MINERVA MILLS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) In these Writ Petitions under Art. 32 of the Constitution the petitioners, including the petitioner Minerva Mills Ltd. and some of its creditors, have challenged the legality of the order dated October 19, 1971 passed under S. 18A of the Industries (Development and Regulation) Act, 1951 (for short 'IDR Act') taking over the management of the textile undertaking of the petitioner, Minerva Mills Ltd., and the constitutional validity of the Sick Textile Undertakings, (Nationalisation) Act, 1974 (for short 'Nationalisation Act').

(2.) On August 20, 1970, the Central Government appointed a Committee under S. 15 of the IDR Act to make a full and complete investigation of the affairs of the Minerva Mills Ltd., hereinafter referred to, as 'the Company'. After the investigation was made the Central Government by an, order dated Oct. 19, 1971, authorised the National Textile Corporation to take over the management of the undertaking of the Company. The petitioners did not challenge the order to take over the management before any Court of law. During the pendency of the management of the undertaking by the National Textile Corporation, the Sick Textile Undertakings Ordinance of 1974 was promulgated and it was replaced by the Nationalisation Act. S. 3(l) of the Nationalisation Act provides that on the appointed day, every sick textile undertaking and the, right, title and interest of the owner in relation to every such sick textile undertaking shall stand transferred to, and shall vest absolutely in, the Central Government. 'Sick textile undertaking' has been defined in S. 2(j) of the Nationalisation Act as meaning, inter alia, a textile undertaking, specified in the First Schedule, the management of which has, before the appointed day, been taken over by the Central Government under the IDR Act. The textile undertaking of the Company has been specified in the First Schedule of the Nationalisation Act. So, in view of the said definition read with S. 3(l) of the Act, the undertaking had vested in the Central Government.

(3.) It has been urged by Mr. R. F. Nariman, learned Counsel appearing on behalf of the petitioners, that there was no justification for taking over the management of the undertaking of the Company under S. 18A of the IDR Act. In support of the said contention, the learned Counsel has drawn our attention to certain facts which will be stated presently. It appears that the Company had been running at a loss during the years from 1956 to 1965. The condition of the mill further deteriorated on account of recession in 1965 coupled with labour problems, and that continued till 1970. On January 2,1970, the mill had to be closed. It is the case of the petitioners that by dint of serious effort on the part of the management and labor, an amicable agreement was arrived at between them, and a phased programme for resumption of production in three stages was drawn up by the management. The then State Government of Mysore was requested to sanction the guarantee of a loan for Rs. 20 lacs. By an order dated April 24, 1971 the Government sanctioned the guarantee to enable the Company to raise a loan of Rs. 20 lacs from the State Bank of India. In the said order it was inter alia stated as follows: