LexUNION OF INDIA versus ELPLLLNSTONE SPINNING AND WEAVING CO. LTD. & ORS. ETC.
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UNION OF INDIA
A
v.
ELPlllNSTONE SPINNING /\ND WEAVING CO. LTD. & ORS. ETC.
JANUARY 10, 2001
B
[G.B. PATTANAIK, S. RA.IENDRA BABU, D.P. MOHAP/\TRA.
DORAISWAMY RAJU AND SHIVARAJ V. PATIL, JJ.]
Conslitulion of India. Arlie/es 14 and 19 (/) (g)-Tex1ile Underlakings
(Taking m·er of Manageme/1/) Ordinance. 1983 and the Tex1ile Undertakings C
(Taking over of A1anagemenl) Act, 1983-Validity of-Takeover of
manageme/1/ of respondenl mills hy legislalion-Bomha)' High Courl slriking
down legisla1io11 as being violatii·e of Arlie/es 14 and 19 {/) (R)-Held, High
Courl was wholly in error in slriking down /he legislation on a supposed
violation of Arlie/es 14 and 19 {I) (g): Further held, microscopic examination D
of data by Court was impermissible and irould not override legislative i/1/e/1/
behind laking over of manage111e111 of the mills in 1he larger public inlere.1·1-
Whether i111pugned legislation violative of Article 19 (!) (g) since govern111enl
did no/ resor/ to remedies available under other legislalions-Held, if
Parlia111enl decided to enact a law for taking over management of textile
mills in public interest it was not open lo the court lo exa111ine the question
whether other re111edies could have been taken-Constitution of India, Article
226-Judicial Review-Scope of
E
Textile Undertakings (Taking over of Management) Ordinance, 1983
and !he Textile Undertakings (Taking over of Management) Act 1983, Ss. 3 F
(3), (4) (6), 6, 8 and 11 (/) rlw Consli/11/ion of India Arlicle 31 A ( /) (b)-
Whelher 1akeover il1lended was for a limiled period and therefore not wi1hin
the pun1iew of Article 31 A of the Constitution-Held, i111pugned legislalion
was law providing for laking over 111anagement for a limited period in public
interest and ca111e within the purview of Article 31 A (/) (b) of the Conslilution.
G
.._
lnlerprelalion of Sta/ules-Texlile Undertakings (Taking over of
Management) Ordinance, 1983 and the Textile Underlaking's (Taking over
of Managemenl) Act 1983- fa:pression 'mismanagement' used in preamble-
High Court holding that the expression must necessarily mean an ele111enl of
fraud or dishonesty-Held, lhe expression 'mismanagement' in preamble H
221
222
SUPREME COURT REPORTS
[2001] I S.C.R.
A would not control the purpose of the Act; Parliament intended not only to
take those mills whose financial condition was deplorable on account of
mismanagement but also those where the financial condition
might be
deplorable but not on account of mismanagement-
B
Words and Phrases : 'Mismanagement'-Meaning of
Textile mills in and around Bombay had gone on strike with effect from
January 18, 1982. On February 15, 1982 the Government oflndia declared
its policy for nationalization of all these textile industries. In October 1982,
the Reserve Bank of India had called a meeting to discuss the situation a~·lsing_
out of the strike. Depending upon the economic conditions of different mills
C the mills had been classified into three groups. The continued textile strike
had deteriorated the financial condition of all the textile mills and the mills
were looking forward to the financial institutions and nationalised banks for
financial aid to make the mills viable.
A Task Force constituted by the government submitted its report by the
D end of September 1983. On October 18, 1983, the management of thirteen
textile mills enumerated in the first schedule to the Textile Undertakings
(Taking over of Management) Ordinance, 19&3 ('Ordinance') were taken over
pending nationalisation. These included the three respondent mills. Later the
Ordinance was replaced by the Textile Undertakings (Taking over of
E Management) Act 1983 ('Act').
F
The Ordinance and the Act were challenged by the three respondent
mills through writ petitions before the Bombay High Court on the grounds
that they were violative of Articles 14 and 19 (I) (g). The High Court held
that since the takeover of the management of the mills was for an indefinite
period and pending nationalisation, the protection under Article 31 A (1) (b)
would not be available and that therefore the challenge to the legislations on
the anvil ofviolation of Articles 14 and 19 (I) (g) had to be examined. After
examining data, the High Court concluded that there was no nexus between
the basis for classifying the respondent mills with other mismanaged mills
and the object and purpoExcerpt shown. Read the full judgment & AI analysis in Lexace.