# NATIOC\AL TEXTILE CORPORATION AND ANOTHER v. STATE OF MAHARASHTRA AND OTHERS

- **Citation:** [1977] 3 S.C.R. 525
- **Court:** Supreme Court of India
- **Decided:** 1977-04-12
- **Case number:** Civil Appeal No. 309 of 1976
- **Bench:** A. C. Gupta, P. S. Kailasam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/natioc-al-textile-corporation-and-another-v-state-of-maharashtra-and-others-7191
- **Pages:** 4

## Headnote

Sick Te.tt£le
Undertakings (Nationalisation)
Act, 1914-Inc1anbra11ceMeani11g of-"A'otificatjon issued under Land A'cquisition Act-If an incurnbrance.
The Stat...-: Government issued two notifications under ss. 4 and 6 of the
Land Acquisition Act seeking to acquire certain land belonging to a textile mill.
A
B
When the Letters Patent Appeal of the Textile mil! was pending before the
C
High Court the mill was taken over by the Central Government and later the
appeJlant \vas substituted for the original appellant.
By virtue of s. 3 of the Sick Textile Undertakings (Nationalisation) Act,
1974 the management of every sick textile mill vested absolutely_ in the Central
·Government and later in the appellant. Section 4(2) of the Act provides that
all property which vested in the Central Government shall, by force of such
vesting, be freed and discharged from trust, obligation, mortgage, charge, lien
and all otlier incu111brances affecting it and any attachment, injunction or decree
D
or order of a:iy court restricting the use of such property in any manner shall
be deemed to have been withdrawn. The appellants• contention that by reason
of s. 4(2) the t\\'0 notifications must be held to have become ineffective because
the .section provides that all property vested in the Central Government shall be
free from all incumbrailces affecting it was rejected by the High Court.
Dismisstni; the appeal to this Court,
HELD : The High Court was right in its view that the notification& issued
E
under ss. 4 and 6 of the Land Acquisition Act were not incumbrances and could
not be held ~v have become inoperative on the land
vesting in the
Central.
Government,
[528 BJ
1. The te.:.-m "incumbrance" has not been defined in the Act,
The dictionary
meaning given to incumbrance is a claim, lien or liability attached to property.
An incu.mbrance in. this sense has to. b~ a liability "attached to property", a
burden or liability that runs with the land. The notifications issued under the
Land Acquis'.tion Act are not a burden or liability attached to the property.
F
f528 Bl
2, .. 'Incumbrance" in the context of s. 4(2) means some burden or liability
attached to the property like mortgage, charge, lien.etc. That this is so would
appear from the words "all other_ incumbrances affecting it".
Having said that
the vesting '~·ill be free from tfust etc., sub-s. (2) goes on to add that "any
attachment, injunction or· decree .... shall be deemed to be withdra\\-n" upon
vesting. If "incumbrance" meant any kind of fetter, any attachment, injunction
or decree or order restricting use of the propert}' \\'ould be· included in "all
G
other incumbra~ces" and it would have be!n quite unnecessary to mention them
separately. This means that fetters on the property like attachment injunction
or decree o:· order of any court restricting the use of the propertY which are
deemed to have been withdrawn upon the property vesting in the Central Government are not really incumbrances within the meaning of the word as
used in
s, 4(2). [528 E-G]

## Text

.
-
•
I
525
NATIOC\AL TEXTILE CORPORATION AND ANOTHER
v.
STATE OF MAHARASHTRA AND OTHERS
April 12, 1977
[A. C. GUPTA AND P. S. KAILASAM, JJ.]
Sick Te.tt£le
Undertakings (Nationalisation)
Act, 1914-Inc1anbra11ceMeani11g of-"A'otificatjon issued under Land A'cquisition Act-If an incurnbrance.
The Stat...-: Government issued two notifications under ss. 4 and 6 of the
Land Acquisition Act seeking to acquire certain land belonging to a textile mill.
A
B
When the Letters Patent Appeal of the Textile mil! was pending before the
C
High Court the mill was taken over by the Central Government and later the
appeJlant \vas substituted for the original appellant.
By virtue of s. 3 of the Sick Textile Undertakings (Nationalisation) Act,
1974 the management of every sick textile mill vested absolutely_ in the Central
·Government and later in the appellant. Section 4(2) of the Act provides that
all property which vested in the Central Government shall, by force of such
vesting, be freed and discharged from trust, obligation, mortgage, charge, lien
and all otlier incu111brances affecting it and any attachment, injunction or decree
D
or order of a:iy court restricting the use of such property in any manner shall
be deemed to have been withdrawn. The appellants• contention that by reason
of s. 4(2) the t\\'0 notifications must be held to have become ineffective because
the .section provides that all property vested in the Central Government shall be
free from all incumbrailces affecting it was rejected by the High Court.
Dismisstni; the appeal to this Court,
HELD : The High Court was right in its view that the notification& issued
E
under ss. 4 and 6 of the Land Acquisition Act were not incumbrances and could
not be held ~v have become inoperative on the land
vesting in the
Central.
Government,
[528 BJ
1. The te.:.-m "incumbrance" has not been defined in the Act,
The dictionary
meaning given to incumbrance is a claim, lien or liability attached to property.
An incu.mbrance in. this sense has to. b~ a liability "attached to property", a
burden or liability that runs with the land. The notifications issued under the
Land Acquis'.tion Act are not a burden or liability attached to the property.
F
f528 Bl
2, .. 'Incumbrance" in the context of s. 4(2) means some burden or liability
attached to the property like mortgage, charge, lien.etc. That this is so would
appear from the words "all other_ incumbrances affecting it".
Having said that
the vesting '~·ill be free from tfust etc., sub-s. (2) goes on to add that "any
attachment, injunction or· decree .... shall be deemed to be withdra\\-n" upon
vesting. If "incumbrance" meant any kind of fetter, any attachment, injunction
or decree or order restricting use of the propert}' \\'ould be· included in "all
G
other incumbra~ces" and it would have be!n quite unnecessary to mention them
separately. This means that fetters on the property like attachment injunction
or decree o:· order of any court restricting the use of the propertY which are
deemed to have been withdrawn upon the property vesting in the Central Government are not really incumbrances within the meaning of the word as
used in
s, 4(2). [528 E-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 309 of 1976.
Appeal by Special Leave from the Judgment and Order dated the
22nd January, 1975 of the Bombay Fli~h Court in Appeal No. 106 of
1969 in Misc. Petition No. 320 of 1964.
7-S02SC!n7
H
526
SUPREME COURT RE).'ORTS
[1977] 3 S.C.R.
A
I. N. Shroff and H. S. Parihar for the Appellanfs.
B
c
D
E
F
G
H
M. N, Shroff for Respondents 1 and 2.
V. P. Raman, Addi. Sol. Gen!, K. J. John and Shri Narain for
Respondent No. 3.
The Judgment of the Court was delivered by
GUPTA, J. Ahmedabad Jupiter Spinning Weaving and Manufacturing O:>mpany Limited was the owner of 5\100 Sq. yds of land torming part of its mill premises at Lower Pare! in Bombay which was
sought to be acquired by the Maharashtra Government for a municipal
~chool. Notifications under sections 4 and 6 were issued on June
19, 1961 and May 29, 1964 respectively. The company filed a petition in the Bombay High Court challenging the validity of the notifications on several grounds.
A single Judge of the High Court having
dismissed the writ petition on August 11, 1969 the company preferred
a letters patent appeal.
During the pendency of the appeal, the
management of the company was taken over by the Central Government on October 8, 1972 under the
Industries (Development and
Regulation) Act, 1951.
On September 21, 1974 an ordinance called
the Sick Textile Undertakings (Nationalisation) Ordinance, 1974 was
promulgated by virtue of which the textile undertaking of the company
the management of which had been taken over by the Central Government, vested absolutely in the Central Government with effect from the
"appointed day", which was April 1, 1974, and immediately thereafter
stood transferred and vested in the National Textile Corporation. The
Ordinance was later replaced by the Sick Textile Undertakings (Nationalisation) Act, 1974 (hereinafter referred to as Sick Textile Act).
Sections 3 and 4 of the Act are as follows :
Acquisition of rights
of owners in respect of sick textile
undertakings.
"3. (1) On the appointed day, eYery sick textile undertaking and the right, title and interest of the owner in relation to every such sick textile undertakings shall stand transferred to, and shall vest absolutely in, the Central Government.
(2) Every sick textile undertaking which stands vested
in the Central Government by virtue of sub-section ( 1) shall,
immediately after it has so vested, stand transferred to, and
vested in, the National Textile Corporation.
General effect of vesting
4. ( 1) The sick textile undertaking referred to in section 2 shall be deemed to include all assets, rights, leaseholds, powers, authorities and t?rivileges and . all_ property,
movable and immovable, includm~ lands, buildings, workshops stores instruments, machinery and equipment, cash
balan~es cash on hand, reserve funds, investments and book
debts and all other rights and }nterests in, or arising o~t of,
such property as were immediately before the appomted
NATIONAL TEXTILE CORP. v. MAHARASHTRA (Gupta, J.) 527
day in the ownership, possession, power or control of the
owner of the sick textile undertaking, whether within or
outside India, aud all books of account, registers and all
other documents of whatever nature relating thereto and
shall aclso be deemed to include the liabilities and obligations
specified in sub-section (2) of section 5.
A
(2) All property as aforesaid which have vested in the
B
Central Government under sub'section ( 1) of section 3
shall, by force of such vesting, be freed and discharged from
any trust, obligation, mortgage, charge, lien and all other
incumbrances affecting it, and any attachment, injunction or
decree or order of any court res!ricting the use of such property in any manner shall be deemed to have been withdrawn."
C
The other sub-sections of section 4 are not relevant for the pre~e11t
purpose.
The National Textile Corporation applied to the High Court for
being substituted in place of the original appellant in the letters patent
appeal which was pending and th<_! application was
allowed.
The
main contention on behalf of the substituted appellant in the High
D
Court was that the two notifications under sections 4 and 6 of the
Land Acquisition Act must be held to have
become ineffective in
view of section 4(2) of the Sick Textile Act which provides that all
property which vests in the Central Government under section 3 (1)
does so free from all "incumbrances affecting it." The High Court
dismissed the appeal holding that the notifications under the l..and
Acquisition Act were not incumbrances within the meaning of secE
lion 4(2) of the Sick Textile Act. In the appeal before us filed with
special leave obtained from this Court, the National Textile Corporation questions the correctness of the view taken by the High Court.
Thus the only question for determination in the appeal is whether
the notifications issued under the Land Acquisition Act are incumbrances within the meaning of the word as used in section 4( l) .,f
the Sick Textile Act.
Section 3 and the first two sub-sections of section 4 of the Sick Textile Act are the only provisions relevant in
this context. Section 3 provides that on the appointed day
every .sick textile undertaking shall vest absolutely in the Central
Government, and then in the National Textile Corporation.
Subsection (1) of section 4 states that the undertakings vesting in the
Central Government under section 3 shall be deemed to include all
assets, rights and interests in the ownership, possession or control of
the owners of such undertakings immediately before the appointed day.
Sub-section, (2) of section 4 provides that all property vesting in the
Central Government under section 3 shall, "by force of such vesting,
be freed and discharged from any trust, obligation, mortgage, charge,
lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of any court restricting the use of such
property in any manner shall be deemed to have been withdrawn".
Counsel for the appellant argues that sub-section (2) of section 4
is intended to vest the sick textile undertakings in the Central Goven1F
G
H
A
B
c.
D
E
F
G
528
SUPREME COURT REPORTS
(1977] 3 s.c.R.
ment free from all fetters, and the notifications issued under the Land
Acquisition Act wh!ch had the effect of freezing the price of the land
were fetters falling m the category of "other incumbrances" mentioned
in section 4(2) of the Sick Textile Act.
The term 'incumbrance' has
not been defined in the Act.
In Wharton's Law lexicon incumbrance
is described as being a claim, lien or liability, attached to property.
This is the sense in which the term is ordinarily used.
An iqcumbrance in this sense has to be a liability "attached to property"• it
must be a burden or liability that runs with the land, as the High Court
has held. But a notification issued by the Government under the
Land Acquisition Act ~ not a burden or liability that is attached to
the property.
The sovereign right of the State _to take proceedings
for the acquisition of any land for public purpose is similar to its tight
to impose a tax on the land which is "paramount to the . ownership
over the land and outside it".
[see The Collector of Bombay v.
Nusserwanj,i Rattanji.Mistri & others (1955] 1 SC R 1311 (at 1323).
Under sub-section (2) of section 4 of the Sick Textile Act all property
which have vested in the Central Government under section 3 ( 1) shall
be freed and discharged from any trust, obligation, mortgage, charge,
lien and all other incumorances affecting it, and any attachment,
injunction or decree or order of any court restricting the use of such
property shall be deemed to have been withdrawn.
Counsel for the
r~spondent, State of Maharashtra, submits that the term incumbrance
should take colour from the different kinds of burden on the land
specified in section 4(2) preceding the words 'all other incumbrances";
it is ai:gued that incumbrance in the context means some burden or
liability that is attached to the property, like mortgage, charge, . lien
etc. That t11is is so would also appear from what follows the words
"all other incumbrances affecting it". Having said that the ves!ffig
will be free from trust, obligation, mortgage, charge, lien and · all
other incumbrances affecting it, sub-section (2) goes on to add that.
"any attachment, injm1ction or decree or order of any court restricting
the use of such property in any manner shall be deemed to have been
withdrawn" upon vesting. If the appellant's
construction of the
provision were correct. and incumbrance meant any kind of fetter, any
attachlnent, injunction or decree or order restricting the use of the
property would be included in "all other incumbrances" and it would
have i>een· quite unnecessary to mention them separately.
This makes
it clear that fetters on the property like attachment, injunction or
decree or order of any court restricting tlie use of the property which
are deemed to have been withdrawn upon the prooerty vesting in the
Central Government are not reallv incumbrRnces within the meaning of
the word as used in sub-section (2) of section 4. We therefore agree
With the High Court that the notifications i.ssued under sections 4 and
6 of the Land Acquisition Act are not incumbrances and cannot be
held to have become inoperath-e on the land in question vesting in
t'te Central Government.
Tlle appeal is dismissed but in the circumstances of tbe case withH
cu.~ nny order as to cost.
PS.R.
Appeal dismissed.
)
.--._.