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Madhya Pradesh High Court · body

2018 DIGILAW 518 (MP)

State of M. P. v. Hukumchand Mills Ltd.

2018-05-22

PRAKASH SHRIVASTAVA

body2018
ORDER 1. This order will govern the disposal of IA No. 3360/2010 and No. 2340/2009.000 2. IA No. 6630/2010 has been filed by the State of M.P. seeking permission under section 446 of the Companies Act, 1956 to institute a civil suit against the company in liquidation for determination of lease and declaration of ownership in the competent civil Court. 3. IA No. 2340/2009 has been filed by the State Government under section 535 of the Companies Act seeking disclaimer of onerous property by the Official Liquidator in respect of the lease land of 42.49 acres with the plea that the company in liquidation was never the owner of the land and the land was never mortgaged by the owner in favour of the Bank and the ownership of the land vests in the Government. 4. The aforesaid I.A of the State Government are opposed by the secured creditors, workers union and O.L raising the plea that the Municipal Corporation, Indore is the owner of the land in question. 5. In the earlier round of litigation Municipal Corporation, Indore had also opposed these I.As but now it has changed its stand. 6. This Court by order dated 4.3.2014 had decided the aforesaid I.As holding that since no lease by the State Government in favour of the company in liquidation was pointed out and the company was in possession of the suit land in pursuance to the lease executed by the Municipal Corporation, Indore, hence no prima-facie State's right to terminate the lease executed by the Municipal Corporation, Indore was found therefore, it was held that no case for granting the leave to the State Government to file the suit in this regard was made out. It was also found that the company in liquidation was only claiming the lease hold right and that the dispute of ownership was between the State and the Municipal Corporation, therefore, for settling that dispute no leave of the Court was required. This Court had accordingly rejected IA No. 6630/2010 and IA No. 2340/2009. 7. This order was affirmed by the Division Bench vide order dated 14.6.2016 passed in Company Appeals No. 3/2014 and 4/2014. Against the order of the Division Bench, the State Government had preferred Civil appeals No. 18898-18899 of 2017 (SLP (C) No. 6548-6549 of 2017). This Court had accordingly rejected IA No. 6630/2010 and IA No. 2340/2009. 7. This order was affirmed by the Division Bench vide order dated 14.6.2016 passed in Company Appeals No. 3/2014 and 4/2014. Against the order of the Division Bench, the State Government had preferred Civil appeals No. 18898-18899 of 2017 (SLP (C) No. 6548-6549 of 2017). Before the Supreme Court the State had submitted that the State is the owner of the land and the said plea was found to be a new case set up by the State Government for the first time, hence, be setting aside the order of this Court the Hon'ble Supreme Court vide order dated 17.11.2017 had directed as under : "4 In our view, this being a new case set up by the State for the first time before this Court, the same needs to be addressed by the learned Company Judge. 5 Accordingly, the impugned order is set aside and the matter is remitted to the learned Company Judge. We make it clear that the learned Company Judge will decide the matter afresh without being influenced by any of the observations made by this Court or the stand taken by the High Court in the impugned order. We request the learned Company Judge to consider the matter expeditiously and in any case, within two months from the date of production of a copy of this judgment. 6 We make it clear that we have not expressed any opinion on the merits of the case, therefore, all contentions are left open to the parties to raise before the learned Company Judge. It will be open to the secured creditors to bring to the notice of the Company Judge any subsequent development as well. The contentions made on behalf of the workmen shall also be addressed by the learned Company Judge. 7 In view of the above, the civil appeals are disposed of. Pending Interlocutory Applications, if any, stand disposed of.” 8. In view of the aforesaid direction learned counsel for the parties are heard afresh. 9. The contentions made on behalf of the workmen shall also be addressed by the learned Company Judge. 7 In view of the above, the civil appeals are disposed of. Pending Interlocutory Applications, if any, stand disposed of.” 8. In view of the aforesaid direction learned counsel for the parties are heard afresh. 9. Having heard the learned counsel for parties and on perusal of the record, it is noticed that though in the IA No. 6630/2010, the prayer made by the State Government is to grant permission under section 446 of the Companies Act to institute civil suit against the company in liquidation, but in the subsequent affidavit dated 14.2.2018, prayer has been made to pass an appropriate order holding the State of Madhya Pradesh as owner of the land in question. As per the direction of the Hon'ble Supreme Court, the issue of ownership of the State Government is to be addressed by this Court. Hence, the elaborate arguments have been advanced by the counsel for parties on the plea of ownership, therefore, this Court is examining the question of title of the State on the leased land in question. 10. The facts in nutshell are that the Hukumchand Mill, the company in liquidation was granted lease of land ad-measuring 42.49 acres by the lesser and the factory was closed down on 12.12.1992. The winding up order was passed by this Court on 22.1.2003. The company in liquidation had taken loan from the banks and the State Government had stood as guarantor. Since the company had failed to repay the debts, therefore, recovery proceedings were initiated by Industrial Development Bank of India, Industrial Finance Corporation of India Limited and ICICI Bank Limited by filing OA No. 337/2001 before DRT in which the State Government was one of the defendant and the DRT had passed the decree dated 26.2.2004 jointly and severally against the concerned parties including the State government. The recovery certificate dated 8.7.2004 was issued and the appeal of the State Government before the DRAT was dismissed by order dated 16.12.2014 by imposing cost of Rs. 10,000/-. Those orders have attained finality. The recovery certificate dated 8.7.2004 was issued and the appeal of the State Government before the DRAT was dismissed by order dated 16.12.2014 by imposing cost of Rs. 10,000/-. Those orders have attained finality. The possession of the assets of the company in liquidation was taken by the O.L. On 3.7.2002 and thereafter the possession of the land in dispute was handed over by the O.L to the Recovery Officer, DRT, Mumbai on 2.9.2014 in pursuance to the order of this Court dated 7.8.2014. The attempts to sell the land in question did not succeed on account of the opposition by the State. 11. Though the State of Madhya Pradesh has come up with the plea that the land ad-measuring 42.49 acres leased out to company in liquidation belongs to the State but no document of title such as any revenue record etc has been produced by the State, whereas the record reflects that the land in question is recorded in the revenue record of the year 1925-26 in the name of Municipal Corporation, Indore. 12. Undisputedly on the date of passing of the winding up order on 22.1.2003 the company in liquidation was holding the land in question ad-measuring 42.49 acres under the lease executed by the Municipal Corporation, Indore. The record reflects that two lease deeds were executed by the Municipal Corporation, Indore on 13.1.1959 in favour of the company in liquidation for 36.74 acres and 5.75 acres, total 42.49 acres of land. The recital of the lease deed dated13.1.1959 is as under : "This indenture made this 13th day of January 1959 between the Assistant Municipal Commissioner, Indore, on behalf of the Municipal Corporation, Indore, (hereinafter called the "Lessor" which expression shall be deemed to include his successors in office and assigns) of the one part and the Hukumchand Mills Limited, a company registered under the Indore Companies Act (Act No. VI of 1914) and have its registered office situated in Indore (hereinafter called the "Lessees" which expression shall be deemed to include their successors and assigns) of the other part." 13. The record further reflects that much prior to 1923 the aforesaid land was leased out by the Indore Municipal Corporation to the company in liquidation and the Municipal Corporation, Indore was receiving the rent of Rs. 1,535/- from the company in liquidation. The record further reflects that much prior to 1923 the aforesaid land was leased out by the Indore Municipal Corporation to the company in liquidation and the Municipal Corporation, Indore was receiving the rent of Rs. 1,535/- from the company in liquidation. Thereafter since the lease in perpetuity was to be executed and such a power was with the Holkar government alone, therefore, the lease deed dated 5.1.1923 was executed by the Prime Minister of the Holkar State in favour of the company in liquidation reiterating the earlier lease rent of Rs. 1,535/-. This lease deed at the end bears the seal of the Indore Municipal Corporation and contains the details of the earlier lease and the lease rent. This position has been clarified in the undisputed letter of the Commissioner, Indore Municipal Corporation dated 17th September, 1958 which was issued at the time of splitting the lease deed into two by mentioning as under : "1 The land in question was included within the municipal limits of Indore city Municipality by Holkar Government Gazette of 1918 and 1921, certified copies of which had already been supplied to you. 2 The Municipality was recovering rent amounting to Rs. 1535/- even prior to the lease agreement signed by the Chief Minister of H.H. The Maharaja Holkar, which was executed in the year 1923, that is to say, two years after the land was included within the municipal limits. The fact that the lease agreement was executed by the Chief Minister of Maharaja Holkar's Government is attributable to the position of the municipality of Indore as them constituted and the special nature of the lease for Industrial purposes. The Municipality period of 10 years and since the lease in question was perpetuity, power to grant which vested in the Holkar Government alone, it was but proper that the execution of the lease agreement was made and signed by the Chief Minister of Maharaja Holkar. The Home Secretary was a signatory to the agreement as the department of the Municipalities was under his jurisdiction at the Secretariat level. (3) It is an undisputed fact, for, it is borne out by our annual records, that the lease money is being recovered by the Municipality and credited to the Municipal funds, right from the year 1922 up-to-date." 14. (3) It is an undisputed fact, for, it is borne out by our annual records, that the lease money is being recovered by the Municipality and credited to the Municipal funds, right from the year 1922 up-to-date." 14. It is worth noting that the Municipal Corporation, Indore since beginning is receiving lease rent from the company in liquidation and not a single document has been filed by the State Government showing receipt of the lease rent. The record further reflects that at the time of splitting of the lease and granting permission to mortgage the land, the Municipal Corporation, Indore had passed the following Resolution No. 307 dated 19.9.1958: uxj ikfyd fuxe dk;kZy;] bUnkSj 316 foŒ Øekad 316 uxj ikfyd fuxe izLrko Øekad 307 fnukad 19-9-1958 uxj ikfyd fuxe ÁLrko Øekad 168 fnukad 27-6-1958 vuqlkj gqdqepan fey okys IykV dk yht+jsUV orZeku ls nqxuk djus ds lEcU/k esa gh vk;qDr egksn;] uxj ikfyd fuxe dk i= dzekad 1750@lhŒbZŒ fnukad 9-7-1958 i<+k x;kA fopkj fofue; ds i'pkr~ mDr IykV dh yht+jsUV nqxuk djus dh Loh—fr Ánku dh tkrh gSA lkFk gh fuxe ÁLrko Øekad 168 fnukad 26-6-1958 }kjk iwoZ esa nh xbZ Loh—fr vuqlkj mDr IykV dk foHkktu djds muesa ls ,d IykV fxjoh j[kus dh vuqefr nsus fo"k;d dk;Zokgh ij vc vey fd;k tk,A gLrk{kj ihŒ,yŒ vM+lqys LFkkuh; es;j uxj ikfydk fuxe bUnkSj fnukad 19-9-1958 15. The Municipal Corporation, Indore had granted permission on 26.2.1965 to the company in liquidation to mortgage the land by issuing the following letter: uxj ikfyd fuxe dk;kZy;] bUnkSj Øekad 123] fnukad 18-2-1965 Jh Mk;jsDVj gqdqepan fey] fBdkuk---------------------------------bUnkSj fo"k;%& yht dh tehu fxjoh j[kus ckcr~A vkidk vtZ vken uaŒ 1667 fnukad 13-1-65 bZloh dk vkus ls nkf[kyk fn;k tkrk gS fd] mijksDr mYysf[kr vuqlkj 36-74 tehu LVsV cSad vkWQ bUnkSj dh vksj fxjoh j[kus dh btktr nh tkrh gSA okLrs vk;qDr bUnkSj uxj ikfyd fuxeA 16. It is also worth noting that the State had knowledge about the lease of the land in question by the Indore Municipal Corporation to the company in liquidation atleast since 1958 when the Indore Municipal Corporation had passed the Resolution No. 307 dated 19.9.1958 (as noted above) in respect of splitting of the lease. It is also worth noting that the State had knowledge about the lease of the land in question by the Indore Municipal Corporation to the company in liquidation atleast since 1958 when the Indore Municipal Corporation had passed the Resolution No. 307 dated 19.9.1958 (as noted above) in respect of splitting of the lease. The said Resolution was sent to the State Government in terms of section 53(5) of the M.P. Municipal Corporation, Act, 1956 which reads as under : "53(5)--A copy of the minutes of every meeting of the Corporation shall be sent by the Municipal Commissioner to the State government and a copy of the same shall be pasted at the notice board of the Corporation within seven days from the date of confirmation of minutes." 17. Hence, at least since 1958 State Government has the knowledge that Municipal Corporation, Indore is the owner of land in question but the State did not object to the title of the Indore Municipal Corporation till 2008 when for the first time the State had come forward claiming its own title. 18. Article 112 of the Limitation Act provides as under: Description of suit Period of limitation Time from which period begins to run 112. Any suit (except a suit before the Supreme Court in the exercise of its original jurisdiction) by or on behalf of the Central Government or any State Government, including the Government of the State of Jammu and Kashmir. Thirty years When the period of limitation would begin to run under this Act against a like suit by a private person 19. Hence, under Article 112 of the Limitation Act, the claim of the State of Madhya Pradesh in respect of the title on the suit land otherwise has become time barred in the year 1988 itself. 20. So far as the Indore Municipal Corporation is concerned, it has filed contradictory affidavits before this Court. In IA No. 10312/09 dated 25.11.2009 the Indore Municipal Corporation had raised the claim of title on the land in question by filing the supporting document and now another affidavit dated 4.4.2018 and 25.4.2018 have been filed by the Dy. Commissioner on behalf of Indore Municipal Corporation stating that the land in question belongs to the State. No Resolution of the Indore Municipal Corporation has been placed on record in respect of the decision to change the stand. Commissioner on behalf of Indore Municipal Corporation stating that the land in question belongs to the State. No Resolution of the Indore Municipal Corporation has been placed on record in respect of the decision to change the stand. The Municipal Corporation Indore has also not filed any documents relinquishing the title in favour of the State. That apart, counsel for respondents have pointed out that in view of sections 52 and 53 of the Transfer of Property Act, principles of lis pendens will apply because the Municipal Corporation has changed the stand pending these proceedings. The counsel for O.L and the secured creditors are also right in submitting that the stand has been changed by the Municipal Corporation in collusion with the State to frustrate the decree of DRT which is already under execution. Even otherwise mere change of the stand of the State is not enough, but having regard to the circumstances of the case and the order of the Hon'ble Supreme Court, the State Government is required to point out necessary documentary evidence showing the title. 21. Learned counsel for State has placed reliance upon the provisions of the Indore Municipal Act, 1909, Madhya Bharat Municipality Act, 1954, Madhya Bharat Municipal Corporation Act, 1956 and M.P. Municipal Corporation Act, 1956 in support of his submission that the land belongs to the State Government and not to the Indore Municipal Corporation. 22. The record reflects that the Indore Municipal Corporation was set up by the Indore Municipal Act, 1909. The Holkar State had transferred all the lands and open sites within the municipal limits which was not the private property and in possession of any department of the State to the Municipal Corporation Indore by the notification dated 18th June, 1917 which reads as under : "PART I THE HOLKAR SIRKAR GAZETTE JUNE 18, 1917 Home Department. Notification. It is notified for general information that His Highness the Maharaja in Hazur Shri Shankar Order No. 214 dated 19-5-17, is pleased to accord sanction to the transfer to the District Municipalities of all lands and open sites that lie within the Municipal limits of the towns where Municipalities have been established, but which are neither the private property nor are in possession of the Revenue Department or any other departments of the State. Sd/K.S.Bapat Sd/S.M.Bapna Home Secretary Home Minister" 23. Sd/K.S.Bapat Sd/S.M.Bapna Home Secretary Home Minister" 23. Similar issue had come up before the Division Bench of this Court in the matter of in the matter of Municipal Corporation, Indore v. State of M.P., and others reported in 1972 JLJ 614 , wherein the Municipal Corporation, Indore being the petitioner as against the State had raised the plea of being the owner of the land situated within the Holkar State. Referring to the above notification and subsequent enactments the Division Bench by a detailed judgment after examining the provisions of the Indore Municipal Act, 1909 and subsequent enactments, has held the Municipal Corporation, Indore to be the owner of the land by observing that under the relevant statutes the properties had vested in the Municipal Corporation. In this regard the Division Bench has held as under : "5. Shri Dubey, learned Government Advocate for the respondents, contended that the scheme of the M. P. Land Revenue Code indicates that all lands belong to the Government, He referred to various provisions of the Code pertaining to the scheme of assessment, and contended that this clearly goes to show that the State is the ultimate owner of all lands. According to him, what was transferred to the municipalities under the various statutes was the power of management, and the properties only vested in the local bodies as trustees and they were expected to manage them in accordance with and for the purposes of the Act. In this view of the matter, learned counsel contended that the State is the 11 ultimate owner of all lands and by its administrative instructions contained in the Revenue Book Circular IV1 it could always withdraw the management of these lands from the hands of the local bodies. Consequently, according to the learned counsel, the Nazul authorities were acting within their powers when they asked the Corporation not to lease out or dispose of any of the open sites in the town. Learned Government Advocate could not suggest any statutory sanction so far as the Revenue Book Circulars are concerned. But he contended that section 57 of the M. P. Land Revenue Code clearly indicates that the State is the owner of all lands. 6. Section 36 of the Indore Municipal Act, 1909 reads thus : "36. Learned Government Advocate could not suggest any statutory sanction so far as the Revenue Book Circulars are concerned. But he contended that section 57 of the M. P. Land Revenue Code clearly indicates that the State is the owner of all lands. 6. Section 36 of the Indore Municipal Act, 1909 reads thus : "36. (1) Subject to any special reservation which may be made by the Government, all property of the nature hereinafter in this section specified and situated within the limits of the Municipality shall be municipal property vested in the Commissioner on behalf of the Government and shall, with all other property which may become so vested, be under his direction, management and control, and shall be held and applied by him for the purposes of this Act, that is to say : (a) All public town-walls, gates, markets, slaughter houses, manure and night-soil depots and public buildings of every description which have been constructed or are maintained out of the Municipal Fund. (b) All public streams, springs and works for the supply, storage and distribution of water for public purposes, and all bridges, buildings, engines, materials and things connected therewith or appertaining thereto and also any adjacent land (not being private property) appertaining to any public tank or well; (c) all public sewers and drains, and all sewers, drams, culverts and water-courses in, alongside or under any street, and all works, materials and things appertaining thereto; (d) all dust, dirt, dung, ashes, refuse, animal matter or filth or rubbish of any kind, or dead bodies of animals collected by the Municipal servants, from the streets, houses, privies, sewers, cess-pools, or elsewhere, or deposited in places fixed under section 49; (e) all public lamps, lamp posts, and apparatus connected therewith or appertaining thereto; (f) all land or other property transferred to the Municipality by gift, purchase or otherwise for local public purposes; (g) all streets, and the pavements, stones and the other materials thereof, and all trees, erections, materials, implements and things provided for such streets; and (h) all lands and open sites which are neither private property nor are in possession of any department of the State. (2) The Government may, by notification in the Holkar Government Gazette direct that any property which has vested under sub-section (1) in the Commissioner shall cease to be so vested, and thereupon the property specified in the notification shall cease to be so vested, and "the Government may pass such orders as it thinks fit regarding the disposal and management of such property". " It is clear from this provision that subject to any reservation which the Stale Government may make the properties mentioned in this section shall vest in the municipality and shall be municipal properties. Clause (h) of sub-section (1) of this section refers to open sites which are neither private properties nor are in possession of any department of the State. It cannot, therefore, be doubted, and it is also not contested, that by the constitution of the Indore Municipality under the provisions of the Indore Municipal Act, 1909, all open lands, which were neither private property nor in possession of any particular department of the State, became municipal property and vested in the Commissioner, and in consequence all these open lands were managed, leased out and disposed of by the Indore Municipality. In 1954 the Indore Act was substituted by the M. B. Municipalities Act and section 2 and its proviso saved the Municipalities constituted under the old Act and all actions taken under that Act. Section 48 of the M. B. Act provided for vesting of the properties in a municipality, and it was as follows : "48. All property of the nature hereinafter in this section specified, and not being specially 13 reserved by the Government shall be vested in and belong to the municipality, and shall, together with all other property, of what nature or kind soever not being specially reserved by the Government, which may become vested in the municipality, be under their direction, management and control, and shall be held and applied by them as trustees, subject to the provisions and for the purposes of this Act, that is to say- (a) all public town-walls, gates, markets, slaughter houses, manure and night-soil depots, and public buildings of every description. (b) all public streams, tanks, reservoirs, cisterns, wells, springs, aqueducts, conduits, runnels, pipes, pumps and other waterworks, and all bridges, buildings, engines, works, materials and things connected therewith or appertaining thereto, and also any adjacent land (not being private property), appertaining to any public tank or well; (c) all public sewers and drains, and all sewers drains, tunnels, culverts, gutters and . watercourses in, alongside and under any streets, and all works, materials and things appertaining thereto, as also all dust, dirt, dung, ashes, refuse, animal matter, filth, night-soil or rubbish of any kind collected by the Municipality or by customary or private sweepers from the streets, houses, privies, sewers, cesspools, or elsewhere; (d) all public lamps, lamp-posts, and apparatus connected therewith, or appertaining thereto; (e) all lands transferred to them by the Government, or by gift or otherwise for local public purposes; (f) all public streets, and the pavements, stones and other materials also thereof and also all trees, erections, materials, implements and things provided for such streets." This provision clearly indicates that the properties will, continue to vest in the municipality except if any reservations are made by the Government. It is also clear from the provisions of this Act that the municipality shall apply these properties as trustees subject to the provisions and for the purposes of this Act. It cannot, therefore be disputed that the properties that vested in the municipality under the Indore Act continued to vest in it even after the M. B. Act came into force. This Act was later substituted by the M. P. Municipalities Act, section 100 of which is as under : "100. It cannot, therefore be disputed that the properties that vested in the municipality under the Indore Act continued to vest in it even after the M. B. Act came into force. This Act was later substituted by the M. P. Municipalities Act, section 100 of which is as under : "100. (1) Subject to any special reservation made or to any special conditions imposed by the State Government, all property of the nature hereinafter in this section specified within the limits of the Municipality, shall vest in and be under the control of the Council and with all other property which has already vested, or may hereafter vest in the Council, shall be held and applied by it as trustees for the purposes of this Act, that is to say- (a) all public town-walls, gates, markets, slaughter-houses, manure and night-soil depots and public buildings of every description which have been constructed or maintained out of the Municipal Fund; (b) all public streams, tanks reservoirs, cisterns, wells, springs, aqueducts, conduits, tunnels, pipes, pumps and other water works, and all bridges, buildings, engines, works, materials and things connected with or appertaining thereto, and also adjacent land not being private property, appertaining to any public tank or well; (c) all public sewers and drains and all sewers, drains, tunnels, culverts, gutters and water-courses in, alongside or under any streets and all works, materials and things appertaining thereto; (d) all dust, dirt, dung, ashes, refuse, animal matter, filth, night-soil or rubbish of any kind collected by the Council or by any customary or private sweepers from the streets, houses, privies, sewers, cesspools or elsewhere; (e) all public lamps, lamp-posts and apparatus connected therewith, or appertaining thereto; (f) all public streets, not being land owned by the State Government and the pavements, stone and other materials thereof and also trees growing on and erections, materials, implements and things provided for such street; (g) all lands and/or other property transferred to the Council by the State Government or acquired by gift, purchase or otherwise for public purposes; (2) The State Government may, by notification, direct that any property which has vested in the Council shall cease to be so vested; and thereupon the property specified in the notification shall cease to be so vested, and the State Government may pass such orders as it thinks fit regarding the disposal and management of such property. (3) The State Government may resume any immovable property transferred to the Council by itself or any other local authority, where such property is required for a public purpose, without payment of any compensation other than the amount paid by the Council for such transfer and the market value at the date of resumption of any building or works subsequently erected or executed thereon by the Council : Provided that before taking any such action, the State Government shall obtain and take into consideration the view or objections of the Council : Provided further that compensation need not be paid for buildings or works constructed or erected in contravention of the terms of the transfer. " This section clearly indicates that all property of the nature specified therein within the limits of the municipality shall vest in and be under the control of the municipality, of course subject to any reservations made or conditions imposed by the State Government under the Act. It cannot be doubted that in fact these properties vested in the municipality even before this Act came into force and there is no case of any reservations or conditions prescribed by the State under the Act. It is no doubt true that the restriction provided in this section was that the properties shall be applied and held as trustees for the purposes of the Act. Clause (g) of sub-section (1) of section 100 of this Act clearly refers to the properties of the kind which are 16 in dispute in this petition. sub-sections (2) and (3) of this section provide the manner in which the Government can, if it so desires, take back the property which vested in the municipality under this Act. In any event, that question is not before us and it is not the case of the Government that they have chosen to act under these sub-sections of section 100. There is, therefore, no need to go into the question as to whether under Sub-sections (2) and (3) of section 100 the Government could take action pertaining to the properties which had vested in the petitioner long before this Act came into force. There is, therefore, no need to go into the question as to whether under Sub-sections (2) and (3) of section 100 the Government could take action pertaining to the properties which had vested in the petitioner long before this Act came into force. As there is no dispute that the Government had not chosen to act under these provisions, it is not necessary for us to go into that question, and it cannot be disputed that the properties, which vested in the Indore municipality long before the passing of this Act, continued to vest in it. Section 101 of this Act also indicates that even under the present Act transfer of certain lands with the Nazul Department to a municipal council is contemplated. This only indicates that where municipalities may be constituted under the provisions of this Act for the first lime, it may be possible for the State to transfer such open pieces of land. This clearly shows that vesting of properties in local bodies even under the scheme of this Act is not a matter not contemplated. In 1956, M. B. Municipal Corporation Act was brought into force and later the same Act with slight modifications was enacted as the M. P. Municipal Corporation Act which came into force in 1961. Section 80 of the M. P. Municipal Corporation Act is as under : "80. (1) No streets, nazul lands, public places, drains or irrigation channels shall be sold, leased or otherwise alienated, save in accordance with such bye-laws as may be made in this behalf. (2) Subject to the provisions of Sub-section- (1)- (a) the Commissioner may, in his discretion grant a lease of any immovable property belonging to the Corporation, including any right of fishing or of gathering and taking fruit, flowers and the like, of which the premium or rent, or both, as the case may be does not exceed five hundred rupees for any period not exceeding twelve months at a time; Provided that every such lease granted by the Commissioner, other than the lease of the class in respect of which standing Committee has by resolution exempted the Commissioner from compliance with the requirements of this proviso, shall be reported by him to the Standing Committee within 15 days after the same has been granted. (b) with the sanction of the Standing Committee, the Commissioner may by sale or otherwise grant a lease of immovable property including any such right as aforesaid, for any period not exceeding three years at a time of which the premium or rent or both, as the case may be, for any one year does not exceed three thousand rupees; (c) with the sanction of the Corporation the Commissioner may lease, sell or otherwise convey any immovable property belonging to the Corporation. (3) The Commissioner may- (a) in his discretion dispose of by sale, letting out on hire or otherwise, any move-able property belonging to the Corporation not exceeding five hundred rupees in value; (b) with the sanction of Standing Committee, dispose of by sale, letting out on hire, or otherwise any immovable property belonging to the Corporation not exceeding five thousand rupees in value; (c) with the sanction of the Corporation sell, let out on hire or otherwise convey any moveable property belonging to the Corporation. (4) The sanction of the Standing Committee or of the Corporation under sub-section (2) or sub-section (3) may be given either generally for any class of cases or specifically in any particular case. (5) The foregoing provisions of this section shall apply to every disposal of property belonging to the Corporation made under or for the purpose of this Act: Provided that- (i) no property vesting in the Corporation in trust shall be leased, sold or otherwise conveyed in a manner that is likely to prejudically affect the purpose of the trust subject to which such property is held : (ii) no land exceeding twenty-five thousand rupees in value shall be sold or otherwise conveyed without the previous sanction of the Government and every sale, or other conveyance of property vesting in the Corporation shall be deemed to be subject to the conditions and limitations imposed by this Act or by any other enactment for the time being in force". This provision clearly indicates and provides for a complete scheme for management of properties within the limits of the Corporation. It is, therefore, clear that this section also provides for the management of the properties that had already vested in the Corporation long before the Act came into force. Section 82 of the M. P. Municipal Corporation Act is as under- "82. It is, therefore, clear that this section also provides for the management of the properties that had already vested in the Corporation long before the Act came into force. Section 82 of the M. P. Municipal Corporation Act is as under- "82. Subject to any special reservation made or to any special conditions imposed by the Government all property of the nature hereinafter in this section specified and situated within the city, shall vest in and be under the control of the Corporation, and with all other property which has already vested, or may hereafter vest in the Corporation shall be held and applied by it for the purposes of this Act, namely, (a) all public gates, markets, slaughterhouses, manure and night-soil depots and public buildings of every description which have been constructed or maintained out of the Municipal fund; (b) all public streams, rivers, springs, and works for the supply, storage and distribution of water for public purposes and all bridges, buildings, engines, materials and things connected therewith or appertaining thereto, and also any adjacent land (not being private property) appertaining to any public tank or well; (c) all public sewers and drains, and all sewers, drains, culverts and watercourses in or under any public street or constructed by or for the Corporation alongside any public street, and all works, materials and things appertaining thereto; (d) all dust, dung, ashes, refuse, animal matter, or filth or rubbish of any kind, on dead bodies of animals, collected by the Corporation from the streets, houses, privies, sewers, cesspools, or elsewhere or deposited in places fixed by the Corporation; (e) all public lamps, lamp-posts and apparatus connected therewith or appertaining thereto; (f) all land or other property transferred to the Corporation by the Government or acquired by gift, purchase or otherwise for local public purposes; (g) all public streets, not being land owned by the Government and the pavements, stone and other material thereof and also trees growing on, and erections, materials, implements and things provided for such streets; (h) all open lands which are neither the property of any person nor of the Government." This provision makes it clear that all properties in the nature specified therein vested in the Corporation and shall be under the control and management of the Corporation except subject to certain reservations, and sub-clause (h) of this section refers to all open lands which are neither the property of any person nor of the Government, a provision more or less similar to sub-clause (h) of section 36 of the Indore Municipal Act, 1909. Consequently it cannot be doubted that under this provision all open lands, which were not private properties and are also not the properties of any department of the Government, shall vest in the Corporation. Apart from the fact, in the case of the petitioner these properties had already vested in the petitioner long before this Act came into force. It cannot, therefore, be doubted that all open lands within the limits of the Corporation, which are not private lands, continued to vest in the petitioner, and the petitioner had the power and authority under this Act as indicated in section 80 to deal with these lands. 7. What is contended on behalf of the respondents is that what had vested in the petitioner is not the absolute property rights. It is in substance contended that the ownership rights have not been vested in the municipality or the Corporation but only the power of management has been entrusted to It under the respective statutes, and as the Government happens to be the owner of the lands, it is entitled to withdraw the power of management conferred on the local bodies. Reliance in this respect was placed on section 57 of the M. P. Land Revenue Code, which is as under- "57. (1) All lands belong to the State Government and it is hereby declared that all such lands, including standing and flowing waters, mines, quarries, minerals and forests reserved or not, and all rights in the sub-soil of any land are the property of the State Government : Provided that nothing in this section shall be deemed to affect any rights of any person susbisting at the coming into force of this Code in any such property. (2) Where a dispute arises between the State Government and any person in respect of any right under Sub-section (1) such dispute shall be decided by the Sub-divisional Officer. (3) Any person aggrieved by any order passed under sub-section (2) may institute a civil suit to contest the validity of the order within a period of one year from the date of such order. (4) Where a civil suit has been instituted under sub-section (3) against any order, such order shall not be subject to appeal or revision." It cannot be doubted that this provision itself saves the rights of parties in whom rights have been vested prior to the passing of this Code. (4) Where a civil suit has been instituted under sub-section (3) against any order, such order shall not be subject to appeal or revision." It cannot be doubted that this provision itself saves the rights of parties in whom rights have been vested prior to the passing of this Code. Apparently therefore, section 57 cannot be used to contend that by this provision the petitioner-Corporation has been divested of the properties which had vested in it. It is also not contended that the Revenue Book Circular under which the respondents now claim to administer and manage the lands (open sites within the Corporation Limits) have any statutory sanction. It is, therefore, clear that whatever incident of property vested in the petitioner under respective provisions of the Acts referred 'o above could not be taken away by an administrative circular, order or instruction. In this view of the matter, it is not necessary for us to go into the question of the extent of rights that were conferred under the various statutes relating to these properties on the petitioner, and the effect of subsequent enactments on those rights. As discussed above, it cannot be doubted that under all the statutes these properties have been protected as they have vested in the municipality or the petitioner-Corporation. Thus whatever rights vested in the petitioner are rights under a statute. It cannot, therefore, be doubted that by an administrative action the petitioner cannot be deprived of those rights which vested in it under various Acts mentioned above. 8. Learned Government Advocate also placed reliance on State of M.P. v. Narmada Prasad, 1968 RN 547 and State of M. P. v. Atmaram, 1970 MPLJ 195. In State of M.P. v. Narmada Prasad (supra), the question was about unoccupied area within a municipality which neither vested in nor was given for management to the municipal council, and in that context it was held that the Tahsildar had jurisdiction to take action under section 248 of the M. P. Land Revenue Code. This decision is based on the admitted circumstances that the land in question neither vested in the Municipal Council nor at any time was transferred to it for management, and in these circumstances that decision can be of no assistance in the present case. The decision in State of M. P. v. Atmaram (supra), also is of no assistance in the present case. The decision in State of M. P. v. Atmaram (supra), also is of no assistance in the present case. In that case, while considering the provisions of the C. P. and Berar Municipalities Act, 1922, a Single Judge of this Court held that the Tahsildar had jurisdiction under section 248 of the M. P. Land Revenue Code to eject a person who is found to have encroached upon an unoccupied land. This decision is based on the assumption that if the municipal committee does not take any action against a person who has encroached upon a public road, the Tahsildar can proceed against him under section 248 of the M. P. Land Revenue Code. As regards the question of Nazul Officers and the Rules, it has been observed in this decision as under : "Lastly it is contended that the power of the Tahsildar under section 248 of the Code is either taken away or controlled by the Nazul Rules. It was, however, conceded that the Nazul Rules are not statutory, and, if that is so, the positive provisions of a statutory enactment like section 248 of the Code cannot be negatived or controlled by such rules." In these circumstances, therefore, the question about the extent of the rights of the Corporation is not necessary to be gone into. 9. Consequently this petition is allowed and the orders passed by the Collector, Indore, and Commissioner, Indore, on the basis of the Government order, which has been described as instructions, declaring all open lands within the Corporation limits as Nazul lands and directing the petitioner not to deal with or dispose of such lands, and also the orders passed on that basis by the Nazul Officer dealing with those lands, are set aside. Consequently all open lands that vest in the petitioner before these orders were passed shall vest in the petitioner. The petitioner shall be entitled to the costs of this petition from the respondents. Counsel's fee Rs. 250/- if certified. The outstanding amount of security deposit shall be refunded to the petitioner." 24. Consequently all open lands that vest in the petitioner before these orders were passed shall vest in the petitioner. The petitioner shall be entitled to the costs of this petition from the respondents. Counsel's fee Rs. 250/- if certified. The outstanding amount of security deposit shall be refunded to the petitioner." 24. Having regard to the detailed discussions of the division bench in the case of Municipal Corporation, Indore (supra), the plea of State of Madhya Pradesh in respect of the ownership based on the provisions of Indore Municipal Act, 1919 and subsequent enactment cannot be accepted, on the contrary above judgment clearly show that Municipal Corporation, Indore is the owner of the land in question since beginning. 25. Learned counsel for State of Madhya Pradesh has also placed reliance upon the Covenant (Annexure P-2) filed along with the affidavit dated 14.2.2018 and has submitted that by this Covenant the Holkar State had transferred the land in question to the State of Madhya Pradesh and thereafter by virtue of Article 294 and 295 of the Constitution of India, the State of Madhya Pradesh had become owner of the land in question. Though the State is setting up the claim but even a legible copy of the Covenant has not been filed. 26. On the minute perusal of the document Annexure P-2, it is found that the Covenant was entered into by the rulers of Gwalior, Indore and certain other states of Central India for the formation of United State of Gwalior, Indore and Malwa (Madhya Bharat) on 19th April, 1948. By Clause 2 of Article XII of the Covenant, the Ruler of each of the covenanting State had to furnish to the Raj Pramukh an inventory of the immovable properties, securities, cash etc. No such details of the property as furnished by the Holkar State to Raj Pramukh have been produced and no document has been filed to show that under the Covenant the land in question was treated to be property of the Holkar State and was made over to the Raj Pramukh. 27. No such details of the property as furnished by the Holkar State to Raj Pramukh have been produced and no document has been filed to show that under the Covenant the land in question was treated to be property of the Holkar State and was made over to the Raj Pramukh. 27. So far as Articles 294 and 295 of the Constitution are concerned, since the counsel for State of Madhya Pradesh has failed to point out any cogent material showing that the land in question belong to the Holkar State, therefore, the question of vesting of this land to the State of Madhya Pradesh by virtue of Articles 294 and 295 of the Constitution does not arise. 28. So far as the argument of the learned counsel for State based on section 57 of the MPLR Code, 1959 is concerned, the said provision reads as under : "57. State ownership in all lands.- (1) All lands belong to the State Government and it is hereby declared that all such lands, including standing and flowing water, mines, quarries, minerals and forests reserved or not, and all rights in the sub-soil of any land are the property of the State Government : 1[Provided that nothing in this section shall, save as otherwise provided in this Code, be deemed to affect any rights of any person subsisting at the coming into force of this Code in any such property.] (2) Where a dispute arises between the State Government and any person in respect of any right under sub-section (1) such dispute shall be decided by the 1 [State Government.] / 2 [Collector] (3) [x x x x] (3-a) x x x x [Deleted in M.P.]" 29. In terms of the proviso to sub-section 1 above, the right which were existing on the date of coming into force of the Code were unaffected and substantive provision contain in section 57(1) did not nullify such right. Undisputely present case relates to rights existing prior to introduction of Code, hence section 57 will have no effect on such rights. 30. Undisputely present case relates to rights existing prior to introduction of Code, hence section 57 will have no effect on such rights. 30. It is also worth noting that the State Government was the guarantor when the loan was taken by the company in liquidation and was impleaded as the respondent No. 4 in Original Application No. 337/2001 filed by the financial institutions before the Mumbai Debt Recovery Tribunal wherein the judgment dated 26th February, 2004 was passed holding the State government liable to pay amount due to the IDBI bank and holding the State government jointly liable in respect of the claim of secured creditor. In pursuance thereto the recovery certificate Annexure R-3 was issued by the Presiding Officer, DRT, Mumbai on 8th July, 2004 as against the State government also. This Court by order dated 7.8.2014 had directed the O.L to handover the possession of the land in question to the Recovery Officer, DRT which has been handed over on 2.9.2014. 31. The record further reflects that in the recovery proceedings before the Recovery Officer, DRT, Mumbai, the State government had raised an issue relating to title and the Recovery Officer in the order dated 21.2.2013 has held as under : "4 Heard all the parties. On perusal of the documents, pleading and records it is established that the property is owned by Municipal Corporation of Indore and the same was lease out to defendant No. 1 i.e. Hukumchand Mill vide two lease deed dt. 31.1.1959. The other objections raised by the defendant No. 4 i.e. the Government of Madhya Pradesh is beyond the jurisdiction of Recovery Officer." 32. Having regard to the aforesaid analysis, I am of the opinion that the State of Madhya Pradesh has failed to produce any material in support of the claim of title on the land in question. 33. It would not be out of place to mention here that so far as the company in liquidation is concerned, it has not claimed any title on the suit land and the O.L. is claiming the lease hold right and DRT, Mumbai is taking steps to sale leasehold rights. 34. 33. It would not be out of place to mention here that so far as the company in liquidation is concerned, it has not claimed any title on the suit land and the O.L. is claiming the lease hold right and DRT, Mumbai is taking steps to sale leasehold rights. 34. The object of section 446 of the Companies Act as settled by the Hon.Supreme Court in the matter of Harihar Nath and others v. State Bank of India and others [ (2006) 4 SCC 457 ], Erach Boman Khavar v. Tukaram Shridhar Bhat and another [ (2013) 15 SCC 655 ], is to save the company in liquidation and to protect the assets for equitable distribution amongst its creditors and shareholders and to see that the company does not face deprivation of its right and the claims are adjudicated with the knowledge of the Company Court. 35. The record further reflects that for some reason the State has adopted insensitive approach towards the workers of the company in liquidation. The last wages paid to the workers was in November 1991. The mill was closed down on 12.12.1992, the winding up order was passed on 22.1.2003, the workers have not been paid their dues (except the interim relief granted by this Court). At the time of passing of the winding up order, the total number of workers were 5895, out of them more than 1700 workers have died and 67 have committed suicide and about 400 workers are suffering from serious diseases and the remaining workers are also in pecuniary conditions. In such circumstances the State Government instead of showing sympathy towards the workers and voluntarily coming forward to settle the claim has made every possible effort to see that the leasehold rights of land in question is not put to auction and the workers do not receive their lawful claim. The then Company Judge in the order dated 13.5.2016 taking note of the stand of the State had observed as under: " Parties through their counsel. This Court on 29.10.2010 has permitted the Debt Recovery Tribunal to proceed ahead with the process of sale of the assets of the Company. This Court has also directed the Debt Recovery Tribunal to associate the Official Liquidator with the process of sale. This Court on 29.10.2010 has permitted the Debt Recovery Tribunal to proceed ahead with the process of sale of the assets of the Company. This Court has also directed the Debt Recovery Tribunal to associate the Official Liquidator with the process of sale. It is pertinent to note that the State Government was also claiming the ownership of the land and a prayer was made by the State Government for grant of leave to file civil suit against the Company inliquidation as well as against the Municipal Corporation claiming title of the land in question. This Court by an order dated 4.3.2014 has rejected the prayer made by the State Government. It has been brought to the notice of this Court that inspite of repeated advertisements issued by the Debt Recovery Tribunal, the assets have not been sold because the State Government is publishing notices in the news paper that the State Government is the owner of the land in question. It is really unfortunate. There is no declaration of title in favour of the State Government and there is no order passed by any Court declaring the State Government to be the owner of the land and allegedly all possible efforts are being made to ensure that the property of the Company is not sold. Approximately 6000 workers are literally hand to mouth and the efforts of the Debt Recovery Tribunal to sell the land are being frustrated by publishing notices in the news paper. A large number of workers are present in the Court room and they want to argue the matter. The Court room is full of old people who are not well and who are claiming themselves to be the worker of the Company. This Court cannot ignore the plight of the workers who are fighting for their rights since 1991. The learned counsel for the Official Liquidator has prayed before this Court that the State Government be restrained from publishing notices in respect of the land which is subject matter of the present Company petition. Resultantly, the Debt Recovery Tribunal is directed to issue fresh notice for auctioning the assets of the Company in-liquidation and the State Government is directed not to issue/publish any such notices claiming the ownership of the land which is the subject matter of the present company petition. Resultantly, the Debt Recovery Tribunal is directed to issue fresh notice for auctioning the assets of the Company in-liquidation and the State Government is directed not to issue/publish any such notices claiming the ownership of the land which is the subject matter of the present company petition. Notice issued by the Debt Recovery Tribunal will also include a clause mentioning categorically that State Government is not the owner of land in question and the lease in respect of the land in question, is renewable by the Municipal Corporation. The Debt Recovery Tribunal shall ensure issuance of fresh advertisement within a period of 15 days from today. The Official Liquidator shall inform the Debt Recovery Tribunal about the order passed today in open Court. List the matter on 15.6.2016." 36. Having regard to the aforesaid factual and legal position, the prayer made by the State of Madhya Pradesh for declaring it to be the owner of the land which was leased to the 27 Company-in-Liquidation, is found to be devoid of any merit. Hence the prayer is rejected and IA No. 6630/2010 and IA No. 2340/2009 are dismissed.