MANOHARSINGH Vs. CALTEX OIL REFINING INDIA LTD

JUDGEMENT

(1.) The Caltex Petroleum Corporation is a foreign company incorporated in the State of Delaware in the United States of America. One of its subsidiaries, namely, the Caltex Oil Refining (India) Limited (an Indian Company), hereinafter referred to as the Caltex Oil Refining, was carrying on the business of refining crude oil and producing petroleum products in India. Another subsidiary of the Caltex Petroleum Corporation, namely, the Caltex (India) Limited (a foreign company) incorporated in Bahamas Islands, hereinafter referred to as the Caltex (India), was carrying on through its undertakings in India the business of marketing and distributing petroleum products. The President of India, on 30th Dec. 1976 promulgated the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited) Ordinance, 1976. The Ordinance was replaced by an Act (Act No. 17 of 1977) bearing the same name. The Act was enacted on 23rd Jan. 1977 but was given retrospective effect from 30th Dec. 1976. By Section 3 of the Ordinance and the Act all the shares in the capital of Caltex Oil Refining stood transferred to and vested in the Central Government from 30th Dec. 1976. The Caltex Oil Refining thus became a Government Company. Section 5 of the Ordinance and the Act had also the effect of transferring and vesting in the Central Government with effect from 30th Dec. 1976 the right, title and interest of Caltex (India) in relation to its undertakings. In India the effect of vesting of the undertakings of Caltex (India) in the Central Govt. is dealt with in Sections 6 and 7. Briefly stated, all rights and liabilities of the Caltex (India) in relation to its undertakings in India vested in the Central Government. Section 7 made it clear that the rights vested in the Central Government included the right under any lease. Power was also conferred on the Central Government to renew or continue a lease on the same terms and conditions by Sub-section (3) of Section 7. Section 9 of the Ordinance and the Act conferred power on the Central Government to direct vesting of the undertakings of the Caltex (India) in a Government company. The provisions of Sections 5 to 7 are to apply in relation to such Government company as they apply in relation to the Central Government. Sections 7 and 9 are material for our purposes and they read as follows :

(2.) On 30th Dec., 1976, the Central Government acting under Section 9 (1) of the Ordinance issued a notification that the right, title and interest and the liabilities of the Caltex (India) in relation to its undertakings in India shall instead of continuing to vest in the Central Government vest with effect from 30th Dec., 1976 in the Caltex Oil Refining. It may here be mentioned that the Caltex Oil Refining because of acquisition of its shares by the Central Government from 30th Dec., 1976 became a Government company.

(3.) The petitioners are owners of a plot of land measuring 6500 sq. ft. situated in Raj Mohalla, Indore. In 1958 this plot was leased out by the petitioners' predecessors in favour of the Caltex (India) for installation of a petrol pump for a period of ten years with a renewal clause for another ten years. The lease was to expire on 1st Nov., 1968 and as there was refusal to renew the lease by the lessors a suit was instituted by the Caltex (India) for specific performance as a result of which the lease was renewed up to 31st Oct., 1978. By letter dated 24th April, 1978 the Caltex Oil Refining expressed its desire for further renewal or continuance of the lease for a period of ten years from 1st Nov., 1978 in exercise of its powers under Section 7 (3) of the Act. The petitioners did not agree to the renewal. The Company Law Board in exercise of its powers under Section 396 of the Companies Act, 1956 (read with the notification of the Central Government issued under Section 637 delegating that power) on 9th May, 1978 notified the Caltex Oil Refining and the Hindustan Petroleum Corporation Limited Amalgamation Order, 1978. By this order the undertakings of the Caltex Oil Refining stood transferred and vested in the Hindustan Petroleum Corporation Limited (hereinafter referred to as the Hindustan Petroleum). Section 3 of this Order reads as follows:- "3. Amalgamation of the Companies.--On the appointed day, the undertaking of CORIL shall stand transferred to, and vested in HPCL, which Company shall, immediately on such transfer be deemed to be the company resulting from the amalgamation. Explanation-- The undertaking of CORIL referred to above shall be deemed to include all assets, rights, leases, tenancies, powers, authorities and privileges, trade marks, trade names, patent rights and licences for the use of patents and all property, movable and immovable, tangible or intangible (including cash and bank balances), reserve funds, book debts, outstandings, reserves, balances on revenue accounts, investments and all other rights and interests in, or arising out of such property and rights as were, immediately before the appointed day, in the ownership, possession, power or control of CORIL in relation to its undertaking and all books, accounts, registers, records and all other documents of whatever nature relating thereto, and shall also be deemed to include all borrowings, debts and other liabilities (including the liability for the payment of any pension and other pensionary benefits to the person's employed in relation to its undertaking) and obligations of whatever kind then subsisting of CORIL in relation to its undertaking." (N. B. CORIL means Caltex Oil Refining (India) Limited, and HPCL means Hindustan Petroleum Corporation Limited).