LORD KRISHNA SUGAR MILLS Vs. UNION OF INDIA

JUDGEMENT

(1.) This writ petition challenges the constitutional validity of the Sick Textile Undertaking (Take-over of Management) Act. 1972 (hereinafter called the impugned Act) and the action taken by the Central Government under the Industrial (Development & Regulation) Act, 1951 (hereinafter called the Act of 1951). The connected writ petition, namely C.W. 1051/72 also raises some of the points which are common to the present petition and the decision given today separately therein will dispose of those points in the present petition.

(2.) Petitioner No.. 1 is a public limited Company registered under the Indian Companies Act, and was started in 1938. The Company owns and operates a textile mill known as Lord Krishna Textile Mills Ltd. at Saharanpur. Petitioners 2 to 5 are the Directors of the Company (Petitioner No. 1). There are seven respondents, including the Union of India through the Secretary, Ministry of Industrial Development, Government of India being respondent No. 1. Respondent No. 3 was the State of U.P. but during the hearing, counsel for the petitioners made a statement that the name of respondent No. 3 be deleted. Therefore respondent No. 3 may be taken to have been deleted. Respondents 5 to 7 were members of the investigation committee appointed under the Act of 1951. Respondent No. 6 is Shri G. S. Sial, Chairman, Director U.P. State Textile Corporation, Kanpur.

(3.) The petitioner No. 1 owns Sugar & Textile Mills both situated at Saharanpur. The Lord Krishna Textile Mill was commissioned in the year 1953. Initially this mill was started with installed capacity of 14.960 spindles, 350 looms and a thermal power plant of 1000 K.V.A. and gradually the installed capacity rose to 32,408 spindles and 385 looms. In 1961 one of the share holders Smt. Avnash Kaur filed a petition in the High Court of Punjab, (Circuit Bench) at Delhi for winding up of the company. This application was disposed of on 27-5-1971, and the prayer for winding up of the company was disallowed. This court, however, appointed a neutral board of Directors with Shri A. N. Kirpal, Advocate as Managing Director. The board however could not function and between 27-5-1971 and 17-10-1971 there was no production in the mill. For some period between 17-8-1971 to 17-2-1972 partial operation of the undertaking took place but soon there was further deterioration and on 17-2-1972 law off notice was put up by the management of the mill and it was closed down. The mill was lying closed when the impugned Act came into force. By an order dated 4-5-1972 the Ministry of Industrial Development appointed a committee under section 15 of the Industries (Development and Regulation) Act of 1951 for making a full and complete investigation into the affairs of the said undertaking. The order dated 4-5-1972 reads as follows :-