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TMI Blog2009 (8) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... society in the year 1970 the lands were sub-leased in favour of M/s. G. Mahadevappa and Sons, a firm. In the year 1978, the mills closed down. In the year 1986, the State Government of Karnataka, in order to revive the mills, enacted the Karnataka Co-operative Textile Mills Limited (Acquisition and Transfer) Act, 1986 (Act No. 29 of 1986) (hereinafter referred to as "the 1986 Act", for brevity) especially with that object. The Government thus took over the lease-hold rights along with the management of the mills in terms of a Notification dated December 29, 1987, issued under section 8(1) of the said 1986 Act. However, in spite of the State Government's intervention, the company which was then incorporated under the Companies Act, 1956, became a sick unit and it was held by the Board for Industrial and Financial Reconstruction as an economically unviable unit under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. M/s. Karnataka State Industrial Investment Development Corporation, a State Financial Corporation, was appointed as the selling agent to sell the assets of the company and the company was sought to be wound up. A company petition was initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the land in survey No. 15 bearing CTS No. 98, Ward No. 3 measuring 8 acres 4 guntas of Mariyan Timmasagara, Hubli Taluk, Dharwad District. The same was also leased to the textile mills and has undergone the same history of transfer of lease-hold rights. The sequence of events vesting with the 2005 Act applies to these lands as well. However, the petitioner had filed a civil suit in O.S. No. 260 of 2002 before the court of the Additional Civil Judge, Hubli, seeking recovery of possession of the lands. The same was decreed as on December 20, 2003. The State has filed an appeal against the same in R. A. No. 26 of 2007 which is said to be pending before the Court of the Civil Judge (Senior Division) Hubli. 5. The State has resisted these petitions on the legal principles involved and on the basis of the 2005 Act, as there is little dispute on facts or the sequence of events which are evidenced by documents or proceedings that are not in dispute. 6. It is contended on behalf of the petitioners that the 1986 Act provided for acquisition and transfer of the mills by the State Government in public interest and to ensure the continued production activity. The Act provided that the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jab, AIR 2008 SC 261; (e) Chairman, Indore Vikas Pradhikaran v. Pure Industrial Cock & Chemicals Ltd., AIR 2008 SC 2458; (f) Lachhm an Dass v. Jagat Ram [2007] 10 SCC 448; (g) Bharat Petroleum Corporation Ltd. v. Maddula Ratnavalli [ 2007] 6 SCC 81; (h) Devinder Singh v. State of Punjab [2007] AIR SCW 6692; (i) State of Bihar v. Project Uchcha Vidya, Sikshak Sangh [2006] 2 SCC 545; (j) Hindustan Petroleum Corporation Ltd. v. Darius Shapur Chenai [2005] 7 SCC 627; (k) State of Uttar Pradesh v. Manohar, AIR 2005 SC 488; (l) State of Tamil Nadu v. Arooran Sugars Ltd. [1997] 1 SCC 326; (m) Union of India v. Tushar Ranjan Mohanty [1994] 5 SCC 450 ; (n) State of Gujarat v . Raman Lal Keshav Lal Soni [1983] 2 SCC 33; (o) Seervai Constitutional Law, 2nd edition, 44th Amendment- Extract; (p) State of Bihar v . Sir Kameshwar Singh, AIR 1952 SC 252; and (q) Ranojirao Madhavrao v. State of Madhya Pradesh, AIR 1965 MP 77. 11. The above are relied upon to emphasise the following propositions. 12. Any legislation made by the State to give effect to its legislative policy must not either be ultra vires the Constitution of India or the Parent Act. The right to property is not only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company, inclusive of the landed property, the said valuation is made even prior to the coming into force of the 1986 Act, as the valuation so arrived at finds mention in the said Act itself under section 9 thereof. The learned advocate general would further point out that the language of section 4 and section 5 of the 1986 Act are unambiguous and wide in their application. The transfer and vesting of the mills, including the ownership of the lands in favour of the Government is in absolute terms. Therefore, the 2005 Act seeking to amend certain provisions of the Parent Act was warranted as a matter of form, to more particularly indicate the intention and purport to include the acquisition of the interest in the land under the Parent Act which was already manifest and the same was also warranted in the light of the view expressed by this court in the earlier writ proceedings. The lacuna if any stands cured, the petitioners are also provided with adequate and just compensation which is in deposit with the Commissioner of Payments and hence the contention that the 1986 Act has spent itself out and the 2005 Act was invalid, etc., are not tenable. Reliance is placed on the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not an economically viable unit and had recommended its winding up by its minutes dated July 6, 1998, the same was received by the company court and numbered as Company Petition No. 149 of 1998. The company was promptly ordered to be wound up by order dated November 5, 1998. 19. It is pertinent to note that the order of winding up order dated November 5, 1998, passed in Company Petition No. 149 of 1998 is a brief order, produced as annexure F to W. P. No. 14758 of 2006, taking note of the report received from the Registrar, Board for Industrial Financial and Reconstruction and the statement of the Government advocate on behalf of the State Government that the company will have to be wound up. The official liquidator was directed to take all further steps. 20. Some of the petitioners herein had filed Company Application No. 762 of 2003 in the above company petition contending that the land leased in favour of the company was under a perpetual lease deed and that the terms of the deed provided that the land would revert to the owners if the company is ordered to be wound up, therefore prayed that the lands be handed over to the applicants. 21. The State Government which was a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession and the same has been decreed as on December 20, 2003 and is pending in appeal preferred by the State Government against the same. In the above background Act No. 20 of 2005 having received the assent of the President of India as on June 24, 2005, it is apparent that there is an absence of cohesion in the conduct of the State Government and the obviously belated legislation in respect of a company that was ordered to be wound up as on November 5, 1998. The said Amendment Act is oblivious to the said circumstance. 26. While on the other hand, the State Government has conceded the possession of the assets of the company to the official liquidator and has also conceded the delivery of possession of the lands of some of these petitioners as already referred to hereinabove. 27. There is no initiative on the part of the State Government to demonstrate that the several orders passed by the company court from time to time ought to be recalled or that the same are to be varied to bring the same in consonance with the Act. In the absence of any reference to the effect of the events and proceedings, up to the date of coming into force of the Amendment Act purported retrospectivity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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