2013 (9) TMI 173 - SC - Companies Law

Supreme Court affirms Bungalow No. 2 ownership decision under Swadeshi Act

National Textile Corpn. (UP) Ltd. Versus Dr. Raja Ram Jaipuria and others

The Supreme Court dismissed the appeals, affirming that Bungalow No. 2 did not vest with the Central Government or NTC under the Swadeshi Act. The court ... Maintainability of Petition - Ownership of Bungalow No.2 - Whether the immovable properties, namely, the Bungalow No.1 and the Administrative Block, have also vested in the Government - 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 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 Held that:- 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 (1988 (2) TMI 61 - SUPREME COURT OF INDIA), 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. - Decided against the appellant / petitioner. Issues Involved:1. Ownership and possession of Bungalow No. 2 of Swadeshi House.2. Validity of the Central Government's takeover of SCMCL properties.3. Application of the Swadeshi Cotton Mills Company (Acquisition and Transfer of Undertakings) Act, 1986.4. Interpretation of the judgment in Doypack Systems Pvt. Ltd. vs. Union of India.5. Proceedings under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971.6. Contempt proceedings for alleged violation of the Doypack judgment.Issue-wise Detailed Analysis:1. Ownership and Possession of Bungalow No. 2 of Swadeshi House:The appellant, National Textile Corporation (NTC), claimed that Bungalow No. 2 was part of the integrated Swadeshi House complex and vested in the Central Government under Section 3 of the Swadeshi Act. The respondents contended that Bungalow No. 2 was always the property of SCMCL and not part of its Kanpur Mills. They argued that the property was purchased and constructed from shareholders' funds and not from the profits of SCMCL, Kanpur. The High Court and various other legal proceedings consistently ruled against the NTC, holding that Bungalow No. 2 did not vest with the Central Government.2. Validity of the Central Government's Takeover of SCMCL Properties:The Central Government took over the management of SCMCL's textile undertakings in 1978, which was later invalidated by the Supreme Court in 1981 due to the lack of an opportunity for SCMCL to be heard. Subsequently, the Swadeshi Act was enacted in 1986 to transfer and vest the textile undertakings and related properties to the Central Government and then to NTC. However, the specific inclusion of Bungalow No. 2 in this takeover remained disputed.3. Application of the Swadeshi Cotton Mills Company (Acquisition and Transfer of Undertakings) Act, 1986:Section 3 of the Swadeshi Act transferred the right, title, and interest of SCMCL's textile undertakings to the Central Government. Section 4 defined the effect of vesting, including all assets and properties related to the textile undertakings. The appellant argued that Bungalow No. 2 was part of this transfer, but the courts consistently found that the property did not vest with the Central Government under the Swadeshi Act.4. Interpretation of the Judgment in Doypack Systems Pvt. Ltd. vs. Union of India:The Supreme Court's judgment in Doypack addressed the vesting of equity shares and specific properties (Bungalow No. 1 and the Administrative Block) but did not explicitly address Bungalow No. 2. The appellant's reliance on Doypack to claim Bungalow No. 2 was repeatedly rejected by the courts, which found that the judgment did not cover this property.5. Proceedings under the Public Premises (Eviction of Unauthorized Occupants) Act, 1971:The NTC initiated eviction proceedings under Sections 5 and 7 of the PP Act, claiming that Bungalow No. 2 vested with them based on the Doypack judgment. The Estate Officer and subsequent appeals rejected this claim, holding that the Doypack judgment did not address Bungalow No. 2 and that the property did not vest with the Central Government.6. Contempt Proceedings for Alleged Violation of the Doypack Judgment:The NTC filed a contempt petition alleging that the respondents violated the Doypack judgment by selling Bungalow No. 2. The Supreme Court dismissed the contempt petition, noting that the Doypack judgment did not cover Bungalow No. 2 and that the appellant had not disclosed ongoing proceedings related to the property.Conclusion:The Supreme Court dismissed the appeals, agreeing with the lower courts that Bungalow No. 2 did not vest with the Central Government or NTC under the Swadeshi Act. The court noted that the appellant had repeatedly failed to establish their claim to Bungalow No. 2 in various legal proceedings. The judgment emphasized that the issue of Bungalow No. 2 was not addressed in the Doypack judgment and that the appellant's claims were consistently rejected by the courts.