LexSWADESHI COTTON MILLS versus UNION OF INDIA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
• • ·:I 'T•J,~. ~~ SWADESHI COTTON MILLS v. UNION OF INDIA January 13, 1981 (R. S. SARKARIA, D. A. DESAI AND 0. CHINNAPPA REDDY, JJ.] Industries (Development and Regulation) Act, 1951, (65 of 1951) Ss. IBA (I)(b), IBAA(I)(a)-Taking over a/ an industrial undertaking-Oppor- tunity of being heard-Whether and when to be given-Denial of oppor- ttuzity-Whethcr vitiates order--Opinion of take-over by Government-Whether liable to judicial scrutiny. Arl111inistrati\'C Law-Do(·trine of iYatural Justice-JVJ:at i~-Whe11 appli- cnble-PrP-decisional and post-d'ecistianal hearing-When 1uises. The Industries (Development and Regulation) Act, 1951 empowers the Unio!l of India in the public interest to take under its control the industries specified in the First Schedule to the Act. Item 23 of the First Schedule relates to textiles of various categories . Section 15 authorises the Central Government to make or cause to be made a tull and complete investigation into the circumstances of the case if the Central Government is. of the opinion that (a) in respect of any scheduled industry or industrial undertaking or undertakings (i) there has been, or is likely A B c D to be, a substantial fall in the volume of production for which, having regard E to the economic conditions prevailing, there is no justification; or (ii) there has been, or is likeJy to be, a marked deterioration in the quality of any article ... which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article ..... for which there is no justification; or (iv) it is necessary to take any such action for the purpose of conserving any resources of national importance; or (b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned F or to public interest. After the investigation is made under section 15, section 16(1) empowers the Central Government if action is desirable, to issue appro~ priate directions, and section 16(2) provides for the issue of interim directions by the Central Government pending investigation under section 15. Chapter III-A consisting of Sections IBA, IB-AA, 18-B, IB-C, 18-D, 18-E and 18~F deal with "direct management or control of Industrial Undertakings by Central Government in certain cases". Sec. 18-A empowers the Central Government by notified order, to authorise any person or body of persons to take over the management of the whole or any part of an industrial under- taking or to exercise in respect of the whole, or any part of the· undertaking such functions of control as may be specified in the order, if the Central Government is of opinion that : (a) an industrial undertaking to which directions have been issued in pur- suance of section 16 has failed to comply with such directions, or (b) an indus- trial undertaking in respect of which an investigation has been made under G H A 534 SUPREME COURT REPORTS (1981] 2 S.C.R. section 15 is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. Section 18AA(5) stipulates that the provisions of Sections 18-B to 18·E shall be applicable to the industrial undertaking in respect of which an order has been made under section 18-AA even as they apply to an industrial under·· taking taken over under Section 18-A. Section 18-F empowers the Central B Government to cancel the order made under section 18-A if it appear& that the purpose of the order has been fulfilled or it is not necessary that the orde( should remain in force. The appellant M/s. Swadeshi Cotton Mills was taken ove.r by the Govern- ment of India by a notification dated April 13, 1978 in exercise of the powers conferred on it under clause (a) of sub-section (1) of section !SAA of the C Indu;tries (Development and Regulation) Act, 1951 on the ground that the company had by creation of encumbrances on the assets of its industrial under .. takings, brought about a situation which had affected and is likely to further affect the production of articles manufactured or produced by it and that imme- diate action i~ ne·;~s~ary to· prevent such a situation, D The Government authorised the Natiollal Textile Corporation Limited to take over the management, subject to the conditions that the authorised person shalt comply \Vitb all the directions issued from time to time by the Central Govern- ment and that the authorised
Excerpt shown. Read the full judgment & AI analysis in Lexace.