Reportable

IN THE SUPREME COURT OF  INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  7448  of  2011

The National Textile Corporation Ltd.      ……….Appellant  

Versus

Nareshkumar Badrikumar Jagad & Ors.          ……...Respondents

J U D G M E N T   

Dr. B. S. CHAUHAN, J.

1. This appeal has been preferred against the judgment and order  

dated 3.8.2009 in Civil Revision Application No. 564 of 2008 passed  

by the High Court of Judicature at Bombay affirming the judgment and  

order of the Small Causes Appellate Court dated 14.8.2008 in Appeal  

No.  627  of  2006  by  which  the  appellate  court  has  affirmed  the

judgment and decree dated 5.8.2006 in TE & R Suit No. 311/326/2001  

passed by the Court of Small Causes at Bombay.   

2. FACTS:  

A. The suit premises belongs to the trust run by the respondents –  

Nareshkumar Badrikumar Jagad & Ors. Sh. Damodar Dass Tapi Dass  

and Sh. Daya Bhai Tapidas executed a lease deed dated 11.3.1893 in  

respect of the suit premises admeasuring 12118 sq. yds.  bearing plot  

no. 9 in Survey No. 73 of Lower Parel  Division,  N.M. Joshi Marg,  

Chinchpokli, Mumbai-400 011, in favour of a company named Hope  

Mills Limited for a period of 99 years commencing from 22.10.1891.  

The lease so executed was to expire on 21.10.1990.   

B. The original owners transferred and conveyed the suit property  

in favour of one Harichand Roopchand and Ratan Bai on 22.2.1907.  

Thereafter,  the  suit  property  came to  be vested  in  and owned by a  

public  charitable  trust,  namely,  Harichand Roopchand  Charity  Trust  

(hereinafter called as `Trust’).

C. The leasehold rights in respect of suit property stood transferred  

to Prospect Mills Ltd. and, thereafter to Diamond Spinning & Weaving  

Co. Pvt. Ltd. and, ultimately, vide a lease indenture dated 25.10. 1926  

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to  Toyo  Poddar  Cotton  Mills  Ltd.  (hereinafter  called  the  ‘Poddar  

Mills’).  

D. The  Textile  Undertakings  (Taking  over  of  Management)  Act,  

1983 (hereinafter called `the Act 1983’) was enacted by the Parliament  

in  order  to  take  over  the  management  of  13  textile  undertakings  

including  the  Poddar  Mills  pending  their  nationalisation.  The  lease  

granted  in  favour  of  Poddar  Mills  expired  by  efflux  of  time  on  

22.10.1990.   Thus,  the  said  Poddar  Mills  continued  as  a  tenant  by  

holding over the suit premises.  The Trust issued a legal notice dated  

2.12.1994 to the National Textile Corporation (hereinafter called as the  

appellant),  terminating  its  tenancy  qua  the  suit  premises.   The  

Parliament  enacted  the  Textile  Undertakings  (Nationalisation)  Act,  

1995 (hereinafter called `the Act 1995’). The Trust filed an eviction  

suit against the appellant under the provisions of the Bombay Rents,  

Hotel and Lodging House Rates Control Act, 1947  (hereinafter called  

`the Act 1947’). The Act 1947  stood repealed by the Maharashtra Rent  

Control Act, 1999 (hereinafter called `the Act 1999’).  The respondent-

Trust issued a notice for terminating the tenancy of the appellant vide  

notice dated 26.9.2000.  The respondents/plaintiffs after withdrawal of  

the suit filed under the Act 1947, filed a fresh suit in the Small Causes  

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Court  at  Bombay  seeking eviction  of  appellant  and for  a  decree  of  

mesne profits on 20.4.2001.  The appellant filed the written statement  

denying the pleas taken by the respondents/plaintiffs.   The suit  was  

decreed  in  favour  of  the  respondents/plaintiffs  vide  judgment  and  

decree dated 5.8.2006 by which the appellant was directed to hand over  

vacant and peaceful possession of the suit premises to the respondents  

within four months.   

E. Being aggrieved, the appellant preferred Appeal No. 627 of 2006  

to  the  Division  Bench  of  the  Small  Causes  Court  at  Bombay  on  

13.11.2006 which was dismissed by the appellate court by affirming  

the judgment and decree of the trial court vide judgment and decree  

dated 14.8.2008.  The appellant preferred civil revision before the High  

Court of Bombay, which has been dismissed vide impugned judgment  

and order dated 3.8.2009.

Hence, this appeal.  

3. Shri  Prag  P.  Tripathi,  learned  Additional  Solicitor  General,  

appearing  for  the  appellant  has  submitted  that  the  judgments  and  

decrees of the courts below have to be set aside as none of the courts  

below has taken into consideration the effect of the provisions of  the  

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Act 1995 by virtue of which the textile undertaking stood absolutely  

vested in the Central Government and further vested in the appellant.  

As on the expiry of the lease of 99 years  on 22.10.1990, the Act 1947  

was in force, the then tenant, Poddar Mills  became the statutory tenant.  

Such tenancy rights stood vested absolutely in the Central Government  

on commencement of the Act 1995 by operation of law. The appellant  

stepped in the shoes of the Central Government  merely as an agent,  

thus,  the  Central  Government  remained  the  tenant.  The  Central  

Government  continued to be a tenant in the suit premises and thus,  

would be protected in terms of Section 3(1) (a) of the Act 1999 being  

premises  let  out  to  the  Government.   The  courts  below  failed  to  

consider this vital legal issue.  The suit filed by the respondents  was  

not maintainable.  The judgments and decrees of the courts below are  

liable to be set aside.   

4. Per  contra,  Shri  Mukul  Rohatgi,  learned  senior  counsel  

appearing for the respondents, submitted that it is not permissible for  

the court to travel beyond the pleadings. No evidence can be led on an  

issue  in  respect  of  which  proper  pleadings  have  not  been  taken.  

Findings of fact cannot be recorded on a issue on facts in respect of  

which no factual  foundation has been laid.  The appellant  had never  

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raised the issue before the courts below that the Central Government  

was the tenant and it was holding the premises merely as an agent. In  

the written statement filed by the appellants, no reference was made to  

the provisions of Act 1995. Even otherwise, the tenancy rights which  

had vested in the Central Government, stood vested  immediately, by  

operation of law, in the appellant, a public sector undertaking as well as  

the public limited company having a paid up share capital of more than  

rupees one crore, thus the appellant has no protection of  the Act 1999.  

As the said provisions of Act 1999 are not attracted in the instant case,  

the  suit  for  eviction  was  filed  before  the  Small  Causes  Court  at  

Bombay. All  issues raised in the plaint have been adjudicated by three  

courts.  The power of the revisional court, in view of the provisions of  

Section 115 of Code of Civil  Procedure,  1908 (hereinafter  called as  

`CPC’),  remains very  limited  after  the  amendment  Act  2002,  w.e.f.  

1.7.2002.  Being the fourth court, in exercise of its power under Article  

136 of the Constitution, this Court should not entertain the appeal.  The  

appeal lacks merit and is liable to be dismissed.  

5. We have considered the rival submissions made by the learned  

counsel for the parties and perused the record.

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6. In the  instant  case,   no reference had ever been made by the  

appellant to the effect of the provisions of the Act 1995 before the trial  

court  while filing the written submissions; neither any issue has been  

framed; nor arguments had been advanced in regard to the same; this  

issue  has  not  been  agitated  either  before  the  appellate  court  or  

revisional  court.  Before  us,  an  application  has  been  filed  to  urge  

additional grounds regarding the application of the Act 1995 without  

seeking amendment to the pleadings (WS).  

7. Pleadings and particulars  are  necessary  to  enable  the  court  to  

decide the rights of the parties in the trial.  Therefore, the pleadings are  

more of help to the court in narrowing the controversy involved and to  

inform the parties concerned  to the question in issue, so that the parties  

may adduce appropriate evidence on the said issue.  It is a settled legal  

proposition that “as a rule relief not founded on the pleadings should  

not be granted”.   A decision of a case cannot be based on grounds  

outside the pleadings of the parties.  The pleadings and issues are to  

ascertain  the  real  dispute  between the parties  to  narrow the  area  of  

conflict and to see just where the two sides differ. (Vide: M/s. Trojan  

& Co. v. RM N.N. Nagappa Chettiar, AIR 1953 SC 235;  State of  

Maharashtra v. M/s. Hindustan Construction Company Ltd., AIR  

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2010 SC 1299; and Kalyan Singh Chouhan v. C.P. Joshi, AIR 2011  

SC 1127).  

8.    In  Ram Sarup Gupta  (dead) by L.Rs. v. Bishun Narain Inter  

College & Ors., AIR 1987 SC 1242, this Court held as under:

“…… in the absence of pleadings, evidence if any,   produced by the parties cannot be considered……  no party should be permitted to travel beyond its   pleading and that all necessary and material facts   should be pleaded by the party in support of the   case set up by it.”    

      Similar view has been reiterated in  Bachhaj Nahar v. Nilima  

Mandal & Ors., AIR 2009 SC 1103.   

9. In Kashi Nath (Dead) through L.Rs. v. Jaganath, (2003) 8 SCC  

740,  this  Court  held  that  “where  the  evidence  is  not  in  line  of  the  

pleadings and is at variance with it, the said evidence cannot be looked  

into or relied upon.”

     Same remain the object for framing the issues under Order  

XIV CPC  and the court should not decide a suit on a matter/point on  

which  no  issue  has  been  framed.  (Vide:  Biswanath  Agarwalla  v.  

Sabitri  Bera  &  Ors.,  (2009)  15  SCC  693;  and  Kalyan  Singh  

Chouhan (supra).  

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  10.       In Syed and Company & Ors. v. State of Jammu & Kashmir  

& Ors., 1995 Supp (4) SCC 422, this Court held as under:

“Without  specific  pleadings  in  that  regard,   evidence  could  not  be  led  in  since  it  is  settled  principle of law that no amount of evidence can be  looked  unless  there  is  a  pleading.   Therefore,   without amendment of the pleadings merely trying  to lead evidence is not permissible.”    

      11. In  Chinta Lingam & Ors. v. The Govt. of India & Ors.,  

AIR 1971 SC 474, this Court held that unless factual foundation has  

been laid in the pleadings no argument is permissible to be raised on  

that particular point.

12. In J. Jermons v. Aliammal & Ors, (1999) 7 SCC 382,  while  

dealing with  a similar issue, this Court held as under:  

“…… there is a fundamental difference between a   case of  raising additional  grounds based on the   pleadings  and the material  available on record   and a case of  taking a new plea not borne out of   the pleadings. In the former case no amendment of   pleading  is  required,  whereas  in  the  latter  it  is   necessary  to  amend  the  pleadings…The  respondents cannot be permitted  to make out  a   new case by seeking permission to raise additional   grounds in revision.”

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13. In view of the above, the law on the issue stands crystallised to  

the effect that a party has to take proper pleadings and prove the same  

by adducing sufficient evidence. No evidence can be permitted to be  

adduced on a  issue unless  factual  foundation has been laid  down in  

respect of the same.  

14. There is no quarrel to the settled legal proposition that a new plea  

cannot  be  taken  in  respect  of  any  factual  controversy  whatsoever,  

however,  a  new  ground  raising  a  pure  legal  issue  for  which  no  

inquiry/proof is required can be permitted to be raised by the court at  

any stage of the proceedings. (See : M/s Sanghvi Reconditioners Pvt.  

Ltd.  v.  Union of  India  & Ors.,  AIR 2010 SC 1089;  and  Greater  

Mohali Area Development Authority & Ors. v. Manju Jain & Ors.,  

AIR 2010 SC 3817).  

15. The  questions  do  arise  as  to  whether  in  the  facts  and  

circumstances of this case the Government is a tenant or the appellant  

can  be  termed  as  “Government”   or  “Government  Department”  or  

“agent” of the Central Government in the context of the Act 1999.  

           The Government loosely means the body of persons authorized  

to administer the affairs of, or to govern, a State. It commands and its  

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decision  becomes  binding  upon  the  members  of  the  society.  

Government includes, both the Central Government as well as the State  

Government. The government is impersonal in character having three  

independent  functionaries  as  its  branches.  It  performs  regal  and  

sovereign functions, which are not alienable to any other person,  e.g.  

defence, security, currency etc. Government means a group of people  

responsible  for  governing  the  country.  It  consists  of  the  activities,  

methods  and  principles  involved  in  governing  a  country  or  other  

political unit.  

      The Government is a body that governs and exercises control  

by issuing directions and is not governed by any other agency. It is a  

body politic  that  formulates  policies  and the  laws by which  a  civil  

society is  controlled.  It  is  a  political  concept  formulated to rule  the  

nation. It is not a profit and loss establishment. “From the legal point of  

view, government may be described as the exercise of certain powers  

and the performance of certain duties by public authorities or officers,  

together with certain private persons or corporations exercising public  

functions.”  

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Thus,  Government  Department  means  something  purely  

fundamental, i.e. relating to a particular government or to the practice  

of governing a country. It has different Wings.  

However,  the expression ‘Government’ may be required to be  

interpreted in the context used in a particular Statute. The expression  

denotes  the  Executive  and  not  the  Legislature.  (Vide:  State  of  

Rajasthan & Anr.  v.  Sripal  Jain, AIR 1963 SC 1323;  Pashupati  

Nath Sukul v. Nem Chandra Jain & Ors.,  AIR 1984 SC 399;  R.S.  

Nayak v. A.R. Antulay, AIR 1984 SC 684; and  V.S. Mallimath v.  

Union of India & Anr., AIR 2001 SC 1455)  

16. To  perform  the  functions,  the  Government  has  its  various  

departments and to facilitate its working, the Government itself may be  

divided into various Sections. To carry out the commercial activities by  

the  State,  the  Corporations  have  been  established  by  enactment  of  

Statutes and the “power to charter Corporations is incidental to or in  

aid  of  Governmental  functions.”  Such  Corporations  would  ex-

hypothesis be agencies of the Government. (Vide : Sukhdev Singh &  

Ors. v. Bhagatram Sardar Singh Raghuvanshi & Anr., AIR 1975  

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SC  1331; and  Ramana  Dayaram  Shetty  v.  The  International  

Airport Authority of India & Ors., AIR 1979 SC 1628).

17. Banks  and  Financial  institutions  carrying  out  financial  

transactions, are independent to do business subject to the regulatory  

laws made by the legislature. They are not under the direct executive  

control  of  the  government.  They  are  profit  and  loss  earning  

organisations  coupled  with  all  connected  financial  and  economic  

activities. They are a body corporate with a limited role to play and do  

not “govern” people as understood by governance. (See: Federal Bank  

Ltd. v. Sagar Thomas & Ors., AIR 2003 SC 4325).  

18. In  State of Punjab & Ors. v. Raja Ram & Ors., AIR 1981 SC  

1694, this  Court  considered the  provisions  of  the  Food Corporation  

Act,  1964  and  held  that  Food  Corporation  of  India  was  not  a  

Government  department  but  a  Government  Company.   The  Court  

observed :

“A  Government  department  has  to  be  an   organisation  which  is  not  only  completely   controlled  and  financed  by  the  Government  but   has also no identity of its own. The money earned   by such a department goes to the exchequer of the  Government  and  losses  incurred  by  the   department  are  losses  of  the  Government.  The  Corporation, on the other hand, is an autonomous  

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body capable of acquiring, holding and disposing  of property and having the power to contract.  It   may also sue or be sued by its own name and the  Government  does  not  figure  in  any  litigation  to   which it is a party.”

 (See also:   The State of Bihar v. The Union of India & Anr., AIR  

1970 SC 1446;   S.S.  Dhanoa v.  Municipal  Corporation  Delhi  &  

Ors., AIR 1981 SC 1395;  K. Jayamohan v. State of Kerala & Anr.,  

(1997)  5  SCC 170; Hindustan  Steel  Works Construction  Ltd.  v.  

State of Kerala & Ors.,  AIR 1997 SC 2275; Mohd. Hadi Raja v.  

State  of  Bihar  &  Anr.,  AIR  1998  SC  1945;  and  State  through  

Narcotics Control Bureau v. Kulwant Singh, AIR 2003 SC 1599).

19. In  Food  Corporation  of  India  v.  Municipal  Committee,  

Jalalabad & Anr., AIR 1999 SC 2573, this  Court considered the case  

of  imposition  of  house  tax  under  the  provisions  of  the  Punjab  

Municipalities Act, 1911 and held that Food Corporation of India was a  

Government Company  and not a Government Department - a distinct  

entity  from  Central  Government.  Thus,  was  not  entitled  to  

exemption  from  tax  under  Article  285  of  the  Constitution.  While  

deciding the said case, reliance had been placed by the Court on its  

earlier judgment in M/s. Electronics Corporation of India Ltd., etc.  

etc.  v.  Secretary,  Revenue  Department,  Government  of  Andhra  

Pradesh & Ors., etc. etc., AIR 1999 SC 1734.

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20. In  A.K. Bindal & Anr. v. Union of India & Ors., (2003) 5  

SCC 163, this Court clarified:  

“The  legal  position  is  that  identity  of  the  government company remains distinct from the  Government.  The  government  company  is  not   identified  with  the  Union  but  has  been  placed   under a special system of control and conferred  certain  privileges  by  virtue  of  the  provisions  contained  in  Sections  619  and  620  of  the   Companies  Act.  Merely  because  the  entire   shareholding  is  owned  by  the  Central  Government  will  not  make  the  incorporated  company as Central Government…..”

(Emphasis added)

21. In Southern Roadways Ltd., Madurai v. S.M. Krishnan,  

AIR  1990  SC  673,  this  Court  examined  an  issue  whether  the  

possession of the agent can be termed to be the possession of the  

principal for all purposes including the acquisition of title and held  

that agent who receives property from or for his principal, obtains  

no  interest  for  himself  in  the  property  for  the  reason  that  

possession of the agent is the possession of the principal and in  

view of the fiduciary relationship  the agent cannot claim his own  

possession. While deciding the said case reliance was placed on  

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various  earlier  judgments  including  Smt.  Chandrakantaben v.  

Vadilal Bapalal Modi, AIR 1989 SC 1269.    

In  Prem Nath Motors Ltd. v. Anurag Mittal, AIR  

2009 SC 569, this Court dealt with the relationship of agent and  

principal and held that in view of the provisions of Section 230 of  

the  Indian  Contract  Act  1872  (hereinafter  called  the  `Contract  

Act’), an agent is not liable for the acts of a disclosed principal  

subject  to  a  contract  to  the  contrary.  Where  the  relationship  of  

principal and agent is established the agent cannot be sued when  

the principal has been disclosed. (See also:  Vivek Automobiles  

Ltd. v. Indian Inc., (2009) 17 SCC 657).  

Thus, it was made clear that suit does not lie against  

an agent where the principal is known or has been disclosed.  

The appellant may be called ‘agency’ or ‘instrumentality’ of  

the Central Government for a limited purpose, namely to label it to  

be the “State” within the ambit of Article 12 of the Constitution.  

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(See:  Pradeep Kumar Biswas v. Indian Institute of Chemical  

Biology & Ors., (2002) 5 SCC 111).  

However,  even  by  stretch  of  imagination,  the  appellant  

cannot  be  held  to  be  an  ‘agent’  of  the  Central  Government  as  

defined under Section 182 of the Contract Act.   

22. Thus,  if the aforesaid settled legal principles are applied to the  

appellant, it becomes evident that appellant is neither the government  

nor the department of the government, but a Government Company.  

Appellant  cannot  identify  itself  with  the  Central  Government.   The  

submission made by Mr. Tripathi that appellant is merely an agent of  

the Central Government is not worth consideration at all for the simple  

reason that rights vested in the appellant stood crystallised after being  

transferred by the Central Government.  Appellant is being controlled  

by the provisions of the Act 1995 and not by the Central Government.  

Whereas  an  agent  is  merely  an  extended  hand of  the  principal  and  

cannot claim independent rights.  

23. Section  3  (1)  (a)  &  (b)  provide  for  exemption  from  the  

application  of  the  Act  1999.  This  Court  examined  the  validity  of  

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provisions of Section 3(1) (a) and (b) of the Act 1999  in  Saraswat  

Coop. Bank Ltd. & Anr. v. State of Maharashtra & Ors., (2006) 8  

SCC 520 and came to the conclusion that it was within the exclusive  

domain of the legislature to decide which section of tenants should be  

afforded protection  on the  basis  of  economic criteria.  If  a  particular  

section  of  tenants  is  not  protected  considering  their  economic  

conditions it can be held to be a reasonable classification and making  

such distinction is valid.  The exclusion of premises let or sub-let to  

banks or any public sector undertaking or any corporation established  

by or under any Central or State Act or foreign missions, international  

agencies,  multinational  companies  and  private  and  public  limited  

companies having paid up share capital of rupees one crore or more  

could  not  be  held  to  be  arbitrary.   The  Court  further  held  that  the  

provisions of Section 3(1)(b) are applicable to all premises whether let  

out before or after commencement of the Act 1999.    

24. In  Leelabai Gajanan Pansare & Ors. v. Oriental Insurance  

Company Ltd. & Ors., (2008) 9 SCC 720,  this  Court dealt with the  

same issue as which of the categories of tenants have been excluded  

from the operation of the Act 1999 and held as under:  

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“Therefore,  we  are  of  the  view  that  on  a  plain   meaning of the word “PSUs” as understood by the   legislature, it is clear that, India's PSUs are in the   form  of  statutory  corporations,  public  sector   companies, government companies and companies  in  which  the  public  are  substantially  interested  (see the Income Tax Act,  1961).  When the word   PSU  is  mentioned  in  Section  3(1)(b),  the  State   Legislature  is  presumed  to  know  the  recommendations  of  the  various  Parliamentary  Committees on PSUs. These entities are basically   cash-rich  entities.  They  have  positive  net  asset   value.  They  have  positive  net  worths.  They  can  afford  to  pay  rents  at  the  market  rate.…….we  hold  that  Section  3(1)(b)  clearly  applies  to   different  categories  of  tenants,  all  of  whom are   capable  of  paying  rent  at  market  rates.   Multinational  companies,  international  agencies,   statutory  corporations,  government  companies,   public  sector  companies can  certainly  afford  to   pay  rent  at  the  market  rates.  This  thought  is   further highlighted by the last category in Section  3(1)(b).  Private  limited  companies  and  public   limited companies having a paid-up share capital   of more than Rs 1,00,00,000 are excluded from the  protection of  the Rent Act.  This further supports  the view which we have taken that each and every   entity mentioned in Section 3(1)(b)  can afford to   pay rent at the market rates.”                                                       (Emphasis added)

(See also: D.C. Bhatia & Ors. v. Union of India & Anr., (1995) 1  

SCC 104).  

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25. The case stands squarely covered by the judgment of this Court  

in Leelabai Gajanan Pansare  (supra) so far as the issue of exemption  

to the Act 1999 is concerned.

26. Section 3(1) and (2) of the Act 1995 reads as under:  

“3(1)  On  the  appointed  day,  the  right,  title  and  interest  of  the  owner  in  relation  to  every  textile  undertaking  shall  stand  transferred  to  and  shall  vest absolutely in, the Central Government.

(2) Every 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.”                               (Emphasis added)

   The  aforesaid  provisions  require  construction  giving  proper  

meaning to  the expression ‘vesting’.  

27. `Vesting’  means  having obtained an absolute  and indefeasible  

right.  It refers to and is used for transfer or conveyance. `Vesting’ in  

the general sense, means vesting in possession.  However,  `Vesting’  

does not necessarily and always means possession but includes vesting  

of  interest  as well.   `Vesting’ may mean vesting in title,  vesting in  

possession or vesting in a limited sense, as indicated in the context in  

which it is used in a particular provision of the Act. Word `Vest’ has  

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different shades, taking colour from the context in which it is used.  It  

does not necessarily mean absolute vesting in every situation and is  

capable of bearing the meaning of a limited vesting, being limited,  in  

title as well as duration. Thus, the word  `vest’ clothes varied colours  

from the context and situation in which the word came to be used in the  

statute.  The expression `vest’ is a word of ambiguous import since it  

has  no  fixed  connotation  and  the  same  has  to  be  understood  in  a  

different context under different set of circumstances. (Vide:  Fruit &  

Vegetable Merchants Union v. Delhi Improvement Trust, AIR 1957  

SC 344 ;  Maharaj  Singh v.  State  of  Uttar  Pradesh & Ors., AIR  

1976  SC  2602;  Municipal  Corporation  of  Hyderabad  v.  P.N.  

Murthy  &  Ors.,  AIR  1987  SC  802;  Vatticherukuru  Village  

Panchayat v. Nori Venkatarama Deekshithulu & Ors., 1991 Supp.  

(2) SCC 228; Dr. M. Ismail Faruqui etc. v. Union of India & Ors.,  

AIR  1995  SC  605 ;  Government  of  A.P.  v.  H.E.H.  The  Nizam,  

Hyderabad, (1996)  3  SCC  282 ;   K.V.  Shivakumar  &  Anr.  v.  

Appropriate  Authority  &  Ors.,  (2000)  3  SCC  485 ;  Municipal  

Corporation of Greater Bombay & Ors. v. Hindustan Petroleum  

Corporation  &  Anr., AIR  2001  SC  3630 ;  and  Sulochana  

Chandrakant Galande v. Pune Municipal Transport & Ors., (2010)  

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8 SCC 467).

28. The Act 1995 has been brought for providing the acquisition and  

transfer of the rights, title and interest of the owners in respect of the  

textile undertakings. Respondents had not been the owner of the textile  

undertaking. They had rented out the premises to Poddar Mills  and  

what had vested in the Central Government was only the right, title and  

interest of the Poddar Mills  and nothing else. The Poddar Mills  was  

having only right in tenancy in the suit premises.  The owner had been  

defined  in  clause  (g)  of  Section  2  of  the  Act  1995,  taking  into  

consideration  the  expression  in  relation  to  textile  undertaking  as  a  

proprietor or lessee, or occupier of the textile company undertaking. It  

included  even  the  receiver  and liquidator  where  the  companies  had  

gone  under  liquidation.   Textile  undertaking  has  been  defined  in  

Section 2(m) which means undertaking specified in column (2) of the  

First  Schedule  to  the  Act  1995  i.e.,  the  textile  undertakings,  

management of which had been taken over by the Central Government  

under the Act 1983. The First Schedule included Poddar Mills at Sl.  

No.9  and  Poddar  Mills  had  been paid  compensation  to  the  tune  of  

Rs.7,46,30,000.  Nothing has been paid so far as respondent No.1 is  

concerned.  Sub-section (6) of Section 4  of the Act 1995 provides that  

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any suit, appeal or other proceedings of whatever nature in relation to  

any  property  which  had  vested  in  the  Central  Government  under  

Section 3 on the appointed day, instituted or preferred by or against the  

textile company is pending, the same shall not abate or adversely affect  

the rights of the parties by reason of the transfer of textile undertaking.  

Thus, the commencement of the Act 1995 does not really affect even  

the pending cases. In view thereof, it is beyond our imagination as how  

the  Act  1995  would  prejudice  the  cause  of  the  respondents  in  the  

proceedings which arose subsequent to the commencement of this Act.  

29.     It is not permissible for the appellant to canvass that the Central  

Government has any concern so far as the tenancy rights are concerned.  

Right vested in the Central Government stood transferred and vested in  

the appellant.  Both are separate legal entities and are not synonymous.  

The appellant being neither the government nor government department  

cannot agitate  that  as it  has been substituted in place of  the Central  

Government, and acts merely as an agent of the Central Government,  

thus protection of the Act 1999 is available to it.    Appellant cannot be  

permitted to say that though  all the rights vested in it but it merely  

remained the agent of the Central Government. Acceptance of such a  

submission  would  require  interpreting  the  expression  `vesting’  as  

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holding on behalf of some other person.  Such a meaning cannot be  

given to the expression ‘vesting’.  

It is a settled legal proposition that an agent cannot be  

sued  where  the  principal  is  known.   In  the  instant  case,  the  

appellant has not taken plea before either of the courts below.  In  

view of the provisions of Order VIII Rule 2 CPC, the appellant  

was under an obligation to take a specific plea to show that the suit  

was not maintainable which it failed to do so.  The vague plea to  

the extent that the suit was bad for non-joinder and, thus, was not  

maintainable, did not meet the requirement of law.  The appellant  

ought  to have taken a plea  in  the written  statement  that  it  was  

merely an `agent’ of the Central Government, thus the suit against  

it was not maintainable. More so, whether A is an agent of B is a  

question  of  fact  and has  to  be  properly  pleaded and proved by  

adducing  evidence.   The  appellant  miserably  failed  to  take  the  

required pleadings for the purpose.  

30. Thus,  in  view  of  the  above,  we  reach  the  inescapable  

conclusion  that  appellant  is  not  entitled  for  exemption  under  

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Section 3(1)(a) or 3(1)(b) of the Act 1999. Nor can it claim the  

status  of  an  ‘agent’  of  the  Central  Government.  Submissions  

advanced on behalf of the appellant are preposterous. Facts and  

circumstances of the case do not warrant review of the impugned  

judgment.  

However,  considering  the  nature  of  business  of  the  

appellant, it is in the interest of justice that appellant be given time  

upto  31.12.2013,  to  vacate  the  premises.  Appellant  shall  file  a  

usual  undertaking  within  four  weeks  from  today  to  hand  over  

peaceful and vacant possession to the respondent No.1.

With  the  aforesaid  observation,  appeal  stands  

dismissed.   

       ……………………….J. (P. SATHASIVAM)

………………………J. (Dr. B.S. CHAUHAN)

New Delhi, September 5, 2011

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