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IN THE HIGH COURT OF JUDICATURE AT PATNA
R.M. Doshit & Ashwani Kumar Singh, JJ.
Bihar State Sugar Corporation Ltd & Ors. - Appellants
Versus
Ahmad Abdullah & Ors. - Respondents
Letters Patent Appeal No. 1354 of 2012 In Civil Writ Jurisdiction Case No. 8840 of 2006
With Interlocutory Application No. 5737 of 2012 In Letters Patent Appeal No. 1354 of 2012, Letters Patent Appeal No. 1387 of 2012 In Civil Writ Jurisdiction Case No. 8840 of 2006 With Interlocutory Application No. 5837 of 2012 In Letters Patent Appeal No. 1387 of 2012, Letters Patent Appeal No. 1462 of 2012 In Civil Writ Jurisdiction Case No. 710 of 2011 With Interlocutory Application No. 6148 of 2012 In Letters Patent Appeal No. 1462 of 2012, Letters Patent Appeal No. 1479 of 2012 In Civil Writ Jurisdiction Case No. 8840 of 2006 With Interlocutory Application No. 6776 of 2012 In Letters Patent Appeal No. 1479 of 2012 Letters Patent Appeal No. 1489 of 2012 In Civil Writ Jurisdiction Case No. 427 of 2008 With Interlocutory Application No. 6244 of 2012 In Letters Patent Appeal No. 1489 of 2012 Letters Patent Appeal No. 1549 of 2012 In Civil Writ Jurisdiction Case No. 427 of 2008 With Interlocutory Application No. 6775 of 2012 And Interlocutory Application No. 132 of 2013 In Letters Patent Appeal No. 1549 of 2012 Letters Patent Appeal No. 1679 of 2012 In Civil Writ Jurisdiction Case No.710 of 2011 With Interlocutory Application No. 7151 of 2012, In Letters Patent Appeal No. 1679 of 2012 Letters Patent Appeal No. 1680 of 2012 In Civil Writ Jurisdiction Case No. 710 of 2011 With Interlocutory Application No. 7051 of 2012 In Letters Patent Appeal No. 1680 of 2012 Letters Patent Appeal No. 1681 of 2012 In Civil Writ Jurisdiction Case No. 427 of 2008 With Interlocutory Application No. 7052 of 2012 In Letters Patent Appeal No. 1681 of 2012.
Decided on : 02.01.2014.
(A) Bihar Sugar Undertaking Acquisition Act, 1985 – Section 7 – Companies Act, 1956 – Section 560(6) – Acquisition and transfer of assets of Motipur Sugar Factory – Assets of sugar factory having been vested in State Government, writ petitioners have no right or claim against assets of sugar factory except right to compensation – Once sugar factory is removed from roll of Registrar of Companies Sugar Factory cannot be said to be existing company nor could it have maintained writ petition – High Court cannot entertain writ petition on a presumption that application for restoration made under Section 560 (6) of Companies Act, will one day be allowed – Writ petition deserves to be dismissed on ground of maintainability alone – Impugned judgment and order set aside – Appeals allowed. (Paras 21 to 25, 28 to 31)
(B) Bihar Sugar Undertaking Acquisition Act, 1985 – Section 7 – A share holder in a company has limited right conferred by Companies Act and has no right, title or interest in assets of company – By mere declaration of shares to wakf estates, property and assets of sugar factory did not stand transferred to wakf estates nor was State Government or Corporation obliged to take prior permission of wakf Board for transfer or disposal of assets of sugar factory – Assets of sugar factory having been vested in State Government free from all encumbrances, wakf estates have no locus standi to challenge action of State Government or Corporation. (Para 26)
This group of Appeals preferred under Clause 10 of the Letters Patent arise from the common judgment and order dated 25th June 2012 passed by the learned single Judge in CWJC Nos. 8840/2006, 427/2008 & 710/2011.
2. The matter at issue is the acquisition of Motipur Sugar Factory, a Company within the meaning of the Companies Act, 1956 acquired under the Bihar Sugar Undertaking Acquisition Ordinance dated 27th October 1985 replaced by the Bihar Sugar Undertaking Acquisition Act, 1985 (Bihar Act No. 12 of 1985) (hereinafter referred to as “the Act of 1985”).
3. Under the provisions of the Act of 1985, the Government of Bihar acquired the Motipur Sugar Factory (hereinafter referred to as “the Sugar Factory”) and transferred the same to the Bihar State Sugar Corporation (hereinafter referred to as “the Corporation”). The Corporation is a Government Company owned by the Government of Bihar. Since its acquisition, the Sugar Factory has been given on lease to M/s Indian Potash Limited for running the factory. The action of the State Government or the Corporation in transferring the Sugar Factory on lease to M/s Indian Potash Limited (hereinafter referred to as “the Company”) has been challenged under Article 226 of the Constitution by the workmen of the Sugar Factory in CWJC No. 8840/2006, by the Sugar Factory in CWJC No. 427/2008 and by the share holders, the five Waqfs in CWJC No. 710/2011. According to the writ petitioners, the transfer of the Sugar Factory by the Corporation to the Company is vitiated by mala fide.
4. The workmen of the Sugar Factory have approached this Court under Article 226 of the Constitution in above CWJC No. 8840 of 2006 to lodge their claim over the assets of the Sugar Factory. The said writ petitioners challenged the public notice given by the Government of Bihar / Corporation for transfer of the assets of the Sugar Factory for reviving and running the Sugar Factory. The writ petitioners were apprehensive that in the guise of the transfer, the assets of the Sugar Factory would be squandered off and the outstanding dues of the workmen would never be paid. The said writ petitioners, therefore, claim that the lands of the Sugar Factory be settled in favour of the workmen.
5. Similarly, feeling aggrieved by the attempt of the State Government to transfer the assets of the Sugar Factory with a view to reviving and running the same, the Sugar Factory has approached this Court in above CWJC No. 427 of 2008. According to the Sugar Factory, the State Government was obliged to clear the outstanding dues of the Sugar Factory to the cane growers, to the workmen and to the other creditors and that the State Government should, after discharging the above referred liabilities, return the assets of the Sugar Factory to its promoters for reviving and running the same.
6. The five of the share holders, the Waqfs have approached this Court under Article 226 of the Constitution in above CWJC No. 710 of 2011. According to the Waqfs, 1/3rd of the total shares of the Sugar Factory were owned by some five persons. The said shareholders have dedicated the said shares to the petitioner Waqfs. The five Waqfs together hold some 843 shares (1/3rd of the total shareholding) in the Sugar Factory. The petitioner Waqfs, therefore, were the owners of the 1/3rd of the assets of the Sugar Factory. The share of the Waqfs could not have been transferred by the Corporation without the permission of the Waqf Board.
7. The petitions were contested by the State Government, the Corporation and the Company. According to the State Government, the State Government had acted in consonance with the provisions of the Act of 1985 and that the said Act of 1985 having been held to be intra vires the Constitution, the action of the State Government was beyond challenge. According to the Company, although it is not a Government Company within the meaning of Section 617 of the Companies Act, its management is controlled by the Government of I
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