1988 (2) TMI 61 - SC - Service Tax

Statement of Objects and Reasons, accompanying when introduced in the Parliament cannot be used to determine the true meaning and effect of the substantive provisions of the statute - The objects and reasons of the Act should be taken into consideration in interpreting the provisions of the statute in case of doubt. - Words and Phrases - Pertaining to , in relation to - The expressions pertaining to , in relation to and arising out of, used in the deeming provision, are used in the expansive sense - Words and Phrases - in relation to - The expression in relation to (so also pertaining to ), is a very broad expression which pre-supposes another subject matter. -Words and Phrases - and all other rights and interests in or arising out of such property, as were immediately before the appointed day, in the ownership, possession, power or control of the company in relation to the said undertakings - The words in the statute must, prima facie, be given its ordinary meaning- Where the grammatical construction is clear and manifest and without doubt, that construction ought to prevail unless there are some strong and obvious reasons to the contrary - It must be emphasised that interpretation must be in consonance with the Directive Principles of State Policy in Article 39(b) and (c) of the Constitution.- Contemporanea expositio, is a well-settled principle or doctrine which applies only to the construction of ambiguous language in old statutes. - The Act must be so read that it further ensures such meaning and secures the ownership and control of the material resources to the community to subserve the common good to see that the operation of economic system does not result in injustice.

Issues Involved
1. Whether equity shares in Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited, held by Swadeshi Cotton Mills, vest in the Central Government under Section 3 of the Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertakings) Act, 1986.
2. Whether immovable properties, namely, Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur, have also vested in the Government.
3. Application of the rules of construction of contemporanea expositio.
4. Relevance and admissibility of certain documents for interpretation.
5. Privilege under Article 74(2) of the Constitution concerning the production of documents.

Issue-wise Detailed Analysis

1. Vesting of Equity Shares in the Central Government

The primary issue was whether the equity shares in Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited, held by Swadeshi Cotton Mills, vest in the Central Government under Section 3 of the Act. The court held that these shares did vest in the Central Government. The judgment emphasized that Section 3 of the Act states that "every textile undertaking and the right, title, and interest of the company in relation to every such textile undertaking shall stand transferred to and shall vest in the Central Government." Section 4 further expands this by stating that the textile undertakings include all assets, rights, leaseholds, powers, authorities, privileges, and all property, movable and immovable, including investments and book debts pertaining to the textile undertakings. The expressions "pertaining to" and "in relation to" were interpreted broadly to include the shares in question.

2. Vesting of Immovable Properties

The court also addressed whether immovable properties, namely, Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur, vested in the Government. The court concluded that these properties did vest in the Central Government under the expansive language of Sections 3 and 4 of the Act. The judgment noted that the language used in these sections was broad enough to include such immovable properties.

3. Application of Contemporanea Expositio

Shri Nariman argued that applying the rules of construction of contemporanea expositio would show that the shares did not vest in the Central Government. However, the court rejected this argument, stating that contemporanea expositio applies primarily to the construction of ambiguous language in old statutes and is not applicable to modern statutes. The court emphasized that the language of Sections 3 and 4 was clear and unambiguous.

4. Relevance and Admissibility of Documents for Interpretation

There was a request for the production of certain documents to establish that the shares were never intended to be taken over and were not considered part of the textile undertaking. The court held that these documents were not relevant for the purpose of interpreting Sections 3 and 4 of the Act. It was noted that the language of the Act was clear and did not require external aids for interpretation. The court reiterated that the intention of Parliament must be gathered from the words used in the statute itself.

5. Privilege under Article 74(2) of the Constitution

The court addressed the issue of whether the documents sought for production were privileged under Article 74(2) of the Constitution. The court held that these documents were part of the preparation leading to the advice tendered to the President and were therefore privileged. The court cited previous decisions, including S.P. Gupta v. Union of India, to support the view that documents related to the advice tendered to the President are protected from disclosure.

Conclusion

The court concluded that the 10,00,000 shares in Swadeshi Polytex Limited and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Limited, held by Swadeshi Cotton Mills, vested in the Central Government under Sections 3 and 4 of the Act. Additionally, the immovable properties, namely, Bungalow No. 1 and the Administrative Block, Civil Lines, Kanpur, also vested in the Central Government. The court dismissed the writ petition and various special leave petitions, directing that the 17th annual general meeting be held in accordance with law, recognizing NTC as the rightful owner of the disputed shares.

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