Case: Assam Sillimanite Limited and Another Vs. Union of India and Others

Act The State under Clause (b) of Article 39 is required to direct its policy towards securing that the ownership and the control of material resources of the community are so distributed as best to subserve the common good. The purpose sought to be achieved by the enactment is the augmentation of the supplies of refractories to meet the essential requirements of the iron and steel industry. It cannot be disputed that iron and steel industry is crucial in the development process. With the expansion of iron and steel industries, the requirement of the necessary ingredients are bound to grow and the plants for manufacture of such ingredients have necessarily to be harnessed to meet such requirements. The key words material resources of the community and distribution occurring in Clause (2) of Article 39 have been interpreted in the earlier decisions of this Court 32. In State of Karnataka v. Ranganatha Reddy (supra), the Karnataka Contract Carriages Acquisition Act, 1976 for nationalisation of contract carriages in the State was challenged on the ground that there is no real and substantial nexus between the purpose of the acquisition and securing the principles specified in Article 39. The Court said at page 515 thus: "And material resources of the community in the context of reordering the national economy embraces all the national wealth, not merely natural resources, all the private and public sources of meeting material needs, not merely public possessions. Every thing of value or use in the material world is material resource and the individual being a member of the community his resources are part of those of the community....nationalisation of transport as a distributive process for the good of the community." 33. In State of Tamil Nadu v. Abu Kavur Bai (supra), it was held that material resources as enshrined in Article 39(b) are wide enough to cover not only natural or physical resources but also movable or immovable properties, such as the vehicles, tools, implements and the workshop etc. It was also held that the nationalisation of the transport would undoubtedly be a distribution for the common good of the people and would be clearly covered by Clause (b) of Article 39. 34. In Sanjeev Coke Manufacturing Company (supra), the constitutional validity of Coking Coals Mines (Nationalisation) Act, 1972 and the Coal Mines (Taking Over of Management) Act, 1973 was under challenge. The Court said that when Article 39(b) refers to material resources of the community, it does not refer only to resources owned by the community as a whole but it refers also to resources owned by individual members of the community. The Court also held that the expression material resources of the community is not confined to natural resources; it is not confined to resources owned by the public; it means and includes all resources, natural and man-made, public and private-owned. 35. Therefore, all things which are capable of producing wealth for the community would be material resources. The conservation of the essential ingredients necessary for the crucial iron and steel industry by nationalisation is only in implementation of the policy declared in Clause (b) of Article 39. 36. In the recent decision of this Court in Tinsukhia Electric Supply Company (supra), the Tinsukhia Electric Supply Undertaking (Acquisition) Act, 1973 was challenged as unconstitutional. The contention that the Act was entitled to the protection under Article 31C was upheld pointing out that electric energy generated by the supplier companies constitute material resources of the community within the scope and meaning of Article 39(b) and having regard to the true nature and purpose of the legislation the objects of the legislation have a direct and reasonable nexus with the objective of distributing the material resources so as to subserve the common good. 37. The Act is declared to have been enacted for giving effect to the policy of the State towards securing principles specified in Clause (b) of Article 39. The Preamble of the Act refers to the necessity to augment the supply of refractories to meet the essential requirements to the iron and steel industry. It further states that special type of refractories including high aluminum refractories needed by the iron and steel industry may be manufactured at the Refractory Plant of Assam Sillimanite Limited and such manufacture will enable the country to progressively reduce the import of such special type of refractories. The Act purports to have been enacted for acquiring the plant for the purpose of augmenting the supplies of refractories to meet the essential requirements of the iron and steel industry. 38. We are, therefore, of the view that the plant as well as the manufactured refractories constitute material resources of the community and the take over of the plant to augment the supplies of refractories to meet the essential requirements of the iron and steel industry in public interest ensures distribution as best to subserve the common good. The impugned Act which is intended to augment the production and supply of refractories to meet the essential requirements of the crucial iron and steel industry is a measure towards implementation of the policy contained in Clause (b) of Article 39. There is, therefore, direct and rational nexus between the objective of the enactment and the principles contained in that Article. The Act in this view is entitled to the protection under Article 31C. 39. An argument has been advanced on behalf of the appellant-company that if the compensation is not only illusory but producing negative result, then the protection of Article 31C is not available to the impugned legislation. We find no merit in this argument. When Article 31C is attracted, the argument in regard to the alleged illusory nature of the amount does not survive at all for consideration. If once the conditions mentioned in Article 31C are fulfilled by the law, no question of compensation arises because the said article expressly excludes not only Articles 14 and 19 but also 31. When Article 31C comes in, Article 31 goes out. 40.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The extent and scope of judicial review ofwhere there is a declaration under Article 31C of the Constitution which enjoins that no law containing a declaration that it is for giving effect to such a policy shall be called in question in any Court on the plea that it does not give effect to such a policy has been considered in Kesavanandai v. State ofSCC 225. On an analysis of the majority judgment therein Sabyasachi Mukharji, J. (as he then was) observed in Tinsukhia Electric Supply Company casethat the declaration in Article 31C does not exclude the jurisdiction of the Court to determine whether the law is for giving effect to the policy of the State towards securing the principles specified in39(b) and (c). Mathew, J. had observed in Kesavanandai v. State ofSCC 225that in order to decide whether a law gives effect to the policy of the State towards securing the directive principles specified in Article 39(b) or (c), a Court will have to examine the pith and substance, the true nature and character of the law as also its design and the subjectmatter dealt with by it together with its object and scope. If a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the real nature of theIt is, therefore, necessary notwithstanding the declaration contained in Section 30 of the Act, to consider whether there is a nexus between the Act and the policy of the State declared in Article 39(b) or (c). The test to determine whether the law is enacted for giving effect to a directive is to determine whether there is real and rational connection between the law andWe shall therefore examine the provisions of the Act for the purpose of satisfying whether the Act furthers the policy stated in(b) of Article 39 as declared in theThe State under(b) of Article 39 is required to direct its policy towards securing that the ownership and the control of material resources of the community are so distributed as best to subserve the common good. The purpose sought to be achieved by the enactment is the augmentation of the supplies of refractories to meet the essential requirements of the iron and steel industry. It cannot be disputed that iron and steel industry is crucial in theprocess. With the expansion of iron and steel industries, the requirement of the necessary ingredients are bound to grow and the plants for manufacture of such ingredients have necessarily to be harnessed to meet such requirements. The key words material resources of the community and distribution occurring in(2) of Article 39 have been interpreted in the earlier decisions of thisIn State of Karnataka v. Ranganatha Reddythe Karnataka Contract Carriages Acquisition Act, 1976 for nationalisation of contract carriages in the State was challenged on the ground that there is no real and substantial nexus between the purpose of the acquisition and securing the principles specified in Article 39. The Court said at page 515 thus1 andmaterial resources of the community in the context of reordering the national economy embraces all the national wealth, not merely natural resources, all the private and public sources of meeting materialneeds, not merely public possessions.of value or use in the material world is material resource and the individual being a member of the community his resources are part of those of the community....y innationalisation of transport as a distributiveood of the community."v. Abu Kavur Bai [it was held that material resources as enshrined in Article 39(b) are wide enough to cover not only natural or physical resources but also movable or immovable properties, such as the vehicles, tools, implements and theetc. It was also held that the nationalisation of the transport would undoubtedly be a distribution for the common good of the people and would be clearly covered by(b) of ArticleIn Sanjeev Coke Manufacturing Companythe constitutional validity of Coking Coals Mines (Nationalisation) Act, 1972 and the Coal Mines (Taking Over of Management) Act, 1973 was under challenge. The Court said that when Article 39(b) refers to material resources of the community, it does not refer only to resources owned by the community as a whole but it refers also to resources ownedl members of the community. The Court also held that the expression material resources of the community is not confined to natural resources; it is not confined to resources owned by the public; it means and includes all resources, natural andpublic and privateTherefore, all things which are capable of producing wealth for the community would be material resources. The conservation of the essential ingredients necessary for the crucial iron and steel industry by nationalisation ison of the policy declared in(b) of ArticleIn the recent decision of this Court in Tinsukhia Electric Supply Companythe Tinsukhia Electric Supply Undertaking (Acquisition) Act, 1973 was challenged as unconstitutional. The contention that the Act was entitled to the protection under Article 31C was upheld pointing out that electric energy generated by the supplier companies constitute material resources of the community within the scope and meaning of Article 39(b) and having regard to the true nature and purpose of the legislation the objects of the legislation have a direct and reasonable nexus with the objective of distributing the material resources so as to subserve the commonThe Act is declared to have been enacted for giving effect to the policy of the State towards securing principles specified in(b) of Article39. The Preamble of the Act refers to the necessity to augment the supply of refractories to meet the essential requirementsof the iron and steel industry. Itfurther states that special type of refractories including highrefractories needed by the iron and steel industry may be manufactured at the Refractory Plant of Assam Sillimanite Limited and such manufacture will enable the country to progressively reduce the import of such special type of refractories. The Act purports to have been enacted for acquiring the plant for the purpose of augmenting the supplies of refractories to meet the essential requirements of the iron. We are, therefore, of the view that the plant as well as the manufactured refractories constitute material resources of the community and theof the plant to augment the supplies of refractories to meet the essential requirements of the iron and steelic interest ensures distribution as best to subserve the common good. The impugned Act which is intended to augment the production and supply of refractories to meet the essential requirements of the crucial iron and steel industry is a measure towards implementation of the policy contained in(b) of Article39. There is, therefore, direct and rational nexus between the objective of the enactment and the principles contained in thatThe Act in this view is entitled to the protection under ArticleAn argument has been advanced on behalf of thethat if the compensation is not only illusory but producing negative result, then the protection of Article 31C is not availableto the impugnedlegislation. We find no merit in this argument. When Article 31C is attracted, the argument in regard to the alleged illusory nature of the amount does not survive at all for consideration. If once the conditions mentioned in Article 31C are fulfilled by the law, no question of compensation arises because the said article expressly excludes not only Articles 14 and 19 but also 31. When Article 31C comes in, Article 31 goes out