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2008 DIGILAW 400 (PAT)

Motipur Sugar Factory Limited v. State Of Bihar

2008-02-26

BARIN GHOSH, RAJESH BALIA

body2008
Judgment 1. Heard learned counsel for the parties. 2. This appeal is directed against the order of learned Single Judge declining to grant interim relief in C.W.J.C. No. 427 of 2008. 3. The appellant owned an industrial undertaking which is a sugar industry situate in the district of Muzaffarpur. Under Bihar Sugar Undertakings (Acquisition) Act, 1985 (hereinafter referred to as the Act), the undertaking owned by the appellant-Company stood transferred and vested in the State Government on the appointed date, that is to say, on 21st October, 1985. 4. As a result of this transfer of the undertaking to the State Government, free from all encumbrances together with all the assets, rights lease holds, powers, authorities and privileges, all property moveable and immoveable, including lands, buildings, workshops, stores, instruments, machinery and equipments, cash balance, cash in hand, reserve funds and investments pertaining to undertakings and all other rights and interests in or arising out of such property rights or interest ceased to exist in the petitioner-Company. 5. Thereafter the management and dealing with the assets of the undertaking remained in absolute domain of the State Government or the Corporation to which the management and control of such undertaking was transferred in terms of sub-sec. (2) of Sec. 3 of the Act. 6. It is in furtherance of sub-sec. (2) of Sec. 3 of the Act the Bihar State Sugar Corporation Limited had been established and undertaking stood transferred to it. 7. The only claim to which the petitioner-appellant-Company remained entitled to since 21.10.1985, as a result of acquisition of the Undertaking and its vesting in the State Government as aforesaid was to receive compensation to be payable u/s. 7 of the Act. 8. Before compensation was to be paid to the Company, the liabilities of the scheduled undertaking in respect of the period prior to the appointed day were to be met in accordance with the rights and interests of the creditors of the respective undertaking from the amount payable as compensation as determined under Sub-sec. (1) of Sec. 7. Discharge of such liability towards the undertakings creditors was also limited to the amount of compensation payable to the petitioner-Company. 9. Before filing this petition, claim to compensation has been made by the petitioner appellant before the State Government, somewhen in 1987, as per statement of learned counsel for the appellants. (1) of Sec. 7. Discharge of such liability towards the undertakings creditors was also limited to the amount of compensation payable to the petitioner-Company. 9. Before filing this petition, claim to compensation has been made by the petitioner appellant before the State Government, somewhen in 1987, as per statement of learned counsel for the appellants. No claim to such compensation has been laid in this petition. 10. It appears that prayer of the petitioner appellant in the writ application relates primarily to restrain the prequalification notices Annexures 11 and 12 issued by the Sugar Corporation inviting prospective investors for taking the undertaking on lease for a period of sixty years renewable 1or another thirty years and a mandamus that instead of allowing strangers to get the undertaking on lease negotiations with the petitioner-Company for handing over the undertaking to it, as a preferential right to acquire the property on lease be made as erstwhile owners of the undertaking. 11. This is apparent from the reliefs claimed by the petitioner-appellant which we notice hereinbelow: (i) "To issue an appropriate writ/ order/direction in the nature of Mandamus restraining the respondents from acting upon the tender document issued pursuant to the. prequalification notice as contained in Annexures 11 and 12 of the writ petition. (ii) To issue an appropriate writ/ order/direction in the nature of Mandamus restraining the respondents to transfer/lease or handover the possession and lease rights/ownership of the Motipur Sugar Factory situated in the district of Muzaffarpur, which in fact belongs to the petitioner prior to its being taken over by the Government under the provisions of the Bihar Sugar Undertaking (Acquisition) Act, 1985 (hereinafter referred to as the Takeover Act) to any other person, other than the petitioner-Company. (iii) To issue an appropriate writ/ order/directions in the nature of Mandamus commanding the respondents to make over the industrial unit to the petitioner-Company after discharging all its current liabilities in full, which includes staff wages and salaries, provident fund, superannuation and gratuity dues as well as all cane price and other material cost and incidental arrears, electricity dues etc. incurred by them." 12. Apparently, this petition is designed to regain the property of the undertaking, which had vested in the State Government way back in 1985, free from all encumbrances. 13. While admitting the writ petition learned Single Judge has declined to grant any interim relief vide order under appeal. 14. incurred by them." 12. Apparently, this petition is designed to regain the property of the undertaking, which had vested in the State Government way back in 1985, free from all encumbrances. 13. While admitting the writ petition learned Single Judge has declined to grant any interim relief vide order under appeal. 14. Two fold contentions have been raised. Firstly, the State Government has failed to fulfil the objects for which the undertaking has been acquired in 1985 and secondly, because compensation has not been paid to the petitioner-appellant-Company so far, therefore, it has prior right to reclaim the property. The petitioner appellant has also raised a third ground that 30% shareholders of the Company is a waqf and transfer of the undertaking on lease to third party is likely to affect their right. The substance of this contention is that waqf as a holder of 30% share in the Company, it owns 30% of assets of the Company which cannot be transferred without permission of Waqf Board and not for any other purpose than the one for which waqf has come into existence. 15. We are of the opinion that none of the grounds raised by the petitioner-appellant has any merit. The Undertaking having vested in the State free from all encumbrances, whatever interest the Company had has come to an end on the appointed date and thereafter only right which under the Act remained with the petitioner-Company over the assets, rights and interest in the properties as mentioned in Sec. 3 of the Act as noticed above was to claim compensation u/s. 7 of the Act determined in accordance therewith. No further claim of the erstwhile Company remain in the management and dealing with the properties of the undertaking vested in the State Government and thereafter transferred to the Sugar Corporation. That being so, to the dealing of such property by the Corporation the petitioner appellant-Company is a rank stranger and cannot intermeddle with the same so as to claim a writ of prohibition or mandamus to seek any priority or preferential rights. It can only participate in seeking proposed lease on competitive terms and subject to other conditions of such invitation to proposal. 16. Moreover, so far as waqf as a shareholder is concerned, it has no direct access to the assets of the Company as a shareholder. It can only participate in seeking proposed lease on competitive terms and subject to other conditions of such invitation to proposal. 16. Moreover, so far as waqf as a shareholder is concerned, it has no direct access to the assets of the Company as a shareholder. Its interest is only if the Company is dissolved, to receive dividends out of spoils of the Company or it can claim rateable distribution in compensation, in the surplus, if any, that remains with the Company after discharging its debts in terms of provisions of Companies Act. So long as the Company exists as a juristic person it has independent identity apart from Shareholders and a shareholder has no reach to any business or assets of the Company except in the manner laid down in the Companies Act. 17. Above all the petitioner before us is a Company, and not the waqf. Company has no locus to further the cause of any individual shareholder, qua his/its shareholding in the Company. 18. Since we do not find any merit in the petition itself, therefore, the question of considering grant of any interim relief does not arise. The petitioner has no prima facie case which merit any consideration. That being so the questions of irreparable loss to the petitioner and existence of balance of convenience in its favour also do not arise. 19. This Letters Patent Appeal is accordingly dismissed. 20. At this juncture learned counsel for the appellant states that in view of above, the writ petition itself may be disposed of, can be disposed off. 21. In view of aforesaid request, the writ application C.W.J.C. No. 427 of 2008 out of which this appeal arises, also stands dismissed. No costs.