Case ID: 5139

Judgment:
tition (Civil) No. 1129 of 1977 Under Article 32 of the Constitution of India. R. Sharma and Dalveer Bhandari for the Petitioner. B.Datta Additional Solicitor General	 Ms. A.Subhashini	 A.K. Goel	 T.V.S.N. Chari	 R.K. Jain	 Dr. N.M. Ghatate	 D.N. Mishra and H.S. Parihar for the Respondents. The Judgment of the Court was delivered by DUTT	 J. In this writ petition the petitioner	 Panipat Woollen & General Mills Co. Ltd.	 hereinafter referred to as 'the Company '	 has challenged the taking over of the management of its two textile mills under the Sick Textile Undertakings (Taking over of Management) Act	 1972 (for short 'Take over Act ') and also the constitutional validity of the Take over Act and the Sick Textile Undertakings (Nationalisation) Act	 1974 (for short 'the Nationalisation Act '). It appears that the Company had falled on evil days resulting in initiation of liquidation proceedings against the Company and the 940 appointment of a provisional liquidator. The mills of the Company were closed sometime in May	 1972. On the application by the Industrial Finance Corporation of India	 the Punjab & Haryana High Court directed the Board of Directors of the Company to hand over possession of the two mills to the Corporation to which the Company was indebted for a huge sum of money. The Corporation was also directed by the High Court to lease out the mills	 and it appears that Padmashree Textile Industries Ltd. was granted the lease of the mills	 that is to say	 the textile undertakings of the Company. At this stage	 it may be mentioned that the lessee	 the said Padmashree Textile Industries Ltd.	 also filed a writ petition before this Court	 inter alia	 challenging the Take over Act and the Nationalisation Act. That writ petition has since been disposed of by this Court upon settlement between the parties. Section 4(1) of the Take over Act provides that on or before the appointed day	 the management of the sick textile undertakings specified in the First Schedule shall vest in the Central Government. Under Section 2(a) "appointed day" means 31st day of October	 1972. Section 2(d) defines "sick textile undertaking" as follows: "section 2(d). "sick textile undertaking" means the textile undertaking which falls within one or more of the following categories	 namely: (i) which is owned by a textile company which is being wound up	 whether voluntarily or by or under the supervision of any Court	 or in respect of which a provisional liquidator has been appointed by a Court	 (ii) which had remained closed for a period of not less than three months immediately before the appointed day and the closure of which is prejudicial to the textile industry	 and the condition of the undertaking is such that it may	 with reasonable inputs	 be re started in the interests of the general public	 (iii) which has been leased to Government or any other person or the management of which has been taken over by Government or any other person under any leave or licence granted by any Receiver or Liquidator by or under the orders of	 or with the approval of	 any Court	 941 (iv) the management of which was authorised by the Central Government	 by a notified order made under section 18A	 or in pursuance of an order made by the High Court under section 18FA	 of the Industries (Development and Regulation) Act	 1951	 to be taken over by a person or body of persons	 but such management could not be taken over by such person or body of persons	 before the appointed day	 (v) the management of which ought to be [according to the report made after investigation by any person or body of persons appointed after the 1st day of January	 1970	 under section 15 or section 15A of the Industries (Development and Regulation) Act	 1951] taken over under section 18A of that Act	 but in relation to which no notified order authorising any person or body of persons to take over the management of such undertaking was made before the appointed day	 (vi) in respect of which an investigation was caused to be made	 before the appointed day	 by the Central Government under section 15 or section 15A of the Industries (Development and Regulation) Act	 1951	 and the report of such investigation was not received by the Central Government before the appointed day; and includes any textile undertaking which is deemed	 under sub section (2) of section 4	 to be a sick textile undertaking;" In view of sub clause (i) of section 2(d)	 as a provisional liquidator was appointed in respect of the textile undertakings of the Company	 they were sick textile undertakings. Moreover	 the sick textile undertakings of the Company have been specified in the First Schedule to the Take over Act and by virtue of section 4(1) of the Take over Act	 the undertakings of the Company have vested in the Central Government as sick textile undertakings. It is vehemently urged by Mr. Sharma	 learned Counsel appearing on behalf of the petitioners	 that before actually taking possession of the undertakings of the Company	 the Company should have been given an opportunity of being heard. It is submitted that if such an 942 opportunity had been given	 the Company could have shown that its undertakings were not sick undertakings. Counsel submits that the intention of the Legislature to give such an opportunity of being heard is apparent from the provisions of clauses (iv)	 (v) and (vi) of section 2(d) of the Take over Act which relate to the taking over of manage ment of an undertaking under the Industries (Development and Regulation) Act	 1951. In support of this contention	 the learned Counsel has placed reliance upon three decisions of this Court in A. K. Kraipak & Ors. vs Union of India & Ors. 	 	 Maneka Gandhi vs Union of India	 [1978] 2 SCR 621	 and Smt. Indira Nehru Gandhi vs Shri Raj Narain	 In our opinion	 none of the above decisions is applicable to the facts and circumstances of the instant case. In the First Schedule to the Take over Act	 the undertakings of the Company have been specified as sick textile undertakings. In other words	 the Legislature has itself decided the undertakings of the Company to be sick textile undertakings. Indeed	 in the First Schedule all the sick textile undertakings have been specified. Thus	 it is apparent that the Legislature has not left it to the Executive to decide whether a particular textile undertaking is a sick textile undertaking or not. If under the Take over Act the question whether a textile undertaking is a sick textile undertaking or not had been directed to be decided by the executive authorities	 the owner of such undertaking could claim an opportunity of being heard. But when an undertaking has been specified in the First Schedule to the Take over Act as a sick textile undertaking	 the question of giving an opportunity to the owner of the undertaking does not at all arise. We are unable to accept the contention of the petitioners that sub clauses (iv)	 (v) and (vi) of section 2(d) indicate that principles of natural justice should be complied with. The provisions of these sub clauses are some of the categories under any one of which the undertaking may fall and	 in that case	 it will be a sick textile undertaking. There is	 therefore	 no substance in the contention made on behalf of the petitioners that the Company should have been given an opportunity of being heard before the management of its undertakings was taken over as sick textile undertakings. It is next urged by the learned Counsel for the petitioners that the Legislature having itself decided the question whether an under taking is a sick textile undertaking or not without giving any opportunity to the owner of such undertaking to make a representation	 has damaged the basic structure of the Constitution of India	 namely	 943 separation of power between the Legislature	 the Executive and the Judiciary. Our attention has been drawn to the observations made by Sikri	 CJ	 in Kesavananda Bharati vs State of Kerala	 [1973] 2 Supp. SCR 1	 and that of Mathew	 J	 in Smt. lndira Nehru Gandhi vs Shri Raj Narain	 at page 503 to the effect	 inter alia	 that separation of powers among the Legislature	 the Executive and the Judiciary	 is one of the basic structures of the Constitution. It is	 accordingly	 submitted on behalf of the petitioners that the doctrine of separation of powers implies that the Legislature should define civil or criminal wrong or a default and create an independent machinery	 judicial or quasi judicial	 to determine the liability of the status of an individual. Further	 the Legislature itself cannot give a judgment and	 in any case	 if such a judgment is given by the Legislature	 it must act in accordance with the principles of natural justice. The above submissions of the petitioners	 in our opinion	 are misconceived. There can be no doubt that in respect of each sick textile undertaking	 a Take over Act and a Nationalisation Act could be passed and	 in that case	 a large number of enactments would come into existence to the inconvenience of all concerned. In order to avoid such cumbersome course and for the sake of convenience	 the Legislature has mentioned in the First Schedule in both the Take over Act and the Nationalisation Act the names of all sick textile undertakings in the country. By including certain textile undertakings as sick textile E undertakings in the First Schedule to the Take over Act	 the Legislature has not made any judicial or quasi judicial determination	 nor has the Legislature given any judgment	 as contended on behalf of the petitioners	 although such inclusion is sometimes loosely expressed as 'legislative judgment '. In section 2(d)	 the Legislature has laid down the criteria for a sick undertaking. The sick textile undertakings have been specified in the First Schedule on the basis of the tests laid down in section 2(d). In including the sick textile undertakings in the First Schedule	 the Legislature has not acted arbitrarily	 for	 it has also laid down the criteria or tests for such inclusion. If any undertaking which has been so specified in the First Schedule does not satisfy the tests under section 2(d) of the Take over Act	 the owner of it is entitled to t challenge such inclusion or take over in a court of law	 although such challenge has to be founded on a strong ground. Thus	 there is no finality or conclusiveness in the legislative determination of an under taking as a sick textile undertaking. Such determination is neither judicial nor quasi judicial. Therefore	 the question of damaging or altering the basic structure of the Constitution	 namely	 separation of 944 powers among the Legislature	 the Executive and the Judiciary	 does not at all arise. So also the question of the validity of the constitutional amendments by which the Take over Act and the Nationalisation Act have been included in the Ninth Schedule on the ground that by such amendments the basic structure of the Constitution is damaged	 as contended on behalf of the petitioners	 does not arise. The contentions are misconceived and are rejected. As a last resort	 the petitioners have challenged the validity of the Nationalisation Act on the ground of inadequacy of compensation. The Company had two undertakings	 namely	 Panipat Woollen Mills and Kharar Textile Mills. In the third column of the First Schedule to the Nationalisation Act	 a sum of Rs. 6	40	000 has been specified for the Panipat Woollen Mills and a sum of Rs. 12	89	000 has been specified for the Kharar Textile Mills by way of compensation for the acquisition of these two undertakings. It is the contention of the petitioners that the amounts of compensation	 which have been specified for the acquisition of these two undertakings	 are inadequate. We are afraid	 as on the date the Nationalisation Act had come into force	 Article 31 of the Constitution was not repealed	 the validity of the Nationalisation Act cannot be challenged on the ground of inadequacy of compensation. In Minerva Mills Ltd. & Ors. vs Union of India & Ors.	 Writ Petition Nos. 356 361 of 1977	 decided on September 9	 1986	 it has been already held by us that the Nationalisation Act gives effect to the policy of the State towards securing the ownership and control of the material resources of the community which are so distributed as best to subserve the common good	 as contained in Article 39(b) of the Constitution. In the circumstances	 the Nationalisation Act falls within the provision of Article 31C of the Constitution before it was amended by the Constitution (Forty Second Amendment) Act	 1976. Even assuming that the Nationalisation Act violates the provision of Article 31	 no challenge to its validity can be made on that ground. Apart from that	 we are of the view that the compensation that has been awarded to the Company is neither inadequate nor illusory as contended on behalf of the petitioners. It is not in dispute that the paid up share capital of the Company was Rs.60 lakhs and it paid dividend up to 1965. Thereafter	 the Company did not pay any dividend from 1965 to 1970. It will not be unreasonable to presume that in specifying the compensation	 the Legislature has taken these facts into consideration. There is	 therefore	 no substance in the contention of the petitioners that the compensation specified in First Schedule to the Nationalisation Act in respect of the undertakings of 945 the Company is illusory. The contention is rejected. No other point has been urged on behalf of the petitioners. For the reasons aforesaid	 the writ petition is dismissed and the rule nisi is discharged. There will	 however	 be no order as to costs. M.L.A. Petition dismissed.

Summary:
A provisional liquidator was appointed in respect of two textile undertakings of the petitioner company since they had gone into huge loss and had to be closed sometime in May 1972. As the textile undertakings of the petitioner company were 'sick textile undertakings ' within the meaning of sub clause (i) of section 2(d) of the Sick Textiles Undertakings (Taking over of Management) Act 1972 (for short	 Take over Act) and have also been specified in the First Schedule to the Take over Act	 they vested in the Central Government as 'sick textile undertakings ' by virtue of section 4(1) of the Take over Act. The petitioner company challenged before the Supreme Court the taking over of the management of the aforesaid two textile mills under the Take over Act and also the constitutional validity of the Take over Act and the Sick Textile Undertakings (Nationalisation) Act 1974 on the grounds (a) that the Company should have been given an opportunity of being heard before the management of its undertakings was taken over as 'sick textiles undertakings ' and if such an opportunity had been given	 the company could have shown that its undertakings were not sick undertakings; (b) that the legislature	 having itself decided the question whether an undertaking is sick textile undertaking or not without giving any opportunity to the owner of such undertaking to make a representation	 has damaged the basic structure of the Constitution 938 namely separation of power between the legislature	 the executive and the judicially; and (c) that the Nationalisa tion Act is consititutionally invalid on the ground of inadequacy of compensation. Dismissing the petition	 ^ HELD 1.1 In the First Schedule to the Take over Act	 the undertakings of the company have been specified as sick textile undertakings. In other words	 the Legislature has itself decided the undertakings of the Company to be sick textile undertakings. Indeed	 in the First Schedule all the sick textile undertakings have been specified. Thus	 it is apparent that the Legislature has not left it to the Executive to decide whether a particular textile undertaking is a sick textile undertaking or not. If under the Take over Act the question whether a textile undertaking is a sick textile undertaking or not had been directed to be decided by the executive authorities	 the owner of such undertaking could claim an opportunity of being heard. But when an undertaking has been specified in the First Schedule to the Take over Act as a sick textile undertaking	 the question of giving an opportunity to the owner of the undertaking does not at all arise. [942C F] 1.2 In including the sick textile undertakings in the First Schedule	 the Legislature has not acted arbitrarily	 for it has also laid down the criteria or tests for such inclusion. If any undertaking which has been so specified in the First Schedule does not satisfy the tests under section 2(d) of the Take over Act	 the owner of it is entitled to challenge such inclusion or take over in a court of law	 although such challenge has to be founded on a strong ground. Thus	 there is no finality or conclusiveness in the legislative determination of an undertaking as a sick textile undertaking. Such determination is neither judicial nor quasi judicial. Therefore	 the question of damaging or altering the basic structure of the Constitution namely	 separation of powers among the Legislature	 the Executive and the Judiciary	 does not at all arise. So also the question of the validity of the constitutional amendments by which the Take over Act and the Nationalisation Act have been included in the Ninth Schedule on the ground that by such amendments the basic structure of the Constitution is damaged	 as contended on behalf of the petitioners	 does not arise. [943F H; 944A B] 2. The Nationalisation Act gives effect to the policy of the State towards securing the ownership and control of the material resources of the community which are so distributed as best to subserve the common 939 good	 as contained in article 39(b) of the Constitution. It falls within the provision of article 31C of the Constitution before it was amended by the Constitution (Forty Second Amendment) Act	 1976. Even assuming that the Nationalisation Act violates the provision of article 31	 no challenge to its validity can be made on that ground. [944E G] Minerva Mills Ltd. & Ors. vs Union of India & Ors.	 Writ Petition Nos. 356 361 of 1977	 decided on September 9	 1986	 relied upon. In the instant case	 the compensation that has been awarded to the Company is neither inadequate nor illusory. It is not in dispute that the paid up share capital of the Company was Rs.60 lakhs and it paid dividend from 1965 to 1970. It will not be unreasonable to presume that in specifying the compensation	 the Legislature has taken these facts into consideration. There is	 therefore no substance in the contention of the petitioners that the compensation specified in First Schedule to the Nationalisation Act in respect of the undertakings of the Company is illusory. [944G H; 945A]