Judges: G.B. Pattanaik, S. Rajendra Babu, D.P. Mohapatra, Doraiswamy Raju and Shivaraj V. Patil, JJ.

Facts:

Union Government took over the managements of three Cotton Mills, namely, The Elphinstone Spinning and Weaving Mills Company Ltd., Jam Manufacturing Mills and New City Mills of Bombay under the provisions of Textile Undertakings (Taking over of Management) Ordinance, 1983, (hereinafter "Ordinance") and the Textile Undertakings (Taking over of Management) Act, 1983, (Act of 1983).

The Ordinance and the Act of 1983 was challenge before the Bombay High Court on ground, inter alia, that it infringed the fundamental right under Article 14 of the Constitution.

Bombay High Court came to the conclusion that the action of the Union Government in taking over the managements of the three Cotton Mills was invalid as it infringed the petitioners' fundamental rights under Articles 14 and 19(1)(g) of the Constitution.

These appeals by the Union of India were filed against the judgment of the Bombay High Court. Certificates of appeal under Articles 132(1) and 133 of the Constitution for leave to appeal to the Supreme Court were granted by the High Court itself.

When the appeals were taken up for hearing by a Three Judge Bench of the Supreme Court, it was felt that in view of the questions which arose for consideration and Article 145(3) of the Constitution, the cases should be heard by a Constitution Bench of Five Hon'ble Judges.

Issues:

(i) Can the impugned Act be held to be a law providing for the taking over of the management of the Mills for a limited period?

(ii) Whether the Act expresses the intention of the Parliament for taking over the management of the Textile Undertakings specified in the First Schedule in the public interest or is it capable of indicating the legislative intent that only those Mills whose financial condition became wholly unsatisfactory by reasons of mis-management of the affairs of the Textile Undertakings which are sought to be specified in the First Schedule and management of those Mills are being taken over under the Act?

(iii) Has any case been made out by the Mills concerned to enable a Court that in fact by clubbing the three Mills in the group of 13 there has been the violation of the mandate under Article 14?

(iv) Was the High Court justified in recording a conclusion that there has been a violation of Article 19(1)(g)?

(v) On the available materials on record was the High Court justified in going behind the legislative intent apparent on the face of the Act to find out the so called true intention and thereby coming to the ultimate conclusion that there has been a gross discrimination in clubbing the three mills with the other admitted mis-managed mills which are enumerated in the Schedule to the Act?

Laws:

Constitution of India, 1950 - Article 14 - Right to equality and equal protection of the laws.

Constitution of India, 1950 - Article 19(1)(g) - Right to practise any profession, or to carry on any occupation, trade or business..

Constitution of India, 1950 - Article 31A(1)(b) - Taking over of the management of any property by the State for a limited period either in the public interest or in order to secure the proper management of the property.

Contentions:

Petitioners

(i) Financial condition of these mills had become so bad that unless large sum of money from the public exchequer was pumped into it, the mills were not in a position to run and that in turn would have made thousands of labourers idle.

(ii) To overcome the aforesaid crisis, the Parliament itself thought it appropriate to take step for acquiring the Mills and pending finalisation of acquisition the Parliament thought it fit to take over the management which was absolutely necessary in the public interest.

(iii) Court would not be justified in examining the data which persuaded the Parliament to take the aforesaid decision.

(iv) Act in question was for a limited period and had been enacted in the public interest coming within the purview of Article 31A(1)(b) of Constitution and, therefore, provisions of Article 14 or Article 19 cannot at all be attracted for assailing the validity of the action taken under the Act.

(v) Inclusion of the three Mills with the group of 13, the Management of which was being taken over by the Act, by no stretch of imagination can be held to be discriminatory. High Court erred in concluding that there has been an infringement of Article 19(1)(g) of the Constitution.

Respondents

(i) Article 31A(1)(b) of Constitution enables to make law for taking over of the management of any property by the State for a limited period either in the public interest or in order to secure proper management of the same.

(ii) Act of 1983, made by the Parliament, permits taking over of management of specified Textile Undertakings only when their financial condition became unsatisfactory by reason of mis-management of the affairs.

(iii) If there is no material to establish that financial losses is on account of mis-management then the taking over of the management of the mill by taking recourse to the Act of 1983 must be held to be invalid and the High Court in fact has held it to be invalid.

(iv) Mere losses will not entitle to take over of the management of mill, inasmuch as, all the mills have suffered loss. There must be some other factors on account of which it will be possible for the Government to take over the management of only 13 mills as included in the First Schedule to the Act of 1983.

(v) Under Article 31A(1)(b) of Constitution, the law for taking over of the management must be for a limited period. The expression `pending nationalisation' in the impugned Act of 1983 cannot be construed to be a definite limited period and, therefore, the Act in question is not referable to Article 31A(1)(b).

(vi) Parliament chose to adopt a procedure without any urgency being there and without any machinery to look into the facts on the basis of which categorisation could be made. The classification is bad in law.

Analysis:

Act of 1983 - Whether provides for taking over of management of the Mills for a limited period

(i) Ultimate policy decision of the Government was to achieve the process of nationalisation in two stages. First by taking over the management of the textile undertakings and thereafter, enact suitable legislation to nationalise the same.

(ii) The ultimate legislation for taking over the management of the mills passed by the Parliament, cannot be held to be a law, providing for taking over of the management for a limited period in public interest.

(iii) Said law comes within the purview of Article 31A(1)(b) of the Constitution, and therefore, its validity cannot be assailed on the ground of violation of Articles 14 and 19 of the Constitution.

Act of 1983 - Whether legislative intent was only to take those Mills whose financial condition was deplorable on account of 'mismanagement'

(i) Cardinal principle of construction of statute that the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed.

(ii) By no stretch of imagination a Judge is entitled to add something more than what is there in the Statute by way of a supposed intention of the legislature.

(iii) Act of 1983, is an Act providing for taking over, in the public interest, of the management of Textile Undertakings specified in the First Schedule, pending their nationalisation and for matters connected therewith or incidental thereto.

(iv) Use of the expression 'mis-management of the affairs' in the Preamble of the Act of 1983 will not control the purpose of the Act, namely, 'public interest'.

(v) Parliament having decided to take over the management of the Textile Mills which were in serious financial crisis, in the public interest, it was not open for the Court to conclude that the legislative intent was only to take those Mills whose financial condition was deplorable on account of mismanagement and not in case of those mills where the financial condition may be deplorable but not on account of mis-management.

Clubbing of three Mills in group of 13 - Whether discriminatory and against mandate of Article 14 of Constitution

(i) As is apparent from the long title of the Act of 1983, the decision to nationalise the mills had already been taken. Pending nationalisation the 13 mills in question including the mills of the three petitioners who filed writ petition before Bombay High Court, the management was taken over by the Act of 1983. This was done to address the imminent danger to the finance to be pumped into the mills for its revival which was necessary to provide employment to the large number of mill workers.

(ii) Parliamentary action in legislating the law and taking over of the management of all the 13 mills included in the First Schedule to the Act of 1983 cannot be held to be discriminatory.

(iii) High Court was also not justified in concluding that the true intention of the legislation was to take over the management of only those mills which were mis-managed and whose financial condition had deteriorated and not others.

(iv) Preamble of the Act of 1983 has clearly indicated that the affairs of the Textile Undertakings specified in the First Schedule, on account of mis-management, have become wholly unsatisfactory. While the Act of taking over of the management of the mills was in the public interest, the inference of mis-management was duly arrived by the Parliament from the fact that their financial condition had become wholly unsatisfactory.

(v) This inference of the Parliament is not subject to a mathematical judicial scrutiny. The way in which the High Court has gone into this question in the impugned judgment is certainly not within the parameters of the power of High Court under Article 226 of the Constitution.

(vi) High Court was wholly in error in striking down the taking over of the three petitioners mills on a supposed violation of Article 14 of the Constitution.

Act of 1983 - Whether any violation of Article 19(1)(g) of Constitution

(i) Act of 1983, had been engrafted in the public interest as the legislature found that there is imperative need to take over of the management of the companies until the process of nationalisation is finalised.

(ii) The preamble also indicates that to make the mills viable, it would be necessary for the public financial institutions to invest very large sum of money, so that the mills will be rehabilitated and the interest of the workmen, employed therein would be protected.

(iii) The preamble further indicates that the process of acquisition would take a longer time and to enable the Central Government to invest large sum of money, it was necessary in the public interest to take over the management of the undertakings.

(iv) Thus, the taking over of the management of the mills was in the public interest, the said public interest being to rehabilitate the mills by pumping in, huge sums of public money to protect the interest of the workers in the mills.

(v) High Court in the impugned judgment, gave a restricted meaning to the purpose of the Act by interpreting the expression 'mismanagement' to connote fraud and dis-honesty.

(vi) High Court was in error to hold that there has been an infraction of Article 19(1)(g) of Constitution in the case in hand.

Conclusions:

(i) Textile Undertakings (Taking over of Management) Act, 1983 is constitutionally valid.

(ii) Bombay High Court erred in concluding that action of the Union Government in taking over the managements of the three Cotton Mills was invalid as it infringed the petitioners' fundamental rights under Articles 14 and 19(1)(g) of the Constitution.

(iii) Act of 1983 does not provide for taking over of the management for a limited period in public interest.

(iv) Provisions of Act of 1983 are neither discriminatory nor against mandate of Article 14 or 19(1)(g) of the Constitution.

Important Precedents:

(i) Indore Malwa United Mills Ltd. and Ors. Vs. Union of India and Ors., MANU/DE/0254/1973

(ii) Sanjeev Coke Manufacturing Company vs. M/s. Bharat Coking Coal Limited MANU/SC/0040/1982