Case Brief
Union of India v. Elphinstone Spinning & Weaving Co. Ltd. & Ors.
Deciding Authority
Supreme Court
Name of the Judges
G.B. Pattanaik, S.Rajendra Babu , D.P.Mohapatra, Doraiswamy Raju, S.V.Patil
Date of Judgment
1 January 2001
Facts of the Case
This appeal was directed against the judgment of the Bombay High Court, Certificates under Articles 132(1) and 133 of the Constitution for leave to appeal to the Supreme Court having been granted by the High Court itself. By the impugned judgment, the Bombay High Court came to the conclusion that the action of the Union Government in taking over the managements of the three Cotton Mills, namely, The Elphinstone Spinning and Weaving Mills Company Ltd., Jam Manufacturing Mills and New City Mills of Bombay under the provisions of Textile Undertakings (Taking over of Management) Ordinance, 1983, (hereinafter referred to as The Ordinance) and the Textile Undertakings (Taking over of Management) Act, 1983 (hereinafter referred to as The Act), infringed the fundamental right under Article 14 of the Constitution and, therefore, qua them it was invalid.
The facts leading to this are-
The Textile Mills in and around Bombay had gone on strike with effect from 18.1.1982. On 15.2.1982 the Government of India declared its policy for nationalisation of all these Textile Industries. In October 1982, the Reserve Bank of India had called a meeting to discuss the situation arising out of the strike. Depending upon the economic conditions of different mills the mills had been classified into three groups. The continued Textile strike had deteriorated the financial condition of all the Textile Mills and the Mills were looking forward to the Financial Institutions and Nationalised Banks for financial aid to make the Mills viable. On 28th March, 1983, the Government of India wrote letters to the Nationalised Banks and IDBI to conduct a viability study of these Mills. The three Mills, in these appeals had been included in category III. On 18th October, 1983, the Ordinance was promulgated and the management of 13 Textile Mills enumerated in the First Schedule to the Ordinance was taken over pending Nationalisation of the Undertakings. The Ordinance indicates that for re-organising and re-habilitating the Textile Mills to protect the interest of the workmen employed therein, and to augment the product and distribution at fair price of different varieties of cloth and yarn so as to subserve the interest of the general public, investment of very large sums of money was necessary and for such investment, the Central Government felt that the acquisition of the Mills would be necessary, but since acquisition would take some time and it was felt that it would be expedient in the public interest to take over the management of the Undertakings, pending acquisition, and that Parliament was not in Session, the President, on being satisfied that circumstances exists for taking immediate action, promulgated the Ordinance in exercise of powers conferred under Article 123(1) of the Constitution. The said Ordinance was replaced by the Act and the Act provided that the same shall be deemed to have come into force on 18th day of October, 1983. Immediately after the promulgation of the Ordinance the Management of the Mills, enumerated in the First Schedule thereof, having been taken over by the Government, the three Mills referred to earlier filed three Writ Petitions in Bombay High Court challenging the applicability of the Ordinance so far as those Mills are concerned. After replacement of the Ordinance by the Act the Writ Petitions were amended and thus the validity of the Act was challenged qua the three Writ Petitioners. Though the challenge was on three counts, namely, violation of Article 14, violation of Article 19(1)(g) and violation of Article 300A, but at the time of hearing the challenge in relation to violation of Article 300A was not pressed and, therefore, the High Court considered the challenge, so far as it relates to violation of Articles 14 and 19(1)(g) of the Constitution.
Judgment
It was contended by Mr. Salve (Solicitor General) appearing for the appellant Union Government contended that the basic approach of the High Court in examining the constitutional validity of the Act is grossly erroneous and such approach has vitiated the ultimate conclusion. According to the learned Solicitor General, the financial condition of these mills had become so bad that unless large sum of money from the public exchequer was pumped into it, the mills were not in a position to run and that in turn would have made thousands of labourers idle. As per the submissions of Mr. Salve the fact that the management of the Mills had been taken over until the Mills are acquired by enacting an Acquisition Act, for all practical purposes the taking over was for a limited period thereby attracting Clause 1(b) of Article 31A and the High Court was in error in concluding that the taking over was not for a limited period and, as such, Clause 1(b) of Article 31A will not get attracted. The Act in question was for a limited period and had been enacted in the public interest coming within the purview of Clause (1)(b) of Article 31A and, therefore, provisions of Article 14 or Article 19 cannot at all be attracted for assailing the validity of the action taken under the Act.
Mr. F.S. Nariman, learned senior counsel appearing for the Elphinstone Spinning and Weaving Mills Company Ltd., emphatically urged that Article 31 A (1)(b) was introduced by the Constitution IVth Amendment Act of 1955 which enables to make law for taking over of the management of any property by the State for a limited period either in the public interest or in order to secure proper management of the same. The law made by the Parliament is the Textiles Undertakings (Taking over of Management) Act, 1983. The said law permits take over only when the financial condition became unsatisfactory by reason of mis-management of the affairs of the Textile Undertakings. He submitted mere losses will not entitle to take over of the management of mill, inasmuch as, all the mills have suffered loss and, therefore, there must be some other factors on account of which it will be possible for the Government to take over the management of only 13 mills as included in the First Schedule to the Act. He also further urged that in view of the language of Article 31A (1)(b) the law for taking over of the management must be for a limited period and the expression pending nationalisation in the impugned Act cannot be construed to be a definite limited period and, therefore, the Act in question is not referable to Article 31A (1)(b).
The court therefore framed the following questions for consideration.-
- Can the impugned Act be held to be a law providing for the taking over of the management of the Mills for a limited period?
- The Act read as a whole expresses the intention of the Parliament for taking over the management of the Textile Undertakings specified in the First Schedule in the public interest or is it capable of indicating the legislative intent that only those Mills whose financial condition became wholly unsatisfactory by reasons of mis-management of the affairs of the Textile Undertakings which are sought to be specified in the First Schedule and management of those Mills are being taken over under the Act?
- Has any case been made out by the Mills concerned to enable a Court that in fact by clubbing the three Mills in the group of 13 there has been the violation of the mandate under Article 14?
- Was the High Court justified in recording a conclusion that there has been a violation of Article 19(1)(g)?
- On the available materials on record was the High Court justified in going behind the legislative intent apparent on the face of the Act to find out the so called true intention and thereby coming to the ultimate conclusion that there has been a gross discrimination in clubbing the three mills with the other admitted mis-managed mills which are enumerated in the Schedule to the Act?
It was held by the apex court that the High Court committed error in recording a finding that the taking over of the management was not for a limited period.
It was held that the impugned Act read as a whole unequivocally indicates that the Parliament was satisfied that the management of the Textile Undertakings specified in the First Schedule should be taken over pending nationalisation of such undertakings, and therefore, passed the impugned Act in public interest.
In the case in hand the High Court appears to have examined in detail the functioning of each of these three mills which had filed Writ Petition before it, for ascertaining whether the financial conditions of those mills had deteriorated because of the strike or on account of mis- management and on scrutiny of different materials came to hold that the Union Government has failed to establish the case of mis-management which in turn would mean a case of fraud and dishonesty on the part of those who were in management of the mills.
Held that the High Court was wholly in error in striking down the taking over of the three petitioner’s mills before it on a supposed violation of Article 14 of the Constitution.
So far as the fifth question is concerned, though it is no doubt true that the Court would be justified to some extent in examining the materials for finding out the true legislative intent, engrafted in a Statute, but the same would be done only, when the Statute itself is ambiguous or a particular meaning given to a particular provision of the Statute, it would make the Statute unworkable or the very purpose of enacting the Statute would get frustrated.
Decision
Appeals were allowed. The impugned judgment of the Bombay High Court was set aside and the writ petitions, filed before the High Court were dismissed.
Shubham Shandilya, IVth Year B.B.A. LL.B. , Symbiosis Law School, Pune