The main legal point established in the judgment is the requirement of compliance with the provisions of the Companies Act, specifically Section 291 and Section 292, in related party transactions, to support a claim.

JUDGMENT :

D. Dash, J.

1. The unsuccessful Defendant Nos. 1 & 2 in the Court below have filed this appeal challenging the Judgment & decree passed by the Learned Civil Judge (Sr. Division), Sambalpur in T.S. No. 82/1986 decreeing the suit of the Respondent No. 1 against these Appellants declaring its right, title & interest over Schedule A, B & C properties described in the plaint & directing these Defendants to deliver possession of the same followed by a decree of permanent injunction restraining them from interfering upon 'A' schedule property in entering with the possession of the Respondent No. 1 in respect of the same. It has also been directed that in the event of failure to give delivery of possession of schedule 'B' & 'C properties, they would be liable to pay a sum of Rs. 5,00,000 to the Respondent No. 1 as compensation. For the sake of convenience, clarity & to avoid confusion, the parties hereinafter have been referred to as they have been arrayed in the Court below.

2. Plaintiffs case -

The Plaintiff is a company incorporated under Indian Companies Act, 1956. It has set up an Engineering unit in the name & style of "Aditya Engineering Works" over 'A' schedule land. The purpose for the same is to undertake repair of the textile machineries & for manufacturing parts of the machines.

(a) The land described in the schedule A-1 which is a part of schedule A land was purchased by the Plaintiff. The extent of purchased land is Ac. 7.80 dec. The Company, named, Bhaskar Textile Mills Ltd. by registered sale deed dated 14.06.1976 had sold the said property to the Plaintiff for a consideration of Rs. 48,00 (sic). The Plaintiff next purchased Ac. 3.73 dec. which was in a compact area bounded by wall, having building, water tank with pipe fittings etc. from one "Aryavarta Industries Pvt. Ltd." by a registered sale deed dated 08.07.1976 for consideration of Rs. 1,40,000. The Plaintiff claims that after purchase, three sheds were constructed over schedule A-2 land wherein machineries were installed by the Plaintiff as detailed in schedule 'B' of the plaint.

(b) The Plaintiff accordingly possessed the entire 'A' schedule & did the job works of manufacturing spare parts. In view of the diminishing trend of the demand for repair work requiring production of spare parts, the Plaintiff found it no more possible to continue with the production since 1983, &, therefore, kept the buildings, machineries, furniture etc. under the lock & key, with the movables as stated in the schedule 'C the plaint & the records of the Plaintiff-company lying inside the premises.

(c) Bhaskar Textile Mills Ltd. is a company having its distinct identity incorporated under the Indian Companies Act had its factory adjoining the Plaintiffs unit.

(d) By virtue of the Bhaskar Textile Mills (Acquisition & Transfer) Ordinance, 1985 (in short called 'the Ordinance'), the said textile undertaking & the right, title & interest of the owner in relation to the said textile undertaking stood transferred to & vested absolutely in the State Government, the Defendant No. 3 with effect from the date the Ordnance came into force & the textile undertaking stood transferred to & vested in the Orissa State Textile Corporation Ltd., the Defendant No. 1. The undertaking included all assets, rights, tease holds, powers, authorities & privileges & all property, movable & immovable, including lands, buildings, workshops, stores, instruments, machinery & equipment, cash balance, cash in hand, reserve funds, investments & all other rights & interest in, or arising out of, such property, as were immediately before the appointed day in the ownership, possession, power or control of the owner of the textile undertaking, whether within or outside India, & all books of account, registers & all other documents of whatever nature relating thereto & those were also by operation of law got freed, discharged from any trust, obligation, mortgage, hypothecation, charge, lien & all other encumbrances affe