1993 (7) TMI 359 - HC - Indian Laws

Summary

Issues Involved:
1. Nature of Tata Mills Limited's occupation of Bombay House.
2. Applicability of Section 3(2) of the Textile Undertakings (Taking Over of Management) Act, 1983.
3. Rights of the Custodian under the Act.
4. Interpretation of "right, power, authority, or privilege" under Section 3(2) of the Act.

Detailed Analysis:

1. Nature of Tata Mills Limited's Occupation of Bombay House:
The petitioners claimed that Tata Mills Limited was permitted to use a part of Bombay House without any specific delineation or demarcation, and this arrangement was flexible and dependent on business needs. They asserted that Tata Mills Limited ceased to make any payments for the space from April 1982, and thus, their occupation was gratuitous. The respondents, however, argued that Tata Mills Limited occupied the premises as tenants protected under the Bombay Rent Act. The court found no evidence to support the respondents' claim of tenancy and accepted the petitioners' assertion that Tata Mills Limited's occupation was gratuitous.

2. Applicability of Section 3(2) of the Textile Undertakings (Taking Over of Management) Act, 1983:
Section 3(2) of the Act states that the textile undertaking includes all assets, rights, leaseholds, powers, authorities, and privileges of the textile company in relation to the said undertaking. The court examined whether Tata Mills Limited's occupation of Bombay House could be considered a "right" under this section. It concluded that the gratuitous occupation did not constitute an enforceable right, and thus, it did not fall within the scope of Section 3(2).

3. Rights of the Custodian under the Act:
The respondents contended that the Custodian had the right to take possession of any part of Bombay House occupied by Tata Mills Limited. The court disagreed, stating that since Tata Mills Limited had no enforceable right to occupy the premises, the Custodian could not claim such a right either. The court emphasized that a license, being a personal right, is neither heritable nor transferable, and thus, it could not vest in the Custodian.

4. Interpretation of "right, power, authority, or privilege" under Section 3(2) of the Act:
The court interpreted the terms "right, power, authority, or privilege" within the context of enforceable rights. It held that Tata Mills Limited's occupation of Bombay House did not constitute any enforceable right, power, authority, or privilege that could vest in the Custodian under Section 3(2). The court rejected the respondents' argument that the occupation amounted to a power, authority, or privilege, and thus, the Custodian's demand for possession was without jurisdiction.

Conclusion:
The court ruled in favor of the petitioners, holding that Tata Mills Limited's occupation of Bombay House was gratuitous and did not constitute an enforceable right under Section 3(2) of the Act. Consequently, the Custodian had no authority to take possession of any part of Bombay House. The petition was granted, and the respondents were prohibited from taking any action to take over possession or control of any area of Bombay House.