KOTHANDRAN SPG. MILLS PVT. LTD. & ANR. versus UNION OF INDIA & ORS.

Citation: [1989] 2 S.C.R. 127 · Decided: 28-03-1989 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed
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Judgment (excerpt)

' • 
KOTHANDRAN SPG. MILLS PVT. LTD. & ANR. 
v. 
UNION OF INDIA & ORS. 
MARCH 28, 1989 
[R.S. PATHAK, CJ, E.S. VENKATARAMIAH, 
RANGANATH MISRA, M.N. VENKATACHALIAH AND 
N.D. OJHA, JJ.] 
Sick Textile Undertakings (Nationalisation) Act, 1974. 
A 
B 
Sections 2(j), 3 and First Schedule-Entry 96---Applicability of-
' Sick Textile Undertaking'-Legislative determination of the petitioner C 
Mills. 
Constitution of India: 1950: Article 31-B and Ninth Schedule-
Sick Textile Undertakings (Nationalisation) Act, 1974-Constitutional 
validity of. 
D 
Petitioner No. l, Kothandran Spg. Mills Pvt. Ltd., was taken over 
under the provisions of the Sick Textile Undertakings (Taking Over of 
Management) Act, 1972 and possession of the mill was taken by the 
National Textile Corporation, respondent No. 2. Subsequently, the Sick 
Textile Undertakings (Nationalisation) Act, 1974 came into force. 
The petitioners tiled a writ petition under Article 32 of the Con-
stitution challenging the vires of the Sick Textile Undertakings 
(Nationalisation) Act, 1974 and that the mills be restored to them. It 
was also submitted that the establishment had been closed down, and 
the Textile Undertaking had completely disappeared by 1969 and there-
fore the aforesaid Act did not apply to it. 
Dismissing the writ petition, 
E 
F 
HELD: I. The Sick Textile Undertakings (Nationalisation) Act, 
1974 has been put into the 9th Schedule of the Constitution by the 39th 
G 
Amendment and, therefore, has come under the umbrella of protection 
provided under Article 31-B of the Constitution. II30C-D I 
Minerva Mills Ltd. & Ors. v. Union of India & Ors., 11986] 4 
S.C.C. 222; Waman Rao v. Union of India, 11981] 2 S.C.R. l; Panipat 
Woollen and General Mills Company Ltd. & Anr. v. Union of India & 
H 
127 
• 
A 
B 
128 
SUPREME COURT REPORTS 
[1989] 2 S.C.R. 
Ors., [1986] 4 S.C.C. 368, applied. 
2. The First Schedule to the Act against Entry 96 shows the 
Petitioner's Mills. There is a legislative determination that petitioner 
company came within the definition of 'sick textile undertaking' as 
provided in Section 2(j) of the Act. The petitioners have not alleged any 
ma la fides against Parliament and rightly. I 1308-C] 
ORIGINAL JURISDICTION: Writ Petition No. 162 of 1977. 
(Under Article 32 of the Constitution of India.) 
+ 
' • 
C 
Jitendra Sharma for the Petitioners. 
D 
T.V.S.N. Chari for the Respondents. 
The Judgment of the Court was delivered by 
RAN GANA TH MISRA, J. This application under Art. 32 of the 
Constitution is by two petitioners-petitioner no. 1, a private company 
and the other a Director thereof. The petitioners have challenged the 
vires of the Sick Textile Undertakings (Nationalisation) Act, 1974 (57 
of 1974) and have asked for a direction to the respondents to restore -+· 
the Mills to the petitioners in the same condition as it was on 31.10.1971 
E 
when it was initially taken over. 
F 
G 
H 
Petitioners have alleged that the spinning mills previously 
belonged to one S.R. Narasimhachari and three others. Mahalingam 
Chettiar, husband of the second petitioner, purchased the said Mills in 
1965. He was not at all aq uainted with the working of spinning mills 
and soon found that the affairs of the Mills were far from satisfactory 
and realised that he had acquired a non-viable asset. In December 
1967, Mahalingam issued notice of closure to be effective from 
3.1.1968, but as a fact by a subsequent notice dated December 22, 
1967, the Mill was closed down with immediate effect. According to 
the petitioners the Mill had ceased to be a "textile undertaking" by 
January 1968; the workmen by numerous claim petitions in the Labour 
Court of Madurai pressed for their various demands, they took posses-
sion of the Mills and even obstructed Mahalingam's entry into the 
premises. At one stage during that period Mahalingam had applied for 
a loan of Rs.10 lakhs from the Government of India with the hope of 
restarting the Mills after replacement of the machinery but that did not 
work out. The establishment had thus closed down and according to 
• 
KOTHANDRAN SPG. MILLS v.U.0.1. (MISRA, J.] 
129 
+ the petitioners the textile undertaking had completely disappeared by 
1969, and the Act did not apply to it. Again, the 1974 Act was ultra 
A 
vires the Constitution. 
The Sick Textile Undertakings (Taking Over of Management) 
Ordinance 9 of 1972 became operative from 31.10.1972. Item 41 of the 
~ 
First Schedule to the Ordinance mentioned petitioner
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