Civil Appeal No 481 of 1971
From the Judgment and Decree dated the 22nd December 1969 of the Allahabad High Court in Writ Petition 
No 210 of 1967
ST Desai and HS Parihar for the Appellant
Harbans Lal Miss A Subhashini and VB Saharya for the Respondent
Mrs Shobha Dikshit for Respondent
No 3
The Judgment of the Court was delivered by 532 AMARENDRA NATH SEN J
Whether the order of the Central Government taking over the management of the Sugar Mill of the Appellant under Rule 125A of the Defence of India Rules and appointing an authorised Controller of the said Mill thereunder is valid is the principal question which falls for determination in this appeal by certificate
The main contention of Mr section T Deasi learned Counsel for the appellant is that on a proper construction of Rule 125A of the Defence of India Rules hereinafter referred to as the Rules the order taking over the management of the Sugar Mill under this rule is invalid as on the date of the order the Sugar Mili was closed and the appellant had no intention of re opening the same
It has not been disputed that if the order of the take over of the management is held to be valid the appellant will not be entitled to any relief and the appeal must fail
We may observe that the question whether the Mill was closed or not on the date the order taking over the management and appointing an authorised Controller under Rule 125 was passed is in serious dispute
However for the purpose of deciding the question raised in this appeal it does not become necessary to go into any dispute with regard to the facts
We propose to proceed on the basis that the Mill had remained closed and the appellant had shut it down permanently on the date the order came to be passed as in our opinion the order in question even if the same be held to have been passed at the time when the Mill was lying so closed must be held to be perfectly valid on a proper interpretation of Rule 125A
As in our opinion on a proper interpretation of Rule 125A the order in question is lawful and justified even if we accept the submission of Mr Desai that the Mill was factually so closed it does not become necessary for us to advert to the facts of this particular case
The real question is one of interpretation of Rule 125A Rule 125A was introduced by an amendment and inserted by G section R 1813 dated 28th December 1962
The provisions of this Rule relevant for the purpose of this appeal are contained in subrules 1 and 2 which provide as follows 125A 1
In this rule unless the context otherwise requires undertaking  means a any undertaking including an undertaking vested in
533 or controlled or managed by a local authority which is engaged in the production generation supply distribution or provision of water transport fuel light electricity or other power or any other thing or service which is notified by the Government as essential to the life of the community b any system of public conservancy and sanitation and any hospital or dispensary and also includes any part or property of an undertaking
2 If it appears to the Central Government or the State Government that for maintaining supplies and services essential to the life of the community it is necessary to take over the management of any undertaking that Government may by notified order authorise any person or body of persons to take over the management of any undertaking specified in the order and thereupon such undertaking shall be managed in accordance with the provisions of that order Provided that powers under this sub rule shall be exercised by the State Government in respect of a company to which the applies
Mr Desai referring to sub rule 1 a of Rule 125A of the Rules has argued that the Mill of the Appellant was not an undertaking within the meaning of this Rule as the Mill on the date of the order was not engaged in production generation supply distribution or provision of water transport fuel light electricity or other power or any other thing or service which is notified by the Government as essential to the life of the community because the Mill had been lying closed
It is his argument that an order under Rule 125A can only be validly passed in respect of an undertaking within the meaning of the Rule and in terms of the definition of undertaking  in the rule an undertaking to which this rule may apply must be one which is engaged in the production generation supply distribution or provision of water transport fuel light electricity or other power or any other thing or service 534 which is notified by the Government as essential to the life of the community
He contends that the Mill had been closed and had not been functioning and therefore the Mill was not engaged in the production generation supply or distribution of any sugar or any other thing or service essential to the life of the community
It is his contention that as the appellant had long before the passing of the order and even before sugar was declared to be an essential commodity completely stopped the running of the Mill with no intention to start it again the Mill had ceased to be engaged in the manufacture or production of sugar and there was therefore no undertaking within the meaning of Rule 125A and the order passed under Rule 125A which was not attracted must be held to be bad and invalid
He has submitted that an order under Rule 125A can only be passed in respect of an undertaking which is actually engaged in the activity of production at the time the order is passed
In support of the submissions made Mr Desai has referred to the decision of this Court in R C Cooper vs Union of India  and also to the decision of the Delhi High Court in the case of National Projects Construction Corporation Ltd vs Commissioner of Wealth Tax
Delhi2
On behalf of the Union of India it has been submitted that stoppage of production and non functioning of the Mill even with an intent to close it down permanently does not in any way affect the power to take over the management under Rule 125A and the jurisdiction and authority to pass an order even in respect of an undertaking closed and intended to be permanently shut down can validly be exercised under rule 125A
The submission is that merely because an undertaking has been shut down with no intention of being reopened it will not on that ground only cease to be an undertaking within the meaning of the rule
The learned counsel argues that for a proper appreciation of the true import and meaning of the word undertaking  and for understanding the true scope and effect of rule 125A it is necessary to refer to rule 125
It is his argument that in the light of the provision contained in rule 125 rule 125A which was introduced by way of amendment to confer further power of take over of the management of an undertaking will have to be understood and construed and on proper interpretation it is clear that in the larger public interest
535 the power and authority conferred under rule 125A can undoubtedly be exercised in respect of an undertaking which may not be functioning and may have even been closed with intent of not reopening the same
The relevant provisions of rule 125 read 125
General control of industry etc 1 In this rule unless the context otherwise requires a any reference to any article or thing shall be construed as including a reference to electrical energy b the expression undertaking  means any undertaking by way of any industry trade or business and includes the occupation of handling loading or unloading of goods in the course of transport
2 If the Central Government or the State Government is of opinion that it is necessary or expedient so to do for securing the defence of India and civil defence the efficient conduct of military operations or the maintenance or increase of supplies and services essential to the life of the community or for securing the equitable distribution and availability of any article or thing at fair prices it may by order provide for regulating or prohibiting the production manufacture supply and distribution use and consumption of articles or thing and trade and commerce therein or for preventing any corrupt practice or abuse of authority in respect of any such matter
3 Without prejudice to the generality of the powers conferred by sub rule 2 an order made thereunder may provide a for regulating by licences permits or otherwise the production manufacture treatment keeping storage movement transport distribution disposal acquisition use or consumption of articles or things of any description whatsoever 536 aa for regulating or prohibiting any class of commercial or financial transactions in respect of any article or thing which in the opinion of the Government are or if not regulated or prohibited are likely to be detrimental to any of the purposes specified in subrule2 b for prohibiting the with holding from sale either generally or to specified persons or classes of persons of articles or things ordinarily kept for sale and for requiring articles or things ordinarily kept for sale to a be sold either generally or to specified persons or class or classes of persons or in specified circumstances c for requiring any person holding in stock any article or thing to sell the whole or a specified part of the stock to the Government or to an officer or agent of the Government or to such other person or class or classes of persons and in such circumstances as may be specified in the order and if the order relates to food grains at such prices as may be specified in the order having regard to i the maximum price if any fixed by order under clause e or by or under any other law for the time being in force for the grade or variety of food grains to which the order this clause applies and ii the price for that grade or variety of food grains prevailing or likely to prevail during the post harvest period in the area to which the order applies d for securing the production or manufacture of specified articles or things in specified quantities and for effecting modification in the pattern of production or manufacture of such articles or things dd for securing the production manufacture supply or sale according to the prescribed standards and specifications of any article or thing appearing to the Government essential to any of the purposes specified in sub rule 2 537 ddd for the minimum and maximum stock of any article or thing appearing to the Government essential to any the purposes specified in sub rule 2 to be held by any consumer or by any producer manufacturer distributor dealer or other person e for controlling the prices or rates at which articles or things of any description whatsoever may be sold or hired or for relaxing any maximum or minimum limits otherwise imposed on such prices or rates f for controlling the rates at which any vessel registered in India may be hired and the rates at which persons or goods may be carried in or on any such vessel g for requiring any employers or class or classes of employers to supply to all or any class of their employees or to any class of dependants of such employees such articles or things in such quantities and at such price as may be specified in the order and to provide such accommodation and other facilities for taking meals at or near the place of employment as may be so specified h for controlling the recruitment and employment of labour in such areas as may be specified in the order with a view to securing that efficient workers are available for undertakings which in the opinion of the Government are essential undertakings i for regulating the carrying on of any undertaking engaged in or capable of doing work appearing to the Government essential to any of the above mentioned purposes and in particular i for requiring work to be done by an under taking ii for determining the order of priority in which and the period or periods within which work shall be done by an undertaking iii for controlling or fixing the charges which may be made by undertaking in respect of the doing of any work by it 538 iv for requiring regulating or prohibiting the engagement in the undertaking of any employees or class or classes of employees v for requiring the undertaking to provide adequate safeguards against sabotage j for requiring persons engaged in the production manufacture supply or distribution of or trade and commerce in any article or thing to maintain and produce for inspection such books accounts and records relating to their business and to furnish such information relating thereto and to employ such accounting and auditing staff as may be specified in the order k for collecting any information or statistics with a view to regulating or prohibiting any of the aforesaid matters i for requiring persons carrying on any industry trade or business or employed in connection with any undertaking to produce to such authority as may be specified in the order any books account or other documents relating thereto and for requiring such persons to furnish such authority as may be specified in the order such estimates returns or other information relating to any industry
trade or business or any undertaking as may be specified in the order or demanded thereunder m for the grant or issue of licences permits or other documents the charging of fees therefor the deposit of such sum if any as may be specified in the order as security for the due performance of the conditions of any such licence permit or other document the forfeiture of the sum to deposited for any part thereof for contravention of any such conditions and the adjudication of such forfeiture by such authority
539 as may be specified in the order                                           4 If it appears to the Central Government or the State Government that in the interests of the defence of India and Civil defence or the efficient conduct of military operations or for maintaining supplies and services essential to the life of the community it is necessary to exercise control over the whole or any part of an existing undertaking that Government may by order authorise any person hereinafter referred to as an authorized controller to exercise with respect to the undertaking or any part thereof specified in the order such functions of control as may be provided by the order and so long as an order made under this sub rule is in force with respect to any undertaking or part of an undertaking a the authorised controller shall exercise his functions in accordance with any instructions given to him by the Central Government or the State Government so however that he shall not have power to give any directions inconsistent with the provisions of any Act or other instrument determining the functioning of the undertakers except in so far as may be specifically provided by the order and b the undertaking or part shall be carried on in accordance with any directions given by the authorised controller in accordance with the provisions of the order and any person having any function of management in relation to the undertaking or part shall comply with any such directions 5 The Central Government so far as it appears to it to be necessary or expedient for securing the defence of India and civil defence or the efficient conduct of military 540 operations or for maintaining supplies and services essential to the life of the community may direct the employment of persons subject to the or the  or the a in any public utility service as defined in section 2 of the  or b in any undertaking or part thereof i which is being carried on by the Central or a State Government or ii which in the opinion of the Central Government is engaged in any trade or business essential to the life of the community or iii with respect to which an order made under subrule 4 is in force
and thereupon it shall be the duty of every person so subject to obey any command given by any superior officer in relation to such employment and every such command shall be deemed to be a lawful command within the meaning and for the purpose of the  or  or the  as the case may be
6 A direction under sub rule 5 may be made with or without the consent of the person carrying on the undertaking or part thereof to which the direction relates but if made without his consent shall be communicated to such person who shall thereupon be deemed to have contravened an order made under this rule if he obstructs or fails to facilitate the employment of persons subject to the  or the or the  in pursuance of the direction
 Sub rule 2 of rule 125 makes it clear that for securing the defence of India and civil defence efficient conduct of military operations or the maintenance or increase of supplies and services essential to the life of the community or for seeking equitable distribution and availability of any article or thing at fair prices very wide powers which are indicated in sub section3 without prejudice to the generality of the powers conferred by this sub section have 541 provided for regulating or prohibiting production manufacture supply and distribution use and consumption of articles or things and trade and commerce and for preventing any corrupt practice or abuse of authority in respect of any such matter
Rule 1251b which defines an undertaking makes it clear that the expression undertaking  means any undertaking by way of any industry trade or business and includes the occupation of handling loading or unloading of goods in the course of transport
Sub rule 3i of rule 125 makes provision for regulating the carrying on of an undertaking engaged in or capable of doing work appearing to the Government essential to any of the purposes mentioned above in sub rule 3 and in particular i for requiring work to be done by an undertaking and ii for determining the order of priority in which and the period or periods within which the work shall be done by an undertaking
It has to be noted that the expression undertaking has been given a very wide meaning in rule 1251b and is not limited to any undertaking which is functioning or is a going concern
Sub rule 3i confers powers and jurisdiction for regulating the carrying on of any undertaking not only engaged in but also capable of doing work appearing to the Government essential and this provision makes this position abundantly clear
In the larger interest of the country and particularly for the purpose specifically mentioned in rule 125 power of general control of very wide amplitude is conferred under rule 125 and there is nothing to indicate in the said rule that the powers conferred under rule 125 cannot be exercised over any undertaking which has stopped functioning
Indeed such a construction is clearly unwarranted on a plain reading of the section which clearly provides that such powers can be exercised not only in respect of an undertaking engaged but also capable of doing the kind of activity contemplated in the rule
Such a narrow construction is likely to defeat the very purpose for which the rule has been enacted
Although rule 125 confers very wide powers for general control of an undertaking there is no provision in the said rule to take over the management of any undertaking
Orders and directions under rule 125 to exercise general control over an undertaking were not considered to be sufficient and the authority felt that further power to take over the management of an undertaking in appropriate cases was necessary when such general control may not prove effective particularly in respect of certain undertakings
Rule 125A by way of amendment was therefore inserted to confer 542 further power of taking over the management of particular undertakings and of appointing authorised controllers for running such undertakings
The meaning of the word undertaking  in rule 125A has to be understood in this background and context
Rule 125A makes it clear that the rule 125A is not intended to apply to each and every undertaking within the meaning of rule 125
Special provision is made in rule 125A in respect of particular undertakings
Only Rule 125A describes and particularises the undertakings to which this rule will be applicable
The provision in this rule that in this rule unless the context otherwise requires an undertaking  means any undertaking including an undertaking vested in or controlled or managed by a local authority which is engaged in the production generation supply distribution or provision of water transfer fuel light electricity or other power or any other thing or service which is notified by the Government as essential to the life of the community is merely descriptive of the undertaking to which this rule is applicable
The words which is engaged in the production    merely describes the kind of undertaking by referring to the nature of the activity of the undertaking for bringing it within the purview of rule 125A and they have no bearing on the question whether the activities are in the process of being carried on or have been stopped
The expression any undertaking which is engaged in  has been used to describe the nature of business of the undertaking and is merely descriptive of the undertaking to which this rule will apply
The take over of the management of an undertaking to which rule 125A is applicable may become all the more necessary in larger public interest and for effectively serving the purposes for which this rule has been incorporated particularly when an undertaking engaged in any kind of activity coming within the purview of this rule stops functioning to enable tee undertaking to function for achieving the purposes for which these provisions have been made
The construction contended for by Mr Desai will be inconsistent with the provisions of the rule and will defeat the purposes which this rule seeks to serve
The decisions relied on by Mr Desai are of no assistance as the expressions undertaking  and engaged  which came to be considered in these cases were used in different status and in entirely different context
We must therefore hold that the taking over of the management of the sugar mill of the appellant and the appointment of 543 the authorised controller were perfectly valid and lawful and the act done by the authorised controller in the course of management by virtue of the provisions of these rules must be held to be binding on the appellant
The appeal therefore fails and is dismissed with no order as to costs
NVK Appeal dismissed


Summary:
The management of the Sugar Mill of the Appellant was taken over under Rule 125 of the Defence of India Rules 1962 and an Authorised Controller was appointed
In the appeal by certificate to this Court it was contended on behalf of the Appellant that long before passing of the order and even before sugar was declared to be an essential commodity the appellant had completely stopped the running of the Mill with no intention to start it again there was therefore no undertaking within the meaning of Rule 125A and the order passed under Rule 125A which was not attracted must be held to be bad and invalid
On behalf of the Union of India it was contended that Rule 125A confers jurisdiction and authority to pass an order even in respect of an undertaking closed and intended to be permanently shut down
Dismissing the appeal  HELD  The taking over of the management of the sugar mill of the appellant and the appointment of the authorised controller were perfectly valid and lawful and the act done by the authorised controller in the course of management is binding on the appellant
553A 531 2
Although Rule 125 confers very wide powers for general control of an undertaking there is no provision in the said rule to take over the management of any undertaking
Rule 125A by way of amendment was therefore inserted to confer further power of taking over the management of particular undertakings and of appointing authorised controllers for running such undertakings
541G 542A 3
Rule 125A makes it clear that the rule was not intended to apply to each and every undertaking within the meaning of Rule 125
Special provision is made in Rule 125A in respect of particular undertakings only
Rule 125A describes and particularizes the undertakings to which this rule will be applicable
542B 4
The provision in Rule 125A that in this rule unless the context otherwise requires an undertaking  means any undertaking including an undertaking vested in or controlled or managed by a local authority which is engaged in  is merely descriptive of the undertaking to which this rule is applicable
The words which is engaged in the production merely describes the kind of undertaking by referring to the nature of the activity of the undertaking for bringing it within the purview of Rule 125A and they have no bearing on the question whether the activities are in the process of being carried on or have been stopped
The expression any undertaking which is engaged in  has been used to describe the nature of business of the undertaking and is merely descriptive of the undertaking to which this rule will apply
542C E