DALMIA INDUSTRIES LTD. AND ANR. versus THE STATE OF UITAR PRADESH AND ANR.

Citation: [1994] 1 S.C.R. 798 · Decided: 09-02-1994 · Supreme Court of India · Bench: KULDIP SINGH, S.P. BHARUCHA · Disposal: Dismissed

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Judgment (excerpt)

A 
DALMIA INDUSTRIES LTD. AND ANR. 
v. 
THE STATE OF UITAR PRADESH AND ANR. 
FEBRUARY 9, 1994 
B 
[KULDIP SINGH AND S.P. BHARUCHA, JJ.) 
Uttar Pradesh State Cement Corporation Ltd. (Acquisition of shares) 
Ordinance 1991-Competence of State to promulgate the ordinance in exercise 
of power emanating from Entry 42 List III, Seventh Schedule of Constitution 
C of India-Independent and separate from legislative power of Union of India, 
emanating from Entry No. 52 in List I, seventh sc_hedule, control of Industries. 
Administrative Law: Judicial Review-U.P. State Cement Corporation 
(Acquisition of shares) ordinance-Whether takes away power of Courts. 
D 
The respondent-State Government decided in April 1990 to privatise 
E 
the Utter Pradesh State Cement Corporation Ltd. as the Corporation was 
running into huge losses, and converted the wholly public sector undertak-
ing, into a Joint Sector enterprise. 
The workmen of the Corporation, through their Unions filed Writ 
Petitions in the High Court, challenging the State Government's decision 
to privatise the Corporation and seeking mandamus to maintain it as 
Government company. The High Court, by interim order stayed the final 
implementation of the decision to hand over the factory. It also gave 
certain interim directions. Another Writ Petition was also filed in this 
F 
connection. 
During the pendency of these petitions, and while interim orders 
passed by the High Court were operating, on October 11, 1991, the State 
Government promulgated the Uttar Pradesh State Cement Corporation 
G Ltd. (Acquisition of Shares) Ordinance, 1991, providing that on the date 
of its commencement all the shares of the Corporcttion held by any com-
pany, including the appellant and its associates would stand transferred 
to and vest in the State Government. 
The appellant challenged the validity of the Ordinance and the High 
H Court upheld the same. Hence this appeal by the appellant-Company. 
798 
' 
,. ).-
DALMIAIND. v. STATEOFU.P. 
799 
Dismissing the appeal, this Court 
A 
HELD: 1. The Ordinance had been legislated to acquire shares of 
the Corporation and not for taking over its control and management. 
Neither management nor control of the Corporation was transferred to the 
appellant. With 51 % of shares in hand, the government was controlling 
and managing the corporation. The day-today functioning of affairs of the B 
corporation, was being done by the appellants under directions ofth2 High 
Court. The question of transferring control and management of the Cor· 
poration to the appellants, could be decided after the assets of the cor· 
poration were evaluated. In view of the various interim order issued by the 
High Court, not only the control and management of the Corporation C 
remained with the gov2rnment, but even the status of the corporation 
continued to be that of a Government company. Factually as well as legally 
the appellants were not in the management of the corporation. (808-F-G] 
2. Entry 52, List I, and Entry 24 List II, seventh schedule of the 
Constitution of India, read with section 2 of the Industries (Development D 
and Regulations) Act, 1951, take away the legislative competem:e of State 
Legislature to legislate about control of cement industries; However, the 
power of State legislatures to legislate for acquisition of property, is 
independent and separate, emanating from Entry 42 List ID Seventh 
Schedule of the Constitution. [807-F] 
E 
Ishwari Khetan Sugar Mills v. State of U.P. & O!"s., (1980] 3 S.C.R. 331 
relied on. 
3. The Qrdinance was promulgated for acquisition of shares of the 
Corporation. The field of acquisition under Entry 42 List ID Seventh F 
Schedule of the Constitution is not occupied by the Industries (Develop· 
ment and Regulations) Act, which deals with the control and management. 
The power conferred upon the Union under the Act can be effectively 
exercised after acquisition of shares of companies. The Ordinance related 
to acquisition of property (shares) of the corporation and therefore falls G 
under Entry 42 List III Seventh Schedule of the Constitution. [810-G] 
4. The Ordinance is not hit by the provisions of Section 20 of the 
Industries (Development and Regulations) Act, 1951, as the Ordinance 
had been promulgated for acquisition of shares of the Corporation. The 
Management and control of the Corporation being under the state govern· H 
800 
SUPREME COURT REPORTS 
[1994) 1 S.C.R. 
A 
ment, when the Ordinance was iss

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