SHREE AMBARNATH MILLS CORPORATION Vs. D B GODBOLE

JUDGEMENT

(1.) THIS is an appeal against the decree passed by Judge Tulzapurkar on 8th October, 1956, in Civil Suit No. 293 of 1956 on the file of the Bombay City Civil Court. Shree Ambarnath Mills Corporation are a partnership consisting of three partners; (1) Rai Bahadur Kunwar Raj Nath, (2) Shaligram Khanna and (3) Pesumal Atalrai Sha-hani. All the three partners of the firm are displaced persons who migrated to India as a result of the Partition in 1947. We will hereafter collectively refer to the three partners of Shree Ambarnath Mills Corporation as "the plaintiffs". The plaintiffs carry on business in Bombay. Prior to 1947 Messrs. Ahmed Abdul Karim Bros. Ltd. . was carrying on business as manufacturers of textiles and bobbins. The properties of that Company consisted of three factories with bungalows and chawls at Ambarnath in the district of Thana, a Bobbin factory at Tardeo in Bombay and the goodwill and other benefits of the business. These properties were notified as evacuee property under a notification, dated 12th September, 1951, issued by the Assistant Custodian of Evacuee Property, and in consequence thereof the properties become vested in the Custodian of Evacuee Property. By an indenture, dated 30th August, 1952, the Custodian entered into a composite agreement with the plaintiffs relating to three distinct matters. There was first a demise under which the nulls at Thana and the factory at Tardeo were leased to the plaintiffs for five years at an annual rental of Rs. 6,00,000/- payable by four quarterly instalments of Rs. 1,50,00/ each, payable in advance on or before the 30th of each quarter. The plaintiffs also agreed to make a security deposit of Rs. 1,50,000/- for due performance of the covenant regarding payment of rent. Secondly there was a covenant under which the plaintiffs agreed to deposit Rs. 7,00,000/- as security for payment of the price of all stocks of raw materials, unsold finished goods, consumers' stores, spare parts, cars and trucks and other moveables which the plaintiffs agreed to purchase from the Custodian. The plain-tiff's also agreed to take delivery of the stocks of raw materials, etc. , which had been hypothecated the certain banks after discharging the in cumbrance. Thirdly there was a covenant of the Custodian to sell the mills and the factory to the plaintiffs subject to certain conditions.

(2.) PURSUANT to this agreement the plaintiffs deposited with the Custodian a sum of Rs. 1,50,000/-on 31st August, 1952, as security for the due filment and observance of the conditions as to-regulate payment of instalments of rent, but it appears that the plaintiffs did not pay the security deposit of Rs. 7,00,000/- for price of goods agreed to be purchased by them. It appears that the plaintiffs remained in possession of the properties, which were notified as evacuee properties, till February 1954. On 12th February, 1954, the Custodian served a notice upon the plaintiffs, purporting to do so in exercise of the powers vested in him by Section 13 of the Administration of Evacuee Property Act, 1950, calling upon the plaintiffs not to remove stocks of raw materials, finished goods and other properties from any of the three Ambarnath Mills or the Bobbin Factory at Tardeo' or the godowns or offices at Bombay and also prohibiting the plaintiffs from raising any monies on the security of the stock of finished goods, goods in process, raw materials, etc. , and further directing the plaintiffs to submit a daily report to the Custodian of all the transactions entered into by them including payments made and received, and further directing the plaintiffs to furnish in writing such information as may' be required from time to time relating to the quality, quantity, nature, approximate value and the place of storage at raw materials, finished goods and goods in process. The notice was given because the plaintiffs had committed default in payment of rent and in giving the guarantee for Rs. 7,00,000/- and Clause5 of the agreement and for other defaults. On 15th February, 1954, the plaintiffs filed a petition on the original side of this Court for a Writ prohibiting the Custodian from holding an enquiry under cof the Administration of Evacuee property Act and from enforcing certain directions given by that officer to the plaintiffs by notice, dated I2th February, 1954. That application was heard by my brother Mr. Justice Tendolkar, and he held by his order, dated 31st March, 1054, that the Custodian had no authority in exercise of powers under Section 12 of the Administration of Evacuee Property Act to cancel or terminate an agreement to which the Custodian was a party. Mr. Justice Tendolkar also held that the other directions given by the Custodian, which could not be split up as to make them applicable to evacuee property only, were also in excess of the jurisdiction of the Custodial ). Accordingly Mr. Justice Tendolkar issued the Writ prayed for.

(3.) AGAINST that order an appeal was preferred. The Court of Appeal held that the Custodian had. under Section 12 of the Administration of Evacuee Property Act, 1950, power to cancel the lease granted by him. It, was observed by the Court that there was no warrant for holding that the power Of the Custodian under Section 12 of the Administration- of Evacuee Property Act could be exercised only in respect of leases granted by the evacuee and that the power of the Custodian extended to all leases, the subject-matter of which was evacuee property. The Court, however, confirmed the derision of Mr. Justice Tendolkar in so far as it related to the other directions given by the Custodian by his order dated 12th February, 1954. The Court accordingly set aside the order prohibiting the Custodian from proceeding with the show cause notice under Section 12 of the Administration of Evacuee Property Act, and confirmed the order to the extent to which the notice of the Custodian Fought to give directions to the plaintiffs.