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PETITIONER: KOTHANDRAN SPG. MILLS PVT. LTD. & ANR.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT28/03/1989

BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH PATHAK, R.S. (CJ) VENKATARAMIAH, E.S. (J) VENKATACHALLIAH, M.N. (J) OJHA, N.D. (J)

CITATION:  1989 AIR 1331            1989 SCR  (2) 127  1989 SCC  (2) 481        JT 1989 (2)    19  1989 SCALE  (1)722

ACT:         Sick Textile Undertakings (Nationalisation) Act, 1974.             Sections 2(j), 3 and First Schedule--Entry  96--Applic a-         bility of’Sick Textile Undertaking’--Legislative  determin a-         tion of the petitioner Mills.             Constitution  of  India: 1950: Article  31-B  and  Nin th         Schedule-Sick  Textile Undertakings  (Nationalisation)  Ac t,         1974---Constitutional validity of.

HEADNOTE:             Petitioner  No. 1, Kothandran Spg. Mills Pvt. Ltd.,  w as         taken  over under the provisions of the Sick Textile  Unde r-         takings (Taking Over of Management) Act, 1972 and possessi on         of  the mill was taken by the National Textile  Corporatio n,         respondent  No. 2. Subsequently, the Sick Textile  Underta k-         ings (Nationalisation) Act, 1974 came into force.             The  petitioners filed a writ petition under Article 32         of  the Constitution challenging the vires of the Sick  Te x-         tile  Undertakings (Nationalisation) Act, 1974 and that  t he         mills  be restored to them. It was also submitted  that  t he         establishment  had been closed down, and the Textile  Unde r-         taking had completely disappeared by 1969 and therefore  t he         aforesaid Act did not apply to it.

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       Dismissing the writ petition,             HELD: 1. The Sick Textile Undertakings (Nationalisatio n)         Act, 1974 has been put into the 9th Schedule of the  Const i-         tution by the 39th Amendment and, therefore, has come  und er         the  umbrella of protection provided under Article  31-B of         the Constitution. [130C-D]             Minerva  Mills  Ltd. & Ors. v. Union of  India  &  Ors .,         [1986]  4 S.C.C. 222; Waman Rao v. Union of India, [1981]  2         S.C.R.  1; Panipat Woollen and General Mills Company Ltd.

JUDGMENT:         Anr. v. Union of India &         128         Ors., [1986] 4 S.C.C. 368, applied.             2. The First Schedule to the Act against Entry 96  sho ws         the Petitioner’s Mills. There is a legislative determinati on         that petitioner company came within the definition of  ’si ck         textile undertaking’ as provided in Section 2(j) of the Ac t.         The  petitioners  have  not alleged  any  malafides  again st         Parliament and rightly. [130B-C] &         ORIGINAL JURISDICTION: Writ Petition No. 162 of 1977.         (Under Article 32 of the Constitution of India. )         Jitendra Sharma for the Petitioners.         T.V.S.N. Chari for the Respondents.         The Judgment of the Court was delivered by             RANGANATH  MISRA, J. This application under Art.  32 of         the Constitution is by two petitioners--petitioner no. 1,  a         private company and the other a Director thereof. The  pet i-         tioners have challenged the vires of the Sick Textile Unde r-         takings  (Nationalisation) Act, 1974 (57 of 1974)  and  ha ve         asked  for  a direction to the respondents  to  restore  t he         Mills to the petitioners in the same condition as it was on         31.10.197 1 when it was initially taken over.             Petitioners have alleged that the spinning mills  prev i-         ously belonged to one S.R. Narasimhachari and three  other s.         Mahalingam  Chettiar,  husband  of  the  second  petitione r,         purchased the said Mills in 1965. He was not at all aquain t-         ed  with the working of spinning mills and soon  found  th at         the  affairs  of the Mills were far  from  satisfactory  a

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nd         realised that he had acquired a non-viable asset. In  Dece m-         ber  1967, Mahalingam issued notice of closure to be  effe c-         tive  from  3.1.1968, but as a fact by a  subsequent  noti ce         dated  December  22,  1967, the Mill was  closed  down  wi th         immediate effect. According to the petitioners the Mill  h ad         ceased  to be a "textile undertaking" by January  1968;  t he         workmen  by numerous claim petitions in the Labour Court of         Madurai pressed for their various demands, they took posse s-         sion  of  the Mills and even obstructed  Mahalingam’s  ent ry         into the premises. At one stage during that period  Mahali n-         gam had applied for a loan of Rs. 10 lakhs from the  Gover n-         ment  of India with the hope of restarting the  Mills  aft er         replacement of the machinery but that did not work out.  T he         establishment had thus closed down and according to         129         the  petitioners  the  textile  undertaking  had  complete ly         disappeared by 1969, and the Act did not apply to it. Agai n,         the 1974 Act was ultra vires the Constitution.             The  Sick Textile Undertakings (Taking Over  of  Manag e-         ment) Ordinance 9 of 1972 became operative from  31.10.197 2.         Item  41  of the First Schedule to the  Ordinance  mention ed         petitioner  no. 1 as one of the textile  undertakings  who se         management  was to be taken over and possession was,  ther e-         fore,  taken by respondent no. 2 in terms of the  provisio ns         of s. 4(1) thereof. The Ordinance was replaced bY Act 72 of         1972  which received Presidential assent on  23.12.1972  b ut         was  deemed to be in force from 31.10.1972. The  petitione rs         had  challenged  the validity of the Act by  filing  a  wr it         petition  before  the High Court of Madras  but  during  t he         pendency  of the writ petition the Sick Textile  Undertaki ng         (Nationalisation)  Ordinance,  12 of 1974, came  into  for ce         from  1.4.1974, and petitioner no. 1 featured as Item 96 in         the  Schedule to the Ordinance. The pending  writ  petitio n,         therefore,  became infructuous and the petitioners  filed

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a         fresh  writ petition challenging the validity of  the  Ord i-         nance  of 1974. The Ordinance was duly replaced by  the  N a-         tionalisation  Act  57 of 1974. During the pendency  of  t he         writ petition Emergency was proclaimed and the writ petiti on         was permitted to be withdrawn in December 1976, with liber ty         to approach the Court again. That is how the present  appl i-         cation has been filed.         Section 2(j) defines a ’sick textile undertaking’to mean:         "a textile undertaking, specified in the First Schedule, t he         management  of  which has, before the  appointed  day,  be en         taken  over by the Central Government under  the  Industri es         (Development and Regulation) Act, 195 1, or as the case  m ay         be, vested in the Central Government under the Sick  Texti le         Undertakings (Taking Over of Management) Act, 1972."         It  is not disputed that management of petitioner no. 1  h ad         been  taken  over under the 1972 Act and petitioner  no. 1,         therefore, came within the definition.         Section 3 provides:         "3(1)  On the appointed day, every sick textile  undertaki ng         and  the right, title and interest of the owner in  relati on         to         130         :every such sick textile undertaking shall stand transfer        red  to, and shall vest absolutely in, the Central  Govern        ment.         (2)  Every sick textile undertaking which stands  vested in         the Central Government by virtue of Sub-section (1) shall,             : immediately after it has so vested, stand  transferr ed         to, and vested in, the National Textile Corporation."         The  First  Schedule to the Act against Entry 96  shows  t he         petitioner’s  Mills.; There is a  legislative  determinati on         that  petitioner no. 1 came Within the definition  of  ’si ck         textile undertaking’ as provided in s. 2(j) of the Act.  T he         petitioners have not alleged any mala-fides against  Parli a-         ment and in our opinion rightly. It is relevant to notice at         this stage that the Central Act 57 of 1974 has been put in to         the  9th Schedule of the Constitution by the 39th  Amendme nt         and,  therefore, has come under the umbrella  of  protecti on

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       provided under Art. 31-B of the Constitution. In the case of         Minerva Mills Ltd. & Ors. v. Union of India & Ors., [1986]  4         SCC 222 challenge was raised against the vires of this  Ac t.         The Court dealt with the effect of the inclusion of the  A ct         in  the 9th Schedule by referring to the ratio in Waman  R ao         v.  Union  of India, [1981] 2 SCR 1 and  upheld  its  vire s.         Similar  was  the view of the Court in the case  of  Panip at         Woollen  and General Mills Company Ltd. & Anr. v.  Union of         India & Ors., [1986] 4 SCC 368.             There  is  no  force in the two  contentions  raised on         behalf  of the petitioners and the writ petition is,  ther e-         fore,  dismissed.  We direct the parties to bear  their  o wn         costs of the proceedings.         T.N.A.                              Petition dismissed.         131