LAWS(MPH)-1980-9-45

INDORE TEXTILES LIMITED Vs. UNION OF INDIA

Decided On September 08, 1980
INDORE TEXTILES LIMITED Appellant
V/S
UNION OF INDIA Respondents

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution, the petitioners challenge an order dated 12th August 1977 passed by the central Government under section 18aa of the Industries (Development and regulation) Act, 1951 authorising the Madhya Pradesh State Textile Corporation Ltd. to take over the management of a textile mill at Ujjain.

(2.) THE Textile Mill with which we are concerned here was originally known as Deepchand Mills and was an industrial undertaking owned by the vinod Mills Ltd. The Textile Mill was purchased by the Phoenix Mills Ltd. sometime in September 1973, after which it was named as Phoenix Mills unit No. 2. This unit enjoyed credit facility of Rs. 80 lacs from the Bank of india. The Textile Mill was purchased on 10th February 1977 by the Indore textiles Ltd. , petitioner No. 1 in this petition, from the Phoenix Mills Ltd. The Bank of India then withdrew the credit facility and transferred it to phoenix Mills Unit No. 1. There was a partial lay-off on 29th March 1977 and from 13th April 1977 the Mill was closed. On 24th May 1977 the deputy Secretary to the Government of Madhya Pradesh, Commerce and industries Department, wrote to the Deputy Secretary to the Government of india, Ministry of Commerce, suggesting action under section 18aa of the industries (Development and Regulation) Act. It was stated in this letter that Kasliwals who owned the controlling shares in the Indore Textiles Ltd. , petitioner No. I, had no experience of running a textile mill, that the bank bad refused to extend credit facility to this company and that in the absence of any financial assistance the Kasliwals were not in a position to start and run the mill. It was also stated that the closure of the mill resulted in the loss of production of an essential commodity and also created a very serious law and order problem as 2700 workers were thrown out of employment. It was further stated that a Sangharsha Samiti had been formed which was resorting to the various modes of agitation such as processions, public meetings and Dhamas, fast unto death etc. and that the situation was explosive and was getting aggravated with the ensuing Assembly elections. It was then stated that the State Government undertook the responsibility for financial and administrative management if action under section 18aa was taken and management entrusted to the Madhya Pradesh Textile Corporation Ltd. , which is a State Government undertaking. There was a press statement by shri Naronha, the Advisor to the Governor on 1st June 1977 indicating that the State Government wanted to take over the management of the Textile mill provided the Central Government agreed to it. This press statement appeared in the Daily Nav Bharat of 1st June 1977. Similarly, in the Daily nai Dunia of 5th June 1977 a news item was published stating that Shri hukumchand Kachhwah, M. P. , gave the information that the Central government had taken a decision for taking over of the Textile Mill. The petitioner company then sent a telegram on 5th June 1977 to the Government of India stating that it was willing to run the mill if normal and usual banking facilities were made available. It was also stated that it will welcome the participation of the labour, Government and bank in the management. In the alternative, it was suggested that it was willing to sell the mill for a fair consideration. The telegram further stated that the petitioner company strongly objected to the take over of the management or appointment of Madhya Pradesh State Textile Corporation Ltd. or Shri Dinker kedarnath, Deputy Secretary to the State Government in Commerce and industries Department, to deal with the mill in any capacity. On 14th June 1977 the Central Government appointed a committee for investigation of the affairs of the mill under section 15. Thereafter, the Central Government passed the impugned order on 12th August 1977. By this order the Central government authorised the Madhya Pradesh State Textile Corporation Ltd. to take over the management of the whole of the mill for a period of five years. The order also records satisfaction of the Central Government for taking action under section 18-AA.

(3.) SECTION 15 of the Industries (Development and Regulation) Act authorises the Central Government to make or cause to be made an investigation in respect of any industry of industrial undertaking. On completion of investigation under section 15, the Central Government can issue directions under section 16 of the Act for regulating the production, requiring the industrial undertaking to take such steps as may be necessary for stimulating-the development of the industry, prohibiting the industrial undertaking from resorting to any act or practice which might reduce its production capacity or economic value and controlling the prices or regulating the distribution. Section 15-A (1) confers power on the Central Government to assume management or control of an industrial undertaking if the undertaking has failed to comply with the directions given in section 16, or if the industrial undertaking in respect of which an investigation has been made under section 15, is being managed in a manner highly detrimental to the industry concerned or to public interest. A perusal of section 18-A goes to show that action under this section can be taken only after an investigation under section 15. Then follows section 18aa which in so far as relevant reads as follows :-