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the Swadeshi Act “27. Penalties Any person who.:- (a) having in his possession, custody or control any property forming part of any of the textile undertaking wrongfully withholds such property from the National Textile Corporation; or (b) wrongfully obtains possession of, or retains any property forming part of, any of the textile undertaking; or shall be punishable with imprisonment for a term which may extend to two years and with fine which may extend to ten thousand rupees. shall be punishable with imprisonment for a term which may extend to two years and with fine which may extend to ten thousand rupees.”- “……that a complaint under Section 27 of Act 30 of 1986 could only have been filed by the petitioner if the title of the property in dispute was clearly in their favour. Both the Courts below have correctly assessed the facts and circumstances of the case and have rightly come to the conclusion that in the absence of having any clear title in their favour the complaint under Section 27 was misconceived and, therefore, rightly dismissed.”

published in http://judis.nic.in/supremecourt/filename=40480

Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4818 OF 2013
(Arising out of SLP (Civil) No. 4706 of 2006)
National Textile Corpn. (UP) Ltd. …. Appellant(s)
Versus
Dr. Raja Ram Jaipuria & Ors. ….
Respondent(s)
WITH
CIVIL APPEAL NO. 4819 OF 2013
(Arising out of SLP (Civil) No. 4773 of 2006)
J U D G M E N T
P. Sathasivam, J.
1) Leave granted.
2) These appeals are directed against the final judgment
and order dated 25.11.2005 passed by the High Court of
Judicature at Allahabad in Misc. Writ Petition Nos. 25090 of
1994 and 30122 of 1996 whereby the High Court dismissed
the petitions filed by the National Textile Corporation (U.P.)
Ltd.-the appellant herein.
1Page 2
SLP (Civil) No. 4706 of 2006
3) Brief facts:
(a) In the year 1921, the Swadeshi Cotton Mills Company
Limited (SCMCL) was incorporated as a private company and
converted into a public company in 1923 which was engaged
in the business of activity of operating and managing textile
mills. The SCMCL acquired property at Civil Lines, Kanpur,
Uttar Pradesh on which an integrated complex popularly
known as ‘Swadeshi House’ was constructed. The said
House consisted of three buildings, viz., Bungalow No. 1
which was used prior to 1971 as the Registered Office of the
SCMCL and after 1971 it was used for general meetings of
the Board of Directors and also as a Guest House, Bungalow
No. 2 was in the physical possession of the Managing
Director of SCMCL and Bungalow No. 3 was the
Administrative Block of the SCMCL.
(b) The Central Government, vide notification dated
13.04.1978, under Section 18AA of the Industrial
Development Regulation Act, 1951, took over the
management of six textile undertakings of the SCMCL
2Page 3
including the Swadeshi Cotton Mills, Kanpur and the
National Textile Corporation Limited, New Delhi (NTC), a
Government undertaking, was appointed as the authorized
representative under the said takeover. As a result of the
takeover, the NTC took possession and custody of various
properties belonging to the SCMCL including the Guest
House and the Administrative Block. However, Bungalow No.
2 continued to be in the physical possession of Dr. Raja Ram
Jaipuria, the then Director of the SCMCL (Respondent No. 1
herein).
(c) Aggrieved by the order dated 13.04.1978 of take over,
the SCMCL filed Writ Petition No. 408 of 1978 before the
High Court of Delhi. In the High Court, vide order dated
04.05.1978, a working arrangement between the parties was
made out wherein Respondent No. 1 herein was permitted to
continue the physical possession of the residential bungalow
on the condition that the same will not be disposed of or
alienated in any way to any outsider. Ultimately, by order
dated 01.05.1979, the High Court upheld the notification
dated 13.04.1978 but certain assets were excluded from the
3Page 4
purview of the same including the ‘Swadeshi House’ and
‘Shrubbery’-the residence of the Secretary of the SCMCL.
(d) Being aggrieved by the aforesaid judgment with regard
to the validity and legality of the order of takeover, Swadeshi
Cotton Mills, National Textile Corporation and Union of India
preferred Civil Appeal Nos. 1629, 1857 and 2087 of 1979
respectively before this Court. This Court, vide judgment
dated 13.01.1981 in Swadeshi Cotton Mills vs. Union of
India (1981) 1 SCC 664 held the said takeover invalid on the
ground that no opportunity of hearing was given to the
SCMCL before the takeover.
(e) On 19.04.1986, the Central Government promulgated
the Swadeshi Cotton Mills Company (Acquisition and
Transfer of Undertakings) Ordinance, 1986. Thereafter, on
30.05.1986, the said ordinance was replaced by the
Swadeshi Cotton Mills Company Limited (Acquisition and
Transfer of Undertakings) Act, 1986 (in short ‘the Swadeshi
Act’). As per Section 3 of the Swadeshi Act, every textile
undertaking and the right, title and interest of the SCMCL in
the said textile undertaking stood transferred and vested
4Page 5
with the Central Government. The transferred undertakings
were further transferred and vested in the NTC. Several
proceedings were instituted by the parties as a result of the
acquisition of the undertakings of the SCMCL.
(f) One Mukesh Bhasin, a minority shareholder of Swadeshi
Polytex Limited (SPL), filed a Civil Suit being No. 506 of 1987
before the High Court of Delhi at New Delhi praying for a
declaration and injunction against the SCMCL on the ground
that all the investments and assets vest with the NTC which
is the rightful owner of the property after coming into force
of the Swadeshi Act. In the said suit, he also sought an
injunction against SPL from recognizing SCMCL and
Swadeshi Mining (subsidiary of SCMCL) as the owners of the
Swadeshi House.
(g) Swadeshi Cotton Mills and SCMCL also preferred a Writ
Petition being No. 2214 of 1987 before the High Court of
Judicature at Allahabad (Lucknow Bench) claiming that
equity shares held by the SCMCL in SPL and Swadeshi Mining
and other “excluded assets” should be declared to be
exempted from the scope and ambit of the Swadeshi Act.
5Page 6
(h) The aforementioned Civil Suit No. 506 of 1987 and Writ
Petition No. 2214 of 1987 were transferred to this Court and
numbered as Transfer Case Nos. 14 and 13 of 1987
respectively. This Court, vide judgment dated 12.02.1988, in
M/s Doypack Systems Pvt. Ltd. vs. Union of India and
Others (1988) 2 SCC 299, allowed Transfer Case No. 14 of
1987 and dismissed Transfer Case No. 13 of 1987 and held
that the ownership and control of the SCMCL vests with the
NTC. It was also held that Bungalow No. 1 and the
Administrative Block, Civil Lines, Kanpur also vested in the
Central Government.
(i) As the SCMCL failed to handover the possession of
Bungalow No. 2 of Swadeshi House, the NTC filed Civil Misc.
Petition No. 26004 of 1988 in Transfer Case No. 13 of 1987
praying for a direction to the SCMCL to handover the vacant
possession of Bungalow No. 2. Vide order dated 03.08.1989,
the petition was dismissed without any order with liberty to
move the appropriate court. In view of the said order, the
National Textile Corporation (U.P.) Ltd. (the appellant
herein), which was a successor-in-interest to the NTC
6Page 7
preferred Criminal Complaint No. 1661 of 1991 against the
respondent herein and others in the Court of Metropolitan
Magistrate, Kotwali, Kanpur under Section 27 of the
Swadeshi Act for possession of the said Bungalow. Vide
order dated 18.02.1993, the said complaint got dismissed in
view of the ruling given in Doypack (supra) that only
Bungalow No. 1 and the Administrative Block vested with the
Central Government.
(j) Being aggrieved by the order dated 18.02.1993, the
NTC filed Criminal Revision No. 86 of 1993 before the
Session Judge, Kanpur which also got dismissed vide order
dated 30.10.1993 holding that the NTC failed to prove
beyond doubt that the said Bungalow vested with Central
Government with a direction to move the appropriate court
in terms of the order dated 03.08.1989.
(k) Aggrieved by the same, the NTC preferred Writ Petition
No. 25090 of 1994 before the High Court of Allahabad. In
the meantime, the NTC filed Contempt Petition No. 75 of
2005 in Transfer Case No. 14 of 1987 before this Court
alleging violation of the judgment in Doypack (supra) but
7Page 8
the same got dismissed vide order dated 03.02.2006 on the
ground of omission to disclose about the instant
proceedings. Vide order dated 25.11.2005, the High Court
dismissed the above said writ petition.
(l) Being aggrieved by the order of the High Court, the
appellant herein has preferred this appeal by way of special
leave.
SLP (Civil) No. 4773 of 2006
(m) On 26.10.1989, the NTC also moved an application
under Sections 5 and 7 of the Public Premises (Eviction of
Unauthorized Occupants) Act, 1971 (in short ‘the PP Act’) for
eviction of the respondent herein from the said Bungalow on
the ground that in Doypack (supra), it has already been
held that the Swadeshi House (which also includes Bungalow
No. 2) vested with the NTC and there is no question as to the
title of the respondent herein. During the pendency of the
proceedings before the Estate Officer, Shri Rajaram Jaipuria
(Respondent No. 2 herein) removed certain valuables from
the Bungalow No. 2. The NTC moved an application for
restraining the Respondents herein for the same before the
8Page 9
Estate Officer which was allowed vide order dated
02.05.1993.
(n) Being aggrieved, M/s Ganesh Synthetics Pvt. Ltd
(Respondent No. 16 herein), a related entity of SCMCL,
preferred a Writ Petition being No. 16091 of 1993 before the
High Court. The High Court, by order dated 11.05.1993,
restrained the respondents from removing any article kept in
Bungalow No. 2. Vide order dated 05.08.1994, the Estate
Officer rejected all the preliminary objections filed by the
SCMCL. The respondents herein preferred an Appeal being
No. 228 of 1994 under Section 9 of the PP Act before the
District Court, Kanpur.
(o) Vide order dated 01.05.1996, the above said appeal
was allowed holding that Doypack (supra) had not
addressed the issue relating to Bungalow No. 2. Being
aggrieved, the NTC preferred Writ Petition being No. 30122
of 1996 before the High Court. The High Court, vide order
dated 25.11.2005 dismissed the said petition.
9Page 10
(p) Being aggrieved by the order of the High Court, the
appellant herein has preferred this appeal by way of special
leave.
4) Heard Ms. Indira Jaising, learned Additional Solicitor
General for the appellant, Mr. Dushyant Dave, learned senior
counsel for the contesting respondents and Mr. K.V.
Vishwanathan, learned senior counsel and Mr. Gautam
Narayan, learned counsel for the newly impleaded parties –
Kanpur Builders and Ministry of Textiles respectively.
5) It is the definite case of the appellant-NTC that
Swadeshi House was and has always consisted of an
integrated complex comprising of three buildings, viz.,
Bungalow No.2 (used as the personal residence of the
Directors), Bungalow No.1 (used as Guest House of the
Company) and an Administrative Block besides Servants’
Quarters and adjacent land and because of Section 3 of the
Swadeshi Act, every textile undertaking and the right, title
and interest of the SCMCL in the said textile undertaking
stood transferred and vested with the Central Government
and further transferred and vested in the NTC. Among the
10Page 11
properties owned by the SCMCL, now we are concerned only
about the ownership of Bungalow No.2.
6) On the other hand, it is the case of the respondents
that the properties of SCMCL, Kanpur, vested with the
Central Government, did not include Bungalow No.2 as the
same was always the property of the SCMCL and not of its
Kanpur Mills. It is their assertion that the land on which the
SCMCL is constructed was purchased in the year 1921 and
the building was constructed soon thereafter. The said land
and house were not purchased/constructed from the profits
generated by the SCMCL, Kanpur but from the shareholders’
fund(s) arranged otherwise. It is also their assertion that the
said land, viz., Bungalow No.2, was never vested in the
appellant as decided by this Court in Doypack (supra). It is
also brought to our notice by the respondents that Bungalow
Nos. 1 and 2 have been recorded by the Kanpur Municipality
as separate premises ever since the said two bungalows
were constructed. It is also pointed out that at present
Bungalow No.1 is numbered as Premises No. 16/15 and
Bungalow No.2 is numbered as Premises No. 16/14, Civil
11Page 12
Lines, Kanpur and both are separate premises having
separate boundaries.
7) In view of the above, it is relevant to mention the
following provisions of the Swadeshi Act:
(i) In Section 2(c) of the Swadeshi Act, there is a reference
to a registered office of the SCMCL being at “Swadeshi
House”.
(ii) The expression “textile undertakings” has been defined
in Section 2(k) to mean the following six textile undertakings
of SCMCL:
(a) the Swadeshi Cotton Mills, Kanpur;
(b) the Swadeshi Cotton Mills, Pondicherry;
(c) the Swadeshi Cotton Mills, Naini;
(d) the Swadeshi Cotton Mills, Maunath Bhanjan;
(e) the Udaipur Cotton Mills, Udaipur;
(f) the Rae Bareli Textile Mills, Rae Bareli;
(iii) Section 3 of the Swadeshi Act transfers and vests the
right, title and interest of the SCMCL “to every such textile
undertaking” in the Central Government and thereafter in
the National Textile Corporation (NTC).
12Page 13
(iv) Section 4 of the Swadeshi Act defines the effect of
“vesting” as under:
“(1) The textile undertakings referred to in Section 3 shall
be deemed to include all assets, rights, lease-holds,
powers, authorities and privileges and all property,
movable and immovable, including lands, buildings,
workshops, stores, instruments, machinery and equipment,
cash balances, cash on hand, reserve funds, investments
and books debts pertaining to the textile undertakings and
all other rights and interests in, or arising out of, such
property as were immediately before the appointed day in
the ownership, possession, power or control of the
Company in relation to the said undertakings whether
within or outside India, and all books of accounts, registers
and all other documents of whatever nature relating
thereto.”
(v) Section 8 of the Swadeshi Act provides a compensation
of Rs.24,32,00,000/- to be paid to the SCMCL.
(vi) Section 27 deals with Penalties as under:
“27. Penalties
Any person who.:-
(a) having in his possession, custody or control any
property forming part of any of the textile undertaking
wrongfully withholds such property from the National
Textile Corporation; or
(b) wrongfully obtains possession of, or retains any
property forming part of, any of the textile undertaking; or
shall be punishable with imprisonment for a term which
may extend to two years and with fine which may extend
to ten thousand rupees.
shall be punishable with imprisonment for a term which
may extend to two years and with fine which may extend
to ten thousand rupees.”
13Page 14
8) Learned ASG has brought to our notice that several
proceedings were instituted by the parties as a result of the
acquisition of textile undertakings of the SCMCL. Two
significant proceedings are:
(1) “A civil suit instituted by one Mukesh Bhasin on 26.02.1987
before the High Court of Delhi. In paragraph 3 (xix) of the
said suit, the appellant made the following submissions:
(xix) The Swadeshi House in an integral part of the Kanpur
Undertaking and includes substantial area of land and
building. The plaintiff reasonably and bona fide believes
that the said House was built in 1921 as a part of the
textile undertaking of defendant No.3 for the benefit and
use of its business, which at that time consisted only of the
Kanpur Textile Undertaking.”
In the said suit, the following prayer was sought:
“(a) that the defendant No.1 is the rightful owner of 10
lakhs equity shares of defendant No.2 held by defendant
No.3 and 17,18,000/- equity shares held by defendant No.4
in defendant No.2 and Swadeshi House at Kanpur and all
the rights, title and interest attached therewith are assets
and investments pertaining to and relate to the textile
undertaking of defendant No.3 and they vest in defendant
No.1 w.e.f. 1.4.1985 and defendant Nos. 3 & 4 be
restrained by a decree of permanent injunction from
dealing with them in any manner whatsoever.
(b) Defendant No.2 should also be restrained by
permanent injunction from recognizing defendant Nos. 3 &
4 as owners of the aforesaid shares and Swadeshi
House.”
(2) “The other was a petition instituted by the Swadeshi
Mining and Manufacturing Company Ltd. (“SMMCL”), a
subsidiary of SCMCL. In the said petition, being the civil
W.P. No. 2214 of 1987 instituted on 03.04.1987 in the High
14Page 15
Court of Allahabad (Lucknow Bench), SCMCL was petitioner
No.2”.
The aforementioned Civil Suit No. 506 of 1987 and Writ
Petition No. 2214 of 1987 were transferred to this Court and
numbered as Transfer Case Nos. 14 and 13 of 1987
respectively. This Court, vide judgment dated 12.02.1988 in
Doypack (supra) allowed Transfer Case No. 14 of 1987 and
dismissed Transfer Case No. 13 of 1987.
9) Both the parties adverted to various paragraphs in
Doypack (supra) in extenso. As a matter of fact, basing
reliance on Doypack (supra), learned ASJ submitted that
Bungalow No.2 of Swadeshi House, Kanpur vested with
them. In the light of the assertion and claim of both the
sides, we have gone through the entire judgment in
Doypack (supra). It is also to be noted that the said
judgment was scrutinized by various courts in earlier legal
proceedings initiated by the appellant herein and all such
proceedings were dismissed by the courts including this
Court. A thorough analysis of the judgment in Doypack
(supra) shows that the issue as to whether Bungalow No.2
15Page 16
of the Swadeshi House vested in appellant or not was neither
considered nor decided by this Court in the said case. This is
clear from the plain reading of first paragraph of the
judgment itself which reads as under:
“1. What falls for consideration in all these matters is a
common question of law, namely, whether equity shares in
the two companies i.e. 10,00,000 shares in Swadeshi
Polytex Limited and 17,18,344 shares in Swadeshi Mining
and Manufacturing Company Limited, held by the Swadeshi
Cotton Mills, vest in the Central Government under Section
3 of the Swadeshi Cotton Mills Company Limited
(Acquisition and Transfer of Undertakings) Act, 1986
(hereinafter referred to as “the said Act”). The other
subsidiary question is whether the immovable properties,
namely the bungalow No. 1 and the Administrative Block,
Civil Lines, Kanpur have also vested in the Government.
The question as to one more property known as Shrubbery
property whether it has been taken over or not is still to be
argued and is not covered by this judgment.”
10) From the above, the questions which formed the
subject matter of Doypack (supra) were as under:
“(a) Whether equity shares in the two companies, i.e.,
10,00,000 shares in Swadeshi Polytex Limited and
17,18,344 shares in Swadeshi Mining and Manufacturing
Co. Ltd. held by the Swadeshi Cotton Mills, vest in the
Central Government under Section 3 of the Swadeshi
Cotton Mills Co. Ltd. (Acquisition and Transfer of
Understandings) Act, 1986 (hereinafter referred to as “the
Act”).
(b) Whether the immovable properties, namely, the
Bungalow No.1 and the Administrative Block, Civil Lines,
Kanpur have also vested in the Government.”
16Page 17
The abovementioned questions, after detailed reasonings,
were answered by this Court in paragraph Nos. 69 and 70 as
under:
“69. We therefore, reiterate that the shares are vested in
the Central Government. Accordingly the shares in
question are vested in NTC and it has right over the said 34
per cent of the shareholdings.
70. In the aforesaid view of the matter we hold that the
10,00,000 shares in Swadeshi Polytex Limited and
17,18,344 shares in Swadeshi Mining and Manufacturing
Company Limited held by the Swadeshi Cotton Mills vested
in the Central Government under Sections 3 and 4 of the
Act.
71. We are further of the opinion that in view of the
amplitude of the language used, the immovable properties,
namely, the bungalow No. 1 and the Administrative Block,
Civil Lines, Kanpur have also vested in NTC.”
11) A bare reading of the judgment in Doypack (supra)
makes it clear that the issue regarding vesting of the
Bungalow No.2 of Swadeshi House, Kanpur was not
considered by this Court in the said judgment. Hence, the
very same contention of the appellant is liable to be
rejected.
12) As the SCMCL failed to handover the possession of
Bungalow No. 2 of Swadeshi House, the NTC filed Civil Misc.
Petition No. 26004 of 1988 in Transfer Case No. 13 of 1987
17Page 18
praying for a direction to the SCMCL to handover the vacant
possession of Bungalow No. 2. The said application was
disposed of by this Court on 03.08.1989 which reads as
under:
“CMP No. 26004 of 1988 : There will be no order on this
CMP. This will not prejudice the right of parties to move
the appropriate courts in accordance with law.”
From the above order, it is clear that this Court did not
decide the issue relating to Bungalow No.2 of the Swadeshi
House and had left it open to the appellant to agitate the
question of title as regards the said Bungalow by moving
before the appropriate court in accordance with law. It is
brought to our notice that such proceedings were never
initiated by the appellant herein.
13) It is useful to point out that despite the dismissal of Civil
Misc. Petition No. 26004 of 1988 in T.C. No. 13 of 1987, the
appellant herein again moved before this Court by filing
Contempt Petition No. 75 of 2005 in Transfer Case No. 14 of
1987 alleging violation of the judgment in Doypack
(supra). It was alleged by the appellant in the said
contempt petition that since the contemnors therein have
18Page 19
sold Bungalow No. 2 to one Kanpur Builders Ltd., they have
violated the judgment in Doypack (supra) and, therefore,
they are liable to be punished for contempt. The Director of
the said Kanpur Builders Ltd. was also impleaded as
Contemnor No. 3 in the said contempt petition. By order
dated 03.02.2006, this Court, dismissed the said contempt
petition. After several rounds of litigation, as discussed in
the paragraphs (supra), the appellant filed Writ Petition No.
25090 of 1994 before the High Court of Allahabad. By
judgment dated 25.11.2005, learned single Judge of the High
Court dismissed the writ petition filed by the appellant
herein holding that under Section 27 of Act 30 of 1986 a
complaint could only have been filed by the appellant if the
property had vested in them. It was further held by the High
Court that,
“……that a complaint under Section 27 of Act 30 of
1986 could only have been filed by the petitioner if the title
of the property in dispute was clearly in their favour. Both
the Courts below have correctly assessed the facts and
circumstances of the case and have rightly come to the
conclusion that in the absence of having any clear title in
their favour the complaint under Section 27 was
misconceived and, therefore, rightly dismissed.”
19Page 20
14) In addition to the above said proceedings, the appellant
herein initiated further proceedings for their eviction under
Sections 5 and 7 of the PP Act. Similarly, after rounds of
litigation, the claim of the appellant herein got rejected and
finally the appellant herein filed Writ Petition No. 30122 of
1996 before the High Court. The High Court, vide order
dated 25.11.2005, also dismissed the same and held as
under:
“…..the learned District Judge has also rightly come the
conclusion that Bungalow No.2 has not vested with the
petitioner. This, the learned Judge has said on the basis of
the judgment of the Hon’ble supreme Court as referred in
the case of Doypack Systems Pvt. Ltd., AIR 1988 SC
782 wherein the only vesting of Bungalow No.1 and
Administrative Block has been upheld. It had been left
open to the petitioner to file a civil suit for declaration of
his title over Bungalow No.2. No suit was filed by the
petitioner. There is no order giving a declaration of title in
favour of the petitioner.”
15) Taking note of all the above said applications/petitions,
as mentioned in paragraphs (supra), it is abundantly clear
that the appellant herein have time and again filed various
proceedings on the premise that Bungalow No.2 formed part
of the Swadeshi House but failed in all the attempts. It is not
in dispute that all the proceedings went against the
appellant herein.
20Page 21
16) All the above details, various orders and decisions by
different courts negatived the claim of the appellant and the
same issue is now again sought to be raised by the appellant
in the present proceedings. We are satisfied that in view of
categorical decision of this Court in Doypack (supra),
rejection of subsequent application filed by the appellant for
clarification/modification, direction to approach the Civil
Court, initiation of proceedings under the PP Act which
ended in dismissal, dismissal of complaint under Section 27
of the Swadeshi Act, were passed by various courts which
undoubtedly go against the claim and stand of the appellant.
It is also brought to our notice by the newly impleaded
parties that they had purchased the said property in a bona
fide manner with clean title of the property vested in the
SCMCL, therefore, they are entitled for the same. It is made
clear that we have not expressed any thing about the said
issue.
17) In view of the above, we are in entire agreement with
the orders passed by the trial Court as well as the High
21Page 22
Court, consequently, both the appeals fail and are
accordingly dismissed. There shall be no order as to costs.
……………….…………………………J.
(P. SATHASIVAM)
.…….…………………………………J.
(JAGDISH SINGH KHEHAR)
NEW DELHI;
JULY 01, 2013.
22

 

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