Union of India and others vs Jagir Singh

M.R. Agnihotri, J.—This letters patent appeal arises out of the judgment of learned single Judge delivered in C.W.P. No. 1294 of 1975 on 4th June, 1991, whereby while allowing the writ petition filed by one Jagir Singh, shareholder of Messrs Suraj Textile Mills Limited, Malout Mandi (in the State of Punjab), the learned single Judge has held the inclusion of the Suraj Textile Mills in the First Schedule to the Sick Textile Undertakings (Taking Over of Management) Act, 1972, as sick textile Mills, and further inclusion of the said Mills in the First Schedule to the Sick Textile Undertakings (Nationalisation) Act, 1974, as illegal. As a necessary consequence, a number of directions have been issued by the learned single Judge to the Central Government, the principal direction being, -- that "the Central Government would hand over the management of the Mills immediately to the erstwhile Management which was there at the time of the taking over of the Mills by the Central Government".

Briefly stating, Messrs Suraj Textile Mills Limited (hereinafter referred to as ''the Mills'') was incorporated and established in June, 1960, in Malout Mandi, District Farid-kot, in the State of Punjab. In April, 1962, the Mills executed English mortgage in favour of the Industrial Finance Corporation and went into production. However, in 1965, as an aftermath of the Pakistan aggression, the Mills suffered a set back as the labour of the Mills started running away from the area. The economic condition of the Mills became bad to worse resulting into the non-payment of taxes and instalments of loans. The Excise and Taxation Department even, attached the Mills for recovery of the taxes and the Mills stopped working completely in 1969. In the very next year, that is, on 17th December, 1970, an inquiry was ordered by the Central Government u/s 15 of the Industries (Development" and Regulation) Act, 1951. The report of the Investigating Committee was submitted to the Central Government on 8th November, 1971, and it was thereafter on 31st October, 1972, that management of the Mills was taken over by the Central Government under the Sick Textile Undertakings (Taking Over of Management) Act, 1972, and since then it has been under the management of the Central Government. Since a number of other mills in the country had also been taken over, the name of the Mills in question, that is, Suraj Textile Mills, finds inclusion at serial No. 43 in the First Schedule to the aforesaid Act.

The vires of the Sick Textile Undertakings (Taking Over of Management) Act, 1972 -- Central Act No. 72 of 1972, hereinafter referred to as ''the Take-over Act'', were challenged by the respondent in C.W.P. No. 4420 of 1974. However, this petition was dismissed as withdrawn on 23rd April, 1974, as with effect from Ist April, 1974, the Sick Textile Undertakings (Nationalisation) Ordinance, 1974 (Ord. 12 of 1974), had come into force. Later on, this Ordinance was repealed by the Sick Textile Undertakings (Nationalisation) Act, 1974, hereinafter referred to as ''the Nationalisation Act'', thereby maintaining the continuity of the provisions with effect from Ist April, 1974 itself. In the Nationalisation Act, the name of the Suraj Textile Mills, Malout Mandi, finds inclusion at serial No. 99 in the First Schedule.

The present writ petition was thereafter filed by the respondent-Jagir Singh, one of the shareholders of the Mills, challenging the vires of ''the Take-over Act'' as well as ''the Nationalisation Act'', mainly on the ground that the Mills was not a sick textile undertaking and, therefore, it could not be so declared under the aforesaid Acts.

In the mean time, the Ninth Schedule to the Constitution was amended by the Constitution (Forty-ninth Amendment) Act, 1975, and vide entries Nos. 97 and 105 the Sick Textile Undertakings (Taking Over of Management) Act, 1972 (Central Act, 72 of 1971), and the Sick Textile Undertakings (Nationalisation) Act, 1974 (Central Act, 57 of 1974), respectively, were inserted, thereby conferring protection under Article 31B of the Constitution. The provisions of the aforesaid two Acts were challenged during the pendency of the present writ petition before this Court, in various petitions before the Hon''ble Supreme Court and the apex Court upheld the constitutional validity of both the Acts in Panipat Woollen and General Mills Co. Ltd. v. Union of India AIR 1986 SC 2082; and Minerva Mills Ltd. and Others Vs. Union of India (UOI) and Others, .

Therefore, when the present writ petition came up for hearing before the learned single Judge, the challenge to.the vires of the aforesaid two Acts was rightly dropped, and the only contention raised was that the Mills had been wrongly included in the above Acts as a sick textile undertaking. The learned single Judge by an elaborate inquiry into the matter and by interpreting the judgment in Panipat Woollen and General Mills Co. Ltd.''s case (supra), has held that the inclusion of the Mills in the Take-over Act as well as the Nationalisation Act was against the pro- visions of Section 2(d)(ii) of the Take-over Act.

Against the aforesaid judgment of the learned single Judge, the present Letters Patent Appeal was admitted on 9th August, 1991, and operation of the judgment under appeal was stayed by the following orders :-

"Mr. M.C. Ramaswamy, Attorney General of India, contends that Panipat Woollen and General Mills Co. Ltd. v. Union of India AIR 1986 SC 2082, has been wrongly interpreted.

Notice.

At this stage, Mr. P.S. Saini, Advocate, accepts notice on behalf of the respondent. Learned Counsel for the parties are agreed that this case be taken up on 14th November, 1991. We order accordingly. The case be listed at No. 1 in the list.

In the meantime, operation of the judgment under appeal is stayed."

Before us, the learned Attorney General has vehemently contended that once the two Acts, that is, the Take-over Act and the Nationalisation Act, had been included by a constitutional amendment in the Ninth Schedule to the Constitution, and the Mills in question, that is, Suraj Textile Mills Ltd., Malput Mandi, stood included in the Schedules appended to the aforesaid Acts, its inclusion could not be challenged by any person on the ground, that a certain inquiry for examining the correctness or validity of inclusion had not been made either by the Central Government or by the Parliament before enacting the legislation. Advancing the argument further, the learned Attorney-General contended, that by including the Mills in the Schedule to the Take-over Act, the provisions of Section 2(d) of the Act had not been violated. Contrary view shall only mean the repeal of the Act in its application to the Mills in question, as the aforesaid Acts had already been included in the Ninth Schedule to the Constitution, and by virtue of Article 31B of the Constitution, such an attack was no longer available before the Courts. According to the learned Attorney- General, for arriving at the aforesaid conclusion the learned single Judge has wrongly interpreted the judgment of the Supreme Court in Panipat Woollen and General Mills Co. Ltd.''s case (supra) AIR 1986 SC 2082, as the learned single Judge could not go into the legislative wisdom behind the enactment of the Take-over Act. It has also been contended that after 1st April, 1974, with the enforcement of the Nationalisation Act, the Mills stood vested in the Central Government, which position is continuing for the last more than seventeen years. Therefore, if the directions issued by the learned single Judge are to be implemented, then it would amount to divesting the Central Government of (he properties of the Mills which have vested in it by the operation of an Act of the Parliament. Apart from this, it has also been contended that the direction with regard to restoring the Mills back to respondent Jagir Singh -- one of the shareholders of the Mills, or to ''the earlier management, is not in accordance with law, as the property belonging to the Mills could not be delivered and handed over to the shareholders.

Defending the judgment of the learned single Judge, Mr. S.N. Kumar, learned Senior Advocate, has pleaded that while enacting the Take-over Act, adequate mate-rial was not placed before the Parliament justifying declaration of the Mills as a sick textile undertaking. As such, mere inclusion of the Mills in the First Schedule to the Takeover Act as well as in the First Schedule to the-Nationalisation Act, would not confer immunity to the Acts so far as the Mills in question-was concerned, and the Courts could still go into that question.

After hearing the learned Counsel for the parties and having considered the matter in detail, we cannot persuade ourselves to agree with the conclusions arrived at by the learned single Judge. In fact, after the authoritative pronouncement of the Supreme Court in K. Nagaraj and Others Vs. State of Andhra Pradesh and Another, ; T. Venkata Reddy v. State of Andhra Pradesh AIR J985 SC 724 : 1986 Lab IC 357 ); Minerva Mills Ltd. and Others Vs. Union of India (UOI) and Others, ; Panipat Woollen And General Mills Co. Ltd. v. Union of India AIR 1986 SC 2082; and Kothandran Spg. Mills Pvt. Ltd. Vs. Union of India and Others, , it is no longer open to the Courts to sit over the wisdom of the Parliament to have an inquiry into the matter with regard to the adequacy, sufficiency or relevancy of the material placed by the Central Government before the Parliament at the time of enactment of the Take-over Act as well as the Nationalisation Act; or at the time of promulgation of the Ordinance of 1974 (supra) by the President of India, for determining as to whether a particular mills was, in fact, a sick textile undertaking which should have been included in the Schedules to the aforesaid Acts for the purposes of taking over their management and subsequent nationalisation, or not. The matter has been clinched and put beyond any pale of controversy by their Lordships of the Supreme Court. Ad seriatim, in K. Nagaraj''s case (supra), it was held that the Ordinance could not be invalidated on the ground of non-application of mind, as the power to issue an Ordinance was not an executive power but is the power of the executive to legislate. In the second case of T. Vcnkata Reddy (supra), the legal position was further reiterated by the Hon''ble Supreme Court in the following words (at page 731):--

"It is a settled rule of constitutional law that the question whether a statute is constitu-1 tional or not is always a question of power of the legislative concerned, dependent upon the subject matter of the statute, the manner in which it is accomplished and the mode of enacting it. While the courts can declare a statute unconstitutional when it transgresses constitutional limits, they are precluded from inquiring into the propriety of the exercise of the legislative power. It has to be assumed that the legislative discretion is properly exercised. The motive of the legislature in passing a statute is beyond the scrutiny of courts. Nor can the courts examine whether the legislature had applied its mind to the provisions of a statute before passing it. The propriety, expediency and necessity of a legislative act are for the determination of the legislative authority and are not for deter- mination by the courts."

In the third case in line, that is, Minerva Mills Ltd. (supra), the Supreme Court held that the decision to take over the management could not be challenged on the ground of grant of financial, economic condition, detrimental functioning or mismanagement of the under." taking, or non-supply of copy of the report of the Investigating Committee, etc. Once the Legislature had decided that a particular Undertaking was sick textile undertaking, by including the same in the Schedule to the Nationalisation Act, the legislative judgment had to be looked upon with respect. Same is the view taken in the next case of Panipat Woollen and General Mills Co. Ltd. (supra), wherein the Hon''ble Supreme Court has further held, that the owner of a sick textile undertaking is neither entitled to any opportunity of being heard before the legislative declaration is made as it does not involve any judicial or quasi-judicial determination of the matter, nor can the Courts go into the adequacy of the compensation paid to the undertaking, etc. By their judgment in Kothandran. Spg. Mills Pvt. Ltd.''s case (supra), the Hon''ble Supreme Court reiterating the aforesaid position, has summed up the matter as under :--

"The First Schedule to the Act (''the Nationalisation Act") against entry 96 shows the petitioners'' mills. There is a legislative determination that petitioner 1 came within the definition of ''sick textile undertaking'' as provided in Section 2(d) of the Act. The petitioners have not alleged any mala fides against Parliament and in our opinion rightly. It is relevant to ''notice at this stage that the Central Act, 57 of 1974 has been put into the Ninth Schedule of the Constitution by the Thirty-ninth Amendment and, therefore, has come under the umbrella of protection provided under Article 31B of the Constitution. In the case of Minerva Mills Ltd. and Others Vs. Union of India (UOI) and Others, , challenge was raised against the vires of this Act. The court dealt with the effect of the inclusion of the Act in the Ninth Schedule by referring to the ratio In Waman Rao and Others Vs. Union of India (UOI) and Others, ) and upheld its vires. Similar was the view of the Court in the case of Panipat Woollen and General Mills Company Ltd. v. Union of India AIR 1986 SC 2082."

The aforesaid authoritative pronouncements are binding on us and with respect, we have no option to disagree with the view taken by the learned single Judge.

Resultantly, we reverse the judgment of the learned single Judge and dismiss the writ petition.

Petition dismissed.