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PETITIONER: DOYPACK SYSTEMS PVT. LTD. ETC.

       Vs.

RESPONDENT: UNION OF INDIA & ORS., ETC.

DATE OF JUDGMENT12/02/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) OZA, G.L. (J)

CITATION:  1988 AIR  782            1988 SCR  (2) 962  1988 SCC  (2) 299        JT 1988 (1)   304  1988 SCALE  (1)273  CITATOR INFO :  F          1988 SC1353  (17)  E&D        1991 SC 772  (18)  R          1991 SC1806  (6)

ACT:      Swadeshi Cotton  Mills Company Limited (Acquisition and Transfer of  Undertakings) Act, 1986-Whether under section 3 thereof  equity  shares  in  Swadeshi  Polytex  Limited  and Swadeshi  Mining  and  Manufacturing  Company  vest  in  the Central Govt. and whether the immovable properties have also vested in the Govt. under the said section.

HEADNOTE: %      What fell for consideration in all these matters, viz., (i) SLPs.  (civil) Nos.  4826 and  7045 of  1987,  (ii)  SLP (civil) No. 5240 of 1987, (iii) C.M.Ps. Nos. 12029-31/87 (in CAs Nos.  577-79 of  1987),  (iv)  C.M.Ps.  Nos.  16635  and 16918/87 (in  S.L.P. (c)  No. 4826/87)  and (v)  Transferred Cases Nos.  13 and  14 of 1987 (with CMPs. Nos. 16887-89 and 17018/87), was  a  common  question  of  law-whether  equity shares in  two companies,  i.e. 10,00,000 shares in Swadeshi Polytex Ltd.  and 17,18,344  shares in  Swadeshi Mining  and Manufacturing Company  Ltd., held  by  the  Swadeshi  Cotton Mills, vested  in the  Central Government under section 3 of the Swadeshi  Cotton Mills  Company  Ltd.  (Acquisition  and Transfer of  Undertakings) Act,  1986. The  other subsidiary question  was  whether  the  immovable  properties,  namely, bungalow  No.  1  and  Administrative  Block,  Civil  Lines, Kanpur, had also vested in the government.      There  were   six  original  proceedings  initiated  by various parties  which gave  rise to  these  civil  appeals, special leave  petitions and  transferred cases  before this Court. These were:      On 18th  February, 1987,  a suit  was filed  before the Delhi High  Court by one Naresh Kumar Barti against Dr. Raja Ram Jaipuria, Swadeshi Polytex and others, for an injunction restraining the company from holding the 17th annual general meeting on  the ground  that  34%  shares  in  the  Swadeshi Polytex vested  in the National Textile Corporation (N.T.C.) in view  of sections  3 and  4 of  the Act.  In the suit, an

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application was  also filed praying that in the event of the annual general  meeting of  the company  being allowed to be held, an independent Chairman should be appointed to conduct the meeting. The High Court 963 refused to  pass any  order (in  view of  an  order  already passed by  the Allahabad  High Court). Against this order of the Delhi High Court, two special leave petitions were filed in this  Court one  by Doypack  Systems Pvt. Ltd. (defendant No. 10 in the Delhi Suit), which came to registered as Civil Appeal No. 577 of 1987 after the grant of special leave, and the other, by Naresh Kumar Barti, the plaintiff in the Delhi Suit, which came to be registered as Civil Appeal No. 578 of 1987 after the grant of special leave.      On 24th  February, 1987, one Bari Prasad Aggarwal filed a suit  in the  court of  the Third  Additional Civil Judge, Kanpur praying inter alia that Shri Raja Ram Jaipuria should not preside  over the  17th annual  general meeting  of  the company. The  application for an interim injunction filed in the suit  was dismissed.  In the  appeal  preferred  by  the plaintiff before  the Allahabad  High Court,  an  order  was passed by the High Court on 2nd March, 1987, appointing Shri M.P. Wadhawan  as the  Chairman of  the said  annual general meeting. Against this order dated 2nd March, 1987, passed by the Allahabad  High Court  M/s. Doypack  System  Pvt.  Ltd., preferred a  special leave  petition in  this  Court,  which after the grant of leave, was registered as Civil Appeal No. 577 of  1987. The  three special  leave petitions were heard together as  Civil Appeals Nos. 577, 578 and 579 of 1987 and disposed of  by this  Court by  a common order on 6th March, 1987, appointing  Shri Jaswant  Singh as the Chairman of the said annual general meeting.      On 26th  February, 1987,  another suit-Suit  No. 506 of 1987-was filed  in the Delhi High Court by Mukesh Bhasin for a declaration  that Swadeshi  Cotton and Swadeshi Mining had no right in respect of 34% of the share-holdings in Swadeshi Polytex and  that the  said shares were vested in the N.T.C. by virtue  of the  said Act. By order dated 9th March, 1987, the High  Court disposed  of that  application  and  granted injunction restraining  defendants Nos. 3 and 4 in that suit from exercising  any right  whatsoever attached  to the  34% shares of  defendant No. 2 held by them and particularly any voting right  in the  annual general meeting scheduled to be held on  the 9th March, 1987, till the decision of the suit. This order was brought to the notice of this Court by C.M.P. forming part  of the  Civil Appeals Nos. 577-579 of 1987. On 9th March,  1987, on  that C.M.P. this Court passed an order directing that NTC, Swadeshi Cotton and Swadeshi Mining, all shall be  entitled to vote at the annual general meeting and the question  as to  who were  the rightful  voters would be decided by  the Chairman  of the  meeting, etc. This was the Transferred Case No. 14 of 1987. 964      One Mukesh  Jasmani, a  shareholder in Swadeshi Polytex filed a  writ petition in the Allahabad High Court. The High Court by  its order dt. 7th March, 1987, dismissed that writ petition, observing that Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the 17th annual general meeting in respect  of their  shares which, according to N.T.C., had vested  in   them.  Against   this  order,  Doypack  Systems preferred the  Special Leave  Petition (civil)  No. 3112  of 1987. This  Court passed  orders on this petition, directing that the  meeting would  be held  under the  chairmanship of Shri Jaswant  Singh notwithstanding  any order  made by  any Court. This  Court also vacated the operative portion of the

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directions contained  in the  order dated 7th March, 1987 of the Allahabad High Court.      On  6th   April,  1987,   M/s.  Swadeshi   Mining   and Manufacturing  Company  filed  a  civil  writ  petition-Writ Petition No.  2214  of  1987-in  the  Allahabad  High  Court (Lucknow Bench)  for stay  of the  operation of  the letters dated 24/30 March, 1987, addressed by NTC to Swadeshi Mining and Manufacturing  Company and Swadeshi Cotton Mills Company Limited, calling for an Extraordinary General Meeting of the Shareholders for removal of the Directors of Swadeshi Mining and Manufacturing  Company Ltd.  The High  Court  passed  an order on  the 6th  April, 1987, staying the operation of the said letters.  Against that order, M/s. Doypack Systems Pvt. Ltd. filed  Special Leave  Petition No. 4826 of 1987 and NTC also filed a Special Leave Petition No. 5240 of 1987 in this Court. By  an order dated 5th May, 1987, this Court directed that Suit  No. 506  of 1987  in the Delhi High Court and the Writ Petition  No. 2214  of 1987 in the Allahabad High Court be transferred  to this Court, which were registered in this Court  as   Transferred  cases   Nos.  14  and  13  of  1987 respectively.      NTC filed  a civil  suit in  the District  Court Kanpur seeking declaration of its title in respect of the shrubbery property in  Kanpur. The  court  refused  any  interlocutory injunction in the suit against which an appeal was preferred before  the  High  Court  of  Allahabad  and  the  same  was dismissed. Consequently,  NTC filed a Special Leave Petition No. 7045 of 1987 in this Court.      Disposing of the matters, the Court, ^      HELD: Swadeshi  Mining and  Manufacturing Co.  Ltd. and Others submitted that the shares in question did not vest in the Central Government. [976B] 965      By  the   Act-Swadeshi  Cotton   Mills   Company   Ltd. (Acquisition and  Transfer of Undertakings) Act, 1986-on the appointed day  "every textile  undertaking" and  the "right, title and  interest of  the company  in  relation  to  every textile mill  of such textile undertakings" were transferred to and  vested in  the Central  Government and  such textile undertakings would be deemed to include "all assets". In the context of  this provision,  the reliance on the decision of this Court  in Balkrishnan  Gupta  and  Others  v.  Swadeshi Polytex Ltd.  and Others,  [1985]  2  S.C.R.  854,  was  not appropriate. [978D-E]      It appears  from the  written statement filed by NTC on 8th February,  1987, in the suit filed by one G.G. Bakshi in Ghaziabad Court,  it was  claimed that  NTC was  entitled to take over  company’s  shares  and  investments.  On  24/30th March, 1987,  NTC issued  notice to  the petitioners 1 and 2 stating that  they were  entitled to shares. It was urged by Shri Nariman,  counsel for Swadeshi Mining and Manufacturing Co. Ltd.  & Ors., that this belated assertion indicated that the shares were not intended to be taken over. The Court was unable to  accept this suggestion or to draw that inference. It did not logically follow. [979G-H; 980A]      Before  dealing  with  the  main  question,  the  Court considered an  application made  by  Shri  Nariman  for  the production  of   certain  documents.   The   petitioner   in Transferred Case No. 13 of 1987 had sought production of the documents. It  was contended  inter alia that the production of those  documents was  necessary  to  establish  that  the shares were  never intended  to be taken over and these were never considered  as part  of the  textile undertaking,  and that the  documents were  definitely relevant  as they would

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throw light on the merits of the case. The production of the documents was  resisted by the Attorney-General on behalf of the Union of India on the ground that the documents were not relevant and in any event most of them were privileged being part of the documents leading to the tendering of the advice by the  Cabinet to the President, as contemplated by Article 74(2) of the Constitution. [989B, C; 990A]      Having considered  the facts  and circumstances  of the case as  well as  the decisions of this Court in a number of cases, the  Court was  of the  opinion that the documents in question were not relevant, and also that the Cabinet papers are  protected  from  disclosure  not  by  reason  of  their contents but  because of the class to which they belong; the Cabinet papers  also include  papers brought  into existence for the  purpose of preparing submission to the Cabinet, and it is the duty of this Court to 966 prevent disclosure  where Article  74(2) is  applicable. The Court was  unable to  accept the prayer of the petitioner to direct disclosures  and production  of the  documents sought for. [993F-G; 994H]      Coming to  the  main  question  involved,  reading  the provisions of section 3(1), section 4(1) and section 2(k) of the Act,  each throwing light on the other, it follows that- (a) under  the first  limb of section 3(1) of the Act, every textile undertaking;  (b) under  the second  limb of section 3(2), every  right, title  and interest  of the  company  in relation to  every  such  undertaking,  is  transferred  and vested, (c)  the deeming provision of section 4(1) amplifies and enlarges  both the  limbs of  the vesting section, being section 3(1), (d) the definition of the section is read into these provisions,  to give  a wider meaning and scope to the vesting provision  and to  what is  transferred  or  vested. [997G-H; 998A]      Sections 7  and  8  of  the  Act  relied  upon  by  the petitioners, being provisions for payment of amounts and for the issue  of shares  by  NTC  respectively,  will  have  no bearing on  the scope  of the  vesting provision. As to what properties have vested cannot proceed on the hypothesis that there is  a clear numerical or mathematical link between the quantum of  compensation and  the items  of property vested. This correlation  with regard  to such  legislation  is  not available. [998B]      Section 8  refers to  the payments  of the  amounts  by Union of  India to  the company. It has no bearing either on the vesting  section or  on section 7 except that the figure of Rs.24  crores 32  lakhs was  introduced into  section  7. [998C-D]      In this  case, a  nationalisation statute is concerned. Even with  other independent management statutes, in respect of textile  undertakings a  series of  decisions have upheld the view  that  the  shares  vest  in  the  Government.  See National Textile  Corporation Ltd.  v. Sitaram Mills, [1986] Supp. S.C.C.  117, Minerva Mills v. Union of India, [1986] 4 S.C.C. 222,  Goverdhan Das  Narasingh Das  Daga v.  Union of India, [1986]  4 S.C.C.  276, Vidharba  Mills Berar  Ltd. v. Union of  India, [1986]  4 S.C.C.  248 and Fine Knitting Co. Ltd. v.  Union of  India, [1986]  4 S.C.C.  276.  The  above provide  the   informed  basis  on  which  the  Court  makes construction of  sections 3 and 4 of the Act. [998G-H; 999A- B]      The expressions  "and all  other rights and interest in or arising  out of such property, as were immediately before the appointed  day, in  the ownership,  possession, power or control  of   the  company   in   relation   to   the   said

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undertakings", appearing  in sub-section (1) of section 4 of the 967 Act indicates  that the shares which have been purchased out of the funds of the textile undertakings and which have been held for the benefit of the said textile undertakings, would come within the scope of section 4 of the Act and thus would also vest  in the  Central Government  under section  3. The origin of these shares and their connection with the textile undertakings  had   been  fully  corroborated.  The  textile business was the only business of the Swadeshi Cotton Mills. There was  inter-connection and  inter-relation between  all the  six   undertakings.  Investments  in  Swadeshi  Polytex Limited from  the funds  of Kanpur  undertaking were  always made.  Investments  in  Swadeshi  Mining  and  Manufacturing Company Ltd.  were always  made from the funds of the Kanpur undertaking.  Assets/investments   held  and  used  for  the benefit of  the textile  business of  SCM were carried on in its textile undertakings. [999B-E]      The words  in the  statute must  Prima facie  be  given their ordinary  meaning. Where  the grammatical construction is clear  and manifest  and without doubt, that construction ought to  prevail unless  there are  some strong and obvious reasons to  the contrary.  Nothing was shown to warrant that literal construction  should not  be given  effect  to.  See Chandavarkar S.R.  Rao v.  Asha Lata, [1986] 4 S.C.C. 447 at 476, approving  44  Halsbury’s  Laws  of  England,  4th  ed. paragraph  856,  p.  552,  Nokes  v.  Doncaster  Amalgamated Colliery Ltd.,  [1940] Appeal Cases 1014 at 1022. It must be emphasised that  interpretation must  be in  consonance with the Directive  Principles of  the State  Policy in  Articles 39(b) and (c) of the Constitution.[999E-G]      The  object  of  interpretation  of  a  statute  is  to discover the intention of the Parliament as expressed in the Act. The  dominant purpose  in constructing  a statute is to ascertain the  intention of  the legislature as expressed in the statute,  considering it  as a whole and in its context. That intention and, therefore the meaning of the statute are particularly to  be sought  in the words used in the statute itself, which  must, if  they are  plain and unambiguous, be applied as  they stand.  In the present case, the words used represented the  real intention  of the  Parliament  as  the Court found not only from the clear words used but also from the very  purpose of  the vesting of the shares. If the fact is borne in mind that these shares were acquired from out of the investments  made by these two companies and furthermore that the assets of the company as such minus the shares were negative and  further the Act in question was passed to give effect to  the principles  enunciated in clauses (b) and (c) of Article  39 of  the Constitution,  no doubt was left that the shares  vested in the Central Government by operation of sections 3 and 4 of the 968 Act. See  in this connection, the observations of Halsbury’s Laws of  England, 4th  Edition, Volume 44, paragraph 856, p. 522 and the cases noted therein. [999G-H; 1000A-C]      There is  no exact  correlation between  the figure  of capital reserve  and the  figure of  investments. That could not be.  These could  never be  equal. The submission of the petitioners  failed  to  take  into  account  the  fact  the undertakings, other  than the  Kanpur undertaking,  also had capital reserve,  even though  there was  no obligation that these were  excluded assets in respect of other undertakings and there were no figures of investments therein. [1000D-E]      Contemporanea Expositio  is a well-settled principle or

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doctrine which applies only to the construction of ambiguous language in  old statutes.  Reliance might be placed in this connection  on  Maxwell,  13th  Ed.  page  269.  It  is  not applicable to modern statutes. Reference may be made to G.P. Singh, Principles of Statutory Interpretation, 3rd Ed. pages 238,239. The  leading case  on  Contemporanea  expositio  is Comppell College  Belfast v.  Commissioner of  Valuation for Northern Ireland,  [1964] 1  W.L.R. 912,  in which  House of Lords made  it clear that the doctrine is to be applied only to the  construction of  ambiguous language  in the very old statutes. Lord  Watson said  in Clyde Navigation Trustees v. Laird, [1983]  8 A.C. 658 that Contemporanea expositio could have no  application to  a modern Act. The Court, therefore, rejected the attempt of the petitioners to lead the Court to this forbidden  track by  referring  to  various  extraneous matters. Furthermore,  those external aids sought before the Court did  not support  the petitioners’  approach  to  this question at all. [1000F-H; 1001A]      Sections 3 and 4 of the Act evolve a legislative policy and set  out the  parameters  within  which  it  has  to  be implemented. The  Court could  not find  that there  was any special intention  to exclude  the shares  in this  case, as seen from  the existence  of at least four other Acquisition Acts which  used identical  phraseology in  sections 3 and 4 and the  other sections  as  well-Aluminium  Corporation  of India  Ltd.   (Acquisition   and   Transfer   of   Aluminium Undertakings) Act, 1984, Amritsar Oil Works (Acquisition and Transfer of  Undertakings) Act,  1982, Britannia Engineering Company (Mohmeh  Unit) and  the Arthur  Butler  and  Company (Muzaffarpore)   Ltd.    (Acquisition   and    Transfer   of Undertakings) Act,  1978, and the Ganesh Flour Mills Company Limited (Acquisition  and  Transfer  of  Undertakings)  Act, 1984. [1001E-F] 969      It appeared  to the  Court that the expression "forming part of"  appearing in  section 27 could not be so read with section 4(1)  as would  have the  effect of  restricting  or cutting down  the scope  and ambit of the vesting provisions in section 3(1). The expression "pertaining to" did not mean "forming  part   of".  Even  assuming  that  the  expression "pertaining to"  appearing in the first limb of section 4(1) means "forming part of", it would mean that only such assets as had  a direct  nexus with  the textile  mills, would fall under the first limb of section 4(1). The shares in question would still  vest in the Central Government under the second limb of section 4(1) of the Act since the shares were bought out of  the income of the textile mills and were held by the company in  relation to  such mills.  The shares  would also fall in  the second  limb of  section 3(1)  being right  and title  of   the  company   in  relation   to   the   textile mills.[1002C-E]      On the construction of sections 3 and 4, the Court came to the  conclusion that  the shares  vested in  the  Central Government even if sections 3 and 4 were read in conjunction with sections  7 and  8  of  the  Act  on  the  well-settled principles.  The   expression  ’in  relation  to’  has  been interpreted  to  be  words  of  the  widest  amplitude.  See National Textile  Corporation Ltd. and Ors. v. Sitaram Mills Ltd. (supra).  Section 4 appears to be an expanding section. It introduces  a deeming  provision, which  is  intended  to enlarge the  meaning of a particular word or include matters which  otherwise  may  or  may  not  fall  within  the  main provisions. It  is well-settled  that the word ’includes’ is an inclusive definition and expands the meaning. [1002F-G]      To leave  a  company,  the  net  wealth  of  which  was

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negative at  the time  of take-over  of the management, with the shares  held by  it as  investment in the other company, was,  in  the  Court’s  opinion,  not  only  to  defeat  the principles of  Articles 39(b)  and (c)  of the Constitution, but it  would permit  the company  to reap the fruits of its mismanagement. That  would be an absurd situation. It had to be borne  in mind  that the net wealth of the company at the time of take-over was negative; hence sections 3 and 4 could be meaningfully  read if all the assets including the shares were considered  to be  taken over  by the acquisition. That was the  only irresistible conclusion that followed from the construction of  the documents  and the  history of the Act, which expressly recites that it was to ensure the principles enunciated in  clauses (b)  and (c)  of Article  39  of  the Constitution. The  Act must  be  so  read  that  it  further ensures such  meaning and  secures the ownership and control of the  material resources  to the community to subserve the common good to see that the operation of the economic system does not result in injustice. [1003F-H; 1004A] 970      The  shares   vested   in   the   Central   Government. Accordingly, the  shares in  question  were  vested  in  the N.T.C. and  it had  right over  the said  34 per cent of the share-holdings. [1004B]      The 10,00,000  shares in  the Swadeshi Polytex Ltd. and 17,18,344 in  the Swadeshi  Mining and Manufacturing Company Ltd. held by the Swadeshi Cotton Mills vested in the Central Government under sections 3 and 4 of the Act. [1004B-C]      In view  of the  amplitude of  the language  used,  the immovable properties,  namely, the  Bungalow No.  1 and  the Administrative Block,  Civil Lines,  Kanpur, also  vested in the NTC. [1004C-D]      In that  view of the matter, in Transferred Case No. 13 of 1987,  the Writ  Petition No. 2214 of 1987 was dismissed. All interim  orders were  vacated. This would dispose of the various other  SLPs and CMPs connected with the Lucknow writ petition, being  SLP (Civil)  No.  4826  of  1987  filed  by Doypack Systems  Pvt. Ltd.,  SLP (Civil)  No. 5240  of  1987 filed by  NTC. CMPs  16918 and 16919 of 1987 in SLP No. 4826 of 1987  would stand disposed of in the above light. [1004D- F]      In the Transferred Case No. 14 of 1987 (in Suit No. 506 of 1987),  the Court  held that 10 lakhs and 17 lakhs equity shares and  the Swadeshi House at Kanpur and all the rights, title  and  interest  attached  therewith,  related  to  the textile undertaking  of defendant  No. 3  and they vested in NTC with  effect from 1st April, 1985, and defendants Nos. 3 and 4  were restrained  by a  decree of permanent injunction from dealing  with them  in any manner whatsoever. Defendant No.  2   was  restrained   by  permanent   injunction   from recognising defendants  Nos.  3  and  4  as  owners  of  the aforesaid shares and the Swadeshi House. [1004F-G]      Defendant No.  2 was  directed to  enter  the  name  of defendant No.  1, namely, NTC in its register of members and to treat  the said  defendant  No.  1  as  its  share-holder instead of  defendants Nos. 3 and 4 in respect of the shares of defendant  No. 2  held by them. In view of the provisions of law  under section 108 of the Companies Act, as there was transmission of  shares by  operation of  law, rectification was not necessary.[1004H; 1005A-B]      Civil Appeals  Nos. 577 to 579 of 1987 were disposed of in the  above terms and it was directed that the 17th annual general meeting  be held in accordance with law after giving proper notice under the 971

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Chairmanship of Shri Jaswant Singh. [1005C]      CMPs Nos. 12760 of 1987 in Civil Appeal No. 577 of 1987 would stand  disposed of  in terms  of  the  orders  in  the Transferred Case No. 14 of 1987 and it was directed that the Chairman  should   act  in  accordance  with  the  aforesaid decision and  NTC should  be considered  to be  entitled  to vote. CMP 16887 of 1987 was rejected. [1005D]      CMP 16888 of 1987 was an application by Doypack Systems Ltd.  to   be  impleaded   as  a   party-respondent  in  the Transferred  Case  No.  13  of  1987.  Doypack  Systems  was permitted to  argue and  was heard  as a  party. No  further order was necessary. [1005E]      CMPs Nos. 16889 and 17018 of 1987 were allowed. CMP No. 18268 of  1987 was  disposed of  with the  direction that no further documents  needed to  be inspected.  In view  of the orders, the  other CMPs  were  no  longer  necessary  to  be disposed of. [1005F]      Irrespective of any order passed by any court, the 17th annual general  meeting should  be held  in accordance  with law, to  be presided over by Shri Jaswant Singh, recognising NTC as the rightful owner of the disputed shares. [1005G]      Balkrishan Gupta  & Ors.  v. Swadeshi  Polytex Ltd. and Ors., [1985]  2 SCR  854; Swadeshi  Cotton Mills v. Union of India, [1981]  2 SCR  533; National  Textile Corporation  v. Sita Ram  Mills, [1986]  Suppl. SCC  117; Minerva  Mills. v. Union of  India, [1986]  4 SCC  222; Goverdhan Das Narasingh Das Daga v. Union of India, [1986] 2 SCC 249; Vidharba Mills Berar Ltd.  v. Union  of India,  [1986] 4  SCC  248;  Kumari Sunita Ramachandra  v. State  of  Maharashtra  and  another, [1986] 1 SCR 697 at 704, c to e; Doctor (Mrs.) Sushma Sharma v. State  of Rajasthan,  [1985]  3  SCR  243  at  263;  Fine Knitting Co. Ltd. v. Union of India, [1986] 4 SCC 276; State of West  Bengal v.  Union of India, [1964] 1 SCR 371 at 379, 380, 381  and 382;  The  Central  Bank  of  India  v.  Their Workmen, [1960]  1 SCR  200 at  217; Babaji Kondaji Garad v. Nasik Merchants  Co_operative Bank  Ltd., Nasik  and Others, [1984]  2  SCC  50,  Paragraphs  14  and  15;  Sanjeev  Coke Manufacturing Company  v. Bharat Coking Coal Ltd. & another, [1983] 1  SCR 1000  at 1029; K.P. Verghese v. The Income-tax Officer, Ernakulam  and another,  [1982] 1  SCR  629;  Chern Taong Shang  & Another, etc. etc. v. Commander S.D. Baijal & Ors., J.T.  1988 1 S.C. 202; Auckland Jute Co. Ltd. v. Tulsi Chandra Goswami,  [1949] F.C.R. 201 at 244; RM AR.AR.R.M.AR. Umayhal Achi v. Lakshmi Achi and Others, [1945] 972 F.C.R. 1;  Black_Clawson International  Ltd. v.  Papierwerke Waldhof Achaffenburg A.G.,[1975] A.C. 591 at 613; S.P. Gupta v. Union  of India  and others,  [1982] 2 S.C.R. 365 at 594; State  of  U.P.  v.  Raj  Narain,  [1975]  3  SCR  333;  The Elphinstone Spinning and Weaving Mills Company Ltd. v. Union of India  and others,  writ petition No. 2401 of 1983; State of Bihar  v. Kripalu  Shankar, A.I.R.  1987 SC 1554 at 1559; Bachittar Singh v. State of Punjab, [1962] Suppl. 3 SCR 713; Air Canada  and others  v. Secretary  of State  and another, [1983] 1  All E.R.  161 at  180; State  Wakf Board  v. Abdul Aziz, A.I.R.  1968 Madras  79, 81;  Nitai Charan  Bagchi  v. Suresh Chandra Paul, 66 C.W.N. 767; Shyam Lal v. M. Shyamlal A.I.R. 1933  All. 649,  76 Corpus  Juris Secundum  621; R.C. Cooper v. Union of India, [1970] 3 SCR 530 at 567, 568, 635; Khajamian Wakf  Estates, etc.  v. State of Madras & another, [1971] 2  SCR 790, at 796 B-E; Harakchand Ratanchand Banthia and others,  etc. v. Union of India and others, [1970] 1 SCR 479 at 496 P & G; Chandavarkar S.R. Rao v. Asha Lata, [1986] 4 SCC  447, 476;  44 Halsbury’s  Laws  of  England  4th  Ed. paragraph 856  at page  552; Nokes  v. Doncaster Amalgamated

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Colliery Limited,  [1940] Appeal  Cases 1014, 1022; Campbell College Belfast  v. Commissioner  of Valuation  for Northern Ireland, [1964]  1 W.L.R.  912; Clyde Navigation Trustees v. Laird, [1933]  8 A.C.  658; The  Corporation of  the City of Nagpur  v.   Its  Employees,   [1960]  2  SCR  942;  Vasudev Ramchandra Shelat  v. Pranlal  Javanand Thakar  and  others, [1975] 1  SCR 534, Palmer’s Company Law 24th Ed. (1987) Page 608; Mahadeo  Lal Agarwala and another v. The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. 1952 Cal. 58 and Unity Company Pvt.  Ltd. v.  Diamond Sugar Mills and others A.I.R. 1971 Cal. 18.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Special  Leave  Petition (Civil) No. 4826 of 1987 etc.      From the  Judgment and  order  dated  6.4.1987  of  the Allahabad High  Court in C.M.A. No. 4555 (W) of 1987 in W.P. No. 2214 of 1987.      K. Parasaran,  Attorney  General,  Milon  K.  Banerjee, Solicitor General,  F.S. Nariman,  Dr.  Y.S.  Chitale,  H.L. Anand, K.K.  Venugopal, A.K.  Ganguli, S.N.  Kacker, Anil B. Diwan, A.K.  Sharma, Harish  N. Salve, K.J. John, S. Swarup, T.V.S.N. Chari,  Vrinda Grover, Miss A. Subhashini, A. Subba Rao, R.B.  Mehrotra, B.B.  Sawhney, N.K. Sharma, P.V. Kapur, P.P. Malhotra,  Miss Annoradha  Dutt, P. Parmeshwaran, Navin Prakash and Naresh K. Sharma for the appearing parties. 973      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI, J. What falls for consideration in all these  matters is  a common  question  of  law,  namely, whether equity  shares in  the two  companies i.e. 10,00,000 shares in  Swadeshi Polytex  Limited and 17,18,344 shares in Swadeshi Mining  and Manufacturing  Company Limited, held by the Swadeshi  Cotton Mills,  vest in  the Central Government under Section 3 of the Swadeshi Cotton Mills Company Limited (Acquisition  and   Transfer  of   Undertakings)  Act,  1986 (hereinafter referred to as ’the Act’). The other subsidiary question is  whether the  immovable properties,  namely, the bungalow No.  1 and  the Administrative  Block, Civil Lines, Kanpur have  also vested  in the Government. The question as to one  more property known as Shrubbery property whether it has been  taken over or not is still to be argued and is not covered by this judgment.      In order to appreciate the question in these matters it has to  be borne  in  mind  that  there  were  six  original proceedings initiated  by various parties which gave rise to these  civil   appeals,  special  leave  petitions  and  the transferred  cases   to  this   Court.  These  six  original proceedings are as follows:      (1) On  18th of February, 1987 Suit No. 418 of 1987 was filed before  the Delhi High Court by one Naresh Kumar Parti against Dr.  Raja Ram Jaipuria, Swadeshi Polytex and others, praying for  an order  of injunction restraining the company from holding  the 17th  annual general meeting on the ground that 34%  shares in Swadeshi Polytex have vested in National Textile Corporation  (briefly referred to as NTC) in view of sections  3  and  4  of  the  said  Act.  In  this  suit  an application for  grant of  interim injunction was also filed praying that  in the event the annual general meeting of the company is  allowed to  be  held,  an  independent  Chairman should be  appointed  to  conduct  the  meeting.  Notice  in respect  of   the  said  application  was  served  upon  the respondents on  20th of  February, 1987.  On 4th March, 1987

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the Delhi  High Court  refused to  pass any order in view of the  order  already  passed  by  the  Allahabad  High  Court mentioned hereinafter.  Against this order of the Delhi High Court, two  special leave petitions were filed in this Court one by Doypack Systems Pvt. Ltd., which was defendant No. 10 in the  Delhi suit.  (Consequent upon  grant of  leave,  the special leave petition came to be registered as Civil Appeal No. 577 of 1987). The other special leave petition was filed by the  plaintiff in  the Delhi  suit, Naresh  Kumar  Parti. (Consequent upon  grant of leave, the special leave petition came to be registered as Civil Appeal 974 No. 578  of 1987). On 24th of February, 1987 one Hari Prasad Aggarwal, filed  a suit  being Case  No. 183  of 1987 in the Court of Third Additional Civil Judge, Kanpur praying, inter alia, that  Shri Raja  Ram Jaipuria  should not preside over the 17th  annual general  meeting of the Company. On 27th of February, 1987, the application for interim injunction filed in the  said suit  was dismissed by the learned trial Judge. In appeal  which  is  not  yet  numbered  preferred  by  the plaintiff before  the Allahabad  High  Court  an  order  was passed by  the Court on 2nd March, 1987 appointing Shri M.P. Wadhawan as the Chairman of the said annual general meeting. The consenting  parties to  the said  proceedings before the Allahabad  High  Court  were  Shri  Raja  Ram  Jaipuria  and Swadeshi Polytex  Limited. Against  this order of 2nd March, 1987 passed by the Allahabad High Court M/s. Doypack Systems Private Limited  preferred a  special leave petition in this Court. Leave  was granted  and as  mentioned hereinbefore it was registered  as Civil  Appeal No.  577 of 1987. The three special leave petitions were heard together as Civil Appeals Nos. 577,  578 and  579 of  1987 and  were disposed  of by a common order  on 6th  March, 1987  by this  Court appointing Shri Jaswant  Singh as  the  Chairman  of  the  said  annual general meeting.      On 26th  of February,  1987 another suit being Suit No. 506 of 1987, was filed in the Delhi High Court by one Mukesh Bhasin praying,  inter alia, for a declaration that Swadeshi Cotton and Swadeshi Mining had no right in respect of 34% of the shareholdings  in Swadeshi  Polytex and  that  the  said shares were  vested in  NTC by virtue of the said Act. By an order dated 9th March, 1987 the Delhi High Court disposed of that application.  The learned  Judge in that case was prima facie satisfied that the plaintiff in that case was entitled to an  injunction claimed  by  him  in  the  meeting  to  be presided over  by Shri  Jaswant Singh. He granted injunction restraining the  defendants Nos.3  and 4  in that  suit from exercising any  right whatsoever  attached to  34% shares of defendant No.2  held by  them and  particularly  any  voting rights in  the annual general meeting which was scheduled to be held  on 9th  of March,  1987 till decision of that suit. This order  was brought  to the  notice of this Court by CMP forming part  of Civil Appeal Nos. 577-79 of 1987. On 9th of March, 1987 on that CMP this Court passed an order directing that NTC,  Swadeshi Cotton and Swadeshi Mining, all shall be entitled to  vote at  the annual  general  meeting  and  the question as to who were the rightful voters would be decided by the Chairman of the meeting. It was further directed that the Chairman  would keep these votes separately. This is the Transferred Case  No. 14  of 1987  herein. On  7th of March, 1987 one Mukesh Jasnani a shareholder in Swadeshi 975 Polytex filed  a writ  petition in  the Allahabad High Court (Lucknow Bench).  The High  Court by  its order dated 7th of March, 1987  dismissed that writ petition. The High Court in

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the said  order observed  that Swadeshi  Cotton and Swadeshi Mining would  be entitled to vote at the 17th annual general meeting in  respect of  their shares which, according to NTC had vested  in them.  Against this  order dated  7th  March, 1987, Doypack  Systems preferred  a special  leave  petition being SLP  (Civil) No. 3112 of 1987. On 9th March, 1987 this Court passed orders in this special leave petition directing that the  meeting would  be held  under the  Chairmanship of Shri Jaswant  Singh notwithstanding  any order  made by  any court, including  the order  dated 3rd March, 1987 passed by the Division  Bench of  the Allahabad High Court. This Court also  vacated   the  operative  portion  of  the  directions contained in  the order  dated 7th March, 1987 passed by the Allahabad High Court.      On  6th   of  April,  1987  M/s.  Swadeshi  Mining  and Manufacturing Company  filed a  civil writ petition No. 2214 of 1987 in the Allahabad High Court (Lucknow Bench) praying, inter alia,  for stay  of the operation of the letters dated 24/30th March,  1987 addressed by NTC to Swadeshi Mining and Manufacturing and  Swadeshi Cotton  Mills  Company  Limited, calling  for   an  Extraordinary   General  Meeting  of  the shareholders for removal of the Directors of Swadeshi Mining and Manufacturing Company Limited. The Division Bench of the High Court  (Lucknow Bench) passed an order on 6th of April, 1987, staying the operation of the said letters addressed by NTC to  the companies.  Against  that  order,  M/s.  Doypack Systems Pvt. Ltd. filed a Special Leave Petition No. 4826 of 1987. NTC  also filed  a special  leave petition against the said order,  being SLP  No. 5240 of 1987 in this Court. Both these petitions  were heard  by this Court on 5th May, 1987. By an order passed on 5th May, 1987 this Court directed that Suit No.  506 of 1987 filed in the Delhi High Court and Writ Petition No.  2214 of  1987 pending  in the  Allahabad  High Court  (Lucknow   Bench)  be   transferred  to  this  Court, (subsequently, registered  as Transferred  Cases Nos. 14 and 13 of  1987 respectively).  Consequent upon leave granted by this Court  by the  order dated  21st of  January, 1987  NTC filed a civil suit in the District Court at Kanpur.seeking a declaration of its title in respect of Shrubbery property in Kanpur. The  learned Trial  Judge refused  any interlocutory injunction in  the said  suit against  which an  appeal  was preferred before  the High Court of Allahabad which was also declined and, consequently, NTC filed Special Leave Petition No. 7045  of 1987  in this  Court. This application is still pending and  is awaiting  disposal. In this background these matters will have to be disposed of. 976      Swadeshi Mining  and Manufacturing  Co. Ltd. and others submitted that  these shares  did not  vest in  the  Central Government. The  main thrust  of Shri  Nariman’s contention, who appeared  on their behalf, was that section 3 of the Act provided that every textile undertaking and right, title and interest of  the company, i.e. Swadeshi Cotton Mills Company Limited vested  in  the  Central  Government.  The  "textile undertakings" mentioned  in section  3 included  all  assets ’pertaining’ to  the textile undertaking as per section 4 of the Act. It is common ground that whether a particular asset is part of the textile undertaking and vests under section 3 or not,  has to be considered in the context of the Act with reference to the language used in section 4 of the Act. Shri Nariman submitted  that there  are different  modes by which Parliament  can  resort  to  nationalisation.  These  modes, according to him, are:      (a) acquisition of 100% shares of the Company;      (b) all assets under the ownership, possession or

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    control of the company being vested in the Government;      (c) only  those assets  in the ownership, possession or      control of  the company in relation to the undertakings      which are  taken over  or "all properties pertaining to      the undertaking"  vest in  the Government. According to      him, the  expressions "pertaining  to" or  "in relation      to" are  expressions of  limitation and restriction, in      the absence  of which  each  and  every  asset  of  the      company  would  have  vested  in  the  Government.  The      background  and  sequence  of  events  leading  to  the      enactment of  this Act  through which Shri Nariman took      us in  detail and  it is  useless to  set  them  up  in      extenso, he  submitted that the shares in question were      all  along   being  considered   and  treated   as  not      comprising part of the textile undertaking.      He referred  to the  order dated  13th of  April,  1978 issued by  the Central  Government under section 18AA of the Industries   (Development    and   Regulation)   Act,   1951 (hereinafter referred  to as  ’the IDR Act’). This order did not purport  to take  over those  shares  held  in  the  two companies by  the Swadeshi  Cotton Mills Company Limited. He also drew our attention to Volume III pages 53 and 54 of the present volumes  before  us,  which  is  the  reply  of  the Minister  of  Law,  Justice  and  Company  Affairs.  It  was clarified to  the Parliament  that the  shares were distinct from the  undertakings of  the company  whose management was taken over. On 27th of March, 1979 in answer to a question 977 the Minister  stated that  apart from  the six  undertakings taken  over  and  presently  run  by  the  National  Textile Corporation Limited,  the business  of the company comprised of:      (i) Investments in Swadeshi Polytex Limited, Ghaziabad.      (ii) Investments  in Swadeshi  Mining and Manufacturing Company Limited, a subsidiary company.      (iii) Land development business.      He drew our attention to the letter dated 9th of April, 1979 from  the Chairman,  Cotton Mills  Ltd. in  answer to a letter by  the  Director,  Department  of  Company  Affairs, stating that the shares in question and the voting rights in respect thereof  continued to  vest  in  the  company,  i.e. Swadeshi Cotton  Mills Limited in spite of the taken over of the management.      Before  we  proceed  further  we  must  deal  with  the decision of  this Court  in Balkrishan  Gupta and  others v. Swadeshi Polytex Ltd. and others, [1985] 2 S.C.R. 854. There it was  observed that the fact that 3,50,000 shares had been pledged in  favour of  the Government of Uttar Pradesh would not make  any difference.  The contention  that was urged on behalf of  the appellant  therein, namely  Balkrishan  Gupta related to  the effect  of an  order  made  by  the  Central Government on  13th of  April, 1978 under section 18AA(1)(a) of the IDR Act taking over the management of Swadeshi Cotton Mills along  with five  other industrial  units belonging to the Company  which was  the subject  matter  of  dispute  in Swadeshi Cotton Mills v. Union of India, [1981] 2 S.C.R. 533 and the  order of extension passed by the Central Government on 26th  November, 1983  which was  the  subject  matter  of dispute in  that case  before this  Court It  was  urged  in Balkrishan v.  Swadeshi Polytex  (supra) on  behalf  of  the appellants therein  that on  the passing of the above orders under Section  18AA(1)(a), the Cotton Mills Company lost its voting rights  in respect  of the  shares in  question. This Court held  that was not so. This Court emphasised that what was taken  over was  the management  of the  six  industrial

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units referred  to therein  and not  all the  rights of  the Cotton Mills  Company. The shares belonged, it was observed, to the  company and  the orders  referred to above could not have any  effect on  these. In that context, it was observed that the  Department of Company Affairs, Government of India rightly expressed  its view  in the  letter written  by  the Director in  the Department  of Company  Affairs on  9th  of April, 1979 to the 978 Chairman of  the Cotton Mills Company that the voting rights in respect of these shares continued to vest with the Cotton Mills Company  and the  manner in  which those voting rights were to  be exercised  was to  be determined by the Board of Directors of  the Cotton Mills Company. Hence the passing of the orders  under section  18AA(1)(a) of  the IDR Act had no effect on  the voting rights of the Cotton Mills Company. It was further  observed that  the Polytex  Company had in that case rightly  treated the  registered holder i.e. the Cotton Mills Company  as the owner of the shares in question and to call the  meeting in accordance with the notice issued under section  169  of  the  Companies  Act,  1956.  Therefore,  a challenge to  the validity  of the meeting was negatived. As good  deal   of  reliance   was  placed  on  behalf  of  the petitioners on this decision, it must be emphasised that the decision must,  however, be understood in the context of the facts and  the language  used  in  the  order  passed  under section 18AA  of the IDR Act whereby only the management had been taken  over and  not the rights of the company therein. But by  the present  Act in  question on  the appointed  day "every  textile  undertaking"  and  "the  right,  title  and interest of the company in relation to every textile mill of such textile undertakings" were transferred to and vested in the Central  Government and  such textile undertakings would be deemed  to include  "all assets" and so in the context of this  provision  the  reference  and  the  reliance  on  the decision of  the  Balkrishan  Gupta  &  others  v.  Swadeshi Polytex Ltd.  and others  (supra) is  not, in  our  opinion, appropriate. It  is true  by the IDR Act only management was taken over, but a further point was sought to be built up on behalf of  the petitioners  that the  Act  in  question  was passed to regularise what was taken over. So because of this decision shares  were not  taken over by the Act. In view of the significant  difference between  the objects  of  taking over of  the assets  and the  taking over  of the management this submission has to be stated to be rejected.      Reliance was  also placed  before us on the decision of the Delhi  High Court  in Writ Petition No. 408 of 1978. The Delhi High  Court held  that the  shares did not vest in the Government under  the order dated 13th of April, 1978 issued under section  18AA of  the IDR  Act. This  judgment of  the Delhi High Court was challenged in appeal before this Court. This Court in its judgment in Swadeshi Cotton Mills v. Union of India (supra) set aside the order of take-over dated 13th April, 1978  for violation  of  the  principles  of  natural justice. But  this Court  did not  give any finding or order with regard to the finding of the High Court that the shares were not included in the take-over order. 979      It was  further urged  before  us  that  this  Act  was preceded by  an  ordinance  namely,  Swadeshi  Cotton  Mills Company Limited  (Acquisition and  Transfer of Undertakings) Ordinance, 1986  which was  promulgated on  19th  of  April, 1986.  Section   10  of   the  ordinance  entitled,  it  was submitted, NTC  to exercise control over the business of the undertakings taken  over. the  NTC passed  an order  to this

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effect on 25th April, 1986, but did not purport to take over the shares, according to Shri Nariman. We cannot attach much significance to that fact as Shri Nariman sought us to do.      Shri Nariman  referred us  to the  Statement of Objects and Reasons  appended to  the Bill and urged that it was not intended that  the shares  were included in the undertaking. He submitted  that the  Statement  of  Objects  and  Reasons showed that  the acquisition  of the  undertaking had  to be resorted to since the order of taking over the management of the company  issued under  section 18AA of the IDR Act could not be continued any further.      The preamble  to the  Act, however, reiterated that the Act provided  for the  acquisition and  transfer of  textile undertakings and  reiterated only  the historical facts that the management  of the  textile undertakings  had been taken over by the Central Government under section 18AA of the IDR Act and  further that  large sums of money had been invested with a view to making the textile undertakings viable and it was necessary  to  make  further  investments  and  also  to acquire the  said  undertakings  in  order  to  ensure  that interests of general public are served by the continuance of the undertakings.  The Act  was passed to give effect to the principles specified in clauses (b) and (c) of Article 39 of the Constitution. In our opinion, this was indicative of the fact that shares were intended to be taken over.      Shri Nariman, however, contended that NTC on 17th June, 1986 had  issued an  order under  section 6 of the Ordinance transferring  four   of  the  textile  undertakings  to  its subsidiary, the  NTC, U.P.  Limited. According  to him,  the shares were  not purported  to  be  transferred  under  this Order. This, however, in our opinion, is non sequitur.      It appears  from the  written statement filed by NTC on 8th of  February, 1987  in the suit filed by one G.G. Bakshi in Ghaziabad  Court, it was claimed that NTC was entitled to take over  company’s  shares  and  investments.  On  24/30th March, 1987  NTC issued  notice to  the petitioners  1 and 2 stating that  they were  entitled to shares. It was urged by Shri Nariman that this belated assertion indicated that the 980 shares were  not intended to be taken over. We are unable to accept this  suggestion or  to draw  that inference. It does not logically follow.      On the  date of  the  take-over  of  the  undertakings, according to  Shri Nariman,  10,00,000  shares  in  Swadeshi Polytex Limited  were attached  for recovery  of electricity dues of  Swadeshi Cotton  Mills  and  3,50,000  shares  were already pledged  with  the  State  Government  of  U.P.  for securing the loans and advances made by the State Government for payment  of wages.  These dues  fall in  Part II  of the Schedule to  the Act and are not payable under section 25 of the Act  by the  Government.  Shri  Nariman  submitted  that compensation payable under the Act was not enough to pay all the dues  falling in  Part I.  He drew  our attention to the Financial Memorandum  of the  Bill  which  showed  that  the Government would  have to pay a further sum of Rs. 15 crores over and  above the  compensation amount.  It could not have been  the   intention  of   the  Act   to  discharge   these encumbrances, according  to him, if they were to vest in the Central Government under section 3 of the Act and the result of which would be that the State of U.P. and the Electricity Board would  not get  anything towards  their large dues. We are unable  to accept this submission. This, in our opinion, is not the proper approach to the construction of the Act on the question whether the shares were taken over or not.      Shri Nariman submitted that while applying the rules of

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construction of  contemporanea expositio,  it must  be  held that the  shares in  question did  not vest  in the  Central Government under  section 3  of the Act. This contention was to  be   supported  from  the  external  aids,  namely,  the background  and  history  of  the  legislation.  There  were internal aids  in the Act itself to support this contention. The internal  aids, according to Shri Nariman, were-(a) long title of  the Act which used the expression "certain textile undertakings"   and    "ensuring   contiuned    manufacture, production and  distribution of different varieties of cloth and yarn";  (b) the  Preamble to  the Act  also  emphasises, according to  Shri Nariman,  that the  textile  undertakings which were taken over under section 18AA should be continued for purposes  of manufacture, production and distribution of cloth and  yarn; (c)  He further  submitted that the Objects and Reasons  appended to  the Bill also supported that view; (d) section  2(k) of  the Act  enumerated only  six  textile undertakings which alone were taken over by the order issued under section  18AA; (e)  sections 7  and 8 also provided an intrinsic aid to the construction of section 4, according to him. Section 7 provided that an amount equal to the value of the assets which will vest in the NTC, would be deemed to be the Central Government’s 981 contribution to  the equity  capital of  NTC and  NTC  shall issue shares  to the Government having a face value equal to the amount  specified in  section 8. The amount equal to the value of the assets was Rs.24.32 crores, which was the share capital of  the Government  in NTC.  This figure of Rs.24.32 crores does  not take  into account  the value of the shares and hence  the shares did not vest under sections 3 and 4 of the Act,  according to  him. (f)  the expression "pertaining to" appearing  in section  4(1)  means  "forming  part  of". Therefore, only  those  assets  which  formed  part  of  the textile undertakings  could vest  in the Central Government, it was  submitted by  Shri Nariman.  It was  for this reason that section  25 of  the Act,  while dealing with penalties, used the  expression "assets  forming part  of" the  textile undertakings.      Shri Nariman  further submitted  that Swadeshi  Polytex Limited  and   Swadeshi  Mining  and  Manufacturing  Company Limited were two separate undertakings distinct from the six textile undertakings  belonging  to  Swadeshi  Cotton  Mills Company  Limited.   Acquisition  of   these  shares   having controlling interests  in the  said two  companies was never intended and  could never  be said to be within the scope of the Act.  The expression  "in relation  to the  six  textile undertakings" appearing  in sections 3 and 4 of the Act, was an expression of limitation, according to him, indicative of the intention  of acquiring of only the textile undertakings and no  other. There existed no public purpose, according to Shri  Nariman,   for  acquiring  these  shares.  The  public purposes mentioned  in the  Act with  reference  to  Article 39(b) and (c) related to the acquisition of only the textile undertakings of Swadeshi Cotton Mills and not acquisition of the synthetic  fibre undertakings  of  Swadeshi  Polytex  or sugar undertakings  of  Swadeshi  Mining  and  Manufacturing Company Limited.      Dr. Chitale  appearing on behalf of Swadeshi Mining and Manufacturing Company  Limited (as respondent in SLP (Civil) No. 5240  of 1987  in which NTC is the petitioner) supported Shri  Nariman  and  advanced  certain  arguments.  His  main arguments were:      (1) Swadeshi  Polytex Limited  and Swadeshi  Mining and      Manufacturing  Company   Limited  were   two   distinct

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    undertakings   different    from   the    six   textile      undertakings belonging to Swadeshi Cotton Mills Company      Limited. Section  3 of the Act, therefore, according to      him, could  not  be  so  construed  as  to  enable  the      Government to  indirectly acquire  altogether different      undertakings belonging to a different company. 982      (2) Swadeshi  Mining and  Manufacturing Company Limited      had also  coal-mines. When Coal-mines (Nationalisation)      Act, 1973 was passed with reference to sections 3 and 6      thereof, it  were the  coal-mines belonging to the said      company along with the right, title and interest of the      owners in  relation to  the coal-mines  which vested in      the Central Government by operation of the Act, we were      reminded.      (3) Dr.  Chitale submitted  that the  Act with which we      are concerned  uses the  expression "pertaining  to" in      section 4,  which according to him is narrower than the      expression "in  relation to"  used in  section 3 of the      Coal-mines (Nationalisation)  Act, 1973. When the coal-      mines were  nationalised,  the  sugar  undertakings  of      Swadeshi  Mining   were  not  taken  over  since  these      constituted separate  undertakings  distinct  from  the      coal-mines. He  referred to Entries 655, 656 and 657 of      the Schedule  to the  Coal-mines (Nationalisation) Act,      1973.      (4)  Dr.   Chitale  submitted   that   the   expression      "investment" may belong to a fund which may be created,      the interests  of which  may be  used  for  payment  of      gratuity  or  provident  fund  to  the  employees.  The      expression  "investment"   cannot  be  applied  in  the      context of the shareholdings of a separate undertaking,      according to him.      Shri S.B.  Mukerjee, appearing  on behalf  of  Swadeshi Cotton Mills  had relied  on the  decision of the Delhi High Court, See  Volume III  pages 64  to 169, which according to him, clearly  held that the shares in question were not part of the  textile undertakings  and, in  fact, the said shares were not  taken over along with the six textile undertakings belonging to  Swadeshi Cotton  Mills Limited,  which we have discussed. Shri Mukerjee further relied on the clarification given by  the Company Law Board which showed that the voting rights in  respect  of  the  shares  continued  to  vest  in Swadeshi Cotton  Mills and  not in  NTC. He  referred to the decision in  Balkrishan Gupta and others v. Swadeshi Polytex Ltd. and another (supra), which has also been discussed. The expression "relating  to" and  "pertaining to"  are words of limitation and they cannot be so construed as to take within their  fold   shares  held  by  Swadeshi  Cotton  Mills,  an independent company doing its business, according to him.      Learned Solicitor  General of India appearing on behalf of the  National Textile  Corporation  in  all  these  cases submitted that the facts 983 stated by way of background and the sequence of events up to the date  of enactment  of the  Act were not relevant to the decision as  to the  scope, ambit  and effect of the vesting provisions contained  in sections  3 and  4 of  the Act. The sequence of  events narrated by the petitioners prior to the enactment of  the Act  all related to the order of take-over of the  undertakings of Swadeshi Cotton Mills Company issued on 13th April, 1978 by the Central Government in exercise of its powers under section 18AA of the IDR Act. The object and purpose of  the said order of take-over of management of the textile  undertakings  was  completely  different  from  the

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object and  purpose of  the Act which related to acquisition and transfer of the undertakings. We agree. The scope of the vesting provisions  contained in  section 3 of the Act would have to be determined per force of its own language employed by Parliament  and not  with reference  to  what  transpired either before  or  after  the  order  of  take-over  of  the management dated  13th April, 1978 passed under section 18AA of the IDR Act. Section 3 of the Act, according to Solicitor General, contained  the vesting  provisions as  was  evident from its  own language  and  also  from  the  marginal  note appended thereto.      For determining the question involved in these matters, it is  necessary to  bear in mind the relevant provisions of law. The  preamble  to  the  Act  in  question  provided  as indicated before  that this  was an  Act for the acquisition and transfer of certain textile undertakings of the Swadeshi Cotton Mills  Company Limited  with a  view to  securing the proper management of such undertakings so as to subserve the interests of  the general  public by  ensuring the continued manufacture,  production   and  distribution   of  different varieties of cloth and yarn. The preamble further reiterated that it  was to  give effect  to the  policy  of  the  State towards securing the principles specified in clauses (b) and (c) of  Article 39  of the  Constitution. It reiterated that large sums  of money had been invested with a view to making the said  textile undertakings viable. It further reiterated that large  sums of  money were necessary for the purpose of securing  the   optimum   utilisation   of   the   available facilities.      Section 3  of the  said Act  provides for  transfer and vesting of  the textile  undertakings. The material portions of sections 3 and 4 are as follows:           "3(1)  On   the  appointed   day,  every   textile           undertaking and  the right,  tilte and interest of           the Company  in relation  to  every  such  textile           undertaking shall, by virtue of this Act, 984           stand  transferred  to,  and  shall  vest  in  the           Central Government.           (2) Every  such textile  undertaking which  stands           vested in the Central Government by virtue of sub-           section (1)  shall, immediately  after it  has  so           vested, stand  transferred to,  and vested  in the           National Textile Corporation.           4.(1) The  textile  undertakings  referred  to  in           section 3  shall be  deemed to include all assets,           rights,  lease-holds,   powers,  authorities   and           privileges   and   all   property,   movable   and           immovable, including  lands, buildings, workshops,           stores, instruments, machinery and equipment, cash           balances, cash on hand, reserve funds, investments           and  book   debts  pertaining   to   the   textile           undertakings and  all other  rights and  interests           in, or  arising  out  of  such  property  as  were           immediately  before   the  appointed  day  in  the           ownership, possession,  power or  control  of  the           Company in  relation  to  the  said  undertakings,           whether within  or outside India, and all books of           account, registers  and  all  other  documents  of           whatever nature relating thereto.           (2)All property  as aforesaid which have vested in           the Central  Government under  sub-section (1)  of           section 3  shall, by  force of  such  vesting,  be           freed and  discharged from  any trust,  obligation           mortgage, charge,  lien and all other encumbrances

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         affecting it,  and any  attachment, injunction  or           decree or  order of  any court  or other authority           restricting the use of such property in any manner           shall be deemed to have been withdrawn.           (3)...............           (4)...............           (5)...............           (6)...............      Section 7  deals with  the shares  to be  issued by the National Textile  Corporation for  the value  of the  assets transferred to  it by  the Central  Government. It  reads as follows: 985           "7. An  amount equal to the value of the assets of           the textile undertakings transferred to and vested           in the  National Textile  Corporation  under  sub-           section (2) of section 3 shall be deemed to be the           contribution made by the Central Government to the           equity   capital    of   the    National   Textile           Corporation; and for the contribution so made, the           National  Textile   Corporation  shall  issue  (if           necessary  after   amending  its   memorandum  and           articles of association) to the Central Government           paid up  shares, in  its equity  capital having  a           face  value  equal  to  the  amount  specified  in           section 8."      Section 8 which is material provides as follows:           "8. For  the transfer  to,  and  vesting  in,  the           Central  Government,   under  section  3,  of  the           textile  undertakings  of  the  Company,  and  the           right,  title  and  interest  of  the  Company  in           relation to  such  undertakings,  there  shall  be           given by  the Central Government to the Company in           cash and in the manner specified in Chapter VI, an           amount of rupees twenty-four crores and thirty-two           lakhs."      Section 10 of the Act deals with the management etc. of the textile  undertakings. Section  12 of the Act deals with the provisions  relating to  the employees  of  the  textile undertakings. Section  24  of  the  Act  provides  that  the provisions of  this Act  shall have  effect  notwithstanding anything inconsistent  therewith contained  in any other law for the  time being  in force  or in  any instrument  having effect by  virtue of any law, other than this Act, or in any decree or  order of  any court, tribunal or other authority. Section 25  provides for  the assumption of liability. It is the true  effect and purport of these sections that requires consideration and adjudication.      It appears  to us  that section 27 of the Act where the expression "forming  part of" is used, would have no bearing on  the  vesting  provisions  and  its  wide  language.  The expression  "forming  part  of"  according  to  the  learned Solicitor General  is merely descriptive of what is actually vested under the vesting provision. The properties which, on the appointed  day, i.e.  with effect  from 1.4.1985, became part of  the taken  over properties which might not be dealt with in any manner contrary to the provisions of the Act.      Shri K.K.  Venugopal, appearing  on behalf  of  Doypack Systems 986 Private Limited in Transferred Case No. 13 of 1987 submitted that  the  present  case  is  directly  covered  by  several decisions of  this  Court.  He  referred  to  the  following decisions National  Textile Corporation  v. Sita  Ram Mills, [1986] Suppl.  S.C.C. 117;  Minerva Mills v. Union of India,

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[1986] 4  S.C.C. 222;  Goverdhan Das  Narasingh Das  Daga v. Union of  India, [1986]  4 S.C.C.  249; Vidharba Mills Berar Ltd. v.  Union of  India,  [1986]  4  S.C.C.  248  and  Fine Knitting Co. Ltd. v. Union of India, [1986] 4 S.C.C. 276.      It was  emphasised that  section 3  of the Act provided that in  addition to  the textile  undertaking  "the  right, title and  interest of the company in relation to every such textile undertaking  is to vest". Therefore, it was urged by Shri Venugopal  that so  applying the  five decisions  cited earlier, if  the shares  were held for the benefit of and/or utilised for the textile undertakings they would vest in the Government under  the provisions  of section  3 of  the  Act itself. He emphasised like others that "pertaining to" would mean "in relation to" in the species of properties mentioned in section 4(1) of the Act. He further submitted that if the amount  of  compensation  declared  to  be  payable  to  the erstwhile owners  of the  undertakings acquired,  was a test for deciding  whether a  particular piece  of property  also stood acquired  or not, then it was submitted that it may be open to  the erstwhile  owners to  contend that even what is expressly stated  to have  been vested  in  the  Government, would not vest in the absence of compensation paid. That was untenable.      In any  event as  against the clear words, according to Shri Venugopal, of section 3 and section 4 read with section 2(k), the  failure to provide for compensation for three out of the six undertakings would not result in three out of six undertakings  being  not  vested  in  the  Government.  Shri Venugopal submitted that the antecedent computation of value by the  executive is  wholly irrelevant  for determining the intention of Parliament. Reference was made to Kumari Sunita Ramachandra v.  State of  Maharashtra and  another, [1986] 1 S.C.R. 697 at 704, c to e and Doctor (Mrs.) Sushma Sharma v. State of Rajasthan, [1985] 3 S.C.R. 243 at 263.      Shri Anil  B. Diwan on behalf of Mukesh Bhasin, in Suit No. 506  of 1987 (Transferred Case No. 14 of 1987) submitted that the  Objects and  Reasons of  the mover of the Bill are not  admissible   as  aids   to  construction  since  it  is impossible to  contend that  the Objects  and Reasons in the minds of  some officials of the Government before the matter is discussed  by the  Cabinet, would  at  all  be  relevant. Reference 987 may be  made to  State of  West Bengal  v. Union  of  India, [1964] 1  S.C.R. 371 at 379, 380, 381, 382; The Central Bank of India  v. Their  Workmen, [1960]  1 S.C.R. 200 at 217. It was further submitted that subsequent documents and/or views of the  officers of  the Government  are not  admissible  as legitimate aids  to the  construction of a statute. Reliance placed by  the petitioners on the documents at pages 452-456 of Volume II as an aid to the interpretation or construction of sections 3 and 4 of the Act was totally misconceived. See the observations  in Babaji Kondaji Garad v. Nasik Merchants Cooperative Bank  Ltd., Nasik and others, [1984] 2 S.C.C. 50 paragraphs 14  and 15 and Dr.(Mrs.) Sushma Sharma and others v. State of Rajasthan and others (supra). It was, therefore, urged that  the material not availed by the Parliament could never affect  or influence  the collective  intention of the Parliament.  The   authentic  voice  is  only  that  of  the Parliament. Reference  may be  made to  the observations  in Sanjeev Coke  Manufacturing Company  v. Bharat  Coking  Coal Ltd. and  another, [1983]  1 S.C.R.  1000 at  1029.  It  was submitted that  the documents  which were  prepared for  the submission to  the Cabinet  and which  related to  the inner working  of   the  Government  were  not  admissible  and/or

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legitimate aids to the construction of statute and therefore not relevant  in deciding  which assets of SCM vested in the Central Government under sections 3 and 4 of the Act. It was further submitted that etymological and plain meaning of the word  "relation"   is  relation  by  birth  or  relation  by sacrament like  marriage or relation in the form of business connection or  dealings. It  was further  submitted that  an asset or  investment which  is created  from the earnings of the undertakings  is clearly  related to the undertakings by its inception or birth. An asset or investment, according to Shri Anil  B. Diwan,  which is  utilised to  preserve and/or give vitality  to  an  undertaking  is  equally  related  or pertained to the same.      Shri A.K.  Ganguli, counsel appearing on behalf of M/s. Doypack Systems  Pvt. Ltd. in SLP (Civil) Nos. 4826 and 7045 of 1987  submitted that even assuming (though not admitting) that the  expressions "pertaining  to" and  "in relation to" appearing in  sub-section (1)  of section  4 of the Act have limited or  restricted meaning,  by the  plain  language  of section 3, which is the vesting provision read with sections 2(k) and 4(1), the shares in question would also vest in the Central Government. Under section 3 of the Act what vests in the Central  Government on  the appointed day are: (i) every textile undertaking;  and (ii) the right, title and interest of  the   company  in   relation  to   every  such   textile undertaking. The meaning, scope and effect of the expression "textile undertaking"  appearing in  section 3(1) of the Act would 988 have to be understood by a combined reading of sections 2(k) and 4(1)  of  the  Act.  Section  2(k)  while  defining  the expression "textile  undertaking",  identifies  the  textile mills concerned  while section  4(1), by adoption of deeming provisions, spells  out the properties which vest along with the concerned  textile mills by reason of their direct nexus with the mills.      The expression  "forming part  of" appearing in section 27, according  to Shri Ganguly, is merely descriptive of the properties already  vested in  the Central  Government under section 3.  Section  1(2)  of  the  Act  provided  that  the provisions of  the Act  including sections  3 and 4 shall be deemed to  have come  into force retrospectively with effect from 1.4.1985  and sections  27 and 28 shall come into force at once.  Thus the  properties which  stood  vested  in  the Central Government with effect from 1.4.1985 already "formed part of"  the textile  undertakings on  the date  of the Act when section 27 came into force (i.e. w.e.f. 30.5.1986). The properties which already stood vested and formed part of the textile undertakings  could not  be dealt with in any manner other than  those permissible  under  the  Act.  Section  27 containing the  penalty provisions could, therefore, validly and justifiably  be given effect to after it came into force on 30.5.1986  when the  Act was  enacted. The meaning of the expression "pertaining  to" appearing  in the  first limb of section  4(1),   therefore,  cannot  be  gathered  from  the language employed in section 27.      Shri Ganguli  further submitted  that the first part of section 7 provided that the amount equal to the value of the assets of  the textile  undertakings which  is vested  under section 3  would be  the contribution  of Central Government made  to   the  equity   capital  of  the  National  Textile Corporation. The  second part of section 7 provided that for the contribution so made by the Central Government, National Textile Corporation  shall issue  to the  Government paid-up shares in  its equity  capital having  a face value equal to

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the amount specified in section 8.      If the  legislative intention,  it was  urged  by  Shri Ganguli, was  that the  National Textile  Corporation  shall issue paid-up  shares (in its equity capital) to the Central Government of  the value  equal to  the value of the assets, which was  deemed to  be the  contribution  of  the  Central Government, then  the language  of the  second part  of this section would  have been  the same  as used  in the  opening words of section 7 itself.      Shri S.N.  Kacker elaborated  the  submissions  of  the petitioner 989 mentioned hereinbefore  and submitted  that the shares could not  have   been  intended   in  view   of  the   facts  and circumstances of  the case,  the language  used and the data available to take over by sections 3 and 4 of the Act.      Before we  deal with  the  main  question  we  have  to consider the application made by Shri Nariman for production of certain  documents. The  production of  the documents has been resisted  by the learned Attorney General on the ground that these  are not  relevant and in any event most of these documents are privileged being part of the documents leading to the  tendering of  the  advice  by  the  Cabinet  to  the President  as   contemplated  by   Article  74(2)   of   the Constitution. The  petitioner in  Transferred Case No. 13 of 1987, has  sought production of certain documents enumerated at page 82, para 85 of Vol. IV, which are as follows:      (1) Proposal  of the  Textile Ministry  in  respect  of      Nationalisation  of   the  six   textile   undertakings      including the notes and memorandum specially in respect      of  calculation   and  determination   of  assets   and      liabilities in  respect of  six textile undertakings of      Petitioner No. 2 in the year 1983-84 and the opinion of      the Law Department then obtained.      (2) Proposal  of the  Textile Ministry  in  respect  of      nationalisation of  the six textile undertakings in the      year 1985-86  including all  notes  and  memorandum  in      respect thereof.      (3) Opinion  of  Law  Department  as  rendered  to  the      Textile Ministry.      (4) Proposal  of the Textile Ministry in respect of the      drafting  of   the  Ordinance   and  the   Act  by  the      Legislative Ministry.      (5) Details  of properties taken into consideration for      the determination  of amount  under section  8  of  the      Ordinance/Act.      (6) Proposal  of the  Textile Ministry  in the  form of      Cabinet Notes  for the  approval of  the Cabinet in the      matter of promulgation of Ordinance/framing of the Act,      and      (7) Notes  and Memorandum  prepared by  the Ministry of      Textile/Ministry of  law at  or before  framing of  the      Ordinance/Act and  subsequent thereto  relating to  the      acquisition of the textile undertakings. 990      It was contended that production of these was necessary to establish that the shares were never intended to be taken over and  these were never considered as part of the textile undertaking. It  was urged  that the  shares were  not taken into  account   in  computing  the  figure  of  compensation amounting to Rs.24.32 crores referred to in section 8 of the Act. It  was submitted  that these  documents are definitely relevant as  they would  throw light  on the  merits of  the case. They  would advance  the case  of the  petitioners and destroy, according  to the  petitioners,  the  case  of  the

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respondent. It  was submitted  that sections  7 and 8 of the said Act,  were intrinsic  aids to  construe section  4. The factual foundation  necessary  for  the  argument  based  on sections 7  and 8 of the said Act, was that the shares etc., were excluded  in computing  the figures of 24.32 crores. It was  submitted   that  these   documents  were  required  to establish this  factual foundation.  The petitioner  alleged that  shares   had  been  excluded  in  the  computation  of compensation and  the petitioner had been so informed by the Hon’ble Minister.  In reply  the Central Government asserted that  compensation   has  been   computed  lumpsum  and  not itemwise. According  to the  petitioner, the  stand  of  the Government that  the compensation  was computed lumpsum, was not borne out by the documents. It was, therefore, necessary to seek  production of  those documents. It was submitted by Shri Nariman  that the  submissions of the Solicitor General in so far as these dealt with the balance-sheet made it even more important  that the  Government should  be directed  to produce  these  documents.  The  calculations  made  by  the petitioner had  merely been  denied by  NTC which had in its possession the  books of  account as also all balance-sheets prior to  the balance-sheet  as on  April  1,  1985.  It  is wrongly suggested that the calculations are hypothetical. It was urged  by the  petitioner that  the calculations made by the petitioners  were not  hypothetical. The  correctness or otherwise of  the said figure, according to the petitioners, would be demonstrated from the said documents.      On behalf  of the  Union of India, the learned Attorney General  submitted   that  records   and   documents   whose production was  sought for,  were not  relevant for deciding the matters of controversy in the instant case.      In our  opinion Sections 3 and 4 of the Act interpreted either on their own language or along with sections 7 and 8, are not  ambiguous; so  documents are  not relevant.  It was further urged,  that even if to consture the language is not clear and  there is  need to resort to aids of construction, it is  clear that  such  aids  can  be  either  internal  or external. 991 Internal aids  of construction  are definitions, exceptions, explanations,  fictions,   deeming   provisions,   headings, marginal notes,  preamble,  provisos,  punctuations,  saving clauses, non-obstante  clauses etc. The notings in the files of various officials do not fall in the category of internal aids for  consideration. Dictionaries, earlier acts, history of   legislation,   Parliamentary   history,   parliamentary proceedings, state  of law  as it  existed when  the Act was passed, the  mischief sought to be suppressed and the remedy sought  to  be  advanced  by  the  Act  are  external  aids. Documents which have been required to be produced do not, in our view  fall within  the  category  of  external  aids  as indicated. Having  considered the facts and circumstances of the case,  we  are  unable  to  accept  the  prayer  of  the petitioner  to  direct  disclosure  and  production  of  the documents sought  for. In  our opinion, the language used in section 4 of the Act, is clear enough read with section 3 of the Act.  We have  set out  the provisions  of the  said two sections. Section  3 states that "on the appointed day every textile undertaking and the right, title and interest of the Company in relation to every textile undertaking shall stand transferred to  and shall  vest in  the Central Government". Section 4  says that  "section 3  shall be deemed to include all assets,  leaseholds, powers, authorities, privileges and all properties,  movable and immovable ... pertaining to the textile undertakings  and all  other rights and interests in

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or arising out of such property".      Francis  Bennion   in  "Statutory  Interpretation  1984 Edition page  526 para  238 states that Hansard reports, and other reports of parliamentary proceedings on the Bill which became the  Act in question, are of obvious relevance to its meaning. They  are often  of doubtful  reliability  however. (emphasis supplied)  The documents  in  question  which  are sought for do not relate to the enacting history or any past enactment or  the present  enactment. The  notings  made  in various  Departments  at  various  levels  by  the  officers namely,  the   Under  Secretary,   Deputy  Secretary,  Joint Secretary; Secretary  etc., whatever their view might be, is not the  view of the Cabinet. The ultimate decision is taken by the  Cabinet. So the notings cannot and are not guides as to what  decision the Cabinet took. See for example the Task Force report  referred to  in National  Textile  Corporation Ltd. v. Sitaram Mills Ltd. & others (supra). This Task Force Report  demonstrated   the  irrelevancy   of  the  documents summoned to  be produced.  The Task  Force Report manifested that certain  mills were  viable. But  from the circumstance under which  managements of  these mills were taken over, it was clear  that the  Cabinet had taken the decision contrary to what  was contained  in the  Task Force  Report.  But  it appears 992 that the  decision of  the Cabinet  was different  from  the views of  the Officers  at various  levels. As  Bennion  has stated at  para 261  (page 560  of the  same book)  that  in interpreting an enactment a two stage approach is necessary. Here there is no real doubt on an informed basis as we shall indicate hereafter  about the real meaning of the enactment. There is  therefore no  question of resolving the doubt. The second stage does not arise here.      This Court  in Sanjeev  Coke Manufacturing  Company  v. Bharat Coking Coal Ltd. and another (supra) held that no one may speak  for the Parliament and Parliament is never before the Court.  After the Parliament has said what it intends to say, only  the Court  may say  what the  Parliament meant to say. None  else. See  also in  this  connection  Dr.  (Mrs.) Sushma Sharma  and others  v. State  of Rajasthan and others (supra).  The   objects  and  purposes  of  the  person  who initiated  the   Bill  are   not  admissible   as  aids   to construction since  it is  impossible to  contend that  such purposes in  the minds  of some  officials of the Government before the  matter is discussed by the Cabinet, would at all be relevant.  See in this connection State of West Bengal v. Union of  India (supra) where this Court reiterated that the Statement  of   Objects  and   Reasons,  accompanying   when introduced in the Parliament cannot be used to determine the true meaning and effect of the substantive provisions of the statute. Such  statement cannot  be used  to show  that  the legislature did  not intend  to  take  over  any  particular property. See  also The  Central  Bank  of  India  v.  Their Workmen (supra).      It has  to be  reiterated, however that the objects and reasons of  the Act  should be  taken into  consideration in interpreting the provisions of the statute in case of doubt. This is  the effect  of the  decision of  this Court in K.P. Verghese v.  The Income  tax Officer, Ernakulam and another, [1982] 1  S.C.R. 629,  where this  Court reiterated that the speech made  by the  Mover of the Bill explaining the reason for the introduction of the Bill could certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by  the legislation  and the object and purpose for which the  legislation was  enacted. It  has been reiterated

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that interpretation  of a  statute being  an exercise in the ascertainment of  meaning,  everything  which  is  logically relevant should  be admissible.  See in  this connection the observations of  this Court in Chern Taong Shang & anr. etc. etc. v.  Commander S.D. Baijal & Ors., J.T. 1988 1 S.C. 202. The documents  now sought  for by the petitioner do not fall within this category. It is neither the object and scheme of the enactment nor the language used therein, that is 993 sought for  in the instant case. It is certainly relevant to know the  mischief that  was intended to be remedied. But in the documents in question which the petitioner is seeking no such correlation has been established. These are, therefore, not relevant. We reiterate that no officer of the Department can speak  for the  Parliament even  after the  Act has been passed. This  Court has to interpret the Act on the basis of informed basis by applying external and internal aids if the language is  ambiguous. In the words of Lord Scarman "We are to  be  governed  not  by  Parliament’s  intentions  but  by Parliament’s    enactments".     See    Cross     "Statutory Interpretation" 2nd  Edition  page  22.  Blackstone  in  his "Commentaries on the Laws of England" (Facsimile of 1st edn. 1765, University  of  Chicago  Press  1979)  Vol.  1  at  59 suggests "The  fairest and most rational method to interpret the will  of the legislator is by exploring his intention at the time  when the  law was  made, by signs most natural and probable. And  these signs  are the  words, the context, the subject matter,  the effect  and consequence,  or the spirit and reason  of the  law." The  documents whose production is sought for  are none  of these.  So in our opinion these are not relevant.  We must further reiterate that the Members of Parliament had before them only the Bill. The notings of the various  officials   in  the   files  were  not  before  the Parliament. Therefore  members could  not be attributed with the knowledge  of the  notings in  the files. Therefore, the notings made  by the  officials are  not relevant.  In  this connection reliance  may be  placed  on  the  principles  of interpretation  as   enunciated  by  the  Federal  Court  in Auckland Jute  Co. Ltd.  v. Tulsi  Chandra  Goswami,  [1949] F.C.R. 201  at 244.  It is trite saying that the interpreter of the  statute must  take note of the well known historical facts. In  conventional language  the interpreter  must  put himself in  the arm  chair of those who were passing the Act i.e. the  Members of  the Parliament.  It is  the collective will of  the Parliament  with which we are concerned. See in this connection  the observations  of the  Federal Court  in RM.AR.AR.R.M.AR. Umayhal  Achi v.  Lakshmi Achi  and others, [1945] F.C.R.  1. We  are therefore, of the opinion that the documents sought  for are  not relevant  for the purpose for which they  were sought  for. In  this case we are concerned only with  the construction  of  the  statute  to  determine whether the  shares vested in the Government or not. As Lord Reid  has   said  in  Black-Clawson  International  Ltd.  v. Papierwerke Waldhof Achaffenburg A G, [1975] A.C. 591 at 613 "We often  say that  we are  looking for  the  intention  of Parliament, but  that is  not quite accurate. We are seeking the meaning  of the  words which  Parliament  used.  We  are seeking not  what Parliament  meant but  the true meaning of what they  said." See  in this  connection the discussion in Cross Statutory Interpretation-2nd Edition, pages 20-30. 994      The next question for consideration is that by assuming that these  documents are  relevant, whether  the  Union  of India is  liable to  disclose these  documents. Privilege in respect of these documents has been sought for under Article

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74(2) of  the Constitution  on behalf  of the  Government by learned Attorney General.      Shri Nariman however, submitted on the authority of the decision of  this Court  in S.P. Gupta v. Union of India and others, [1982]  2 S.C.R.  365 at page 594 that the documents sought for  herein were  not privileged. The context and the nature of  the documents  sought for  in S.P.  Gupta’s  case (supra)  were   entirely  different.   In  this  case  these documents as  we see  are part  of the  preparation  of  the documents leading to the formation of the advice tendered to the President  of India  and as  such these  are  privileged under Article  74(2) of the Constitution which provides that the question  whether  any,  and  if  so  what,  advice  was tendered by Ministers to the President shall not be enquired into in  any court.  This Court is precluded from asking for production of  these documents. In S.P. Gupta’s case (supra) the question  was not  actually what  advice was tendered to the President on the appointment of Judges. The question was whether there  was  the  factum  of  effective  consultation between the  relevant  constitutional  authorities.  In  our opinion that  is not the problem here. We are conscious that there  is   no  sacrosanct  rule  about  the  immunity  from production of  documents and  the privilege  should  not  be allowed in  respect of each and every document. We reiterate that the  claim of immunity and privilege has to be based on public interest.  Learned Attorney  General  relied  on  the decision of  this Court  in the case of State of U.P. v. Raj Narain, [1975]  3 S.C.R.  333. The principle or ratio of the same is  applicable here. We may however, reiterate that the real damage  with which  we are concerned would be caused by the publication  of the  actual documents of the Cabinet for consideration and  the minutes  recorded in  its discussions and its  conclusions. It  is well settled that the privilege cannot be  waived.  In  this  connection,  learned  Attorney General drew  our attention to an unreported decision in The Elphinstone Spinning and Weaving Mills Company Ltd. v. Union of India  and others,  Writ Petition  No. 2401 of 1983. This resulted ultimately  in Sitaram  Mills’s case  (supra).  The Bombay High  Court held  that  the  Task  Force  Report  was withheld deliberately  as it  would support the petitioner’s case. It is well to remember that in Sitaram Mills’s (supra) this Court  reversed the  judgment of  the Bombay High Court and upheld the take over. Learned Attorney General submitted that the  documents there  were not tendered voluntarily. It is well to remember that it is duty of this Court to prevent disclosure where Article 74(2) is applicable. We are 995 convinced that  the notings  of the  officials which lead to the Cabinet note leading to the Cabinet decision formed part of the  advice tendered  to the  President as  the  Act  was preceded by an ordinance promulgated by the President.      We respectfully  follow the  observations in S.P. Gupta and others  v. Union  of India  and others  (supra) at pages 607, 608 and 609. We may refer to the following observations at page 608 of the report:           "It  is   settled  law   and  it  was  so  clearly           recognised in Raj Narain’s case (supra) that there           may be  classes of documents which public interest           requires should  not be  disclosed, no matter what           the individual  documents  in  those  classes  may           contain or in other words, the law recognises that           there may  be classes  of documents  which in  the           public interest  should be immune from disclosure.           There is  one such  class of  documents which  for           years has  been recognised  by the law as entitled

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         in the  public interest  to be  protected  against           disclosure and  that class  consists of  documents           which  it  is  really  necessary  for  the  proper           functioning of the public service to withhold from           disclosure.  The  documents  falling  within  this           class are  granted immunity  from  disclosure  not           because of their contents but because of the class           to which  they belong. This class includes cabinet           minutes, minutes  of discussions  between heads of           departments,   high    level    inter-departmental           communications  and  despatches  from  ambassadors           abroad (vide Conway v. Rimmer, [1969] Appeal Cases           910 at  pp. 952,  973, 979, 987 and 993 and Reg v.           Lewes J.K.  Ex parte  Home Secretary,  [1973] A.C.           388 at  412. Papers brought into existence for the           purpose of  preparing a submission to cabinet vide           Lanyon  Property   Ltd.   v.   Commonwealth,   129           Commonwealth  Law   Reports  650  and  indeed  any           documents  which   relate  to   the   framing   of           government  policy  at  a  high  level  (vide  re.           Grosvenor Hotel,  London [1964]  3  All  E.R.  354           (CA)".      Cabinet   papers   are,   therefore,   protected   from disclosure not  by reason  of their  contents but because of the class  to which  they belong.  It  appears  to  us  that Cabinet papers  also include  papers brought  into existence for the  purpose of preparing submission to the Cabinet. See Geoffrey Wilson  cases and  Materials on  Constitutional and Administrative Law,  2nd Edition  pages 462  to 464. At page 463 para 187, it was observed: 996           "The real damage with which we are concerned would           be  caused   by  the  publication  of  the  actual           documents of the Cabinet for consideration and the           minutes  recording   its   discussions   and   its           conclusions. Criminal  sanctions should  apply  to           the unauthorised communication of these papers." See in  this Connection  State of  Bihar v. Kripalu Shankar, A.I.R. 1987  S.C. 1554 at page 1559 and also the decision of Bachittar Singh  v. State  of Punjab  [1962] Suppl. 3 S.C.R. 713. Reference  may also be made to the observations of Lord Denning in  Air Canada  and others v. Secretary of State and another, [1983] 1 All E.R. 161 at 180.      We therefore,  reject the claim for production of these documents.      In  view   of  the   language  used   in  the  relevant provisions, it  appears to  us that section 3 has two limbs: (i) textile undertakings; and (ii) right, title and interest of  the   company  in   relation  to   every  such   textile undertaking. The  expression "textile  undertaking" has been defined in section 2(k) to mean the six textile undertakings of the company specified therein. The definition of the said expression in  section 2(k)  is,  however,  subject  to  the opening words  of the  section which  provide, "In this Act, unless the  context otherwise  requires". In  the context of the expression  "textile undertakings"  employed in  section 3(1) of  the Act,  section 4(1)  provides that  the  textile undertakings referred  to in  section 3  shall be  deemed to include all  assets, rights, leaseholds, powers, authorities and privileges  and all  property,  movable  and  immovable, including   lands,   buildings,   workshops,   stores   .... investments  and   book  debts  pertaining  to  the  textile undertakings and  all rights and interests in or arising out of such  property as  are, immediately  before the appointed day, in  the ownership,  possession, power or control of the

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company in relation to all six undertakings. The expressions "pertaining to", "in relation to" and "arising out of", used in the  deeming provision,  are used in the expansive sense, as per  decisions of  courts,  meanings  found  in  standard ’dictionaries, and  the  principles  of  broad  and  liberal interpretation in  consonance with  Article 39(b) and (c) of the Constitution.      The words  "arising out of" have been used in the sense that it  comprises purchase  of shares and lands from income arising out of the Kanpur undertaking. We are of the opinion that the words "pertaining to" and "in relation to" have the same wide  meaning and  have been  used interchangeably  for among other reasons, which may include 997 avoidance of  repetition of  the same  phrase  in  the  same clause or  sentence, a method followed in good drafting. The word "pertain"  is synonymous  with the  word "relate",  see Corpus Juris Secundum, Volume 17, page 693.      The expression  "in relation  to" (so  also "pertaining to"), is  very broad  expression which  pre-supposes another subject matter.  These are  words of comprehensiveness which might have both a direct significance as well as an indirect significance depending  on the context, see State Wakf Board v. Abdul  Aziz, A.I.R.  1968 Madras  79, 81 paragraphs 8 and 10, following  and approving  Nitai Charan  Bagchi v. Suresh Chandra Paul,  66 C.W.N.  767, Shyam  Lal v.  M.  Shayamlal, A.I.R. 1933  All 649  and  76  Corpus  Juris  Secundum  621. Assuming that  the investments in shares and in lands do not form part  of the  undertakings but  are  different  subject matters, even then these would be brought within the purview of the  vesting by  reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages  620 and  621 where  it is  stated  that  the  term "relate"  is   also  defined   as  meaning   to  bring  into association  or   connection  with.   It  has  been  clearly mentioned that  "relating to" has been held to be equivalent to  or   synonymous  with   as  to   "concerning  with"  and "pertaining  to".  The  expression  "pertaining  to"  is  an expression of expansion and not of contraction.      As to  what an undertaking means, has been clarified in R.C. Cooper  v. Union of India, [1970] 3 S.C.R. 530 at pages 567, 568,  635, where the Act of 1969 was challenged. It was held that  the meaning  of the expression "undertaking" is a going concern  as distinct  from its assets and liabilities. It was  also  observed  that  it  covered  every  corner  of property, right,  title and  interest  therein.  This  Court rejected one  of the  grounds of  challenge as  there was no evidence that  the named  banks  held  any  assets  for  any distinct non-banking  business, which  finding gives an idea as to  what could have been excluded from the acquisition of the undertaking.      Reading the  provisions of  section 3(1),  section 4(1) and section  2(k) of  the Act,  each throwing  light on  the other, it  follows that-(a)  under the first limb of section 3(1) of  the Act  every textile  undertaking; (b)  under the second limb  of section 3(2) every right, title and interest of the  company in  relation to  every such  undertaking, is transferred and vested. (c) The deeming provision of section 4(1) amplifies  and enlarges  both the  limbs of the vesting section, being  section 3(1).  (d) The definition of section is read into these provisions, to give a 998 wider meaning and scope to the vesting provision and to what is transferred or vested.      Sections 7  and  8  of  the  Act  relied  upon  by  the

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petitioners, being provisions for payment of amounts and for the issue  of shares  by  NTC  respectively,  will  have  no bearing on  the scope  of the  vesting provision. As to what properties have vested cannot proceed on the hypothesis that there is  a clear numerical or mathematical link between the quantum of  compensation and  the items  of property vested. This correlation  with regard  to such  legislation  is  not available. In  this connection  reference may be made to the decision of  this Court  in Khajamian  Wakf Estates  etc. v. State of  Madras &  another, [1971] 2 S.C.R. 790 at page 796 B-E.      Section 8 refers to payments of amounts by the Union of India to  the company.  It has  no  bearing  either  on  the vesting section  or on  section 7  except that the figure of Rs.24 crores  32 lakhs mentioned therein was introduced into section 7.  The provisions  of this section are no different from the  provisions of  the similar sections in the earlier Act of  1974. For  example, under  section  8  of  the  Sick Textile Undertakings  Nationalisation Act,  1974 (page 59 of Vol. X),  the amount  mentioned is  specified in  the  first schedule as  there are  a number of companies involved. This provision cannot  be the starting point for investigation as to which  amount relates  to which property or as a guide to construction.      It appears  to us  from the  Delhi High  Court decision (supra) and the decision of this Court in Balkrishan Gupta’s case (supra)  as well  as the  statement of  the Minister in December,  1985  that  there  were  legal  difficulties,  in respect of  taking over, under the 1951 IDR Act. The IDR Act was-(a)  concerned   with  the   management   of   scheduled industries in, inter alia, running of factories, where there was no  deeming provision  in such  wide terms;  (b) it  was concerned with setting up of machinery for imposing controls on  industrial   undertakings,  see   Harakchand  Ratanchand Banthia and others etc. v. Union of India and others, [1970] 1 S.C.R. 479 at page 496 F and G.      We are  further of  the opinion  that the  decision  in Harakchand Ratanchand  (supra) would  not be  applicable. In this case,  the Court  is concerned  with a  nationalisation statute. Even with other independent management statutes, in respect of  textile undertakings  a series of decisions have upheld the  view that the shares vest in the Government. See National Textile Corporation Ltd. v. Sitaram Mills (supra); 999 Minerva Mills  Ltd. and  others etc.  etc. v. Union of India and  others  (supra);  Govardhandas  Narasinghdas  Daga  and others v.  Union of  India and others (supra); Fine Knitting Mills Ltd.  & Ors.  v. Union  of India  & Ors.  (supra)  and Vidharbha Mills  Berar Ltd.  v. Union  of India (supra). The above provide  the informed  basis  on  which  we  make  the construction of sections 3 and 4 of the Act.      The expression  "and all  other rights and interests in or arising  out of such property, as were immediately before the appointed  day, in  the ownership,  possession, power or control  of   the  company   in   relation   to   the   said undertakings", appearing  in sub-section (1) of section 4 of the Act  indicates that the shares which have been purchased from out  of the funds of the textile undertakings and which have  been   held  for  the  benefit  of  the  said  textile undertakings, would  come within  the scope  of section 4 of the Act  and thus  would also vest in the Central Government under section  3. The  origin  of  these  shares  and  their connection with  the textile  undertakings have  been  fully corroborated. The  textile business  is the only business of Swadeshi Cotton  Mills. There is inter-connection and inter-

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relation between  all the  six undertakings.  Investments in Swadeshi  Polytex   Limited  from   the  funds   of   Kanpur undertaking have  always been  made. Investments in Swadeshi Mining and  Manufacturing Company Ltd. were always made from the funds of the kanpur undertaking. Assets/investments held and used  for the  benefit of  the textile  business of SCM, were carried on in its textile undertakings.      The words  in the  statute must,  prima facie, be given their ordinary  meaning. Where  the grammatical construction is clear  and manifest  and without doubt, that construction ought to  prevail unless  there are  some strong and obvious reasons to  the contrary.  Nothing has been shown to warrant that literal construction should not be given effect to. See Chandavarkar S.R.  Rao v.  Asha Lata, [1986] 4 S.C.C. 447 at page 476,  approving 44  Halsbury’s Laws of England, 4th Ed. paragraph 856  at page  552, Nokes  v. Doncaster Amalgamated Colliery Limited,  [1940] Appeal Cases 1014 at 1022. It must be emphasised that interpretation must be in consonance with the Directive  Principles of  State Policy in Article 39 (b) and (c) of the Constitution.      It  has   to  be   reiterated  that   the   object   of interpretation of  a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and  in its context. That intention, and therefore the meaning 1000 of the  statute, is primarily to be sought in the words used in the  statute itself,  which must,  if they  are plain and unambiguous, be  applied as they stand. In the present case, the  words   used  represent   the  real  intention  of  the Parliament as  we have  found not  only from the clear words used but  also from  the very  purpose of the vesting of the shares. If  we bear  in mind the fact that these shares were acquired from  out of  the investments  made  by  these  two companies and  furthermore that the assets of the company as such minus  the shares  were negative and further the Act in question  was  passed  to  give  effect  to  the  principles enunciated in  clauses (b)  and (c)  of Article  39  of  the Constitution, we  are left  with no  doubt that  the  shares vested in  the Central Government by operation of sections 3 and 4  the Act.  See in  this connection the observations of Halsbury’s  Laws   of  England,   4th  Edition,  Volume  44, paragraph 856 at page 522 and the cases noted therein.      There is  no exact  correlation between  the figure  of capital reserve  and the figure of investments. That, in our opinion cannot  be. These  can never  be exactly  equal. The submission of  the petitioner fails to take into account the fact  that   the  undertakings   other   than   the   kanpur undertaking, also have capital reserve, even though there is no allegation  that these were excluded assets in respect of other undertakings  and there were no figures of investments therein. The  covering letter  for these documents, page 408 of Volume  II, itself  stated that  the provisional balance- sheet shows  investments which included these shares as part of assets.  With regard  to the figure of Rs. 11 lakhs taken in the calculation filed by the petitioner, we find that the calculations filed by the petitioner were not supportable.      Contemporanea Expositio, is a well-settled principle or doctrine which applies only to the construction of ambiguous language in  old statutes.  Reliance may  be placed  in this connection  on   Maxwell  13th  Ed.  page  269.  It  is  not applicable to modern statutes. Reference may be made to G.P. Singh, Principles  of  Statutory  Interpretation,  3rd  Edn.

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pages 238 and 239. As noted in Maxwell on The Interpretation of Statutes,  12th Edition  at page  269  that  the  leading modern case  on  contemporanea  expositio  is  the  case  of Campbell College,  Belfast v.  Commissioner of Valuation for Northern Ireland,  [1964] 1  W.L.R. 912  in which  House  of Lords has  made it  clear that the doctrine is to be applied only to  the construction  of ambiguous language in the very old statutes.  It is  therefore well  to remember  what Lord Watson said  in Clyde Navigation Trustees v. Laird, [1983] 8 A.C.  658   that  contemporanea   expositio  could  have  no application to  a modern  Act.  We,  therefore,  reject  the attempt on the part of the petitioners to lead us to 1001 this forbidden  track by  referring  to  various  extraneous matters which  we have  indicated before.  Furthermore those external  aids   sought  before   us  do   not  support  the petitioners’ approach to this question at all.      It appears  that the shares held in SPL themselves were the subject  matter of  both pledge and attachment to secure loans from the U.P. State Government of about Rs.66 lacs for payment of  wages to  workers of  the Kanpur undertaking and Rs.95 lacs  being electricity dues of the Kanpur undertaking owing to  the U.P.  State Electricity Board. From all these, the acceptance of the petitioner’s case, would mean that the State would  pump in Rs.15 crores of public money to release the shares from its liabilities and thereafter hand over the shares free from such liability back to the company when the net worth  of the  company at  the  time  of  take  over  of management was  negative and  in the  teeth of  the  present financial liabilities  built up  by the  company the  shares would inevitably  have sold  in discharge of its liabilities and in  any event  the shares  stood charged  with the  very liabilities which related to the undertakings of the company which were taken over by the Government.      It appears  to us  that sections  3 and  4 of  the  Act evolve a  legislative policy  and  set  out  the  parameters within which  it has  to be implemented. We cannot find that there was  any special  intention to  exclude the  shares in this case  as seen from the existence of at least four other Acquisition  Acts   which  used   identical  phraseology  in sections 3  and  4  and  in  the  other  sections  as  well. Reference was  made to  the Aluminium  Corporation of  India Limited (Acquisition and Transfer of Aluminium Undertakings) Act, 1984,  the Amritsar Oil Works (Acquisition and Transfer of  Undertakings)   Act,  1982,  the  Britannia  Engineering Company Limited  (Mohameh Unit)  and the  Arthur Butler  and Company (Muzaffarpore)  Limited (Acquisition and Transfer of Undertakings) Act,  1978 and  the Ganesh Flour Mills Company Limited (Acquisition  and  Transfer  of  Undertakings)  Act, 1984.      In the present case we are satisfied that the shares in question were  held and  utilised for  the  benefit  of  the undertakings for the reasons that (a) the shares in Swadeshi Polytex Limited  were acquired from the income of the kanpur Unit. Reference may be made to page 23 of Compilation D-III, (b) the  shares held  in Swadeshi  Mining and  Manufacturing Company were  acquired in  1955. Originally  there were four companies and  their acquisition has been explained fully in the Compilation D-III with index, (c) the shares held in SPL were pledged 1002 or attached  for running the Kanpur undertaking, for payment of ESI and Provident Fund dues for the workers of the Kanpur undertaking, for  wages and  for payment of electricity dues of the  Kanpur undertaking, (d) the shares held in SMMC were

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pledged for  raising monies  and loans of Rs. 150 lakhs from the Punjab National Bank for running the Kanpur undertaking. These loans  fall in  category II  of Part I of the Schedule which liabilities  have been  taken over  by the Government, (e) the shares held in SPL were offered for sale by SCM from time to  time and  to utilise  the sale  proceeds thereof by ploughing them  back into  the textile business for reviving the textile undertakings acquired under the Act.      It appears  to us that the expression "forming part of" appearing in  section 27 cannot be so read with section 4(1) as would  have the effect of restricting or cutting down the scope and  ambit of  the vesting provisions in section 3(1). The expression  "pertaining to"  does not mean "forming part of". Even  assuming  that  the  expression  "pertaining  to" appearing in  the first  limb of section 4(1) means "forming part of",  it would  mean that only such assets which have a direct nexus  with the textile mills as would fall under the first limb  of section  4(1). The  shares in  question would still vest  in the  Central Government under the second limb of section  4(1) of the Act since the shares were bought out of the  income of  the textile  mills and  were held  by the company in  relation to  such mills.  The shares  would also fall in  the second  limb of  section 3(1)  being right  and title of the company in relation to the textile mills.      On the construction of sections 3 and 4 we have come to the  conclusion   that  the   shares  vest  in  the  Central Government even  if we  read sections 3 and 4 in conjunction with sections  7 and  8 of  the  Act  on  the  well  settled principles which  we have  reiterated before. The expression ’in relation  to’ has  been interpreted  to be  the words of widest amplitude.  See National Textile Corporation Ltd. and others v.  Sitaram Mills  Ltd. (supra). Section 4 appears to us to  be an  expanding section.  It  introduces  a  deeming provision. Deeming  provision is  intended  to  enlarge  the meaning of  a particular  word or  to include  matters which otherwise may or may not fall within the main provisions. It is well  settled that  the word  ’includes’ is  an inclusive definition and  expands the  meaning. See The Corporation of the City of Nagpur v. Its Employees, [1960] 2 S.C.R. 942 and Vasudev Ramchandra  Shelat  v.  Pranlal  Javanand  Thakarand others, [1975] 1 S.C.R. 534. The words ’all other rights and interests’ are  words of  widest amplitude.  Section 4  also uses the  words "ownership,  possession, power or control of the Company 1003 in relation to the said undertakings". The words ’pertaining to’ are not restrictive as mentioned hereinbefore.      Section 8  provides  for  payment  of  compensation  in lumpsum  and   the  transfer  and  vesting  of  whatever  is comprised in  section 3.  As section  4 expands the scope of section 3,  the compensation  mentioned in  section 8 is for the property mentioned in section 3 read with section 4. The compensation provided  in section  8 is  not calculated as a total of  the value of various individual assets in the Act. It is  a lumpsum  compensation. See  in this  connection the principles  enunciated  by  this  Court  in  Khajamian  Wakf Estates etc.  v. State of Madras and another (supra). There, it was held that even if it was assumed that no compensation was provided  for particular  item, the  acquisition of  the ’inam’ is  valid. In the instant case section 8 provides for compensation to  be paid  to the undertakings as a whole and not separately  for each  of the  interests of  the company. Therefore, it  cannot  be  said  that  no  compensation  was provided for the acquisition of the undertaking as a whole.      Section 7  of the Act, in our opinion, neither controls

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sections 3  and 4  of the  Act nor creates any ambiguity. It was highlighted  before us  and in  our opinion rightly that this sum  of Rs.24.32  crores paid  by way  of  compensation comes out of the public exchequer. The paid-up shares in its equity capital can necessarily have a face value only of the amounts so  paid, irrespective  of whatever may be contended to be  the value  of the  assets and irrespective of whether any asset  or property  in relation to the undertakings, was taken into  account. After  providing  for  compensation  of Rs.24.32 crores  to be paid to the Commissioner for payments to discharge part I liabilities, Government has to undertake an additional  15 crores  at  least  for  discharging  those liabilities. To  leave a company, the net wealth of which is negative at  the time  of take-over  of the management, with the shares held by it as investment in other company, in our opinion, is  not only  to defeat  the principles of Articles 39(b) and  (c) of  the Constitution  but it  will permit the company to  reap the fruits of its mismanagement. That would be an  absurd situation. It has to be borne in mind that the net wealth  of the  company at  the time  of take-over,  was negative, hence sections 3 and 4 can be meaningfully read if all the  assets including  the shares  are considered  to be taken over by the acquisition. That is the only irresistible conclusion  that   follows  from  the  construction  of  the documents and  the history  of this  Act. We have to bear in mind the Preamble of the Act which expressly recites that it was to  ensure the  principles enunciated in clauses (b) and (c) of  Article 39  of the  Constitution. The Act must be so read that it further ensures such meaning and 1004 secures the  ownership and control of the material resources to the community to subserve the common good to see that the operation of economic system does not result in injustice.      We therefore,  reiterate that  the shares vested in the Central Government.  Accordingly the  shares in question are vested in  NTC and it has right over the said 34 per cent of the shareholdings.      In the  aforesaid view  of the  matter we hold that the 10,00,000 shares  in Swadeshi  Polytex Limited and 17,18,344 shares in  Swadeshi Mining and Manufacturing Company Limited held by  the Swadeshi  Cotton Mills  vested in  the  Central Government under sections 3 and 4 of the Act.      We are  further of  the opinion  that in  view  of  the amplitude of  the language  used, the  immovable properties, namely, the  Bungalow No.  1 and  the Administrative  Block, Civil Lines, Kanpur have also vested in NTC.      In that  view of  the matter in Transferred Case No. 13 of 1987,  we dismiss the Writ Petition No. 2214 of 1987. All interim orders in the said Writ Petition will stand vacated. This will  dispose  of  the  various  other  SLPs  and  CMPs connected with  the Lucknow  Writ Petition being SLP (Civil) No. 4826 of 1987 filed by Doypack Systems Pvt. Ltd., against the order dated 6th April, 1987, SLP(Civil) No. 5240 of 1987 filed by  NTC against  the same  order of 6th April, 1987 in the Lucknow Bench and the order dated 6th April, 1987 in CMP No. 4555(W)  of 1987  in the  Lucknow Bench of the Allahabad High Court.  CMPs Nos. 16918 and 16919 of 1987 being CMPs in SLP No.  4826 of  1987 will  stand disposed  of in the above light.      In Transferred  Case No.  14 of 1987 in Suit No. 506 of 1987, we  hold that  10 lakhs  and 17  lakhs  equity  shares mentioned hereinbefore  and the Swadeshi House at Kanpur and all the rights, title and interest attached therewith relate to the  textile undertaking of defendant No. 3 and they vest in NTC  with effect  from 1st  of April,  1985 and defendant

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Nos. 3  and 4  are  restrained  by  a  decree  of  permanent injunction from  dealing with them in any manner whatsoever. Defendant No.2  is restrained  by permanent  injunction from recognising  defendant  Nos.  3  and  4  as  owners  of  the aforesaid shares and the Swadeshi House.      Defendant  No.2’is   directed  to  enter  the  name  of defendant No.  1 namely,  NTC in its register of members and to treat the said 1005 defendant No. 1 as its shareholder instead of defendant Nos. 3 and  4 in respect of the shares of defendant No. 2 held by them. In  view of the provisions of law under Section 108 of the Companies  Act as  there was  transmission of  shares by operation of  law, rectification  is not  necessary. See  in this connection  Palmer’s Company  Law, 24th Ed. (1987) page 608. See  also in  this connection  Sahadeo Lal Agarwala and another v. The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. 1952  Cal. 58  and Unity Company Pvt. Ltd. v. Diamond Sugar Mills and others, A.I.R. 1971 Cal. 18.      Civil Appeals Nos. 577 to 579 of 1987 stand disposed of in the  above terms  and we  direct  that  the  17th  annual general meeting  be held in accordance with law after giving proper notice under the Chairmanship of Shri Jaswant Singh.      CMP No.  12760 of 1987 in Civil Appeal No. 577 of 1987, shall  stand   disposed  of   in  terms  of  the  orders  in Transferred Case  No. 14 of 1987 and it is directed that the Chairman  should   act  in  accordance  with  the  aforesaid decision and  NTC should  be considered  to be  entitled  to vote. CMP  No. 16887  of 1987  is rejected,  on the  grounds indicated in the judgment.      CMP No.  16888 of  1987 is  an application  by  Doypack Systems Ltd.  to  be  impleaded  as  a  party-respondent  in Transferred Case No. 13 of 1987. Doypack Systems has already been permitted  to argue  and has  been heard as a party. No further order is necessary.      CMP No.  16889 of  1987 is  allowed and delay condoned. CMP No.  17018 of  1987 is allowed. CMP No. 18268 of 1987 is disposed of  by directing  that no further documents need be inspected. In  view of  the orders,  the other  CMPs are  no longer necessary to be disposed of.      We direct  that irrespective of any order passed by any court the  17th annual  general meeting  should be  held  in accordance with  law to  be presided  over by  Shri  Jaswant Singh recognising  NTC as the rightful owner of the disputed shares.      In all  these proceedings  National Textile Corporation as well  as Union  of India wherever they are parties herein will be  entitled  to  their  costs  from  their  respective opposite parties.  The other parties will pay and bear their own costs in these matters. S.L. 1006