LawforAll

advocatemmmohan

My photo
since 1985 practicing as advocate in both civil & criminal laws

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - SHARE THE KNOWLEDGE

Tuesday, September 6, 2011

Textile Undertakings (Nationalisation) Act, 1995 (hereinafter called `the Act 1995′).The Act 1995 has been brought for providing the acquisition and transfer of the rights, title and interest of the owners in respect of the textile undertakings. Respondents had not been the owner of the textile undertaking. They had rented out the premises to Poddar Mills and what had vested in the Central Government was only the right, title and interest of the Poddar Mills and nothing else. The Poddar Mills was having only right in tenancy in the suit premises. The owner had been defined in clause (g) of Section 2 of the Act 1995, taking into consideration the expression in relation to textile undertaking as a proprietor or lessee, or occupier of the textile company undertaking. It included even the receiver and liquidator where the companies had gone under liquidation. Textile undertaking has been defined in Section 2(m) which means undertaking specified in column (2) of the First Schedule to the Act 1995 i.e., the textile undertakings, management of which had been taken over by the Central Government under the Act 1983. The First Schedule included Poddar Mills at Sl. No.9 and Poddar Mills had been paid compensation to the tune of Rs.7,46,30,000. Nothing has been paid so far as respondent No.1 is concerned. Sub-section (6) of Section 4 of the Act 1995 provides that 2


                                                                     Reportable








                IN THE SUPREME COURT OF  INDIA


                 CIVIL APPELLATE JURISDICTION




                   CIVIL APPEAL NO.  7448  of  2011








The National Textile Corporation Ltd.                      ..........Appellant 








                                     Versus








Nareshkumar Badrikumar Jagad & Ors.                          .........Respondents










                              J U D G M E N T  










Dr. B. S. CHAUHAN, J.








1.     This   appeal   has   been   preferred   against   the  judgment  and  order 




dated 3.8.2009 in Civil Revision Application No. 564 of 2008 passed 




by the High Court of Judicature at Bombay affirming the judgment and 




order of the Small Causes Appellate Court dated 14.8.2008 in Appeal 




No.   627   of   2006   by   which   the   appellate   court   has   affirmed   the 



judgment and decree dated 5.8.2006 in TE & R Suit No. 311/326/2001 




passed by the Court of Small Causes at Bombay.  








2.     FACTS: 




A.     The suit premises belongs to the trust run by the respondents - 




Nareshkumar Badrikumar Jagad & Ors. Sh. Damodar Dass Tapi Dass 




and Sh. Daya Bhai Tapidas executed a lease deed dated 11.3.1893 in 




respect of the suit premises admeasuring 12118 sq. yds.   bearing plot 




no.   9   in   Survey   No.   73   of   Lower   Parel   Division,   N.M.   Joshi   Marg, 




Chinchpokli, Mumbai-400 011, in favour of a company named Hope 




Mills Limited for a period of 99 years commencing from 22.10.1891. 




The lease so executed was to expire on 21.10.1990.  








B.     The original owners transferred and conveyed the suit property 




in   favour   of   one   Harichand   Roopchand   and   Ratan   Bai   on   22.2.1907. 




Thereafter,   the   suit   property   came   to   be   vested   in   and   owned   by   a 




public   charitable   trust,   namely,   Harichand   Roopchand   Charity   Trust 




(hereinafter called as `Trust').








C.     The leasehold rights in respect of suit property stood transferred 




to Prospect Mills Ltd. and, thereafter to Diamond Spinning & Weaving 




Co. Pvt. Ltd. and, ultimately, vide a lease indenture dated 25.10. 1926 








                                                                                     2



to   Toyo   Poddar   Cotton   Mills   Ltd.   (hereinafter   called   the   `Poddar 




Mills'). 








D.     The   Textile   Undertakings   (Taking   over   of   Management)   Act, 




1983 (hereinafter called `the Act 1983') was enacted by the Parliament 




in   order   to   take   over   the   management   of   13   textile   undertakings 




including   the   Poddar   Mills   pending   their   nationalisation.   The   lease 




granted   in   favour   of   Poddar   Mills   expired   by   efflux   of   time   on 




22.10.1990.     Thus,   the   said   Poddar   Mills   continued   as   a   tenant   by 




holding over the suit premises.   The Trust issued a legal notice dated 




2.12.1994 to the National Textile Corporation (hereinafter called as the 




appellant),   terminating   its   tenancy   qua   the   suit   premises.     The 




Parliament   enacted   the   Textile   Undertakings   (Nationalisation)   Act, 




1995   (hereinafter   called   `the   Act   1995').   The   Trust   filed   an   eviction 




suit   against   the   appellant   under   the   provisions   of   the   Bombay   Rents, 




Hotel and Lodging House Rates Control Act, 1947  (hereinafter called 




`the Act 1947'). The Act 1947  stood repealed by the Maharashtra Rent 




Control Act, 1999 (hereinafter called `the Act 1999').  The respondent-




Trust issued a notice for terminating the tenancy of the appellant vide 




notice dated 26.9.2000.  The respondents/plaintiffs after withdrawal of 




the suit filed under the Act 1947, filed a fresh suit in the Small Causes 








                                                                                     3



Court   at   Bombay   seeking   eviction   of   appellant   and   for   a   decree   of 




mesne profits on 20.4.2001.   The appellant filed the written statement 




denying   the   pleas   taken   by   the   respondents/plaintiffs.     The   suit   was 




decreed   in   favour   of   the   respondents/plaintiffs   vide   judgment   and 




decree dated 5.8.2006 by which the appellant was directed to hand over 




vacant and peaceful possession of the suit premises to the respondents 




within four months.  








E.     Being aggrieved, the appellant preferred Appeal No. 627 of 2006 




to   the   Division   Bench   of   the   Small   Causes   Court   at   Bombay   on 




13.11.2006   which   was   dismissed   by   the   appellate   court   by   affirming 




the   judgment   and   decree   of   the   trial   court   vide   judgment   and   decree 




dated 14.8.2008.  The appellant preferred civil revision before the High 




Court of Bombay, which has been dismissed vide impugned judgment 




and order dated 3.8.2009.




               Hence, this appeal. 








3.     Shri   Prag   P.   Tripathi,   learned   Additional   Solicitor   General, 




appearing   for   the   appellant   has   submitted   that   the   judgments   and 




decrees of the courts below have to be set aside as none of the courts 




below has taken into consideration the effect of the provisions of   the 










                                                                                     4



Act  1995   by   virtue   of  which  the   textile   undertaking   stood   absolutely 




vested in the Central Government and further vested in the appellant. 




As on the expiry of the lease of 99 years  on 22.10.1990, the Act 1947 




was in force, the then tenant, Poddar Mills  became the statutory tenant. 




Such tenancy rights stood vested absolutely in the Central Government 




on commencement of the Act 1995 by operation of law. The appellant 




stepped in the shoes of the Central  Government   merely  as an agent, 




thus,   the   Central   Government   remained   the   tenant.   The   Central 




Government     continued   to   be   a   tenant   in   the   suit   premises   and   thus, 




would be protected in terms of Section 3(1) (a) of the Act 1999 being 




premises   let   out   to   the   Government.     The   courts   below   failed   to 




consider this vital legal issue.   The suit filed by the respondents   was 




not maintainable.   The judgments and decrees of the courts below are 




liable to be set aside.  








4.      Per   contra,   Shri   Mukul   Rohatgi,   learned   senior   counsel 




appearing for the respondents, submitted  that it is not permissible for 




the court to travel beyond the pleadings. No evidence can be led on an 




issue   in   respect   of   which   proper   pleadings   have   not   been   taken. 




Findings   of  fact  cannot   be  recorded  on  a   issue  on  facts  in  respect  of 




which   no   factual   foundation   has   been   laid.   The   appellant   had   never 








                                                                                      5



raised  the issue before  the courts below that the Central  Government 




was the tenant and it was holding the premises merely as an agent. In 




the written statement filed by the appellants, no reference was made to 




the provisions of Act 1995. Even otherwise, the tenancy rights which 




had vested in the Central Government, stood vested   immediately,  by 




operation of law, in the appellant, a public sector undertaking as well as 




the public limited company having a paid up share capital of more than 




rupees one crore, thus the appellant has no protection of  the Act 1999. 




As the said provisions of Act 1999 are not attracted in the instant case, 




the   suit   for   eviction   was   filed   before   the   Small   Causes   Court   at 




Bombay. All  issues raised in the plaint have been adjudicated by three 




courts.  The power of the revisional court, in view of the provisions of 




Section   115   of   Code   of   Civil   Procedure,   1908   (hereinafter   called   as 




`CPC'),   remains   very   limited   after   the   amendment   Act   2002,   w.e.f. 




1.7.2002.  Being the fourth court, in exercise of its power under Article 




136 of the Constitution, this Court should not entertain the appeal.  The 




appeal lacks merit and is liable to be dismissed. 








5.     We have considered the rival submissions made  by the learned 




counsel for the parties and perused the record.










                                                                                   6



6.      In   the   instant   case,     no   reference   had   ever   been   made   by   the 




appellant to the effect of the provisions of the Act 1995 before the trial 




court   while filing the written submissions; neither any issue has been 




framed; nor arguments had been advanced in regard to the same; this 




issue   has   not   been   agitated   either   before   the   appellate   court   or 




revisional   court.   Before   us,   an   application   has   been   filed   to   urge 




additional  grounds  regarding   the application  of the  Act 1995  without 




seeking amendment to the pleadings (WS). 










7.      Pleadings   and   particulars   are   necessary   to   enable   the   court   to 




decide the rights of the parties in the 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 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 sides differ. (Vide: M/s. Trojan 




& Co. v. RM N.N. Nagappa Chettiar, AIR 1953 SC 235;   State of 




Maharashtra v. M/s. Hindustan Construction Company Ltd.,  AIR 






                                                                                       7



2010 SC 1299; and  Kalyan Singh Chouhan v. C.P. Joshi, AIR 2011 




SC 1127). 








8.       In  Ram Sarup  Gupta  (dead) by L.Rs.  v. Bishun  Narain Inter 




College & Ors., AIR 1987 SC 1242, this Court held as under:




                 "...... in the absence of pleadings, evidence if any,  


                 produced by the parties cannot be considered......  


                 no   party   should   be   permitted   to   travel   beyond   its  


                 pleading and that all necessary and material facts  


                 should   be   pleaded   by   the   party   in   support   of   the  


                 case set up by it."   


             




              Similar   view   has   been   reiterated   in  Bachhaj   Nahar   v.   Nilima 




Mandal & Ors., AIR 2009 SC 1103.  








9.      In Kashi Nath (Dead) through L.Rs. v. Jaganath, (2003) 8 SCC 




740,   this   Court   held   that   "where   the   evidence   is   not   in   line   of   the 




pleadings and is at variance with it, the said evidence cannot be looked 




into or relied upon."




                   Same remain the object for framing the issues under Order 




XIV CPC   and the court should not decide a suit on a matter/point on 




which   no   issue   has   been   framed.   (Vide:  Biswanath   Agarwalla   v. 




Sabitri   Bera   &   Ors.,   (2009)   15   SCC   693;   and  Kalyan   Singh 




Chouhan (supra). 










                                                                                         8



  


10.       In Syed and Company & Ors. v. State of Jammu & Kashmir 




& Ors., 1995 Supp (4) SCC 422, this Court held as under:




             "Without   specific   pleadings   in   that   regard,  


             evidence   could   not   be   led   in   since   it   is   settled  


             principle of law that no amount of evidence can be  


             looked   unless   there   is   a   pleading.     Therefore,  


             without amendment of the pleadings merely trying  


             to lead evidence is not permissible."   




      


11.       In  Chinta   Lingam   &  Ors.   v.   The   Govt.   of   India   &   Ors., 




AIR 1971 SC 474, this Court held that unless factual foundation has 




been laid in the pleadings no argument is permissible to be raised on 




that particular point.








12.       In J. Jermons v. Aliammal & Ors, (1999) 7 SCC 382,  while 




dealing with  a similar issue, this Court held as under: 




              "...... there is a fundamental difference between a  


              case   of   raising   additional   grounds   based   on   the  


              pleadings     and   the   material   available   on   record  


              and a case of   taking a new plea not borne out of  


              the pleadings. In the former case no amendment of  


              pleading   is   required,   whereas   in   the   latter   it   is  


              necessary   to   amend   the   pleadings...The  


              respondents   cannot   be   permitted     to   make   out   a  


              new case by seeking permission to raise additional  


              grounds in revision."










                                                                                     9



13.    In view of the above, the law on the issue stands crystallised to 




the effect that 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. 








14.    There is no quarrel to the settled legal proposition that a 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. (See : M/s Sanghvi Reconditioners Pvt. 




Ltd.   v.   Union   of   India   &   Ors.,   AIR   2010   SC   1089;  and  Greater 




Mohali Area Development Authority & Ors. v. Manju Jain & Ors., 




AIR 2010 SC 3817). 








15.    The   questions   do   arise   as   to   whether   in   the   facts   and 




circumstances of this case the Government is a tenant or the appellant 




can   be   termed   as   "Government"     or   "Government   Department"   or 




"agent" of the Central Government in the context of the Act 1999. 








            The Government loosely means the body of persons authorized 




to administer the affairs of, or to govern, a State. It commands and its 






                                                                                    1



decision   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 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   of   the   activities, 




methods   and   principles   involved   in   governing   a   country   or   other 




political unit. 






                 The Government is a body that governs and exercises control 




by issuing directions and is not 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. "From the legal point of 




view, government may be described as the exercise of certain powers 




and the performance of certain duties by public authorities or officers, 




together with certain private persons or corporations exercising public 




functions." 










                                                                                         1



       Thus,   Government   Department   means   something   purely 




fundamental, i.e. relating to a particular government or to 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   the   Legislature.   (Vide:  State   of 




Rajasthan   &   Anr.   v.   Sripal   Jain,  AIR   1963   SC   1323;  Pashupati 




Nath Sukul v. Nem Chandra Jain & Ors.,  AIR 1984 SC 399;  R.S. 




Nayak   v.   A.R.   Antulay,   AIR   1984   SC   684;   and  V.S.   Mallimath   v. 




Union of India & Anr., AIR 2001 SC 1455) 








16.     To   perform   the   functions,   the   Government   has   its   various 




departments and to facilitate its working, the Government itself may be 




divided into various Sections. 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 Government. (Vide : Sukhdev Singh & 




Ors.  v. Bhagatram Sardar  Singh  Raghuvanshi  & Anr.,  AIR  1975 










                                                                               1



SC   1331;  and  Ramana   Dayaram   Shetty   v.   The   International 




Airport Authority of India & Ors., AIR 1979 SC 1628).










17.    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 limited role to play and do 




not "govern" people as understood by governance. (See: Federal Bank 




Ltd. v. Sagar Thomas & Ors., AIR 2003 SC 4325). 










18.    In  State of Punjab & Ors. v. Raja Ram & Ors., AIR 1981 SC 




1694,  this   Court   considered   the   provisions   of   the   Food   Corporation 




Act,   1964   and   held   that   Food   Corporation   of   India   was   not   a 




Government   department   but   a   Government   Company.     The   Court 




observed :






           "A   Government   department   has   to   be   an  


           organisation   which   is   not   only   completely  


           controlled   and   financed   by   the   Government   but  


           has also no identity of its own. The money earned  


           by such a department goes to the exchequer of the  


           Government   and   losses   incurred   by   the  


           department   are   losses   of   the   Government.   The  


           Corporation, on the other hand, is an autonomous  






                                                                               1



              body capable of acquiring, holding and disposing  


              of   property   and   having   the   power   to   contract.   It  


              may also sue or be sued by its own name and the  


              Government   does   not   figure   in   any   litigation   to  


              which it is a party."






          


(See also:    The State of Bihar v. The Union of India & Anr., AIR 




1970   SC   1446;    S.S.   Dhanoa   v.   Municipal   Corporation   Delhi   & 




Ors., AIR 1981 SC 1395;  K. Jayamohan v. State of Kerala & Anr., 




(1997)   5   SCC   170;  Hindustan   Steel   Works   Construction   Ltd.   v. 




State   of   Kerala   &   Ors.,   AIR   1997   SC   2275;  Mohd.   Hadi   Raja   v. 




State   of   Bihar   &   Anr.,   AIR   1998   SC   1945;   and  State  through 




Narcotics Control Bureau v. Kulwant Singh, AIR 2003 SC 1599).








19.     In  Food   Corporation   of   India   v.   Municipal   Committee, 




Jalalabad & Anr., AIR 1999 SC 2573, this  Court considered the case 




of   imposition   of   house   tax   under   the   provisions   of   the   Punjab 




Municipalities Act, 1911 and held that Food Corporation of India was a 




Government Company  and not a Government Department - a distinct 




entity   from   Central   Government.  Thus,   was   not   entitled   to 




exemption   from   tax   under   Article   285   of   the   Constitution.   While 




deciding   the   said   case,   reliance   had   been   placed   by   the   Court   on   its 




earlier judgment in  M/s. Electronics Corporation of India Ltd., etc. 




etc.   v.   Secretary,   Revenue   Department,   Government   of   Andhra 




Pradesh & Ors., etc. etc., AIR 1999 SC 1734.








                                                                                        1



20.    In  A.K.   Bindal   &   Anr.   v.   Union   of   India   &   Ors.,  (2003)   5 




SCC 163, this Court clarified: 






               "The   legal   position   is   that  identity   of   the  


           government company remains distinct from the  


           Government.   The   government   company   is   not  


           identified   with   the   Union  but   has   been   placed  


           under a special  system of control  and conferred  


           certain   privileges   by   virtue   of   the   provisions  


           contained   in   Sections   619   and   620   of   the  


           Companies   Act.   Merely   because   the   entire  


           shareholding   is   owned   by   the   Central  


           Government   will   not   make   the   incorporated  


           company as Central Government....."


                                                      (Emphasis added)








21.    In  Southern Roadways Ltd., Madurai v. S.M. Krishnan, 




AIR   1990   SC   673,   this   Court   examined   an   issue   whether   the 




possession of the agent can be termed to be the possession of the 




principal for all purposes including the acquisition of title and held 




that agent who receives property from or for his principal, obtains 




no   interest   for   himself   in   the   property   for   the   reason   that 




possession   of   the   agent   is   the   possession   of   the   principal   and   in 




view of the fiduciary relationship  the agent cannot claim his own 




possession.  While   deciding   the   said   case   reliance   was   placed   on 










                                                                                   1



various   earlier   judgments   including  Smt.   Chandrakantaben   v. 




Vadilal Bapalal Modi, AIR 1989 SC 1269.   








               In  Prem   Nath   Motors   Ltd.   v.   Anurag   Mittal,   AIR 




2009 SC 569, this Court dealt with the relationship of agent and 




principal and held that in view of the provisions of Section 230 of 




the   Indian   Contract   Act   1872   (hereinafter   called   the   `Contract 




Act'),   an   agent   is  not   liable   for  the   acts   of  a   disclosed   principal 




subject   to   a   contract   to   the   contrary.   Where   the   relationship   of 




principal and agent is established the agent cannot be sued when 




the   principal   has   been   disclosed.   (See   also:  Vivek   Automobiles 




Ltd. v. Indian Inc., (2009) 17 SCC 657). 








               Thus, it was made clear that suit does not lie against 




an agent where the principal is known or has been disclosed. 








       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. 










                                                                                    1



(See:  Pradeep  Kumar  Biswas  v.  Indian  Institute  of  Chemical 




Biology & Ors., (2002) 5 SCC 111). 








        However,   even   by   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.  








22.     Thus,   if the aforesaid settled legal principles are applied to the 




appellant, it becomes evident that appellant is neither the government 




nor   the   department   of   the   government,   but   a   Government   Company. 




Appellant   cannot   identify   itself   with   the   Central   Government.     The 




submission made by Mr. Tripathi that appellant is merely an agent of 




the Central Government is not worth consideration at all 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 the Central Government. 




Whereas   an   agent   is   merely   an   extended   hand   of   the   principal   and 




cannot claim independent rights. 








23.    Section   3   (1)   (a)   &   (b)   provide   for   exemption   from   the 




application   of   the   Act   1999.   This   Court   examined   the   validity   of 










                                                                                  1



provisions   of   Section   3(1)   (a)   and   (b)   of   the   Act   1999     in  Saraswat 




Coop. Bank Ltd. & Anr. v. State of Maharashtra & Ors.,  (2006) 8 




SCC 520 and came  to the conclusion that it was within  the exclusive 




domain of the legislature to decide which section of tenants should be 




afforded   protection   on   the   basis   of   economic   criteria.   If   a   particular 




section   of   tenants   is   not   protected   considering   their   economic 




conditions it can be held to be a reasonable classification and making 




such   distinction   is   valid.     The   exclusion   of   premises   let   or   sub-let   to 




banks or any public sector undertaking or any corporation established 




by or under any Central or State Act or foreign missions, international 




agencies,   multinational   companies   and   private   and   public   limited 




companies   having   paid   up   share   capital   of   rupees   one   crore   or   more 




could   not   be   held   to   be   arbitrary.     The   Court   further   held   that   the 




provisions of Section 3(1)(b) are applicable to all premises whether let 




out before or after commencement of the Act 1999.   








24.     In  Leelabai   Gajanan   Pansare   &   Ors.   v.   Oriental   Insurance 




Company Ltd. & Ors., (2008) 9 SCC 720,   this   Court dealt with the 




same   issue   as   which   of   the   categories   of   tenants   have   been   excluded 




from the operation of the Act 1999 and held as under: 










                                                                                          1



         "Therefore,   we   are   of   the   view   that   on   a   plain  


         meaning of the word "PSUs" as understood by the  


         legislature, it is clear that, India's PSUs are in the  


         form   of   statutory   corporations,   public   sector  


         companies, government companies and companies  


         in   which   the   public   are   substantially   interested  


         (see   the   Income   Tax   Act,   1961).   When   the   word  


         PSU   is   mentioned   in   Section   3(1)(b),   the   State  


         Legislature   is   presumed   to   know   the  


         recommendations   of   the   various   Parliamentary  


         Committees on PSUs. These entities are basically  


         cash-rich   entities.   They   have   positive   net   asset  


         value.   They   have   positive   net   worths.  They   can  


         afford   to   pay   rents   at   the   market   rate........we  


         hold   that   Section   3(1)(b)   clearly   applies   to  


         different   categories   of   tenants,   all   of   whom   are  


         capable   of   paying   rent   at   market   rates.  


         Multinational   companies,   international   agencies,  


         statutory   corporations,  government   companies,  


         public   sector   companies  can   certainly   afford   to  


         pay   rent   at   the   market   rates.   This   thought   is  


         further highlighted by the last category in Section  


         3(1)(b).   Private   limited   companies   and   public  


         limited companies having a paid-up share capital  


         of more than Rs 1,00,00,000 are excluded from the  


         protection   of   the   Rent   Act.   This   further   supports  


         the view which we have taken that each and every  


         entity   mentioned   in   Section   3(1)(b)   can   afford   to  


         pay rent at the market rates." 


                                                              (Emphasis added)




(See also:  D.C. Bhatia  & Ors. v. Union  of India & Anr.,  (1995) 1 




SCC 104). 










                                                                                  1



25.     The case stands squarely covered by the judgment of this Court 




in Leelabai Gajanan Pansare  (supra) so far as the issue of exemption 




to the Act 1999 is concerned.








26.     Section 3(1) and (2) of the Act 1995 reads as under: 




            "3(1)   On   the   appointed   day,   the   right,   title   and 


            interest   of   the   owner   in   relation   to   every   textile 


            undertaking   shall   stand   transferred   to   and  shall 


            vest absolutely in, the Central Government.




            (2) Every textile undertaking which stands vested 


            in the Central Government by virtue of sub-section 


            (1), shall immediately after it has so vested,  stand 


            transferred to, and vested in, the National Textile 


            Corporation."                               (Emphasis added)








        The   aforesaid   provisions   require   construction   giving   proper 




meaning to  the expression `vesting'. 








27.     `Vesting'   means   having   obtained   an   absolute   and   indefeasible 




right.   It refers to and is used for transfer or conveyance. `Vesting' in 




the   general   sense,   means   vesting   in   possession.     However,   `Vesting' 




does not necessarily and always means possession but includes vesting 




of     interest   as   well.     `Vesting'   may   mean   vesting   in   title,   vesting   in 




possession or vesting in a limited sense, as indicated in the context in 




which it is used in a particular provision of the Act. Word `Vest' has 










                                                                                          2



different shades, taking colour from the context in which it is used.  It 




does   not   necessarily   mean   absolute   vesting   in   every   situation   and   is 




capable of bearing the meaning of a limited vesting, being limited,  in 




title as well as duration. Thus, the word  `vest' clothes varied colours 




from the context and situation in which the word came to be used in the 




statute.   The expression `vest' is a word of ambiguous import since it 




has   no   fixed   connotation   and   the   same   has   to   be   understood   in   a 




different context under different set of circumstances. (Vide:  Fruit & 




Vegetable Merchants Union v. Delhi Improvement Trust, AIR 1957 




SC   344 ;  Maharaj   Singh   v.   State   of   Uttar   Pradesh   &   Ors.,  AIR 




1976   SC   2602;  Municipal   Corporation   of   Hyderabad   v.   P.N. 




Murthy   &   Ors.,   AIR   1987   SC   802;  Vatticherukuru   Village 




Panchayat v. Nori Venkatarama Deekshithulu & Ors., 1991 Supp. 




(2) SCC 228;  Dr. M. Ismail Faruqui etc. v. Union of India & Ors., 




AIR   1995   SC   605 ;  Government   of   A.P.   v.   H.E.H.   The   Nizam, 




Hyderabad,  (1996)   3   SCC   282 ;    K.V.   Shivakumar   &   Anr.   v. 




Appropriate   Authority   &   Ors.,  (2000)   3   SCC   485 ;  Municipal 




Corporation   of   Greater   Bombay   &   Ors.   v.   Hindustan   Petroleum 




Corporation   &   Anr.,  AIR   2001   SC   3630 ;   and  Sulochana 




Chandrakant Galande v. Pune Municipal Transport & Ors., (2010) 










                                                                                    2



8 SCC 467).








28.    The Act 1995 has been brought for providing the acquisition and 




transfer of the rights, title and interest of the owners in respect of the 




textile undertakings. Respondents had not been the owner of the textile 




undertaking.   They   had   rented   out   the   premises   to   Poddar   Mills     and 




what had vested in the Central Government was only the right, title and 




interest of the Poddar Mills   and nothing else. The Poddar Mills   was 




having only right in tenancy in the suit premises.  The owner had been 




defined   in   clause   (g)   of   Section   2   of   the   Act   1995,   taking   into 




consideration   the   expression   in   relation   to   textile   undertaking   as   a 




proprietor or lessee, or occupier of the textile company undertaking. It 




included   even   the   receiver   and   liquidator   where   the   companies   had 




gone   under   liquidation.     Textile   undertaking   has   been   defined   in 




Section 2(m) which means undertaking specified in column (2) of the 




First   Schedule   to   the   Act   1995   i.e.,   the   textile   undertakings, 




management of which had been taken over by the Central Government 




under  the   Act  1983.  The  First  Schedule  included   Poddar  Mills   at  Sl. 




No.9   and   Poddar   Mills   had   been   paid   compensation   to   the   tune   of 




Rs.7,46,30,000.     Nothing   has   been   paid   so   far   as   respondent   No.1   is 




concerned.  Sub-section (6) of Section 4  of the Act 1995 provides that 








                                                                                    2



any suit, appeal or other proceedings of whatever nature in relation to 




any   property   which   had   vested   in   the   Central   Government   under 




Section 3 on the appointed day, instituted or preferred by or against the 




textile company is pending, the same shall not abate or adversely affect 




the rights of the parties by reason of the transfer of textile undertaking. 




Thus, the commencement of the Act 1995 does not really affect even 




the pending cases. In view thereof, it is beyond our imagination as how 




the   Act   1995   would   prejudice   the   cause   of   the   respondents   in   the 




proceedings which arose subsequent to the commencement of this Act. 








29.     It is not permissible for the appellant to canvass that the Central 




Government has any concern so far as the tenancy rights are concerned. 




Right vested in the Central Government stood transferred and vested in 




the appellant.  Both are separate legal entities and are not synonymous. 




The appellant being neither the government nor government department 




cannot   agitate   that   as   it   has   been   substituted   in   place   of   the   Central 




Government, and acts merely as an agent of the Central  Government, 




thus protection of the Act 1999 is available to it.    Appellant cannot be 




permitted   to   say   that   though  all   the   rights   vested   in  it   but   it   merely 




remained  the  agent  of  the Central   Government.  Acceptance   of  such  a 




submission   would   require   interpreting   the   expression   `vesting'   as 








                                                                                          2



holding   on   behalf   of   some   other   person.     Such   a   meaning   cannot   be 




given to the expression `vesting'. 








                It is a settled legal proposition that an agent cannot be 




sued   where   the   principal   is   known.     In   the   instant   case,   the 




appellant has not taken plea before either of the courts below.   In 




view   of   the   provisions   of   Order   VIII   Rule   2  CPC,   the   appellant 




was under an obligation to take a specific plea to show that the suit 




was not maintainable which it failed to do so.   The vague plea to 




the extent that the suit was bad for non-joinder and, thus, was not 




maintainable, did not meet the requirement of law.  The appellant 




ought   to   have   taken   a   plea   in   the   written   statement   that   it   was 




merely an `agent' of the Central Government, thus the suit against 




it was not maintainable. More so, whether A is an agent of B is a 




question   of   fact   and   has   to   be   properly   pleaded   and   proved   by 




adducing   evidence.     The   appellant   miserably   failed   to   take   the 




required pleadings for the purpose. 








30.     Thus,   in   view   of   the   above,   we   reach   the   inescapable 




conclusion   that   appellant   is   not   entitled   for   exemption   under 










                                                                                    2



Section   3(1)(a)   or  3(1)(b)   of   the   Act   1999.   Nor   can   it   claim   the 




status   of   an   `agent'   of   the   Central   Government.   Submissions 




advanced   on   behalf   of   the   appellant   are   preposterous.   Facts   and 




circumstances of the case do not warrant review of the impugned 




judgment. 








                However,   considering   the   nature   of   business   of   the 




appellant, it is in the interest of justice that appellant be given time 




upto   31.12.2013,   to   vacate   the   premises.   Appellant   shall   file   a 




usual   undertaking   within   four   weeks   from   today   to   hand   over 




peaceful and vacant possession to the respondent No.1.








                With   the   aforesaid   observation,   appeal   stands 




dismissed.  




                                                       ............................J.


                                                       (P. SATHASIVAM)








                                                       ...........................J.


                                                       (Dr. B.S. CHAUHAN)


New Delhi,


September 5, 2011










                                                                                   2



2