PETITIONER:
NATIONAL TEXTILE CORPORATION AND ANOTHER
Vs.
RESPONDENT:
STATE OF MAHARASHTRA AND OTHERS
DATE OF JUDGMENT12/04/1977
BENCH:
GUPTA, A.C.
KAILASAM, P.S.
CITATION:
1977 AIR 1566 1977 SCR (3) 525
1977 SCC (3) 4
ACT
Sick Textile Undertakings (Nationalisation) Act,
1974--Incumbrance-Meaning of--Notification issued under Land
Acquisition Act--If an incumbrance.
HEADNOTE
The state Government issued two notifications under ss.
4 and 6 of the Land Acquisition Act seeking to acquire
certain land belonging to a textile mill. When the Letters
Patent Appeal of the ’Textile mill was pending before the
High Court the mill was taken over by the Central Government
and later the appellant was substituted for the original
appellant.
By virtue of s. 3 of the Sick Textile Undertakings
(Nationalisation) Act, 1974 the management of every sick
textile mill vested absolutely in the Central Government and
later in the appellant. Section 4(2) of the Act provides
that all property which vested in the Central Government
shall, by force of such vesting, be freed and discharged
from trust, obligation, mortgage, charge, lien and all other
incumbrances affecting it and any attachment, injunction or
decree or order of any court restricting the use of such
property in any manner shall be deemed to have been with-
drawn. The appellants’ contention that by reason of
ss.4(2)the two notifications must be held to have become
ineffective because the section provides that all property
vested in the Central Government shall be free from all
incumbrances affecting it was rejected by the High Court.
Dismissing the appeal to this Court,
HELD : The High Court was right in its view that the notifi-
cations issued under ss 4 and 6 of the Land Acquisition
Act were not incumbrances and could not be held to have
become inoperative on the land vesting in the Central
Government. [528 B]
1.The term "incumbrance" has not been defined in the
Act, The dictionary meaning given to incumbrance is a
claim, lien or liability attached to property. An incum-
brance in this sense has to be a liability "attached to
property". a burden or liability that runs with the land.
The notifications issued under the Land Acquisition Act are
not a burden or liability attached to the property.[528 B]
2. "Incumbrance" in the context of s. 4(2) means some
burden or liability attached to the property ,like mortgage,
charge, lien etc. That this is so would appear from the
words ’all other incumbrances affecting it". Having said
that the vesting will be free from trust etc., sub-s. (2)
goes on to add that "any attachment. injunction or
decree .... shall be deemed to be withdrawn" upon vesting.
If "incumbrance" meant any kind of fetter, any attachment,
injunction or decree or order restricting use of the proper-
ty would be included in "all other incumbrances" and it
would have been quite unnecessary to mention them separate-
ly. This means that fetters on the property like attach-
ment, injunction or decree or order of any court restricting
the use of the property which are deemed to have been with-
drawn upon. the property vesting in the Central Government
are not really incumbrances within the meaning of the word
as used in s.4(2) [528 E-G]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 309 of
1976.
Appeal by Special Leave from the Judgment and Order
dated the 22nd January, 1975 of the Bombay High Court in
Appeal No. 106 of 1969 in Misc. Petition No. 320 of 1964.
7-502 SCI/77
526
I. N. Shroff and H.S. Parihar for the Appellants.
M.N. Shroff for Respondents 1 and 2.
V.P. Ram an, Addl. Sol. Genl, K.J. John and Shri Narain
for Respondent No. 3.
The Judgment of the Court was delivered by
GUPTA, J. Ahmedabad Jupiter Spinning Weaving and Manu-
facturing Company Limited was the owner of 5900 Sq. yds of
land forming part of its mill premises at Lower Parel in
Bombay which was sought to be acquired by the Maharashtra
Government for a municipal school. Notifications under
sections 4 and 6 were issued on June 19, 1961 and May 29,
1964 respectively. The company filed a petition in the
Bombay High Court challenging the validity of the notifica-
tions on several grounds. A single Judge of the High Court
having dismissed the writ petition on August 11, 1969 the
company preferred a. letters patent appeal. During the
pendency of the appeal, the management of the company
was taken over by the Central Government on October 8, 1972
under the Industries (Development and Regulation) Act,
1951. On September 21, 1974 an ordinance called the Sick
Textile Undertakings (Nationalisation) Ordinance, 1974
was .promulgated by virtue of which the textile undertaking
of the company the ’management of which had been taken over
by the Central Government, vested absolutely in the Central
Government with effect from the "appointed day", which was
April 1, 1974, and immediately thereafter stood transferred
and vested in the National Textile Corporation. The Ordi-
nance was later replaced by the Sick Textile Undertakings
(Nationalisation) Act, 1974 (hereinafter referred to as Sick
Textile Act). Sections 3 and 4 of the Act are as follows:
Acquisition of rights of owners in respect of
sick textile undertakings.
"3. (1 ) On the appointed day every
sick textile taking and the right title and
interest of the owner in relation to every
such sick textile undertakings shall stand
transferred to, and shall vest absolutely in,
the Central Government.
(2) Every sick 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 Corpora-
tion.
General effect of vesting
4. (1 ) The sick textile undertaking
referred to in section 2 shall be deemed to
include all assets, rights, leaseholds,
powers, authorities and privileges and all
property, movable and immovable, including
lands, buildings, workshops, stores, instru-
ments, machinery and equipment, cash balances,
cash on hand, reserve funds, investments and
book debts and all other rights and interests
in, or arising out of, such property as were
immediately before the appointed
527
day in the ownership, possession, power or
control of the owner of the sick textile
undertaking, whether within or outside
India, and all books of account, registers
and all other documents of whatever nature
relating thereto and shall also be deemed to
include the liabilities and obligations speci-
fied in sub-section (2) of section 5.
(2) All property as aforesaid which have
vested in the Central Government under sub-
section (1) of section 3 shall, by force of
such vesting, be freed and discharged from any
trust, obligation, mortgage, charge, lien and
all other incumbrances affecting it, and any
attachment, injunction or decree or order of
any court restricting the use of such property
in any manner shall be deemed to have been
withdrawn."
The other sub-sections of section 4 are not relevant for the
present purpose.
The National Textile Corporation applied to the High
Court for being substituted in place of the original appel-
lant in the letters patent appeal which was pending and the
application was allowed. The main contention on behalf of
the substituted appellant in the High Court was that the
two notifications under sections 4 and 6 of the Land Acqui-
sition Act must be held to have become ineffective in view
of section 4(2) of the Sick Textile Act which provides
that-all property which vests in the Central Government
under section 3(1) does so free from all "incumbrances
affecting it." The High. Court dismissed the appeal hold-
ing that the notifications under the Land Acquisition Act
were not incumbrances within the meaning of section 4(2) of
the Sick Textile Act. In the appeal before us filed with
special leave obtained from this Court, the National Textile
Corporation questions the correctness of the view taken by
the High Court.
Thus the only question for determination in the appeal
is whether the notifications issued under the Land Acquisi-
tion Act are incumbrances within the meaning of the word as
used in section 4(2} of the Sick Textile Act. Section 3 and
the first two sub-sections of section 4 of the Sick Textile
Act are the only provisions relevant in this context.
Section 3 provides that on the appointed day every sick
textile undertaking shall vest absolutely in the Central
Government, and then in the National Textile Corporation.
Subsection (1 ) of section 4 states that the undertakings
vesting in the Central Government under section 3 shall be
deemed to include all assets, rights and interests in the
ownership, possession or control of the owners of such
undertakings immediately before the appointed day. Sub-
section (2) of section 4 provides that all property vesting
in the Central Government under section 3 shall, "by force
of such vesting, be freed and discharged from any trust,
obligation, mortgage, charge, lien and all other incum-
brances affecting it, and any attachment, injunction or
decree or order of any court restricting the use of such
property in any manner shall be deemed to have been with-
drawn".
Counsel for the appellant argues that sub-section (2) of
section 4 is intended to vest the sick textile undertakings
in the Central Govern-
528
ment free from all fetters, and the notifications issued
under the Land Acquisition Act which had the effect of
freezing the price of the land were fetters falling in the
category of "other incumbrances" mentioned in section 4(2)
of the Sick Textile Act. The term ’incumbrance’ has not
been defined in the Act. In Wharton’s Law lexicon incum-
brance is described as being a claim, lien or liability,
attached to property. This is the sense in which the term is
ordinarily used. An incumbrance in this sense’ has to be a
liability "attached to property", it must be a burden or
liability that runs with the land, as the High Court has
held. But a notification issued by the Government under
the Land Acquisition Act is not a burden Or liability that
is attached to the property. The sovereign right of the
State to take proceedings for the acquisition of any land
for public purpose is similar to its right to impose a tax
on the land which is paramount to the ownership over the
land and outside it". [see The Collector of Bombay v.
Nusserwanji Rattanji Mistri & others [1955] 1 SCR 1311 (at
1323). Under sub-section (2) of section 4 of the Sick Tex-
tile Act all property which have vested in the Central
Government under section 3 (1) shall be freed and discharged
from any trust, obligation, mortgage, charge, lien and all
other incumbrances affecting it, and any attachment,
injunction or decree or order of any court restricting the
use of such property shall be deemed to have been withdrawn.
Counsel for the respondent. State of Maharashtra, submits
that the term incumbrance should take colour from the dif-
ferent kinds of burden on the land specified in section
4(2) preceding the words all other incumbrances"it is argued
that incumbrance in the context means’ Some burden or li-
ability that is attached to the property ,like mortgage,
charge, lien That this is so would also appear from what
follows the words "all other incumbrances affecting it".
Having said that the vesting will be free from trust,
obligation, mortgage, charge, lien and all other incum-
brances affecting it. sub-section (2) goes on to add that
"any attachment. injunction or decree or order of any court
restricting the use of such property in any manner shall be
deemed to have been withdrawn" upon vesting. If the appel-
lant’s construction of the provision were correct, and
incumbrance meant any kind of fetter, any attachment, in-
junction or decree or order restricting the use of the
property would be included in "all other incumbrances" and
it would have been quite unnecessary to mention them sepa-
rately. This makes it clear that fetters on the property
like attachment, injunction or decree or order of any
court restricting the use of the property which are deemed
to have been withdrawn upon the property vesting in the
Central Government are not really incumbrances within the
meaning of the word as used in sub-section (2) of section 4.
We therefore agree with the High Court that the notifica-
tions issued under sections 4 and 6 of the Land Acquisition
Act are not incumbrances and cannot be held to have become
inoperative on the land in question vesting in the Central
Government.
The appeal is dismissed but in the circumstances of the case
without any order as to cost.
P. B.R. Appeal dismissed.
529