A

MINERVA MILLS LTD. & ORS. ETC. ETC.

v.

B

UNION OF INDIA & ORS.

SEPTEMBER 9, 1986

[O. CHINNAPPA REDDY .AND MURARI Me>HON DUTT, JJ.]

~

Industrial (Development and Regulation) Act 1951, ss. 15 and

C !BA-Non-supply of Report of Investigation Committee-Whether fai­

lure

of natural justice-Take over of management of undertaking-Grant

of loan by government to the undertaking-Whether sufficient to say that

order of'takeover' has no basis.

'i

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·Sick Textile Undertakings (Nationalisation) Act, 1974-Validity of.

Constitution

of India, Articles 14, 19, 31A and 3/C-Challenge

that

basic or essential feature of Constitution is damaged or destroyed­

When can be raised.

Administrative Law-Natural justice-Failure of-Whether arises

in non-supply

of copy of Investigation Committee Repori under s. ! 5

· . ....._

Industrial (Development and Regulation) Act.

The petitioner, Minerva Mills Ltd.-a textile undertaking iiad been

running at a 1°"8 and bad to be closed down. The Central Government

ordered

an investigation into the affairs of the petitioner-company under

s.

15 of the Industries (Development & Regulation) Act 1931. Thereafter,

~

the State Gove'rnment of Mysore sanctioned the guarantee to enable the

petitioner-company to raise a loan of Rs.20 lacs from the State Bank of

India. After the investigation was made, the Central Government passed

an order under s. 18Aofthe IDR Act taking over the management of the undertaking of the Company on the ground that the Central Government

was

of

opinioo that the undertaking was being managed in a manner

highly detrimental to public interest. During the pendency of the man­

agement

of the

1111dertaking by the National Textile Corporation, the Sick

Textile Undertakings Ordinance of 1974 was promulgated, and it was

replaced

later on by the

Sick Textile Undertakings (Nationalisation) Act

1974.

718

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MINERVA MILLS v. U.O.l. 719

The petitioners including the company unsuccessfully challenged

before the

High Court under Art. 227, the order dated October 18, 1971,

passed by the Central Government

under s. 18A of the Industrial

(De·

velopment and Regulation) Act as also the Nationalisation Act. Their

appeals were

also summarily dismissed by the Division Bench of the High

Court.

The petitioner, Minerva Mills Ltd. and some of its creditors cha

I·

Ienged before the Supreme Court under Art. 32 of the Constitution, the

legality

of the aforesaid order as also the constitutional validity of

Sick

Textile Undertakings (Nationalisation) Act 1974.

Dismissing the writ petitions,

HELD: 1.1 The investigation

that was made under s. 15 of the

Industrial (Development

and Regulation) Act and the consequent

find­

ings of the Government on the basis of which the management of the

undertaking

of the Company was taken over under s. ISA of the

Indus!·

rial (Development and Regulation) Act, was that the affairs of the under­

taking of the Company were being managed in a manner highly detri­

mental to public interest. The undertaking had been running' at a loss and

had to be closed down on January 2, 1970. This miserable condition of the

undertaking might be due to the mismanagement of its affairs. [723E-F]

1.2 The Government might have thought of assisting the Company

to raise a loan of Rs.20 lacs, but that fact or the fact that such proposal

for assistance was made for special reasons as provided in the second

proviso to s. 4

of the Mysore

State Aid to Industries Act, 1959 is not,

sufficient to uphold the contention

of

the petitioners that there was no

basis

or foundation fortheorderunders. 18A.

[7BF-G]

l.3 The legislature had decided that the undertaking of the Com·

pany was a sick textile undertaking by including the same in the First

Schedule to the Nationalisation Act. There can be no doubt

that the

legislative judgment should be looked upon with respect and it requires

very

strong grounds to set it at naught. Jn the instant case, there is no

existence

of any such ground. [724B-C

I

2. The petitioner-company was given a hearing by the Investiga­

tion Committee and, therefore, it got ample opportunities to make re­

presentations against the proposed take-over. It is difficult to lay down

that non-supply of a copy of the report of investigation under s. 15 of the

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720 SUPREME COURT REPORTS 11986] 3 S.C.R.

Industrial (Development and Regulation) Act will always occasion a

failure of natural justice. Whether in a particular case there has been •

failure of natural justice or not will depend on the facts and circumst-

ances

of that case.

f7?5A-B]

I ,

In the instant case also, the petitioners were not in the least pre­

judiced for the non-supply to them of a copy of the report. Moreover,

they never asked for a copy of the report. They did not also move against

the order under s, ISA before the undertaking was nationalised under the -Y

Nationalisation Act. It shows that the petitioners were not aggrieved by

the said order under s. ISA for they could not be as they had not the •

required minimum resources for running the mill. [725F-H] ';} -

3. I The Nationalisation Act has been enacted to give effect to

the

policy of the

State towards securing the principles specified in clause (b)

of Art. 39 of the Constitution. Indeed a declaration in that regard has

beenmadeins.39oftheNationalisation Act. [728C-D] 'f

3.2 The Nationalisation Act gives effect to the policy of the State

towards securing the ownership and control of the material resources of

the community, which are so distributed as best to subserve the common

good.

In the circumstances, as the Nationalisation Act comes under the

protective

umbrella of Article 3IC, the petitioners are not entitled to

challenge the constitutional validity thereof on the ground of violation

of

'-"(

the provisions of Arts. I4 and I9 of the Constitution. '[728G·HI

4. Only constitutional amendments made on or after April 24,

I973 by which Acts

or Regulations were included in the Ninth

Schedule ;

can be challenged on the ground that they damage the basic or essential

features

of the Constitution or its basic structure. But if any of such Acts

~

and Regulations is saved by Art. 3 IA or by Art. 3 IC as it stood prior to

the amendment of the Constitution by the Forty-second Amendment, _..

such challenge on the ground that the constitutional amendment damages '

or destroy a basic or essential feature of the Constitution or its basic

structure as reftected in Art. I4 or Art. I9, will become otiose. [728A-C]

5. Under s. 4(I) of the Nationalisation Act, the sick textile under­

taking shall be deemed to include all properties, movable and inunov­

able, including lands, buildings, workshops, stores, etc., in the owner­

ship, possession, power or control of the owner of the sick textile under­

' taking. The question whether the vacant land has been in use, is not,

relevant for the purpose

of s. 4(I). In view of the said provision, it is

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MINERVAMILLSv. U.0.1. [DUTT,J.[ 721

difficult

to accept the contention of tlie petitioners that the vacant land.is

not a

part of the undertaking.

[731D-E]

In the instant case, the whole of the said 17.52 acres of land includ-

A

ing 4,37 acres thereof, is situate within the mill compound. The Court

cannot accept the contention of the petitioners that as the land

is lying

8

vacant since the take over it

does not form part of the undertaking. [732C-D]

>"f · ORIGINAL JURISDICTION: Writ Petition Nos. 356·361 of

.. \:

1977

Under Article 32 of the Constitution of Indi~.

R.F. Nariman, J. Peres, Mrs. A.K. Verma and S. I. Thakur for

the Petitioners.

B. Datta, Add.itional Solicitor General, T.V.S.N. Chari, Ms. V.

Grover,

Ms. Sunita Mudigarda and W. Quadri for the Respondents.

The Judgment of the Court was delivered by

DUTI, J. In these Writ

Petitions under Article 32 of the Constitu­

tion of India 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 section 18A of the Industries (Develop·

men! and Regulation) Act, 1951 (for short '!DR 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').

On August 20, 1970, the Central Government appointed a Com·

mittee section 15 of the !DR Act to make a full and complete investiga·

lion of the affairs of the Minerva Mills Ltd., hereinafter referred to as

'the Company'. After the investigation was made the Central Govern­

ment by an order dated October 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 Coporation, the

Sick Textile

Undertakillgs Ordinance of 1974 was promulgated and it

was replaced by the Nationalisation Act. Section 3( 1) of the N ationalisa·

lion Act provides that on the appointed day, every sick textile underta k -

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722 SUPREME COURT REPORTS [1986] 3 S.C.R.

ing and the right, title and interest of the owner in relation to every such

sick textile undertaking shall stand transferred to, and shall vest abso­

lutely in, the Central Government. 'Sick textile undertaking' has been

defmed in section 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 Com­

pany has been specified in the First Schedule of the Nationalisation Act.

So, in view

of the said definition read with section 3(1) of the Act, the

undertaking had vested in the Central Government.

It has been urged by Mr. R.F. Nariman, learned Counsel appear­

ing

on behalf of the petitioners, that there was no justification for taking

over the management

of the undertaking of the Company under section

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 prob­

lems, 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 labour, 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:

"The Government have carefully considered the various

factors leading to the present state of affairs of the

Mills and

also the various recommendations made by the Investigation

Committee constituted by the Government of India to go into the affairs of this Mills and have come to the conclusion •

that the Mills should be assisted to raise finances required

for working the Mills."

The said order was passed after the investigation under section 15

of the IDR Act. A few months thereafter, on October 19, 1971, the

order under section

18A of the IDR Act was passed taking over the

management of the undertaking of the

Company on the ground that the

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I

MINERVAMILLSv. U.0.1. [DUTT,J.J 723

~

Central Government was of opinion that the undertaking was being

A

managed

in a manner highly·detrimental to public interest.

It is strenuously urged on behalf of the petitioners that the order

under section 18A dated

October 19, 1971 was passed without any

application of mind, regard being had to the earlier order dated April

B

24,

1971 sanctioning the guarantee of a loan. It is submitted that there i

was no foundation for the finding of the Central Government that the

undertaking of the Company was being managed in a manner highly

detrimental to public interest, for, if that was the condition of manage-

-~

ment, the Government could not sanction a guarantee for incurring a

--

loan of Rs.20 lacs. It is, accordingly, contended that the order under

section

18A was illegal and invalid. It is submitted that on this ground c

the nationalisation of the undertaking of the

Company should be-held to

have no basis whatsoever, for, the Nationalisation Act has been made

~-

applicable to the undertaking of the Company in view of section 2U) of

the Nationalisation Act defining 'Sick textile undertaking'.

D

We are unable to accept the contention of the petitioners that the

order under section

18A of the IDR Act was

illegal. It is true that the

Government sanctioned the guarantee of a loan for Rs.20 lacs

on the

recommendation

of the Director of Industries and Commerce of the }

Government of Mysore. But, at the same time, we cannot ignore the

investigation that was made under section

15 of the IDR Act and the

consequent finding of the Government on the basis of which the man-

E 1 agement qf the undertaking of the Company was taken over _under

section 18A of the IDR Act, namely, that the_ affairs of the undertaking

"'-

of the Company were being managed in a manner highly detrimental to

~--

public interest. It has been already found that the undertaking had been

,

running at a loss and had to be closed down January 2, 1970. This

F

I

qiiserable condition of the undertaking might be due to the mismanage-

-+

ment of its affiars. The Government might have thought of assisting the

Company to raise a loan of Rs.20 lacs, but that fact or the fact that such

proposal for assistance

was

m_ade for special reasons as provided in the

second proviso to section 4 of the Mysore State Aid to Industries Act,

1959 is not, in our opinion, sufficient to uphold the contention of the

G

petitioners that there

was no basis or foundation for the order under

section 18A. /.1.. Moreover, it does not appear that the petitioners were aggrieved

by the order under section 18A inasmuch as the same was not cha!-

lenged in any court of law. There

is some force in the contention made

H

724 SUPREME COURT REPORTS [1986] 3 S.C. R.

A by the learned Additional Soliciter General that after the lapse of .,._

several years from the date of the take-over of the management of the

undertaking, the petitioners should not be allowed to challenge the

validity

of the order under section 18A. Apart from this technical

objection, the Legislature had decided that the undertaking

of the

B

Company was a sick textile undertaking by including the same in the

First Schedule to the Nationalisation Act. There can be no doubt

that

the legislative judgment should be looked upon with respect and it

t-· requires very strong grounds to set it at naught. In our opinion, there is

no existence of any such ground. '

The next ground

of attack

of.the petitioners to the validity of the ;J.

-c order under section 18A is that it was vitiated as there was no direction

by the Central Government 'under section 16 of the IDR Act. Section

16 authorises the Central Government to issue directions to the indust-

rial undertaking concerned for certain purposes as are mentioned in

r-clauses (a) to (d) of section 16 after an investigation under section 15 is

D

made and the Central Government

is satisfied that action under sec-

tion

16 is desirable. It is apparent from section 16 that it is not obligato-

ry on the Central Government to issue directions for all or any of the

purposes as mentioned in the said section. One of the two grounds for

taking over management

of an industrial undertaking, as contained in

clause (a) of section 18A, is that the industrial undertaking has failed

--..{ to comply with the directions given under section 16. The other ground

E

is that, as contained in clause (b) of section 18A, an industrial under-

taking in respect

of which an investigation has been made under sec-

'

tion 15 (whether or not any directions have been issued to the under-

•

taking in pursuance of section 16) is being managed in a manner highly ...

detrimental to the scheduled industry concerned or to public interest.

-...(

In the instant case, the undertaking of the Company had been taken over

F

under clause (b) of section 18A on the ground that it was being man-

aged in a manner highly detrimental to public interest. There is, there-

t-

fore, no substance in the contention made on behalf of the petitioners

that the impugned order under section 18A was vitiated as no direction

under section

16 was issued by the Central Government.

""

G

It is urged on behalf of the petitioners that as the Company was

not supplied with a copy of the report of investigation before the

impugned order under section

18A was passed, the respondents acted

illegally in violation

of the principles of natural justice, and the im-

pugned order

is liable to be struck down on that ground. In our opi-

H

nion, there is no substance in this contention. The Company was

MINERVA MILLS v. U.0.1. IDUTT, J.) 725

~

given a hearing by the Investigation Committee and, therefore, it got A

ample opportunities to make representations against the proposed

take-over.

It is difficult to lay down that non-supply of a copy of the

report

of investigation under section 15 of the IDR Act will always

occasion a failure

of natural justice. Whether in a particular case there

has been failure of natural justice or not

will depend on the facts and

B

circumstances of that case. As has been laid down by this Court in

KeshavMillsCo. Ltd.v. Unionoflndia, [1973]·JSCR380thatincertain

""'

cases where, unless the report is given, the party concerned cannot

make any effective representation about the action that Government

~.

takes or proposes to take on the basis of that report, the non-supply of

-

the report may invoke the application of the rules of natural justice. In

' that case, it was contented by the appellants that they should have c

been given further hearing by the Government before they took the

final decision to take over their undertaking under section

18A of the

-..(

!DR Act and that, in any event, they should have been supplied with a

copy

of the report of the Investigation Committee.

One of the grounds

that weighed with this Court for rejecting the contention was that since

D

the appellants had received a fair treatment and also all reasonable

opportunities to make out their own case before the Government they

should not be allowed to make

any grievance of the fact that they were

not given a formal notice calling upon them to show cause

why their

undertaking should not be taken over or that they had not been

~- furnished with a copy of the report. In the instant case also, as has

E

been already noticed, the Company was given a reasonable opportu-

nity of being heard

by the Investigation Committee during the investiga-

tion under section

15 of the !DR Act. In our opinion, the petitioners

,

.... were not in the least prejudiced for the non-supply to them of a copy of

~

the report. The view we take, finds support from some other facts

stated hereafter.

F

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It does not appear that the petitioners ever asked for a copy of

the report. They did not also move against the order under section 18A

before the undertaking was nationalised under the Nationalisation

Act.

It is the case of the petitioners that they did not challenge the

impugned order under section

18A because the take-over of the man-

G

agement of the undertaking was for a limited period of

five years and

the petitioners were hopeful that they would get back the undertaking

-~

after the expiry of the said period as provided in sub-section (2) of

section 18A of the

!DR Act. It shows that the petitioners were not

aggrieved

by the said order under section 18A, for they could not be as

they had not the required minimum resources for running the mill. It is

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726

SUPREME COURT REPORTS [1986] 3 S.C.R.

stated

in the counter affidavit of the respondents that the financial

position of the Company

was adverse in all respects. The

accumulated· ''r

losses as on 31.12.1969 was Rs.35.46 lakhs which did not include ar-

rears of depreciation amounting to Rs.44.06 lakhs. The worJ<\ing capi-

tal and net wealth assumed negative values. The outstanding secured

loans amounted to Rs.170.20 lakhs and unsecured loans to Rs.14.60

lakhs. There were defaults

in payment of instalments and interest.

It is

further stated that according to the Investigation Committee, the

reasons for this state of affairs

was low capital base., heavy borrowings

:.,

and consequent interest burden and paucity of working capital.

In this connection, it may be pointed out that sometime

in June

1975, after the nationalisation of the undertakings, the petitioners

including the Company filed separate writ petitions under Article

226

of the Constitution in the High Court of Karnataka challenging the

order dated October 19, 1971 under section

!SA of the !DR Act, and

also the constitutional validity of the Nationalisation Act. All these

Writ Petitions were dismissed

by a learned Single Judge of the

Karnataka High Court on July 8,

1976. The appeals preferred by some

of the petitioners including the Company were also summarily

dismis­

sed by the Division Bench of the said High Court. By an order dated

March 25,

1977, the Division Bench also dismissed applications for

leave to appeal to this Court under Article

133 of the Constitution of

India.

We are afraid, in view of the aforesaid facts the petitioners are

not entitled to challenge the impugned order under section 18A.

We

may now consider the challenge of the petitioners to the

constitutional validity of the Nationalisation Act.

It is contended on

behalf of the petitioners that the provisions of sections 5(1), 19(3),

21

read with the Second Schedule, 25 and 27 impos.e restrictions on the

exercise

by the petitioners of their fundamental right; such restrictions

being arbitrary and excessive are not reasonable within the meaning of

Article

19(6) and are violative of Articles 14 and 19(1)(g) of the

Con­

stitution. It is submitted that the Nationalisation Act containing the

said provisions alters or damages the basic structure of the Constitu­

tion as reflected in Articles 14 and 19 of the Constitution. Further, it is

submitted that though the Nationalisation Act has been included in the

Ninth Schedule to the Constitution, yet,

in view of the decision of this

Court in Waman Rao

v.

Union of India, 11981] 2 SCR I, as the inclu­

sion has been made after April 24, 1973, such challenge can be made.

We

fail to understand hciw the provisions of the Nationalisation

'

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MINERVA llLLSv. U.0.1. (DUIT, J.J 727

Act can alter or damage the basic structure of the Constitution. The A

basic structure

of the Constitution can be altered or damaged by an

amendment

of the provisiqns of the Constitution. The decision in Wa-

man Rao's case (supra) does not at all support the contention of the

petitioners. In that case, it has been observed as follows: "Jn Keshvananda Bharati ([1973] Suppl. SCR 1) decided on

April 24,

1973 it was held by the majority that Parliament

has no power to amend the Constitution so

as to damage or

destroy its basic or essential features or its basic structure.

We hold that ali amendments to the Constitution which

were made before April 24,

1973 and by which the 9th

Schedule to the Constitution was amended from time to

time by the inclusion of various Acts and Regulations the­

rein, are valid and constitutional. Amendment to the Con­

stitution made on or after April 24, 1973 by which the 9th

Schedule

to the Constitution was amended from time to

time by the inclusion of various Acts and Regulations

the­

rein, are open to challenge on the ground that they, or any

one

or

more of them are beyond the constituent power of

the Parliament since they damage the basic or essential

features

of the Constitution or its basic structure. We do

not pronounce upon the validity

of such subsequent

con­

stitutional amendments except to say that if any Act Regu­

lation i11cluded in the 9th Schedule by a Constitutional

amendment made on

or after April 24, 1973 is saved by

Article 31A, or by Article 31C as it stood prior to its

amendment

by the 42nd Amendment, the challenge to the

validity

of the relevant Constitutional Amendment by

which

that Act or Regulation is put in the 9th Schedule, on

the ground that the Amendment damages

or destroys a

basic

or essential feature of the Constitution or its basic

structure as reflected

in Articles 14, 19 or 31,

will become

otiose.

(3) Article 31C of the Constitution, as it.stood prior

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to its amendment

by section 4 of the Constitution ( 42nd G

Amendment), Act,

1976, is valid to the extent to which its

constitutionality was upheld in

Keshvananda Bharati. Arti-

cle 31C, as it stood prior to the Constitution (42nd Amend-

ment) Act does not damage any of the

b~ic or essential

features

of the Constitution or its basic

structure."

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728 SUPREME COURT REPORTS [1986] 3 S.C.R.

It is apparent from the above observation that only constitutional

amendments made on or after April 24,

1973 by which Acts or Regula­

tions were included in the Ninth Schedule can be challenged on the

ground that they damage the basic

or essential features

of the Con­

stitution

or its basic structure. But if any of such Acts and Regulations

is saved by Article 31A

or by Article 31C as it stood prior to the

amendment of the Constitution

by the Forty-Second Amendment. such

challenge on the ground that the constitutional amendment damages

or destroys a basic or essential feature of the Constitution or its basic

structure as reflected in Article

14 or Article 19, will become otiose.

The Nationalisation Act has been enacted to

give effect to

the

policy of the State towards securing the principles specified in clause

(b) of Article

39 of the Constitution. Indeed, a declaration in that

regard has been made

in section 39 of the Nationalisation Act. It was,

however, open to the petitioners to challenge this declaration, for,

in

Keshvananda Bhartiv.

State of Kera/a, [1973] Suppl. SCR l, this Court

by a majority struck down the second part of Article

31C of the Con­

stitution, namely,

"and no law containing a declaration that it is for

giving effect

to such policy, shall be called in question in any court on

the ground that it does not give effect to such

policy." No contention

has, however, been advanced before us

on behalf of the petitioners

that the Nationalisation Act does not give effect to the policy of the State towards securing the principles specified in clause (b) of Article

39 of Constitution. The reason why no such contention has been made

is obvious

in view of the objectives the Nationalisation Act seeks to

achieve. It cannot be gainsaid that textile industries constitute material

resources of the community and any setback or fall

in the production

of textile goods will have adverse effect on the national economy and

also cause hardship to the people.

It is with a view to re-organising and

rehabilitating the sick textile undertakings

so as to subserve the in­

terests

of the general public by the augmentation of the production

and distribution, at fair prices, of different varieties of cloth and yarn,

and for matters connected therewith

or incidental thereto, as stated in

the preamble, that the Nationalisation Act has been enacted. We have

considered the different provisions of the Nationalisation Act and are

satisfied that it gives effect to the policy of the

State towards securing

the ownership and control of the material resources of the community,

which are so distributed as best to subserve the common good. In the

circumstances, as the Nationalisation Act comes under the protective

· umbrella of Article 3 lC, the petitioners are not entitled to challenge

the constitutional validity thereof on the ground of violation of the

provisions of Articles

14 and 19 of the Constitution.

?

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\.

MINERVA MILLS v. U.0.1. IDUTT, J.I 729

The learned counsel for the petitioners, however, submits that in

spite

of the fact that the Nationalisation Act has been included in the

Ninth Schedule, the petitioners are entitled to challenge the constitu­

tional validity

of the provisions of the.Nationalisation Act as violative

of Articles 14 and 19 of the Constitution. It has been already noticed

A

that the Nationalisation Act fall squarely within the

ruµbit of Article

8

31C

and, consequ·ently, none of its provisions can be challenged on the

1

ground of violation of Article 14 or Article 19 of the Constitution.

Much reliance has, however, been placed by the petitioners on a ma­

jority decision

of this Court in Bhim Singhji v.

Union of India. AIR

1981

SC 234. In that case, the question that has been considered re-

lates to whether the

Urban Land (Ceiling and Regulation) Act, 1976

furthers the Directive Principles of State Policy in clauses (b) and ( c) .

of Article 39 of the Constitution. It has been held by the majority

consisting

of Chandrachud

C.J., P.N. Bhagwaii J. (as he then was) and

Krishan Iyer J. that the said Act implements or achieves the purposes

of clauses (b) and (c) of Article 39 and is valid except that section 27(1)

of the said Act in so far as it imposes a restriction on transfer of any

urban or urbanisable land with a buildin&_ or a portion only of such

building, which

is within the ceiling area, is invalid. It has been ob­

served by Chandrachud

C.J., with whom Bhagwati, J. concurs, that

fuller reasons will follow later. Subsequently, a judgment has been

delivered by Chandrachud C.J., for himself and Bhagwati J. (AIR

1985 SC 1650) wherein it has been inter alia observed as follows:

"We have gone through Krishna Iyer J's judgment closely

and find

that there is nothing that we can usefully add to it."

c

D

E

In orther words, the learned Chief Justice and Bhagwati J. have

adopted the reasons given by Krishna Iyer J. F

The learned Counsel for the petitioners has drawn our attention

to the fact that none of the Judges constituting the majority, including

Krishna Iyer J. has given any reason for striking down the provision

of

section 27(1) of the said Act. It is submitted that the majority judg­

ment is a precedent for the proposition that even though a statute

comes within the purview of Article 31C of the Constitution, yet its

validity can be challenged

on the ground of its violation of Article 14

or Article 19 of the Constitution. It is contended that in view of Bhim

Singhji's

case, we cannot take any view other than the view that such a

challenge can be made

G

H

A

B

c

D

E

F

G

H

730 SUPREME COURT REPORTS 119861 3 S.C.R.

In support of the above contention, the learned Counsel for the

petitioners has placed reliance upon the decision

of the Court of

Ap­

peal in Harper and others v. National Coal Board, [19741 2 ALL ER

441. In that case, the Court of Appeal had to consider the propriety of

the judgment of the learned Trial Judge, who based his decision on the

speeches

in the House of Lords in Central Asbestos Co. Ltd v. Dodd.

[

19721 2 ALL ER 1135. In Dodd's case the House of Lords by a

majority

of 3 to 2 affirmed the majority decision of the Court of Appeal

that time did not begin to run against the plaintiff under section 1(3) of

the Limitation Act,

1963 until he discovered that he had a worthwhile

cause

of action.

Of the three Judges, who constituted the majority of

the House of Lords, two took the same view of the law as that taken by

the majority of the Court

of Appeal, while the third took another view

of the law

which· in substance accorded with that of minority of the

House, that is, that time began to run under section

1(3) as soon as the

plaintiff knew of the facts

on which his action was based. The question

that had to be considered by the Court of Appeal was whether it was

bound by the reasoning in the speeches of the House

of Lords in

Dodd's case. In that contention, Lord Denning MR observed as

follows:

"How then do we stand on the law? We have listened to a

most helpful discussion by counsel for the proposed

plaintiffs on the doctrine

of precedent.

One thing is clear.

We can only accept a line

of reasoning which supports the

actual decision

of the House of Lords. By no possibility can

we accept any reasoning which would show the decision

itself

to be wrong. The second proposition is that, if we can

J

discover the reasoning on which the majority based their

decision, then

we should accept that as binding on us. The

third proposition is that, if

we can discover the reasoning

on which the minority base their decision,

we should reject

it.

It must be wrong

be"cause it led ihem to the wrong result.

The fourth proposition

is that if we cannot discover the

reasoning on which the majority based their decision we

are not bound by it.

We are free to adopt any reasoning

which appears to us to be correct, so long

as it supports the

actual decision

of the

House."

We fail to understand how the above observation lend any sup­

port to the contention of the petitioners. The Court of Appeal was

considering the same point as was before the House of Lords in

Dodd's

{

(

)111NERVAMILLSv. U.O.J. IDUTI,J.I 731

case. The question

was whether the Court of Appeal was bound to

adopt the same reasoning as

in Dodd's case and it was held that since

there was no discernible ratio decidendi common to the speeches in

the House of Lords in Dodd's case, the Court of Appeal

was not

bound by the reasoning

in those speeches and was free to adopt any

reasoning which appeared to the Court to be correct provided that it

supported the actual decision of the House. In the instant case, we are

not considering the question of the constitutional validity of section

27(1)

of

Urban Land (Ceiling and Regulation) Act and, therefore, it is

quite irrelevant for our purpose whether any reason was given by the

majority

in Bhim Singhji's case (supra) or not.

In

view of our decision that the Nationalisation Act comes within

the purview of Article 3

lC of the Constitution, we do not think we are

called upon to adjudicate upon the contention of the petitioners that

some of

_the provisions of the Nationalisation Act are violative of Arti­

cles

14 and 19 of the Constitution.

· . The only contention of the petitioners that remains to be con­

sidered is that the respondents have ill~gally taken over possession of

the vacant land belonging to the Company. It is the case of the

petitioners that out of the land, the mill premises comprises 34.

78

acres and the rest of the land measuring

17.5~ acres was and is vacant

~/ land. It is not in dispute that the said 17 .52 acres of land is situate

within the mill compound and except 4.37 acres thereof, the remaining

13.57 acres of land including the said 4.37 acres, is unrelated to and

unconnected with the undertaking of the Company and, accordingly, it

did not vest

in the Central Government under the Nationalisation Act.

It is also pointed out on behalf of the petitioners that the vacant land

~has not been utilised by the National Textile Corporation for any

purpose of the undertaking.

It is urged that as the vacant land was

1

: illegally and wrongfully taken possession of by the National Textile

Corporation, although the same had not vested in the Central Govern­

ment, the same should be released and given back to the Company.

In

any event, it is submitted on behalf of the petitioners that possession of

the said 4.37 acres

of land which does not form part of the compact

block of the vacant land measuring 13.57 acres should be delivered

back to the petitioners.

The respondents in their affidavit in opposition have denied and

disputed the contention of the petitioners that the said 17.52 acres

or

the said 4.37 acres of land does not form part of the sick textile under-

A

B

c

D

E

F

G

H

A

B

c

D

E

F

G

H

732 SUPREME COURT REPORTS [1986) 3 S.C. R.

taking. It is the case of the respondents that except the land measuring

4 acres 14 Gunthas (stated to be equivalent to 4.37 acres) the rest of

the land forms one compact block in which the buildings, office and

quarters of the undertaking are situate. Further it is said that the

National Textile Corporation has a programme for locating an institu­

tion

to train the technical personnel and to build quarters as a welfare

measure and, necessarily, such a complex must have vacant land

to

implement the expansion programme. Accordingly, it is contended by

the respondents that even the vacant land measuring 4 acres 14

Gunthas form an integral part of the textile undertaking.

It has already been noticed that the whole of the said 17 .52 acres of

)

land including 4.37 acres thereof, is situate within the mill compound.

We are unable to accept the contention

of the petitioners that as the

land

is lying vacant since the take over, it does not form part of the

undertaking. Under section 4(1) of the Nationalisation Act, the sick

~

textile undertaking shall be deemed to include all properties, movable r

and immovable, including lands, buildings, workshops, stores, etc. in

the ownership, possession, power

or control of the owner of the sick

textile undertaking.

In view of the said provision, it is difficult to

accept

the contention of the petitioners that the vacant land is not a

part of the undertaking. It may be that the said 17 .52 acres of land or

the said portion of it measuring 4.37 acres has not been put to any use,

but

that will not entitle the petitioners to claim that possession of the

~

land should be delivered back to the Company. The question whether

the vacant land has been in use, is not, in our opinion, relevant for

the

purpose of section 4(1). It is, therefore, difficult for us to accept the

contention

of the petitioners that the vacant land is unrelated to and

unconnected with the textile undertaking.

The learned cousel for the petitioners has placed reliance upon -

an observation

of this

Court in National Textile Corporation Ltd. and

others etc.

v. Sitaram Mills Ltd. and Others, AIR 1986

SC )234. The

question that was involved in that case was whether surplus land in the

precinct

of the taken-over undertaking was an asset in relation to the

undertaking. It was observed

"The test is whether it was held for the

benefit of, and utilised for, the textile mill". Relying upon this obser­

vation,

it is contended by the learned counsel for the petitioners that as

the vacant land, in the instant case, has not been utilised for the

undertaking, it is not an asset of the undertaking. We do not think that

. in

Sita ram Mills case this Court really meant to lay down a proposition )

that in order that a piece of land to be considered as the asset of the

textile undertaking, it must be held for the benefit of and utilised for

MINERVAMILLSv. U.0.1. [DUIT,J.J 733

the undertaking in question. Can it be said that a piece of land which is

held for the benefit

of but not utilised for the textile undertaking, as in

the instant case, is not an asset of the undertaking? The answer must

be in the negative.

In

Sitaram Mills case that observation was made in

the context

of facts of that case, namely, that the surplus land was held

for the benefit

of and also utilised for the textile undertaking.

We do not think that

the said observation in the case of Sitaram

Mills case is of any help to the petitioners. We hold that tne whole of

the said 17 .52 acres of land forms part of the te~tile undertaking of the

Company. No

other point has been urged in these writ petitions.

A

B

For the

reas9ns aforesaid, all these writ petitions are dismissed. C

There will. however. be no

order for costs.

M.L.A. Petitions dismissed.