{"id":48540,"date":"2001-01-01T00:00:00","date_gmt":"2000-12-31T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-elphinstone-spinning-weaving-on-1-january-2001"},"modified":"2017-10-09T10:21:35","modified_gmt":"2017-10-09T04:51:35","slug":"union-of-india-vs-elphinstone-spinning-weaving-on-1-january-2001","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-elphinstone-spinning-weaving-on-1-january-2001","title":{"rendered":"Union Of India vs Elphinstone Spinning & Weaving … on 1 January, 2001"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Union Of India vs Elphinstone Spinning & Weaving … on 1 January, 2001<\/div>\n
Author: Pattanaik<\/div>\n
Bench: G.B. Pattanaik, S.Rajendra Babu, D.P.Mohapatra, Doraiswamy Raju, S.V.Patil<\/div>\n
           CASE NO.:\nAppeal (civil)  2995-2997 of 1984\n\nPETITIONER:\nUNION OF INDIA\n\nRESPONDENT:\nELPHINSTONE SPINNING & WEAVING CO.LTD.& ORS.\n\nDATE OF JUDGMENT: 01\/01\/2001\n\nBENCH:\nG.B. PATTANAIK & S.RAJENDRA BABU & D.P.MOHAPATRA & DORAISWAMY RAJU & S.V.PATIL\n\nJUDGMENT:\n<\/pre>\n
JUDGMENT<\/p>\n
DELIVERED BY:\n<\/p>\n
G.B. PATTANAIK (J) <\/p>\n
PATTANAIK,J.\n<\/p>\n
      These  appeals  by  the Union of\tIndia  are  directed
\nagainst\t the judgment of the Bombay High Court, Certificates
\nunder  Articles 132(1) and 133 of the Constitution for leave
\nto  appeal  to the Supreme Court having been granted by\t the
\nHigh  Court  itself.  By the impugned judgment,\t the  Bombay
\nHigh  Court  came to the conclusion that the action  of\t the
\nUnion Government in taking over the managements of the three
\nCotton\tMills, namely, The Elphinstone Spinning and  Weaving
\nMills  Company\tLtd., Jam Manufacturing Mills and  New\tCity
\nMills of Bombay under the provisions of Textile Undertakings
\n(Taking\t over  of Management) Ordinance, 1983,\t(hereinafter
\nreferred to as The Ordinance) and the Textile Undertakings
\n(Taking\t over of Management) Act, 1983 (hereinafter referred
\nto  as\tThe  Act), infringed the  fundamental  right  under
\nArticle\t 14 of the Constitution and, therefore, qua them  it
\nwas  invalid.  The High Court also further came to hold that
\nthe  Act infringed the petitioners fundamental rights under
\nArticle\t 19(1)(g)  and on that count qua the petitioner\t was
\nequally\t invalid.  In coming to the aforesaid conclusion the
\nHigh  Court  after thorough discussion of the  materials  on
\nrecord\tfound that the Union Government failed to  establish
\neither\tdirectly or inferentially any mis-management on\t the
\npart of the three companies and failed to establish from the
\nmaterial on record that there was any nexus between the main
\nobject\tor purpose of the Act, viz., to take over management
\nof  only those mills whose financial condition before strike
\nwas wholly unsatisfactory by reason of mis-management.\n<\/p>\n
      The  short  facts leading to the promulgation  of\t the
\nOrdinance  and\treplacement of the same by the Act are\tthat
\nthe  Textile  Mills in and around Bombay had gone on  strike
\nwith  effect from 18.1.1982.  On 15.2.1982 the Government of
\nIndia  declared its policy for nationalisation of all  these
\nTextile\t Industries.   In October 1982, the Reserve Bank  of
\nIndia  had called a meeting to discuss the situation arising
\nout  of the strike.  Depending upon the economic  conditions
\nof  different mills the mills had been classified into three
\ngroups.\t  The continued Textile strike had deteriorated\t the
\nfinancial  condition of all the Textile Mills and the  Mills
\nwere  looking  forward\tto the\tFinancial  Institutions\t and
\nNationalised  Banks  for  financial aid to  make  the  Mills
\nviable.\t  On 28th March, 1983, the Government of India wrote
\nletters\t to  the  Nationalised Banks and IDBI to  conduct  a
\nviability study of these Mills.\t The three Mills, with which
\nwe  are\t concerned,  in these appeals had been\tincluded  in
\ncategory  III.\t On 20th September, 1983, the Government  of
\nIndia  in  the Ministry of Commerce had issued a  Memorandum
\nconstituting  a Task Force to collect data and submit a note
\nfor  being  placed before Economic Affairs Committee of\t the
\nUnion Cabinet to enable it to take a decision as to which of
\nthe  Mills in category III would be Nationalised.  The\tsaid
\nTask  Force  submitted\tits report by the end  of  September
\n1983.\tOn 18th October, 1983, the Ordinance was promulgated
\nand  the  management of 13 Textile Mills enumerated  in\t the
\nFirst  Schedule\t to  the Ordinance was\ttaken  over  pending
\nNationalisation\t  of   the   Undertakings.   The   Ordinance
\nindicates  that\t for re-organising and\tre-habilitating\t the
\nTextile\t Mills\tto  protect  the  interest  of\tthe  workmen
\nemployed   therein,   and  to\taugment\t the   product\t and
\ndistribution  at fair price of different varieties of  cloth
\nand  yarn  so  as to subserve the interest  of\tthe  general
\npublic, investment of very large sums of money was necessary
\nand  for  such investment, the Central Government felt\tthat
\nthe  acquisition of the Mills would be necessary, but  since
\nacquisition  would  take some time and it was felt  that  it
\nwould  be expedient in the public interest to take over\t the
\nmanagement  of\tthe Undertakings, pending  acquisition,\t and
\nthat  Parliament was not in Session, the President, on being
\nsatisfied  that\t circumstances exists for  taking  immediate
\naction,\t promulgated  the  Ordinance in exercise  of  powers
\nconferred  under  Article 123(1) of the\t Constitution.\t The
\nsaid  Ordinance was replaced by the Act and the Act provided
\nthat  the  same shall be deemed to have come into  force  on
\n18th   day   of\t October,   1983.   Immediately\t after\t the
\npromulgation  of the Ordinance the Management of the  Mills,
\nenumerated  in the First Schedule thereof, having been taken
\nover  by the Government, the three Mills referred to earlier
\nfiled  three Writ Petitions in Bombay High Court challenging
\nthe applicability of the Ordinance so far as those Mills are
\nconcerned.   After  replacement of the Ordinance by the\t Act
\nthe Writ Petitions were amended and thus the validity of the
\nAct  was challenged qua the three Writ Petitioners.   Though
\nthe  challenge\twas  on three counts, namely,  violation  of
\nArticle\t 14, violation of Article 19(1)(g) and violation  of
\nArticle\t 300A,\tbut at the time of hearing the challenge  in
\nrelation  to violation of Article 300A was not pressed\tand,
\ntherefore,  the High Court considered the challenge, so\t far
\nas  it\trelates to violation of Articles 14 and 19(1)(g)  of
\nthe  Constitution.  The High Court in the impugned  judgment
\nmade elaborate discussion of the materials on record as well
\nas  interpreted the different provisions of the Constitution
\nand came to hold that the act with its object of only taking
\nover  the  management  cannot be considered to\tbe  law\t for
\ntaking\tover  the ownership and control of the property,  as
\nrequired  under Article 39(b), but would squarely fall under
\nArticle\t 31A (1)(b) and, therefore, Article 31(c) will\thave
\nno  application.  The High Court also came to the conclusion
\nthat  to  protect a legislation under Article  31(c),  there
\nmust be a declaration in the legislation itself that the Act
\nwas enacted to give effect to the Directive Principles under
\nArticle\t 39(b) and (c), and in the case in hand, there being
\nno  such declaration either in the Ordinance and in the Act,
\nArticle\t 31(c)\twill have no application and,  squarely\t the
\nchallenge on the ground of violation of Article 14 or 19 has
\nto  be\texamined.  On examining Article 31A(1)(b)  the\tHigh
\nCourt  was  of\tthe  opinion that  two\tconditions  must  be
\nsatisfied for attracting Clause 1(b) of Article 31A, namely,
\nthat  the  taking over of the management of the property  by
\nthe  State  would be for a limited period, and\tsuch  taking
\nover must be either in public interest or in order to secure
\nthe proper management of the property, since the taking over
\nof  management\twas not for any limited period and  in\tfact
\nsuch management had been taken over pending nationalisation,
\nthe  provisions of Clause 1(b) of Article 31A would not\t get
\nattracted.   According\tto  the High  Court  the  expression
\nPending Nationalisation cannot be held to be for a limited
\nperiod\tand  the protection of Article 31A (1)(b)  would  be
\navailable only when there is a definite limit in the law for
\nthe  period of management and, consequently the challenge on
\nthe anvil of violation of Articles 14 and 19(1)(g) has to be
\nexamined.   The High Court then examined the factual  aspect
\nfor  considering  the question as to whether there were\t any
\nmaterials  to  put the three Mills in a class of  Mills\t for
\nwhich\tthe  taking  over  of\tthe  management\t was   meant
\nnotwithstanding\t a  declaration or recital in  the  Preamble
\nitself,\t the same being Mills whose financial condition had
\nbecome\twholly unsatisfactory by reason of  mis-management.
\nThe  High Court then examined the different datas  collected
\nby  the\t Government  of\t India as well\tas  several  reports
\nincluding  the Task Force Report and ultimately came to\t the
\nconclusion  that  even\tthough the financial  condition\t had
\nbecome unsatisfactory but the Union Government has failed to
\nestablish that such unsatisfactory financial condition is by
\nreason\tof mis-management and, therefore, there was no nexus
\nbetween\t the  basis of the classification of the  petitioner
\nMills  with  other mismanaged Mills and the said object\t and
\nthe purpose of the Act.\t In other words, the High Court came
\nto  the conclusion that inclusion of the three Mills in\t the
\nSchedule appended to the Ordinance and the Act was arbitrary
\nand,  on  the other hand, the figures given by the Union  of
\nIndia  itself show that the financial position of the  three
\nMills  were  far  better than even the Mills which  were  in
\ncategory  II.\tConsequently,  the  High Court\twas  of\t the
\nopinion\t that the Government could not have, for taking over
\nof  the\t management  of the petitioners\t Mills,\t classified
\nthose  Mills as Mills whose financial condition was bad\t due
\nto  mis-management.   The High Court, therefore,  ultimately
\ncame to the conclusion that there has been a gross violation
\nof  Article 14 in clubbing the three Mills with other  Mills
\nin  category  three, enumerated in the Schedule appended  to
\nthe  Act  and such inclusion violates the fundamental  right
\nguaranteed  under Article 14 of the Constitution.  The\tHigh
\nCourt  also  came  to the conclusion that the  impugned\t Act
\ninfringed  the petitioners right under Article 19(1)(g) and
\non  that count qua petitioners was equally invalid.   Having
\ncome  to  the aforesaid conclusion the Writ  Petitions\twere
\nallowed\t and  the order of taking over of the management  of
\nthree  Mills was set aside.  But the operation of the  order
\nhad  been  stayed for 8 weeks and certain  restrictions\t had
\nbeen  imposed  and the High Court also\tgranted\t Certificate
\nunder  Article 132(1) and 133 of the Constitution for  Leave
\nto  Appeal to the Supreme Court.  When the matter was listed
\nbefore\tthis  Court the aforesaid interim order staying\t the
\noperation of the judgment was continued and later on certain
\nMisc.\tApplications being filed by different Mills  certain
\norders\thave  been  passed by the Court with regard  to\t the
\npossession   of\t certain  assets,   like,   car,   telephone
\nconnections etc.  When the appeals were taken up for hearing
\nin  January  1985,  the same had been heard before  a  Three
\nJudge  Bench but after hearing for some time the Three Judge
\nBench  felt  that in view of the questions which  arise\t for
\nconsideration, and in view of Clause 3 of Article 145 of the
\nConstitution  the  cases should be heard by a Bench  of\t not
\nless  than Five Honble Judges and that is why these appeals
\nwere heard by us.\n<\/p>\n
      Mr.   Salve, the learned Solicitor General,  appearing
\nfor  the appellant Union Government contended that the basic
\napproach  of the High Court in examining the  constitutional
\nvalidity  of the Act is grossly erroneous and such  approach
\nhas  vitiated  the  ultimate conclusion.  According  to\t the
\nlearned\t Solicitor General, the financial condition of these
\nmills  had become so bad that unless large sum of money from
\nthe  public exchequer was pumped into it, the mills were not
\nin  a  position\t to  run and that in turn  would  have\tmade
\nthousands  of  labourers  idle.\t To overcome  the  aforesaid
\ncrisis\tand since large scale government money was going  to
\nbe  pumped  into  the  Mills   for  making  it\tviable,\t the
\nParliament  itself  thought it appropriate to take step\t for
\nacquiring  the Mills and pending finalisation of acquisition
\nthe  Parliament\t thought it fit to take over the  management
\nwhich  was  absolutely\tnecessary in  the  public  interest.
\nAccording  to  Mr.   Salve this is apparent  from  the\tBill
\nintroduced  by\tthe  concerned Minister as well as  the\t Act
\nitself\tand in such a case the Court would not be  justified
\nin  examining  the datas which persuaded the  Parliament  to
\ntake the aforesaid decision to come to a conclusion that the
\nsaid decision of the Parliament could not have been taken on
\nthe  available materials.  According to Mr.  Salve the\tfact
\nthat  the management of the Mills had been taken over  until
\nthe  Mills are acquired by enacting an Acquisition Act,\t for
\nall  practical\tpurposes the taking over was for  a  limited
\nperiod thereby attracting Clause 1(b) of Article 31A and the
\nHigh  Court was in error in concluding that the taking\tover
\nwas  not  for a limited period and, as such, Clause 1(b)  of
\nArticle\t 31A  will not get attracted.  According to  learned
\nSolicitor  General  the\t Act in question was for  a  limited
\nperiod\tand  had been enacted in the public interest  coming
\nwithin\tthe  purview  of Clause (1)(b) of Article  31A\tand,
\ntherefore,  provisions of Article 14 or Article 19 cannot at
\nall  be\t attracted for assailing the validity of the  action
\ntaken  under  the Act.\tThe learned Solicitor  General\talso
\nfurther urged that the materials which were there before the
\nGovernment  before promulgation of the Ordinance and  before
\nthe  Parliament before enactment of the Act were  sufficient
\nfor  classifying the Mills into three categories and in fact
\nby  inclusion of the three Mills with which we are concerned
\nin  the present appeals with the group of 13, the Management
\nof  which was being taken over by the Act, by no stretch  of
\nimagination  can  be  held  to\tbe  discriminatory  nor\t the
\nconclusion  of\tthe  High  Court  that\tthere  has  been  an
\ninfringement  of Article 19(1)(g) of the Constitution is  at
\nall  sustainable.  The learned Solicitor General also placed
\nreliance  on the averments made by the Union of India in its
\nCounter\t Affidavit  filed before the High Court to  indicate
\nhow  it was absolutely necessary to promulgate the Ordinance
\nand  how the Government took the decision after\t considering
\nthe  reports  submitted\t by  the IDBI  and  other  financial
\ninstitutions  as  well as the report of the so\tcalled\tTask
\nForce.\t He  also  placed reliance on the Affidavit  of\t Mr.
\nPrabhat\t Kumar,\t the then Secretary Commerce explaining\t the
\nTask  Force Report and contended that the High Court was  in
\nerror  in basing its conclusion on the earlier Affidavit  of
\none Mr.\t Singh.\t According to learned Solicitor General that
\nwhile  considering the constitutional validity of a statute,
\nmore particularly a statute on economic matter, certain well
\nestablished  principles\t evolved by the Courts as  rules  of
\nguidance  in  discharge\t of its constitutional\tfunction  of
\njudicial review have to be borne in mind, and in the case in
\nhand the impugned judgment of the High Court, on the face of
\nit,  indicates\tthat those guiding principles have not\tbeen
\nborne  in mind.\t According to the learned Solicitor  General
\none  cardinal  principle  well accepted\t and  recognized  by
\nCourts\tis  that the legislature understands  and  correctly
\nappreciates  the  needs of its own people and its  laws\t are
\ndirected  to  problems made manifest by experience  and\t its
\ndiscrimination\tare  based  on\t adequate  grounds  and\t the
\npresumption of constitutionality is indeed so strong that in
\norder  to  sustain it the Court may take into  consideration
\nmatters\t of common knowledge, matters of common report,\t the
\nhistory\t of  the times and may assume every state  of  facts
\nwhich  can be conceived existing at the time of legislation.
\nHe  further  emphasised\t that the law relating\tto  economic
\nactivities  should be viewed with greater latitude than laws
\ntouching  civil\t rights such as freedom of speech,  religion
\netc.   and the High Court totally over-looked the  aforesaid
\napproach and guidelines in basing its conclusion.  According
\nto  the\t learned Solicitor General the preamble of  the\t Act
\nunequivocally indicates the Act to be a piece of legislation
\nfor  taking over in the public interest of the management of
\nthe  Textile Undertakings of the Companies specified in\t the
\nFirst Schedule pending nationalisation of such undertakings.
\nIt  no\tdoubt,\tfurther stipulates that by  reason  of\tmis-
\nmanagement  of\tthe  affairs  of  the  Textile\tUndertakings
\nspecified  in  the First Schedule their financial  condition
\nbecame\twholly unsatisfactory but the financial condition of
\nthese  Mills had become so precarious and unsatisfactory  as
\nwas   found   from  the\t  reports  of  different   financial
\ninstitutions  including\t IDBI  that  mis-management  is\t the
\nnatural\t inference  and the preamble read as a\twhole  would
\nindicate  that the Parliament thought it appropriate to take
\nover  the  management of Textile Undertakings in the  public
\ninterest  pending nationalisation of such undertaking and in
\nthis  view of the matter the High Court was  hyper-technical
\nin  recording  a  finding  that even  though  the  financial
\ncondition  become  wholly unsatisfactory but the  Government
\nfailed\tto  establish the mis-management of the\t undertaking
\nwhich\thad   brought  the   financial\tcondition  to\tsuch
\nunsatisfactory\tstage and, therefore, by including the three
\nmills  in  question  in\t the  group of\t13  there  has\tbeen
\nviolation of Article 14.  The learned Solicitor General also
\nseriously  commented  upon the conclusion of the High  Court
\nand  submitted\tthat  the  High\t Court\tcommitted  error  in
\nassuming mis-management as fraud and such fraud has not been
\nestablished  by the Union Government .\tAccording to learned
\nSolicitor General the High Court mis-understood the basis of
\nthe classification itself and taking an over all view of the
\nfinancial  position  of these three Mills the conclusion  is
\nirresistible  that  these three Mills were  rightly  clubbed
\ntogether  with the group of 13 whose financial position\t was
\nwholly\tunsatisfactory and government money was required  to
\nbe  pumped  into  it  for making the mills  viable  and\t for
\neffective  running of the Mills so that the large number  of
\nworkers\t will  not face the misery of closure of the  Mills.
\nThe learned Solicitor General also urged that in view of the
\nprevailing  situation  in the 13 Mills including  the  three
\nwith  which  we\t are  concerned,   in  these  appeals,\t the
\nParliament  thought  that only way to put the management  on
\nthe  wheels  was  to take over the management of  the  Mills
\nwhich  is  permissible\tin the larger  public  interest,  as
\ncontained  in  Article 31A (1)(b) of the  Constitution,\t and
\nsuch Parliamentary wisdom cannot be scrutinised by the Court
\nin  a scale on the basis that certain reports might not have
\nbeen  placed  before  the Parliament or on the\tground\tthat
\nfactually  the\tMills  were  not  mis-managed  and  yet\t had
\nsustained  heavy  financial  loss and thereby  putting\tthem
\nalongwith  the\tgroup  of 13 constitutes  an  infraction  of
\nArticle\t 14  of the Constitution.  According to the  learned
\nSolicitor  General the burden being on a person who  attacks
\nthe  constitutionality on the grounds of discrimination\t the
\nsaid  burden  cannot be held to have been discharged by\t the
\nMills  and  the\t High  Court   committed  serious  error  in
\nannulling  the\ttaking over of the management of  the  three
\nMills  under the Act on the ground that Government failed to
\nestablish  the\trelevant  material before  the\tCourt.\t The
\nlearned\t Solicitor  General also argued that  Article  31(c)
\ndoes  apply  to the legislation in question, and  therefore,
\ninfraction  of\tArticle 14 or 19 should not have  been\tgone
\ninto by the Court.\n<\/p>\n
      Mr.   F.S.  Nariman, learned senior counsel  appearing
\nfor the Elphinstone Spinning and Weaving Mills Company Ltd.,
\nemphatically  urged that Article 31 A (1)(b) was  introduced
\nby the Constitution IVth Amendment Act of 1955 which enables
\nto  make  law  for  taking over of  the\t management  of\t any
\nproperty  by  the State for a limited period either  in\t the
\npublic\tinterest or in order to secure proper management  of
\nthe  same.   The law made by the Parliament is the  Textiles
\nUndertakings  (Taking  over of Management) Act,\t 1983.\t The
\nsaid law permits take over only when the financial condition
\nbecame\tunsatisfactory\tby reason of mis-management  of\t the
\naffairs\t of  the Textile Undertakings.\tAnd, this being\t the
\nposition,  if  there  is  no   material\t to  establish\tthat
\nfinancial  losses  is on account of mis-management then\t the
\ntaking over of the management of the mill by taking recourse
\nto  the impugned Act must be held to be invalid and the High
\nCourt  in fact has held it to be invalid.  According to\t Mr.
\nNariman\t mere  losses will not entitle to take over  of\t the
\nmanagement of mill, inasmuch as, all the mills have suffered
\nloss  and,  therefore, there must be some other\t factors  on
\naccount\t of which it will be possible for the Government  to
\ntake over the management of only 13 mills as included in the
\nFirst  Schedule\t to the Act.  He also further urged that  in
\nview  of  the  language of Article 31A (1)(b)  the  law\t for
\ntaking\tover of the management must be for a limited  period
\nand the expression pending nationalisation in the impugned
\nAct cannot be construed to be a definite limited period and,
\ntherefore,  the Act in question is not referable to  Article
\n31A  (1)(b).  It is in this connection he cited the decision
\nof Raman Lal as well as the decision of the Delhi High Court
\nin  ILR\t 74  (1)  Delhi 311 and also a\tdecision  of  Andhra
\nPradesh High Court in AIR 1977 A.P.  420.  Mr.\tNariman also
\nargued\tthat in the impugned Act there is intrinsic evidence
\nto indicate that the taking over of management was not for a
\nlimited period as it would be apparent from Sections 33, 34,
\n36  and\t Sections  6,  8   and\t11(1),\tand  essentially  it
\nconstitutes  acquisition and not take over of management for
\na  limited  period.   Mr.   Nariman   also  urged  that\t the
\nlegislative  declaration  of facts are not  beyond  judicial
\nscrutiny in the constitutional context of Articles 14 and 16
\nand  the  Court can always tear the veil to decide the\treal
\nnature of the statute if the facts and circumstances warrant
\nsuch  a course.\t A mere declaration in the legislation would
\nnot  be\t permissible so as to defeat the fundamental  right.
\nIf the legislation in question was merely a pretence and the
\nobject\twas discrimination the validity of the statute could
\nbe  examined  by the Court notwithstanding  the\t declaration
\nmade  by the legislature and, therefore, the High Court\t was
\nfully  justified  in examining the facts and coming  to\t the
\nconclusion  that in grouping the three mills alongwith other
\n13  mills  for\tthe purpose of taking  over  the  management
\nconstitutes an infraction of Article 14 of the Constitution.
\nIn  support  of\t this contention he places reliance  on\t the
\ndecision of this Court in Indira Sawhney vs.  Union of India
\nand  others<\/a>  (2000)  1 Supreme Court Cases 168.\t  Mr.\tR.F.
\nNariman,  learned  senior  counsel   pursued  the  arguments
\nadvanced  by  Mr.   F.S.   Nariman and\tcontended  that\t the
\nclassification\titself\tmay be valid but while choosing\t the
\nmills to be included in such classification and clubbing the
\nElphinstone Mill within the group of 13 is discriminatory in
\nas  much as a well managed mill is being clubbed with a mis-\n<\/p>\n
managed\t  mill.\t   According   to    Mr.    R.F.     Nariman
\ncategorisation\tof the Elphistone mill as a mis-managed mill
\nis  contrary to the facts available on record, and as  such,
\nit  violates  Article 14.  Mr.\tR.F.  Nariman  also  further
\nurged  that  a\tmachinery  available under IDR\tAct  for  an
\ninquiry\t not having been resorted to it contravenes  Article
\n19(1)(g).  According to learned counsel the Parliament chose
\nto  adopt  a procedure without any urgency being  there\t and
\nwithout any machinery to look into the facts on the basis of
\nwhich  categorisation  could be made, the classification  is
\nbad  in\t law.  Mr.  Nariman also contended that in  view  of
\nArticle 300A the law must be reasonable and fair and in view
\nof  the\t judgment  of this Court in Dwarkadas  Shrinivas  of
\nBombay\tvs,.  The Sholapur Spinning & Weaving Co.  Ltd.\t and
\nothers\t1954 Supreme Court Reports 674, the impugned action
\nis  bad in law.\t Mr.  RF Nariman also contended that it\t was
\nopen  for  the Writ Petitioners to place and establish\tthat
\nthe  legislative  facts\t are  incorrect\t  and  in  fact\t the
\npetitioners have discharged that burden by placing materials
\non record and the High Court, therefore, was fully justified
\nin  arriving at its decision on the materials produced.\t  He
\nplaced\treliance on the decision of this Court in Dr.\tK.R.
\nLakshmanan  vs.\t State of T.N.\tand another (1996) 2 Supreme
\nCourt\tCases  226  in\t support  of  aforesaid\t contention.
\nAccording  to  Mr.  Nariman the following facts\t establishes
\nthat  the  Elphinstone Mill was not a mis-managed  mill\t and
\nParliament  erroneously\t clubbed  the same with\t other\tmis-
\nmanaged\t mills.\t Those facts are :- (a) IDBI viability study
\nreport\t(b)  Task Force Report (c) Approval of\tthe  Central
\nGovernment  itself  to\tappoint\t a  Managing  Director\t (d)
\nSanction  of loan by IRCI AND IDBI in September 1993 (e)  No
\ninvestigation  done  under Section 15 and 15(a) of IDR\tAct,
\nand  (f)  No  action  of any kind under\t the  provisions  of
\nCompanies  Act, and on this score the conclusion of the High
\nCourt is unassailable.\n<\/p>\n
      Mr.   Ganesh,  learned counsel appearing for  the\t New
\nCity Mills contended, that the High Court itself has given a
\npositive  finding  on the basis of the materials those\thave
\nbeen  produced that the performance of the mill;  was  good.
\nEven  the  Counter Affidavit of the Union Government  before
\nthe High Court does not indicate that the performance of the
\nNew  City  Mill\t was  in any way made out  a  case  of\tmis-
\nmanagement.   The  analysis of Mr.  Bilmoria, the letter  of
\nRBI  dated  23rd March, 1983 and the very Task Force  Report
\nclearly demonstrates that the New City Mill was not at all a
\nmis-managed mill and these materials could be looked into by
\nthe  Court  when the Mill itself had alleged  discrimination
\nunder  Article 14.  In support of this contention he  places
\nreliance  on the decision of this Court in Shashikant Laxman
\nKale  and  Another vs.\tUnion of India and  Another<\/a>  1990(4)
\nSupreme\t Court Cases 366 and Mrs.  Maneka Gandhi vs.   Union
\nof  India  and\tAnother<\/a> 1978 Supreme Court Cases  248.\t Mr.
\nGanesh also placed reliance on the decision of this Court in
\nChiranjit  Lal Chowdhuri vs.  The Union of India and  Others<\/a>
\n1950  Supreme  Court Reports 869 and submitted that in\tthat
\ncase  the  Court did go into the materials and came  to\t the
\nconclusion  about the mis-management and, therefore, in\t the
\ncase  in  hand\tthe  High   Court  was\tfully  justified  in
\ninterfering with the order of taking over qua New City Mill.\n<\/p>\n
      Ms.  Indira Jaisingh, learned senior counsel appearing
\nfor  the  workers of the Mills supported the stand taken  by
\nthe learned Solicitor General and placed before us different
\nmaterials  on record to establish the mis-management of\t the
\nmills concerned.\n<\/p>\n
      In  view\tof  the\t  rival\t submissions  the  following
\nquestions arise for our consideration:-\n<\/p>\n
      1.  Can the impugned Act be held to be a law providing
\nfor  the  taking over of the management of the Mills  for  a
\nlimited\t period?  2.  The Act read as a whole expresses\t the
\nintention  of the Parliament for taking over the  management
\nof  the Textile Undertakings specified in the First Schedule
\nin  the\t public interest or is it capable of indicating\t the
\nlegislative  intent  that only those Mills  whose  financial
\ncondition  became  wholly  unsatisfactory   by\treasons\t  of
\nmis-management\tof  the affairs of the Textile\tUndertakings
\nwhich  are sought to be specified in the First Schedule\t and
\nmanagement  of\tthose Mills are being taken over  under\t the
\nAct?   3.  Has any case been made out by the Mills concerned
\nto  enable a Court that in fact by clubbing the three  Mills
\nin  the\t group\tof 13 there has been the  violation  of\t the
\nmandate\t under Article 14?  4.\tWas the High Court justified
\nin recording a conclusion that there has been a violation of
\nArticle\t 19(1)(g)?  5.\tOn the available materials on record
\nwas the High Court justified in going behind the legislative
\nintent\tapparent  on the face of the Act to find out the  so
\ncalled\ttrue  intention and thereby coming to  the  ultimate
\nconclusion  that  there has been a gross  discrimination  in
\nclubbing the three mills with the other admitted mis-managed
\nmills which are enumerated in the Schedule to the Act?\n<\/p>\n
      But  before examining the aforesaid questions it would
\nbe  appropriate\t for  us  to notice the\t legal\tposition  on
\ncertain\t general  principles relating to the challenge of  a
\nstatute\t in  the  anvil\t of  Articles  14  and\t19  and\t the
\nparameters  of Courts jurisdiction to examine materials for
\narriving  at the legislative intent behind a statute as well
\nas the presumption of constitutionality of a statute.\n<\/p>\n
      A\t statute is construed so as to make it effective and
\noperative.    There  is\t always\t a  presumption\t  that\t the
\nlegislature  does not exceed its jurisdiction and the burden
\nof  establishing  that\tthe   legislature  has\ttransgressed
\nconstitutional\t mandates  such\t as,   those   relating\t  to
\nfundamental  rights  is always on the person who  challenges
\nits  vires.  Unless it becomes clear beyond reasonable doubt
\nthat  the  legislation in question transgresses\t the  limits
\nlaid  down by the organic law of the constitution it must be
\nallowed to stand as the true expression of the national will\n<\/p>\n
–  Shell  Company of Australia vs.  Federal Commissioner  of
\nTaxation  (1931)  AC  275 (Privy  Council).   The  aforesaid
\nprinciple,  however,  is subject to one exception that if  a
\ncitizen\t is  able  to  establish that  the  legislation\t has
\ninvaded\t its fundamental rights then the State must  justify
\nthat  the  law\tis  saved.  It is also a  cardinal  rule  of
\nconstruction  that  if one construction being given  statute
\nwill  become  ultra  vires  the powers\tof  the\t legislature
\nwhereas\t on  another  construction which may  be  open,\t the
\nstatute\t remains effective and operative then the Court will
\nprefer\tthe  latter, on the ground that the  legislature  is
\npresumed not to have intended an excess of jurisdiction.  In
\nSanjeev\t Coke Manufacturing Company vs.\t M\/s.  Bharat Coking
\nCoal  Limited<\/a>  (1983)  1  Supreme   Court  Cases  147,\t the
\nConstitution Bench speaking through Chinnappa Reddy, J., had
\nobserved, in the context of interpretation of the provisions
\nof  Coking  Coal Mines (Nationalisation) Act, 1972 that\t the
\nCourt  is  not\tconcerned with the statements  made  in\t the
\nAffidavits  filed by the parties to justify and sustain\t the
\nlegislation.  The deponents of the affidavits filed into the
\ncourt  may speak for the parties on whose behalf they  swear
\nto  the\t statements.  They do not speak for the\t Parliament.
\nNo  one may speak for the Parliament and Parliament is never
\nbefore the court.  After Parliament has said what it intends
\nto  say, only the court may say what the Parliament meant to
\nsay.   None  else.  Once a statute leaves Parliament  House,
\nthe  Court  is the only authentic voice which may  echo\t the
\nParliament.   This  the Court will do with reference to\t the
\nlanguage  of  the statute and other permissible\t aids.\t The
\nexecutive  Government  may  place  before  the\tcourt  their
\nunderstanding of what Parliament has said or intended to say
\nor what they think was Parliaments object and all the facts
\nand   circumstances  which  in\ttheir\tview  led   to\t the
\nlegislation.   When  they  do  so, they\t do  not  speak\t for
\nParliament.  No Act of Parliament may be struck down because
\nof  the\t understanding or misunderstanding of  parliamentary
\nintention  by  the  executive Government  or  because  their
\nspokesmen  do  not  bring  out\trelevant  circumstances\t but
\nindulge in empty and self-defeating affidavits.\t They do not
\nand they cannot bind Parliament.  Validity of legislation is
\nnot to be judged merely by affidavits filed on behalf of the
\nState, but by all the relevant circumstances which the court
\nmay  ultimately\t find  and more especially by  what  may  be
\ngathered  from what the legislature has itself said.  In the
\nfacts  of  that\t case  the Court had held that\tWe  do\tnot
\nentertain  the\tslightest doubt that the nationalisation  of
\nthe coking coal mines and the specified coke oven plants for
\nthe  above purpose was towards securing that the  ownership
\nand  control of the material resources of the community\t are
\nso distributed as best to subserve the common good and there
\nhas  been no discrimination or infringement of Article 14 of
\nthe Constitution Justice A.N.  Sen in his separate judgment
\nalso agreed with the ultimate conclusion of Chinnappa Reddy,
\nJ  and\thad  said  that\t there was  logical  basis  for\t the
\nnationalisation\t of  the 4 oven plants of  the\tpetitioners,
\nleaving out a few and I am not satisfied that there has been
\nany  wrong and arbitrary discrimination of Article 14 of the
\nConstitution.\tWhile examining the constitutional  validity
\nof the special courts bill in the anvil of Article 14 of the
\nConstitution,\tafter  an  exhaustive\treview\tof  all\t the
\ndecisions  bearing on the question, in 1979(1) S.C.C.\t380,
\nit was held as follows:-\n<\/p>\n
      (3) The constitutional command to the State to afford
\nequal  protection of its laws sets a goal not attainable  by
\nthe   invention\t and  application  of  a  precise   formula.
\nTherefore,  classification  need  not be constituted  by  an
\nexact  or  scientific exclusion or inclusion of\t persons  or
\nthings.\t  The courts should not insist on delusive exactness
\nor  apply doctrinaire tests for determining the validity  of
\nclassification\tin  any\t given\t case.\t Classification\t  is
\njustified  if  it  is  not   palpably  arbitrary.   (4)\t The
\nprinciple underlying the guarantee of Article 14 is not that
\nthe  same  rules of law should be applicable to all  persons
\nwithin the Indian territory or that the same remedies should
\nbe  made  available to them irrespective of  differences  of
\ncircumstances.\t It  only means that all  persons  similarly
\ncircumstanced  shall  be  treated alike both  in  privileges
\nconferred and liabilities imposed.  Equal laws would have to
\nbe applied to all in the same situation, and there should be
\nno  discrimination  between  one person and  another  if  as
\nregards the subject-matter of the legislation their position
\nis  substantially  the same.  x x x x x x x x x (6) The\t law
\ncan  make  and set apart the classes according to the  needs
\nand   exigencies  of  the  society   and  as  suggested\t  by
\nexperience.   It can recognise even degree of evil, but\t the
\nclassification\tshould\tnever  be arbitrary,  artificial  or
\nevasive.   (7) The classification must not be arbitrary\t but
\nmust  be rational, that is to say, it must not only be based
\non  some qualities or characteristics which are to be  found
\nin  all\t the persons grouped together and not in others\t who
\nare  left  out but those qualities or  characteristics\tmust
\nhave a reasonable relation to the object of the legislation.
\nIn order to pass the test, two conditions must be fulfilled,
\nnamely,\t (1)  that the classification must be founded on  an
\nintelligible  differentia which distinguishes those that are
\ngrouped\t together from others and (2) that that\t differentia
\nmust  have  a rational relation to the object sought  to  be
\nachieved by the Act.\n<\/p>\n
      In  the Doypack System Pvt.  Ltd.\t vs.  Union of India
\n  (1988) 2 Supreme Court Cases 299, the Court had  observed
\nthat  when  the constitutionality of a legislation is  being
\nassailed  before  a Court it is the collective will  of\t the
\nParliament with which the Court is concerned.  No officer of
\nthe   department   can\tspeak\tfor  the  Parliament.\t The
\ninterpreter  of the statute must take note of the well known
\nhistorical  facts.  In conventional language the interpreter
\nmust  put himself in the armchair of those who were  passing
\nthe  Act  i.e.\t the Members of the Parliament.\t It  is\t the
\ncollective  will  of  the  Parliament\twith  which  we\t are
\nconcerned.   The aforesaid observation had been made in\t the
\ncontext\t of  an\t argument sought for by the  petitioner\t for
\nproduction  of\tcertain documents to ascertain the  question
\nwhether the shares vested in the Government or not?\n<\/p>\n
      In  Bearer  Bonds case (1981) 4 Supreme  Court  Cases
\n675,  this Court held that it is a rule of equal  importance
\nthat  laws relating to economic activities should be  viewed
\nwith  greater latitude than law touching civil rights,\tsuch
\nas freedom of speech, religion etc.  The Court observed that
\n:-\n<\/p>\n
      It  has been said by no less a person than Holmes, J.
\nthat  the  legislature\tshould be allowed some play  in\t the
\njoints,\t because it has to deal with complex problems  which
\ndo  not\t admit\tof  solution   through\tany  doctrinaire  or
\nstrait-jacket  formula and this is particularly true in case
\nof  legislation dealing with economic matters, where  having
\nregard\tto  the nature of the problems required to be  dealt
\nwith,  greater\tplay in the joints has to be allowed to\t the
\nlegislature.   The  court should feel more inclined to\tgive
\njudicial  deference to legislative judgment in the field  of
\neconomic  regulation  than in other areas where\t fundamental
\nhuman rights are involved.  Nowhere has this admonition been
\nmore  felicitously expressed than in Morey v.  Doud (354  US
\n457:1 L Ed 2d 1485 (1957) where Frankfurter, J.\t said in his
\nintimitable style:\n<\/p>\n
      In  the utilities, tax and economic regulation  cases,
\nthere  are  good reasons for judicial self-restraint if\t not
\njudicial deference to legislative judgment.  The legislature
\nafter  all  has the affirmative responsibility.\t The  courts
\nhave  only  the\t power to destroy, not to  reconstruct,\t the
\nuncertainty,  the  liability  to   error,  the\t bewildering
\nconflict  of the experts, and the number of times the judges
\nhave been overruled by events  self- limitation can be seen
\nto be the path to judicial wisdom and institutional prestige
\nand stability.\n<\/p>\n
      The  Court  must always remember that legislation\t is
\ndirected  to practical problems, that the economic mechanism
\nis  highly  sensitive  and complex, that many  problems\t are
\nsingular   and\tcontingent,  that   laws  are  not   abstrct
\npropositions and do not relate to abstract units and are not
\nto  be\tmeasured by abstract symmetry;\tthat exact  wisdom
\nand  nice  adaption of remedy are not always  possible\tand
\nthat  judgment\tis largely a prophecy based on\tmeagre\tand
\nuninterpreted  experience.  Every legislation  particularly
\nin  economic matters is essentially empiric and it is  based
\non  experimentation  or\t what one may call trial  and  error
\nmethod\tand  therefore\tit cannot provide for  all  possible
\nsituations  or anticipate all possible abuses.\tThere may be
\ncrudities   and\t inequities  in\t  complicated\texperimental
\neconomic  legislation but on that account alone it cannot be
\nstruck\tdown as invalid.  The courts cannot, as pointed\t out
\nby  the\t United\t States\t Supreme   Court  in  Secretary\t  of
\nAgriculture  v.\t Central Reig Refining Company (94 L Ed 381:
\n338  US\t 604 (1950)) be converted into tribunals for  relief
\nfrom  such  crudities  and inequities.\tThere  may  even  be
\npossibilities  of abuse, but that too cannot of itself be  a
\nground\tfor invalidating the legislation, because it is\t not
\npossible  for  any legislature to anticipate as if  by\tsome
\ndivine prescience, distortions and abuses of its legislation
\nwhich  may be made by those subject to its provisions and to
\nprovide\t against  such\tdistortions   and  abuses.   Indeed,
\nhowsoever  great may be the care bestowed on its framing, it
\nis  difficult  to  conceive of a legislation  which  is\t not
\ncapable\t of being abused by perverted human ingenuity.\t The
\nCourt  must therefore adjudge the constitutionality of\tsuch
\nlegislation  by the generality of its provisions and not  by
\nits crudities or inequities or by the possibilities of abuse
\nof  any of its provisions.  If any crudities, inequities  or
\npossibilities  of  abuse come to light, the legislature\t can
\nalways\tstep  in and enact suitable amendatory\tlegislation.
\nThat  is the essence of pragmatic approach which must  guide
\nand inspire the legislature in dealing with complex economic
\nissues.\n<\/p>\n
      In  Shri\tRam  Krishna Dalmia vs.\t Shri  Justice\tS.R.
\nTendolkar and Ors.,<\/a> 1959, S.C.R., 279, this Court held:\n<\/p>\n
      (a)  xxxxxxx  xxxxxxxx  (b)that  there  is  always  a
\npresumption  in\t favour\t of   the  constitutionality  of  an
\nenactment  and the burden is upon him who attacks it to show
\nthat   there   has  been  a  clear  transgression   of\t the
\nconstitutional principles;  (c)that it must be presumed that
\nthe  legislature  understands and correctly appreciates\t the
\nneed  of  its  own  people, that its laws  are\tdirected  to
\nproblems   made\t  manifest  by\t experience  and  that\t its
\ndiscriminations\t are based on adequate grounds;\t (d)that the
\nlegislature  is\t free  to recognise derees of harm  and\t may
\nconfine\t its  restrictions to those cases where the need  is
\ndeemed to be the clearest;  (e) that in order to sustain the
\npresumption  of\t constitutionality the court may  take\tinto
\nconsideration matters of common knowledge, matters of common
\nreport,\t the history of the times and may assume every state
\nof  facts  which  can be conceived existing at the  time  of
\nlegislation.\n<\/p>\n
      In  the case of The Superintendent and Remberancer  of
\nLegal  Affairs, West Bengal vs.\t Girish Kumar Navalakha\t and
\nOrs.,<\/a> 1975(4) S.C.C., 754, this Court held:\n<\/p>\n
      The  preamble provides the key to the general purpose
\nof  the\t Act.\tThat purpose is the  regulation\t of  certain
\npayments,  dealings  in foreign exchange and securities\t and
\nthe  import  and  export  of currency  and  bullion  in\t the
\neconomic  and  financial  interest of  India.\tThe  general
\npurpose\t or object of the Act given in the preamble may\t not
\nshow  the  specific  purpose of the classification  made  in
\nSection 23(1)(a) and Section 23(1A) .The Court has therefore
\nto  ascribe  a purpose to the statutory\t classification\t and
\nco-ordinate the purpose with the more general purpose of the
\nAct  and with other relevant Acts and public policies.\t For
\nachieving  this the Court may not only consider the language
\nof Section 23 but also other public knowledge about the evil
\nsought\tto be remedied, the prior law, the statement of\t the
\npurpose\t of  the  change in the prior law and  the  internal
\nlegislative  history.\tWhen  the purpose  of  a  challenged
\nclassification\tis  in\tdoubt, the court  attribute  to\t the
\nclassification\tthe  purpose  thought to be  most  probable.
\nInstead\t of asking what purpose or purposes the statute\t and
\nother\tmaterials   reflect,   the   Court  may\t  ask\twhat
\nconstitutionally  permissible  objective  this\tstatute\t and
\nother  relevant\t materials could plausibly be  construed  to
\nreflect.   The latter approach is the proper one in economic
\nregulation  cases.   The  decisions  dealing  with  economic
\nregulation  indicate  that courts have used the\t concept  of
\npurpose\t and  similar situations in a manner which  give
\nconsiderable  leeway  to the Legislature.  This approach  of
\njudicial  restraint  and  presumption  of  constitutionality
\nrequires  that the Legislature is given the benefit of doubt
\nabout its purpose.  How far a court will go in attributing a
\npurpose\t which\tthough perhaps not the probable is at  least
\nconceivable  and  which\t would allow the  classification  to
\nstand depends to a certain extent upon its imaginative power
\nand its devotion to the theory of judicial restraint.\n<\/p>\n
      The Court further held:\n<\/p>\n
      It  would seem that in fiscal and regulatory  matters
\nthe  Court  not\t only entertains a  greater  presumption  of
\nconstitutionality  but\talso places the burden on the  party
\nchallenging  its validity to show that it has no  reasonable
\nbasis for making the classification.\n<\/p>\n
      The  Legislation\tin a modern State is  actuated\twith
\nsome  policy to curb some public evils or to effectuate some
\npublic\tbenefit.   The Legislation is primarily directed  to
\nthe  problems  before the legislature based  on\t information
\nderived\t from  past and present experience.  It may also  be
\ndesigned  by use of general words to cover similar  problems
\narising\t in future.  But from the very nature of things,  it
\nis  impossible\tto anticipate fully, the  varied  situations
\narising\t  in  future  in  which\t  the  application  of\t the
\nlegislation  in hand may be called for, and, words chosen to
\ncommunicate  such  indefinite reference are bound to  be  in
\nmany  cases,  lacking  in clarity and  precision,  and\tthus
\ngiving\trise to the controversial question of  construction.
\nBearing in mind the aforesaid general principles, let us now
\nexamine the five questions formulated earlier.\n<\/p>\n
      Coming  to  the first question, the contention of\t the
\nCompanies, who were the petitioners before the High Court is
\nthat  under  Article 31A(1)(b), a law providing\t for  taking
\nover  of  the management of any property by the State for  a
\nlimited period, either in the public interest or in order to
\nsecure\tthe  proper  management of the property,  cannot  be
\nassailed  on the ground of violation of Article 14 or 19 but
\nthe  impugned  ordinance and the Act cannot be held to be  a
\nlaw  for  providing for taking over of the management for  a
\nlimited\t period, even though, the same may be in the  public
\ninterest and as such, such a law cannot be held to be immune
\nfrom  attack being violative of Article 14 or 19 within\t the
\nambit  of Article 31A(1)(b) of the Constitution.   According
\nto  the learned counsel, appearing for these textile  mills,
\nthe  expression\t for  a\t limited   period  as  a  definite
\nconnotation  and the impugned legislation being a law  until
\nthe acquisition proceedings are over, cannot be held to be a
\nlaw  for a limited period.  This argument found favour\twith
\nthe  High Court and following the decision of this Court  in
\nRaman  lals case, the High Court held that the\tlegislation
\nin  question  cannot  be held to be within  the\t purview  of
\nArticle\t 31A(1)(b)  of\tthe Constitution.  Mr.\t Salve,\t the
\nlearned\t Solicitor General, appearing for the Union of India
\ncontended  before us that it is the usual pattern of  taking
\nover  of  such\tundertaking  to take  over  the\t management,
\nimmediately by a law made by the appropriate legislature and
\nsince  it  was apparent at the time of enactment of the\t law
\nthat   the  taking  over  of   the  management\tis   pending
\nnationalisation\t which had been embodied in the\t legislation
\nitself,\t such take-over of the management must be held to be
\nfor  a limited period and the observations of this Court  in
\nRaman  lal, must be construed in the context of the facts of
\nthe  said case and will have no application to the facts and
\ncircumstances of the present case.  According to the learned
\nSolicitor  General, the legislature on being satisfied about
\nthe   financial\t instability  of   the\tmills  and   further
\nsubstantial  sum  of  money required to be pumped  into\t the
\nmills  for  running  of the same, so that  large  number  of
\nemployees  will\t not  be  kept out  of\temployment,  it\t was
\nnecessary in the public interest to take over the management
\nimmediately, inasmuch as the process of nationalisation will
\ntake  sometime,\t the  conclusion is  irresistible  that\t the
\nso-called  taking over was for a limited period and not\t for
\nad  infinitum,\tand  is intended to over-come  a  particular
\ncrisis.\t  That being the position, the High Court  committed
\nerror  in  recording a finding that the taking over  of\t the
\nmanagement was not for a limited period.\n<\/p>\n
      Mr.   Nariman,  the learned senior counsel,  appearing
\nfor  one of the mills, on the other hand contended that\t the
\nexpression  pending  nationalisation,  by  no  stretch\tof
\nimagination can be held to be a definite period and this has
\nbeen  answered\tdirectly  in the case of  The  Indore  Malwa
\nUnited\tMills Ltd.  and Ors.  Vs.  Union of India and  Ors.,
\nIndian\tLaw Reports(Delhi) 1974(1) Page 311, as well as\t the
\nHigh  Court of Andhra Pradesh in Full Bench decision of The
\nGoverning  Body\t of the Rangaraya Medical College,  Kakinada
\nand  Anr.   vs.\t The Govt.  of Andhra Pradesh and Anr.,\t AIR
\n1977,  Andhra  Pradesh, Page 420, following the decision  of
\nthis  Court in Raman lal, 1969(1) S.C.R., 42.  According  to
\nMr.   Nariman,\tthere is intrinsic evidence in the  impugned
\nAct  itself  that  the so-called taking-over was not  for  a
\nlimited period, as is apparent from examining Sections 3(3),
\n3(4),  3(6),  Section 6, Section 8 and Section 11(1) of\t the
\nAct.   The Counsel further urged that the Act is in  essence
\none  for  acquisition and not for taking over of  management
\nfor  a limited period and consequently, the challenge on the
\nground\tof Article 14 and 19 will get attracted, as the\t law
\ndoes not come within the purview of Article 31A(1)(b) of the
\nConstitution.\t Article   31A\twas    introduced   by\t the
\nConstitution  (First  Amendment)Act,  1951 to  validate\t the
\nacquisition  of\t Zamindari  and the abolition  of  Permanent
\nSettlement  without  interference from Courts.\tThe  further
\namendment of the Constitution was made by (Fourth Amendment)
\nAct  of\t 1955  with the object that items  of  agrarian\t and
\nsocial\twelfare\t legislation, which affect  the\t proprietary
\nrights, should be kept out of the purview of Articles 14, 19
\nand  31.   Clause (b) of Article 31A(1) provides for  taking
\nover  the management of any property, movable or  immovable,
\nagricultural  or  non-agricultural  for\t  a  limited  period
\nwithout\t being\tobliged to justify its action in a Court  of
\nlaw,  with  reference  to Article 14 or 19.   The  necessary
\nconditions  for application of sub-clause (b), therefore are
\nthat  the  taking  over in question must be  for  a  limited
\nperiod, as distinguished from any indefinite period and such
\ntaking\tover  must  be either in the public interest  or  in
\norder to secure the proper management of the property, which
\nof  course require to be objectively established.  That\t the
\nfacts  and  circumstances leading to the taking over of\t the
\nmanagement  of the sick mills undoubtedly indicated that the
\nsame  was  in  the public interest, but\t the  only  question
\nremains to be answered is whether it can be said to be for a
\nlimited\t period.   In Ramanlals case, 1969 (1) S.C.R.,\t42,
\nthe  provisions of Bombay Tenancy and Agricultural Lands Act
\nwas under consideration before this Court.  The said Act had
\nbeen  amended  by Bombay Act 13 of 1956, which\tconfers\t the
\npower on the State Government to take over the management of
\nany  land  on the ground that full and efficient use of\t the
\nland  had not been made for the purposes of agriculture\t and
\nunder  the Act, it was contemplated that the land taken over
\ncould  be  returned  to\t the   land  holder  under   certain
\ncontingencies.\tThis Court considering the provisions of the
\nAct  and  the rules made thereunder, came to the  conclusion
\nthat even though there may be a possibility of return of the
\nland  to  the original owner but that does not\tsatisfy\t the
\nrequirement  of Article 31A(1)(b), as the taking-over of the
\nmanagement  was\t not for a limited period.  The\t Court\theld
\nthat  the scheme of the Act ought to have shown the limit of
\nthe  period for which the management is being taken over and
\nconsequently,  the protection of Article 31A(1)(b) cannot be
\ninvoked\t as  the limit for the period of management had\t not
\nbeen  indicated.  Having examined the ratio of the aforesaid
\ndecision  to  the case in hand, we are not in a position  to
\nhold  that  the taken over of the management in the  present
\ncase  was  not\tfor  a\tlimited period\t.   The\t Act  itself
\nstipulates  that  the management of the mill is being  taken
\nover  pending  nationalisation of the mill,  therefore,\t the
\ndecision  to  nationalise the mills had already been  taken.
\nBut  as\t the  process  of   nationalisation  would  take   a
\nconsiderable  period and it was thought absolutely necessary
\nin  the\t public interest to take over the management of\t the
\nmills  immediately,  the  Parliament   passed  the  impugned
\nlegislation.  In our considered opinion the context in which
\nthe observations have been made by this Court in Raman lals
\ncase,  referred\t to supra, will have no application  to\t the
\ncase in hand and it must be construed that the management of
\nthe  property in the present case by virtue of the ordinance
\nand  the Act was for a limited period, the period being till
\nthe  process  of nationalisation is finalised.\tIt is to  be
\nnoticed that Sita Ram Mills, which was also one of the mills
\nin  category  III and had been put in Group II by  the\tTask
\nForce,\twhose  management  had\tbeen taken  over  under\t the
\nprovisions   of\t Textile  Undertakings\t (Taking   over\t  of
\nManagement)  Act, 1983 had approached the High Court and the
\nHigh Court had upheld the action of taking over but had held
\nthat  the  surplus lands appurtenant to the mills would\t not
\nvest under sub-section (2) of Section 3 of the Act, but this
\nCourt  had reversed the said decision and had held that\t the
\nsurplus lands appurtenant to the mill did form a part of the
\nassets\tin  relation to the textile undertaking\t within\t the
\nmeaning\t of  Section 3(2) of the Act and the said  land\t was
\nheld  for the benefit of, and utilised for the textile\tmill
\nin  question.\tBefore\tthis  Court, it\t is  true  that\t the
\nquestion  of  applicability  of Article\t 31A(1)(b)  had\t not
\ncropped\t up for consideration, but yet certain\tobservations
\nof  this Court in the aforesaid case would be appropriate to
\nbe quoted:-\n<\/p>\n
      There can be no doubt that the legislative intent and
\nobject\tof the impugned Act was to secure the  socialisation
\nof  such  surplus  lands  with a view to  sustain  the\tsick
\ntextile undertakings so that they could be properly utilised
\nby the Government for social good i.e.\tin resuscitating the
\ndying  textile undertakings.  Hence, a paradoxical situation
\nshould\thave  been avoided by adding a narrow  and  pedantic
\nconstruction  of a provision like sub- section(2) of Section
\n3  of the Act which provides for the consequences that ensue
\nupon the taking over in public interest of the management of
\na textile undertaking under sub-section(1) thereof as a step
\ntowards\t nationalisation  of  such undertakings,  which\t was
\nclearly\t against  the  national interest.  In  dealing\twith
\nsimilar\t legislation, this Court has always, adopted a broad
\nand liberal approach.\n<\/p>\n
      What  has been observed above, while interpreting sub-
\nsection (2) of Section 3, should be borne in mind also while
\ninterpreting  the expression for a limited period used\tin
\nArticle\t 31A(1)(b)  and in our view the construction to\t the
\naforesaid  expression  made  by\t Delhi\tHigh  Court  in\t its
\nJudgment  in The Indore Malwa United Mills Ltd.\t & Ors.\t Vs.
\nUnion  of India and Ors., I.L.R.(Delhi) 1974(1) 311, as well
\nas the Bombay High Court in the impugned judgment, cannot be
\naccepted.   The Delhi High Court has no doubt in The  Indore
\nMalwa  United  Mills case, considered the applicability\t of
\nArticle\t 31A(1)(b)  and\t held  that   taking  over  of\t the
\nmanagement, pending nationalisation cannot be held to be for
\na  limited  period, since there is no question of  returning
\nthe  property  to the old management, but we are  unable  to
\naccept\tthis  view of Delhi High Court and we hold that\t the
\nviews  expressed  therein  are not correct in  law.   Having
\nregard\tto  the\t conditions of these mills at  the  time  of
\ntaking\tover  of  the management and having  regard  to\t the
\ndecision  of  the  Union Cabinet on the basis  of  data\t and
\nmaterials  to  nationalise the mills falling under  category
\nIII  and  the ultimate policy decision of the Government  to
\nachieve\t the process of nationalisation in two stages, first
\nby  taking  over the management of the textile\tundertakings
\nand  thereafter,  enact suitable legislation to\t nationalise
\nthe  same,  the\t ultimate legislation for  taking  over\t the
\nmanagement of the mills passed by the Parliament, cannot but
\nbe  held  to  be  a law, providing for taking  over  of\t the
\nmanagement  for\t a limited period in public interest and  as
\nsuch  the  said\t law  comes within the\tpurview\t of  Article
\n31A(1)(b) of the Constitution.\tOnce it is held that the law
\nis  one\t attracting Article 31A(1)(b) of  the  Constitution,
\nthen  the validity of the said law cannot be assailed on the
\nground\t of  violation\tof  Articles  14  and  19   of\t the
\nConstitution.\tBut  since  elaborate\targuments  had\tbeen
\nadvanced, we would also examine the other questions posed by
\nus.\n<\/p>\n
      So far as the second question is concerned, the entire
\nemphasis   of\tthe   arguments\t  advanced  on\t behalf\t  of
\nt<\/p>\n
Mills  persuaded\t the High Court\t and
\nthe  High Court in fact came to the conclusion in  paragraph
\n125  of the impugned judgment that the provisions of the Act
\nread  with  its objects and reasons and the preamble  go  to
\nshow  that in the context of things the term mismanagement
\nhas been used in the impugned Act not as indicating mere bad
\nor  incompetent\t or  poor  management as  contended  by\t the
\nlearned\t  counsel  for\tthe  Union   of\t India\t but   meant
\nmismanagement  having  an  element of fraud  or\t dishonesty.
\nThereafter  the High Court examined different affidavits and
\nmaterials  and\tcame to the conclusion that the question  of
\nmanagement of the mills had no where been discussed or dealt
\nwith either directly or indirectly and that the existence of
\nbad  financial\tcondition  was in fact a  general  phenomena
\nduring\tthe said period amongst the Textile Mills in  Bombay
\nand  the same by itself anything more could not have been an
\nindication  of bad\/inadequate management.  In paragraph\t 180
\nof  the\t impugned  judgment  the  High\tCourt  came  to\t the
\nconclusion  that the Government, therefore, could not  have,
\nfor  taking over the management of the said Mills, relied on
\nthe  said  CATS\t for classifying the petitioners  Mills\t as
\nmills  whose  financial\t condition  was\t  bad  due  to\tmis-
\nmanagement.   In paragraph 203 of the impugned judgment\t the
\nlearned Judges came to the ultimate conclusion :\n<\/p>\n
      In  our  view,  therefore,   all\tthe   circumstances
\nmentioned  above  by  the learned counsel for the  Union  of
\nIndia  do not bring out either directly or inferentially any
\nmis-management on the part of the petitioner company, but on
\nthe  contrary  the fact that the said circumstances  existed
\neven in case of some of CAT I and CAT II Mills show that the
\nGovernment  could not have considered the said circumstances
\nfor  concluding\t that  the   said  Petitioners\tMills  were
\nmismanaged   or\t their\tfinancial   condition\twas   wholly
\nunsatisfactory by reason of such mismanagement.\n<\/p>\n
      The  learned Judges then held that there was no  nexus
\nbetween\t the main object or purpose of the Act to take\tover
\nthe management of only those Mills whose financial condition
\nbefore\tstrike\twas  wholly   unsatisfactory  by  reason  of
\nmis-management.,  and as such, the rights of the Mills under
\nArticle\t 14  of the Constitution has been violated.  At\t the
\noutset\tit  may\t be  stated that the  High  Court  committed
\nserious\t error in recording a finding that the preamble\t and
\nother  provisions of the Act go to show that in the  context
\nof  things  the term mis-management has been used to  mean
\nmis-  management  having an element of fraud or\t dishonesty.
\nWe  have examined the impugned Act carefully and we fail  to
\nunderstand  that  how  the  High   Court  could\t come  to  a
\nconclusion  that  the expression mis-management\t has  been
\nused to indicate an element of fraud and dis-honesty whereas
\nin  fact neither the provisions of the Act nor the object or
\npreamble have indicated any such intention.  While examining
\na  particular statute for finding out the legislative intent
\nit  is\tthe attitude of judges in arriving at a solution  by
\nstriking  a  balance  between the letter and spirit  of\t the
\nstatute\t without  acknowledging\t that they have in  any\t way
\nsupplement  the\t statute would be the proper criteria.\t The
\nduty  of  judges  is to expound and not to  legislate  is  a
\nfundamental  rule.   There  is no doubt a marginal  area  in
\nwhich  the courts mould or creatively interpret\t legislation
\nand  they  are\tthus finishers, refiners  and  polishers  of
\nlegislation which comes to them in a state requiring varying
\ndegrees\t of further processing.\t (see:\tCorocraft Ltd.\t vs.
\nPan American Airways Inc.  (1968) 3 WLR 714, p.732, State of
\nHaryana\t vs.  Sampuran Singh<\/a>  1975 (2) SCC 810).  But by no
\nstretch\t of imagination a Judge is entitled to add something
\nmore  than what is there in the Statute by way of a supposed
\nintention  of the legislature.\tIt is, therefore, a cardinal
\nprinciple  of construction of statute that the true or legal
\nmeaning\t of  an\t enactment  is derived\tby  considering\t the
\nmeaning\t of the words used in the enactment in the light  of
\nany  discernible  purpose  or object which  comprehends\t the
\nmischief  and its remedy to which the enactment is directed.
\nApplying   the\taforesaid  principle  we  really   fail\t  to
\nunderstand as to how the learned judges of Bombay High Court
\ncould  come  to\t a conclusion that  the\t mismanagement\tmust
\nnecessarily  mean an element of fraud or dishonesty.  Courts
\nare  not  entitled to usurp legislative function  under\t the
\ndisguise of interpretation and they must avoid the danger of
\ndetermining  the  meaning of a provision based on their\t own
\npreconceived notions of ideological structure or scheme into
\nwhich  the  provision to be interpreted is  somehow  fitted.
\nCaution\t is  all  the  more  necessary\tin  dealing  with  a
\nlegislation  enacted  to  give effect to policies  that\t are
\nsubject\t to bitter public and parliamentary controversy\t for
\nin  controversial  matters there is room for differences  of
\nopinion\t as  to what is expedient, what is just and what  is
\nmorally\t justifiable;\tit  is the Parliaments\topinion\t in
\nthese  matters that is paramount.  (see;  Duport Steels Ltd.
\nvs.   Sirs,  (1980) 1 All ER 529 at 541.  When the  question
\narises as to the meaning of a certain provision in a Statute
\nit  is not only legitimate but proper to read that provision
\nin its context.\t The context means;  the statute as a whole,
\nthe  previous state of law, other statutes in pari  materia,
\nthe  general  scope of the statute and the mischief that  it
\nwas  intended  to remedy.  An Act consists of a\t long  title
\nwhich  precedes\t the preamble and the said long title  is  a
\npart  of  an Act itself and is admissible as an aid  to\t its
\nconstruction.  It has been held in several cases that a long
\ntitle  along with preamble or even in its absence is a\tgood
\nguide  regarding  the  object, scope or purpose of  the\t Act
\nwhereas the preamble being only an abbreviation for purposes
\nof  reference  is  not a useful aid  to\t construction.\t The
\npreamble  of  an Act, no doubt can also be read\t along\twith
\nother  provisions of the Act to find out the meaning of\t the
\nwords  in  enacting  provisions to decide whether  they\t are
\nclear  or ambiguous but the preamble in itself not being  an
\nenacting  provision  is not of the same weight as an aid  to
\nconstruction  of a Section of the Act as are other  relevant
\nenacting  words\t to  be\t found elsewhere in  the  Act.\t The
\nutility\t of  the preamble diminishes on a conclusion  as  to
\nclarity\t of enacting provisions.  It is therefore said\tthat
\nthe  preamble  is  not to influence  the  meaning  otherwise
\nascribable  to\tthe  enacting  parts   unless  there  is   a
\ncompelling  reason  for\t it.  If in an Act the\tpreamble  is
\ngeneral\t or brief statement of the main purpose, it may well
\nbe  of little value.  Mudholkar, J.  had observed in Burakar
\nCoal  Co.  Ltd.\t vs.  Union of India – AIR 1961 SC 954,\t It
\nis one of the cardinal principles of construction that where
\nthe  language  of  an  Act is clear, the  preamble  must  be
\ndisregarded though, where the object meaning of an enactment
\nis  not\t clear the preamble may be resorted to\texplain\t it.
\nAgain  where  very general language is used in an  enactment
\nwhich,\tit  is\tclear  must be intended to  have  a  limited
\napplication,  the  preamble may be used to indicate to\twhat
\nparticular  instances,\tthe enactment is intended to  apply.
\nWe cannot, therefore, start with the preamble for construing
\nthe  provisions\t of an Act, though we could be justified  in
\nresorting  to it nay we will be required to do so if we find
\nthat  the language used by Parliament is ambiguous or is too
\ngeneral\t though in point of fact Parliament intended that it
\nshould\thave  a limited application.  In Coal Bearing  Areas
\n(Acquisition  and  Development)\t Act   1957  the  Court\t was
\nconstruing  a Notification issued under Section 4(1) of\t the
\nsaid Act and as in the present case the preamble of that Act
\nwas  to\t the  effect  An Act to establish in  the  economic
\ninterest  of  India  greater public control  over  the\tcoal
\nmining\tindustry  and its development by providing  for\t the
\nacquisition  by\t the  State of unworked land  containing  or
\nlikely\tto contain coal deposits or of right in or over such
\nland,  for the extinguishment or modification of such rights
\naccruing  by  virtue  of  any agreement,  lease\t license  or
\notherwise,  and for matters connected therewith.  Repelling
\nan  argument advanced on behalf of the Mine owners that\t the
\nAct  intended  to apply only to virgin land and not  on\t the
\nland  which  are  being worked or were worked  in  the\tpast
\nbecause\t of  the  use of the words unworked  land  in  the
\npreamble,  this Court held that the language of the enacting
\nprovisions  was\t clear and therefore not controlled  by\t the
\npreamble.   (see;  Burrakur Coal Co.  Vs.  Union of India
\nAIR  1961 SC 954 at p.\t957).  This being the position,\t and
\nthe  Textile Undertakings Taking Over of the Management Act,
\n1983,  being an Act providing for taking over in the  public
\ninterest  of  the Management of Textile Undertakings of\t the
\nCompanies   specified\tin  the\t  First\t  Schedule   pending
\nnationalisation\t of  such  undertakings\t  and  for   matters
\nconnected  therewith  or incidental thereto as\tis  apparent
\nfrom  the long title, use of the expression mis-management
\nof  the affairs in the preamble will not control the purpose
\nof  the Act, namely, the public interest and the  Parliament
\nhaving\tdecided\t to take over the management of the  Textile
\nMills  which were in serious financial crisis, in the public
\ninterest  it  was  not\topen  for the Court  to\t come  to  a
\nconclusion  by\ttaking\trecourse  to the  use  of  the\tword
\nmis-management in the preamble to hold that the Parliament
\nintended  only to take those Mills whose financial condition
\nwas  deplorable on account of mismanagement and not in\tcase
\nof  those  mills  where\t the   financial  condition  may  be
\ndeplorable but not on account of mis-management.\n<\/p>\n
      Mr.   R.F.Nariman, learned senior counsel had strongly
\nrelied\tupon the decision of this Court in Madras Race\tClub
\ncase\t1996 (2) Supreme Court Cases, 226,  whereunder\tthe
\nCourt  struck  down  the  provisions  of  Madras  Race\tClub
\n(Acquisition  and Transfer of Undertakings) Act, 1986, on  a
\nconclusion that the declaration made in the Act that the Act
\nwas  made to implement Article 39 (b) & (c) was a mere cloak
\nand  there  was\t no nexus between the Act  and\tthe  objects
\ncontained  in  Article 39 (b) & (c), and as such the Act  is
\narbitrary.   But a reading of the aforesaid case would\tmake
\nit  clear  that\t the facts and features of  that  case\twere
\ncompletely  different  from  the facts and features  of\t the
\npresent\t case.\tIn the Madras case the objects and  reasons,
\nas  indicated in the Act, was that the acquisition is for  a
\npublic\tpurpose\t but in fact there was no material  to\tshow
\nthat any inquiry or investigation had been held by the State
\nGovernment  in\tthe affairs of the Club and the\t Court\theld
\nthat  no  public purpose is being served by the\t acquisition
\nand  transfer  of  the\tundertaking  of\t the  Club  by\t the
\nGovernment.  But in the case in hand, as has been noticed by
\nthis Court in Sitaram Mills Case, the Government had before
\nit  several viability surveys made by different\t authorities
\nlike,  Ahmedabad  Textile Industries  Research\tAssociation,
\nTextile\t Commissioner Office, SR Batliboi and Company and an
\nindependent  survey  by the IDBI itself.  These surveys\t had
\nbeen  directed\tin  ascertaining whether  companies  textile
\nundertaking was a techno economically viable unit or not and
\nwhether\t it  was desirable to provide the company  with\t the
\nworking capital.  The Government in the Ministry of Commerce
\nhad constituted a Task Force to look into the affairs of the
\nCategory  III  strike affected mills.  On the basis  of\t all
\nthese informations it was decided as a matter of policy that
\nit  was desirable to achieve the process of nationalisation,
\ninitially  by  taking over the management of the  mills\t and
\nthereafter  by enacting suitable legislation to\t nationalise
\nthe  same.  The objects and reasons of the Act unequivocally
\nindicated  that the basic decision of nationalisation having
\nbeen  taken  a\tgenuine apprehension having  arisen  in\t the
\nGovernments   mind  that  unless   the\tmanagement  of\tthe
\nconcerned  undertakings\t was taken over on immediate  basis,
\nthere  might be large scale flittering away of assets  which
\nwould  be  detrimental\tto the public interest and  it\tthus
\nbecame\turgently  necessary for Government to take over\t the
\nmanagement  of the undertakings in the public interest.\t  In
\nthis state of affairs, we have no doubt in our mind that the
\ndecision  in Madras Race Club case will have no\t application
\nto the case in hand.\n<\/p>\n
      In  our considered opinion the impugned Act read as  a
\nwhole  unequivocally  indicates\t that\tthe  Parliament\t was
\nsatisfied  that\t the management of the Textile\tUndertakings
\nspecified in the First Schedule should be taken over pending
\nnationalisation\t of such undertakings, and therefore, passed
\nthe impugned Act in public interest.\n<\/p>\n
      So  far  as third question is concerned, we  think  it
\nappropriate  to discuss the same alongwith Fifth question as
\nthey  are inter-linked.\t In the case in hand the High  Court
\nappears\t to have examined in detail the functioning of\teach
\nof  these  three mills which had filed Writ Petition  before
\nit,  for  ascertaining whether the financial  conditions  of
\nthose  mills  had deteriorated because of the strike  or  on
\naccount\t of  mis-  management and on scrutiny  of  different
\nmaterials  came to hold that the Union Government has failed
\nto  establish the case of mis-management which in turn would
\nmean a case of fraud and dishonesty on the part of those who
\nwere  in management of the mills.  We have already indicated
\nthat  the  legislature\tnowhere\t  expressed  that  fraud  or
\ndishonesty  on\tthe part of those who were in management  of
\nthe  mills  had\t brought the mills to  the  acute  financial
\ncrisis.\t  That\tapart,\twhen  an Act has been  made  by\t the
\nParliament  as the Parliament thought the taking over of the
\nmanagement   of\t  the  13   Textile  Mills   pending   their
\nnationalisation\t would be in the public interest, it was not
\nopen for a Court in exercise of its power of judicial review
\nto  have  in  depth  examination   of  different  facts\t and
\ncircumstances  and record a conclusion, as has been done  in
\nthe  case  in  hand by the High Court concerned.  It  is  of
\ncourse\ttrue,  as  held by this Court in the case  of  Indra
\nSawhney\t vs.   Union of India and Others<\/a>  (2000) 1  Supreme
\nCourt  Cases 168, that the legislative declaration of  facts
\nare  not  beyond  judicial scrutiny  in\t the  constitutional
\ncontext\t of Articles 14 and 16.\t In Keshwanand Bhartis case
\nthis  Court had also observed that the Courts could lift the
\nveil  and  examine  the position inspite  of  a\t legislative
\ndeclaration.   In Indra Sawhneys case (supra) the Court was
\nexamining  whether the Appropriate Authorities have  rightly
\ndetermined the persons to be included in the creamy layer or
\nwhether such determination has been arbitrarily made.  These
\nprinciples  will have no application to a legislation of the
\npresent nature where the Parliament itself had already taken
\na  decision  to\t nationalise  the Textile  Mills  which\t had
\nundergone  severe financial crisis and such mills could\t not
\nbe  re-started without pumping in large amount of money from
\nthe  public  exchequer\tand, therefore, the  legislation  in
\nquestion was passed to take over the management of the mills
\nimmediately  as\t such take over was in the public  interest.
\nThe  argument  advanced\t on  behalf of\tthe  mills  and\t the
\nmicroscopic  examination of datas by the Court for  arriving
\nat a conclusion as to the alleged violation of Article 14 of
\nthe  Constitution  is not permissible and will not  override
\nthe  legislative intent behind taking over of management  of
\nthe  mills in the larger public interest.  The conclusion of
\nthe  High  Court  on the basis of the IDBI  Viability  Study
\nReport,\t the  Task  Force Report, approval  of\tthe  Central
\nGovernment  to\tthe posting of a Managing Director  and\t the
\nsanction  of loan by the financial institution by no stretch
\nof  imagination\t could\tout-weigh   the\t conclusion  of\t the
\nlegislature  that  the\tAct is intended to provide  for\t the
\ntaking over of the management of the Textile Undertakings of
\nthe  Companies\tspecified  in the  First  Schedule,  pending
\nnationalisation\t in  the public interest.  We are unable  to
\nagree  with the arguments advanced on behalf of the  counsel
\nappearing  for the respondents that by picking up the  three
\nmills  who  had approached the High Court and clubbing\tthem
\ntogether  with\tother  mills  in   the\tFist  Schedule\t the
\nGovernment did not have germane considerations before it, in
\nfact  it is not the Executive Government but the  Parliament
\nitself\thad  chosen  to take over the management of  the  13
\nmills included in the First Schedule to the impugned Act and
\nfor  that  purpose the impugned legislation was enacted\t and
\nthe management of the mills could be taken over by operation
\nof law.\t As has been indicated in the judgment of this Court
\nin  the case of National Textile Corpn.\t Ltd.  vs.   Sitaram
\nMills Ltd.  and others<\/a>.\t  1986 (Suppl.) Supreme Court Cases
\n117,  that  the\t Textile Mills and the Textile\tIndustry  in
\nIndia has played an important role in the growth of national
\neconomy.   Its importance in the industrial field is because
\nof  the fact that it produces an essential commodity and the
\nexport\tof  such commodity helps in building up the  foreign
\nexchange reserve of the country, simultaneously the industry
\ngives  employment  to  a  large number of  persons.   It  is
\nbecause of this consideration the Government has always been
\nconscious  that\t it is necessary to preserve such mills\t and
\nassist\tthem  by  granting  necessary  financial  loans\t and
\nadvances  from\tpublic financial institutions so that  mills
\nwill  not  be close down but in the year 1983 because of  an
\nindefinite   strike   the  financial   condition   was\t not
\nsatisfactory  on account of lack of proper management.\tThis
\nCourt  had  indicated that as the overall  economic  factors
\napplicable  to\tall  Textile  Mills in\tGrater\tBombay\twere
\nbroadly\t and  generally\t comparable the worker\tposition  of
\nmills in question was attributable to mis- management.\tThis
\nCourt had also taken note of the fact that the Government of
\nIndia  was  required to evolve a scheme to put\tthe  Textile
\nIndustries  on\tits  rail and therefore\t after\tgetting\t the
\nmatter investigated by committee and after recommending that
\nIDBI  and  Nationalised Bank should finance and put  through
\nexpeditiously,\tthe  re-habilitation  programme\t and  having
\naccepted  the  categorisation made in the meeting called  by
\nthe  Reserve  Bank of India on October 29, 1982, and  having
\nrealised  that none of the 13 mills in Category III could be
\nexpected  to  survive  on a sound  basis  without  financial
\nassistance  from the Government controlled Institutions\t and
\nNationalised  Banks  and  thereafter  obtaining\t a  detailed
\nViability Report from the IDBI and the Task Force, which was
\nconstituted  by\t the  Ministry of  Commerce  the  Government
\ndecided\t that the Mills in question should be re-habilitated
\nby  injecting  public funds but since the management of\t the
\nmills  has  been defective, in as much as had there been  no
\nmis-management\tthe  mills would not be found themselves  in
\nthe  conditions\t in which they were even before the  general
\nstrike.\t As the matter of policy it was desirable to achieve
\nthe process of nationalisation in two stages (1) taking over
\nof the management and (2) thereafter suitable legislation to
\nnantionalise  the same and the taking over of management was
\nwith  a\t view to implement the decision of  nationalisation.
\nWe  have  refrained  from  going into  the  details  of\t the
\nfinancial  position of different mills which filed the\tWrit
\nPetition  in  Bombay High Court in as much as the  financial
\ncondition  was\tsuch that it could not have revived  without
\npumping\t in  of large scale of money either  from  financial
\ninstitutions or from the IDBI.\tThe fact that in some of the
\nReports\t indicating  viability of the mills on\tlarge  scale
\nmoney  being  pumped  in  would not in any  way\t affect\t the
\nultimate conclusion of the Parliament in providing for a law
\nto  take  over\tin  the public interest\t the  management  of
\nTextile Undertakings of the Companies specified in the First
\nSchedule,  as the danger of pumping in of large sum from the
\npublic\texchequer without taking over the management of\t the
\nmills  would  not have been a prudent action.  As  has\tbeen
\nstated\tearlier,  and as is apparent from the long title  of
\nthe  Act itself, that the decision to nationalise the  mills
\nhad  already been taken, but pending nationalisation the  13
\nmills  in  question  including\tthe   mills  of\t the   three
\npetitioners  who  filed Writ Petition Bombay High Court\t the
\nmanagement  was\t taken over by the impugned  legislation  as
\notherwise  there  was imminent danger to the finance  to  be
\npumped\tin to the for its revival and revival was  necessary
\nto  provide employment to the large number of mill  workers.
\nIn  the aforesaid premises, we have no hesitation to come to
\na  conclusion  on the materials on record the  Parliamentary
\naction\tin  legislating\t the  law and  taking  over  of\t the
\nmanagement  of\tall  the  13 mills  included  in  the  First
\nSchedule  to the Act cannot be held to be discriminatory nor
\nthe High Court was justified in recording a conclusion about
\nthe  true  intention of the legislation that it is only\t the
\nmis-managed    mills   whose\t financial   condition\t had
\ndeteriorated,  the management of those to be taken over\t and
\nnot  others.   On the other hand the sharp deterioration  in
\nthe  financial\tposition lead to an irresistible  conclusion
\nthat  it was because of mis- management and nothing else and
\nthat  is why in the preamble of the Act the legislature have
\nindicated  that\t the  affairs of  the  Textile\tUndertakings
\nspecified in the First Schedule on account of mis-management
\nhave become wholly unsatisfactory.  In other words while the
\nAct of taking over of the management of the mills was in the
\npublic\tinterest,  the inference of mis-management  was\t the
\ninference  of  the Parliament duly arrived at from the\tfact
\nthat  the financial condition of the mills had become wholly
\nunsatisfactory\teven before the commencement in January 1982
\nand  such  financial  condition\t  has  further\tdeteriorated
\nthereafter.  This inference of the Parliament is not subject
\nto a mathematical judicial scrutiny and the way in which the
\nHigh  Court  has  gone into this question  in  the  impugned
\njudgment  is  certainly\t not within the para meters  of\t the
\npower  of High Court under Article 226 of the  Constitution.
\nIn  our view the High Court was wholly in error in  striking
\ndown  the taking over of the three petitioners mills  before
\nit   on\t  a  supposed  violation  of  Article  14   of\t the
\nConstitution.\n<\/p>\n
      So  far as the fifth question is concerned, though  it
\nis  no doubt true that the Court would be justified to\tsome
\nextent\tin examining the materials for finding out the\ttrue
\nlegislative  intent,  engrafted in a Statute, but  the\tsame
\nwould  be done only, when the Statute itself is ambiguous or
\na  particular meaning given to a particular provision of the
\nStatute,  it  would make the Statute unworkable or the\tvery
\npurpose\t of enacting the Statute would get frustrated.\t But
\nby  no stretch of imagination, it would be open for a  Court
\nto  expand even the language used in the preamble to extract
\nthe  meaning  of  the  Statute or to  find  out\t the  latent
\nintention  of  the legislature in enacting the Statute.\t  As
\nhas  been  stated earlier, in the case in hand,\t the  Taking
\nover  of  Management Statute of 1983, had been engrafted  in
\nthe  public interest as the legislature found that there  is
\nimperative  need  to  take  over of the\t management  of\t the
\ncompanies until the process of nationalisation is finalised.
\nThis  is apparent from the long title of the Act itself\t and
\nthe  preamble also indicates that to make the mills  viable,
\nit  would be necessary for the public financial institutions
\nto invest very large sum of money, so that the mills will be
\nrehabilitated  and  the\t interest of the  workmen,  employed
\ntherein\t would be protected.  The preamble further indicates
\nthat the process of acquisition would take a longer time and
\nto  enable  the\t Central Government to invest large  sum  of
\nmoney,\tit was necessary in the public interest to take over
\nthe  management of the undertakings.  Thus, the taking\tover
\nof  the management of the mills was in the public  interest,
\nthe  said public interest being to rehabilitate the mills by
\npumping\t in,  huge  sums  of public  money  to\tprotect\t the
\ninterest of the workers in the mills.  The High Court in the
\nimpugned  judgment, however gave a restricted meaning to the
\npurpose\t  of   the  act\t by  interpreting   the\t  expression
\nMismanagement  used in the first preamble to connote fraud
\nand  dis-honesty,  and in our considered opinion,  the\tHigh
\nCourt  was  wholly unjustified in going behind the  apparent
\nlegislative  intention as already stated and in coming to  a
\nconclusion which cannot be sustained either on the materials
\non  record  or\tapplying the rules of  interpretation  of  a
\nStatute.   The\tsaid conclusion of the High Court as to\t the
\nspirit behind the Statute, therefore, cannot be sustained.\n<\/p>\n
      Apart  from  answering the five points, formulated  by
\nus, we may also deal with some other ancillary points, which
\nhave been raised in course of arguments.  Mr.  R.F.  Nariman
\nhad  argued on the basis of Article 300A of the constitution
\nand  relied  upon  the judgment of this Court  in  Dwarkadas
\nShrinivas  of Bomay vs.\t The Sholapur Spinning & Weaving Co.
\nLtd.   and  Ors.<\/a>   1954, S.C.R.\t 674, but we find  from\t the
\nimpugned  judgment  that  the said contention had  not\tbeen
\npressed\t before\t the High Court and, therefore, we  are\t not
\ncalled\tupon  to examine the contention to find out  whether
\nthe  Act can be held to be reasonable and fair.\t That apart,
\nthe  impugned  Act merely takes over the management  of\t the
\nproperty  by a legislation permitted under Article 31A(1)(b)
\nof  the Constitution.  This being the position, Article 300A
\nwill have no application.\n<\/p>\n
      Mr.   Nariman  also had raised a contention  that\t the
\nvery  fact  that the other provisions, available  under\t the
\nCompanies Act or under Industrial Development and Regulation
\nAct  had  not  been adhered to and a drastic step  had\tbeen
\ntaken  by  immediately taking over of the management of\t the
\nmills,\twould  constitute an infraction of Article  19(1)(g)
\nand  in\t support of the said contention, reliance  has\tbeen
\nplaced\ton  the decision of this Court in the case of  Mohd.
\nFaruk vs.  State of Madhya Pradesh and Ors.,<\/a> 1970(1) S.C.R.,\n<\/p>\n
156.   In the aforesaid case, the Court was considering\t the
\nvalidity  of  the notification issued by the  Government  of
\nMadhya Pradesh in canceling the confirmation of the bye-laws
\nmade  by  Jabalpur Municipality, in so far as  the  bye-laws
\nrelate\tto slaughter of bulls and bullocks.  This Court\t had
\nobserved  that the Court in considering the validity of the
\nimpugned  law imposing a prohibition on the carrying on of a
\nbusiness  or profession, attempt an evaluation of its direct
\nand  immediate\timpact\tupon the fundamental rights  of\t the
\ncitizens  affected  thereby and the larger  public  interest
\nsought to be ensured in the light of the object sought to be
\nachieved,  the necessity to restrict the citizens  freedom,
\nthe  inherent pernicious nature of the act prohibited or its
\ncapacity  or  tendency to be harmful to the general  public,
\nthe  possibility of achieving the object by imposing a\tless
\ndrastic\t restraint,  and  in   the  absence  of\t exceptional
\nsituations  such as the prevalence of a state of emergency
\nnational  or local  or the necessity to maintain  essential
\nsupplies,  or  the necessity to stop  activities  inherently
\ndangerous,  the\t existence  of a machinery  to\tsatisfy\t the
\nadministrative\tauthority  that\t no case  for  imposing\t the
\nrestriction  is made out or that a less drastic\t restriction
\nmay  ensure the object intended to be achieved. It is these
\nobservations  on  which Mr.  R.F.  Nariman  strongly  relied
\nupon , since in the case in hand, the appropriate Government
\ndid  not  take\tany  action  under  the\t provisions  of\t the
\nCompanies  Act,\t nor  there had been  any  investigation  as
\nprovided  under\t Section  15  and   15A\t of  the  Industrial
\nDevelopment  and Regulation Act, according to Mr.   Nariman,
\nobviously,  those provisions are less drastic in nature than
\nthe  impugned Act and in fact, there was no urgent necessity
\nfor  enacting  a law and taking a drastic measure of  taking
\nover  the management of the mills.  We are unable to  accept
\nthis  contention, since we have already discussed the public
\ninterest  involved and how the Parliament thought of  taking
\nover the management of the mills without which, it would not
\nbe  feasible to pump in, large sums of money from the public
\nexchequer  and\tleave  the  management\twith  the  erstwhile
\nmanagers  for whose mismanagement, the mills would not\thave
\nbeen  in  the situation in which the law was  enacted.\t The
\ndecision  to  take over the management of the mills  with  a
\nview  to  implement  the decision to nationalise  the  mills
\nbeing  the  basis  for enactment of the Taking Over  of\t the
\nManagement  of the Mills Act, question of taking recourse to
\nthe remedies available under the Companies Act or Industries
\nDevelopment  and  Regulation Act really do not arise and  on
\nthat score it cannot be said that there has been a violation
\nof  Article  19(1)(g).\t Applying the observations  of\tthis
\nCourt  in Dwarka Das, in fact a somewhat similar  contention
\nhad  been noticed in Sitaram Mills case in paragraph 14\t of
\nthe  judgment.\t We  are,   therefore,\tunable\tto  persuade
\nourselves  to accept the contention that the very fact\tthat
\nGovernment did not proceed with the remedies available under
\nother  Act  and proceeded to enact a legislation for  taking
\nover  of  the  management of the Mills would  constitute  an
\ninfraction of Article 19 (1)(g) of the Constitution.  We may
\nreiterate  that\t we are examining the enactment of a law  by
\nthe  Parliament\t itself and the wisdom of the Parliament  in
\ntaking\ta decision to take over the management of the  mills
\nin  the larger public interest and not an executive decision
\nof  the\t Government which could have taken recourse to\tsome
\nother  remedial\t measure  provided   under  the\t  Industries
\nDevelopment  and  Regulation Act or the Companies  Act.\t  If
\nParliament  decides  to\t enact\ta law for  taking  over\t the
\nmanagement  of the Textile Mills, pending completion of\t the
\nprocess\t of nationalisation, on a genuine apprehension\tthat
\nthere  might  be a large scale flittering away of assets  if
\nthe  management is not taken over and that would be  grossly
\ndetrimental  to the public interest it would not be open for
\nthe  Court  to examine the question whether  other  remedies
\ncould  have been taken and not being taken there has been an
\ninfraction  of Article 19(1)(g).  In the aforesaid premises,
\nwe  have no hesitation in coming to the conclusion that\t the
\nHigh  Court  was  in error to hold that there  has  been  an
\ninfraction of Article 19(1)(g) in the case in hand.\n<\/p>\n
      In  view\tof our conclusions, as aforesaid, we do\t not
\npropose\t to examine the contention of the learned  Solicitor
\nGeneral,  with regard to the applicability of Article 31C of
\nthe  Constitution,  which  he had raised in  course  of\t his
\narguments.  In the premises, these appeals are allowed.\t The
\nimpugned  judgment of the Bombay High Court is set aside and
\nthe  writ  petitions,  filed  before the  High\tCourt  stand
\ndismissed.\n<\/p>\n
      During  the  pendency of these appeals this Court\t had
\npassed\tsome  interim  orders with regard to  possession  of
\ncertain land and other assets as well as with regard to cars
\nand  telephone connections.  In view of our decision setting
\naside the impugned judgment of Bombay High Court and in view
\nof  Section  3(2) of the Act all interim orders would  stand
\nvacated.   But\tthe Elphinstone Spinning & Weaving Mills  in
\nits  Writ Petition No.\t2401 of 1983 having made a  specific
\ncase  that  notwithstanding  the  Act being  valid  and\t the
\nmanagement of the mills can be taken over and its properties
\nand  assets  vest with the Central Government under  Section
\n3(2)  of  the Act, but there are certain other assets  which
\ncannot\tbe held to form a part of the assets of\t Elphinstone
\nSpinning  and  Weaving Mill and, therefore, cannot be  taken
\nover, the High Court has not considered this question as the
\nAct  itself was struck down but it would be meet and  proper
\nfor the High Court now to consider the same, bearing in mind
\nthe  law  laid\tdown by this Court in  Sitaram\tMills  case
\ninterpreting  the  provisions of Section 3(2) of the Act  on
\nthe  materials to be produced by the parties.  Be it  stated
\nthat  until  a decision is given by the High Court  on\tthis
\nscore,\tby  virtue of operation of law all the assets  would
\nstand  vested  and such vesting would be subject to a  final
\ndecision  of  the  High\t Court in respect of  any  of  these
\nso-called  assets which the petitioner establishes not to be
\nan  asset  of  Elphinstone Mill\t notwithstanding  the  wider
\nmeaning given to Section 3(2) in Sitaram Mills case.\n<\/p>\n
      ………………………………………..J.
\n\t\t\t\t(G.B.  PATTANAIK)<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Union Of India vs Elphinstone Spinning & Weaving … on 1 January, 2001 Author: Pattanaik Bench: G.B. Pattanaik, S.Rajendra Babu, D.P.Mohapatra, Doraiswamy Raju, S.V.Patil CASE NO.: Appeal (civil) 2995-2997 of 1984 PETITIONER: UNION OF INDIA RESPONDENT: ELPHINSTONE SPINNING & WEAVING CO.LTD.& ORS. DATE OF JUDGMENT: 01\/01\/2001 BENCH: G.B. PATTANAIK & S.RAJENDRA […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-48540","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nUnion Of India vs Elphinstone Spinning & Weaving ... on 1 January, 2001 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/union-of-india-vs-elphinstone-spinning-weaving-on-1-january-2001\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Union Of India vs Elphinstone Spinning & Weaving ... on 1 January, 2001 - 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