THE KESHAV MILLS COMPANY LTD. & ANR. versus UNION OF INDIA AND ORS.

Citation: [1973] 3 S.C.R. 22 · Decided: 08-12-1972 · Supreme Court of India · Bench: A.N. GROVER · Disposal: Dismissed
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Judgment (excerpt)

22 
THE KESHAV MILLS COMPANY LTD. & ANR. 
A 
v. 
UNION OF·INDIA AND ORS. 
December 8, 1972 
[A. N. GROVER, K. K. MATHEW AND A. K. MUKHERJEA, JJ.j 
B 
Ittdustries 
(Development 
and 
Regulation) Act 
1951-S. 18A-
whether it is necessary to observe the rules of natural justice once during 
the irivestigation anfl again when action is taken under S. lSA. 
The Keshav Mills Co. Ltd. and another challenged the validity of an 
order passed by the Governmen1 of India, ullder S. 18-A of the Industries 
(Development and Regulation) Act, 1951 by which the Gujarat State 
Textile Corporation Ltd.' has 
been 
appointed and a.uthorised controller 
of the Company for a period of five years. The Company is the owner 
of a cotton textile mill and it was established in 1934. Till 1965, the 
Company made flourishing business. 
After the year 1964·65, the Com· 
pany fell on evil days and the textile mill of the company was one of the 
12 sick textile mills i:n Gujarat, which had to be closed down during 1966 
and 1968. On 31st May 1969, Government of India passed an order 
appointing a Committee for investigation into the affairs of the Company 
under the provisions of S. 15 of the Act. 
In due course, the Investigat· 
ing Committee completed its inquiry and submitted its report to the Gov-
ernment. On 24th November, 1970, the Government of India passed 
an Order under S. 18-A of the Act autl)orising the Gujarat State Textile 
Corporation to take over the management of the Company for a period 
of five years from the date of public-.ition of that order in the Official 
Gazette. 
The Company filed a writ petition before the High .Court of Delhi 
praying for appropriate relief. 
The High Court dismissed the petition. 
The main -contention of the appe1lants before the Delhi High Court was 
that Government of India was not competent to proceed under S. 18-A 
a11ainst the company without supplying before hand, a copy of the report 
of the Investigating Committee to the Company. 
Acocrding to the appel· 
)ants. the Government should not only have supplied a copy of the report 
to the Company, but should also have given a hearing to the Company 
before finally deciding upon taking over the company's undertaking under 
S. 18·A of the Act. 
This contention was ' pressed on behalf of the ap-
pellants in spite of the fact that an opportunity had been given by the 
Investigating Committee to the management and the employees of the 
Company for adducing evidence and for making representation before the 
r.ompletion of the investigation. 
The only question that this Court had to decide was whether after the 
undertaking had already been given an opportunity of being heard at the 
time of investigation, the Company is entitled to have a copy of the 
report and to make, if necessary, further representation about that report 
before a final decision is made by the Government under S. 18-A of the 
Act. The answer depended on the following questions; (I) Is it neces· 
Sary to observe the rules of natural justice before enforcing a decision 
under S. 18·A of the Act. 
(2) What are the rules of natural justice in 
such a case. 
(3) (a) In the present case, have the rules to be observed 
once during the investigation under S. 15 and then again, after the in-
vestigation is completed and action on the report of the Investigating Com-
c 
D 
F 
G 
H 
A 
B 
c 
D 
E 
F 
G 
KESHAV MILLS LTD. v. UNION (Mu,kherjea, J.) 
23 
mittee taken under S. lS.-A (b) Was it necessary to furnish a copy of the 
Investigating Committee\ Report hefore passing an order of take over? 
Dismissing the appeal, 
HELD : 
(i) Althoug 1 the order of the Government of India taking 
over the management of th3 Company was a purely executive order, em-
bodying an administrative decision, even so, the question of natural jus-
tice does arise in this case. 
It is too lat~ nnw to contend that the princi-
ples of natural justice do not apply to administrative orders or proceed-
ings. [29G] 
Regina v. Gaming Board, exparte Benaim [1970] 2 W.L.R. 
1009, re· 
ferred to. 
(ii) The concept of natural justice cannot be put 'into a straight jacket 
It is futile to look for definition' or standards of natural justice. 
The 
only essential point that has to be kept in mind in all cases is that the 
person concerned should have a reasonable opportunity of presenting his 
case and u:lministrative 
authority 
concerned 
should act fairly, imM 
partia1Iy and reasonably. 
It only means that such measure of natura
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