Case: Rashtriya Mill Mazdoor Sangh Vs. State of Maharashtra and Others

Central India Spinning, Weaving and Manufacturing Company Limited, with a view to securing the proper management of such undertaking so as to subserve the interest of the general public by ensuring the continued manufacture, production and distribution of textile and paper products which are essential to the needs of the economy of the country and for matters connected therewith or incidental theretoWHEREAS, the Central India Spinning, Weaving and Manufacturing Company Limited, being an existing company as defined in clause (ii) of sub-section (1) of Section 3 of the Companies Act, 1956 had been engaged in the manufacture and production of yarn, cloth and paper through its undertaking which was composite textile mill and paper manufacturing unit, styled as the Central India Spinning, Weaving and Manufacturing Company Limited, The Empress Mills, Nagpur; AND WHEREAS, in Petition No. 183 of 1986 filed by the Company for voluntary winding up, the High Court of Bombay had made an order for appointment of the provisional liquidator and the proceedings for its liquidation were pending; AND WHEREAS, the company had declared lockout throwing about more than 6000 workers out of employment and the undertaking has not been functioning since 3rd May, 1986 AND WHEREAS, it was expedient to acquire the undertaking of the said Company to ensure that the interest of the general public and of the employees of the undertaking were served by the continuance, by the undertaking of the said Company, of the manufacture, production and distribution of textile and paper products which are essential to the needs of the country and to provide for matters connected therewith or incidental thereto; AND WHEREAS, such acquisition is giving effect to the policy of the State towards securing the principle specified in clause (b) of Article 39 of the Constitution 4. The provisions contained in the Act have to be appreciated in the above background. At the outset, it may be stated that the challenge based on Article 14 or Article 19 would not be available by virtue of Article 31-C if the enactment is for giving effect to the policy of the State towards securing the directive principle specified in clause (b) of Article 39 of the Constitution. A declaration to this effect is contained in the Act itself 5. However, as held in Tinsukhia Electric Supply Co. Ltd. v. State of Assam judicial review is not excluded to examine the nexus between the impugned law and Article 39. In our opinion, the permissible judicial scrutiny to this extent reveals that the enactment undoubtedly is for effectuating the directive principle in clause (b) of Article 39 towards securing that the ownership and control of the undertaking are so utilised as best to subserve the common good. The declaration made to this effect in the Act is fully supported by the undisputed facts mentioned in the Statement of Objects and Reasons and the Preamble. The alternative to the nationalisation of this industry in the manner it is done by this Act is liquidation and unemployment of all the employees of the undertaking. The Act ensures continuance of the undertaking as a productive unit and continuation in employment of as many as possible. It was stated at the bar that more than fifty per cent of the employees have been retained in service after nationalisation of the undertaking. There cannot be any doubt that the requisite nexus of the Act with Article 39(b) is clear and duly established. This being so, the Act is immune to challenge on any ground based on Article 14 or Article 19 by virtue of Article 31-C 6. The contention of the learned counsel for the appellant relating to absence of nexus of the Act with Article 39(b) being rejected, it is unnecessary to refer to his contentions based on Article 14 and Article 19(1)(c) because of the immunity conferred by Article 31-C. The only surviving challenge now is based on Article 21. The learned counsel for the appellant contended that there is violation of Article 21 inasmuch as a large number of workmen have been rendered unemployed because every employee has not been continued in service. He submitted that this has resulted from the powers given unilaterally to the new management by Section 9(2) to reorganise the functioning of the different units and offices of the undertaking and the employees employed therein and thereby restructure such units and offices with such strength of employees as it deems fit. It was urged that this provision prescribes a procedure different from the provision for retrenchment under the Bombay Industrial Relations Act, 1946 (11 of 1947) which is the general law applicable in the State of Maharashtra for the retrenchment of workmen; and since it results in unemployment of the employees not continued in service as a result of this exercise of restructure of the units, it violates Article 21. This contention has no merit for several reasons 7. In the first place, this argument is really based on Article 14 on the ground of difference in the procedure from that prescribed in the Bombay Industrial Relations Act, the general law which is not available because of Article 31-C. Secondly, it overlooks the effect of the legislation which is to save as many employees as possible from unemployment since the only other option is liquidation which would result in all the employees being rendered unemployed. It is not a case, in effect of retrenchment. The argument is, therefore, based on a misappreciation of the effect of the enactment. Moreover, the unemployment of those who could not be continued in service is not because of the act of nationalisation since unemployment of all employees was the logical consequence otherwise. The act of nationalisation in this manner saves majority of the employees from unemployment. The argument based on Article 21 is misplaced 8. In our opinion, the above reasons alone are sufficient to reject the challenge made by the appellant to the constitutional validity of the aforesaid provisions in Maharashtra Act No. 46 of 1986

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]7. In the first place, this argument is really based on Article 14 on the ground of difference in the procedure from that prescribed in the Bombay Industrial Relations Act, the general law which is not available because of Article. Secondly, it overlooks the effect of the legislation which is to save as many employees as possible from unemployment since the only other option is liquidation which would result in all the employees being rendered unemployed. It is not a case, in effect of retrenchment. The argument is, therefore, based on a misappreciation of the effect of the enactment. Moreover, the unemployment of those who could not be continued in service is not because of the act of nationalisation since unemployment of all employees was the logical consequence otherwise. The act of nationalisation in this manner saves majority of the employees from unemployment. The argument based on Article 21 is misplaced8. In our opinion, the above reasons alone are sufficient to reject the challenge made by the appellant to the constitutional validity of the aforesaid provisions in Maharashtra Act No. 46 of 1986