LexPANIPAT WOOLLEN & GENERAL MILLS CO. LTD. & ANOTHER versus UNION OF INDIA & OTHERS
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PANIPAT WOOLLEN & GENERAL MILLS CO. LTD. & ANOTHER v . . UNION OF INDIA & OTHERS SEPTEMBER 26, 1986 )I: [0. CHINNAPPA REDDY AND MURARI MOHON DUTT, JJ.J Sick Textile Undertakings (Taking Over of Management) Act, ........--1972, ss .. 2(a), 2(d) and 4(1)-Management of undertaking taken over by 9W Central Government-Undertaking specified in First Schedule as a 'sick · . textile undertaking-Whether opportunity of hearing should be given to the owner before such 'taking over', A B c 'f Sick Textile Undertakings (Nationalisation) Ac~ 1974-Consti- D tutional validity of-Art. 31, 31C & 39 (b) of Constitution of India. A provisional liquidator was appointed in respect of two textile nndertakings of the petitioner-company since they had gone into huge loss and had to lie closed sometime in May 1972. As the textile under- takings of the petitioner-company were 'sick· textile undertakings' within the meaning of sub-clause (i) of s. 2(d) of·the Sick Textiles Under- takings (Taking-over of Management) Act 1972 (for short, Take over Act) 11nd have also been specified in the First Schedule to the Take-over Act, they vested in the Central Government as 'sick textile undertak- ings' by virtue of s. 4( 1) of the Take-over Act. The petitioner-company challenged before the Supreme Court the taking over of the management of the aforesaid two textile mills under the Take-over Ac( and also the constitutional validity of the Take-over Act and the Sick Textile Undertakings (Nationalisation) Act 1974 on the grounds (a) that the Company should have been given an opportu- nity of being heard before the management of its undertakings was taken over as 'sick textiles undertakings' and if such an opportunity had been given, the company could have shown that its undertakings were not sick undertakings; (b) that the legislature, having itself decided the qnestion whether an undertaking is sick textile undertaking or notwith- out giving any. opportunity to the owner of snch undertaking to make a representation, has damaged the basic structure of the Constitution 937 E F G H A B c D E F G H 938 SUPREME COURT REPORTS [1986] 3 S.C.R. namely separation of iiower between the legislature, the executive and -1. the jndicially; and (c) that the Nationalisation Act is consititutionally invalid on the ground ofinadeqnacy of compensation. Dismissing the petition, HELD 1.1 In the First Schedule to the Take-over Act, the under- takings of the company have been specified as sick textile undertakings. ~ In other words, the Legislature has itself decided the undertakings of the Company to be sick textile undertakings. Indeed, in the First Schedule all the sick textile undertakings have been specified. Thus, it is ·111 apparent that the Legislature has not left it to the Executive to decide whether a particular textile undertaking is a sick textile undertaking or · · not. H under the Take-over Act the question whether a textile undertak- ing is a sick textile undertaking o~ not had been directed to be decided by the executive anthorities, the owner of such undertaking could claim r • an opportunity of being heard. But when an undertaking has been · specified in the First Schedule to the Take-over Act as a sick textile undertaking, the question of giving au opportunity to the owner of the undertaking does not at all arise. [942C-F] 1.2 In including the sick textile undertakings iu the First Schedule, the Legislature. has not acted arbitrarily, for it has also laid down the criteria or tests for such inclnsioo. If any undertaking which has been so specified in the First Schedule does not satisfy the tests under s. 2(d) of the Take-over Ad, the owner of it is entitled to challenge such inclusion or take-over in a court of law' although such challenge has to be founded on a strong ground. Thus, there is no finality or conclusiveness in the legislative determination of an under- taking as a sick textile undertaking. Such determination is neither judi- cial nor quasi-judicial. Therefore, the question of damaging or altering the basic structure of the Constitution namely, separation of powers among the Legislature, the Executive and the Judiciary, does not at all arise. So also the question of the validity of the constitutional amend- ments by which the Take-over Act and the Nationalisation Act have been included in the Ninth Schedule on the ground that by such amend- ments the basic structure
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