Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8085 OF 2013

(Arising out of S.L.P. (C) No.3306 of 2011)

State of U.P. …Appellant

Versus

M/s Lakshmi Sugar & Oil Mills Ltd. and Ors.…Respondents

With

CIVIL APPEAL NO. 8086 OF 2013

(Arising out of S.L.P. (C) No.3307 of 2011)

U.P. State Sugar Corporation …Appellant

Versus

M/s Lakshmi Sugar & Oil Mills Ltd. and Ors.…Respondents

J U D G M E N T

T.S. THAKUR, J.

1.Leave granted.

1

Page 2 2.These appeals arise out of a Judgment and Order dated

30

th

April, 2010 passed by the Lucknow Bench of the High

Court of Judicature at Allahabad, whereby writ petition

No.187 of 2007 filed by the respondent-company has been

allowed with a direction to respondents 4 to 6 to delete the

name of the appellant-U.P. State Sugar Corporation from the

relevant revenue records and restore that of the respondent-

Company. That direction followed a finding recorded by the

High Court that the land in dispute being agricultural land

had not vested in the appellant-Corporation under the

provisions of The U.P. Sugar Undertakings (Acquisition) Act,

1971. The mandamus issued by the High Court includes a

further direction for delivery of possession of the disputed

parcel of land to the respondent-company within a period of

one month from the date of presentation of a certified copy

of the impugned judgment and order.

3. The respondent-Lakshmi Sugar and Oil Mills Limited

established a sugar factory in District Hardoi of the State of

Uttar Pradesh as early as in the year 1933. Several such

sugar mills having gone sick in the State of Uttar Pradesh,

2

Page 3 the State legislature enacted what is known as Uttar Pradesh

Sugar Undertakings (Acquisition) Act, 1971. Twelve private

sugar manufacturing units in the State of Uttar Pradesh were

acquired by the State Government under the said Act and

vested in the appellant-Corporation so as to revive such sick

mills and, thereby, protect the interest of cane growers in

the State. Section 3 of the Act, inter alia, provided that “on

the appointed day, every scheduled undertaking shall, by

virtue of this Act, stand and be deemed to have stood

transferred and vested in the Corporation free from any

debt, mortgage charge or other encumbrance or lien, trust

or similar obligation (excepting any, lien or other obligation

in respect of any advance on the security of any sugar stock

or other stock in trade) attaching to the undertaking.” The

expression “scheduled undertaking” was defined in Section

2(h) of the Act, inter alia, to mean an undertaking engaged

in the manufacture or production of sugar by means of

vacuum pans and with the aid of mechanical power in a

factory specified in any of the Schedules to the Act and

3

Page 4 comprising plants, machinery and other equipments and

assets enumerated thereunder.

4.The respondent-sugar factory, it is common ground,

figured at Item-7 of the Second Schedule to the Act and,

therefore, stood vested in the appellant-Corporation with

effect from 28

th

October, 1984, the date appointed for

vesting of undertakings specified in the said schedule in

terms of notification dated 27

th

October, 1984. Possession of

the respondent-Sugar Mill was taken over by District

Magistrate, Hardoi on 28

th

October, 1984 and handed over to

the appellant-Corporation.

5.Consolidation proceedings appear to have started in

Village Nanakganj Grunt, Pargana Gopamau, Tehsil and

District Hardoi sometime in June, 1986 and a mutation in

respect of land held by the respondent-Company and

situated at Dheer Maholia passed by the SDO, Sadar, Hardoi

on 14

th

February, 1987. A similar order of mutation was

passed for another parcel of land situated at Nagheta by the

SDO, Sadar, Hardoi on 19

th

February, 1987. In regard to the

third parcel of land situate in village Nanakganj Trust, the

4

Page 5 appellant-Corporation acting through its General Manager

addressed a letter dated 26

th

August, 1992 to the

Consolidation Officer, Hardoi requesting him to record the

name of the appellant-Corporation in place of the

respondent-Company. The letter pointed out that the said

parcel of land had been acquired by the State Government

and stood vested in the appellant-Corporation with effect

from 28

th

October 1984 under the provisions of the U.P.

Sugar Undertakings (Acquisition) Act, 1971 read with the

Amendment Act of 1985.

6.The Consolidation Officer registered the request as Case

No.9760 and initiated proceedings in which he issued notices

to the respondent-M/s Lakshmi Sugar Mills at its registered

office. The respondent-Company remained unrepresented

even after the notice was pasted in public places and

announcement by beat of drum regarding the proceedings.

The Consolidation Officer eventually passed an order on 2

nd

September, 1992 directing that land measuring 122.4.0

Bighas in Khata No.132 in CH 23, shall be shown in the

5

Page 6 ownership of the appellant-Corporation in place of the

respondent-company.

7.Against the order passed by the Consolidation Officer

the respondent-company appealed to the Settlement Officer,

Consolidation, Hardoi who dismissed the same by his Order

dated 24

th

January, 1997. The respondent-Company then

preferred a revision before the District Consolidation

Director/Collector, Hardoi who concurred with the view taken

by the officers below and dismissed the Revision Petition on

6

th

December, 2006.

8.Aggrieved by the orders passed by the Consolidation

authorities, the respondent-Company preferred Writ Petition

No.187 (Consolidation) of 2007 before the Lucknow Bench of

the High Court of Allahabad. By its order dated 30

th

April,

2010 impugned in these appeals, the High Court has allowed

Writ Petition No.187 (Consolidation) of 2007 and quashed

the orders passed by the Consolidation authorities with the

directions to which we have made a reference in the

beginning of this judgment.

6

Page 7 9.On behalf of the appellant-Corporation, it was

strenuously argued that the High Court had fallen in error, in

interfering with the order passed by the Consolidation Officer

and those passed in appeal and revision filed against the

same, in all of which it had been concurrently held that the

land in dispute was a part of the undertaking as defined in

Section 2(h) of the Act as the same was not held or occupied

by the company for agricultural purposes. The High Court

had, it was contended, over-stepped its jurisdiction in

reversing a finding of fact upon a reappraisal of the evidence

as if it was sitting in appeal over the orders passed by the

authorities below. There was, according to the learned

counsel, overwhelming evidence to show that the land in

question was at no point of time used for cultivation by the

respondent-Company or held for any such purpose. The

entire extent was, argued the learned counsel, used for

industrial purpose and recorded as “Parti Kadim Tilla”, which

meant that it had not been cultivated for a very long time

and hence was a part of the undertaking which upon

acquisition vested in the appellant-Corporation.

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Page 8 10.Mr. Huzefa Ahmadi, learned senior counsel appearing

for the respondent-Company argued that under the scheme

of the Acquisition Act, it was necessary to establish a nexus

between the asset sought to be acquired/taken over and the

undertaking. It was only if such a nexus is established that

the property under the said Act would vest in the State or

the Corporation and not otherwise. Reliance in support of

that submission was placed upon the Aims and Objectives of

the Act, and the decision of this Court in U.P. State Sugar

Corporation v. Burwal Sugar Mills Co. Ltd. and Ors.

(2004) 4 SCC 98 . No such nexus, was according to the

learned counsel, established in the case at hand, as

according to the respondent-Company the land in question

was not used or meant for the use of the undertaking, that

was taken over by the State. The takeover of the

undertaking did not, however, mean takeover of the

company or such of its assets as had no nexus with the

undertaking. The High Court had recorded a finding that no

such nexus was established between the undertaking and

the land in question which quite clearly proved the absence

8

Page 9 of an essential requirement for the land to vest in the

appellant-Corporation.

11.The Statement of Objects and Reasons for the

enactment of the Uttar Pradesh Sugar Undertakings

(Acquisition) Act, 1971 referred to problems which certain

sugar mills of the State had created for the cane-growers

and labourers and thereby adversely impacted the general

economy of the areas where such mills were situate. The

legislation, therefore, provided for acquisition of such mills,

payment of compensation for the same and for the

replacement of the dues of cane-growers, labourers as also

of the Government out of the amount of compensation so

payable. The Preamble of the Act states as follows:

“An Act to provide, in the interest of the general

public, for the acquisition and transfer of certain

sugar undertakings, and for matters connected

therewith or incidental thereto.”

12. Section 3 of the Act deals with vesting of the schedule

undertaking and is in the following terms:

“Section 3: Vesting: On the appointed day, every

schedule undertaking shall, by virtue of this Act,

stand and be deemed to have stood transferred to

9

Page 10 and vest and be deemed to have vested in the

Corporation free from any debt, mortgage, charge or

other encumbrance or lien trust or similar obligation

(excepting any lien or other obligation in respect of

any advance on the security of any sugar stock or

other stock-in-trade) attaching to the undertaking.

Provided that any such debt, mortgage, charge

or other encumbrance or lien, trust or similar

obligation shall attach to the compensation referred

to in Section 7, in accordance with the provisions of

that section, in substitution for the undertaking:

Provided further that a debt, mortgage, charge

or other encumbrance or lien, trust or similar

obligation created after the scheduled undertaking

or any property or asset comprised therein had been

attached or a receiver appointed over it, in any

proceedings for realisation of any tax or cess or

other dues recoverable as arrears of revenue shall

be void as against all claims for dues recoverable as

arrears of revenue.”

13.We are in the present appeal concerned only with

Section 2(h) (vi) of the Act which may be reproduced for

ready reference:

“2(h) “scheduled undertaking” means an

undertaking engaged in the manufacture or

production of sugar by means of vacuum pans and

with the aid of mechanical power in factory specified

[in any of the schedules of this Act], and comprises

–

xxx xxx xxx

(vi)all lands (other than lands held or occupied for

purposes of cultivation and grovelands) and

buildings held or occupied for purposes of that

factory (including buildings pertaining to any of the

10

Page 11 properties and assets hereinbefore specified, and

guest houses and residences of directors,

managerial personnel, staff and workmen or of any

other person as lessee or licensee, and any store

houses, molasses, tanks, roads, bridges, drains

culverts, tubewells, water storage or distribution

system and other civil engineering works) including

any leasehold interest therein”

14. A plain reading of the above would show that all lands

other than those held or occupied for purposes of cultivation

and grovelands are treated as being part of the ‘scheduled

undertaking’ which would upon acquisition vest in the

appellant-Corporation, provided such lands and buildings are

“held or occupied for purposes of the sugar factory”. What is

important is that buildings pertaining to any of the property

and assets specified in Section 2(h) (i) to (xii) including guest

houses and residences of directors, managerial personnel,

staff and workmen or of any other person as lessee or

licensee including any store houses, molasses, tank, roads,

bridges, drains, culverts, tubewells, water storage or

distribution system and other civil engineering works

including lease hold interest therein are also treated as part

of the scheduled undertaking. The test, therefore, is

whether the asset or any interest therein is held or occupied

11

Page 12 ‘for purpose of a sugar factory’. If the answer is in the

affirmative, the same is treated to be a part of the scheduled

undertaking that would vest in the appellant- Corporation

upon acquisition.

15.In Burwal Sugar Mills case (supra) on which Mr.

Ahmadi placed reliance the question that fell for

consideration before this Court was whether the registered

office of the company that had set up the sugar factory

comprised the undertaking and could, therefore, be taken

over by the State or the Corporation. A two-Judge Bench of

this Court held that the intention of the legislature clearly

was to take over only such land and buildings as are

connected with or were in use for purposes of factory. The

registered office of the company, observed this Court, was

located at House No.54/14, Canal Range, Kanpur, and in the

absence of any material to show that the premises in

question was being used or occupied for the storage of sugar

or as a guest house or for residence of any director of the

factory as was alleged on behalf of the Corporation, there

was no question of treating the building used as registered

12

Page 13 office of the Company as a part of the undertaking. This

Court noticed the difference between a company owning the

undertaking and the sugar undertaking itself and held that

while a company is a much wider entity, the undertaking is

only one of the assets of the company. The legislature

deliberately did not touch the company and provided for

acquisition of only the undertaking. This Court on that

reasoning held that handing over of the possession of the

registered office of the company to the Corporation was

illegal and contrary to the provisions of the Act.

16.It is evident not only from a plain reading of Section

2(h) (supra) but also the interpretation placed upon the

same by this Court that grovelands and lands held for

cultivation are excluded from the definition of undertaking.

But all other lands and buildings if held or occupied for the

purpose of the sugar factory would comprise the undertaking

and would upon acquisition vest in the Corporation.

17.In the case at hand the respondent-company had

claimed the lands in question to be exempted from

acquisition and take over on the ground that the same were

13

Page 14 held and occupied for cultivation. It was not the case of the

respondent-company that the lands in question were

groveland nor was it the case of the Company that the land

even though not meant for cultivation was held for a purpose

other than the sugar factory. Whether or not the

respondent-company held or occupied the land in dispute for

cultivation was, therefore, the only question that fell for

consideration which question was essentially a question of

fact answered against the company by all the three statutory

authorities concurrently on the basis of material available

with them. The authorities held that the land in question

was never held or occupied by the respondent-Company for

cultivation purposes. The exemption claimed by the

respondent-company was on that basis declined and the land

held to have vested in the Corporation as part of the

undertaking. The following passage from the order passed by

the Settlement Officer (Consolidation) Hardoi is relevant:

“Copies of U.P. Sugar Undertaking (Acquisition) Act

1971 (as amended) and CH Form 21 (A) relating to

the disputed land has been filed wherein in Column

6 the name of Laxmi Sugar Mill is registered. In

Column 8 the disputed land is shown outside

consolidation and in column 24 the same is shown

14

Page 15 as parti zadid on site, parti usar, rugged terrain and

uneven hillocks. In this manner there is no

evidence/ entry regarding any cultivation on this

land or the disputed land to be an agriculture land.

Accordingly, the disputed land is found not to be an

agricultural land. The disputed land has been

acquired in favour of U.P. Sugar Corporation Limited

Unit Hardoi under aforesaid gazette. If the appellant

had any objection in that regard then, as per law, he

was to lodge proceedings against notification before

the Hon’ble High Court, but in this regard there is no

evidence available on records. Therefore the

allegation that the disputed land is an agriculture

land and therefore the same is to be registered in

the name of Laxmi Sugar and Oil Mills Limited,

Hardoi instead of U.P. Sugar Corporation Limited, is

baseless and devoid of merits. The disputed land has

been acquired in favour of U.P. State Sugar

Corporation Limited. It is for this reason the learned

consolidation officer has rightly registered the same

in the name of U.P. Sugar Corporation Limited Unit

Hardoi and the portion of the aforesaid land

registered in Account No. 82, 49 of Village Dheear

Maholia and Account No. 245 of Village Nagheta has

already been registered in the name of U.P. Sugar

Corporation Limited Unit Hardoi after deletion of the

name of Laxmi Sugar & Oil Mills by the S.D.O.

Hardoi vide his order dated 14.02.1987.

Accordingly, the order of Learned Consolidation

Officer is lawful and proper and does not warrant

any interference. The appeal does not have any

force and is devoid of merit.”

(emphasis supplied)

18.The order passed by the District Consolidation Director/

Collector, Hardoi also concurred with the view taken by the

Officers below and held that there was no evidence on record

to show that the subject land was ever held or occupied for

agricultural purposes or that any agricultural activity was

15

Page 16 ever carried out on the same. These concurrent findings of

fact, in our opinion, could not have been reversed by the

High Court in its writ jurisdiction. The High Court obviously

failed to appreciate that it was not sitting in appeal over the

findings recorded by the authorities below. It could not

reappraise the material and hold that the land was held or

occupied for cultivation and substitute its own finding for that

of the authorities. In as much as the High Court did so, it

committed an error. It is noteworthy that the revenue

record clearly belied the assertion of the respondent

company and described the land as “Parti Kadim Tilla” which

meant that the land has not been cultivated for a long time

and is in the form of a hillock.

19.It was next argued by learned counsel for the appellant

that the claim for exemption from acquisition was even

otherwise unfounded keeping in view the fact that the land in

question had been treated as exempted under Section 6(1)

(a) of the U.P. Imposition of Ceiling on Land Holdings Act,

1960 on the ground that the same was held for industrial

purposes being a part of the sugar factory. If the land in

16

Page 17 question was indeed held for cultivation purposes as alleged

by the company, it could not remain immune to the rigors of

the Ceiling Act. It was excluded from the application of the

said Act only because it was treated as industrially attached

to the sugar factory. The respondent-company has not been

able to effectively refute that contention of the appellant-

Corporation. If the land had indeed been treated as industrial

for purposes of the Ceiling Act we find it difficult to see how

the same could be treated to be held or occupied for

cultivation, for the purposes of U.P. Sugar Undertakings

(Acquisition) Act, 1971.

20.As noticed earlier it is not the case of the respondent-

company that although the land was non-agricultural and

although the same was held and occupied for industrial

purposes, the industrial purpose for which it was held by the

company was un-related to the sugar factory. No such plea

having been raised or urged at any stage, the subject land

has been rightly taken as vested in the Corporation. The

land in question is situate in the immediate vicinity of the

sugar factory. The fact situation is thus completely different

17

Page 18 from that of Burwal Sugar Mills case (supra) where the

registered office of the company sought to be taken over was

in Kanpur while the sugar factory was itself at Baragaon.

Distance between the factory and the asset held by the

company may not be a true test for determining whether the

same is a part of the undertaking but in the absence of any

evidence, showing cultivation, the close proximity of the land

to the factory is a strong circumstance that cannot be

ignored.

21.In the circumstance, therefore, we find it difficult to

uphold the order passed by the High Court not only because

the High Court acted as if it was sitting in appeal over the

findings of fact recorded by the authorities below but also

because the High Court failed to notice that the land was

exempted from the Ceiling Act on the ground of being used

for industrial purpose which in the context of the present

case meant that it was used for the purpose of sugar factory.

These appeals, accordingly, succeed and are hereby allowed,

the judgment and order passed by the High Court is set

aside and Writ Petition No.187 of 2007 filed by the

18

Page 19 respondent-company dismissed but in the circumstances,

without any order as to costs.

.…………………………….……….…..…J.

(T.S. THAKUR)

.................………………..…..…J.

(JAGDISH SINGH KHEHAR)

New Delhi

September 12, 2013.

19