TMI Blog2012 (10) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... during consideration and successful implementation of the formulated scheme - jurisdiction is vested in BIFR/AAIFR to issue directives, declarations and prohibitory orders within the rationalized scope and limitations prescribed under Section 22(1), 22(3) and 22A of the Act of 1985. Provisions of Sick Industrial Companies (Special Provisions) Act, 1985 shall have precedence and overriding effect over the provisions of Transfer of Property Act, 1882. - CIVIL APPEAL NOS. 1920 TO 1923 OF 2012 - - - Dated:- 7-2-2012 - S.H. KAPADIA, J. K.S. RADHAKRISHNAN AND SWATANTER KUMAR, JJ. JUDGMENT Swatanter Kumar , J Leave granted in all cases. 1.1 An interesting question of law as to the ambit and scope of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, the 'Act of 1985') and its overriding application over the provisions of Transfer of Property Act, 1882 (for short, the 'Act of 1882'), with particular reference to Section 53A and Section 54 of the latter Act, arises for consideration in the present case. Reference to the basic facts which give rise to this proposition of law would be necessary and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of the said agreement, the Appellant-Company was to pay the second instalment of ₹ 25 crore , as and when required, to be utilized only to remove the first charge on the saleable land, the third instalment of ₹ 48.90 crore was to be paid on receipt of 'No Objection Certificate' from the labour , Kalyan Dombivli Municipal Corporation and, on completion of fencing and the vacant possession of non-colony land and the fourth and final instalment of Rs. 72.50 crore was to be paid subsequent thereto. 3. The Agreement dated 1st March, 2007 had postulated payment of the sale consideration in instalments. The parties continued further negotiations in regard to payment of the balance sale consideration. The Respondent-Company had requested the Appellant-Company to advance the payment of instalments. Thereafter, the parties came to an understanding and, in furtherance to such understanding, a supplementary deed to the agreement was signed on 29th September, 2007. As already noticed, the Appellant-Company had declined to pay the third instalment of the consideration payable, causing impediment to payments towards labour costs and other expenses of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007. It directed that the sale of assets, including investments, will require prior approval of the BIFR. It also appointed the Punjab National Bank as the Operating Agency under Section 17 ( 3) of the Act of 1985. 5. As per Section 18 ( 8) of the Act of 1985, the cut-off date is the date of coming into operation of the sanctioned scheme, or any provisions thereof. In other words, all matters relating to the company would, after this date, be within the ambit and scope of the provisions of the Act of 1985 and, as already noticed, the BIFR had declared the cut-off date to be 30th July, 2007. Vide its order dated 16th July, 2009, which was passed under Section 17 ( 3) of the Act of 1985, the following directions were given: ( i ) The Company shall submit a fully tied up DRS to the OA (Punjab National Bank) (PNB) within a period of three months. The sale of 350 acres of land stated to be approved by the CDR Empowered Group (EG) and the secured creditors may form part of the DRS. The details of the land to be sold including survey numbers should be clearly specified. The company shall give similar details of the remaining land and conform that it is adequate for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or approval of BIFR as the company is now under the purview of SICA. ( v ) The company shall submit a copy of the clearance stated to have been received from Hon'ble High Court of Bombay for sale of 350 acres of land under copy to the OA (PNB). ( vi ) The secured creditors are directed u/s 22 ( 1) of SICA not to take any coercive action against the company without prior permission of BIFR. 6. As is evident from the above-noted directions, the BIFR treated the land as an investment and has put certain restrictions thereupon, including that of sale of assets, which required the prior approval of BIFR as the Respondent-Company was under the purview of the Act of 1985. With reference to the land, it was directed that Capacity Valuation Report should be placed on record to show how the sale consideration of ₹ 166.40 crore was arrived at. Aggrieved from this order, the Appellant-Company as well as the Respondent-Company, both have preferred an appeal before the Appellate Authority for Industrial and Financial Reconstruction (for short the 'AAIFR') under Section 25 of the Act of 1985. The AAIFR made major variations in the order of the BIFR. Firstly, it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ummed up its conclusion in paragraphs 41 and 42 which read as under: 41. To sum up : The sale-purchase agreement dated 30.6.2009 was signed after the reference was filed and 15 days before the BIFR passed the restraint order under section 22A; There is no evidence to show whether various provisions of SEBI Take Over Code have been complied with; The company has violated the amended terms and conditions of STL dated 29.6.2009 by not paying to PNB one instalment of ₹ 2.78 crores before 30.6.2009; Consequently, PNB ha not released the shares of AOL for re-pledge by ISG Traders Ltd.: According to PNB, however, the company has shown the entire shares of AOL as sold: There is no evidence to show that sale consideration has been paid; and The ISG Traders Ltd. is neither a party before the BTR nor before this Authority. In these circumstances, the BIFR was fully justified in seeking full details of the investments to be sold in the CDR scheme and to direct that the sale of investments will require the prior approval of the BIFR. We find no reasons to interfere with the aforesaid order of the BIFR regarding sale of investments. 42. We observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land, under the agreements for sale, would not only complicate the matter but would hamper the revival process and would also lead to a prolonged litigation between the parties and this will not be in the interest of revival of the sick company. The provisions of Section 22A which are prospective in nature would not impact pre existing contract for sale entered into by the company before it filed reference under Section 15(1) of SICA and, therefore, the directions given under Section 22A will not apply to the agreement for sale deed 1/3/2007. The restraint order passed by the BIFR would apply to any subsequent proposals for disposal of assets of the company, if any. But these agreements will be subject to interim orders and final orders to be passed by the High Court in the pending writ petition challenging the settlement dated 5/9/2008. For all these reasons, the AIFR held that the agreement for sale cannot be part of DRS under Section 18(d) of SICA as the same is under transfer and unencumbered and legally enforceable contract exists between the appellant company and respondent no.13. However, the AIFR held that the balance sale consideration in respect of the land to the tune of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at large. It had repercussions on the industrial growth of the country. With the passage of time the number of sick industrial units increased rapidly. Therefore, it was imperative to salvage the productive assets and release, to the extent possible, the amounts due to the banks and financial institutions from non-viable sick industrial debtor companies by liquidation of those companies or through formulation of rehabilitation schemes. With these objects, the Bill was introduced with the salient features inter alia of identification of sickness in the industrial companies, on the basis of symptomatic indices of cash losses for the specified periods. Wherever the Government or the Reserve Bank were satisfied that an industrial company has become sick, they were required to make a reference to the BIFR. The BIFR consists of experts, in various relevant fields, with powers to inquire into and determine the incidences of sickness in the industrial companies and devise suitable measures through appropriate schemes to revive them. An appeal lies from the order of BIFR to an appellate authority (the AAIFR) consisting of members selected from amongst Supreme Court or High Court Judges o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt quashed the demand and the recovery proceedings. This Court, while dealing with the scope of Section 22 read with Sections 16 and 17 of the Act of 1985, took the view that all proceedings for execution, distress or the like against the properties of the company would automatically be suspended and could not continue without the consent of the BIFR. This Court held as under: - 10. In the light of the steps taken by the Board under Sections 16 and 17 of the Act, no proceedings for execution, distress or the like proceedings against any of the properties of the company shall lie or be proceeded further except with the consent of the Board. Indeed, there would be automatic suspension of such proceedings against the company's properties. As soon as the inquiry under Section 16 is ordered by the Board, the various proceedings set out under sub-section (1) of Section 22 would be deemed to have been suspended. 11. It may be against the principles of equity if the creditors are not allowed to recover their dues from the company, but such creditors may approach the Board for permission to proceed against the company for the recovery of their dues/outstandings/overdues or arre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llect amounts due to the Revenue and withhold it indefinitely and unreasonably. Such a construction which is unfair, unreasonable and against spirit of the statutes in a business sense, should be avoided. 13. While taking the above view, this Court also noticed the judgment in Shree Vallabh Glass Works Ltd. ( supra ) but distinguished the same by stating that the facts in that case were distinct. 14. The above two judgments covered the field of law in this regard for a considerable time, till the judgment of this Court was rendered in the case of Jay Engg. Works Ltd. v. Industry Facilitation Council [2006] 71 SCL 189. In the said judgment, this Court was dealing with a question as to whether the award made under Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 was covered under Section 22 of the Act of 1985 or despite the pendency of such proceedings before the BIFR the award could be executed. This Court also discussed the issue as to which of the above two Acts would prevail. Dealing with the language of Section 22 of the Act of 1985, this Court took the view that the said Act shall prevail and though the adjudicatory pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or matters connected therewith or incidental thereto. 15 . Furthermore, in a recent judgment of this Court in the case of Shree Sajjan Mills Ltd. v. Municipal Corpn [2009] 17 SCC 665, this Court was dealing with a company which had approached the BIFR for being registered as a sick company and was so declared on 21st November, 1989. The BIFR had recommended the winding up of the sick company but the AAIFR had taken the view that the company could be rehabilitated and, therefore, framed the scheme for its revival. For the purpose of revival, an Assets Sales Committee was constituted for selling, via tender process, the surplus land belonging to the appellant-company. The issue under consideration was that when the 20 per cent of the purchase price deposited by the tenderer as earnest money as per the terms and conditions of the sale was forfeited, whether the same could be challenged only before the BIFR or the civil courts could determine the dispute and whether the bar contained under Section 26 of the Act of 1985 would operate. This Court took the view as under: - 12. We agree with the view expressed by the High Court that the forfeiture of the earnest money by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Such operating agency is expected to complete the inquiry expeditiously and preferably within 60 days from the date of commencement of inquiry. The BIFR is vested with powers such as appointing special directors for the sick company and issuing directions to the special directors in relation to discharge of their duties and to improve the performance of any or all of the functions postulated under Section 16(6) of the Act of 1985. After the inquiry by the BIFR or by the operating agency is completed, BIFR if satisfied that the company has become sick and upon considering all relevant facts and circumstances of the case in exercise of its powers under Section 17 of the Act of 1985, may pass orders requiring the company to make its net worth exceed the accumulated losses within a reasonable time and for that purpose it may impose such restrictions or conditions as may specified in the order in terms of Section 17(2) of the Act of 1985. Further, where the BIFR decides that it is not practicable for a sick industrial company to make its net worth exceed the accumulated losses within a reasonable time and that it is otherwise necessary or expedient in public interest to adopt all or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecommendation of the operating agency, the BIFR can consider further modifications or even prepare a fresh scheme providing for such measures as the operating agency may consider it necessary and recommended in terms of Section 18(5) of the Act of 1985. 18. Section 18(7) of the Act of 1985 is an important provision which provides that the sanction accorded by the BIFR shall be conclusive evidence that all the requirements of the scheme relating to reconstruction or amalgamation or any measure specified therein have been complied with and a copy of the sanctioned scheme certified in writing by an officer of the BIFR to be a true copy thereof shall be admissible as evidence in all legal proceedings. To resolve the difficulties that may arise in giving effect to the provisions to the sanctioned scheme, the BIFR may, on the recommendation of the operating agency or otherwise, by order do anything, not inconsistent with such provisions, which appears to it to be necessary or expedient for the purpose of removing difficulty in terms of Section 18(9) of the Act of 1985. The role of the BIFR does not end here and it may even periodically monitor the implementation of the scheme. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof [and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company] shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. (2) Where the management of the sick industrial company is taken over or changed, in pursuance of any scheme sanctioned under section 18, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or in the memorandum and articles of association of such company or any instrument having effect under the said Act or other law - ( a ) it shall not be lawful for the shareholders of such company or any other person to nominate or appoint any person to be a director of the company; ( b ) no resolution passed at any meeting of the shareholders of such company shall be given effect to unless approved by the Board. (3) Where an inquiry under section 16 is pending or any scheme referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability, the period during which it or the remedy for the enforcement thereof remains suspended under this section shall be excluded. 22A. Direction not to dispose of assets - The Board may, if it is of opinion that any direction is necessary in the interest of the sick industrial company or creditors or shareholders or in the public interest, by order in writing direct the sick industrial company not to dispose of, except with the consent of the Board, any of its assets - ( a ) during the period of preparation or consideration of the scheme under section 18; and ( b ) during the period beginning with the recording of opinion by the Board for winding up of the company under sub-section (1) of section 20 and up to commencement of the proceedings relating to the winding up before the concerned High Court. 20. A bare reading of the above provision shows that Section 22 of the Act of 1985 is concerned with the suspension of legal proceedings, execution and distress sale etc. against the assets of a sick company while Section 22A deals with power of the Board to issue directions restraining the disposal of assets of such companies. These two provisions primarily ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act of 1985. It is a settled canon of interpretation of statutes that the statute should not be construed in its entirety and a sub-section or a section therein should not be read and construed in isolation. Chapter III, in fact, is the soul and essence of the Act of 1985 and it provides for the methodology that is to be adopted for the purposes of detecting, reviving or even winding up a sick industrial company. Provisions under the Act of 1985 also provide for an appeal against the orders of the BIFR before another specialised body, i.e., the AAIFR. To put it simply, this is a self-contained code and because of the non obstante provisions, contained therein, it has an overriding effect over the other laws. As per Section 32 of the Act of 1985, the Act is required to be enforced with all its vigour and in precedence to other laws. 22. The BIFR has been vested with wide powers and, being an expert body, is required to perform duties and functions of wide-ranged nature. If one looks into the legislative intent in relation to a sick industrial company, it is obvious that the BIFR has to first make an effort to provide an opportunity to the sick industrial company to make it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have been reckoned or included in the scheme for rehabilitation failing which the recovery or proceedings in relation to that particular liability would continue despite the provisions of the Act of 1985. In that case the Court was concerned with the recovery of sales tax dues, which the sick industrial company was enabled to collect after the date of sanction of the scheme. The revenue was due to the department and the recovery of such amount was held to be beyond the purview of the Act of 1985. 24. In Jay Engg. Works Ltd. ( supra ), the dictum of this Court was that the Act of 1985 is a complete code in itself and the provisions of Section 22 of the Act of 1985 would apply to an award made under the Interest on Delayed Payments to Small Scale and Ancillary Industries Undertaking Act, 1993, which would be governed by the provisions of the Arbitration and Conciliation Act, 1996. This Court also stated the principle that the Act of 1985 would have an overriding effect over other statutes, i.e. the 1993 Act in that case. However, the question whether the BIFR, while implementing the scheme, could reduce the quantum of liability of the creditors was left open. 25. Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors and shareholders, in the interest of the company or even in public interest, directing the company not to dispose of any assets, except with the consent of the BIFR. The directions so issued are to remain in force during the preparation and consideration of the scheme. BIFR is also vested with similar powers where it recommends to the High Court for winding up of a company. The directive issued by BIFR would remain in force upto the commencement of the proceedings for winding up before the High Court. Section 22 is the reservoir of the statutory powers empowering the BIFR to determine a scheme, right from its presentation till its complete implementation in accordance with law, free of interjections and interference from other judicial processes. Section 22(1) deals with the execution, distress or the like proceedings against the company's properties, including appointment of a Receiver. It also specifically provides that even a winding up petition would not be instituted and no other proceedings shall lie or proceed further, except with the consent of the BIFR. In contradistinction to this power, Section 22(3) states that pending an enquiry or a scheme under the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r own limitations and not by force of any other law, agreement, memorandum or even articles of association of the company. The purpose is so very clear that during the examination, finalization and implementation of the scheme, there should be no impediment caused to the smooth execution of the scheme of revival of the sick industrial company. It is only when the specified period of restrictions and declarations contemplated under the provisions of the Act of 1985 is over, that the status quo ante as it existed at the time of the consideration and finalization of the scheme, would become operative. This is done primarily with the object that the assets of the company are not diverted, wasted, taken away and/or disposed of in any manner, during the relevant period. 27. The powers of the BIFR under Section 22(3) can be segregated under two different heads. Firstly, the power to suspend simplicitor the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or any other instrument in force, to which the sick industrial company is a party or which may be applicable to the sick industrial company before the date of such o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommencement of the proceedings for winding up before the concerned High Court, in the event the BIFR recommends winding up proceedings. 30. The relevant provisions of the Act of 1985 clearly demonstrate that BIFR is vested with the power to issue directions in the interest of the company or even in public interest, to prevent the disposal of assets of the company during the period of preparation, consideration or implementation of the scheme. Not only this, BIFR is expected to ensure proper implementation by appropriately monitoring the scheme during the entire relevant period. Sections 22 and 22A thus specify the complete jurisdiction and authority of the BIFR in relation to preparation, consideration, finalization and implementation of a revival scheme in relation to a sick industrial company. 31. Where Section 22(1) deals with the restrictions and limitations vis- -vis the court proceedings while Section 22(3) of the Act of 1985 deals with the agreement, intents or other obligations as stated in that provision and declarations which will be made by the BIFR for the purposes of finalization and effective implementation of the scheme. There, Section 22A deals with rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Act were in the nature of proceedings by way of execution, distress or the like contemplated by Section 22(1) of the Act, this Court followed its earlier view and held that even the proceedings for recovery of tax under the State Act were covered within the scope of Section 22(1) of the Act of 1985, and thus, could not be given effect to without approval/consent of the BIFR. 33. As already noticed above, in the case of Corromandal Pharmaceuticals ( supra ), this Court had taken the view that the bar or embargo envisaged in Section 22(1) can apply only to such of those cases where it is reckoned or included in the sub-judice schemes. Amounts like the sales tax which the sick industry is enabled to collect after the date of the sanction of the scheme, had to be recovered in the normal course, by the Revenue and protection of Section 22(1) was not available. 34. This view, however, was not clearly adopted by this Court in subsequent judgments of Jay Engg. Works Ltd. ( supra ), where this Court accepted the wider connotation of the words 'proceedings' appearing in Section 22(1) where an award passed under the Interest on Delayed Payments to Small Scale an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsure revival, this preventive provision has been enacted. The provision has an overriding effect as it contains non obstante clauses not only vis- -vis the Companies Act but even qua any other law, even the memorandum and articles of association of the industrial company and/or any other instrument having effect under any other Act or law. These proceedings cannot be permitted to be taken out or continued without the consent of the BIFR or the AAIFR, as the case may be. The expression 'no proceedings' that finds place in Section 22(1) is of wide spectrum but is certainly not free of exceptions. The framers of law have given a definite meaning to the expression 'proceedings' appearing under Section 22(1) of the Act of 1985. These proceedings are for winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a Receiver in respect thereof. The expression 'the like' has to be read ejusdem generis to the term 'proceedings'. The words 'execution, distress or the like' have a definite connotation. These proceedings can have the effect of nullifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of the provisions of Section 22(1) and as such, these provisions were not attracted. Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association AIR 1992 SC 1439. 36. Referring to the facts of the present case, the land was one of the major assets of the Respondent Company and in the event the said asset was kept outside the scope of the scheme or its sale was permitted by the BIFR, probably the company could never be revived and any effort in that direction de hors such asset of the company would be in futility. Besides, the fact that the statutory protection contained in Section 22(3) was available to the company, it could be stated with more emphasis that the BIFR could even adopt and permit the transaction with such adoption as it may have deemed appropriate. The imperative nature of the functions of the BIFR under the provisions of the Act of 1985 and the overriding effect of its provisions fully support such a view. Overriding effect of the Act of 1985 : 37. This Court has taken the view in Tata Motors Ltd. v. Pharmaceutical Products of India Ltd. [2008] 84 SCL 355 that the Act of 1985 has been enacted to secure the principles spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court but its jurisdiction in a case of this nature is limited. 38. Even in the case of NGEF Ltd. v. Chandra Developers (P) Ltd. [2005] 64 SCL 1, this Court specifically reiterated and with emphasis the principle that the provisions of the Act of 1985 contained non-obstante clauses, it is a special statute which is a complete code in itself and that the jurisdiction of the Company Court in such matters would arise only when AAIFR and BIFR have exercised their jurisdiction under Section 20 and 25 respectively of the Act of 1985. The provisions of SICA would prevail over the provisions of the Companies Act. 39. From the above judgments of this Court, the unambiguous principle of law that emerges is that the provisions of the Act of 1985 shall normally override the other laws except the laws which have been specifically excluded by the Legislature under Section 32 of the Act of 1985. The Act of 1985 has been held to be a special statute vis- -vis the other laws, most of which have been indicated above. In the present case, we are concerned with the provisions of the Act of 1882. It is the case of the respondent-company before us that they have got an interest in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , District Thane was agreed to be sold on the conditions which were stated therein and it had also postulated the execution of a proper Agreement to Sell. Principal Agreement of Sale was executed on 1st March, 2007 between the parties. As certain amounts were found to have been incorrectly stated in the Principal Agreement and parties intended to pre-pone the payment of instalments as per the terms of that agreement, they executed First Supplementary Agreement dated 29th September, 2007. It may be noticed here that the Respondent Company, in the meanwhile, had financial crisis and was not able to pay off its debt of nearly ₹ 147 crore as on 31st March, 2006. The company itself had approached the BIFR for declaring the company as a 'sick industrial company' and to examine the possibility of its revival through a scheme, in accordance with the provisions of the Act of 1985. 42. The scheme of rehabilitation in relation to the sick industrial company was presented before the Corporate Debt Restructuring (CDR) Empowered Group which was appointed by the consortium of the banks to whom large sums were due from the said company on 13th June, 2007. The scheme was approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1882, the title in the property in question is vested in the Respondent-Company and they are entitled to transfer of the property, free from any restrictions or limitations. As such, the order of the High Court is liable to be set aside and that of the AAIFR be restored. In view of our afore-stated discussion and the reasons to follow, we are unable to accept this contention entirely or even in part for that matter. Firstly, we may examine whether an agreement to sell in relation to an immovable property transfers or creates any right or title in the immovable property itself in favour of the purchaser. Section 54 defines 'Sale' as a transfer of ownership in exchange for price paid or promised or part-paid and part-promised. Such a transfer of tangible immovable property of the value of ₹ 100/- and upwards can be made only by a registered instrument. The 'contract for sale' has been explained under this very provision as follows: - Contract for sale:- A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to the proprietor requiring that site and that they had taken possession, but been dispossessed. It was held by the Judicial Committee that the suit must fail. The Judicial Committee was of the opinion that the agreement conferred on the society no present estate or interest in the site, and was unenforceable as a covenant, since it did not run with the land, and infringed the rule against perpetuity. Lord Buckmaster who pronounced the opinion of the Judicial Committee observes as follows: Further, if the case be regarded in another light - namely, an agreement to grant in the future whatever land might be selected as a site for a temple - as the only interest created would be one to take effect by entry at a later date, and as this date is uncertain, the provision is obviously bad as offending the rule against perpetuities, for the interest would not then vest in present, but would vest at the expiration of an indefinite time which might extend beyond the expiration of the proper period. (11) But there has been a change in the legal position in India since the passing of the Transfer of Property Act. Section 54 of the Act states that a contract for sale of immovable pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same footing as a mere personal contract, for it can be enforced against an assignee with notice. There is a superficial kind of resemblance between the personal obligation created by the contract of sale described under s. 40 of the Act which arises out of the contract, and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon and the equitable interest of the person purchasing under the English Law, in that both these rights are liable to be defeated by a purchaser for value without notice. But the analogy cannot be carried further and the rule against perpetuity which applies to equitable estates in English law cannot be applied to a covenant of pre-emption because s. 40 of the statute does not make the covenant enforceable against the assignee on the footing that it creates an interest in the land. 45. This very view was reiterated by this Court in the cases of State of U.P . v. District Judge AIR 1997 SC 53 Dharma Naika v. Rama Naika AIR 2008 SC 1276 and Mrs. Saradamani Kandappan v. Rajalakshmi [JT 2011 (8) SC 129]. 46. Heavy reliance was placed by the learned counsel appearing for the Respondent- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eree, where a transferor has given and the transferee has taken possession of the property or any part thereof. Even this provision does not create title of the transferee in the property in question but gives him a very limited right, that too, subject to the satisfaction of the conditions as stated in Section 53A of the Act of 1882 itself. In the case of District Judge ( supra ), this Court, while deliberating upon the rights emerging from Section 53A of the Act of 1882, held as under: That protection is available as a shield only against the transferor, the proposed vendor, and would disentitle him from disturbing the possession of the proposed transferees who are put in possession pursuant to such an agreement. But that has nothing to do with the ownership of the proposed transferor who remains full owner of the said land till they are legally conveyed by Sale Deed to the proposed transferees. 48. Thus, even if the part performance of the agreement is accepted, still no title is created in favour of the Respondent-Company. Provisions of Section 53A would also not, in any way, alter the position of the Act of 1985 having an overriding effect vis- -vis the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question on the one hand and the utility of the remaining land for revival of the company on the other. To put it simply, the land was the paramount asset of the company for its revival and successful implementation of the scheme in accordance with law. The asset was duly taken into consideration in formulation of the scheme as contemplated under Sections 17 and 18 of the Act of 1985 and appropriate directions, prohibitory orders were issued within the ambit and scope of Sections 22(1), 22(3) and 22A of the Act of 1985. In view of the clear statement of law, as afore-recorded, and facts of the present case, we are unable to find any merit in the submission of the Respondent-Company that the BIFR had no jurisdiction to pass such directives. 50. AAIFR had disturbed the above order and held that the contract between the parties could not be suspended under Section 22(3) and it was not in the interest of the Respondent-Company. In other words, it had permitted the sale to be completed without any restriction. This order was set aside and the order of the BIFR was restored by the High Court. We find no jurisdictional or other error in the order of the High Court in restoring th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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