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PETITIONER: NATIONAL TEXTILE CORPORATION AND ANOTHER

       Vs.

RESPONDENT: STATE OF MAHARASHTRA AND OTHERS

DATE OF JUDGMENT12/04/1977

BENCH: GUPTA, A.C. 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

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       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.

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                           (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.

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       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

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       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