JUDGMENT

Bhan, J.-U.P. State Sugar Corporation Limited, appellant herein, is a company registered under the provisions of the Companies Act, 1956, It is owned and controlled by the State Government. In the year 1971, U.P. Sugar Undertakings (Acquisition) Ordinance, 1971 (U.P. Ordinance 13 of 1971) was issued which was replaced by U.P. Sugar Undertaking (Acquisition) Act, 1971 (for short the Act ). The objects of the Act as given in the Statement of Objects and Reasons are as follows:

"The owners of certain sugar mills of the State or their lessees had created serious problems for the canegrowers and labour which created an adverse impact on the general economy of the areas, where those mills were situate. The only solution of these problems was for the State Government to take immediate steps to acquire with a view to renovating those and rehabilitating mills or carry out improvement therein.

2. Accordingly, a legislation was prepared to acquire such mills, which provided for acquisition of properties and assets pertaining to those mills and for payment of compensation for the same and for the replacement of the dues of cane-growers, labourers and of the Government out of the amount or compensation and for other connected and incidental matters.

3. To prepare the mills for crushing before the next crushing season, the usual annual repairs (which are carried out during off season) had to be carried out well in time and since the time available was short, immediate action was called for. As both the Houses of the State Legislature were not in session, the Governor promulgated the Uttar Pradesh Sugar Undertakings (Acquisition) Ordinance, 1971 on July 3, 1971.

4. The State Government have since decide that the dues of canegrowers and labourers should be given higher priority than the State Government s taxes and other unsecured dues.

5. This Bill is being introduced to replace the aforesaid Ordinance with the above notifications."

2. Act provided for acquisition of properties and assets pertaining to the mills which had failed to clear their outstanding dues to the canegrowers, labourers and the government and for payment of compensation for the same. The Preamble of the Act reads:

"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."

3. Section 3 of the Act provided that on the appointed day, every sugar undertaking shall deemed to be acquired and transferred to the Corporation-appellant.

4. Burwal Sugar Mills Co. Ltd., respondent No.1 herein, is a company registered under the Companies Act. It runs a sugar factory at Barabanki. On the coming into force of the Act the respondent No.1 s undertaking stood transferred and vested in the Corporation-appellant as provided under Section 3 of the Act.

5. Several persons whose sugar undertakings had been acquired by the said Act challenged the constitutional validity of the same by filing writ petitions in the High Court. Respondent No.1 also filed writ petition challenging the constitutional validity of the Act. The High Court passed an interim order on 3rd July, 1971 directing the parties to maintain status quo as it existed on 3rd July, 1971. Since at the time of acquisition, the sugar mill was in possession of the Receiver, the possession was restored to the Receiver. The writ petitions including the one filed by respondent No.1 were rejected. The Constitutional validity of the Act was upheld. Aggrieved against the order of the High Court, appeals were filed in this Court which were rejected and the order of the High Court was upheld. The judgment is reported in Ishwari Khetan Sugar Mills (P) Ltd. and Others vs. State of U.P. & Others [1980 (4) SCC 136]. After the dismissal of the writ petitions, possession of the scheduled property was taken over by the appellant.

6. Respondent No.1 filed writ petition No. 2292 of 1983 objecting to the taking over of the properties oth