DOYPACK SYSTEMS PVT. LTD. ETC. v. UNION OF INDIA & ORS., ETC.

The words in the statute must, prima facie, be given their ordi- nary meaning. Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless ; there are some strong and obvious reasons to the contrary. Nothing has been shown to warrant that literal construction should not be given F '-._,__ ~effect to. See Chandavarkar S.R. Rao v. Asha Lata, [1986] 4 S.C.C. r"'447 at page 476, approving 44 Halsbury's Laws of England, 4th Ed. paragraph 856 at page 552, Nokes v. Doncaster Amalgamated Colliery Limited, [1940] Appeal Cases 1014 at 1022. It must be emphasised that interpretation must be in consonance with the Directive Principles of State Policy in Article 39 (b) and (c) of the Constitution. G

'l It has to be reiterated that the object of interpretation of a sta- tute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention, and therefore the meaning H

1000 SUPREME COURT REPORTS I1988) 2 S.C.R. A of the statute, is primarily to be sought in the words used in the statute itself, which inust, if they are plain and unambiguous, be applied as they stand. In the present case, the words used represent the real intention of the Parliament as we have found not only from the clear words used but also from the very purpose of the vesting of the shares. If we bear in mind the fact that these shares were acquired from out of the investments made by these two companies and furthermore that the assets of the company as such minus the shares were negative and further the Act in question was passed to give effect to the principles enunciated in clauses (b) and (c) of Article 39 of the Constitution, we are left with no doubt that the shares vested in the Central Govern· ment by operation of sections 3 and 4 the Act. See in this connection the observations of Halsbury's Laws of England, 4th Edition, Volume .J..-

44. paragraph 856 at page 522 and the cases noted therein. ' ~

There is no exact correlation between the figure of capital reserve and the figure of investments. That, in our opinion cannot be. These can never be exactly equal. The submission of the petitioner . D fails to ta~ into account the fact that the undertakings other than the )- kanpur undertaking, also have capital reserve, even though there is no allegation that these were excluded assets in respect of other under· takings and there were no figures of investments therein. The covering letter for these documents, page 408 of Volume II, itself stated that the provisional balance-sheet shows investments which included these _,- E shares as part of assets. With regard to the figure of Rs.11 lakhs taken in the calculation filed by the petitioner, we find that the calculations filed by the petitioner were not supportable.

DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.] 1001

y this forbidden track by referring to various extraneous matters which . A we have indicated before. Furthermore those external aids sought ~' before us do not support the petitioners' approach to this question at all.

It appears that the shares held in SPL themselves were the sub- ject matter of both pledge and attachment to secure loans from the B U .P. State Government of about Rs.66 lacs for payment of wages to workers of the Kanpur undertaking and Rs.95 lacs being electricity dues of the Kanpur undertaking owing to the U.P. State Electricity Board. From all these, the acceptance of the petitioner's case, would mean that the State would pump in Rs.15 crores of public money to release the shares from its liabilities and thereafter hand over the shares C - ,.l._..free from such liability back to the company when the net worth of the J company at the time of take over of management was negative and in the teeth of the present financial liabilities built up by the company the shares would inevitably have sold in discharge of its liabilities and in any event the shares stood charged with the very liabilities which re- lated to the .undertakings of the company which were taken over by the D Government.

It appears to us that sections 3 and 4 of the Act evolve a legis- lative policy and set out the parameter~ within which it has to be implemented. We cannot find that there was any special intention to· )- exclude the shares in this case as seen from the existence of at least E four other Acquisition Acts which used identical phraseology in sec- tions 3 and 4 and in the other sections as well. Reference was made to the Aluminium Corporation of India Limited (Acquisition and Trans- fer of Aluminium Undertakings) Act, 1984, the Amritsar Oil Works (Acquisition and Transfer of Undertakings) Act, 1982, the Britannia Engineering Company Limited (Mohameh Unit) and the Arthur F 'l.,... Butler and Company (Muzaffarpore) Limited (Acquisition and Trans- f fer of Undertakings) Act, 1978 and the Ganesh Flour Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1984.

In the present case we are satisfied that the shares in question were held and utilised for the benefit of the undertakings for the G reasons that (a) the shares in Swadeshi Polytex Limited were acquired y from the income of the kanpur Unit. Reference may be made to page 23 of Compilation D-III, (ii) the shares held in Swadeshi Mining and Manufacturing Company were acquired in 1955. Originally there were four companies and their acquisition has been explained fully in the Compilation D-III with index, (c) the shares held in SPL were pledged H

1002 SUPREME COURT REPORTS I1988) 2 S.C.R.

A or attached for running the Kanpur undertaking, for payment of ES! Y and Provident Fund dues for the workers of the Kanpur undertaking, for wages and for payment of electricity dues of the Kanpur under- taking, (d) the shares held in SMMC were pledged for raising monies and loans of Rs.150 lakhs from the Punjab National Bank for running the Kanpur undertaking. These loans fall in category II of Part I of the B Schedule which liabilities have been taken over by the Government, (e) the shares held in SPL were offered for sale by SCM from time to ~ time and to utilise the sale proceeds thereof by ploughing them back into the textile business for reviving the textile undertakings acquired under the Act.

It appears to us that the expression "forming part of" appearing - c in section 27.cannot be so read with section 4(1) as would have th~ effect of restricting or cutting down the scope and ambit of the vesting provisions in section 3(1). The expression "pertaining to" does not mean "forming part of". Even assuming that the expression "pertain- ing to" appearing in the first limb of section 4(1) means "forming part of", it would mean that only such a~sets which have a direct nexus with the textile mills as would fall under the first limb of section 4(1). The shares in question would still vest in the Central Government under the second limb of section 4( 1) of the Act since the shares were bought uut of the income of the textile mills and were held by the company in relation to such mills. The shares would also fall in the second limb of section 3(1) being right and title of the company i.n relation to the i textile mills.

On the construction of sections 3 and 4 we have come to the conclusion that the shares vest in the Central Government even if we read sections 3 and 4 in conjunction with sections 7 and 8 of the Act on the well settled principles which we have reiterated before. The expre- ssion 'in relation to' has been interpreted to be the words of widest._\/ amplitude. See National Textile Corporation Ltd. and others v. Sitaram 'T Mills Ltd. (supra). Section 4 appears to us to be an expanding section. It introduces a deeming provision. Deeming provision is intended to enlarge the meaning of a particular word or to include matters which 'r G otherwise may or may not fall within the .nain provisions. It is well settled that the word 'includes' is an inclusive definition and expands v the meaning. See The Corporation of the City of Nagpur v. Its Emp- r loyees, [1960) 2 S.C.R. 942 and Vasudev Ramchandra Shelatv. Pranlal Javanand Thakar and others, I1975) 1 S.C.R. 534. The words 'all other rights and interests' are words of widest amplitude. Section 4 also uses the words "ownership, possession, power or control of the Company

DOYPACK SYS1EMS v. U.0.1. I MUKHARJI, J.] 1003

y in relation to the said undertakings". The words 'pertaining to' are not restrictive as mentioned hereinbefore.

Section 8 provides for payment of compensation in lumpsum and the transfer and vesting of whatever is comprised in section 3. As section 4 expands the scope of section 3, the compensation mentioned in section 8 is for the property mentioned in section 3 read with section B ~ 4. The compensation provided in section 8 is not calculated as a total of the value of various individual assets in the Act. It is a lumpsum ~ } compensation. See in this connection the principles enunciated by this - Court in Khajamian Wakf Estates etc. v. State of Madras and another (supra). There, it was held that even if it was assumed that no compen- sation was provided for particular item, the acquisition of the 'inam' is C ~valid. In the instant case section 8 provides for compensation to be / paid to the undertakings as a whole and not separately for each of the interests of the company. Therefore, it cannot be said that no compen- sation was provided for the acquisition of the undertaking as a whole.

Section 7 of the Act, in our opinion, neither controls sections 3 D > · -t and 4 of the Act nor creates any ambiguity. It was highlighted before us and in our opinion rightly that this sum of Rs.24.32 crores paid by way of compensation comes out of the public exchequer. The paid-up shares in its equity capital can necessarily have a face value only of the amounts so paid, irrespective of whatever may be contended to be the 'r value of the assets and irrespective of whether any asset or property in E relation to the undertakings, was taken into account. After providing ,,.- for compensation of Rs.24.32 crores to be paid to 'the Commissioner for payments to discharge part I liabilities, Government has·to under- " take an additional 15 crores at least for discharging those liabilities. To leave a company, the net wealth of which is negative at the time of take-over of the management, with the shares held by it as investment F , . in other company, in our opinion, is not only to defeat the principles 'j-of Articles 39(b) and (c) of the Constitution but it will permit the company to reap the fruits of its mismanagement. That would be an absurd situation. It has to be borne in mind that the net wealth of the company at the time of take--0ver, was negative, hence sections 3 and 4 can be meaningfully read if all the assets including the shares are G considered to be taken over by the acquisition. That is the only irresistible conclusion that follows from the construction of the docu- ments and the history of this Act. We have to bear in mind the Pream- ble of the Act which expressly recites that it was to ensure the princi- ples enunciated in clauses (b) and (c) of Article 39 of the Constitution. The Act must be so· read that it further ensures such meaning and H

1004 SUPREME COURT REPORTS [1988] 2 S.C.R,

A secures the ownership and control of the material resources to the y· community to subserve the common good to see that the operation of economic system does not result in injustice. r--..

We therefore, reiterate that the shares vested in the Central Government. Accordingly the shares in question are vested in NTC B and it has right over the said 34 per cent of the shareholdings.

In the aforesaid view of the matter we hold that the 10,00,000 shares in Swadeshi Polytex Limited and 17, 18,344 shares in Swadeshi Mining and Manufacturing Company Limited held by the Swadeshi Cotton Mills vested in the Central Government under sections 3 and 4 of the Act. c We are further of the opinion that in view of the amplitude of the language used, the immovable properties, namely, the Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur have also vested in NTC. D In that view of the matter in Transferred Case No. 13 of 1987, we dismiss the Writ Petition No. 2214 of 1987. All interim orders in the said Writ Petition will stand vacated. This will dispose of the various other SLPs and CMPs connected with the Lucknow Writ Petition being SLP (Civil) No. 4826 of 1987 filed by Doypack Systems Pvt. Ltd., E against the order dated 6th April, 1987, SLP(Civil) No. 5240 of 1987 filed by NTC against the same order of 6th April, 1987 in the Lucknow Bench and the order dated 6th April, 1987 in CMP No. 4555(W) of 1987 in the Lucknow Bench of the Allahabad High Court. CMPs Nos. 16918 and 16919of1987 being CMPs in SLP No. 4826 of 1987 will stand disposed of in the above light. F In Transferred Case No. 14 of 1987 in Suit No. 506 of 1987, we ___j-' hold that 10 lakhs and 17 lakhs equity shares mentioned hereinbefore ( and the Swadeshi House at Kanpur and all the rights, title and interest attached therewith relate to the textile undertaking of defendant No. 3 and they vest in NTC with effect from lst of April, 1985 and defendant G Nos. 3 and 4 are restrained by a decree of permanent injunction from dealing with them in any manner whatsoever. Defendant No. 2 is v restrained by permanent injunction from recognising defendant Nos. 3 r and 4 as owners of the aforesaid shares and the Swadeshi House.

Defendant No. 2 'is directed to ehter the name of defendant H No. 1 namely, NTC in its register of members and to treat the said

DOYPACK SYSIBMS v. U.0.1. I MUKHARJ!, J.J 1005

y defendant No. 1 as its shareholder instead of defendant Nos. 3 and 4 in A respect of the shares of defendant No. 2 held by them. In view of the provisions of law under Section 108 of the Companies Act as there was transmission of shares by operation of law, rectification is not neces- sary. See in this connection Palmer's Company Law, 24th Ed. (1987) page 608. See also in this connection Sahadeo Lal Agarwala and another v. The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. B 1952 Cal. 58 and Unity Company Pvt. Ltd. v. Diamond Sugar Mills and others, A.I.R. 1971 Cal. 18.

- Civil Appeals Nos. 577 to 579 of 1987 stand disposed of in the above terms and we direct that the 17th annual general meeting be held in accordance with law after giving proper notice under the C . ~ ChairmanshipofShriJaswantSingh.

I CMP No. 12760 of 1987 in Civil Appeal No. 577 of 1987, shall stand disposed of in terms of the orders in Transferred Case No. 14 of 1987 and it is directed that the Chairman should act in accordance with the aforesaid decision and NTC should be considered to be entitled to D >-t vote. CMP No. 16887 of 1987 is rejected, on the grounds indicated in the judgment.

CMP No. 16888 of 1987 is an application by Doypack Systems Ltd. to be impleaded as a party-respondent in Transferred Case No. 13 of 1987. Doypack Systems has already been permitted to argue and E has been heard as a party. No further order is necessary.

CMP No. 16889 of 1987 is allowed and delay condoned. CMP No. 17018 of 1987 is allowed. CMP No. 18268 of 1987 is disposed of by directing that no further documents need be inspected. In view of the orders, the other CMPs are no longer necessary to be disposed of. F

We direct that irrespective of any order passed by any court the 17th annual general meeting should be held in accordance with law to be presided over by Shri Jaswant Singh recognising NTC as the rightful owner of the disputed shares. G In all these proceedings National Textile Corporation as well as Union of India wherever they are parties herein will be entitled to their costs from their respective opposite parties. The other parties will pay and bear their own costs in these matters.