LexSHRI KRISHNA GYANODAY SUGAR LTD. AND ANR. versus STATE OF BIHAR
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L
SHRI KRISHNA GY A NODA Y SUGAR LTD. AND ANR.
A
v.
ST A TE OF BIHAR
FEBRUARY 18, 2003
[S. RAJENDRA BABU, D.M. DHARMADHIKARI AND
G.P. MATHUR, JJ.]
Bihar Sugar Undertakings (Acquisition) Act, 1985:
B
Act providing for acquisition and transfer of sugar undertaking in the C
State-Validity of-Held, Act within the legislative competence of the State
since the legislation falls under Entry 42 of List !JJ-Acquisition and requisition
of property-Object and purpose for which the Act was enacted-Discussed-
1nclusion of alcohol industries in the list of scheduled industries in 1951 Act
does not detract legislative power of States to acquire distilleries since D
acquisition is different from control and regulation of industries-1985 Act
and 1978 Act do not overlap the same field thus 1985 Act not invalid-
Constitution of India, 1950-Articles 246, 254(1) and Entry 42 of List II{-
Industries (Development and Regulation) Act, 1951-Sugar Undertaking
[Taking over of Management] Act, 1978.
E
State issuing notification to acquire certain sugar mills of a party on
29.10. 78-Party selling one of its distillery to third party on 5. 6.83-Subsequent
notification withdrawing earlier notification-Sugar undertakings taken over
by Ordinance of 1985 replaced by Act of 1985-Whether distillery sold to
third party cover~d by the 1985 Act-Held, yes since section 4(4)(ii)(e) nullifies
all alienations effected after 29.10.78 of the properties and taking over of the F
same-Scope and applicability of section 4(4)(ii)(e)-Discussed
Bihar Sugar Undertakings (Acquisition) Act, 1976 was enacted to
provide for acquisition and transfer of certain sugar undertakings in the
State. Thereafter on 29.10.1978 notifications were issued and petitioner's G
sugar mills-SKG were included in the schedule of the Act. Petitioner
challenged the same. High Court struck down the notification as ultra vires
and quashed the take overs. Respondent-State filed appeals. During the
pendency of the appeals petitioners withdrew their writ petition.
Thereafter, the Division Bench set aside the judgment under appeal so far
75
H
76
SUPREME COURT REPORTS
[2003) 2 S.C.R.
A as the petitioners were concerned. On 5.7.1983 petitioner sold the distillery
at H to United Distilleries (P) Ltd. On 29.9.1984, State Government issued
a notification purporting to withdraw the notification dated 29.10.1978
to the extent it related to the petitioner's sugar mills. The said notification
was challenged. High Court granted stay. Workers of the petitioner also
B challenged the notification. Thereafter, both the writ petitions were
transferred to this Court. Meanwhile, an Ordinance was issued by the
State Government which is replaced by Act 12of1985, to acquire the sugar
mills of the petitioners. Petitioners-SKG and United Distilleries (P) Ltd.
and others challenge the said notification.
c
Petitioners-SKG contended that the Bihar Sugar Undertakings
[Acquisition] Act, 1985 is beyond the legislative competence of the State;
that Entry 42 of List III to the Seventh Schedule to the Constitution
provides for acquisition of property and does not deal with take-over of
industries under Entry 24 of List II to the Seventh Schedule, which are
subject the provision of Entry 52 of List I to the Seventh Schedule; that
D the decision in Ishwari Khetan Sugar Mills (P) Ltd. v. State of U.P. stands
overruled by the decision in Synthetics & Chemicals Ltd. v. State of U.P.;
that none of the objectives of the Act have been achieved and the purposes
for which the enactment was made having failed impugned Act cannot be
enforced, therefore, must be declared to be invalid; that the valuation of
E the sugar undertaking en the basis of book value is not reasonable; that
the inclusi!m of alcohol industries in the list of scheduled industries in the
Industries (Development and Regulation) Act, 1951 detracts legislative
power of the States to acquire distilleries; and that the Sugar Undertaking
[Taking over of Management] Act, 1978 was enacted to provide for the
take-over in public interest of the management of certain sugar
F undertakings and the impugned enactment is also for better management
of sugar industries, therefore, the two enactments overlap the same field.
Petitioners-United Distilleries (P) Ltd. contended that petitioner's
distillery is not covered by the Bihar Sugar Undertakings (Acquisition)
Act, 1985 as the object of the Act is to acquire only such dExcerpt shown. Read the full judgment & AI analysis in Lexace.