL LIQUIDATOR & ANR. Respondent(s)
O R D E R
In the present case, the erstwhile Raja of Gwalior, by a deed dated 22.10.1912, granted permission to M/s.Binodiram Balchand to open a spinning and weaving mill at Ujjain. Clause (1) of the said communication states that around 75- 80 bighas will be given to the Firm on an annual rental calculated at the current assessment rates for so long as the mill is in existence. A lease deed, being styled as “Lease-Acceptance”, was then entered into by the sons of Balchand with the Raja of Gwalior, in which clauses (1), (2) and (4) are material and are set out hereinbelow:
“1. The name of the Mills shall be “the Binod Mills Co. Ltd.” and the Mills shall work under this name.
2. A plot of land measuring about 80 (eighty) Bighas and to the East side of the town of Ujjain is solicited to be granted. The said plot of land under this condition shall remain in our possession Signature Not Verified as long as the Mills stand. The said plot shall be Digitally signed by NIDHI AHUJA granted after due measurement, and a certain amount Date: 2019.03.05 16:52:12 IST Reason: of annual rent shall be fixed by Govt. & shall regularly be paid by us in the Treasury fixed by the Govt.
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4. The rent fixed on the said plot of land thus granted shall regularly be paid into the govt. Treasury as long as the mills shall stand on the said plot. If under any circumstances, we shift or re-move the Machinery of the Mills or shall clear away the ground & make as clear as it was before and hand it over to the Govt. and pay up the rent upto the date of clearance.” By an order dated 05.02.1960 passed by the Collector, Ujjain, it was certified that 86 bighas and 4 biswas had, in fact, been given to establish the Binod Mills Co. Ltd. This land will remain in their possession till the Binod Mill continues, that is, the Government to not take possession till the Mill is in existence subject, however, to the periodical reassessment of land revenue.
In 1979, on 22.06.1979, a show cause notice was issued under section 182 of the M.P. Land Revenue Code, 1959, stating that the terms and conditions of the Grant had been contravened and that, therefore, the Government seeks to re- enter the land. It may be stated, however, that nothing was done in pursuance of this notice.
Meanwhile, the Mills were closed in the year 1991 and have remained closed ever since. A Company Petition No. 12/92 dated 16.10.1992 was filed by the Company itself asking for a voluntary winding-up. On 06.01.1996, a winding-up order was passed in which the Official Liquidator was appointed to take over the assets of the company. The Official Liquidator then attempted to get NOCs from the 2 CIVIL APPEAL NO. 2373 OF 2019 Government in order to be able to sell the land as an asset of the company, but to no avail. Meanwhile, the learned Company Judge, by an order dated 12.01.2004, decided that the Official Liquidator ought to be granted permission to sell the land in question as the land was in the nature of an irrevocable Grant entitling the company to sell and/or dispose of and/or transfer the land with a condition to use the land for industrial purposes or purposes akin to it. It was also held that no steps were taken by the State to recognise their right of re-entry, leading to the conclusion that the Grant was therefore irrevocable in nature. Accordingly, the Official Liquidator was granted permission to sell the land “belonging to the company”. Meanwhile, an appeal was filed against the aforesaid order in 2004. While the appeal was pending, the State Government, by an order dated 11.07.2014, exercised rights under section 182 of the M.P. land Revenue Code, 1959, and directed the Tehsildar, Ujjain, to immediately obtain the possession of the land in question.
Meanwhile, since the workers dues from 1991 till 1996 were found by the Official Liquidator to amount to a sum of Rs.57,24,94,583/-, the State Government itself came out with a scheme dated 29.01.2016, in which it is stated that upon developing the aforesaid land and receiving moneys by virtue of such development, it will disburse from such amount, (a) 3 CIVIL APPEAL NO. 2373 OF 2019 expenditure on the main infrastructure (b) payment of the arrears of the laborers (c) payment of other obligations permitted by the High Court and (d) the remainder shall be deposited in the treasury of the Municipal Corporation, Ujjain.
Meanwhile, the company appeal was decided by the impugned judgment dated 12.04.2017. The appeal from the learned Single Judge’s Order was dismissed as the Division Bench agreed with the learned Single Judge in holding that the the present was a case of an irrevocable Grant made in favour of the company. It further went on to state that no concrete proposal to clear workers dues has been given by the State Government, as a result of which, the official Liquidator was, therefore, granted sanction to sell the aforesaid land.
Learned counsel appearing on behalf of the State of Madhya Pradesh, the appellant before us, has argued that both the Single Judge and the Division Bench were in error in holding that the land was in the nature of an irrevocable Grant. It is clear on a reading of the communication of 1912 as well as the Lease-Acceptance deed that a certain rent had to be paid and that the lease of the land would subsist only until the Mill that was to be constructed upon it would continue as such. He also submitted that the Government was ready and willing to abide by the Revenue 4 CIVIL APPEAL NO. 2373 OF 2019 Department’s letter of 29.01.2016 and would clear all workers’ dues without interest within a period of 2 years from the date of the land being released to the Government, so that it could ultimately set up a “Smart City” thereon.
On the other hand, the learned counsel appearing on behalf of the Official Liquidator has supported the judgments of the Courts below. He has also argued that, in point of fact, no right of re-entry could be exercised as section 481 of the Companies Act states that the company would continue in the process of winding up until it is dissolved and struck off the company register. This has still not occurred till date. In addition, he stated that there were very large dues owed to secured creditors who have intervened before us and submitted that a mortgage thus subsists on this very land in favour of IDBI bank and IFCI bank. They therefore, exhorted us to keep whatever rights they may have in such mortgage apart, so that such mortgage is not affected by any judgment that would be passed.
Learned counsel appearing on behalf of the workers has told us that most of the workers are now dead and that an application for interest on the amount owning to them is pending before the Official Liquidator. Further, the rate of interest allowable under the Companies Act is 4 per cent per annum.
Having heard learned counsel on behalf of the parties, 5 CIVIL APPEAL NO. 2373 OF 2019 we are of the view that neither the judgment of the Single Judge nor the judgment of the Division Bench can be sustained. It is clear on a reading of the 1912 document as well as the Lease-Acceptance deed that only a lease was entered into of the aforesaid land by the erstwhile Gwalior State in favour of the Binod Mills Co. Ltd., which lease was conditioned by payment of rent and by the condition that the Mill must continue and not cease to exist. In this view of the matter, it cannot be said that any irrevocable Grant had been made by the erstwhile Gwalior State in favour of the Binod Mills Co. Ltd. Further Section 182 of the M.P. Land Revenue Code, 1959, states as follows:
“182. Rights and liabilities of a Government lessee.-
(1) A Government lessee shall, subject to any express provisions in this Code, hold his land in accordance with the terms and conditions of the grant, which shall be deemed to be a grant within the meaning of the Government Grants Act, 1895 (XV of 1895).
(2) A Government lessee may be ejected from his land by order of a Revenue Officer on one or more of the following grounds, namely: -
(i) that he has failed to pay the rent for a period of three months from the date on which it became due; or
(ii) that he has used such land for purposes other than for which it was granted; or
(iii) that the term of his lease has expired; or
(iv) that he has contravened any of the terms and conditions of the grant:
Provided that no order for ejectment of a Government lessee under this sub-section shall be passed without giving him an opportunity of being heard in his defence.” 6 CIVIL APPEAL NO. 2373 OF 2019 This provision again makes it clear that a land held under a Government Grant can be held as a Government lessee only if no ground for ejectment is made out under sub- section (2). Sub-section (2) has grounds for ejectment, apart from user of land for purposes other than for which it was granted. Failure to pay the rent for a period of three months from the date on which it became due, as also that any other terms and conditions of the grant had been contravened are also grounds for ejectment. It is, thus clear that even if the Mill was running, the Binod Mills Co. Ltd. could have been ejected if they failed to pay rent for a period of three months from the date on which such rent became due. This would show that this is a case of a Government lease and not an irrevocable Grant, as has wrongly been held by both the Single Judge and the Division Bench.
The Official Liquidator’s argument that under section 481 of the Companies Act, dissolution of the company is yet to take place has no legs to stand on. This is because the lease is explicit in stating that the event which grants the Government a right of re-entry is the factum of the mill closing. This has occurred way back in the year 1991.
We have also considered the fact that workers who worked since 1991 till 1996, which is the date of the winding-up order, have not been paid any wages. We may 7 CIVIL APPEAL NO. 2373 OF 2019 hasten to add that, given the time period involved, most of these persons are dead. We, therefore, direct that the State Government may put the aforesaid land to whichever use it proposes, subject to paying off workers dues which have been quantified by the Official Liquidator as Rs.57,24,94,583/-. Added to this figure will be simple interest at the rate of 4 per cent per annum for the year 01.01.1991 till 06.01.1996 and 2 per cent per annum thereafter until payment. The State Government is given a period of two years from the date of this judgment within which to pay-off the aforesaid sum to the workers.
Possession of the land to be handed over by the Official Liquidator to the State Government within one week from today.
We have been informed by the learned counsel appearing on behalf of the workmen that by an order dated 20.06.2017, the order dated 11.07.2014 has been set aside on the ground that the very basis of the aforesaid order does not survive since the order was passed on the basis of the interim order of the Division bench in the Company Appeal, and the Company Appeal itself has now been dismissed by holding in favour of the company in liquidation. The order dated 20.06.2017 would no longer be valid in view of this judgment in which we have allowed the company appeal. In this view of the matter, the order dated 11.07.2014 cannot be said to be bad 8 CIVIL APPEAL NO. 2373 OF 2019 in law.
The appeal is disposed of accordingly in the aforesaid terms.
……………………………………………………………………., J.
[ ROHINTON FALI NARIMAN ] ……………………………………………………………………., J.
[ SANJAY KISHAN KAUL ] New Delhi;
February 27, 2019.
9 CIVIL APPEAL NO. 2373 OF 2019 ITEM NO.4 COURT NO.6 SECTION IV-A S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Civil Appeal No. 2373/2019
(Arising out of SLP (C)No. 27539 of 2017) THE STATE OF MADHYA PRADESH Appellant(s) VERSUS M/S. BINOD MILLS CO. PVT. LTD.
THROUGH OFFICIAL LIQUIDATOR & ANR. Respondent(s) (With IA No. 6382/2018 – CLARIFICATION/DIRECTION, IA No. 85485/2017 – EXEMPTION FROM FILING O.T., IA No. 65969/2018, 110896/2018, 119854/2018 and 139174/2018 – INTERVENTION/IMPLEADMENT) Date : 27-02-2019 This matter was called on for hearing today. CORAM :
HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN HON'BLE MR. JUSTICE SANJAY KISHAN KAUL For Appellant(s) Mr. Rahul Kaushik, AOR Ms. Bhuvneshwari Pathak, Adv.
Ms. Shilpi Satyapriya Satyam, Adv. Mr. Siddharth Chakravorty, Adv. For Respondent(s) Mr. Navin Prakash, AOR Mr. Dheeraj Singh Panwar, Adv.
Mr. Sandeep Mahapatra, Adv.
Ms. Mrinmayee Sahu, AOR Mr. B. K. Satija, Adv.
Mr. Jagat Arora, Adv.
Mr. Rajat Arora, Adv.
Mr. Niraj Kumar, Adv.
Mr. Sanjay Kapur, Adv.
Mr. Bharath Gangadharan, Adv.
Ms. Megha Karnwal, Adv.
Ms. Shubhra Kapur, Adv.
Mr. Pradeep Aggarwal, Adv.
Mr. Lal Pratap Singh, Adv.
Mr. Divyank Tyagi, Adv.
10 CIVIL APPEAL NO. 2373 OF 2019 Mr. Arjun Aggarwal, Adv.
Mr. Umesh Pratap Singh, Adv.
UPON hearing the counsel the Court made the following O R D E R Leave granted.
The appeal stands disposed of in terms of the signed order.
Applications for intervention are allowed. Pending applications stand disposed of.
(NIDHI AHUJA) (RENU DIWAN)
COURT MASTER (SH) ASSISTANT REGISTRAR
[Signed order is placed on the file.]
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