# STATE OF PUNJAB v. SARDAR SEWA SINGH GILL & ORS

- **Citation:** [1970] 3 S.C.R. 13
- **Court:** Supreme Court of India
- **Decided:** 1969-10-27
- **Case number:** Civil Appeal No. 1434 of 1967
- **Bench:** V. Ramaswami, D. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-punjab-v-sardar-sewa-singh-gill-ors-4894
- **Pages:** 5

## Headnote

Agreement between State and promoters of company-Construction
of-Land given to company to revert to State in case of winding up of
company-Machinery etc. to be removed by company with 24 months of
notice-Requirements of valid notice under 4th proviso to cl. 6(a) of
Agreement.
Respondent No. 1 was granted certain land in Patiala State in 1946
for the purpose of promoting a company for the manufacture of Banaspati ghee. After he had paid the costs of the land possession of the said
land w;as given to respondent No. 1 on Novembelr 17, 1946. On February
12, 1947 a promoting company was formed.
There was an Agreement
between the Patiala State and the promoting company. The third proviso
to cl. 6(a) of the Agreement laid down inter a/ia that if the proposed
company was wound up the land granted to it would revert to Pafuila
State. On such reve .. ion compensation would be paid by the State. The
foulrth proviso to cl, 6(a) further laid down that in the above case the
land would be delivered to Patiala State by the proposed company within
a reasonable time and the cOmpany would be under an obligation to re·
move its machinery etc. from such land within 24 months after a notice
had been given in this regard by the State. If it was not removed within
the notice period or a further period of 6 months which the State could
allow the machi0elry etc. would become the property of the State.
The
proposed company (respondent No. 2 herein) was incorporated on May
27, 1948 but it never went into production. In 1951 respondent no. 1
filed a petition for the winding up of the company, in the name of the
company.
Two provisional liquidators were appointed, but the petition
wa·s dismissed as incompetent. Thereafter in 1955 on a petition by certain
sharel)olde'rs an order for winding up of the company was passed by the
High Court. The voluntary liquidators resigned and the Bank of Patiala
as. Official Liquidator entered into possession of the company's property
. and auctioned the same in 1959. Considering a claim by respondent No.
1 to the land a Single Judge of the High Court held that the land had
vested in the company and respondent no. 1 was not entitled to it. The
Division Bench held that the land belonged to the State but the company
would cOntinue in possession till a valid notice was given in term.s of the
4th proviso to cl. 6(a) of the Agreement. In appeal before this Court
the State urged that the notice given by the Director of Ind~stries to the
provisional liquidators on August 14, 1952 was legally sufficient.
HELD : The title to the land had already vested in the State Government under the third proviso to cl, 6(a) of the Agreement beca.use of the
order of winding up of the company made by the High Court .. There
was nothing in the Agreement to ·show that the .company was ent!tled to
be in possession of the property even after the tttle had vested m
t~e
State Government.
The 4tl) pJoviso only said t~at if the company did
not deliver possession within reasonable time and !f any machinery plant,
buildings or structures remained on the land the title to these also would
vest in the State Government if the company did not remove the struc-
14
SUPREME COURT REPORTS
[1970] 3 S.C.R.
lures or the machinery within 24 months from the date of the notice.
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In the circumstances of the case it must be held that the notice given by
the Director of Industries dated August 14, 1952 satisfied the requirements of the fourth proviso to cl. 6(a) of the Agreement.
The notice
period having expired, the State was entitled to possession of the land.
[17 B·El

## Text

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STATE OF PUNJAB
v.
SARDAR SEWA SINGH GILL & ORS.
October 27, 1969
[V. RAMASWAMI AND I, D. DUA, JJ.]
Agreement between State and promoters of company-Construction
of-Land given to company to revert to State in case of winding up of
company-Machinery etc. to be removed by company with 24 months of
notice-Requirements of valid notice under 4th proviso to cl. 6(a) of
Agreement.
Respondent No. 1 was granted certain land in Patiala State in 1946
for the purpose of promoting a company for the manufacture of Banaspati ghee. After he had paid the costs of the land possession of the said
land w;as given to respondent No. 1 on Novembelr 17, 1946. On February
12, 1947 a promoting company was formed.
There was an Agreement
between the Patiala State and the promoting company. The third proviso
to cl. 6(a) of the Agreement laid down inter a/ia that if the proposed
company was wound up the land granted to it would revert to Pafuila
State. On such reve .. ion compensation would be paid by the State. The
foulrth proviso to cl, 6(a) further laid down that in the above case the
land would be delivered to Patiala State by the proposed company within
a reasonable time and the cOmpany would be under an obligation to re·
move its machinery etc. from such land within 24 months after a notice
had been given in this regard by the State. If it was not removed within
the notice period or a further period of 6 months which the State could
allow the machi0elry etc. would become the property of the State.
The
proposed company (respondent No. 2 herein) was incorporated on May
27, 1948 but it never went into production. In 1951 respondent no. 1
filed a petition for the winding up of the company, in the name of the
company.
Two provisional liquidators were appointed, but the petition
wa·s dismissed as incompetent. Thereafter in 1955 on a petition by certain
sharel)olde'rs an order for winding up of the company was passed by the
High Court. The voluntary liquidators resigned and the Bank of Patiala
as. Official Liquidator entered into possession of the company's property
. and auctioned the same in 1959. Considering a claim by respondent No.
1 to the land a Single Judge of the High Court held that the land had
vested in the company and respondent no. 1 was not entitled to it. The
Division Bench held that the land belonged to the State but the company
would cOntinue in possession till a valid notice was given in term.s of the
4th proviso to cl. 6(a) of the Agreement. In appeal before this Court
the State urged that the notice given by the Director of Ind~stries to the
provisional liquidators on August 14, 1952 was legally sufficient.
HELD : The title to the land had already vested in the State Government under the third proviso to cl, 6(a) of the Agreement beca.use of the
order of winding up of the company made by the High Court .. There
was nothing in the Agreement to ·show that the .company was ent!tled to
be in possession of the property even after the tttle had vested m
t~e
State Government.
The 4tl) pJoviso only said t~at if the company did
not deliver possession within reasonable time and !f any machinery plant,
buildings or structures remained on the land the title to these also would
vest in the State Government if the company did not remove the struc-
14
SUPREME COURT REPORTS
[1970] 3 S.C.R.
lures or the machinery within 24 months from the date of the notice.
A
~
In the circumstances of the case it must be held that the notice given by
the Director of Industries dated August 14, 1952 satisfied the requirements of the fourth proviso to cl. 6(a) of the Agreement.
The notice
period having expired, the State was entitled to possession of the land.
[17 B·El
CIVIL APPELLATE JURISDICTION :
Civil Appeal No.
1434
of 1967.
Appeal from the judgment and order dated May 8, 1964 of
the Punjab High Court in Letters Patent Appeals Nos. 230-304
of 1962.
·
V. C. Mahajan and R. N. Sachthey, for the appellant.
Harbans Singh, for respondent No. 2.
The Judgment of the Court was delivered by
1
~ami, J. This appeal is brough~ by certificate from
the judgment of the Punjab High Court dated May 8, 1964 in
L.P.A. Nos. 230/304 of 1962.
'
Sardar Sewa Singh Gill (respondent no. 1) wanted to promote a company for the manufacture of Banaspati and for that
purpose he approached the Maharaja of Patiala for certain concessions and grant of land at Doraha. Subsequently by an order of
the ljlis·i-khas dated October 29, 1946 it was decided to give to
.Sardar Sewa Singh Gill a plot of land measuring about 96, 700
sq. yds. at Doraha. This plot of land was to be made over to him
on payment of the costs of the land. Certain undertakings were
given by the respondent no. 1. Possession of the land was handed
over tg respondent no. 1 on November 17, 1946 vide Ex. P.W.
I/I, report no. 96.
On February 4,
1947 an agreement Ex.
C.W. I 3 was entered into between Sewa Santokh Brothers (P)
Ltd., and the Patiala State for grant of certain concessions for the
establishment of the ghee factory.
The ghee factory that was to
be established was styled as the Patiala Banaspati and Allied
Products Co. Ltd., (hereinafter referred to as the Company).
Clause 6 of the agreement states :
"The Patiala State agrees to give the proposed Company the following among other facilities :
(a) The Patiala State shall provide for the proposed
company land upto 100 acres at Doraha as required by the company. In respect of such portion of the land as the Government property
it shall be made available at such concessional
rates as may be fixed by the Minister in charge
of Development and in regard to such portion
as may have to be acquired for the Company
from private owners, such cost shall be paid
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PUNJAB v. SEWA SINGH (Ramaswami, J.)
to the State as may be assessed under the provisions of the Patiala Land Acquisition
Act,
1995 Bk. Besides the above 100 acres as required for the factory site and the factory
farm, another 25 acres of land will be acquired
under the said Act for the brick kilns at a suitable site near the factory area.
Provided firstly, that the Patiala State shall
protect and indemnify the proposed Company
against any claims or actions arising out of the
acquisition of the land or the construction of
the factory of the proposed Company thereon.
Provided secondly, that if the Mill of the proposed Company is not erected on the land provided, within two years after the rec~ipt of vegetable ghee machinery against orders to be placed
by the proposed Company which period shall in
case of Force Majeure be reasonably extended,
the land will revert to the Patiala State, in
which case the proposed Company shall be reimbursed with the full cost of acquisition paid
by it.
Provided thirdly, that in the case of winding
up of the proposed Company or before that the
land or any part thereof not required by the
proposed Company shall revert to the Patiala
State, who shall pay therefor a price equivalent
to the original value of the
land within 12
months less such reasonable compensation as
may be assessed by the Minister in charge Development for damages done to the said land by
the proposed Company in consequence of the
removal of machinery, buildings, materials etc.
Provided fourthly, that if, as soon as the
Company is free to hand over the possession of
such land, the same is not delivered by the proposed Company to the Patiala· State within
reasonable time after it is no longer required for
the said purpose, and there shall remain in or
upon the said
land any
machinery,
plant,
building,
structure stores
and other
works,
erections and conveniences, the same shall, if
not removed by the proposed Company within
24 calendar
months, after notice in writing
requiring their removal be given to the proposed
Company by the Minister in charge Develop15
16
SUPREME COURT REPORTS
[1970] 3 S.C.R.
ment be deemed to become the property of the
Patiala State and may be sold or disposed of for
the benefit of the Patiala State, in such manner
as they shall deem fit without liability to pay any
compensation or to account to the
proposed
company in respect thereof.
Provided, however, that the said period of 24 months may be
extension is necessary."
State, in case they are satisfied that such an
extention is necessary."
On February 12, 1947
Messrs Sewa
Santokh
Brothers was
incorporated and on May 27, 1948 the Company was incorporated. On April 20, 1948 prospectus of the Company as filed
with the Registrar of Joint Stock Company, Patiala and on July
21, 1948
certificate for the
commencement of business was
granted to the Company.
Admittedly the Company iwver went
into production or ever erected the factory.
On December 24,
1951 a petition for the winding up of the Company was filed by
S. Sewa Singh Gill in the name of the Company. On February
26, 1952 two
provisional
liquidators of the Company were
appointed namely S. Kartar Singh Kawatra and R. N. Sanghi.
This petition was, however, dismissed on October 13, 1952 on the
ground that it was not competent.
On October 28,
1954 13
shareholders filed a petition for compulsory winding up of the
Company and on 21st October 1955 an order for the compulsory
winding up of the Company was passed by the PEPSU High
Court.
On the passing of this order the voluntary liquidators
resigned and the Bank of Patiala was appointed as the Official
Liquidator.
The Bank of Patiala took over possession of the
property of the Company and on August 13, 1959
auctioned
its machinery.
Various claim
petitions were
filed including
L.M. 106 of 1957 and L.M. 32 of 1952 wherein, respondent no. 1
claimed various sums on account of expenses incurred including
the land at Doraha. The petitions were heard by Mahajan, J. who
by his order dated May 26, 1962 disallowed the claim of respondent no. 1 to the land but held that the land remained vested
in the respondent Company till such time as State exercised its
rights under the agreement of February 4, 1947.
Against the
judgment of the learned Single Judge the State of Punjab filed
L.P.A. 304 of 1962 and respondent no. 1 filed LP.A. 230 of
1962. The appeals were heard by Dulat and Pandit, JJ. who on
May 8, 1964 allowed the appeal of the State to the extent that the
land in dispute belonged to the State but its possession would
remain with the Company till a valid notice was
given by the
State.
In support of this appeal it was contended on behalf of theState of Punjab that the High Court was in error in holding that
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PUNJAB v. SEWA SINGH (Ramaswami, /,)
17
the first notice ·given by the Director of Industries to the provisional liquidators was not legally sufficient and the respondent
no. 2 was not bound to give possession to the State unless a fresh
notice was given. In our opinion the argument put forward on
behalf of the appellant is well-founded and must be accepted as
correct.
In the first place it is obvious that the title to the land
has already vested in the State
Government
under the third
proviso to cl. 6 (a) of the Agreement because of the order of
winding up of the Company made by the High Court.
There is
nothing in the agreement to suggest that the Company was entitled to be in possession of the property even after its title had
vested in the State Government.
The 4th proviso only states that
if the Company does not deliver possession within reasonable time
and if any machinery, plant, buildings or structures remain on
the land the title to these also will vest in the State Government
if the Company does not remove the structures or the machinery
within 24 months from date of the notice.
In the circumstances
of the case we are of opinion that the respondents were
given
sufficient notice by the letter of the Director of Industries dated
August 14, 1 ?52.
That notice satisfies the requirements of the
fourth proviso of cl. 6 (a) of the Agreement and the State is
entitled to take possession of the land and other properties located
therein within two years from date of that notice. It is necessary
to state that according to P.W. 4 Jaswant Singh the buildings on
the site are in an area of one bigha, the structure was pucca but
temporary. It is the admitted case that the machinery has been
sold by auction more than
seven years
back and only grass
grows on the land. The evidence of Tarachand R. W. 1 also
shows that a greater part of the land is barren and the machinery
and other valuable properties had already been removed. Counsel
on behalf of respondent no. 2 prayed that some further time may
be given before the State takes possession of the properties. We
consider that a further period of six months' time will be sufficient.
For these reasons we hold that the order of the Division
Bench May 8, 1964 should be modified and the respondents
should be directed to hand over possession of the land in dispute
to the State of Punjab within six months from this date. We
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accordingly allow this appeal. But there will be no order as to
costs.
G.C.
Appeal allowed.