STATE OF WEST BENGAL AND ORS, versus SRI PRONAB KR. SUR AND ORS.

Citation: [2003] 3 S.C.R. 393 · Decided: 04-04-2003 · Supreme Court of India · Bench: K.G. BALAKRISHNAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

• 
STATE OF WEST BENGAL AND ORS, 
A 
v. 
SRI PRONAB KR. SUR AND ORS. 
APRIL 4, 2003 
[K.G. BALAKRISHNAN AND P. VENKATARAMA REDDI, JJ.] 
B 
Urban land (Ceiling and Regulation) Act, 1976-Sections /0(3)(5), 20 
and 42-Companies Act, 1956-sections 391and394-Company under debt-
/ts property mortgaged to Bank-Winding up petition by creditor-Declaration C 
under land Ceiling Act filed by Company-Application filed to authorities for 
exemption of its excess land in order to sell it for payment of its dues and its 
revival-Offer by another Company to purchase the vacant land-Application 
of exemption rejected by authorities and the land declared to be vested in 
State-Writ petition challenging vesting of the land-In company appeal and 
lt'rit appeal direction by High Court to State to consider Company's fresh D 
application for exemption-Rejection OJ application by State-Confirmation 
of sale by High Court holding that exemption liable to be granted/or revival 
of induslly and that during proceedings under Companies Act, State not 
competent to vest the land-On appeal, held: Confirmation of sale by High 
Court was not justified-Order of High Court was beyond its jurisdiction as 
procedure provided under provisions of Companies Act facilitating revival of E 
the Company and payment of dues to the creditors, and guidelines to exercise 
power of exemption of excess land held by sick industrial units not followed 
by the Court-Proceedings under Companies Act are not a bar to the 
proceedings under land Ceiling Act by virtue of overriding effect of Section 
a 
F 
Urban land (Ceiling and Regulation) Act, 1976 [Repealed by Urban 
land (Ceiling and Regulation) Act, 1999)-Effect of repealing Act on 
applicability of main Act-Jn relation to a State pursuant to whose resolution 
the main Act was passed-Held: The repeal Act ipso facto does not result in 
the main Act ceasing to apply, unless the Stale adopts the repealing Act by G 
resolution passed in that behalf under Article 2 52(2)-Constitution of India, 
1950-Article 252(2). 
2nd respondent-Company had filed a declaration under Urban Land 
(Ceiling and Regulation) Act. In 1991 the Company totally suspended its H 
393 
394 
SUPREME COURT REPORTS 
[2003) 3 S.C.R. 
A operations on account of financial and marketing problems. The assets of 
the Company were mortgaged to the Bank. Bank filed suit for recovery 
of money by enforcing the mortgage. Respondent-Company had filed 
application u/s 20 of the Land Ceiling Act seeking exemption of excess 
vacant land held by it on the ground that part of the vacant land had to 
be necessarily sold for discharging the dues and for revival of the 
B Company. A creditor of the Company filed a winding up petition before 
High Court, wherein the respondent-Company came forward with a 
'scheme application' envisaging payment to the creditors by sale of a 
portion of the company's land. Company Judge rejected the application 
on the ground that the scheme was not feasible as the property was 
C mortgaged to the Bank and passed direction for advertisement of winding 
up petition. 
Company filed an appeal against the order of Company Judge before 
Division Bench and the Company placed an offer from 6th respondent-
Company for purchase of the vacant land. Division Bench accepted the 
D proposal in view of the fact that according to the proposal all the dues 
could be paid and the balance amount could be utilized for revival of the 
Company. 6th respondent had approached Government for getting 
clearance under the Act; Court directed the Government to pass 
appropriate orders in that behalf. The application u/s 20 of the Land 
E Ceiling Act was rejected by the Government. Excess vacant land was 
determined and notice u/s 10(5) of the Land Ceiling Act was given calling 
upon the 2nd respondent to hand over possession of the vested land. 
2nd respondent-Company filed writ petition challenging the notice 
u/s 10(5) of the Act and a subsequent notice by Calcutta Improvement 
F Trust. Single Judge refused to grant interim relief and the Company 
preferred writ appeal. Deciding the writ appeal as well as Company 
appeal, the Division Bench directed the Government to pass fresh orders 
u/s 20 on a fresh application filed by 2nd respondent. State Government 
rejected the application u/s 20 by a speaking order. Division Bench 
confirmed the sale holding that exemption under the Act could be lawfully 
G granted even for the purpose of transferring the land to revive t

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