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        REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.    8085             OF 2013 (Arising out of S.L.P. (C) No.3306 of 2011)

State of U.P. …Appellant

Versus

M/s Lakshmi Sugar & Oil Mills Ltd. and Ors. …Respondents

With

CIVIL APPEAL NO.    8086             OF 2013 (Arising out of S.L.P. (C) No.3307 of 2011)

U.P. State Sugar Corporation …Appellant

Versus

M/s Lakshmi Sugar & Oil Mills Ltd. and Ors. …Respondents

J U D G M E N T

T.S. THAKUR, J.

1. Leave granted.

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2. These appeals arise out of a Judgment and Order dated  

30th April, 2010 passed by the Lucknow Bench of the High  

Court  of  Judicature  at  Allahabad,  whereby  writ  petition  

No.187 of 2007 filed by the respondent-company has been  

allowed with a direction to respondents 4 to 6 to delete the  

name of the appellant-U.P. State Sugar Corporation from the  

relevant revenue records and restore that of the respondent-

Company.  That direction followed a finding recorded by the  

High Court that the land in dispute being agricultural land  

had  not  vested  in  the  appellant-Corporation  under  the  

provisions of The U.P. Sugar Undertakings (Acquisition) Act,  

1971. The mandamus issued by the High Court includes a  

further  direction for delivery of possession of the disputed  

parcel of land to the respondent-company within a period of  

one month from the date of presentation of a certified copy  

of the impugned judgment and order.  

3.  The  respondent-Lakshmi  Sugar  and  Oil  Mills  Limited  

established a sugar factory in District Hardoi of the State of  

Uttar  Pradesh as early as in the year 1933.  Several  such  

sugar mills having gone sick in the State of Uttar Pradesh,  

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the State legislature enacted what is known as Uttar Pradesh  

Sugar Undertakings (Acquisition) Act, 1971. Twelve private  

sugar manufacturing units in the State of Uttar Pradesh were  

acquired by the State Government under the said Act and  

vested in the appellant-Corporation so as to revive such sick  

mills and, thereby, protect the interest of cane growers in  

the State. Section 3 of the Act, inter alia, provided that “on  

the  appointed day,  every  scheduled  undertaking shall,  by  

virtue  of  this  Act,  stand  and  be  deemed  to  have  stood   

transferred  and  vested  in  the  Corporation  free  from any  

debt, mortgage charge or other encumbrance or lien, trust   

or similar obligation (excepting any, lien or other obligation   

in respect of any advance on the security of any sugar stock   

or other stock in trade) attaching to the undertaking.”  The  

expression “scheduled undertaking” was defined in Section  

2(h) of the Act, inter alia, to mean an undertaking engaged  

in  the  manufacture  or  production  of  sugar  by  means  of  

vacuum pans  and  with  the  aid  of  mechanical  power  in  a  

factory  specified  in  any  of  the  Schedules  to  the  Act  and  

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comprising  plants,  machinery  and  other  equipments  and  

assets enumerated thereunder.

4. The  respondent-sugar  factory,  it  is  common  ground,  

figured at Item-7 of the Second Schedule to the Act and,  

therefore,  stood  vested  in  the  appellant-Corporation  with  

effect  from  28th October,  1984,  the  date  appointed  for  

vesting  of  undertakings  specified  in  the  said  schedule  in  

terms of notification dated 27th October, 1984. Possession of  

the  respondent-Sugar  Mill  was  taken  over  by  District  

Magistrate, Hardoi on 28th October, 1984 and handed over to  

the appellant-Corporation.   

5. Consolidation  proceedings  appear  to  have  started  in  

Village  Nanakganj  Grunt,  Pargana  Gopamau,  Tehsil  and  

District Hardoi sometime in June, 1986 and a mutation in  

respect  of  land  held  by  the  respondent-Company  and  

situated at Dheer Maholia passed by the SDO, Sadar, Hardoi  

on 14th February,  1987.   A similar  order  of  mutation was  

passed for another parcel of land situated at Nagheta by the  

SDO, Sadar, Hardoi on 19th February, 1987. In regard to the  

third parcel of land situate in village Nanakganj Trust, the  

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appellant-Corporation  acting  through  its  General  Manager  

addressed  a  letter  dated  26th August,  1992  to  the  

Consolidation Officer,  Hardoi  requesting him to  record the  

name  of  the  appellant-Corporation  in  place  of  the  

respondent-Company. The letter  pointed out  that  the said  

parcel of land had been acquired by the State Government  

and  stood  vested  in  the  appellant-Corporation  with  effect  

from 28th October  1984  under  the  provisions  of  the  U.P.  

Sugar  Undertakings  (Acquisition)  Act,  1971  read  with  the  

Amendment Act of 1985.

6. The Consolidation Officer registered the request as Case  

No.9760 and initiated proceedings in which he issued notices  

to the respondent-M/s Lakshmi Sugar Mills at its registered  

office.   The  respondent-Company remained  unrepresented  

even  after  the  notice  was  pasted  in  public  places  and  

announcement by beat of drum regarding the proceedings.  

The Consolidation Officer eventually passed an order on 2nd  

September,  1992  directing  that  land  measuring  122.4.0  

Bighas in  Khata  No.132 in  CH 23,  shall  be  shown in  the  

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ownership  of  the  appellant-Corporation  in  place  of  the  

respondent-company.   

7. Against the order passed by the Consolidation Officer  

the respondent-company appealed to the Settlement Officer,  

Consolidation, Hardoi who dismissed the same by his Order  

dated 24th January, 1997.  The respondent-Company then  

preferred  a  revision  before  the  District  Consolidation  

Director/Collector, Hardoi who concurred with the view taken  

by the officers below and dismissed the Revision Petition on  

6th December, 2006.   

8. Aggrieved by the  orders passed by the  Consolidation  

authorities, the respondent-Company preferred Writ Petition  

No.187 (Consolidation) of 2007 before the Lucknow Bench of  

the High Court of Allahabad. By its order dated 30th April,  

2010 impugned in these appeals, the High Court has allowed  

Writ  Petition No.187 (Consolidation) of  2007 and quashed  

the orders passed by the Consolidation authorities with the  

directions  to  which  we  have  made  a  reference  in  the  

beginning of this judgment.  

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9. On  behalf  of  the  appellant-Corporation,  it  was  

strenuously argued that the High Court had fallen in error, in  

interfering with the order passed by the Consolidation Officer  

and those passed in  appeal  and revision filed against  the  

same, in all of which it had been concurrently held that the  

land in dispute was a part of the undertaking as defined in  

Section 2(h) of the Act as the same was not held or occupied  

by the company for  agricultural purposes.  The High Court  

had,  it  was  contended,  over-stepped  its  jurisdiction  in  

reversing a finding of fact upon a reappraisal of the evidence  

as if it was sitting in appeal over the orders passed by the  

authorities  below.  There  was,  according  to  the  learned  

counsel,  overwhelming evidence  to  show that  the  land in  

question was at no point of time used for cultivation by the  

respondent-Company  or  held  for  any  such  purpose.  The  

entire  extent  was,  argued  the  learned  counsel,  used  for  

industrial purpose and recorded as “Parti Kadim Tilla”, which  

meant that it had not been cultivated for a very long time  

and  hence  was  a  part  of  the  undertaking  which  upon  

acquisition vested in the appellant-Corporation.

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10. Mr.  Huzefa Ahmadi,  learned senior counsel appearing  

for the respondent-Company argued that under the scheme  

of the Acquisition Act, it was necessary to establish a nexus  

between the asset sought to be acquired/taken over and the  

undertaking.  It was only if such a nexus is established that  

the property under the said Act would vest in the State or  

the  Corporation and not  otherwise.  Reliance in support  of  

that submission was placed upon the Aims and Objectives of  

the Act, and the decision of this Court in U.P. State Sugar  

Corporation v.  Burwal  Sugar  Mills  Co.  Ltd.  and Ors.   

(2004) 4 SCC 98.  No such nexus, was according to the  

learned  counsel,  established  in  the  case  at  hand,  as  

according to the respondent-Company the land in question  

was not used or meant for the use of the undertaking, that  

was  taken  over  by  the  State.  The  takeover  of  the  

undertaking  did  not,  however,  mean  takeover  of  the  

company or  such of  its  assets  as  had no nexus with the  

undertaking. The High Court had recorded a finding that no  

such nexus was established between  the  undertaking and  

the land in question which quite clearly proved the absence  

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of  an  essential  requirement  for  the  land  to  vest  in  the  

appellant-Corporation.   

11. The  Statement  of  Objects  and  Reasons  for  the  

enactment  of  the  Uttar  Pradesh  Sugar  Undertakings  

(Acquisition) Act,  1971 referred to problems which certain  

sugar mills of the State had created for the cane-growers  

and labourers and thereby adversely impacted the general  

economy of the areas where such mills were situate.  The  

legislation, therefore, provided for acquisition of such mills,  

payment  of  compensation  for  the  same  and  for  the  

replacement of the dues of cane-growers, labourers as also  

of the Government out of the amount of compensation so  

payable.  The Preamble of the Act states as follows:

“An Act  to  provide,  in  the  interest  of  the  general   public,  for  the  acquisition  and  transfer  of  certain   sugar  undertakings,  and  for  matters  connected   therewith or incidental thereto.”   

12.  Section 3 of the Act  deals with vesting of the schedule  

undertaking and is in the following terms:

“Section 3:  Vesting: On the appointed day, every   schedule  undertaking  shall,  by  virtue  of  this  Act,   stand and be deemed to have stood transferred to   

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and  vest  and  be  deemed  to  have  vested  in  the   Corporation free from any debt, mortgage, charge or  other encumbrance or lien trust or similar obligation   (excepting any lien or other obligation in respect of   any advance on the security of any sugar stock or   other stock-in-trade) attaching to the undertaking.

Provided that any such debt, mortgage, charge  or  other  encumbrance  or  lien,  trust  or  similar   obligation shall attach to the compensation referred   to in Section 7, in accordance with the provisions of   that section, in substitution for the undertaking:

    Provided further that a debt, mortgage, charge  or  other  encumbrance  or  lien,  trust  or  similar   obligation  created  after  the  scheduled  undertaking   or any property or asset comprised therein had been   attached  or  a  receiver  appointed  over  it,  in  any   proceedings  for  realisation  of  any  tax  or  cess  or   other dues recoverable as arrears of revenue shall   be void as against all claims for dues recoverable as   arrears of revenue.”

13. We  are  in  the  present  appeal  concerned  only  with  

Section 2(h) (vi) of the Act which may be reproduced for  

ready reference:

“2(h)  “scheduled  undertaking”  means  an   undertaking  engaged  in  the  manufacture  or   production of sugar by means of vacuum pans and   with the aid of mechanical power in factory specified   [in any of the schedules of this Act], and comprises   –

xxx xxx xxx  

(vi) all lands (other than lands held or occupied for   purposes  of  cultivation  and  grovelands)  and   buildings  held  or  occupied  for  purposes  of  that   factory (including buildings pertaining to any of the   

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properties  and  assets  hereinbefore  specified,  and  guest  houses  and  residences  of  directors,   managerial personnel, staff and workmen or of any   other person as lessee or licensee,  and any  store   houses,  molasses,  tanks,  roads,  bridges,  drains   culverts,  tubewells,  water  storage  or  distribution   system and other civil engineering works) including   any leasehold interest therein”        

14. A plain reading of the above would show that all lands  

other than those held or occupied for purposes of cultivation  

and grovelands are treated as being part of the ‘scheduled  

undertaking’  which  would  upon  acquisition  vest  in  the  

appellant-Corporation, provided such lands and buildings are  

“held or occupied for purposes of the sugar factory”.  What is  

important is that buildings pertaining to any of the property  

and assets specified in Section 2(h) (i) to (xii) including guest  

houses  and residences  of  directors,  managerial  personnel,  

staff  and  workmen  or  of  any  other  person  as  lessee  or  

licensee including any store houses, molasses, tank, roads,  

bridges,  drains,  culverts,  tubewells,  water  storage  or  

distribution  system  and  other  civil  engineering  works  

including lease hold interest therein are also treated as part  

of  the  scheduled  undertaking.   The  test,  therefore,  is  

whether the asset or any interest therein is held or occupied  

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‘for  purpose of  a  sugar  factory’.   If  the  answer  is  in  the  

affirmative, the same is treated to be a part of the scheduled  

undertaking that  would vest  in  the  appellant-  Corporation  

upon acquisition.

15. In  Burwal  Sugar  Mills  case  (supra)   on  which  Mr.  

Ahmadi  placed  reliance  the  question  that  fell  for  

consideration before this Court was whether the registered  

office  of  the  company that  had  set  up  the  sugar  factory  

comprised the  undertaking and could,  therefore,  be taken  

over by the State or the Corporation. A two-Judge Bench of  

this Court held that the intention of the legislature clearly  

was  to  take  over  only  such  land  and  buildings  as  are  

connected with or were in use for purposes of factory. The  

registered office of the company, observed this Court, was  

located at House No.54/14, Canal Range, Kanpur, and in the  

absence  of  any  material  to  show  that  the  premises  in  

question was being used or occupied for the storage of sugar  

or as a guest house or for residence of any director of the  

factory as was alleged on behalf of the Corporation, there  

was no question of treating the building used as registered  

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office of the Company as a part of the undertaking.  This  

Court noticed the difference between a company owning the  

undertaking and the sugar undertaking itself and held that  

while a company is a much wider entity, the undertaking is  

only  one  of  the  assets  of  the  company.  The  legislature  

deliberately  did  not  touch  the  company  and  provided  for  

acquisition  of  only  the  undertaking.  This  Court  on  that  

reasoning held that handing over of the possession of the  

registered  office  of  the  company  to  the  Corporation  was  

illegal and contrary to the provisions of the Act.  

16. It is evident not only from a plain reading of Section  

2(h)  (supra)  but  also  the  interpretation  placed  upon  the  

same  by  this  Court  that  grovelands  and  lands  held  for  

cultivation are excluded from the definition of undertaking.  

But all other lands and buildings if held or occupied for the  

purpose of the sugar factory would comprise the undertaking  

and would upon acquisition vest in the Corporation.    

17. In  the  case  at  hand  the  respondent-company  had  

claimed  the  lands  in  question  to  be  exempted  from  

acquisition and take over on the ground that the same were  

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held and occupied for cultivation.  It was not the case of the  

respondent-company  that  the  lands  in  question  were  

groveland nor was it the case of the Company that the land  

even though not meant for cultivation was held for a purpose  

other  than  the  sugar  factory.   Whether  or  not  the  

respondent-company held or occupied the land in dispute for  

cultivation  was,  therefore,  the  only  question  that  fell  for  

consideration which question was essentially a question of  

fact answered against the company by all the three statutory  

authorities  concurrently  on  the  basis  of  material  available  

with them.  The authorities held that the land in question  

was never held or occupied by the respondent-Company for  

cultivation  purposes.  The  exemption  claimed  by  the  

respondent-company was on that basis declined and the land  

held  to  have  vested  in  the  Corporation  as  part  of  the  

undertaking. The following passage from the order passed by  

the Settlement Officer (Consolidation) Hardoi is relevant:

“Copies of U.P. Sugar Undertaking (Acquisition) Act   1971 (as amended) and CH Form 21 (A) relating to   the disputed land has been filed wherein in Column   6 the name of Laxmi Sugar Mill  is  registered.  In   Column  8  the  disputed  land  is  shown  outside   consolidation and in column 24 the same is shown   

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as parti zadid on site, parti usar, rugged terrain and   uneven  hillocks.   In  this  manner  there  is  no  evidence/  entry  regarding  any  cultivation  on  this   land or the disputed land to be an agriculture land.   Accordingly, the disputed land is found not to be an   agricultural  land. The  disputed  land  has  been  acquired in favour of U.P. Sugar Corporation Limited   Unit Hardoi under aforesaid gazette.  If the appellant   had any objection in that regard then, as per law, he   was to lodge proceedings against notification before   the Hon’ble High Court, but in this regard there is no   evidence  available  on  records.  Therefore  the  allegation  that  the  disputed  land is  an  agriculture   land and therefore the same is to be registered in   the  name  of  Laxmi  Sugar  and  Oil  Mills  Limited,   Hardoi instead of U.P. Sugar Corporation Limited, is   baseless and devoid of merits. The disputed land has   been  acquired  in  favour  of  U.P.  State  Sugar   Corporation Limited.  It is for this reason the learned   consolidation officer has rightly registered the same  in the name of U.P. Sugar Corporation Limited Unit   Hardoi  and  the  portion  of  the  aforesaid  land  registered in Account No. 82, 49 of Village Dheear   Maholia and Account No. 245 of Village Nagheta has   already been registered in the name of U.P. Sugar  Corporation Limited Unit Hardoi after deletion of the   name  of  Laxmi  Sugar  &  Oil  Mills  by  the  S.D.O.   Hardoi  vide  his  order  dated  14.02.1987.   Accordingly,  the  order  of  Learned  Consolidation   Officer  is  lawful  and proper and does not  warrant   any  interference.   The  appeal  does  not  have  any   force and is devoid of merit.”   

(emphasis supplied)  

18. The order passed by the District Consolidation Director/  

Collector, Hardoi also concurred with the view taken by the  

Officers below and held that there was no evidence on record  

to show that the subject land was ever held or occupied for  

agricultural  purposes  or  that  any  agricultural  activity  was  

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ever carried out on the same.  These concurrent findings of  

fact,  in our opinion, could not have been reversed by the  

High Court in its writ jurisdiction.  The High Court obviously  

failed to appreciate that it was not sitting in appeal over the  

findings  recorded  by  the  authorities  below.   It  could  not  

reappraise the material and hold that the land was held or  

occupied for cultivation and substitute its own finding for that  

of the authorities.  In as much as the High Court did so, it  

committed  an  error.   It  is  noteworthy  that  the  revenue  

record  clearly  belied  the  assertion  of  the  respondent  

company and described the land as “Parti Kadim Tilla” which  

meant that the land has not been cultivated for a long time  

and is in the form of a hillock.    

19. It was next argued by learned counsel for the appellant  

that  the  claim  for  exemption  from  acquisition  was  even  

otherwise unfounded keeping in view the fact that the land in  

question had been treated as exempted under Section 6(1)

(a) of the U.P. Imposition of Ceiling on Land Holdings Act,  

1960 on the ground that the same was held for industrial  

purposes being a part of the sugar factory. If the land in  

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question was indeed held for cultivation purposes as alleged  

by the company, it could not remain immune to the rigors of  

the Ceiling Act. It was excluded from the application of the  

said Act only because it was treated as industrially attached  

to the sugar factory.  The respondent-company has not been  

able to effectively refute  that  contention of the appellant-

Corporation. If the land had indeed been treated as industrial  

for purposes of the Ceiling Act we find it difficult to see how  

the  same  could  be  treated  to  be  held  or  occupied  for  

cultivation,  for  the  purposes  of  U.P.  Sugar  Undertakings  

(Acquisition) Act, 1971.   

20. As noticed earlier it is not the case of the respondent-

company that  although  the  land was  non-agricultural  and  

although  the  same  was  held  and  occupied  for  industrial  

purposes, the industrial purpose for which it was held by the  

company was un-related to the sugar factory.  No such plea  

having been raised or urged at any stage, the subject land  

has been rightly taken as vested in the Corporation.  The  

land in question is situate in the immediate vicinity of the  

sugar factory.  The fact situation is thus completely different  

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from that of  Burwal Sugar Mills  case (supra) where the  

registered office of the company sought to be taken over was  

in Kanpur while the  sugar  factory was itself  at  Baragaon.  

Distance  between  the  factory  and  the  asset  held  by  the  

company may not be a true test for determining whether the  

same is a part of the undertaking but in the absence of any  

evidence, showing cultivation, the close proximity of the land  

to  the  factory  is  a  strong  circumstance  that  cannot  be  

ignored.

21. In  the  circumstance,  therefore,  we find it  difficult  to  

uphold the order passed by the High Court not only because  

the High Court acted as if it was sitting in appeal over the  

findings of fact recorded by the authorities below but also  

because the High Court failed to notice that the land was  

exempted from the Ceiling Act on the ground of being used  

for  industrial  purpose which in the context  of  the present  

case meant that it was used for the purpose of sugar factory.  

These appeals, accordingly, succeed and are hereby allowed,  

the  judgment  and order  passed by the  High Court  is  set  

aside  and  Writ  Petition  No.187  of  2007  filed  by  the  

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respondent-company  dismissed  but  in  the  circumstances,  

without any order as to costs.            

.…………………………….……….…..…J. (T.S. THAKUR)

  .................………………..…..…J.

            (JAGDISH SINGH KHEHAR) New Delhi September  12, 2013.

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