Telangana High Court
M/S. Nava Bharat Ventures Limited vs The State Of Andhra Pradesh on 19 April, 2022
Author: B. Vijaysen Reddy
Bench: B. Vijaysen Reddy
HON'BLE SRI JUSTICE B. VIJAYSEN REDDY
WRIT PETITION No.21539 of 2008
ORDER:
This writ petition is filed challenging Notice No.F2/2856/76 dated 25.08.2008 issued by respondent No.2 - the Special Officer & Competent Authority, Urban Land Ceiling, Hyderabad, purported to be in exercise of powers conferred under the provisions of the Urban Land (Ceiling and Regulation) Act 1976 as illegal, arbitrary and ultra vires of the provisions of the Urban Land (Ceiling and Regulation) Repeal Act 1999 as adopted by the State of Andhra Pradesh in G.O. Ms.No.603 dated 22.04.2008 and in violation of principles of natural justice and the petitioners' rights guaranteed under Articles 14, 19(1)(g) and 300-A of the Constitution of India.
2. Brief facts leading to filing of this writ petition are as under:
(i) Petitioner No.1 - M/s. Nava Bharat Ventures Limited, Navabharath Chambers, Hyderabad is a public limited company registered under the provisions of the Companies Act 1956. It is 2 engaged in the business of manufacture and sale of ferro alloys, power sugar and allied products and machine building. It was incorporated in 1972 with its registered office at Door No.6-3-1109/1, Nava Bharat Chambers, Raj Bhavan Road, Somajiguda, Hyderabad.
(ii) Petitioner No.1 is absolute owner and possessor of the industrial land situated in Survey No.617/1 (old) and presently Survey Nos.617/3 to 617/13 in Malkajgiri Village, Hyderabad East Taluq, Hyderabad District admeasuring Acs.65.00. Originally, this land belongs to the HEH Nizam of Hyderabad. The said land was purchased in a public auction held on 23.12.1952 by one Smt. N. Kamala Devi, wife of Mr. N. Durgaiah. Possession of the subject land was handedover to her after payment of full sale consideration on 10.03.1954. A registered document was executed in her name vide sale deed dated 08.11.1961. She obtained permission from the Tahsildar, Hyderabad East Taluq under Sections 47 and 48 of Hyderabad Tenancy and Agricultural Lands Act 1950 for transfer of the patta lands in Survey No.617/1 (old) admeasuring Acs.100-20 guntas in favour of M/s. Andhra Foundry 3 & Machine Company Limited (hereinafter referred to as "Andhra Foundry") vide Proceedings No.D.DIS.B5/495/6 dated 22.02.1962.
Subsequently, Smt. N. Kamala Devi alienated an extent of Acs.100-20 guntas in favour of Andhra Foundry, represented by its Director Mr. M. Harichandra Prasad for a valuable sale consideration under a registered sale deed bearing document No.177 of 1962. The Andhra Foundry has set up a Spun Pipe Division in the subject premises and subsequently when it went into financial crisis, it was referred to the Board for Industrial and Financial Reconstruction (for short 'BIFR') and it was registered with Registration No.56 of 1987. During the process of rehabilitation, petitioner No.1 company proposed a scheme of amalgamation of Andhra Foundry with M/s. Nava Bharat Ferro Alloys Limited i.e., petitioner No.1 herein. By the orders dated 01.06.1990, the BIFR has approved and sanctioned scheme for rehabilitation of Andhra Foundry with petitioner No.1. In terms of the scheme, the effective date of transfer was 01.04.1989. As per clause 4 of the scheme with effect from transfer date, the entire undertaking and business of Andhra Foundry including all its 4 properties, movable and immovable, stood transferred to and vested into petitioner No.1 company pursuant to the order to that effect by BIFR from the date of transfer date. The BIFR has passed order dated 01.06.1990 approving the sanctioned scheme for rehabilitation of Andhra Foundry. By virtue of the said sanctioned scheme and merger, petitioner No.1 company got absolute right over the assets of the Andhra Foundry including the subject land in Survey Nos.617/3 to 617/13. It is claimed that from the date of purchase, petitioner No.1 had been in continuous and peaceful possession of the subject land.
(iii) The Andhra Foundry filed declaration under Section 6(1) of the Urban Land (Ceiling and Regulation) Act, 1976 (for short "ULC Act") on 13.08.1976 before respondent No.2 in respect of As.87-971/2 cents in Survey Nos.617/3 to 617/13 and out of which, an extent of Acs.43-97½ cents was shown to be covered by plant, machinery, buildings etc., and rest was stated to have been required for the company's proposed expansion. Simultaneously, Andhra Foundry made an application to respondent No.1 under Section 20(1)(a) of the ULC Act seeking exemption of the vacant 5 land for an extent of Acs.44-00 from applicability of the ULC Act. Draft statement under Section 8(1) of the ULC Act was issued by the order dated 11.03.1986 determining the vacant land holding by the declarant company as 3,46,675.65 square meters. Out of which, an extent of 1000 square meters of land was allowed to be retained in terms of Section 4(1)(b) of the ULC Act and an extent of 3,45,675.65 square meters of land was shown to be surplus vacant land. Objections were filed by the Andhra Foundry. After considering the objections, respondent No.2 passed orders under Section 8(4) of the ULC Act confirming the draft statement under Section 8(1) of the ULC Act, thereby it was held that the Andhra Foundry is holding an extent of 3,45,675.65 square meters of excess vacant land. Aggrieved by the order dated 21.03.1986 under Section 8(4) of the ULC Act, the Andhra Foundry preferred an appeal to respondent No.1 on 11.04.1986. Respondent No.1 by the letter dated 01.05.1986 informed the company that its application for exemption was under consideration, and therefore, if the company intends to challenge the orders of respondent No.2 dated 21.03.1986, a proper appeal was advised to be filed before 6 the appellate authority under Section 33 of the ULC Act or revision to the Government under Section 34 of the ULC Act. The Andhra Foundry preferred revision before respondent No.1 on 13.05.1986 and the same was taken up for hearing on various occasions and adjourned from time to time and so far, no final orders have been passed therein. Petitioner No.1 company alienated an extent of Acs.13-00 of land to various third parties after obtaining necessary permissions from respondent No.1 under Section 20 of the ULC Act. Petitioner No.1 company is presently holding an extent of Acs.65.00 i.e., 2,62,990 square meters of land.
(iv) The case of the petitioners is that even after 1990, neither the respondents passed any orders in regard to the proceedings in continuation to orders passed by respondent No.2 under Section 8(4) of the ULC Act nor notice under Section 9 or 10(1) of the ULC Act, which are mandatory, was issued to the petitioner company.
(v) The Urban Land (Ceiling and Regulation) Repeal Act 1999 (for short "ULC Repeal Act") came in to force with effect 7 from 22.03.1999 and in the State of Andhra Pradesh on 27.03.2008. By virtue of the provisions of the ULC Repeal Act, the proceedings initiated under the ULC Act shall abate. While so, respondent No.2 issued impugned notice No.F2/2856/76 dated 25.08.2008 calling upon petitioner No.1 company to make an application for regularization of possession over the land in Survey Nos.617/3 to 617/13 situated at Malkajgiri Village admeasuring 3,05,207.05 in terms of G.O.Ms. No.747 dated 18.06.2008 on or before 30.08.2008. It is stated that G.O. Ms. No.747 has no application to the petitioners' land, which is being utilized for industrial purpose and shown as industrial land. The petitioners are in absolute possession of the subject land.
3. Respondent No.1 - the State, represented by its Principal Secretary to the Government, filed counter. It is submitted that the Secretary of the Andhra Foundry filed declaration under Section 6(1) of the ULC Act, draft statement under Section 8(1) and Notice under Section 8(3) of the Act were issued holding that the declarant company holding excess land of 3,45,675.65 square meters. The notice was got served through the enquiry officer on 11.03.1986. 8 The declarant company has filed its objections to the draft statement. Consequently, final orders under Section 8(4) of the ULC Act and final statement under Section 9 of the ULC Act were issued on 21.03.1986 confirming the approved excess holding under the draft statement.
(i) Notification under Section 10(1) was issued in the Andhra Pradesh State Gazette No.18 dated 01.02.1988. Since no objections were received under Section 10(2)of the ULC Act, declaration under Section 10(3) of the Act was issued on 25.04.2002 and were got published in the Andhra Pradesh Gazette Extraordinary on 10.05.2022, by virtue of which, the land vested with the Government is free from all encumbrances. Notice under Section 10(5) of the ULC Act was issued on 04.06.2002 and sent through registered post with acknowledgement due which was returned un-served with an endorsement "address lost." Thereafter, the enquiry officer made necessary enquiry, proceeded to the factory premises and finding that the company was locked and defunct without any representative, affixed the notice under Section 10(5) of the ULC Act to the gate of the factory and 9 obtained signature of the witnesses on 06.05.2006. Since possession was not handed-over, the competent authority authorized the enquiry officer to take possession of the excess land under Section 10(6) of the ULC Act. The enquiry officer has taken over possession of the surplus land on 15.03.2008. Hence, the lands are governed by the principal Act i.e., the ULC Act by virtue of the saving clause under the ULC Repeal Act. The petitioner No.1 company has no right or title over the land declared as surplus. The petitioner No.1 company has no legal right or title over the land held by the declarant company under the provisions of the ULC Act unless and until the declarant company has got exemption from the Government under Section 20 of the ULC Act for transfer in favour of petitioner No.1 company. Even though assets of the declarant company were transferred in favour of petitioner No.1 company under BIFR Scheme, petitioner No.1 company is not having absolute title over the land held by the declarant. The ULC Act is a Central Act and it has overriding effect over all other Acts, customs, usages or decree as defined under Section 42 of the ULC Act.
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(ii) The Government has granted exemption under Section 20 of the ULC Act for certain lands held by the company by G.O.Ms.No.900 dated 28.07.1986, G.O. No.712 dated 17.11.1988 and G.O. Ms. No.1061 dated 27.11.1991 for an extent of Acs.22.00 to alienate the same in favour of M/s. Nava Bharath Industrial Living and Equipment Limited, Voith India Limited and also ARM Private Limited and the Government vide Memo No.1002/UC.III/84-37 dated 01.12.1987 rejected the revision of the Andhra Foundry under Section 34 of the ULC Act. Final order was passed under Section 8(4) of the ULC Act determining an extent of 3,45,675.65 square meters held by the declarant as surplus. The Government issued Memo No.7914/UC.III/88-13 dated 10.10.1994 directing to take over the excess vacant land. In view of the same, the case has been processed up to 10(6) and possession of the surplus land was taken over by the Government on 15.03.2008 which is prior to the ULC Repeal Act. Since none filed objections to the notification under Section 10(1) of the ULC Act, notification under Section 10(3) was issued and published in the Andhra Pradesh Gazette No.84 dated 10.05.2002. 11 Consequently, notice under Section 10(5) of the ULC Act was issued and sent under RPAD which was returned un-served as "addressee left". But, the declarant company failed to handover the excess land, as such, possession was taken over by issuing orders under Section 10(6) of the ULC Act. The asset transfer in favour of petitioner No.1 company by the declarant company is voidable and is in violation of the provisions of the ULC Act until and unless exemption was granted under the provisions of the ULC Act.
4. In the rejoinder filed by the petitioner to the counter of respondent No.1, inter alia, it was contended that notice under Section 10(5) of the ULC was not served on petitioner No.1 company which has taken over assets of Andhra Foundry under BIFR Scheme. Further, G.O. Ms. No.1061 dated 27.11.1991 was issued to petitioner No.1 company by respondent No.1 permitting it to sell part of the land to another company and post-merger of M/s. Nava Bharat Ferro Alloys. The claim of respondent No.1 about service of notice under Section 10(5) of the ULC Act on 04.06.2002 contradicts notings in the relvant file as extracted in the 12 rejoinder filed by the petitioner to the counter of respondent No.1 which reads as under:
"The note dated 21.02.2007 at page no.49 item no.183 shows that:
"in this CC, the notice under section 10(5) of the Act was issued on 04.06.2002, but the served copy or OC, not made available on record. Hence, fresh notice under section 10(5) of the Act is submitted for approval please."
Surprisingly, the said noting at item no.183 contradicts with the averments mentioned in the counter filed by the Respondent No.1 with regard to alleged affixing of the notice to the gate of the subject land of the writ on 06.05.2006. It shows that the affixing of the notice dated 04.06.2002 under section 10(5) of the ULC Act on 06.05.2006 is nothing but an afterthought after filing the writ petition and invented now for the purpose of filing the counter. The further contradiction can be seen from item no.183 with reference to item no.184 dated 01.03.2007 which states:
"10(5) was already issued on 22.02.2007. 10(6) will be submitted after completion of statutory period. Submitted for perusal please"
The noting made on 14.03.2007 as item no.185:
'the 10(6) proceedings is put up for approval."13
The physical possession of petitioner No.1 company over the subject land is admitted by respondent No.1 in its counter. The alleged panchanama dated 15.03.2008 is in printed proforma and was not prepared manually or otherwise.
5. Heard Mr. M.V.S. Suresh Kumar, learned senior counsel, appearing for M.V. Pratap Kumar, learned counsel for the petitioners, Mr. Harender Pershad, learned Special Government Pleader for the respondents, and perused the material on record.
6. The learned senior counsel appearing for the petitioners has submitted that notice under Section 10(5) of the ULC Act allegedly issued to Andhra Foundry is invalid. The name of the petitioner company was changed on 01.06.1990 and that M/s. Andhra Foundry was merged with petitioner No.1 company under the scheme of amalgamation by order dated 01.06.1990 with effect from 01.04.1989. Later, name of petitioner No.1 company was changed to M/s. Nava Bharat Ventures Limited. Exemption was granted to petitioner No.1 company on 27.11.1991 vide G.O.Ms. No.1061 for sale of Acs.12-00 of land under Section 14 20(1)(a) of the Act. However, surprisingly 10(5) notice was issued in the name of Andhra Foundry. Issuance of notice under Section 10(5) of the ULC Act is mandatory and the impugned proceedings are contrary to the law laid down by a learned single Judge of this Court in Raj Kumar Surana v. Government of Andhra Pradesh1.
7. The learned Special Government Pleader for the respondents has submitted that the declarant is not before this Court. The scheme of amalgamation is a compromise or arrangement between two companies which is a transfer under Section 3 of the Transfer of Property Act 1882. The respondents were never put on notice about amalgamation of two companies.
Petitioner No.1 company cannot set up an independent title. Possession of the subject land was taken prior to the ULC Repeal Act coming into force. In any case, the amalgamation requires registration, and therefore, hit by Section 17 of the Registration Act. The learned Special Government Pleader relied on the decision of the Hon'ble Supreme Court in Yellapu Uma 1 (2014) 3 ALT 167 15 Maheswari v. Buddha Jagadheeswararao2 and Hindustan Lever v. State of Maharashtra3.
8. In reply, the learned senior counsel appearing for the petitioners submitted that the proceedings of exemption dated 27.11.1991 vide G.O. Ms. No.1061 was issued in favour of petitioner No.1 recognising merger of two companies. The issue of registration does not fall for consideration in this writ petition. Whether the notice issued under Section 10(5) of the ULC Act is valid or not is the only point involved in this writ petition. The respondents have to satisfy this Court that the notice under Section 10(5) of the ULC Act is valid. The respondents have to succeed on the strength of their own case.
9. The crucial point that arises for consideration is whether the notice under Section 10(5) of the ULC Act dated 04.06.2002 issued by respondent No.1 to petitioner No.1 company is valid or not?
2 (2015) 16 SCC 787 3 (2004) 9 SCC 438 16
10. An identical issue came up for consideration before this Court in Raj Kumar Surana's case (Supra 1), wherein it was held in paragraph Nos.37 and 42 as under:
"It is the pleaded case of the respondents that notice under Section 10(5) of the Act was sent to the declarant's address and that the same was affixed at a conspicuous place of the subject land on 30.12.2005.
Learned Assistant Government Pleader has produced the record, a perusal of which shows that the notice, dated 16.10.2003, purportedly issued under Section 10(5) of the Act sent to the declarant's address, was returned with a postal endorsement, dated 23.10.2003, which is not decipherable. The record also contains the panchanama, dated 04.03.2008, which is on a printed proforma. It shows that three private persons who purportedly acted as panchas have affixed their signatures. The blanks in the printed proforma (in Telugu) have been filled as if to show that the land to an extent of 13,829 square meters was taken possession on 04.03.2008.
Even ignoring the theory of notice by affixture set up by the respondents, it is not the pleaded 17 case of the respondents that they have issued notice to any of the petitioners who are, admittedly, in possession of their plots when the purported physical possession was taken by the respondents.
As noted above, Section 10(5) of the Act mandates service of notice to the persons in physical possession of the land. Forceful possession can be taken only if the persons in occupation of the land do not voluntarily surrender the same. As held by the Supreme Court forceful dispossession can be resorted to under Section 10(6) of the Act only after issuing notice under Section 10(5) of the Act which was held to be mandatory. Admittedly, the petitioners were not given notices. Therefore, the panchanama set up by the respondents, under which physical possession of the land was purportedly taken, has no legitimacy in law. Further more, the very theory of taking physical possession of the subject land is contradicted by the respondents' own showing. The respondents did not dispute that the petitioners are in physical possession of the subject land. Indeed, to some of the petitioners, notices in writing were given calling upon them to apply for regularisation of 18 possession of their lands. It is not the pleaded case of the respondents that after physical possession was taken on 04.03.2008, the petitioners have illegally occupied the subject land. Thus, the very plea set up by the respondents that they have taken physical possession of the land on 04.03.2008 is self-contradictory and the same cannot be accepted. On the respondents' own showing, the petitioners are continuing in physical possession of the subject land and what was evidently taken was only a symbolic possession on paper.
As held by the Supreme Court in Hari Ram (supra), the Repeal Act will save only in such cases where the de facto possession (physical possession) was taken and mere vesting of the land under Section 10(3) of the Act or symbolic possession on paper would not save the proceedings under the Act from getting lapsed under the Repeal Act as and when the same is adopted by the respective State legislatures.
On the above analysis, this Court has no option other than holding that the ULC proceedings initiated in respect of the subject land have lapsed as, the respondents failed to take physical possession of the subject land as on the 19 date on which the Andhra Pradesh legislature has adopted the Repeal Act or even subsequent thereof. Consequently, there is no need for the petitioners to seek regularisation of their possession over the subject land. The respondents cannot retain the amounts collected from the petitioners in the name of regularisation. For the above-mentioned reasons, the Writ Petitions are allowed as prayed for. As a sequel to disposal of the Writ Petitions, W.P.M.P. Nos.20718, 20723, 20786, 20790 and 20814 of 2013 filed by the petitioners for interim relief are disposed of and WVMP. Nos.3010, 3000, 3008, 3009 and 3001 are dismissed as infructuous."
11. In the present case, according to respondent No.1, notice under Section 10(5) of the ULC Act dated 04.06.2002 was attempted to be served on the Factory Premises of the petitioner No.1 company through 'Registered Post with Acknowledgement Due', which was returned with endorsement "addressee left." Thus, the notice under Section 10(5) of the ULC Act was affixed to the gate of the factory in the presence of witnesses. As the possession was not handed over, possession of surplus land was 20 taken on 15.03.2008. It is admitted by respondent No.1 that G.O.Ms. No.1061 dated 27.11.1991 was issued to the petitioner No.1 company to alienate the land of Acs.22.00 guntas. It is duly mentioned in the said G.O. issued under Section 20(1) of the ULC Act that M/s. Andhra Foundry & Machine Company (declarant) was merged with petitioner No.1 company (M/s. Nava Bharat Ferro Alloys). Copy of G.O. Ms. No.1061 was sent to the address of petitioner No.1 company at Raj Bhavan Road, Hyderabad.
12. It is obvious on the face of record that respondent No.1 was not diligent in verifying the entire file and merger proceedings before BIFR and ensure service of notice to the proper address of petitioner No.1 company and proper party. As held in Raj Kumar Surana's case (Supra 1) and State of U.P. v. Hariram4, service of notice under Section 10(5) of the ULC Act is mandatory. By its negligence, respondent No.1 issued notice under Section 10(5) of the ULC Act to the declarant company (Andhra Foundry & Machine Company Limited) which was not in existence. Thus, the contention of the respondents that possession was taken over from 4 (2013) 4 SCC 280 21 the petitioner No.1 company is baseless. Further, it is relevant to point out that petitioner No.1 is admittedly in possession of the subject land and impugned notice under G.O. Ms. No.747 was issued calling upon petitioner No.1 to regularize the land. It is not the case of the respondents that petitioner No.1 company was dispossessed pursuant to the order under Section 10(6) of the ULC Act and panchanama dated 15.03.2008 and that petitioner No.1 reoccupied the land. Thus, notice under Section 10(5) of the ULC Act dated 04.06.2002 and the order under Section 10(6) of the ULC Act and consequential panchanama are nonest and null and void.
13. In Hindustan Lever's case (Supra 3), the appellant therein challenged constitutional validity of Section 2(g)(iv) of Bombay Stamp Act 1958. When stamp duty was sought to be levied on the order of amalgamation passed under Section 394 of the Companies Act 1956, after examining various provisions of the Companies Act 1956, Bombay Stamp Act 1958 and amendments made to the said Act, the issues that came up for consideration before the Hon'ble Surpeme Court are as under: 22
"8. The issues which are debated before us are: (1) whether the State Legislature had the legislative competence to impose stamp duty on the order of amalgamation passed by a court? And (2) whether an order sanctioning a scheme of amalgamation under Section 394 read with Section 391 of the Companies Act, 1956, is liable to be stamped in accordance with the provisions of the Bombay Stamp Act in its application in the State of Maharashtra?
14. Mr. Harender Pershad, learned Special Government Pleader, places heavy reliance on the decision in Hindustan Lever's case (Supra 3) and by referring to paragraph Nos.30 to 38 therein, contended that amalgamation of petitioner No.1 company also requires registration and for want of registration, the petitioner does not have locus standi to file this writ petition. The issues arisen in Hindustan Lever's case (Supra 3) and the decision rendered thereon are totally unconnected to the issues in the instant case under the ULC Act. So also the decision in Yellapu Uma Maheswari's case (Supra 2) dealing with the effect of non- registration of documents required to be registered is not concerned 23 with the issues in the present lis. Thus, the principles of law laid down in Hindustan Lever and Yellapu Uma Maheswari's cases (Supra 3 and 2 respctively) are not applicable to the facts of the present lis.
15. The issue regarding registration of amalgamation before BIFR does not fall for consideration in this matter, more so, in view of admitted factual position that petitioner No.1 company is in physical possession of the subject land. As possession of the subject land was not taken in accordance with law pursuant to the order dated 21.03.1986 passed under Section 8(4) of the ULC Act by virtue of Section 4 of the Repeal Act, the impugned proceedings stood abated.
16. For the aforesaid reasons, the writ petition is allowed and the impugned notice is set aside. No order as to costs.
As a sequel thereto, miscellaneous petitions, if any, pending stand closed.
______________________ B. VIJAYSEN REDDY, J April 19, 2022.
PV