Special Leave Petition Civil No 4826 of 1987 etc
From the Judgment and order dated 641987 of the Allahabad High Court in CMA No 4555 W of 1987 in WP No 2214 of 1987
K Parasaran Attorney General Milon K Banerjee Solicitor General FS Nariman Dr YS Chitale HL Anand KK Venugopal AK Ganguli SN Kacker Anil B Diwan AK Sharma Harish N Salve KJ John section Swarup TVSN Chari Vrinda Grover Miss A Subhashini A Subba Rao RB Mehrotra BB Sawhney NK Sharma PV Kapur PP Malhotra Miss Annoradha Dutt P Parmeshwaran Navin Prakash and Naresh K Sharma for the appearing parties
973 The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
What falls for consideration in all these matters is a common question of law namely whether equity shares in the two companies ie 1000000 shares in Swadeshi Polytex Limited and 1718344 shares in Swadeshi Mining and Manufacturing Company Limited held by the Swadeshi Cotton Mills vest in the Central Government under Section 3 of the Swadeshi Cotton Mills Company Limited Acquisition and Transfer of Undertakings Act 1986 hereinafter referred to as the Act 
The other subsidiary question is whether the immovable properties namely the bungalow No 1 and the Administrative Block Civil Lines Kanpur have also vested in the Government
The question as to one more property known as Shrubbery property whether it has been taken over or not is still to be argued and is not covered by this judgment
In order to appreciate the question in these matters it has to be borne in mind that there were six original proceedings initiated by various parties which gave rise to these civil appeals special leave petitions and the transferred cases to this Court
These six original proceedings are as follows 1 On 18th of February 1987 Suit No 418 of 1987 was filed before the Delhi High Court by one Naresh Kumar Parti against Dr Raja Ram Jaipuria Swadeshi Polytex and others praying for an order of injunction restraining the company from holding the 17th annual general meeting on the ground that 34 shares in Swadeshi Polytex have vested in National Textile Corporation briefly referred to as NTC in view of sections 3 and 4 of the said Act
In this suit an application for grant of interim injunction was also filed praying that in the event the annual general meeting of the company is allowed to be held an independent Chairman should be appointed to conduct the meeting
Notice in respect of the said application was served upon the respondents on 20th of February 1987
On 4th March 1987 the Delhi High Court refused to pass any order in view of the order already passed by the Allahabad High Court mentioned hereinafter
Against this order of the Delhi High Court two special leave petitions were filed in this Court one by Doypack Systems Pvt Ltd which was defendant No 10 in the Delhi suit
Consequent upon grant of leave the special leave petition came to be registered as Civil Appeal No 577 of 1987
The other special leave petition was filed by the plaintiff in the Delhi suit Naresh Kumar Parti
Consequent upon grant of leave the special leave petition came to be registered as Civil Appeal 974 No 578 of 1987
On 24th of February 1987 one Hari Prasad Aggarwal filed a suit being Case No 183 of 1987 in the Court of Third Additional Civil Judge Kanpur praying inter alia that Shri Raja Ram Jaipuria should not preside over the 17th annual general meeting of the Company
On 27th of February 1987 the application for interim injunction filed in the said suit was dismissed by the learned trial Judge
In appeal which is not yet numbered preferred by the plaintiff before the Allahabad High Court an order was passed by the Court on 2nd March 1987 appointing Shri MP Wadhawan as the Chairman of the said annual general meeting
The consenting parties to the said proceedings before the Allahabad High Court were Shri Raja Ram Jaipuria and Swadeshi Polytex Limited
Against this order of 2nd March 1987 passed by the Allahabad High Court Ms Doypack Systems Private Limited preferred a special leave petition in this Court
Leave was granted and as mentioned hereinbefore it was registered as Civil Appeal No 577 of 1987
The three special leave petitions were heard together as Civil Appeals Nos 577 578 and 579 of 1987 and were disposed of by a common order on 6th March 1987 by this Court appointing Shri Jaswant Singh as the Chairman of the said annual general meeting
On 26th of February 1987 another suit being Suit No 506 of 1987 was filed in the Delhi High Court by one Mukesh Bhasin praying inter alia for a declaration that Swadeshi Cotton and Swadeshi Mining had no right in respect of 34 of the shareholdings in Swadeshi Polytex and that the said shares were vested in NTC by virtue of the said Act
By an order dated 9th March 1987 the Delhi High Court disposed of that application
The learned Judge in that case was prima facie satisfied that the plaintiff in that case was entitled to an injunction claimed by him in the meeting to be presided over by Shri Jaswant Singh
He granted injunction restraining the defendants Nos3 and 4 in that suit from exercising any right whatsoever attached to 34 shares of defendant No2 held by them and particularly any voting rights in the annual general meeting which was scheduled to be held on 9th of March 1987 till decision of that suit
This order was brought to the notice of this Court by CMP forming part of Civil Appeal Nos
577 79 of 1987
On 9th of March 1987 on that CMP this Court passed an order directing that NTC Swadeshi Cotton and Swadeshi Mining all shall be entitled to vote at the annual general meeting and the question as to who were the rightful voters would be decided by the Chairman of the meeting
It was further directed that the Chairman would keep these votes separately
This is the Transferred Case No 14 of 1987 herein
On 7th of March 1987 one Mukesh Jasnani a shareholder in Swadeshi 975 Polytex filed a writ petition in the Allahabad High Court Lucknow Bench
The High Court by its order dated 7th of March 1987 dismissed that writ petition
The High Court in the said order observed that Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the 17th annual general meeting in respect of their shares which according to NTC had vested in them
Against this order dated 7th March 1987 Doypack Systems preferred a special leave petition being SLP Civil No 3112 of 1987
On 9th March 1987 this Court passed orders in this special leave petition directing that the meeting would be held under the Chairmanship of Shri Jaswant Singh notwithstanding any order made by any court including the order dated 3rd March 1987 passed by the Division Bench of the Allahabad High Court
This Court also vacated the operative portion of the directions contained in the order dated 7th March 1987 passed by the Allahabad High Court
On 6th of April 1987 Ms Swadeshi Mining and Manufacturing Company filed a civil writ petition No 2214 of 1987 in the Allahabad High Court Lucknow Bench praying inter alia for stay of the operation of the letters dated 2430th March 1987 addressed by NTC to Swadeshi Mining and Manufacturing and Swadeshi Cotton Mills Company Limited calling for an Extraordinary General Meeting of the shareholders for removal of the Directors of Swadeshi Mining and Manufacturing Company Limited
The Division Bench of the High Court Lucknow Bench passed an order on 6th of April 1987 staying the operation of the said letters addressed by NTC to the companies
Against that order Ms Doypack Systems Pvt
Ltd filed a Special Leave Petition No 4826 of 1987
NTC also filed a special leave petition against the said order being SLP No 5240 of 1987 in this Court
Both these petitions were heard by this Court on 5th May 1987
By an order passed on 5th May 1987 this Court directed that Suit No 506 of 1987 filed in the Delhi High Court and Writ Petition No 2214 of 1987 pending in the Allahabad High Court Lucknow Bench be transferred to this Court subsequently registered as Transferred Cases Nos 14 and 13 of 1987 respectively
Consequent upon leave granted by this Court by the order dated 21st of January 1987 NTC filed a civil suit in the District Court at Kanpurseeking a declaration of its title in respect of Shrubbery property in Kanpur
The learned Trial Judge refused any interlocutory injunction in the said suit against which an appeal was preferred before the High Court of Allahabad which was also declined and consequently NTC filed Special Leave Petition No 7045 of 1987 in this Court
This application is still pending and is awaiting disposal
In this background these matters will have to be disposed of
976 Swadeshi Mining and Manufacturing Co Ltd and others submitted that these shares did not vest in the Central Government
The main thrust of Shri Nariman s contention who appeared on their behalf was that section 3 of the Act provided that every textile undertaking and right title and interest of the company ie Swadeshi Cotton Mills Company Limited vested in the Central Government
The textile undertakings mentioned in section 3 included all assets pertaining  to the textile undertaking as per section 4 of the Act
It is common ground that whether a particular asset is part of the textile undertaking and vests under section 3 or not has to be considered in the context of the Act with reference to the language used in section 4 of the Act
Shri Nariman submitted that there are different modes by which Parliament can resort to nationalisation
These modes according to him are a acquisition of 100 shares of the Company b all assets under the ownership possession or control of the company being vested in the Government c only those assets in the ownership possession or control of the company in relation to the undertakings which are taken over or all properties pertaining to the undertaking vest in the Government
According to him the expressions pertaining to or in relation to are expressions of limitation and restriction in the absence of which each and every asset of the company would have vested in the Government
The background and sequence of events leading to the enactment of this Act through which Shri Nariman took us in detail and it is useless to set them up in extenso he submitted that the shares in question were all along being considered and treated as not comprising part of the textile undertaking
He referred to the order dated 13th of April 1978 issued by the Central Government under section 18AA of the Industries Development and Regulation Act 1951 hereinafter referred to as the IDR Act 
This order did not purport to take over those shares held in the two companies by the Swadeshi Cotton Mills Company Limited
He also drew our attention to Volume III pages 53 and 54 of the present volumes before us which is the reply of the Minister of Law Justice and Company Affairs
It was clarified to the Parliament that the shares were distinct from the undertakings of the company whose management was taken over
On 27th of March 1979 in answer to a question 977 the Minister stated that apart from the six undertakings taken over and presently run by the National Textile Corporation Limited the business of the company comprised of i Investments in Swadeshi Polytex Limited Ghaziabad
ii Investments in Swadeshi Mining and Manufacturing Company Limited a subsidiary company
iii Land development business
He drew our attention to the letter dated 9th of April 1979 from the Chairman Cotton Mills Ltd in answer to a letter by the Director Department of Company Affairs stating that the shares in question and the voting rights in respect thereof continued to vest in the company ie Swadeshi Cotton Mills Limited in spite of the taken over of the management
Before we proceed further we must deal with the decision of this Court in Balkrishan Gupta and others vs Swadeshi Polytex Ltd and others  There it was observed that the fact that 350000 shares had been pledged in favour of the Government of Uttar Pradesh would not make any difference
The contention that was urged on behalf of the appellant therein namely Balkrishan Gupta related to the effect of an order made by the Central Government on 13th of April 1978 under section 18AA1a of the IDR Act taking over the management of Swadeshi Cotton Mills along with five other industrial units belonging to the Company which was the subject matter of dispute in Swadeshi Cotton Mills vs Union of India  and the order of extension passed by the Central Government on 26th November 1983 which was the subject matter of dispute in that case before this Court It was urged in Balkrishan vs Swadeshi Polytex supra on behalf of the appellants therein that on the passing of the above orders under Section 18AA1a the Cotton Mills Company lost its voting rights in respect of the shares in question
This Court held that was not so
This Court emphasised that what was taken over was the management of the six industrial units referred to therein and not all the rights of the Cotton Mills Company
The shares belonged it was observed to the company and the orders referred to above could not have any effect on these
In that context it was observed that the Department of Company Affairs Government of India rightly expressed its view in the letter written by the Director in the Department of Company Affairs on 9th of April 1979 to the 978 Chairman of the Cotton Mills Company that the voting rights in respect of these shares continued to vest with the Cotton Mills Company and the manner in which those voting rights were to be exercised was to be determined by the Board of Directors of the Cotton Mills Company
Hence the passing of the orders under section 18AA1a of the IDR Act had no effect on the voting rights of the Cotton Mills Company
It was further observed that the Polytex Company had in that case rightly treated the registered holder ie the Cotton Mills Company as the owner of the shares in question and to call the meeting in accordance with the notice issued under section 169 of the 
Therefore a challenge to the validity of the meeting was negatived
As good deal of reliance was placed on behalf of the petitioners on this decision it must be emphasised that the decision must however be understood in the context of the facts and the language used in the order passed under section 18AA of the IDR Act whereby only the management had been taken over and not the rights of the company therein
But by the present Act in question on the appointed day every textile undertaking and the right title and interest of the company in relation to every textile mill of such textile undertakings were transferred to and vested in the Central Government and such textile undertakings would be deemed to include all assets and so in the context of this provision the reference and the reliance on the decision of the Balkrishan Gupta  others vs Swadeshi Polytex Ltd and others supra is not in our opinion appropriate
It is true by the IDR Act only management was taken over but a further point was sought to be built up on behalf of the petitioners that the Act in question was passed to regularise what was taken over
So because of this decision shares were not taken over by the Act
In view of the significant difference between the objects of taking over of the assets and the taking over of the management this submission has to be stated to be rejected
Reliance was also placed before us on the decision of the Delhi High Court in Writ Petition No 408 of 1978
The Delhi High Court held that the shares did not vest in the Government under the order dated 13th of April 1978 issued under section 18AA of the IDR Act
This judgment of the Delhi High Court was challenged in appeal before this Court
This Court in its judgment in Swadeshi Cotton Mills vs Union of India supra set aside the order of take over dated 13th April 1978 for violation of the principles of natural justice
But this Court did not give any finding or order with regard to the finding of the High Court that the shares were not included in the take over order
979 It was further urged before us that this Act was preceded by an ordinance namely Swadeshi Cotton Mills Company Limited Acquisition and Transfer of Undertakings Ordinance 1986 which was promulgated on 19th of April 1986
Section 10 of the ordinance entitled it was submitted NTC to exercise control over the business of the undertakings taken over
the NTC passed an order to this effect on 25th April 1986 but did not purport to take over the shares according to Shri Nariman
We cannot attach much significance to that fact as Shri Nariman sought us to do
Shri Nariman referred us to the Statement of Objects and Reasons appended to the Bill and urged that it was not intended that the shares were included in the undertaking
He submitted that the Statement of Objects and Reasons showed that the acquisition of the undertaking had to be resorted to since the order of taking over the management of the company issued under section 18AA of the IDR Act could not be continued any further
The preamble to the Act however reiterated that the Act provided for the acquisition and transfer of textile undertakings and reiterated only the historical facts that the management of the textile undertakings had been taken over by the Central Government under section 18AA of the IDR Act and further that large sums of money had been invested with a view to making the textile undertakings viable and it was necessary to make further investments and also to acquire the said undertakings in order to ensure that interests of general public are served by the continuance of the undertakings
The Act was passed to give effect to the principles specified in clauses b and c of Article 39 of the Constitution
In our opinion this was indicative of the fact that shares were intended to be taken over
Shri Nariman however contended that NTC on 17th June 1986 had issued an order under section 6 of the Ordinance transferring four of the textile undertakings to its subsidiary the NTC UP Limited
According to him the shares were not purported to be transferred under this Order
This however in our opinion is non sequitur
It appears from the written statement filed by NTC on 8th of February 1987 in the suit filed by one GG Bakshi in Ghaziabad Court it was claimed that NTC was entitled to take over company s shares and investments
On 2430th March 1987 NTC issued notice to the petitioners 1 and 2 stating that they were entitled to shares
It was urged by Shri Nariman that this belated assertion indicated that the 980 shares were not intended to be taken over
We are unable to accept this suggestion or to draw that inference
It does not logically follow
On the date of the take over of the undertakings according to Shri Nariman 1000000 shares in Swadeshi Polytex Limited were attached for recovery of electricity dues of Swadeshi Cotton Mills and 350000 shares were already pledged with the State Government of UP for securing the loans and advances made by the State Government for payment of wages
These dues fall in Part II of the Schedule to the Act and are not payable under section 25 of the Act by the Government
Shri Nariman submitted that compensation payable under the Act was not enough to pay all the dues falling in Part I
He drew our attention to the Financial Memorandum of the Bill which showed that the Government would have to pay a further sum of Rs 15 crores over and above the compensation amount
It could not have been the intention of the Act to discharge these encumbrances according to him if they were to vest in the Central Government under section 3 of the Act and the result of which would be that the State of UP and the Electricity Board would not get anything towards their large dues
We are unable to accept this submission
This in our opinion is not the proper approach to the construction of the Act on the question whether the shares were taken over or not
Shri Nariman submitted that while applying the rules of construction of contemporanea expositio it must be held that the shares in question did not vest in the Central Government under section 3 of the Act
This contention was to be supported from the external aids namely the background and history of the legislation
There were internal aids in the Act itself to support this contention
The internal aids according to Shri Nariman were a long title of the Act which used the expression certain textile undertakings and ensuring contiuned manufacture production and distribution of different varieties of cloth and yarn b the Preamble to the Act also emphasises according to Shri Nariman that the textile undertakings which were taken over under section 18AA should be continued for purposes of manufacture production and distribution of cloth and yarn c He further submitted that the Objects and Reasons appended to the Bill also supported that view d section 2k of the Act enumerated only six textile undertakings which alone were taken over by the order issued under section 18AA e sections 7 and 8 also provided an intrinsic aid to the construction of section 4 according to him
Section 7 provided that an amount equal to the value of the assets which will vest in the NTC would be deemed to be the Central Government s 981 contribution to the equity capital of NTC and NTC shall issue shares to the Government having a face value equal to the amount specified in section 8
The amount equal to the value of the assets was Rs2432 crores which was the share capital of the Government in NTC
This figure of Rs2432 crores does not take into account the value of the shares and hence the shares did not vest under sections 3 and 4 of the Act according to him
f the expression pertaining to appearing in section 41 means forming part of
Therefore only those assets which formed part of the textile undertakings could vest in the Central Government it was submitted by Shri Nariman
It was for this reason that section 25 of the Act while dealing with penalties used the expression assets forming part of the textile undertakings
Shri Nariman further submitted that Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited were two separate undertakings distinct from the six textile undertakings belonging to Swadeshi Cotton Mills Company Limited
Acquisition of these shares having controlling interests in the said two companies was never intended and could never be said to be within the scope of the Act
The expression in relation to the six textile undertakings appearing in sections 3 and 4 of the Act was an expression of limitation according to him indicative of the intention of acquiring of only the textile undertakings and no other
There existed no public purpose according to Shri Nariman for acquiring these shares
The public purposes mentioned in the Act with reference to Article 39b and c related to the acquisition of only the textile undertakings of Swadeshi Cotton Mills and not acquisition of the synthetic fibre undertakings of Swadeshi Polytex or sugar undertakings of Swadeshi Mining and Manufacturing Company Limited
Dr Chitale appearing on behalf of Swadeshi Mining and Manufacturing Company Limited as respondent in SLP Civil No 5240 of 1987 in which NTC is the petitioner supported Shri Nariman and advanced certain arguments
His main arguments were 1 Swadeshi Polytex Limited and Swadeshi Mining and Manufacturing Company Limited were two distinct undertakings different from the six textile undertakings belonging to Swadeshi Cotton Mills Company Limited
Section 3 of the Act therefore according to him could not be so construed as to enable the Government to indirectly acquire altogether different undertakings belonging to a different company
982 2 Swadeshi Mining and Manufacturing Company Limited had also coal mines
When Coal mines Nationalisation Act 1973 was passed with reference to sections 3 and 6 thereof it were the coal mines belonging to the said company along with the right title and interest of the owners in relation to the coal mines which vested in the Central Government by operation of the Act we were reminded
3 Dr Chitale submitted that the Act with which we are concerned uses the expression pertaining to in section 4 which according to him is narrower than the expression in relation to used in section 3 of the Coal mines Nationalisation Act 1973
When the coal mines were nationalised the sugar undertakings of Swadeshi Mining were not taken over since these constituted separate undertakings distinct from the coal mines
He referred to Entries 655 656 and 657 of the Schedule to the Coal mines Nationalisation Act 1973
4 Dr Chitale submitted that the expression investment may belong to a fund which may be created the interests of which may be used for payment of gratuity or provident fund to the employees
The expression investment cannot be applied in the context of the shareholdings of a separate undertaking according to him
Shri SB Mukerjee appearing on behalf of Swadeshi Cotton Mills had relied on the decision of the Delhi High Court See Volume III pages 64 to 169 which according to him clearly held that the shares in question were not part of the textile undertakings and in fact the said shares were not taken over along with the six textile undertakings belonging to Swadeshi Cotton Mills Limited which we have discussed
Shri Mukerjee further relied on the clarification given by the Company Law Board which showed that the voting rights in respect of the shares continued to vest in Swadeshi Cotton Mills and not in NTC
He referred to the decision in Balkrishan Gupta and others vs Swadeshi Polytex Ltd and another supra which has also been discussed
The expression relating to and pertaining to are words of limitation and they cannot be so construed as to take within their fold shares held by Swadeshi Cotton Mills an independent company doing its business according to him
Learned Solicitor General of India appearing on behalf of the National Textile Corporation in all these cases submitted that the facts 983 stated by way of background and the sequence of events up to the date of enactment of the Act were not relevant to the decision as to the scope ambit and effect of the vesting provisions contained in sections 3 and 4 of the Act
The sequence of events narrated by the petitioners prior to the enactment of the Act all related to the order of take over of the undertakings of Swadeshi Cotton Mills Company issued on 13th April 1978 by the Central Government in exercise of its powers under section 18AA of the IDR Act
The object and purpose of the said order of take over of management of the textile undertakings was completely different from the object and purpose of the Act which related to acquisition and transfer of the undertakings
We agree
The scope of the vesting provisions contained in section 3 of the Act would have to be determined per force of its own language employed by Parliament and not with reference to what transpired either before or after the order of take over of the management dated 13th April 1978 passed under section 18AA of the IDR Act
Section 3 of the Act according to Solicitor General contained the vesting provisions as was evident from its own language and also from the marginal note appended thereto
For determining the question involved in these matters it is necessary to bear in mind the relevant provisions of law
The preamble to the Act in question provided as indicated before that this was an Act for the acquisition and transfer of certain textile undertakings of the Swadeshi Cotton Mills Company Limited with a view to securing the proper management of such undertakings so as to subserve the interests of the general public by ensuring the continued manufacture production and distribution of different varieties of cloth and yarn
The preamble further reiterated that it was to give effect to the policy of the State towards securing the principles specified in clauses b and c of Article 39 of the Constitution
It reiterated that large sums of money had been invested with a view to making the said textile undertakings viable
It further reiterated that large sums of money were necessary for the purpose of securing the optimum utilisation of the available facilities
Section 3 of the said Act provides for transfer and vesting of the textile undertakings
The material portions of sections 3 and 4 are as follows 31 On the appointed day every textile undertaking and the right tilte and interest of the Company in relation to every such textile undertaking shall by virtue of this Act 984 stand transferred to and shall vest in the Central Government
2 Every such textile undertaking which stands vested in the Central Government by virtue of sub section 1 shall immediately after it has so vested stand transferred to and vested in the National Textile Corporation
41 The textile undertakings referred to in section 3 shall be deemed to include all assets rights lease holds powers authorities and privileges and all property movable and immovable including lands buildings workshops stores instruments machinery and equipment cash balances cash on hand reserve funds investments and book debts pertaining to the textile undertakings and all other rights and interests in or arising out of such property as were immediately before the appointed day in the ownership possession power or control of the Company in relation to the said undertakings whether within or outside India and all books of account registers and all other documents of whatever nature relating thereto
2All property as aforesaid which have vested in the Central Government under sub section 1 of section 3 shall by force of such vesting be freed and discharged from any trust obligation mortgage charge lien and all other encumbrances affecting it and any attachment injunction or decree or order of any court or other authority restricting the use of such property in any manner shall be deemed to have been withdrawn
3   4   5   6  
Section 7 deals with the shares to be issued by the National Textile Corporation for the value of the assets transferred to it by the Central Government
It reads as follows 985 7
An amount equal to the value of the assets of the textile undertakings transferred to and vested in the National Textile Corporation under sub section 2 of section 3 shall be deemed to be the contribution made by the Central Government to the equity capital of the National Textile Corporation and for the contribution so made the National Textile Corporation shall issue if necessary after amending its memorandum and articles of association to the Central Government paid up shares in its equity capital having a face value equal to the amount specified in section 8
 Section 8 which is material provides as follows 8
For the transfer to and vesting in the Central Government under section 3 of the textile undertakings of the Company and the right title and interest of the Company in relation to such undertakings there shall be given by the Central Government to the Company in cash and in the manner specified in Chapter VI an amount of rupees twenty four crores and thirty two lakhs
 Section 10 of the Act deals with the management etc
of the textile undertakings
Section 12 of the Act deals with the provisions relating to the employees of the textile undertakings
Section 24 of the Act provides that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act or in any decree or order of any court tribunal or other authority
Section 25 provides for the assumption of liability
It is the true effect and purport of these sections that requires consideration and adjudication
It appears to us that section 27 of the Act where the expression forming part of is used would have no bearing on the vesting provisions and its wide language
The expression forming part of according to the learned Solicitor General is merely descriptive of what is actually vested under the vesting provision
The properties which on the appointed day ie with effect from 141985 became part of the taken over properties which might not be dealt with in any manner contrary to the provisions of the Act
Shri KK Venugopal appearing on behalf of Doypack Systems 986 Private Limited in Transferred Case No 13 of 1987 submitted that the present case is directly covered by several decisions of this Court
He referred to the following decisions National Textile Corporation vs Sita Ram Mills   Minerva Mills vs Union of India   Goverdhan Das Narasingh Das Daga vs Union of India  Vidharba Mills Berar Ltd vs Union of India and Fine Knitting Co Ltd vs Union of India It was emphasised that section 3 of the Act provided that in addition to the textile undertaking the right title and interest of the company in relation to every such textile undertaking is to vest
Therefore it was urged by Shri Venugopal that so applying the five decisions cited earlier if the shares were held for the benefit of andor utilised for the textile undertakings they would vest in the Government under the provisions of section 3 of the Act itself
He emphasised like others that pertaining to would mean in relation to in the species of properties mentioned in section 41 of the Act
He further submitted that if the amount of compensation declared to be payable to the erstwhile owners of the undertakings acquired was a test for deciding whether a particular piece of property also stood acquired or not then it was submitted that it may be open to the erstwhile owners to contend that even what is expressly stated to have been vested in the Government would not vest in the absence of compensation paid
That was untenable
In any event as against the clear words according to Shri Venugopal of section 3 and section 4 read with section 2k the failure to provide for compensation for three out of the six undertakings would not result in three out of six undertakings being not vested in the Government
Shri Venugopal submitted that the antecedent computation of value by the executive is wholly irrelevant for determining the intention of Parliament
Reference was made to Kumari Sunita Ramachandra vs State of Maharashtra and another  at 704 c to e and Doctor Mrs Sushma Sharma vs State of Rajasthan  at 263
Shri Anil B Diwan on behalf of Mukesh Bhasin in Suit No 506 of 1987 Transferred Case No 14 of 1987 submitted that the Objects and Reasons of the mover of the Bill are not admissible as aids to construction since it is impossible to contend that the Objects and Reasons in the minds of some officials of the Government before the matter is discussed by the Cabinet would at all be relevant
Reference 987 may be made to State of West Bengal vs Union of India 1964 1 SCR 371 at 379 380 381 382 The Central Bank of India vs Their Workmen  at 217
It was further submitted that subsequent documents andor views of the officers of the Government are not admissible as legitimate aids to the construction of a statute
Reliance placed by the petitioners on the documents at pages 452 456 of Volume II as an aid to the interpretation or construction of sections 3 and 4 of the Act was totally misconceived
See the observations in Babaji Kondaji Garad vs Nasik Merchants Cooperative Bank Ltd Nasik and others  paragraphs 14 and 15 and DrMrs Sushma Sharma and others vs State of Rajasthan and others supra
It was therefore urged that the material not availed by the Parliament could never affect or influence the collective intention of the Parliament
The authentic voice is only that of the Parliament
Reference may be made to the observations in Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd and another  at 1029
It was submitted that the documents which were prepared for the submission to the Cabinet and which related to the inner working of the Government were not admissible andor legitimate aids to the construction of statute and therefore not relevant in deciding which assets of SCM vested in the Central Government under sections 3 and 4 of the Act
It was further submitted that etymological and plain meaning of the word relation is relation by birth or relation by sacrament like marriage or relation in the form of business connection or dealings
It was further submitted that an asset or investment which is created from the earnings of the undertakings is clearly related to the undertakings by its inception or birth
An asset or investment according to Shri Anil B Diwan which is utilised to preserve andor give vitality to an undertaking is equally related or pertained to the same
Shri AK Ganguli counsel appearing on behalf of Ms Doypack Systems Pvt Ltd in SLP Civil Nos 4826 and 7045 of 1987 submitted that even assuming though not admitting that the expressions pertaining to and in relation to appearing in sub section 1 of section 4 of the Act have limited or restricted meaning by the plain language of section 3 which is the vesting provision read with sections 2k and 41 the shares in question would also vest in the Central Government
Under section 3 of the Act what vests in the Central Government on the appointed day are i every textile undertaking and ii the right title and interest of the company in relation to every such textile undertaking
The meaning scope and effect of the expression textile undertaking appearing in section 31 of the Act would 988 have to be understood by a combined reading of sections 2k and 41 of the Act
Section 2k while defining the expression textile undertaking identifies the textile mills concerned while section 41 by adoption of deeming provisions spells out the properties which vest along with the concerned textile mills by reason of their direct nexus with the mills
The expression forming part of appearing in section 27 according to Shri Ganguly is merely descriptive of the properties already vested in the Central Government under section 3
Section 12 of the Act provided that the provisions of the Act including sections 3 and 4 shall be deemed to have come into force retrospectively with effect from 141985 and sections 27 and 28 shall come into force at once
Thus the properties which stood vested in the Central Government with effect from 141985 already formed part of the textile undertakings on the date of the Act when section 27 came into force ie wef 3051986
The properties which already stood vested and formed part of the textile undertakings could not be dealt with in any manner other than those permissible under the Act
Section 27 containing the penalty provisions could therefore validly and justifiably be given effect to after it came into force on 3051986 when the Act was enacted
The meaning of the expression pertaining to appearing in the first limb of section 41 therefore cannot be gathered from the language employed in section 27
Shri Ganguli further submitted that the first part of section 7 provided that the amount equal to the value of the assets of the textile undertakings which is vested under section 3 would be the contribution of Central Government made to the equity capital of the National Textile Corporation
The second part of section 7 provided that for the contribution so made by the Central Government National Textile Corporation shall issue to the Government paid up shares in its equity capital having a face value equal to the amount specified in section 8
If the legislative intention it was urged by Shri Ganguli was that the National Textile Corporation shall issue paid up shares in its equity capital to the Central Government of the value equal to the value of the assets which was deemed to be the contribution of the Central Government then the language of the second part of this section would have been the same as used in the opening words of section 7 itself
Shri SN Kacker elaborated the submissions of the petitioner 989 mentioned hereinbefore and submitted that the shares could not have been intended in view of the facts and circumstances of the case the language used and the data available to take over by sections 3 and 4 of the Act
Before we deal with the main question we have to consider the application made by Shri Nariman for production of certain documents
The production of the documents has been resisted by the learned Attorney General on the ground that these are not relevant and in any event most of these documents are privileged being part of the documents leading to the tendering of the advice by the Cabinet to the President as contemplated by Article 742 of the Constitution
The petitioner in Transferred Case No 13 of 1987 has sought production of certain documents enumerated at page 82 para 85 of Vol
IV which are as follows 1 Proposal of the Textile Ministry in respect of Nationalisation of the six textile undertakings including the notes and memorandum specially in respect of calculation and determination of assets and liabilities in respect of six textile undertakings of Petitioner No 2 in the year 1983 84 and the opinion of the Law Department then obtained
2 Proposal of the Textile Ministry in respect of nationalisation of the six textile undertakings in the year 1985 86 including all notes and memorandum in respect thereof
3 Opinion of Law Department as rendered to the Textile Ministry
4 Proposal of the Textile Ministry in respect of the drafting of the Ordinance and the Act by the Legislative Ministry
5 Details of properties taken into consideration for the determination of amount under section 8 of the OrdinanceAct
6 Proposal of the Textile Ministry in the form of Cabinet Notes for the approval of the Cabinet in the matter of promulgation of Ordinanceframing of the Act and 7 Notes and Memorandum prepared by the Ministry of TextileMinistry of law at or before framing of the OrdinanceAct and subsequent thereto relating to the acquisition of the textile undertakings
990 It was contended that production of these was necessary to establish that the shares were never intended to be taken over and these were never considered as part of the textile undertaking
It was urged that the shares were not taken into account in computing the figure of compensation amounting to Rs2432 crores referred to in section 8 of the Act
It was submitted that these documents are definitely relevant as they would throw light on the merits of the case
They would advance the case of the petitioners and destroy according to the petitioners the case of the respondent
It was submitted that sections 7 and 8 of the said Act were intrinsic aids to construe section 4
The factual foundation necessary for the argument based on sections 7 and 8 of the said Act was that the shares etc were excluded in computing the figures of 2432 crores
It was submitted that these documents were required to establish this factual foundation
The petitioner alleged that shares had been excluded in the computation of compensation and the petitioner had been so informed by the Hon ble Minister
In reply the Central Government asserted that compensation has been computed lumpsum and not itemwise
According to the petitioner the stand of the Government that the compensation was computed lumpsum was not borne out by the documents
It was therefore necessary to seek production of those documents
It was submitted by Shri Nariman that the submissions of the Solicitor General in so far as these dealt with the balance sheet made it even more important that the Government should be directed to produce these documents
The calculations made by the petitioner had merely been denied by NTC which had in its possession the books of account as also all balance sheets prior to the balance sheet as on April 1 1985
It is wrongly suggested that the calculations are hypothetical
It was urged by the petitioner that the calculations made by the petitioners were not hypothetical
The correctness or otherwise of the said figure according to the petitioners would be demonstrated from the said documents
On behalf of the Union of India the learned Attorney General submitted that records and documents whose production was sought for were not relevant for deciding the matters of controversy in the instant case
In our opinion Sections 3 and 4 of the Act interpreted either on their own language or along with sections 7 and 8 are not ambiguous so documents are not relevant
It was further urged that even if to consture the language is not clear and there is need to resort to aids of construction it is clear that such aids can be either internal or external
991 Internal aids of construction are definitions exceptions explanations fictions deeming provisions headings marginal notes preamble provisos punctuations saving clauses non obstante clauses etc
The notings in the files of various officials do not fall in the category of internal aids for consideration
Dictionaries earlier acts history of legislation Parliamentary history parliamentary proceedings state of law as it existed when the Act was passed the mischief sought to be suppressed and the remedy sought to be advanced by the Act are external aids
Documents which have been required to be produced do not in our view fall within the category of external aids as indicated
Having considered the facts and circumstances of the case we are unable to accept the prayer of the petitioner to direct disclosure and production of the documents sought for
In our opinion the language used in section 4 of the Act is clear enough read with section 3 of the Act
We have set out the provisions of the said two sections
Section 3 states that on the appointed day every textile undertaking and the right title and interest of the Company in relation to every textile undertaking shall stand transferred to and shall vest in the Central Government
Section 4 says that section 3 shall be deemed to include all assets leaseholds powers authorities privileges and all properties movable and immovable  pertaining to the textile undertakings and all other rights and interests in or arising out of such property
Francis Bennion in Statutory Interpretation 1984 Edition page 526 para 238 states that Hansard reports and other reports of parliamentary proceedings on the Bill which became the Act in question are of obvious relevance to its meaning
They are often of doubtful reliability however
emphasis supplied The documents in question which are sought for do not relate to the enacting history or any past enactment or the present enactment
The notings made in various Departments at various levels by the officers namely the Under Secretary Deputy Secretary Joint Secretary Secretary etc whatever their view might be is not the view of the Cabinet
The ultimate decision is taken by the Cabinet
So the notings cannot and are not guides as to what decision the Cabinet took
See for example the Task Force report referred to in National Textile Corporation Ltd vs Sitaram Mills Ltd  others supra
This Task Force Report demonstrated the irrelevancy of the documents summoned to be produced
The Task Force Report manifested that certain mills were viable
But from the circumstance under which managements of these mills were taken over it was clear that the Cabinet had taken the decision contrary to what was contained in the Task Force Report
But it appears 992 that the decision of the Cabinet was different from the views of the Officers at various levels
As Bennion has stated at para 261 page 560 of the same book that in interpreting an enactment a two stage approach is necessary
Here there is no real doubt on an informed basis as we shall indicate hereafter about the real meaning of the enactment
There is therefore no question of resolving the doubt
The second stage does not arise here
This Court in Sanjeev Coke Manufacturing Company vs Bharat Coking Coal Ltd and another supra held that no one may speak for the Parliament and Parliament is never before the Court
After the Parliament has said what it intends to say only the Court may say what the Parliament meant to say
None else
See also in this connection Dr Mrs Sushma Sharma and others vs State of Rajasthan and others supra
The objects and purposes of the person who initiated the Bill are not admissible as aids to construction since it is impossible to contend that such purposes in the minds of some officials of the Government before the matter is discussed by the Cabinet would at all be relevant
See in this connection State of West Bengal vs Union of India supra where this Court reiterated that the Statement of Objects and Reasons accompanying when introduced in the Parliament cannot be used to determine the true meaning and effect of the substantive provisions of the statute
Such statement cannot be used to show that the legislature did not intend to take over any particular property
See also The Central Bank of India vs Their Workmen supra
It has to be reiterated however that the objects and reasons of the Act should be taken into consideration in interpreting the provisions of the statute in case of doubt
This is the effect of the decision of this Court in KP Verghese vs The Income tax Officer Ernakulam and another   where this Court reiterated that the speech made by the Mover of the Bill explaining the reason for the introduction of the Bill could certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation was enacted
It has been reiterated that interpretation of a statute being an exercise in the ascertainment of meaning everything which is logically relevant should be admissible
See in this connection the observations of this Court in Chern Taong Shang  anr
vs Commander SD Baijal  Ors JT
The documents now sought for by the petitioner do not fall within this category
It is neither the object and scheme of the enactment nor the language used therein that is 993 sought for in the instant case
It is certainly relevant to know the mischief that was intended to be remedied
But in the documents in question which the petitioner is seeking no such correlation has been established
These are therefore not relevant
We reiterate that no officer of the Department can speak for the Parliament even after the Act has been passed
This Court has to interpret the Act on the basis of informed basis by applying external and internal aids if the language is ambiguous
In the words of Lord Scarman We are to be governed not by Parliament s intentions but by Parliament s enactments
See Cross Statutory Interpretation 2nd Edition page 22
Blackstone in his Commentaries on the Laws of England Facsimile of 1st edn
1765 University of Chicago Press 1979 Vol 1 at 59 suggests The fairest and most rational method to interpret the will of the legislator is by exploring his intention at the time when the law was made by signs most natural and probable
And these signs are the words the context the subject matter the effect and consequence or the spirit and reason of the law
 The documents whose production is sought for are none of these
So in our opinion these are not relevant
We must further reiterate that the Members of Parliament had before them only the Bill
The notings of the various officials in the files were not before the Parliament
Therefore members could not be attributed with the knowledge of the notings in the files
Therefore the notings made by the officials are not relevant
In this connection reliance may be placed on the principles of interpretation as enunciated by the Federal Court in Auckland Jute Co Ltd vs Tulsi Chandra Goswami at 244
It is trite saying that the interpreter of the statute must take note of the well known historical facts
In conventional language the interpreter must put himself in the arm chair of those who were passing the Act ie the Members of the Parliament
It is the collective will of the Parliament with which we are concerned
See in this connection the observations of the Federal Court in RMARARRMAR
Umayhal Achi vs Lakshmi Achi and others We are therefore of the opinion that the documents sought for are not relevant for the purpose for which they were sought for
In this case we are concerned only with the construction of the statute to determine whether the shares vested in the Government or not
As Lord Reid has said in Black Clawson International Ltd vs Papierwerke Waldhof Achaffenburg A G  at 613 We often say that we are looking for the intention of Parliament but that is not quite accurate
We are seeking the meaning of the words which Parliament used
We are seeking not what Parliament meant but the true meaning of what they said
 See in this connection the discussion in Cross Statutory Interpretation 2nd Edition pages 20 30
994 The next question for consideration is that by assuming that these documents are relevant whether the Union of India is liable to disclose these documents
Privilege in respect of these documents has been sought for under Article 742 of the Constitution on behalf of the Government by learned Attorney General
Shri Nariman however submitted on the authority of the decision of this Court in SP Gupta vs Union of India and others 1982 2 SCR 365 at page 594 that the documents sought for herein were not privileged
The context and the nature of the documents sought for in SP Gupta s case supra were entirely different
In this case these documents as we see are part of the preparation of the documents leading to the formation of the advice tendered to the President of India and as such these are privileged under Article 742 of the Constitution which provides that the question whether any and if so what advice was tendered by Ministers to the President shall not be enquired into in any court
This Court is precluded from asking for production of these documents
In SP Gupta s case supra the question was not actually what advice was tendered to the President on the appointment of Judges
The question was whether there was the factum of effective consultation between the relevant constitutional authorities
In our opinion that is not the problem here
We are conscious that there is no sacrosanct rule about the immunity from production of documents and the privilege should not be allowed in respect of each and every document
We reiterate that the claim of immunity and privilege has to be based on public interest
Learned Attorney General relied on the decision of this Court in the case of State of UP vs Raj Narain  The principle or ratio of the same is applicable here
We may however reiterate that the real damage with which we are concerned would be caused by the publication of the actual documents of the Cabinet for consideration and the minutes recorded in its discussions and its conclusions
It is well settled that the privilege cannot be waived
In this connection learned Attorney General drew our attention to an unreported decision in The Elphinstone Spinning and Weaving Mills Company Ltd vs Union of India and others Writ Petition No 2401 of 1983
This resulted ultimately in Sitaram Mills s case supra
The Bombay High Court held that the Task Force Report was withheld deliberately as it would support the petitioner s case
It is well to remember that in Sitaram Mills s supra this Court reversed the judgment of the Bombay High Court and upheld the take over
Learned Attorney General submitted that the documents there were not tendered voluntarily
It is well to remember that it is duty of this Court to prevent disclosure where Article 742 is applicable
We are 995 convinced that the notings of the officials which lead to the Cabinet note leading to the Cabinet decision formed part of the advice tendered to the President as the Act was preceded by an ordinance promulgated by the President
We respectfully follow the observations in SP Gupta and others vs Union of India and others supra at pages 607 608 and 609
We may refer to the following observations at page 608 of the report It is settled law and it was so clearly recognised in Raj Narain s case supra that there may be classes of documents which public interest requires should not be disclosed no matter what the individual documents in those classes may contain or in other words the law recognises that there may be classes of documents which in the public interest should be immune from disclosure
There is one such class of documents which for years has been recognised by the law as entitled in the public interest to be protected against disclosure and that class consists of documents which it is really necessary for the proper functioning of the public service to withhold from disclosure
The documents falling within this class are granted immunity from disclosure not because of their contents but because of the class to which they belong
This class includes cabinet minutes minutes of discussions between heads of departments high level inter departmental communications and despatches from ambassadors abroad vide Conway vs Rimmer 1969 Appeal Cases 910 at pp
952 973 979 987 and 993 and Reg vs Lewes JK Ex parte Home Secretary 1973 AC 388 at 412
Papers brought into existence for the purpose of preparing a submission to cabinet vide Lanyon Property Ltd vs Commonwealth 129 Commonwealth Law Reports 650 and indeed any documents which relate to the framing of government policy at a high level vide re
Grosvenor Hotel London Cabinet papers are therefore protected from disclosure not by reason of their contents but because of the class to which they belong
It appears to us that Cabinet papers also include papers brought into existence for the purpose of preparing submission to the Cabinet
See Geoffrey Wilson cases and Materials on Constitutional and Administrative Law 2nd Edition pages 462 to 464
At page 463 para 187 it was observed 996 The real damage with which we are concerned would be caused by the publication of the actual documents of the Cabinet for consideration and the minutes recording its discussions and its conclusions
Criminal sanctions should apply to the unauthorised communication of these papers
 See in this Connection State of Bihar vs Kripalu Shankar  at page 1559 and also the decision of Bachittar Singh vs State of Punjab 1962 Suppl 3 SCR 713
Reference may also be made to the observations of Lord Denning in Air Canada and others vs Secretary of State and another at 180
We therefore reject the claim for production of these documents
In view of the language used in the relevant provisions it appears to us that section 3 has two limbs i textile undertakings and ii right title and interest of the company in relation to every such textile undertaking
The expression textile undertaking has been defined in section 2k to mean the six textile undertakings of the company specified therein
The definition of the said expression in section 2k is however subject to the opening words of the section which provide In this Act unless the context otherwise requires
In the context of the expression textile undertakings employed in section 31 of the Act section 41 provides that the textile undertakings referred to in section 3 shall be deemed to include all assets rights leaseholds powers authorities and privileges and all property movable and immovable including lands buildings workshops stores  investments and book debts pertaining to the textile undertakings and all rights and interests in or arising out of such property as are immediately before the appointed day in the ownership possession power or control of the company in relation to all six undertakings
The expressions pertaining to in relation to and arising out of used in the deeming provision are used in the expansive sense as per decisions of courts meanings found in standard dictionaries and the principles of broad and liberal interpretation in consonance with Article 39b and c of the Constitution
The words arising out of have been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur undertaking
We are of the opinion that the words pertaining to and in relation to have the same wide meaning and have been used interchangeably for among other reasons which may include 997 avoidance of repetition of the same phrase in the same clause or sentence a method followed in good drafting
The word pertain is synonymous with the word relate see Corpus Juris Secundum Volume 17 page 693
The expression in relation to so also pertaining to is very broad expression which pre supposes another subject matter
These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context see State Wakf Board vs Abdul Aziz AIR 1968 Madras 79 81 paragraphs 8 and 10 following and approving Nitai Charan Bagchi vs Suresh Chandra Paul  Shyam Lal vs M Shayamlal AIR 1933 All 649 and 76 Corpus Juris Secundum 621
Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters even then these would be brought within the purview of the vesting by reason of the above expressions
In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term relate is also defined as meaning to bring into association or connection with
It has been clearly mentioned that relating to has been held to be equivalent to or synonymous with as to concerning with and pertaining to
The expression pertaining to is an expression of expansion and not of contraction
As to what an undertaking means has been clarified in RC Cooper vs Union of India  at pages 567 568 635 where the Act of 1969 was challenged
It was held that the meaning of the expression undertaking is a going concern as distinct from its assets and liabilities
It was also observed that it covered every corner of property right title and interest therein
This Court rejected one of the grounds of challenge as there was no evidence that the named banks held any assets for any distinct non banking business which finding gives an idea as to what could have been excluded from the acquisition of the undertaking
Reading the provisions of section 31 section 41 and section 2k of the Act each throwing light on the other it follows that a under the first limb of section 31 of the Act every textile undertaking b under the second limb of section 32 every right title and interest of the company in relation to every such undertaking is transferred and vested
c The deeming provision of section 41 amplifies and enlarges both the limbs of the vesting section being section 31
d The definition of section is read into these provisions to give a 998 wider meaning and scope to the vesting provision and to what is transferred or vested
Sections 7 and 8 of the Act relied upon by the petitioners being provisions for payment of amounts and for the issue of shares by NTC respectively will have no bearing on the scope of the vesting provision
As to what properties have vested cannot proceed on the hypothesis that there is a clear numerical or mathematical link between the quantum of compensation and the items of property vested
This correlation with regard to such legislation is not available
In this connection reference may be made to the decision of this Court in Khajamian Wakf Estates etc
vs State of Madras  another  at page 796 B E Section 8 refers to payments of amounts by the Union of India to the company
It has no bearing either on the vesting section or on section 7 except that the figure of Rs24 crores 32 lakhs mentioned therein was introduced into section 7
The provisions of this section are no different from the provisions of the similar sections in the earlier Act of 1974
For example under section 8 of the Sick Textile Undertakings Nationalisation Act 1974 page 59 of Vol
X the amount mentioned is specified in the first schedule as there are a number of companies involved
This provision cannot be the starting point for investigation as to which amount relates to which property or as a guide to construction
It appears to us from the Delhi High Court decision supra and the decision of this Court in Balkrishan Gupta s case supra as well as the statement of the Minister in December 1985 that there were legal difficulties in respect of taking over under the 1951 IDR Act
The IDR Act was a concerned with the management of scheduled industries in inter alia running of factories where there was no deeming provision in such wide terms b it was concerned with setting up of machinery for imposing controls on industrial undertakings see Harakchand Ratanchand Banthia and others etc
vs Union of India and others  at page 496 F and G We are further of the opinion that the decision in Harakchand Ratanchand supra would not be applicable
In this case the Court is concerned with a nationalisation statute
Even with other independent management statutes in respect of textile undertakings a series of decisions have upheld the view that the shares vest in the Government
See National Textile Corporation Ltd vs Sitaram Mills supra 999 Minerva Mills Ltd and others etc
vs Union of India and others supra Govardhandas Narasinghdas Daga and others vs Union of India and others supra Fine Knitting Mills Ltd  Ors
vs Union of India  Ors
supra and Vidharbha Mills Berar Ltd vs Union of India supra
The above provide the informed basis on which we make the construction of sections 3 and 4 of the Act
The expression and all other rights and interests in or arising out of such property as were immediately before the appointed day in the ownership possession power or control of the company in relation to the said undertakings appearing in sub section 1 of section 4 of the Act indicates that the shares which have been purchased from out of the funds of the textile undertakings and which have been held for the benefit of the said textile undertakings would come within the scope of section 4 of the Act and thus would also vest in the Central Government under section 3
The origin of these shares and their connection with the textile undertakings have been fully corroborated
The textile business is the only business of Swadeshi Cotton Mills
There is inter connection and inter relation between all the six undertakings
Investments in Swadeshi Polytex Limited from the funds of Kanpur undertaking have always been made
Investments in Swadeshi Mining and Manufacturing Company Ltd were always made from the funds of the kanpur undertaking
Assetsinvestments held and used for the benefit of the textile business of SCM were carried on in its textile undertakings
The words in the statute must prima facie be given their ordinary meaning
Where the grammatical construction is clear and manifest and without doubt that construction ought to prevail unless there are some strong and obvious reasons to the contrary
Nothing has been shown to warrant that literal construction should not be given effect to
See Chandavarkar SR Rao vs Asha Lata  at page 476 approving 44 Halsbury s Laws of England 4th Ed
paragraph 856 at page 552 Nokes vs Doncaster Amalgamated Colliery Limited 1940 Appeal Cases 1014 at 1022
It must be emphasised that interpretation must be in consonance with the Directive Principles of State Policy in Article 39 b and c of the Constitution
It has to be reiterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act
The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute considering it as a whole and in its context
That intention and therefore the meaning 1000 of the statute is primarily to be sought in the words used in the statute itself which must if they are plain and unambiguous be applied as they stand
In the present case the words used represent the real intention of the Parliament as we have found not only from the clear words used but also from the very purpose of the vesting of the shares
If we bear in mind the fact that these shares were acquired from out of the investments made by these two companies and furthermore that the assets of the company as such minus the shares were negative and further the Act in question was passed to give effect to the principles enunciated in clauses b and c of Article 39 of the Constitution we are left with no doubt that the shares vested in the Central Government by operation of sections 3 and 4 the Act
See in this connection the observations of Halsbury s Laws of England 4th Edition Volume 44 paragraph 856 at page 522 and the cases noted therein
There is no exact correlation between the figure of capital reserve and the figure of investments
That in our opinion cannot be
These can never be exactly equal
The submission of the petitioner fails to take into account the fact that the undertakings other than the kanpur undertaking also have capital reserve even though there is no allegation that these were excluded assets in respect of other undertakings and there were no figures of investments therein
The covering letter for these documents page 408 of Volume II itself stated that the provisional balance sheet shows investments which included these shares as part of assets
With regard to the figure of Rs 11 lakhs taken in the calculation filed by the petitioner we find that the calculations filed by the petitioner were not supportable
Contemporanea Expositio is a well settled principle or doctrine which applies only to the construction of ambiguous language in old statutes
Reliance may be placed in this connection on Maxwell 13th Ed
page 269
It is not applicable to modern statutes
Reference may be made to GP Singh Principles of Statutory Interpretation 3rd Edn
pages 238 and 239
As noted in Maxwell on The Interpretation of Statutes 12th Edition at page 269 that the leading modern case on contemporanea expositio is the case of Campbell College Belfast vs Commissioner of Valuation for Northern Ireland in which House of Lords has made it clear that the doctrine is to be applied only to the construction of ambiguous language in the very old statutes
It is therefore well to remember what Lord Watson said in Clyde Navigation Trustees vs Laird 1983 8 AC 658 that contemporanea expositio could have no application to a modern Act
We therefore reject the attempt on the part of the petitioners to lead us to 1001 this forbidden track by referring to various extraneous matters which we have indicated before
Furthermore those external aids sought before us do not support the petitioners  approach to this question at all
It appears that the shares held in SPL themselves were the subject matter of both pledge and attachment to secure loans from the UP State Government of about Rs66 lacs for payment of wages to workers of the Kanpur undertaking and Rs95 lacs being electricity dues of the Kanpur undertaking owing to the UP State Electricity Board
From all these the acceptance of the petitioner s case would mean that the State would pump in Rs15 crores of public money to release the shares from its liabilities and thereafter hand over the shares free from such liability back to the company when the net worth of the company at the time of take over of management was negative and in the teeth of the present financial liabilities built up by the company the shares would inevitably have sold in discharge of its liabilities and in any event the shares stood charged with the very liabilities which related to the undertakings of the company which were taken over by the Government
It appears to us that sections 3 and 4 of the Act evolve a legislative policy and set out the parameters within which it has to be implemented
We cannot find that there was any special intention to exclude the shares in this case as seen from the existence of at least four other Acquisition Acts which used identical phraseology in sections 3 and 4 and in the other sections as well
Reference was made to the Aluminium Corporation of India Limited Acquisition and Transfer of Aluminium Undertakings Act 1984 the Amritsar Oil Works Acquisition and Transfer of Undertakings Act 1982 the Britannia Engineering Company Limited Mohameh Unit and the Arthur Butler and Company Muzaffarpore Limited Acquisition and Transfer of Undertakings Act 1978 and the Ganesh Flour Mills Company Limited Acquisition and Transfer of Undertakings Act 1984
In the present case we are satisfied that the shares in question were held and utilised for the benefit of the undertakings for the reasons that a the shares in Swadeshi Polytex Limited were acquired from the income of the kanpur Unit
Reference may be made to page 23 of Compilation D III b the shares held in Swadeshi Mining and Manufacturing Company were acquired in 1955
Originally there were four companies and their acquisition has been explained fully in the Compilation D III with index c the shares held in SPL were pledged 1002 or attached for running the Kanpur undertaking for payment of ESI and Provident Fund dues for the workers of the Kanpur undertaking for wages and for payment of electricity dues of the Kanpur undertaking d the shares held in SMMC were pledged for raising monies and loans of Rs 150 lakhs from the Punjab National Bank for running the Kanpur undertaking
These loans fall in category II of Part I of the Schedule which liabilities have been taken over by the Government e the shares held in SPL were offered for sale by SCM from time to time and to utilise the sale proceeds thereof by ploughing them back into the textile business for reviving the textile undertakings acquired under the Act
It appears to us that the expression forming part of appearing in section 27 cannot be so read with section 41 as would have the effect of restricting or cutting down the scope and ambit of the vesting provisions in section 31
The expression pertaining to does not mean forming part of
Even assuming that the expression pertaining to appearing in the first limb of section 41 means forming part of it would mean that only such assets which have a direct nexus with the textile mills as would fall under the first limb of section 41
The shares in question would still vest in the Central Government under the second limb of section 41 of the Act since the shares were bought out of the income of the textile mills and were held by the company in relation to such mills
The shares would also fall in the second limb of section 31 being right and title of the company in relation to the textile mills
On the construction of sections 3 and 4 we have come to the conclusion that the shares vest in the Central Government even if we read sections 3 and 4 in conjunction with sections 7 and 8 of the Act on the well settled principles which we have reiterated before
The expression in relation to  has been interpreted to be the words of widest amplitude
See National Textile Corporation Ltd and others vs Sitaram Mills Ltd supra
Section 4 appears to us to be an expanding section
It introduces a deeming provision
Deeming provision is intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provisions
It is well settled that the word includes  is an inclusive definition and expands the meaning
See The Corporation of the City of Nagpur vs Its Employees  and Vasudev Ramchandra Shelat vs Pranlal Javanand Thakarand others 1975 1 SCR 534
The words all other rights and interests  are words of widest amplitude
Section 4 also uses the words ownership possession power or control of the Company 1003 in relation to the said undertakings
The words pertaining to  are not restrictive as mentioned hereinbefore
Section 8 provides for payment of compensation in lumpsum and the transfer and vesting of whatever is comprised in section 3
As section 4 expands the scope of section 3 the compensation mentioned in section 8 is for the property mentioned in section 3 read with section 4
The compensation provided in section 8 is not calculated as a total of the value of various individual assets in the Act
It is a lumpsum compensation
See in this connection the principles enunciated by this Court in Khajamian Wakf Estates etc
vs State of Madras and another supra
There it was held that even if it was assumed that no compensation was provided for particular item the acquisition of the inam  is valid
In the instant case section 8 provides for compensation to be paid to the undertakings as a whole and not separately for each of the interests of the company
Therefore it cannot be said that no compensation was provided for the acquisition of the undertaking as a whole
Section 7 of the Act in our opinion neither controls sections 3 and 4 of the Act nor creates any ambiguity
It was highlighted before us and in our opinion rightly that this sum of Rs2432 crores paid by way of compensation comes out of the public exchequer
The paid up shares in its equity capital can necessarily have a face value only of the amounts so paid irrespective of whatever may be contended to be the value of the assets and irrespective of whether any asset or property in relation to the undertakings was taken into account
After providing for compensation of Rs2432 crores to be paid to the Commissioner for payments to discharge part I liabilities Government has to undertake an additional 15 crores at least for discharging those liabilities
To leave a company the net wealth of which is negative at the time of take over of the management with the shares held by it as investment in other company in our opinion is not only to defeat the principles of Articles 39b and c of the Constitution but it will permit the company to reap the fruits of its mismanagement
That would be an absurd situation
It has to be borne in mind that the net wealth of the company at the time of take over was negative hence sections 3 and 4 can be meaningfully read if all the assets including the shares are considered to be taken over by the acquisition
That is the only irresistible conclusion that follows from the construction of the documents and the history of this Act
We have to bear in mind the Preamble of the Act which expressly recites that it was to ensure the principles enunciated in clauses b and c of Article 39 of the Constitution
The Act must be so read that it further ensures such meaning and 1004 secures the ownership and control of the material resources to the community to subserve the common good to see that the operation of economic system does not result in injustice
We therefore reiterate that the shares vested in the Central Government
Accordingly the shares in question are vested in NTC and it has right over the said 34 per cent of the shareholdings
In the aforesaid view of the matter we hold that the 1000000 shares in Swadeshi Polytex Limited and 1718344 shares in Swadeshi Mining and Manufacturing Company Limited held by the Swadeshi Cotton Mills vested in the Central Government under sections 3 and 4 of the Act
We are further of the opinion that in view of the amplitude of the language used the immovable properties namely the Bungalow No 1 and the Administrative Block Civil Lines Kanpur have also vested in NTC
In that view of the matter in Transferred Case No 13 of 1987 we dismiss the Writ Petition No 2214 of 1987
All interim orders in the said Writ Petition will stand vacated
This will dispose of the various other SLPs and CMPs connected with the Lucknow Writ Petition being SLP Civil No 4826 of 1987 filed by Doypack Systems Pvt Ltd against the order dated 6th April 1987 SLPCivil No 5240 of 1987 filed by NTC against the same order of 6th April 1987 in the Lucknow Bench and the order dated 6th April 1987 in CMP No 4555W of 1987 in the Lucknow Bench of the Allahabad High Court
CMPs Nos 16918 and 16919 of 1987 being CMPs in SLP No 4826 of 1987 will stand disposed of in the above light
In Transferred Case No 14 of 1987 in Suit No 506 of 1987 we hold that 10 lakhs and 17 lakhs equity shares mentioned hereinbefore and the Swadeshi House at Kanpur and all the rights title and interest attached therewith relate to the textile undertaking of defendant No 3 and they vest in NTC with effect from 1st of April 1985 and defendant Nos 3 and 4 are restrained by a decree of permanent injunction from dealing with them in any manner whatsoever
Defendant No2 is restrained by permanent injunction from recognising defendant Nos 3 and 4 as owners of the aforesaid shares and the Swadeshi House
Defendant No2 is directed to enter the name of defendant No 1 namely NTC in its register of members and to treat the said 1005 defendant No 1 as its shareholder instead of defendant Nos 3 and 4 in respect of the shares of defendant No 2 held by them
In view of the provisions of law under Section 108 of the as there was transmission of shares by operation of law rectification is not necessary
See in this connection Palmer s Company Law 24th Ed
1987 page 608
See also in this connection Sahadeo Lal Agarwala and another vs The New Darjeeling Union Tea Co Ltd and others AIR 1952 Cal
58 and Unity Company Pvt Ltd vs Diamond Sugar Mills and others AIR 1971 Cal
Civil Appeals Nos
577 to 579 of 1987 stand disposed of in the above terms and we direct that the 17th annual general meeting be held in accordance with law after giving proper notice under the Chairmanship of Shri Jaswant Singh
CMP No 12760 of 1987 in Civil Appeal No 577 of 1987 shall stand disposed of in terms of the orders in Transferred Case No 14 of 1987 and it is directed that the Chairman should act in accordance with the aforesaid decision and NTC should be considered to be entitled to vote
CMP No 16887 of 1987 is rejected on the grounds indicated in the judgment
CMP No 16888 of 1987 is an application by Doypack Systems Ltd to be impleaded as a party respondent in Transferred Case No 13 of 1987
Doypack Systems has already been permitted to argue and has been heard as a party
No further order is necessary
CMP No 16889 of 1987 is allowed and delay condoned
CMP No 17018 of 1987 is allowed
CMP No 18268 of 1987 is disposed of by directing that no further documents need be inspected
In view of the orders the other CMPs are no longer necessary to be disposed of
We direct that irrespective of any order passed by any court the 17th annual general meeting should be held in accordance with law to be presided over by Shri Jaswant Singh recognising NTC as the rightful owner of the disputed shares
In all these proceedings National Textile Corporation as well as Union of India wherever they are parties herein will be entitled to their costs from their respective opposite parties
The other parties will pay and bear their own costs in these matters


Summary:
 The respondent was apprehended while taking bribe
Investigation was held and the respondent was chargesheeted before the Special Judge
The respondent raised an objection to the framing of charges against him on the ground that the investigation of the case was in contravention of rule 1638 of the Punjab Police Rules
The Special Judge overruled the objection and framed charges and posted the case for trial
The respondent filed a petition before the High Court under section 561A of the Code of Criminal Procedure 1898 for quashing the proceedings against him before the Special Judge
A full bench of the High Court held that rule 1638 is mandatory and not directory in character and that the mandate would govern criminal prosecution as well as departmental inquiries in equal measure
The full bench having noticed that the investigation against the respondent had not been done in accordance with rule 1638 allowed the petition and quashed the charges framed against the respondent
Hence this appeal filed by certificate issued by the High Court
Allowing the appeal and setting aside the High Court s judgment this Court  HELD The procedure prescribed in rule 1638 has only a limited field of operation that is applicable only to departmental inquiries and punishments
This could be seen from the fact that clause 3 of the rule enjoins every Magistrate to whom a complaint against a police officer is referred by the District Magistrate for judicial enquiry to report the details of the case to the District Magistrate in order to enable the District Magistrate to forward the report to the Superintendent of Police
The clause further says that if the District Magistrate himself takes cognizance of a case he should of his own accord send a report to 937 the Superintendent of Police
Clause IV of rule 1638 also throws light on the matter and brings out the objective in greater clarity
This clause sets out that in order to protect the interest of police officers serving in districts where petition mongering activities are notorious the District Magistrate can direct that all petitions complaining about police officers shall be presented to him personally so that he can scrutinize them to find out whether the petitions are of a frivolous nature or they have been engineered by factious groups in the districts etc
In fact the words used in the clause are of a tell tale nature viz complaints against police officers in those districts where abuses of law with the object of victimising such officers or hampering investigation is rife
 945F H 946A B The purpose underlying the rule is to enable the District Magistrate and the District Superintendent of Police to exercise personal control and supervision over the complaints received against members of the police force in the performance of their duties and enable the District Magistrate to ensure that the complaint is not a baseless or mala fide one and secondly to determine whether the complaint requires investigation by a police officer or by a selected Magistrate
The procedure envisaged by the rule is for effective check being exercised against victimisation of efficient and honest police officers on the one hand and favouritism being shown to the delinquent police officers on the other
These rules were not intended to replace and certainly cannot over ride the provisions of the Criminal Procedure Code
946C E In the instant case the Full Bench was in error in taking the view that the Punjab Police Rules read in conjunction with the Police Act prescribe a different procedure for the investigation and prosecution of offences committed by Police Officer under the IPC or other Acts in connection with their relations with the public and that the rules constitute a special statute and take precedence over the provisions of the Cr
The Full Bench has failed to note that Rule 1638 only mandates the investigation of cases pertaining to departmental enquiries and the holding of departmental enquiries in accordance with the procedure prescribed thereunder948B C Raj Kumar A section I vs The State of Punjab 1976 IV CLR Pb  Har page 39 overruled
State of Punjab vs Charan Singh   referred toagreed to
Delhi Administration vs Chanan Shah 1969 3 SCR 653 938 Union of India vs Ram Kishan   State of Uttar Pradesh vs Babu Ram Upadhya   Maulud Ahmad vs State of UP 1963 Supp 2 SCR 38 Ajaib Singh vs Joginder Singh  and SN Sharma vs Bipan Kumar Tiwari  Ors
1970 1 SCC 653 referred to