54 of 1955
Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights
Purshottam Tricumdas section N Andley Rameshwar Nath J B Dadachanji and P L Vohra for the petitioner  C K Daphtary Solicitor General of India Porus A 
Mehta and R H Dhebar for the respondent
M L Misra Advocate General UP and CP Lal for the Intervener
May 1
The Judgment of section R Das C J Jafer Imam section K Das and Govinda Menon JJ
was delivered by section K Das J Sarkar J delivered a separate judgment
section K DAS JOn November 8 1955 the Ministry of Commerce and Industry Government of India published a notified order in exercise of the powers conferred on that Government by section 18A of the Industries Development and Regulation Act 1951 hereinafter referred to as the Act authorising one Shri Kedar Nath Khetan of Padrauna called the 1054 authorised Controller to take over the management of the Ishwari Khetan Sugar Mills Ltd Lakshmiganj Deoria subject to certain conditions
The order as originally passed and published was to have effect for a period of one year only commencing on the date of its publication in the official gazette
On November 7 1956 there was an amendment of that order
The amendment was published in notification No 338 A of even date and stated in effect that in stead and place of the words one year  occurring in the order the words 1 two years  shall be substituted
Petitioner No 1 before us is one Kamlaprasad
Khetan who states that lie is a Director and shareholder of the second petitioner which is the Ishwari Khetan Sugar Mills Ltd The Union of India was and is the only respondent
By an order dated October 1 1956 this Court permitted the said authorised Controller to intervene with the result that both the Union of India and the authorised Controller have been heard in opposition to the petition
The substantial case of the petitioners is that the order referred to above dated November 8 1955 and the amending order dated November 7 1956 are invalid in law and bad on certain other grounds to be stated presently and it is not open to the Central Government to interfere with the fundamental right of the petitioners to hold and manage their property on the strength of the said invalid orders the petitioners therefore pray for the issue of appropriate writs or directions to quash those orders
Short and simple as the case of the petitioners appears to be at first sight it is necessary to refer to a background of certain antecedent facts for a proper understanding and appreciation of the issues involved in the present dispute between the parties
The Ishwari Khetan Sugar Mills Ltd is a public limited Company in which four branches of a family known as the Khetan family held a large number of shares and only about one fourth of the shares were held by outsiders
The Company was managed by a firm of Managing Agents subject to supervision by the Directors
Four members of the Khetan family 1055 constituted the Managing Agency firm of which Kedar Nath Khetan later appointed as the authorised Controller was one and Onkarmal Khetan now deceased father of petitioner Kamlaprasad Khetan was another
The Managing Agents managed two Mills known as the Ishwari Khetan Sugar Mills Ltd Lakshmiganj and the Maheshwari Khetan Sugar Mills Ltd Ramkola District Deoria
We are concerned in the present case with the Ishwari Khetan Sugar Mills Ltd The Managing Agents were also partners in the firm of managing agents of certain other companies namely Morarji Gokul Das Spinning and Weaving Mills Bombay and Laxmidevi Sugar Mills Ltd Deoria
In the affidavit in opposition filed on behalf of the authorised Controller it is stated that the Khetan family was in the beginning a mere trading family but  due to the initiative business acumen and imagination of Rai Bahadur Kedar Nath Khetan various manufacturing concerns including several sugar factories grew up   and it was under his direction that the other members of the family including Onkarmal Khetan were put in charge of the day today routine administration of one business or the other
There was a provision in the Managing Agency agreement under which every member of the firm of Managing Agents was authorised to exercise all the powers of the Managing Agents
According to the case of the authorised Controller trouble arose between the members of the different branches of the family of Managing Agents sometime in 1950 51 when it came to light that Onkarmal Khetan had surreptitiously withdrawn large sums of money from the accounts of the various businesses in which the members of the Khetan family were interested as Managing Agents and this led to certain suits being instituted against Onkarmal Khetan
The latter in his turn retaliated by bringing suits for the appointment of a Receiver or for restraining the holding of a general meeting of one of the mills and instituting certain other preceedings stated to be of an obstructive nature and calculated to create an impasse in the working of the mills 1056 The petitioners on the contrary alleged that when the balance sheet of the Ishwari Khetan Sugar Mills Ltd for the financial year 1950 51 was published in June 1952 it was discovered that some of the Directors including the authorised Controller had utilised the funds of the Company for their personal gain and had committed breaches of certain provisions of the Indian Companies Act
This led to Suit No 4 of 1952 brought by the petitioners against some of the Directors including the authorised Controller for an order of permanent injunction restraining the said Directors from exercising any powers as Directors of petitioner No 2 and also for a declaration that a notice calling the twenty fourth ordinary general meeting of the Company to be held on July 9 1952 was illegal and invalid
In that suit an ex parte order of injunction was made against the Directors concerned on July 8 1952
That order was however subsequently vacated as being without jurisdiction and a fresh order was made on June 3 1953
In the affidavit filed on behalf of the authorised Controller it has been stated that on legal advice obtained by the defendants of that suit to the effect that the ex parte order of injunction dated July 8 1952 was without jurisdiction the twenty fourth ordinary general meeting of the Company was held on July 9 1952 and the shareholders unanimously passed a resolution in that meeting approving and adopting the Directors  report and the audited balance sheet of the Company as on October 9 1951
The fresh temporary order of injunction which was passed by the Civil Judge Deoria on June 3 1953 was confirmed by the High Court of Allahabad by its order dated September 14 1953
Feeling that the order of stay would completely dislocate the affairs of the Company the shareholders themselves called an extraordinary general meeting which was held on November 9 1953 and at that meeting the authorised Controller and certain other persons were re elected as Directors of the Company subject to the condition that if the Court decided in Suit No 4 of 1952 that the said Directors had not ceased to be Directors the resolution would be ineffectual to that extent
There 1057 were several proceedings in the High Court of Allahabad In connection with Suit No 4 of 1952 and in one of them the High Court was moved for an expeditious hearing of the suit and such a direction was made by the High Court
Unfortunately however for reasons which need not be stated here Suit No 4 of 1952 is still awaiting trial and on July 31 1956 petitioner No 1 obtained an ex parte order from the said High Court adjourning the hearing of the suit
The case of the anthorised Controller is that petitioner No 1 having realised that he is not supported by the majority of shareholders and cannot therefore legally represent the Company is delaying the hearing of Suit No 4 of 1952 on one ground or another
While all this legal tussle with allegations and counter allegations made by the parties was going on in the arena of the Courts of law certain other events happened to which a reference must now be made
The petitioners allege that the authorised Controller finding that the majority of the shareholders and Directors were not in favour of his managing the Ishwari Khetan Sugar Mills Ltd moved the Ministry of Food through his grandson Durga Prasad Khetan and another gentle man
related to him for passing orders under sections 15 and 17 of the Act
On November 8 1952 a communication was received from the Ministry of Food and Agriculture Government of India wherein was stated The Government of India consider that if on account of the failure of the parties concerned to compose their differences and inability to take timely and proper steps to arrange for normal working of the mills the mills are not able to start work in time during the 1952 53 season or are unable to work at all it will result in a substantial fall in the production of sugar without due justification
Such a result will lead to the conclusion that the mills are being managed in a manner likely to damage the interests of a substantial body of consumers besides cane growers and mill workers
 The communication concluded with the statement that in the circumstances stated above the Government of India would be constrained to order an investigation 136 1058 into the matter and if necessary to undertake the management of the said mills
It may be stated hers that the communication was in respect of both the Ishwari Khetain Sugar Mills Ltd and the Maheshwari Khetan Sugar Mills Ltd
On December 18 1952 the Central Government did actually pass an order under sub section
4 of section 3 of the Essential Supplies Temporary Powers Act 1946 under which the authorised Controller was empowered to exercise certain functions of control in respect of the Ishwari Khetan Sugar Mills Ltd the functions of control being stated in detail in notification No SRO 2073 of even date
On December 23 1952 Onkarmal filed a writ petition to this Court against the aforesaid order of the Central Government and asked for an interim direction staying the operation of the order
This Court gave a direction expediting the hearing of the petition and further directed that the accounts of the petitioner Company be audited periodically by a Government or private auditor at the instance of Onkarmal
The writ petition itself could not however be heard in time and was later dismissed on May 14 1954 as having become infructuous in the meantime
On July 30 1953 the Central Government passed an order under section 15 of the Act in respect of several mills including the Ishwari Khetan Sugar Mills Ltd
Under that order the Central Government appointed three independent persons for making a full and complete investigation into the circumstances of each of the industrial undertakings referred to therein
Then on November 14 1953 the Central Government made an order under section 18A of the Act by which the authorised Controller was appointed to take over the management of the Ishwari Khetan Sugar Mills Ltd
It may be stated here that the Act was amended in 1953 by Act 26 of 1953
By that amendment section 17 was omitted and a new chapter viz Chapter IIIA was inserted
This new chapter contained section 18A under which the Central Government passed its order dated November 14 1953
The order stated that it shall have effect for a period of one year
In December 1953 came the decision of this Court in Dwarkadas Shrinivas of 1059 Bombay vs The Sholapur Spinning  Weaving Co Ltd That decision pronounced oil article 312 of the Constitution with reference to the validity of the Sholapur Spinning and Weaving Company Emergency Provisions Ordinance 11 of 1950 and Act XXVIII of 1950
As a result presumably of that decision on May 21 1954 the Central Government cancelled all appointments of authorised Controllers under the provisions of the Act and on such cancellation the management of the industrial undertaking vested again in the owner of the undertaking
The case of the petitioners is that in spite of the cancellation the authorised Controller continued to remain in possession of the undertaking in question
On July 16 1954 the Central Government again passed an order under sub section
4 of section 3 of the Essential Supplies Temporary Powers Act 1946 thereby again giving the authorised Controller certain functions of control in respect of the Ishwari Khetan Sugar Mills Ltd On September 19 1954 there was another investigation under section 15 of the Act by a panel of officers and it is stated that they recommended that the Central Government should take over the management of the Mills for a period of three years
On January 31 1955 the present petitioners filed a writ petition in this Court in respect of the order passed by the Central Government on July 16 1954
This is the writ petition which after necessary amendments is now under consideration before us the amendments having been necessitated by reason of certain subsequent notifications made by the Central Government
These subsequent notifications are 1 the notifications made on November 8 1955 by which the earlier order made on July 16 1954 was cancelled and a fresh order made under section 18A of the Act and 2 the amending order dated November 7 1956 to both of which a reference has been made in the first paragraph of this judgment
By reason of these subsequent notifications the order dated July 16 1954 no longer exists and the writ petition which was originally directed against that order stands in need of amendment
1  1060 The petitioners have prayed for an amendment of the original writ petition and also for permission to urge fresh grounds to challenge the validity of the two notified orders one dated November 8 1955 and the other dated November 7 1956
By an order of the Judge in Chambers dated February 18 1957 the petition for amendment and for urging additional grounds was directed to be heard along with the main petition under article 32
But before that date ie on November 51956 when the stay application of the petitioners was heard the following direction was given by this Court  The hearing of the main petition under article 32 to be expedited       it will be open to the petitioners to challenge that the appointment of R B Kedar Nath Khetan if again made is also bad
 In view of the aforesaid directions we have treated the main petition under article 32 as a petition against the latest orders passed by the Central Government appointing the authorised Controller to take over the management of the undertaking and we have also permitted the petitioners to urge fresh grounds in support of their petition
Having indicated in the preceding paragraphs the necessary background against which the dispute between the parties has to be considered we proceed now to a consideration of the grounds on which the petitioners challenge the validity of the orders dated November 8 1955 and November 7 1956
It is necessary to clear the ground by stating at the very outset that learned counsel for the petitioners has not challenged the validity of section 18A of the Act under which the impugned orders were made
We have already stated that Chapter IIIA of the Act was inserted by the Amending Act 26 of 1953
Article 31B of the Constitution was enacted by the Constitution First Amendment Act 1951 which states inter alia that none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void or ever to have become void on the ground that such Act Regulation or provision is 1061 inconsistent with or takes away or abridges any of the rights conferred by any provisions of this Part meaning Part III of the Constitution
The Ninth Schedule was added to by the Constitution Fourth Amendment Act 1955
Item No 19 of the Ninth Schedule is now Chapter IIIA of the Act as inserted by the Industries Development and Regulation Amendment Act 1953
Learned Counsel for the petitioners has frankly conceded that in view of these amending provisions he is not now in a position to challenge the validity of section 18A of the Act
Therefore the principal question for our consideration is the validity of the impugned orders made under that section
Learned counsel for the petitioners has attacked the two orders on the following grounds 1the order of November 8 1955 is not a lawful order as it does not fulfill one of the essential requirements of section 18A of the Act under which it purports to have been made 2even assuming that the order was a good order when it was made section 18A of the Act does not authorise an extension of the period during which the order is to remain in force in the manner in which the extension was made on November 7 1956 and such extension did not comply with one of the essential requirements of section 21 of the General Clauses Act No X of 1897 and 3in any event the order is not a bonafide order in that the Central Government appointed the very person who was mismanaging the undertaking who was one of the parties to a pending dispute and against whom an order of injunction had been passed by a Court of competent jurisdiction
These three grounds we now propose to examine in the order in which we have set them out
1We must first read section 18A of the Act so far as it is relevant for our purpose
The section states If the Central Government is of opinion that a    ban industrial undertaking in respect of which an investigation has been made under section 15 whether or not any directions have been issued to the 1062 undertaking in pursuance of section 16 is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest the Central Government may by notified order authorise any person or body of persons to take over the management of the whole or any part of the undertaking 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
2Any notified order issued under sub section 1 shall have effect for such period not exceeding five years as may be specified in the order
Provided that the Central Government if it is of opinion that it is expedient in public interest so to do may direct that any such notified order shall continue to have effect after the expiry of the period of five years aforesaid for such further period as may be specified in the direction and where any such direction is issued a copy thereof shall be laid as soon as may be before both Houses of Parliament
 The argument before us is that for the application of cl
b of sub section
1 of section 18A the two essential requirements are 1 an investigation under section 15 of the Act and ii the opinion of the Central Government that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or lo public interest
Learned counsel for the petitioners has conceded that before the order dated November 8 1955 was made there was an investigation under section 15 of the Act in respect of the industrial undertaking in question and the first requirement was thus fulfilled
Learned counsel has however very strongly submitted that the second requirement was not fulfilled in the present case because the authorised Controller himself was in charge of the undertaking from December 18 1952 till November 8 1955 when the impugned order was made with a small break of less than two months only between the two dates May 21 1954 when all appointments under the Act were cancelled and July 16 1954 when a fresh order under the Essential Supplies Temporary Powers Act 1946 was made and 1063 even during this short period the case of the petitioners is that the authorised Controller continued in possession
Founding himself on these circumstances learned counsel for the petitioners contends that it was rationally and logically impossible for the Central Government to be of opinion that the industrial undertaking was being managed in a manner highly detrimental to the public interest before the impugned order was made
We are unable to accept this argument as correct
We have already referred to the legal tussle which was going on between the parties with regard to the management of the industrial undertaking in question
The Central Government very rightly pointed out in their letter dated November 8 1952 that the result of the differences between the parties was likely to be a stoppage of the mill and a fall in the production of sugar with consequential detriment to the interests of the industry concernedand the interests of a substantial body of consumers cane growers and mill workers
In view of the litigation which was pending between the parties the likelihood of the dangers at which the Central Government hinted in 1952 must have continued to exist as long as the management was not fully and completely taken over by the authorised Controller
In December 1952 the order passed under the Essential Supplies Temporary Powers Act 1946 merely gave some functions of control to the authorised Controller it did not vest the management in him
This distinction between exercising certain functions of control however drastic the functions may be on an order made under sub section
4 of section 3 of the Essential Supplies Temporary Powers Act and the taking over of the management of the whole of an undertaking on an order under section 18A of the Act is a real distinction which must be borne in mind as it has a bearing on the argument advanced before us
Sub section 4 of section 3 of the Essential Supplies Temporary Powers Act 1946 authorises the Controller to exercise with respect to the whole or any part of the undertaking such functions of control as may be provided by the order section 18A of the Act is in wider terms and empowers the 1064 Central Government to authorise any person or body of persons to take over the management of the whole or any part of the undertaking 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
Section 18B of the Act states the effect of a notified order under section 18A in sub section
1 cls
a to e is stated the effect of taking over the management and in sub
section 3 is stated the effect of merely giving functions of control a distinction which is clearly drawn in the section itself
It is not difficult to conceive that in a particular industrial undertaking the mere giving of some functions of control may not be enough to meet the situation which has arisen and it may be necessary for the Central Government to pass an order taking over the management of the whole of the undertaking
In the case under our consideration in December 1952 certain functions of control were vested in the authorised Controller but the management of the whole undertaking wasnot taken over
This continued till an investigation was ordered under section 15 of the Acton July 30 1953
Then on November 14 1953 the authorised Controller was directed to take over the management of the whole of the industrial undertaking
This order was however cancelled on May 21 1954 and under section 18F of the Act the effect of the cancellation was to vest the management of the undertaking again in its owner the expression I owner  meaning under section 3 f of the Act the person who or the authority which has the ultimate control over the affairs of the undertaking and where the said affairs are entrusted to a manager managing director or managing agent such manager managing director or managing agent
Therefore the legal effect of the cancellation on May 21 1954 was to vest the management of the Ishwari Khetan Sugar Mills Ltd in the Directors and Managing Agents who were quarreling amongst themselves
On behalf of the petitioners it has been pointed out that Kedar Nath Khetan the erstwhile authorised Controller continued to remain in possession in spite of the cancellation order
In an affidavit filed on behalf of the Central Government it 1065 is stated that after the cancellation order Kedar Nath Khetan the erstwhile authorised Controller informed the Government of India that he was continuing in management in a capacity other than that of authorised Controller
The affidavit filed on behalf of the authorised Controller states however that between the time the Central Government directed him to hand over possession to the Directors and the time when he was again appointed on July 16 1954 the management of the Company remained in the hands of the Directors who were in possession of the under taking
It is not necessary for us to pronounce on these disputed facts
It is abundantly clear from the affidavits filed that peace amongst the Directors or in the family of the Managing Agents had not been restored by the time the cancellation order was made on May 21 1954
Suit No 4 of 1952 was still pending and the tussle between the parties was going on
This was the position when another order was made under the Essential Supplies Temporary Powers Act 1946
 on July 16 1954
This was followed by a second investigation under section 15 of the Act in September 1954
Petitioner No I was still pursuing what he conceived to be his legal remedy by filing a writ application in respect of the order dated July 16 1954 in this Court and also in other proceedings arising out of Suit No 4 of 1952 in the High Court of Allahabad
In these circumstances the Central Government made the impugned order dated November 8 1955
Having regard to the circumstances just stated it is we think idle to contend that the Central Government had no materials before it for arriving at the opinion that the industrial undertaking was being managed in a manner highly detrimental to public interest
The Central Government might reasonably have felt that the order dated July 16 1954 which vested certain functions of control only was not enough to meet the situation and a more drastic step was necessary
It is worthy of note that in the affidavit filed on behalf of the Central Government it is stated that the affairs of the industrial undertaking were investigated a second 137 1066 time under section 15 of the Act in September 1954 and the panel of officers who held that investigation recommended that Government should take over the management of the industrial undertaking for a period a of three years
It is on that recommendation that the Central Government passed the impugned order on November 8 1955
We are unable to accept the argument of learned counsel for the petitioners that one of the essential requirements of cl
b of sub section
1 of section 18A of the Act was not fulfilled before the order dated November 8 1955 was made
Learned counsel for the petitioners has drawn our attention to those statements in the affidavit filed on behalf of the Central Government which referred to the improvement in management after the undertaking was taken over by the authorised Controller
In that affidavit it is stated   I say that by virtue of the order issued by the Government of India under section 34 of the Essential Supplies Temporary Powers Act 1946 the Government of India had taken over only the supervisory control and the said Kedar Nath Khetan had only powers to issue directions to the management
The management was with the old management and the Government of India or the authorised Controller had no effective functioning in the management as the authorised Controller could not manage the undertaking
I say that in view of the continued litigation referred to in detail in the affidavit of the intervener dated 25th October 1956 it was apparent that the mill was being managed in a manner highly detri mental to the interests of the undertaking and that it was necessary to pass the order under section 18A of the Industries Development and Regulation Act 1951
1 say that after the management was taken over by Shri Kedar Nath Khetan the Government has reason to believe that the management has improved and has saved further deterioration
 In another part of the same affidavit it is stated that the mill earned a profit during 1953 54 and in 1954 55 also the mill was likely to make a net profit of 1067 Rs 84321
We see nothing in these statements from which it can be inferred that the recorded opinion of the Central Government in the order dated November 8 1955 that the industrial undertaking was being managed in a manner highly detrimental to public interest contained a palpably false statement
The crux of the matter was the dispute inter se amongst the Directors and the Managing Agents leading to protracted and harassing litigation some of which was still pending that was the real cause of the trouble and we think that the Central Government had enough materials for its opinion that the industrial undertaking in question was being managed in a manner highly detrimental to public interest
2We now turn to the amending order of November 7 1956
The amending order is in these terms   In the said order in sub clause ii of clause I and clause 2 for the words one year  the words two years  shall be substituted
 Section 21 of the General Clauses Act states  Where by any Central Act or Regulation a power to issue notifications orders rules or bye laws is conferred then that power includes a power exercisable in the like manner and subject to the like sanction and conditions if any to add to amend vary or rescind any notifications orders rules or bye laws so issued The argument of learned counsel for the petitioners is that neither section 18A of the Act nor section 21 of the General Clauses Act save the amending order of November 7 1956
There has been some argument before us with regard to the proviso to sub section
2 of section 18A of the Act which we have quoted in extensor in an earlier part of this judgment
That proviso it is contended by learned counsel for the petitioners refers only to an order which is initially made for a period of five years or alternatively which comes to an end on the expiry of a period of five years
According to him the proviso empowers the Central Government to continue the order after the expiry of a period of 1068 five years for such further period as may be specified in the direction given by the Central Government and the only safeguard is that a copy of the direction is to be laid before both Houses of Parliament
The argument of learned Counsel for the petitioners proceeds to state that the proviso has no application in the present case where the original order was made for a period of one year only and the amending order merely continued it for another year
In the view which we have taken of the substantive provisions of sub section
1 of section 18A of the Act and section 21 of the General Clauses Act we do not think it necessary to make any pronouncement with regard to the true scope and effect of the aforesaid proviso
In our opinion the amending order is protected under section 21 of the General Clauses Act read with sub sec
1 of section 18A of the Act
Section 21 of the General Clauses Act says inter alia that the power to issue an order under any Central Act includes a power to amend the order but this power is subject to a very important qualification and the qualification is contained in the words exercisable in the like manner and subject to the like sanction and conditions if any 
There is no dispute before us that the amending order was made in the same manner as the original order that is by means of a notified order
As no sanction is necessary for an order under section 18A the only question before us is whether the amending order complied with the like conditions under which the original order was made
We have already stated what are the two essential requirements of an order under cl
b of sub s 1 of section 18A of the Act
The argument of learned counsel for the petitioners is that those two essential conditions must be fulfilled again before any amendment of the order can be made this he ureas is the true scope and effect of the expression subject to the like conditions if any  occurring in section 21 of the General Clauses Act
We agree with learned counsel for the petitioners that the power to amend which is included in the power 1069 to make the order is exercisable in the like manner and subject to the like sanction and conditions if any as govern the making of the original order this is stated by the section itself
It becomes necessary however to understand clearly the true nature of the conditions  which have to be fulfilled before an order under el
b of sub section
1 of section 18A of the Act can be made
Once the true nature of those conditions is appreciated there is in our opinion little difficulty left in the application of section 21 of the General Clauses Act
Now the first condition in cl
b of sub section
1 of section 18A of the Act is that the industrial undertaking must be one in respect of which an investigation has been made under section 15 of the Act
Section 15 is in these terms Where 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 to be a substantial fall in the volume of production in respect of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings as the case may be for which having regard to the economic conditions prevailing there is no justification or ii there has been or is likely to be a marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings as the case may be 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 or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings as the case may be for which there is no justification or iv it is necessary to take any such action as is provided in this Chapter for the purpose of conserving any resources of national importance which are utilised in the industry or the industrial undertaking or under
takings as the case may be or 1070 b any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest the Central Government may make or cause to be made a full and complete investigation into the circumstances of the case by such person or body of persons as it may appoint for the purpose
 The order for investigation in this case was made under cl
b of section 15 and that clause again uses the expression that the industrial undertaking is being managed in a manner highly detrimental to the industry concerned or to public interest the same expression which occurs in cl
b of sub section
1 of section 18A of the Act
Section 16 of the Act states inter alia that if after making or causing to be made any investigation under section 15 the Central Government is satisfied that action under the section is desirable it may then issue certain directions which are stated in the section
It may however be that in a given case the management is so detrimental to the industry concerned or to public interest that mere directions under section 16 are not enough in that event the Central Government may take over the management by an order passed under cl
b of sub section
1 of section 18A of the Act
There may even be a case where in spite of the directions no sufficient improvement has taken place and an order under sub section
1 of section 18A of the Act becomes necessary
That is why in cl
b of sub section
1 occurs the expression whether or not any directions have been issued to the undertaking in pursuance of section 16  The reason why the same expression is being managed in a manner highly detrimental etc  occurs both in cl
b of section 15 and cl
b of sub section
1 of section 18A of the Act is this an investigation is ordered when the conditions mentioned in section 15 are fulfilled one of the conditions being that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest
On such an investigation being made the Central Government may issue directions under section 16 those directions may or may not improve the situation
If they do not improve the 1071 situation or if the mere giving of directions under section 16 is not considered sufficient to meet the situation the Central Government may pass an order under section 18A but one of the requisite conditions is that the Central Government must he of opinion that the industrial undertaking is still being managed in a manner highly detrimental to the scheduled industry concerned or to public interest
If these sections 15 16 and 18A are read together as they must be read then it becomes at once clear that the condition as to the management of the industrial undertaking in a manner highly detrimental to the scheduled industry concerned or to public interest relates in its true scope and effect to a period when the management of the industrial undertaking is in the hands of its owner that is to a period before the management of the whole or any part of the undertaking is taken over
Similarly with regard to the exercise of functions of control which also is contemplated by section 18A of the Act the condition again relates to a period before the functions of control are taken over
It would in our opinion be illogical and against the terms of sections 15 16 and 18A of the Act to hold that the condition as to mismanagement using the word mismanagement  for the purpose of brevity and convenience for the correct expression namely management in a manner highly detrimental to the scheduled industry concerned or to public interest  can apply after the management has been taken over and during the period of its management by the authorised Controller
The contention of learned counsel for the petitioners is that whenever an amendment is made the test of mismanagement must again be fulfilled
Let us examine the full implications of this argument
If after the management is taken over the authorised Controller becomes seriously ill or dies in a few days when the period of the order has not expired the Central Government may find it necessary to appoint another person and for that purpose make an amendment
If the argument of learned counsel for the petitioners is correct then no amendment can be made unless the test of mismanagement is again 1072 fulfilled but how can such a test be fulfilled when the management was in the hands of the authorised Controller till he died the authorised Controller being more or less in the position of an agent of the Central Government  The argument of learned counsel for the petitioners pushed to its logical extreme will thus result in an absurdity and no amendment will ever be possible
Learned counsel for the authorised Controller has on the contrary contended that the two conditions laid down in el
b of sub section
1 of section 18A of the Act are not static in nature and once they are fulfilled they continue to have effect thereafter whatever may have happened in the meantime
The argument proceed to state that if an investigation under section 15 of the Act had once been made and if at some previous stage the industrial undertaking was mismanaged the two conditions continue to operate irrespective of whether the undertaking vests in the owner again for a time and an amendment may be made at any time and even a fresh order can be made without the necessity of a fresh investigation and a fresh mismanagement
We consider that both these are extreme views
On a proper construction of sections 15 16 and 18A of the Act the correct view appears to be what we have stated earlier namely the two conditions one as to an investigation under section 15 and the other as to mismanagement relate to a period when the management of the industrial undertaking is legally vested in its owner and section 18A must be read with reference to the two conditions stated in el
b of sub section
1 as though the words while the undertaking is vested in its owner  are present in the clause
If as in this case the management is once taken over by an order under section 18A but the order is later cancelled and the management again vests in the owner the two conditions must be fulfilled again before an order under el
b of sub section
1 of section 18A of the Act can be made
That is what happened in the present case
The management was taken over on November 14 1953 but the order was cancelled on May 21 1954 and the management vested in the owner
An 1073 investigation under section 15 of the Act was again made in September 1954 and the Central Government being satisfied that the industrial undertaking was being mismanaged in spite of the order under the Essential Supplies Temporary Powers Act made on July 16 1954 passed the impugned order on November 8 1955
So far as the amending order of November 7 1956 was concerned the like conditions still continued to exist and there was no necessity for a fresh investigation etc because the management had not since November 8 1955 vested in the owner and by their very nature the conditions continued to exist till the management went into the hands of the owner again
Having regard to the true nature of the conditions laid down in section 18A of the Act there was no violation of section 21 of the General Clauses Act when the amendment was made on November 7 1956 and in our opinion the requirements of section 21 had been substantially complied with
The power to amend which is included in the power to make the order was exercised subject to like conditions within the meaning of section 21 of the General Clauses Act the conditions being an investiga tion under section 15 of the Act and management in a manner highly detrimental to public interest both of which necessarily related to the period when the management of the industrial undertaking was legally vested in its owner and both had been fulfilled and continued to be so fulfilled when the amendment was made
It is to be remembered that section 21 of the General Clauses Act embodies a rule of construction and that rule must have reference to the context and subject matter of the particular statute to which it is being applied for example section 18A of the Act does not prescribe any conditions for the cancellation of an order made under that section but section 18F does and the power of cancellation referred to in section 21 of the General Clauses Act must have reference to section 18F
Similarly an order of amendment made becomes an order under section 18A and is subject to all the conditions mentioned therein including the condition mentioned in sub section
A reference was made in this connection to a decision of this Court in Strawboard Manufacturing Co vs Gutta 138 1074 Mill Workers  Union 1
In that case the State Government of Uttar Pradesh had referred an industrial dispute to the Labour Commissioner on February 18 1950 and directed that the award should be submitted not later than April 5 1950
The award however was made on April 13 and on April 26 the Governor issued a notification extending the time for making the award up to April 30 1950
It was held by this Court that the State Government had no authority whatever to extend the time and the adjudicator became functus officio on the expiry of the time fixed in the original order of reference and the award was therefore one made without jurisdiction and a nullity
It was further held that section 14 of the U P General Clauses Act did not in terms or by necessary implication give any such power of extension of time to the State Government
It was argued on behalf of the State Government in that case that the order of April 26 1950 could be supported with reference to section 21 of the U P General Clauses Act
But this Court rejected the argument and held that the power of amendment and modification conferred by section 21 of the U P General Clauses Act could not be exercised so as to have retrospective operation
We do not think that the principle of that decision has any application in the present case
But as already stated by us the provision in section 21 of the General Clauses Act embodies a rule of construction and the implied power of amendment therein embodied must be determined with reference to the context and subject matter of the provisions of the principal statute
In the present case that rule of construction applies but it does so with reference to the context and subject matter of sections 15 16 and 18A of the Act
3 We now turn to the third and last question which has been agitated before us
Learned counsel for the petitioners has contended that the impugned orders are not bona fide orders
He has submitted that the authorised Controller was one of the parties to the dispute which led to so much protracted litigation
1  1075 He has pointed out that there was an order of injunction against him
He has also referred to certain other circumstances arising out of other activities of the authorised Controller and relating to income tax demands against him
He has submitted that the authorised Controller ceased to be a Director by reason of breaches of certain provisions of the Indian Companies Act committed by him
These submissions have been very seriously contested in the affidavit filed on behalf of the authorised Controller
On the materials before us it is neither possible nor desirable that we should make any pronouncement with regard to these disputed questions of fact
It is sufficient to state that the selection of a suitable person to be the authorised Controller rests with the Central Government and it may be presumed that the Central Government knows best the needs of the particular industry and of its own subjects and the suitability of the person to be appointed as authorised Controller
Having regard to the facts and circumstances to which we have already made a reference it cannot be said that the appointment of Kedar Nath Khetan as the authorised Controller in this particular case was made for some ulterior purpose that is a purpose other than the purpose of achieving the objects for which the impugned order was passed
The primary concern of the Central Government was to see that the mills were managed in a manner which was not detrimental to public interest and having regard to the experience of Kedar Nath Khetan in the industry in question it was open to the Central Government to select him as the most suitable person to be appointed as the authorised Controller notwithstanding that he was a party to the dispute
The test to be applied in cases of this nature where lack of good faith in the Central Government is pleaded is not whether a better or more independent man was or might be available nor is it the duty of the Court to subject the selection made by the Central Government to another and independent test of propriety and suitability for the Court has really no materials for such a test
The test to be applied is whether the 1076 appointment was made for some ulterior purpose some purpose other than the object for which the law under which the impugned order is made was enacted
In our view the petitioners have completely failed to satisfy that test in the present case
For the reasons given above we hold that the order made on November 8 1955 and the amending order dated November 7 1956 are both valid in law and the petitioners have not made out any case of a violation of their fundamental right
In conclusion it may be stated that on behalf of the authorised Controller a preliminary objection was also taken that petitioner No 1 was not legally competent to represent petitioner No 2
Having regard to our decision on merits it is unnecessary to say anything more about this preliminary objection
It was stated at the Bar that this preliminary objection has also been taken in Suit No 4 of 1952
As that suit is still pending we have thought it fit to refrain from expressing any opinion on the preliminary objection
The result is that there is no merit in the petition which is dismissed with costs in favour of the respondent the Union of India
The authorised Controller who intervened at his own risk must bear his own costs
SARKAR J
I have had the privilege of reading the judgment just delivered by my brother section K Das
I regret that on one of the questions that arise in this matter I have come to entertain a different opinion
In this judgment I will say a few words on that question only
With the rest of the judgment of SK Das J I am in entire agreement
He has dealt with the facts very fully and therefore I do not propose to state them myself The Central Government had by an order published in the Official Gazette of November 8 1955 and made in exercise of the power conferred by section 18A of the Industries Development  Regulation Act 1951 LXV of 1951 authorised Kedar Nath Khetan who has been allowed to intervene in these proceedings to take 1077 over the management of Ishwari Khetan Sugar Mills Limited an industrial concern then in the management of its directors
The order provided that it was to have effect for a period of one year commencing on the date of its publication in the Official Gazette
By another 2 order made on November 7 1956 the Central Government directed that in the order of November 8 1955 for the words one year the words I two years  should be substituted
The effect of this latter order was that Kedar Nath Khetain was to be in management of the Mills up to November 7 1957
The question is whether the order of November 7 1956 was a valid order
The latter order is only an amendment of the earlier order
Had the Central Government then any power so to amend Section 18A does not expressly confer any power to amend an order once it is made under it
Section 21 of the General Clauses Act however provides that a power of amendment shall exist in certain circumstances
The only question therefore is whether section 21 of the General Clauses Act justifies the amendment made in this case
Section 21 is in these terms Where by any Central Act or Regulation a power to issue notifications orders rules or bye laws is conferred then that power includes a power exercisable in the like manner and subject to the like sanction and conditions if any to add to amend vary or rescind any notifications orders rules or bye laws so issued
 Under this section a Notification or an Order once issued can be amended only in the like manner and subject to the like sanction and conditions if any 
This means that the power of amendment can be exercised only in the same manner and subject to the same sanction and conditions if any were imposed in which the power to make the order could be exercised under the main Act
Was the order of November 7 1956 then made in the same manner and subject to the same sanction and conditions under which an order under section 18A of the main Act could be made  Under section 18A the power to authorise a person to take over the management of an undertaking can be 1078 exercised only by a notified order that is to say an order notified in the Official Gazette
This is the manner of the exercise of the power
The amending Order had been made in the same manner
This requirement of section 21 of the General Clauses Act therefore was fulfilled in this case
Section 18A does not provide for any sanction being obtained before the exercise of the power conferred by it
The amending Order therefore did not need any sanction and no question of satisfying any requirement as to any sanction arises
The difficulty has arisen as to the last requirement specified in section 21 namely that indicated by the words subject to like conditions 
Section 18A of the main Act so far as relevant for the present purpose is in these terms  If the Central Government is of opinion that  a      b an industrial undertaking in respect of which an investigation has been made under section 15 is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest the Central Government may by a notified order authorise any person or to take over the management of the undertaking Learned counsel for the petitioner formulated his argument in this way
He said that the right to exercise the power conferred by section 18A arises only on two conditions being fulfilled namely a the existence of an industrial undertaking in respect of which an investigation had been made under section 15 and b the Central Government being of opinion that such an undertaking is being managed in a manner highly detrimental to the industry or to public interest
It was said that in this case the second condition was not present when the order for amendment of the earlier order was made and therefore it is invalid
I agree that the second condition was not present when the amending order was made
The reason is this
Section 18A contemplates the taking over of management of an undertaking by a person authorised by the Government
It therefore contemplates a state of 1079 affairs in which the management is not in such a person
It follows that it contemplates management in a manner highly detrimental to the industry or public interest by a person other than that appointed by the Government under the Act
In this case at the 2 date of the amendment the management was in the person appointed by the Government by its earlier order of November 7 1955 and therefore the Government could not at the date of the amending order have been of opinion that the management was by a person other than that appointed by it and such management was in a manner highly detrimental to the industry or to public interest
In my view however when section 21 of the General Clauses Act makes the power to amend exercisable subject to the like conditions as in the main Act it does not contemplate those conditions upon the fulfillment of which the right to issue the order arises under the main Act
If this were so the power of amendment conferred by section 21 would have been wholly redundant and unnecessary
If the conditions upon the fulfillment of which the right to exercise the power arose under the main Act existed then the Government could have instead of amending the order made a fresh order under section 14 of the General Clauses Act if necessary rescinding the earlier order
Therefore it seems to me that the provision in section 21 of the General Clauses Act that the power of amendment shall be exercisable subject to like conditions does not refer to conditions upon the existence of Which the right to exercise the power arises under the main Act
In my view the conditions referred to in section 21 are the conditions to which the order issued under the main Act must be made subject
Thus in this case sub section 2 of section 18A provides that any notified order issued under sub section 1 shall have effect for such period not exceeding five years as may be specified in the order
The effect of this sub section is that the order made under section 18A must be subject to the condition that it cannot have effect for a longer period than 5 years
When therefore an order once made under section 18A is sought to be amended with the 1080 aid derived from section 21 of the General Clauses Act the amendment must observe the condition laid down in sub section
2 of section 18A Such amendment is subject to the conditions in the main Act
The amendment cannot therefore extend the operation of the order beyond the period of five years mentioned in the main Act
In the present case the amending order of November 7 1956 complied with this condition and therefore it was properly made in compliance with the provisions of section 21 of the General Clauses Act
For this reason in my view the argument of the learned Counsel for the petitioner that the amending order was invalid must fail
I therefore agree with the order proposed by section K Das J Petition dismissed


Summary:
By a notified order dated November s 1955 the Government of India took over the management of certain Sugar Mills under section 18Aib of the Industries Development and Regulation Act 1951 for one year and vested it in a Controller
This was preceded by an investigation under section 15 of the Act and the Central Government had materials before it to be of the opinion that the management was being conducted in a manner highly detrimental to the undertaking and to public interest
On November 7 1956 this order was amended extending the Controller s management for a further period of two years
It was contended on behalf of the petitioners that the requirement of section 18Aib of the Act not having been satisfied before the amending order was made the amendment was invalid and that in any event the appointment of the same person as the authorised Controller was not bona fide
Held per section R Das CJ jafer Imam section K Das and Govinda Menon JJthat section 18A of the Industries Development and Regulation Act 1951 read with sections 15 and 16 of the Act and properly construed leaves no doubt that the two conditions mentioned in cl
b of sub section
i of section 18A relating to investigation and mismanagement must relate to a period when the management of the undertaking was legally vested in its owner and once they are found to exist and the management is taken over by the Government the conditions continue to exist by their very nature till the management goes back to the owner therefore the amending order also fulfilled the same conditions subject to which the original order was made
When a notified order under the section is sought to be amended by the application Of section 21 of the General Clauses Act like conditions  mentioned in the latter section to which such order of amendment must be subject are the two conditions relating to investigation and mismanagement mentioned ins
18Aib of the Industries Development and Regulation Act
1053 Strawboard Manufacturing Co vs Gutta Mill Workers  Union   held inapplicable
The appointment of a suitable person as the Controller rests entirely with the Central Government and unless an appointment can be shown to have been made for any ulterior purpose contrary to what the Statute has in view its bona fides is not open to question
Consequently in the instant case both the original notification and its amendment were valid in law
Per Sarkar J Like conditions  mentioned in section 21 of the General Clauses Act when applied to section 18A of the Industries Development and Regulation Act cannot mean the two conditions mentioned in cl
b of sub section
1 of that section on the fulfillment of which the Central Government has the right to issue a notification but must mean the condition mentioned in sub section
2 of that section subject to which alone the right to issue a notification can be exercised namely that a notified order cannot have effect for more than five years and consequently the amending order in question which satisfied that condition must be valid in law