Full Judgment Text
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PETITIONER:
MINERVA MILLS LTD. & ORS. ETC. ETC.
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT09/09/1986
BENCH:
DUTT, M.M. (J)
BENCH:
DUTT, M.M. (J)
REDDY, O. CHINNAPPA (J)
CITATION:
1986 AIR 2030 1986 SCR (3) 718
1986 SCC (4) 222 JT 1986 375
1986 SCALE (2)381
CITATOR INFO :
RF 1986 SC2082 (10)
RF 1988 SC 782 (26,55)
F 1989 SC1331 (5)
ACT:
Industrial (Development and Regulation) Act 1951, ss.
15 and 18A-Non-supply of Report of Investigation Committee-
Whether failure of natural justice-Take over of management
of undertaking--Grant of loan by government to the
undertaking-Whether sufficient to say that order of ’take
over’ has no basis.
Sick Textile Undertakings (Nationalisation) Act, 1974-
Validity of.
Constitution of India, Articles 14, 19, 31A and 31C’-
Challenge that basic or essential feature of Constitution is
damaged or destroyed-When can be raised.
Administrative Law-Natural justice-Failure of-Whether
arises in non-supply of copy of Investigation Committee
Report under s.s 15 Industrial (Development and Regulation)
Act.
HEADNOTE:
The petitioner, Minerva Mills Ltd.-a textile
undertaking had been running at a loss and had to be closed
down. The Central Government ordered an investigation into
the affairs of the petitioner-company under s. 15 of the
Industries (Development & Regulation) Act 1931. Thereafter,
the State Government of Mysore sanctioned the guarantee to
enable the petitioner-company to raise a loan of Rs.20 lacs
from the State Bank of India. After the investigation was
made, the Central Government passed an order under s. 18A of
the IDR Act taking over the management of the undertaking of
the Company on the ground that the Central Government was of
opinion that the undertaking was being managed in a manner
highly detrimental to public interest. During the pendency
of the management of the undertaking by the National Textile
Corporation, the Sick Textile Undertakings ordinance of 1974
was promulgated, and it was replaced later on by the Sick
Textile Undertakings (Nationalisation) Act 1974.
719
The petitioners including the company unsuccessfully
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challenged before the High Court under Art. 227, the order
dated October 18, 1371, passed by the Central Government
under s. 18A of the Industrial (Development and Regulation)
Act as also the Nationalisation Act. Their appeals were also
summarily dismissed by the Division Bench of the High Court.
R
The petitioner. Minerva Mills Ltd. and some of its
creditors challenged before the Supreme Court under Art. 32
of the Constitution, the legality of the aforesaid order as
also the constitutional validity of Sick Textile
Undertakings (Nationalisation) Act 1974.
Dismissing the writ petitions,
^
HELD: 1.1 The investigation that was made under s. 15
of the Industrial (Development and Regulation) Act and the
consequent findings of the Government on the basis of which
the management of the undertaking of the Company was taken
over under s. 18A of the Industrial (Development and
Regulation) Act, was that the affairs of the under taking of
the Company were being managed in a manner highly
detrimental to public interest. The undertaking had been
running at a loss and had to be closed down on January 2,
1970. This miserable condition of the undertaking might be
due to the mismanagement of its affairs. [723E-F]
1.2 The Government might have thought of assisting the
Company to raise a loan of Rs.20 lacs, but that fact or the
fact that such proposal for assistance was made for special
reasons as provided in the second proviso to s. 4 of the
Mysore State Aid to Industries Act, 1953 is not, sufficient
to uphold the contention of the petitioners that there was
no basis or foundation for the order under s. 18A. [723F-G]
1.3 The legislature had decided that the undertaking of
the Company was a sick textile undertaking by including the
same in the First Schedule to the Nationalisation Act. There
can be no doubt that the legislative judgment should be
looked upon with respect and it requires very strong grounds
to set it at naught. In the instant case, there is no
existence of any such ground. [724B-C]
2. The petitioner-company was given a hearing by the
Investigation Committee and, therefore, it got ample
opportunities to make representations against the proposed
take-over. It is difficult to lay down that non-supply of a
copy of the report of investigation under s. 15 of the
720
Industrial (Development and Regulation) Act will always
occasion a failure of natural justice. Whether in a
particular case there has been failure of natural justice or
not will depend on the facts and circumstances of that case.
[725A-B]
In the instant case also, the petitioners were not in
the least prejudiced for the non-supply to them of a copy of
the report. Moreover, they never asked for a copy of the
report. They did not also move against the order under s.
18A before the undertaking was nationalised under the
Nationalisation Act. It shows that the petitioners were not
aggrieved by the said order under s. 18A for they could not
be as they had not the required minimum resources for
running the mill. [725F-H]
3.1 The Nationalisation Act has been enacted to give
effect to the policy of the State towards securing the
principles specified in clause (b) of Art. 39 of the
Constitution. Indeed a declaration in that regard has been
made in s. 39 of the Nationalisation Act. [728C-D]
3.2 The Nationalisation Act gives effect to the policy
of the State towards securing the ownership and control of
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the material resources of the community, which are so
distributed as best to subserve the common good. In the
circumstances, as the Nationalisation Act comes under the
protective umbrella of Article 31C, the petitioners are not
entitled to challenge the constitutional validity thereof on
the ground of violation of the provisions of Arts. 14 and 19
of the Constitution. [728G-H]
4. Only constitutional amendments made on or after
April 24, 1973 by which Acts or Regulations were included in
the Ninth Schedule can be challenged on the ground that they
damage the basic or essential features of the Constitution
or its basic structure. But if any of such Acts and
Regulations is saved by Art. 31A or by Art. 31C as it stood
prior to the amendment of the Constitution by the Forty-
second Amendment, such challenge on the ground that the
constitutional amendment damages or destroy a basic or
essential feature of the Constitution or its basic structure
as reflected in Art. 14 or Art. 19, will become otiose.
[728A-C]
5. Under s. 4(1) of the Nationalisation Act, the sick
textile under taking shall be deemed to include all
properties, movable and immovable, including lands,
buildings, workshops, stores, etc., in the owner ship,
possession, power or control of the owner of the sick
textile under taking. The question whether the vacant land
has been in use, is not, relevant for the purpose of s.
4(1). In view of the said provision, it is
721
difficult to accept the contention of the petitioners that
the vacant land is not a part of the undertaking. [732 D-E]
In the instant case, the whole of the said 17.52 acres
of land including 4.37 acres thereof. is situate within the
mill compound. The Court cannot accept the contention of the
petitioners that as the land is Lying vacant since the take
over it does not form part of the undertaking. [732 C-D]
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition Nos. 356-361 of
1977
Under Article 32 of the Constitution of India.
R.F. Nariman, J. Peres, Mrs. A.K. Verma and S. I.
Thakur for the Petitioners.
B. Datta, Additional Solicitor General, T.V.S.N. Chari,
Ms. V. Grover, Ms. Sunita Mudigarda and W. Quadri for the
Respondents.
The Judgment of the Court was delivered by
DUTT, J. In these Writ Petitions under Article 32 of
the Constitution of India the petitioners, including the
petitioner Minerva Mills Ltd. and some of its creditors,
have challenged the legality of the order dated October 19,
1971 passed under section 18A of the Industries (Development
and Regulation) Act, 1951 (for short ’IDR Act’) taking over
the management of the textile undertaking of the petitioner,
Minerva Mills Ltd., and the constitutional validity of the
Sick Textile Undertakings (Nationalisation) Act, 1974 (for
short ’Nationalisation Act’).
On August 20, 1970, the Central Government appointed a
Committee section 15 of the IDR Act to make a full and
complete investigation of the affairs of the Minerva Mills
Ltd., hereinafter referred to as ’the Company’. After the
investigation was made the Central Government by an order
dated October 19, 1971, authorised the National Textile
Corporation to take over the management of the undertaking
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of the Company. The petitioners did not challenge the order
to take over the management before any court of law. During
the pendency of the management of the undertaking by the
National Textile Coporation, the Sick Textile Undertakings
ordinance of 1974 was promulgated and it was replaced by the
Nationalisation Act. Section 3(1) of the Nationalisation Act
provides that on the appointed day, every sick textile
undertak-
722
ing and the right, title and interest of the owner in
relation to every such sick textile undertaking shall stand
transferred to, and shall vest absolutely in, the Central
Government. ’Sick textile undertaking’ has been defined in
section 2(j) of the Nationalisation Act as meaning, inter
alia, a textile undertaking, specified in the First
Schedule, the management of which has, before the appointed
day, been taken over by the Central Government under the IDR
Act. The textile undertaking of the Company has been
specified in the First Schedule of the Nationalisation Act.
So, in view of the said definition read with section 3(1) of
the Act, the undertaking had vested in the Central
Government.
It has been urged by Mr. R.F. Nariman, learned Counsel
appearing on behalf of the petitioners, that there was no
justification for taking over the management of the
undertaking of the Company under section 18A of the IDR Act.
In support of the said contention, the learned Counsel has
drawn our attention to certain facts which will be stated
presently. It appears that the Company had been running at a
loss during the years from 1956 to 1965. The condition of
the mill further deteriorated on account of recession in
1965 coupled with labour problems, and that continued till
1970. On January 2, 1970, the mill had to be closed. It is
the case of the petitioners that by dint of serious effort
on the part of the management and labour, an amicable
agreement was arrived at between them, and a phased
programme for resumption of production in three stages was
drawn up by the management. The then State Government of
Mysore was requested to sanction the guarantee of a loan for
Rs.20 lacs. By an order dated April 24, 1971 the Government
sanctioned the guarantee to enable the Company to raise a
loan of Rs.20 lacs from the State Bank of India. In the said
order it was inter alia stated follows:
"The Government have carefully considered the
various factors leading to the present state of
affairs of the Mills and also the various
recommendations made by the Investigation
Committee constituted by the Government of India
to go into the affairs of this Mills and have come
to the conclusion that the Mills should be
assisted to raise finances required for working
the Mills. "
The said order was passed after the investigation under
section 15 of the IDR Act. A few months thereafter, on
October 19, 1971, the order under section 18A of the IDR Act
was passed taking over the management of the undertaking of
the Company on the ground that the
723
Central Government was of opinion that the undertaking was
being managed in a manner highly detrimental to public
interest.
It is strenuously urged on behalf of the petitioners
that the order under section 18A dated October 19, 1971 was
passed without any application of mind, regard being had to
the earlier order dated April 24, 1971 sanctioning the
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guarantee of a loan. It is submitted that there was no
foundation for the finding of the Central Government that
the undertaking of the Company was being managed in a manner
highly detrimental to public interest, for, if that was the
condition of management, the Government could not sanction a
guarantee for incurring a loan of Rs.20 lacs. It is,
accordingly, contended that the order under section 18A was
illegal and invalid. It is submitted that on this ground the
nationalisation of the undertaking of the Company should be
held to have no basis whatsoever, for, the Nationalisation
Act has been made applicable to the undertaking of the
Company in view of section 2(j) of the Nationalisation Act
defining ’Sick textile undertaking’.
We are unable to accept the contention of the
petitioners that the order under section 18A of the IDR Act
was illegal. It is true that the Government sanctioned the
guarantee of a loan for Rs.20 lacs on the recommendation of
the Director of Industries and Commerce of the Government of
Mysore. But, at the same time, we cannot ignore the
investigation that was made under section 15 of the IDR Act
and the consequent finding of the Government on the basis of
which the management of the undertaking of the Company was
taken over under section 18A of the IDR Act, namely, that
the affairs of the undertaking of the Company were being
managed in a manner highly detrimental to public interest.
It has been already found that the undertaking had been
running at a loss and had to be dosed down January 2, 1970.
This miserable condition of the undertaking might be due to
the mismanagement of its affiars. The Government might have
thought of assisting the Company to raise a loan of Rs.20
lacs, but that fact or the fact that such proposal for
assistance was made for special reasons as provided in the
second proviso to section 4 of the Mysore State Aid to
Industries Act, 1959 is not, in our opinion, sufficient to
uphold the contention of the petitioners that there was no
basis or foundation for the order under section 18A.
Moreover, it does not appear that the petitioners were
aggrieved by the order under section 18A inasmuch as the
same was not challenged in any court of law. There is some
force in the contention made
724
by the learned Additional Soliciter General that after the
lapse of several years from the date of the take-over of the
management of the undertaking, the petitioners should not be
allowed to challenge the validity of the order under section
18A. Apart from this technical objection, the Legislature
had decided that the undertaking of the Company was a sick
textile undertaking by including the same in the First
Schedule to the Nationalisation Act. There can be no doubt
that the legislative judgment should be looked upon with
respect and it requires very strong grounds to set it at
naught. In our opinion, there is no existence of any such
ground.
The next ground of attack of the petitioners to the
validity of the order under section 18A is that it was
vitiated as there was no direction by the Central Government
under section 16 of the IDR Act. Section 16 authorises the
Central Government to issue directions to the industrial
undertaking concerned for certain purposes as are mentioned
in clauses (a) to (d) of section 16 after an investigation
under section 15 is made and the Central Government is
satisfied that action under section 16 is desirable. It is
apparent from section 16 that it is not obligatory on the
Central Government to issue directions for all or any of the
purposes as mentioned in the said section. One of the two
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grounds for taking over management of an industrial
undertaking, as contained in clause (a) of section 18A, is
that the industrial undertaking has failed to comply with
the directions given under section 1.6. The other ground is
that, as contained in clause (b) of section 18A, an
industrial undertaking in respect of which an investigation
has been made under section 15 (whether or not any
directions have been issued to the undertaking in pursuance
of section 16) is being managed in a manner highly
detrimental to the scheduled industry concerned or to public
interest. In the instant case, the undertaking of the
Company had been taken over under clause (b) of section 18A
on the ground that it was being managed in a manner highly
detrimental to public interest. There is, therefore, no
substance in the contention made on behalf of the
petitioners that the impugned order under section 18A was
vitiated as no direction under section 16 was issued by the
Central Government.
It is urged on behalf of the petitioners that as the
Company was not supplied with a copy of the report of
investigation before the impugned order under section 18A
was passed, the respondents acted illegally in violation of
the principles of natural justice, and the impugned order is
liable to be struck down on that ground. In our opinion,
there is no substance in this contention. The Company was
725
given a hearing by the Investigation Committee and,
therefore, it got ample opportunities to make
representations against the proposed take-over. It is
difficult to lay down that non-supply of a copy of the
report of investigation under section 15 of the IDR Act will
always occasion a failure of natural justice. Whether in a
particular case there has been failure of natural justice or
not will depend on the facts and circumstances of that case.
As has been laid down by this Court in Keshav Mills Co. Ltd.
v. Union of India, [1973] 1 SCR 380 that in certain cases
where, unless the report is given, the party concerned
cannot make any effective representation about the action
that Government takes or proposes to take on the basis of
that report, the non-supply of the report may invoke the
application of the rules of natural justice. In that case,
it was contented by the appellants that they should have
been given further hearing by the Government before they
took the final decision to take over their undertaking under
section 18A of the IDR Act and that, in any event, they
should have been supplied with a copy of the report of the
Investigation Committee. One of the grounds that weighed
with this Court for rejecting the contention was that since
the appellants had received a fair treatment and also all
reasonable opportunities to make out their own case before
the Government they should not be allowed to make any
grievance of the fact that they were not given a formal
notice calling upon them to show cause why their undertaking
should not be taken over or that they had not been furnished
with a copy of the report. In the instant case also, as has
been already noticed, the Company was given a reasonable
opportunity of being heard by the Investigation Committee
during the investigation under section 15 of the IDR Act. In
our opinion, the petitioners were not in the least
prejudiced for the non-supply to them of a copy of the
report. The view we take, finds support from some other
facts stated hereafter.
It does not appear that the petitioners ever asked for
a copy of the report. They did not also move against the
order under section 18A before the undertaking was
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nationalised under the Nationalisation Act. It is the case
of the petitioners that they did not challenge the impugned
order under section 18A because the take-over of the
management of the undertaking was for a limited period of
five years and the petitioners were hopeful that they would
get back the undertaking after the expiry of the said period
as provided in sub-section (2) of section 18A of the IDR
Act. It shows that the petitioners were not aggrieved by the
said order under section 18A, for they could not be as they
had not the required minimum resources for running the mill.
It is
726
stated in the counter affidavit of the respondents that the
financial position of the Company was adverse in all
respects. The accumulated losses as on 31.12.1969 was
Rs.35.46 lakhs which did not include arrears of depreciation
amounting to Rs.44.06 lakhs. The working capital and net
wealth assumed negative values. The outstanding secured
loans amounted to Rs.170.20 lakhs and unsecured loans to
Rs.14.60 lakhs. There were defaults in payment of
instalments and interest. It is further stated that
according to the Investigation Committee, the reasons for
this state of affairs was low capital base, heavy borrowings
and consequent interest burden and paucity of working
capital.
In this connection, it may be pointed out that sometime
in June 1975, after the nationalisation of the undertakings,
the petitioners including the Company filed separate writ
petitions under Article 226 of the Constitution in the High
Court of Karnataka challenging the order dated October 19,
1971 under section 18A of the IDR Act, and also the
constitutional validity of the Nationalisaiion Act. All
these Writ Petitions were dismissed by a learned Single
Judge of the Karnataka High Court on July 8, 1976. The
appeals preferred by some of the petitioners including the
Company were also summarily dismissed by the Division Bench
of the said High Court. By an order dated March 25, 1977,
the Division Bench also dismissed applications for leave to
appeal to this Court under Article 133 of the Constitution
of India. We are afraid, in view of the aforesaid facts the
petitioners are not entitled to challenge the impugned order
under section 18A.
We may now consider the challenge of the petitioners to
the constitutional validity of the Nationalisation Act. It
is contended on behalf of the petitioners that the
provisions of sections 5(1), 19(3), 2 1 read with the Second
Schedule, 25 and 27 impose restrictions on the exercise by
the petitioners of their fundamental right; such
restrictions being arbitrary and excessive are not
reasonable within the meaning of Article 19(6) and are
violative of Articles 14 and 19(1)(g) of the Constitution.
It is submitted that the Nationalisation Act containing the
said provisions alters or damages the basic structure of the
Constitution as reflected in Articles 14 and 19 of the
Constitution. Further, it is submitted that though the
Nationalisation Act has been included in the Ninth Schedule
to the Constitution, yet, in view of the decision of this
Court in Waman Rao v. Union of India, [1981] 2 SCR l, as the
inclusion has been made after April 24, 1973, such challenge
can be made.
We fail to understand how the provisions of the
Nationalisation
727
Act can alter or damage the basic structure of the
Constitution. The basic structure of the Constitution can be
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altered or damaged by an amendment of the provisions of the
Constitution. The decision in Waman Rao’s case (supra) does
not at all support the contention of the petitioners. In
that case. it has been observed as follows:
"In Keshvananda Bharati ([1973] Suppl. SCR 1)
decided on April 24, 1973 it was held by the
majority that Parliament has no power to amend the
Constitution so as to damage or destroy its basic
or essential features or its basic structure. We
hold that all amendments to the Constitution which
were made before April 24, 1973 and by which the
9th Schedule to the Constitution was amended from
time to time by the inclusion of various Acts and
Regulations therein, are valid and constitutional.
Amendment to the Constitution made on or after
April 24, 1973 by which the 9th Schedule to the
Constitution was amended from time to time by the
inclusion of various Acts and Regulations therein,
are open to challenge on the ground that they, or
any one or more of them are beyond the constituent
power of the Parliament since they damage the
basic or essential features of the Constitution or
its basic structure. We do not pronounce upon the
validity of such subsequent constitutional
amendments except to say that if any Act
Regulation included in the 9th Schedule by a
Constitutional amendment made on or after April
24, 1973 is saved by Article 31A, or by Article
31C as it stood prior to its amendment by the 42nd
Amendment, the challenge to the validity of the
relevant Constitutional Amendment by which that
Act or Regulation is put in the 9th Schedule, on
the ground that the Amendment damages or destroys
a basic or essential feature of the Constitution
or its basic structure as reflected in Articles
14, 19 or 31, will become otiose.
(3) Article 31C of the Constitution, as it
stood prior to its amendment by section 4 of the
Constitution (42nd Amendment), Act, 1976, is valid
to the extent to which its constitutionality was
upheld in Keshvananda Bharati. Article 31C, as it
stood prior to the Constitution (42nd Amendment)
Act does not damage any of the basic or essential
features of the Constitution or its basic
structure."
728
It is apparent from the above observation that only
constitutional amendments made on or after April 24, 1973 by
which Acts or Regulations were included in the Ninth
Schedule can be challenged on the ground that they damage
the basic or essential features of the Constitution or its
basic structure. But if any of such Acts and Regulations is
saved by Article 31A or by Article 31C as it stood prior to
the amendment of the Constitution by the Forty-Second
Amendment. such challenge on the ground that the
constitutional amendment damages or destroys a basic or
essential feature of the Constitution or its basic structure
as reflected in Article 14 or Article 19, will become
otiose.
The Nationalisation Act has been enacted to give effect
to the policy of the State towards securing the principles
specified in clause (b) of Article 39 of the Constitution.
Indeed, a declaration in that regard has been made in
section 39 of the Nationalisation Act. It was, however, open
to the petitioners to challenge this declaration, for, in
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Keshvananda Bhartiv. State of Kerala, [1973] Suppl. SCR 1,
this Court by a majority struck down the second part of
Article 31C of the Constitution, namely, "and no law
containing a declaration that it is for giving effect to
such policy, shall be called in question in any court on the
ground that it does not give effect to such policy." No
contention has, however, been advanced before us on behalf
of the petitioners that the Nationalisation Act does not
give effect to the policy of the State towards securing the
principles specified in clause (b) of Article 39 of
Constitution. The reason why no such contention has been
made is obvious in view of the objectives the
Nationalisation Act seeks to achieve. It cannot be gainsaid
that textile industries constitute material resources of the
community and any setback or fall in the production of
textile goods will have adverse effect on the national
economy and also cause hardship to the people. It is with a
view to re-organising and rehabilitating the sick textile
undertakings so as to subserve the in terests of the general
public by the augmentation of the production and
distribution, at fair prices, of different varieties of
cloth and yarn, and for matters connected therewith or
incidental thereto, as stated in the preamble, that the
Nationalisation Act has been enacted. We have considered the
different provisions of the Nationalisation Act and are
satisfied that it gives effect to the policy of the State
towards securing the ownership and control of the material
resources of the community, which are so distributed as best
to subserve the common good. In the circumstances, as the
Nationalisation Act comes under the protective umbrella of
Article 31C, the petitioners are not entitled to challenge
the constitutional validity thereof on the ground of
violation of the provisions of Articles 14 and 19 of the
Constitution.
729
The learned counsel for the petitioners, however,
submits that in spite of the fact that the Nationalisation
Act has been included in the Ninth Schedule, the petitioners
are entitled to challenge the constitutional validity of the
provisions of the Nationalisation Act as violative of
Articles 14 and 19 of the Constitution. It has been already
noticed that the Nationalisation Act fall squarely within
the ambit of Article 31C and, consequently, none of its
provisions can be challenged on the ground of violation of
Article 14 or Article 19 of the Constitution. Much reliance
has, however, been placed by the petitioners on a majority
decision of this Court in Bhim Singhji v. Union of India.
AIR 1981 SC 234. In that case, the question that has been
considered relates to whether the Urban Land (Ceiling and
Regulation) Act, 1976 furthers the Directive Principles of
State Policy in clauses (b) and (c) of Article 39 of the
Constitution. It has been held by the majority consisting of
Chandrachud C.J., P.N. Bhagwati J. (as he then was) and
Krishan Iyer J. that the said Act implements or achieves the
purposes of clauses (b) and (c) of Article 39 and is valid
except that section 27(1) of the said Act in so far as it
imposes a restriction on transfer of any urban or
urbanisable land with a building or a portion only of such
building which is within the ceiling area, is invalid. It
has been observed by Chandrachud C.J., with whom Bhagwati,
J. concurs, that fuller reasons will follow later.
Subsequently, a judgment has been delivered by Chandrachud
C.J., for himself and Bhagwati J. (AIR 1985 SC 1650) wherein
it has been inter alia observed as follows:
"We have gone through Krishna Iyer J’s judgment
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closely and find that there is nothing that we can
usefully add to it."
In other words the learned Chief Justice and Bhagwati
J. have adopted the reasons given by Krishna Iyer J.
The learned Counsel for the petitioners has drawn our
attention to the fact that none of the Judges constituting
the majority, including Krishna Iyer J. has given any reason
for striking down the provision of section 27(1) of the said
Act. It is submitted that the majority judgment is a
precedent for the proposition that even though a statute
comes within the purview of Article 31C of the Constitution,
yet its validity can be challenged on the ground of its
violation of Article 14 or Article 19 of the Constitution.
It is contended that in view of Bhim Singhji’s case, we
cannot take any view other than the view that such a
challenge can be made
730
In support of the above contention, the learned Counsel
for the petitioners has placed reliance upon the decision of
the Court of Ap peal in Harper and others v. National Coal
Board, [1974] 2 ALL ER 441. In that case, the Court of
Appeal had to consider the propriety of the judgment of the
learned Trial Judge, who based his decision on the speeches
in the House of Lords in Central Asbestos Co. Ltd v. Dodd.
[1972] 2 ALL ER 1135. In Dodd’s case the House of Lords by a
majority of 3 to 2 affirmed the majority decision of the
Court of Appeal that time did not begin to run against the
plaintiff under section 1(3) of the Limitation Act, 1963
until he discovered that he had a worthwhile cause of
action. Of the three Judges, who constituted the majority of
the House of Lords, two took the same view of the law as
that taken by the majority of the Court of Appeal, while the
third took another view of the law which. in substance
accorded with that of minority of the House, that is, that
time began to run under section 1(3) as soon as the
plaintiff knew of the facts on which his action was based.
The question that had to be considered by the Court of
Appeal was whether it was bound by the reasoning in the
speeches of the House of Lords in Dodd’s case. In that
contention, Lord Denning MR observed as follows:
"How then do we stand on the law? We have listened
to a most helpful discussion by counsel for the
proposed plaintiffs on the doctrine of precedent.
One thing is clear. We can only accept a line of
reasoning which supports the actual decision of
the House of Lords. By no possibility can we
accept any reasoning which would show the decision
itself to be wrong. The second proposition is
that, if we can discover the reasoning on which
the majority based their decision, then we should
accept that as binding on us. The third
proposition is that, if we can discover the
reasoning on which the minority base their
decision, we should reject it. It must be wrong
be-cause it led them to the wrong result. The
fourth proposition is that if we cannot discover
the reasoning on which the majority based their
decision we are not bound by it. We are free to
adopt any reasoning which appears to us to be
correct, so long as it supports the actual
decision of the House."
We fail to understand how the above observation lend
any sup port to the contention of the petitioners. The Court
of Appeal was considering the same point as was before the
House of Lords in Dodd’s
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case. The question was whether the Court of Appeal was bound
to adopt the same reasoning as in Dodd’s case and it was
held that since there was no discernible ratio decidendi
common to the speeches in the House of Lords in Dodd’s case,
the Court of Appeal was not bound by the reasoning in those
speeches and was free to adopt any reasoning which appeared
to the Court to be correct provided that it supported the
actual decision of the House. In the instant case, we are
not considering the question of the constitutional validity
of section 27(1) of Urban Land (Ceiling and Regulation) Act
and, therefore, it is quite irrelevant for our purpose
whether any reason was given by the majority in Bhim
Singhji’s case (supra) or not.
In view of our decision that the Nationalisation Act
comes within the purview of Article 31C of the Constitution,
we do not think we are called upon to adjudicate upon the
contention of the petitioners that some of the provisions of
the Nationalisation Act are violative of Articles 14 and 19
of the Constitution.
The only contention of the petitioners that remains to
be considered is that the respondents have illegally taken
over possession of the vacant land belonging to the Company.
It is the case of the petitioners that out of the land, the
mill premises comprises 34.78 acres and the rest of the land
measuring 17.52 acres was and is vacant land. It is not in
dispute that the said 17.52 acres of land is situate within
the mill compound and except 4.37 acres thereof, the
remaining 13.57 acres of land including the said 4.37 acres,
is unrelated to and unconnected with the undertaking of the
Company and, accordingly, it did not vest in the Central
Government under the Nationalisation Act. It is also pointed
out on behalf of the petitioners that the vacant land has
not been utilised by the National Textile Corporation for
any purpose of the undertaking. It is urged that as the
vacant land was illegally and wrongfully taken possession of
by the National Textile Corporation, although the same had
not vested in the Central Government, the same should be
released and given back to the Company. In any event, it is
submitted on behalf of the petitioners that possession of
the said 4.37 acres of land which does not form part of the
compact block of the vacant land measuring 13.57 acres
should be delivered back to the petitioners.
The respondents in their affidavit in opposition have
denied and disputed the contention of the petitioners that
the said 17.52 acres or the said 4.37 acres of land does not
form part of the sick textile under-
732
taking. It is the case of the respondents that except the
land measuring 4 acres 14 Gunthas (stated to be equivalent
to 4.37 acres) the rest of the land forms one compact block
in which the buildings, office and quarters of the
undertaking are situate. Further it is said that the
National Textile Corporation has a programme for locating an
institution to train the technical personnel and to build
quarters as a welfare measure and, necessarily, such a
complex must have vacant land to implement the expansion
programme. Accordingly, it is contended by the respondents
that even the vacant land measuring 4 acres 14 Gunthas form
an integral part of the textile undertaking.
It has already been noticed that the whole of the said
17.52 acres of land including 4.37 acres thereof, is situate
within the mill compound. We are unable to accept the
contention of the petitioners that as the land is lying
vacant since the take over, it does not form part of the
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undertaking. Under section 4(1) of the Nationalisation Act,
the sick textile undertaking shall be deemed to include all
properties, movable and immovable, including lands,
buildings, workshops, stores, etc. in the ownership,
possession, power or control of the owner of the sick
textile undertaking. In view of the said provision, it is
difficult to accept the contention of the petitioners that
the vacant land is not a part of the undertaking. It may be
that the said 17.52 acres of land or the said portion of it
measuring 4.37 acres has not been put to any use, but that
will not entitle the petitioners to claim that possession of
the land should be delivered back to the Company. The
question whether the vacant land has been in use, is not, in
our opinion, relevant for the purpose of section 4(1). It
is, therefore, difficult for us to accept the contention of
the petitioners that the vacant land is unrelated to and
unconnected with the textile undertaking.
The learned counsel for the petitioners has placed
reliance upon an observation of this Court in National
Textile Corporation Ltd. and others etc. v. Sitaram Mills
Ltd. and others, AIR 1986 SC 1234. The question that was
involved in that case was whether surplus land in the
precinct of the taken-over undertaking was an asset in
relation to the undertaking. It was observed "The test is
whether it was held for the benefit of, and utilised for,
the textile mill". Relying upon this observation, it is
contended by the learned counsel for the petitioners that as
the vacant land, in the instant case, has not been utilised
for the undertaking, it is not an asset of the undertaking.
We do not think that in Sitaram Mills case this Court really
meant to lay down a proposition that in order that a piece
of land to be considered as the asset of the textile
undertaking, it must be held for the benefit of and utilised
for
733
the undertaking in question. Can it be said that a piece of
land which is held for the benefit of but not utilised for
the textile undertaking, as in the instant case, is not an
asset of the undertaking? The answer must be in the
negative. In Sitaram Mills case that observation was made in
the context of facts of that case, namely, that the surplus
land was held for the benefit of and also utilised for the
textile undertaking.
We do not think that the said observation in the case
of Sitaram Mills case is of any help to the petitioners. We
hold that the whole of the said 17.52 acres of land forms
part of the textile undertaking of the Company. No other
point has been urged in these writ petitions.
For the reasons aforesaid, all these writ petitions are
dismissed. There will however. be no order for costs.
M.L.A. Petitions dismissed.
734