U.P. STATE SUGAR CORPORATION versus BURWAL SUGAR MILLS CO. LTD. AND ORS.

Citation: [2004] 2 S.C.R. 605 · Decided: 24-02-2004 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

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U.P. STATE SUGAR CORPORATION 
A 
v. 
BURWAL SUGAR MILLS CO. LTD. AND ORS. 
FEBRUARY 24, 2004 
·-
[ASHOK BHAN AND S.H. KAPADIA, JJ.] 
B 
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UP. Sugar Undertaking (Acquisition) Act, 1971; Ss. 2(h) and 3: 
Acquisition of sugar factory of the Respondent and others by the State-
Constitutional validity-Challenge to-Upheld by High Court-Affirmed by c 
Supreme Court-Transferring of possession of the scheduled property of 
undertaking of the company to appellant-Sugar Corporation-Disposal of some 
of the units of sugar factory to private sector-Issuance of notice inviting 
f 
tenders-Challenge to-Partly allowing the writ petition, High Court held 
that certain portion of the scheduled property could not vest in the D 
Corporation-On appeal, held: As per provisions in the Act, the factory with 
properties connected thereto/being used for the purposes of the factory could 
.. 
be acquired and not other properties/ assets being used for running the factory-
Company is much wider entity as against the Undertaking which is an asset 
of the Company-Legislature intends to acquire the Undertaking and not the 
Company-Registered Office of the Company not includible in the schedule E 
property of the Undertaking, since it was never used as godown of the factory 
under the provisions of the UP. Sugarcane (Purchase Tax) Act-Hence, transfer 
of its possession to appellant-Corporation illegal/contrary to the provisions of 
the Act-Interpretation of Statutes-UP. Suggr cane (Purchase Tax) Act, 
1961-Section 3A. · 
F 
Sugar factories of Respondent No.1-Company and Others had been 
taken over by the State of Uttar Pradesh as the Company and others had 
failed to clear outstanding dues to the cane growers/labourers/Government 
under the provisions of the U.P. Sugar Undertakings (Acquisition) Act, 1971. 
Later, the factory/Undertaking of Respondent No.1 stood transferred to the G 
appellant-Corporation. Respondent No.1 and others challenged the 
constitutional validity of the Acquisition Act. High Court upheld the 
constitutional validity of the Act. In appeal, order of the High Court was 
~ 
affirmed by the Supreme Court in lshwari Khetan Sugar Mills (P) Ltd& Ors. 
-· 
v. State of UP. and Ors., [1980) 4 SCC 136. 
605 
H 
606 
SUPREME COURT REPORTS 
[2004] 2 S.C.R. 
A 
In the meanwhile, Appellant-Corporation took over possession of the 
schedule property of the Undertaking of Respondent No:l, who filed a writ 
petition objecting to taking over of the properties other than as provided under 
Section 2(h) of the Act Later, the State Government decided to dispose of 
some of the units/sugar factories of the appellant-Corporation including 
B factory of Respondent No.1 by issuing notice inviting tenders for sale, which 
was also challenged by him by filing another writ petition. Both the writ 
petitions were disposed of by the High Court holding that certain portions of 
the schedule property could not vest in the Corporation. Hence the present 
appeals by the Appellant-Corporation. 
c 
It was contended for the appellant-Corporation that since the house/ 
premises in question was being used as godown for storing sugar and also 
used as a residence of the Director/guest house of the factory, State acted 
rightly in taking over possession thereof. On behalf of the Respondent No.1-
Company, it was submitted that the house/premises in question could not have 
been used as godow for storing sugar since it was situated far away from the 
D factory. 
Dismissing the appeals, the Court 
HELD: 1.1. There is no material on record to show that the premises 
in question were being used or occupied for the storage of sugar, and that 
E the house in question was being used as a guest house or for the residence of 
a Director of the factory. Under the provisions of U.P. Sugar Undertaking 
(Acquisition) Act, it is the factory along with its properties which were 
connected with or were in use for the purposes of the factory which were 
acquired and not the properti'es and assets of the Company running that 
F factory. The Act specifically differentiates between a Company owning a 
Sugar Undertaking and the Sugar Undertaking itself. The Company is much 
wider entity as against the undertaking which is only one of the assets of the 
Company. The Legislature deliberately did not touch the Company and 
acquired only the undertaking as per the objects of the Legislature. The 
registered office of the Company is owned and possessed by the Company 
G and is not a part 

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