STATE OF PUNJAB versus SARDAR SEWA SINGH GILL & ORS.

Citation: [1970] 3 S.C.R. 13 · Decided: 27-10-1969 · Supreme Court of India · Bench: V. RAMASWAMI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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13 
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 Banas-
pati 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 Govern-
ment 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 require-
ments 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. 
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V. C. Mahajan and R. N. Sachthey, for the appellant. 
Harbans Singh, for respondent No. 2. 
The Judgment of the Court was delivered by 
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~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. 
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Sardar Sewa Singh Gill (respondent no. 1) wanted to pro-
mote a company for the manufacture of Banaspati and for that 
purpose he approached the Maharaja of Patiala for certain conces-
sions and grant of land at Doraha. Subseq

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