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PETITIONER: SWADESHI COTTON MILLS

       Vs.

RESPONDENT: UNION OF INDIA

DATE OF JUDGMENT13/01/1981

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) SARKARIA, RANJIT SINGH DESAI, D.A.

CITATION:  1981 AIR  818            1981 SCR  (2) 533  1981 SCC  (1) 664        1981 SCALE  (1)90  CITATOR INFO :  RF         1985 SC 520  (35)  F          1985 SC1416  (100)  RF         1986 SC 555  (6)  RF         1986 SC1173  (24)  RF         1986 SC1571  (44)  D          1987 SC1802  (29)  RF         1988 SC 686  (12)  RF         1988 SC 782  (8,9)  F          1990 SC1402  (23)  RF         1992 SC   1  (133)

ACT:      Industries (Development  and Regulation) Act, 1951, (65 of  1951)   Ss.  18A(1)(b),  18AA(1)(a)-Taking  over  of  an industrial undertaking-Opportunity  of  being  heard-Whether and when  to be given-Denial of opportunity-Whether vitiates order-Opinion of  take-over by  Government-Whether liable to judicial scrutiny.      Administrative Law-Doctrine of Natural Justice-What is- When applicable-Pre-decisional  and post-decisional hearing- When arises.

HEADNOTE:      The Industries  (Development and  Regulation) Act, 1951 empowers the  Union of  India in the public interest to take under its  control the  industries specified  in  the  First Schedule to  the Act.  Item 23 of the First Schedule relates to textiles of various categories.      Section 15 authorises the Central Government to make or cause to  be made a full and complete investigation into the circumstances of  the case  if the  Central Government is of the opinion that (a) in respect of any scheduled industry or industrial undertaking  or undertakings  (i) there has been, or is  likely to  be, a  substantial fall  in the  volume of production  for   which,  having   regard  to  the  economic conditions prevailing,  there is  no justification;  or (ii) there has  been, or  is likely to be, a marked deterioration in the  quality of  any article...  which could have been or can be avoided; or (iii) there has been or is likely to be a rise in  the price of any article..... for which there is no justification; or  (iv) it  is necessary  to take  any  such

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action for  the  purpose  of  conserving  any  resources  of national importance;  or (b)  any industrial  undertaking is being  managed   in  a  manner  highly  detrimental  to  the scheduled industry  concerned or  to public  interest. After the investigation  is made  under section  15, section 16(1) empowers the  Central Government  if action is desirable, to issue appropriate directions, and section 16(2) provides for the issue  of interim  directions by  the Central Government pending investigation under section 15.      Chapter III-A  consisting of Sections 18A, 18-AA, 18-B, 18-C, 18-D,  18-E and  18-F deal  with "direct management or control of  Industrial Undertakings by Central Government in certain cases". Sec. 18-A empowers the Central Government by notified order,  to authorise  any person or body of persons to take  over the  management of the whole or any part of an industrial undertaking  or to  exercise in  respect  of  the whole, or  any part  of the  undertaking such  functions  of control as  may be  specified in  the order,  if the Central Government is of opinion that:      (a) an  industrial undertaking to which directions have been issued  in pursuance of section 16 has failed to comply with such  directions, or  (b) an  industrial undertaking in respect of which an investigation has been made under 534 section 15  is being  managed in a manner highly detrimental to the scheduled industry concerned or to public interest.      Section  18AA(5)  stipulates  that  the  provisions  of Sections 18-B  to 18 E shall be applicable to the industrial undertaking in respect of which an order has been made under section  18-AA   even  as   they  apply   to  an  industrial undertaking taken  over under  Section  18-A.  Section  18-F empowers the  Central   Government to  cancel the order made under section  18-A if  it appears  that the  purpose of the order has  been fulfilled  or it  is not  necessary that the order should remain in force.      The appellant M/s. Swadeshi Cotton Mills was taken over by the Government of India by a notification dated April 13, 1978 in  exercise of the powers conferred on it under clause (a) of  sub-section (1)  of section 18AA of the   Industries (Development and  Regulation) Act,  1951 on  the ground that the company had by creation of encumbrances on the assets of its industrial undertakings, brought about a situation which had affected  and is likely to further affect the production of  articles   manufactured  or  produced  by  it  and  that immediate action is necessary to prevent such a situation.      The  Government   authorised   the   National   Textile Corporation Limited  to take over the management, subject to the conditions  that the authorised person shall comply with all the  directions issued  from time to time by the Central Government and  that the authorised person shall hold office for a period of five years.      The appellant Mills challenged the aforesaid order in a writ petition  in the  High Court.  The case  was heard by a Full Bench  of five  Judges to consider the question whether in construing section 18AA of the Industries Development and Regulation Act,  1951, compliance with the principle of audi alteram partem is to be implied and whether hearing is to be given to  the parties  who would be affected by the order to be passed  prior to  the passing  of the  order  or  whether hearing can  be given  after the order is passed and whether the order  passed under  the said Section is vitiated by not giving of such hearing and whether such vice can be cured.      The Bench by a majority answered the three questions as follows:-      (a) Section  18AA(1)(a)(b) excludes the giving of prior

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hearing  to  the  party  who  would  be  affected  by  order thereunder.      (b)  Section   18-F  expressly  provides  for  a  post- decisional  hearing   to  the   owner  of   the   industrial undertaking, the  management of  which is  taken over  under section 18AA  to have  the order  made  under  section  18AA cancelled on any relevant ground.      (c) As  the taking over of management under section 18A is not  vitiated by  the failure  to grant prior hearing the question of  any such  vice being  cured by  a  grant  of  a subsequent hearing does not arise.      The minority, however, held that in compliance with the principles of natural justice, prior hearing to the owner of the undertaking  was required to be given before the passing of an order under section 18AA, that the second question did not arise  as the  denial of  a prior hearing would not cure the vice by the 535 grant of  subsequent hearing,  but it  would be  open to the Court to moderate the relief in such a way that the order is kept alive  to the  extent necessary until the making of the fresh  order   to  subserve  public  interest  and  to  make appropriate directions.      After the  decision  on  the  reference  the  case  was reheard on  merits by  a Full  Bench of three Judges and the writ petition  was allowed  in part.  The challenge  to  the validity of  the order  being rejected  but insofar  as  the impugned order  seeking to take over the corporate entity of the company,  the corporate entity of the subsidiary and its assets, the  petition was  allowed and  the respondents, the Union of  India and  the authorised  person were directed to release  from   its  control   and  custody  and/or  deliver possession of  any assets  or property  of the company which were not referable to the industrial undertakings.      Appeals to  this Court  were filed  on  behalf  of  the Company as  well as  by the  Union of India and the National Textile Corporation.      Two propositions  were  propounded  on  behalf  of  the company that:  (a) Whether  it was  necessary to observe the rules of  natural justice  before issuing  a notified  order under section  18AA(1)(a) and  further whether  section 18-F impliedly excludes  rules of  natural  justice  relating  to prior hearing;  and it was contended (1) the mere use of the word ’immediate’ in sub-clause (a) of  section 18AA does not show a legislative intent to exclude the application of audi alteram partem  rule altogether. (2) The word ’immediate’ in clause  (a)   has  been   used  in   contra  distinction  to ’investigate’. It  only means that under section 18AA action can be  taken without  prior investigation under section 15. The use  of the word  ’immediate’ in section 18AA(1)(a) only dispenses with  investigation under  section 15 and not with the principle  of audi alteram partem altogether and this is indicated by  the marginal note of section 18A and para 3 of the Statement  of Objects  and Reasons of the Amendment Bill which  inserted   section  18AA   in  1971.   (3)  The  word ’immediate’ occurs  only in clause (a) and not in clause (b) of section  18AA(1). It would be odd if intention to exclude this principle of natural justice is spelt out in one clause of the  sub-section when  the other  clause does not exclude it. (4)  Section 18-F  does  not  exclude  a  pre-decisional hearing. The  so-called post-decisional hearing contemplated by section  18-F cannot  be and  is not  intended  to  be  a substitute for  a pre-decisional  hearing. (5)  Section  18F incorporates only  a facet,  albeit qualified, of section 21 of the  General Clauses  Act. The  language of  the  Section

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implicity prohibits  an enquiry  into circumstances that led to the  passing of  the order  of take-over and under it the aggrieved person  is not entitled to show that on merits the order was void ab initio. (6) ’Immediacy’ does not exclude a duty to  act fairly  because even  an emergent situation can co-exist with the canons of natural justice. The only effect of urgency  on the  application of  the  principle  of  fair hearing would  be that  the width,  form and duration of the hearing would  be tailored  to the  situation and reduced to the reasonable  minimum so that it does not delay and defeat the purpose  of the contemplated action. (7) Where the civil consequences of  the administrative action are grave and its effect is  highly prejudicial to the rights and interests of the person affected and there is nothing in the language and scheme of  the statute  which unequivocally  excludes a fair pre-decisional  hearing   and  the  post-decisional  hearing provided therein is not a real remedial hearing equitable to a full  right of appeal the Court should be loath to infer a legislative intent to exclude even a minimal fair hearing at the 536 pre-decisional stage  merely on  ground of  urgency. (8) The Central  Government   appointed  four  Government  Officials including one from the office of the Textile Commissioner to study the affairs of the Company and to make recommendation. This Official  Group submitted  its report  on February  16, 1978. The  evidence on the basis of which the impugned order was passed  was not  disclosed to the appellant company till May 1978,  only after  it had filed the writ petition in the High Court.  If there was anything adverse to the appellants in the  survey report  there was time enough about six weeks between the  submission of the Survey Report and the passing of  the  impugned  order  for  giving  a  short,  reasonable opportunity  to   the  appellants  to  explain  the  adverse findings against  them. If  there was  immediacy situational modifications could  be made  to  meet  the  requirement  of fairness, by  reducing the  period of  notice; that even the manner and  form of  such  notice  could  be  simplified  to eliminate delay, that telephonic notice or short opportunity for furnishing  their explanation  to the Company might have satisfied the  requirements  of  natural  justice.  Such  an opportunity of  hearing could  have  been  given  after  the passing of  a conditional  tentative order  and  before  its enforcement under section 18AA. For the interregnum suitable interim action such as freezing the assets of the Company or restraining the  Company from creating further encumbrances, could be taken under section 16.      On behalf  of the  Union of  India and  the  Authorised Officer it  was contended that (1) the presumption in favour of audi  alteram partem  rule stands  impliedly displaced by the  language   scheme,  setting  and  the  purpose  of  the provision in  section 18AA.  (2) Section  18AA on  its plain terms  deals  with  situations  where  immediate  preventive action is  required.  The  paramount  concern  is  to  avoid serious problems  which may be caused by fall in production. The purpose of an order under section 18AA is not to condemn the owner  but to  protect the scheduled industry. The issue under section  18AA is not solely between the Government and the management  of the industrial undertaking. The object of taking action under this Section is to protect other outside interests of the community at large and the workers. (3) The rule  of   natural  justice  to  give  a  hearing  has  been incorporated in section 18-F which gives an opportunity of a post-decisional hearing  to the owner of the undertaking who if he  feels aggrieved  can on  his application be heard, to

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show that  even the  original order  under section  18AA was passed  on  invalid  grounds  and  should  be  cancelled  or rescinded. (4)  On a  true construction of section 18AA read with section  18-F the  requirements of  natural justice and fair play  can be  read into  the statute  only  insofar  as conformance to  such canons can reasonably and realistically be required of it by the provision for a remedial hearing at a subsequent  stage. (5)  Under  section  18-F  the  Central Government  exercises  curial  functions  and  that  Section confers on  the aggrieved  owner a  right to  apply  to  the Government to  cancel the  order of  take-over. This section casts an  obligation on  the Central Government to deal with and  dispose   of  an   application  filed  thereunder  with reasonable expedition.      Allowing the appeal by the Company, ^      HELD: (Sarkaria  & Desai,  JJ. per  Chinnappa Reddy, J. dissenting.)      In the  facts and  circumstances of  the instant  case, there has  been a noncompliance with the implied requirement of the audi alteram partem rule of 537 natural justice  at the  pre-decisional stage.  The impugned order could  be struck  down as invalid on that score alone. But in  view of  the commitment  / concession that a hearing would be  afforded to  the Company,  the case is remitted to the Central  Government to  give a  full, fair and effective hearing.                                               [587G-H, 588C]      1. The  phrase ’natural  justice’ is  not capable  of a static and  precise definition.  It cannot  be imprisoned in the straight-jacket of a cast-iron formula. Rules of natural justice are  not embodied  rules. Hence not possible to make an exhaustive  catalogue  of  such  rules.  Two  fundamental maxims  of  natural  justice  have  now  become  deeply  and indelibly ingrained  in the  common consciousness of mankind as pre-eminently   necessary  to  ensure  that  the  law  is applied  impartially  objectively  and  fairly.  These  twin principles are  (i) audi  alteram partem and (ii) nemo judex in re  sua. Audi  alteram partem  is a highly effective rule devised by  the Courts  to ensure that a statutory authority arrives at  a just decision and it is calculated to act as a healthy check  on the  abuse or  misuse of  power. Its reach should   not    be   narrowed    and    its    applicability circumscribed.[554C-G]      2. The  rules of  natural justice  can operate  only in areas not  covered by  any law  validly made. If a statutory provision either  specifically or  by inevitable implication excludes the  application of  the rules  of natural  justice then the Court cannot ignore the mandate of the Legislature. Whether or  not the application of the principles of natural justice in a given case has been excluded in the exercise of statutory power  depends upon  the language and basic scheme of the  provision conferring  the power,  the nature  of the power the  purpose for  which it is conferred and the effect of that power. [556A-B]      3. The  maxim audi  alteram partem has many facets. Two of them  are (a)  notice of  the case  to be  met,  and  (b) opportunity to explain. The rule cannot be     sacrificed at the altar  of administrative  convenience or  celerity; for, convenience and  justice are  often not  on speaking  terms. Difficulties, however, arise when the statute conferring the power does not expressly exclude this rule but its exclusion is sought  by implication  due to  the presence  of  certain factors such  as urgency where the obligation to give notice

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and opportunity  to be  heard would  obstruct the  taking of prompt action  of a  preventive  or  remedial  nature.  Audi alteram partem  rule  may  be  disregarded  in  an  emergent situation where  immediate action brooks no delay to prevent some imminent danger or injury or hazard to paramount public interests. Section  133 of  the Code  of Criminal  Procedure empowers  the  magistrates  specified  therein  to  make  an exparte conditional  order in  emergent cases for removal of dangerous public  nuisances. Action  under section  17  Land Acquisition Act  furnishes another  such instance. Similarly action on grounds of public safety public health may justify disregard of the rule of prior hearing. [556C-H]      4. Cases  where owing  to the  compulsion of  the  fact situation or  the necessity  of taking speedy action no pre- decisional hearing is given but the action, is followed soon by a  full post-decisional hearing to the person affected do not in  reality constitute  an exception to the audi alteram partem rule.  To call  such cases as exception is a misnomer because they do not exclude fair play in action but adapt it to the  urgency of  the situation by balancing the competing claims of hurry and hearing. [560H-561A]      5. The  general  principle  as  distinguished  from  an absolute rule  of uniform application seems to be that where a statute does not in terms exclude this rule 538 of prior  hearing but contemplates a post-decisional hearing amounting to  a full  review of the original order on merits then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. [561G]      6. If  the statute  conferring the power is silent with regard to the giving of pre-decisional hearing to the person affected  and  the  administrative  decision  taken  by  the authority involves  civil consequences of a grave nature and no full  review or appeal on merits against that decision is provided courts will be extremely reluctant to construe such a statute  as excluding the duty of affording even a minimal hearing shorn  of all  its  formal  trappings  and  dilatory features  at   the  pre-decisional   stage,  unless   viewed pragmatically it  would paralyse  the administrative process or frustrate the need for utmost promptitude. [561H]      7(i).  A   comparison  of  the  provisions  of  Section 18A(1)(b) and Section  18AA(1)(c), bring out two main points of distinction: First, action under Section 18A(1)(b) can be taken only  after  an  investigation  had  been  made  under Section 15; while under Section 18AA(1)(a) or (b) action can be taken  without such  investigation. The  language, scheme and setting of Section 18AA read in the light of the Objects and Reasons  for enacting  this provision make this position clear beyond  doubt.  Second,  before  taking  action  under Section 18A(1)(b),  the Central  Government has  to form  an opinion on  the basis  of the  investigation conducted under section 15,  in regard  to the  existence of  the  objective fact, namely:  that  the  industrial  undertaking  is  being managed in  a manner  highly detrimental  to  the  scheduled industry  concerned  or  to  public  interest;  while  under section 18A(1)(a)  the Government has to satisfy itself that the persons incharge of the undertaking have brought about a situation likely  to cause fall in production, by committing any of  the three kinds of acts specified in that provision. This shows  that the preliminary objective fact attributable to the persons in charge of the management or affairs of the undertaking, on the basis of which action may be taken under section 18(A)(1)(b),  is of  far wider  amplitude  than  the circumstance, the  existence of  which is a sine qua non for taking action  under section  18AA(1).  The  phrase  "highly

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detrimental to the scheduled industry or public interest" in section 18-A  is capable of being construed to cover a large variety of acts or things which may be considered wrong with the manner  of running  the industry  by the  management. In contrast with  it, action  under section  18AA(1)(a) can  be taken only  if the  Central  Government  is  satisfied  with regard to  the existence of the twin conditions specifically mentioned  therein,   on  the   basis  of  evidence  in  its possession. [569D-H]      7(ii). An  analysis of  section  18AA(1)(a),  indicates that as a necessary preliminary to the exercise of the power thereunder, the  Central Government  must be satisfied "from documentary or  other evidence  in its possession" in regard to the  co-existence of  two  circumstances:  (i)  that  the persons in  charge of  the industrial  undertaking  have  by committing any  of these acts, namely, reckless investments, or creation  of incumbrances  on the  assets  of  industrial undertaking, or  by diversion  of  funds,  brought  about  a situation which  is likely  to affect  the production of the article  manufactured   or  produced   in   the   industrial undertaking, and  (ii) that immediate action is necessary to prevent such a situation.                                                     [570B-D]      8. It cannot be laid down as a general proposition that whenever a  statute confers  a power  on  an  administrative authority and  makes the  exercise of that power conditional on the formation of an opinion by that authority in regard 539 to the  existence of  an immediacy, its opinion in regard to that preliminary  fact is  not open  to judicial scrutiny at all.  While   it  may   be  conceded   that  an  element  of subjectivity is  always involved in the formation of such an opinion, the  existence of  the circumstances from which the inference constituting  the opinion, as the sine qua non for action, are  to be  drawn, must  be  demonstrable,  and  the existence of  such "circumstances",  if questioned,  must be proved at least prima facie. [571 E-G]      9. From  a plain  reading of  section 18AA, it is clear that it  does not  expressly in unmistakable and unequivocal terms exclude  the application  of the  audi alteram  partem rule at the pre-decisional stage. [574B]      In  the   instant  case,  so  far  as  Kanpur  Unit  is concerned, it  was lying  closed for  more than three months before the  passing of  the impugned  order.  There  was  no ’immediacy’ in  relation to  that unit,  which could absolve the Government  from the  obligation of complying fully with audi alteram  partem rule  at  the  pre-decisional  or  pre- takeover stage. [583A]      Keshav Mills  Co. Ltd.  v. Union  of  India,  [1973]  3 S.C.R. 22;  Kamla Prasad  Khetan v.  Union of  India, [1957] S.C.R. 1052;  Maneka Gandhi  v. Union  of  India,  [1978]  2 S.C.R. 621;  Sukhdev Singh & Ors. v. Bhagatram Sardar Singh, [1975] 3 S.C.R. 619; A. K. Kraipak v. Union of India, [1970] 1 S.C.R. 457; Ridge v. Baldwin, [1964] A.C. 40; 196; Heatley v. Tasmanian  Racing &  Gaming Commission, 14 Australian Law Reports 519; Nawabkhan Abbaskhan v. State of Gujarat, [1974] 3 S.C.R. 427; State of Orissa v. Dr. Bina Pani Dei, [1962] 2 S.C.R. 625; Ambalal M. Shah v. Hathi Singh Manufacturing Co. Ltd. [1962]  3 S.C.R.  171; and  S. L.  Kapoor v. Jagmohan & Ors., [1981] 1 S.C.R. 746, referred to. (Per Chinnappa Reddy, J. dissenting)      The principles  of natural justice are not attracted to the situations  contemplated by  section 18AA  of Industries (Development and Regulation) Act.      1. Natural  justice like  Ultra Vires and Public Policy

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is a  branch of  the public  law and  is a formidable weapon which can be wielded to secure justice to the citizen. While it may  be used  to protect  certain fundamental  liberties, civil and  political rights,  it may be used as indeed it is used more often than not, to protect vested interests and to obstruct the  path of  progressive change. The time has come to make  an appropriate  distinction between natural justice in its  application  to  fundamental  liberties,  civil  and political rights  and natural  justice in its application to vested interests. [590A-B]      2. Our  constitution as  befits the  Constitution of  a Socialist  Secular   Democratic  Republic,   recognises  the paramountcy of  the public  weal over  the private interest. Natural justice,  ultra vires,  public policy,  or any other rule of interpretation must, therefore, conform, grow and be tailored to  serve the  public interest  and respond  to the demands of an evolving society. [590C]      3(i). The principles of natural justice have taken deep root in  the judicial conscience of our people. They are now considered  so  fundamental  as  to  be  implicit  in  every decision  making   function,  judicial,   quasi-judicial  or administra- 540 tive. Where  authority functions  under a  statute  and  the statute provides  for the  observance of  the principles  of natural justice in a particular manner, natural justice will have to  be observed  in that  manner and in no other. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. Where the conflict is  between the  public interest  and  the  private interest the  presumption must  necessarily be weak and may, therefore, be  readily displaced.  The presumption  is  also weak, where  what are  involved are mere property rights. In cases of  urgency, particularly where the public interest is involved, preemptive  action may  be a  strategic necessity. Even in  cases of  preemptive  action,  if  the  statute  so provides or  if the Courts so deem fit in appropriate cases, a postponed hearing may be substituted for natural justice.                                             [590A-C; 591F-G]      3(ii). Where  natural justice is implied, the extent of the implication and the nature of the hearing must vary with the statute, the subject and the situation.                                                       [592B]      4. The  absence of the expression ’immediate action’ in section 18AA(1)(b)  does not  make any  difference.  Section 18AA(1)(a) refers  to a situation where immediate preventive action  may   avert  a   disaster,  whereas   section   18AA contemplates a situation where the disaster has occurred and action is  necessary to  restore  normalcy.  Restoration  of production where production has stopped in a key industry or industrial undertaking  is as  important and  urgent in  the public  interest   as  prevention   of  a   situation  where production may  be affected. Immediate action is, therefore, as  necessary  in  the  situation  contemplated  by  section 18AA(1)(b) as  in  the  situation  contemplated  by  section 18AA(1)(a).                                                    [596 F-G]      5. The  marginal note  refers to the power to take over without investigation  but there  is no sufficient reason to suppose that  the word  immediate is  used only  to  contra- distinguish  it   from  the  investigation  contemplated  by section 15  of the  Act, though  of course  a consequence of immediate action  under section 18AA may be to dispense with the enquiry  under section  15. In fact, facts which come to

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light during the course of an investigation under section 15 may form the basis of action under section 18AA(1)(a). Where in the  course of  an investigation  under section  15 it is discovered that the management have, by reckless investments or creation  of encumbrances on the assets of the industrial undertaking  or  by  diversion  of  funds  brought  about  a situation which  is likely  to affect  the production of the articles  manufactured   or  produced   in  the   industrial undertaking, if  the Government  is satisfied that immediate action is necessary to prevent such a situation, there is no reason why  the Central Government may not straightaway take action  under   section  18AA(1)(a)   without  waiting   for completion of investigation under section 15. [597A-B]      6. Where there is a provision in the statute itself for revocation of  the order  by the  very authority  making the decision, it appears to be unnecessary to insist upon a pre- decisional observance of natural justice. [598A]      7. The  likelihood of  production being  jeopardized or the stoppage  of production  in a key industrial undertaking is a  matter of grave concern affecting the public interest. Parliament has taken so serious a view of the matter that it has authorised  the Central  Government  to  take  over  the management of the industrial undertaking if immediate action may prevent  jeopardy to  production or  restore  production where it has already stopped. The necessity for immediate 541 action by  the Central Government contemplated by Parliament is  definitely   indicative  of  the  exclusion  of  natural justice. It  is not  as  if  the  owner  of  the  industrial undertaking is  left with no remedy. He may move the Central Government under section 18-F to cancel the order made under section 18AA. [598C-D]      8. Neither  section 18-F of the Industries (Development and Regulation)  Act nor  section 21  of the General Clauses Act by  itself excludes  natural justice.  The exclusion  of natural justice  where such  exclusion is not express has to be implied  by reference to the subject, the statute and the statutory situation.  Where  an  express  provision  in  the statute itself  provides for  a post  decisional hearing the other provisions  of the Statute will have to be read in the light  of   such  provision  and  the  provision  for  post- decisional hearing  may then  clinch the  issue  where  pre- decisional natural  justice appears  to be  excluded on  the other terms  of the  statute. That a post-decisional hearing may also  be had  by the  terms of section 21 of the General Clauses Act  may not  necessarily help in the interpretation of the provisions of the statute concerned. [599 A-C]      Ridge v.  Baldwin, 1964 A.C. p. 40; Annie G. Phillip v. Commissioner of  Internal Revenue,  75 L.E.d.  1289; John H. Fahey v. Paul Mallonee, 91 L.E.d. 2030; Margarita Fuentes v. Robert L.  Shevin, Attorney General of Florida, 32 L.E.d. 2d 556 and  Lawrence Mitchell  v. W. T. Grant Co., 40 L.E.d. 2d 406, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 1629, 1857 & 2087 of 1979.      From the Judgment and Order dated 1-5-1979 of the Delhi High Court in Civil Writ No. 408 of 1978.      F. S. Nariman, S. D. Parekh, A. D. Mehta, Lalit Bhasin, Vinay Bhasin and Vineet Kumar for the Appellants in C.A. No. 1629 and for R. 1 in C.A. No. 2087/79.      V. N.  Tarkunde, S.  Ganesh, K.  Vasudev  and  T.V.S.N.

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Chari for the Appellants in CA 1857/79.      Soli J.  Sorabjee, Solicitor General and Girish Chandra for Appellants  in CA  2087 and  for Respondent  (UOI) in CA 1629/79.      Soli J.  Sorabjee, Solicitor  General, S. Ganesh Vasdev and T.V.S.N. Chari for Respondent No. 2 in CA 1629.      T. V.  S. N.  Chari for  Respondent No.  4 in  CA  2087 Suresh Parik and S. Swarup for Respondent No. 3 in CA 2087.      F. S.  Nariman, B.  P. Maheshwari  and Suresh Sethi for Respondent-Swadeshi Cotton Mills Co. Ltd. in CA No. 1857 and 2087/79.      C. M. Chopra for Intervenor.      The Judgment of R. S. Sarkaria and D. A. Desai, JJ. was delivered by  Sarkaria, J.  O. Chinnappa  Reddy, J.  gave  a dissenting Opinion. 542      SARKARIA,J. These  appeals arise  out  of  a  judgment, dated May  1, 1979,  of the  High Court  of  Delhi,  in  the following circumstances:      Appellant No.  1  in  Civil  Appeal  1629  of  1979  is Swadeshi Cotton  Mills Co.  Ltd. (hereinafter referred to as the Company).  It was incorporated as a private company with an authorised  capital of  Rs.  30  lakhs  in  1921  by  the Horseman family  by converting  their  partnership  business into a  Private Joint  Stock Company. Its capital was raised in 1923  to Rs. 32 lakhs and thereafter in 1945 to Rs. 52.50 lakhs by issue of bonus shares. In 1946, the Jaipuria family acquired substantial holding in the Company. Jaipuria family is the  present management. By issue of further bonus shares in 1946,  the capital  of the  Company was  increased to Rs. 122.50 lakhs.  In 1948,  the paid-up  capital of the Company was raised  to Rs.  210 lakhs  by the issue of further bonus shares. The  subscribed and issued capital consisting mainly of the  bonus shares  has since remained constant at Rs. 210 lakhs.      In the year 1946, the Company had only one undertaking, a Textile  Unit at  Kanpur, known  as "The  Swadeshi  Cotton Mills, Kanpur".  Between 1956  and 1973,  the Company set up and/or acquired  five further  Textile Units in Pondicherry, Naini, Udaipur,  Maunath Bhanjan  and Rae  Bareilly. Each of these  six   Units  or   undertakings  of  the  Company  was separately registered  in accordance  with the provisions of Section 10  of the  Industries (Development  and Regulation) Act, 1951 (hereinafter called the IDR Act).      In addition  to these  six industrial undertakings, the Company (it  is claimed)  had other  distinct businesses and assets. It  holds inter  alia 97  per  cent  shares  in  the subsidiary, Swadeshi  Mining and Manufacturing Company Ltd., which owns  two sugar  Mills. The  Company  claims,  it  has substantial income  from  other  businesses  and  activities including investments  in its subsidiary and in other shares and  securities   which  include   substantial  holding   of 10,00,000 Equity Shares of Rs. 10/- each in Swadeshi Polytex Ltd., representing  30 per  cent of the total equity capital value of  Swadeshi Polytex Ltd., the intrinsic value whereof exceeds Rs. 5 crores.      The Company made considerable progress during the years 1957 to  1973. The  reserves  and  surplus  of  the  Company increased from  Rs. 2.3  crores in 1957 to Rs. 4.3 crores in 1973-74, but  declined to  Rs. 2.8  crores in  1976-77.  The fixed assets  of the  Company increased  from 5.8  crores in 1957 to 19 crores in 1973-74, but declined to Rs. 18 crores, registering a marginal decrease of Rs. 1 crore in 1976-77. 543      The Company  maintained separate  books of accounts for

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each of  its six  industrial undertakings.  From  and  after April 1973, the Company maintained separate sets of books of accounts of the businesses and assets other than of the said six industrial  undertakings. Annual  accounts  of  the  six industrial undertakings  were first  prepared separately  in seven sets  which were  separately audited. The consolidated annual accounts  of the Company were then prepared from such annual accounts  at the  registered office of the Company at Kanpur, and after audit, were placed before the shareholders of the  Company. The Company made over-all profits up to the year 1969  and even thereafter up to 1975. The Balance Sheet showed that  the Company  suffered a loss of Rs. 86.23 lakhs after providing depreciation of Rs. 93.93 lakhs and gratuity of Rs.  48.79 lakhs,  though the  trading results  showed  a gross profit  of Rs.  56.49 lakhs.  During the  year  ending March 31,  1976, the  Company again  suffered a  loss of Rs. 294.82 lakhs  after providing  for  depreciation.  The  last Balance Sheet  and Profit  & Loss  Account  adopted  by  the shareholders and  published by  the Company  relates to  the year ending  March 31,  1977.  It  shows  that  the  Company suffered a  loss of  Rs.  200.34  Lakhs  after  taking  into account depreciation  of  Rs.  73.27  lakhs  which  was  not provided in accounts.      Between 1975  and 1978,  the Company created the under- noted encumbrances on the fixed assets: ------------------------------------------------------------ Unit       As on      As on      As on    As on      Remarks            31-3-75    31-3-76    31-3-77  31-3-78                (in lakhs)          (in lakhs) ------------------------------------------------------------  1           2           3           4        5         6 ------------------------------------------------------------ (i) Pondi-  2.40        Nil         Nil    Nil     On fixed     chery                                          assets of                                                    of Pondi-                                                    cherry                                                    Unit. (ii) Maun-  11.40       5.71        Nil    Nil     On fixed      ath                                           assets of     Bhanjan                                        Unit. (iii)Udaipur 2.76       Nil         Nil    Nil     On fixed                                                    assets of                                                    Udaipur                                                    Unit. (iv) Kanpur 13.44       9.75       5.95    2.00    On fixed      (ICICI)                                        asset of                                                    Kanpur                                                    Unit. (v) Kanpur   Nil       150.00    150.00   150.00   On fixed                                                    assets of                                                    Kanpur,                                                      Maunath                                                    Bhanjan &                                                    Pondi-                                                    cherry                                                    Units for                                                    wages and                                                    Bank Dues ------------------------------------------------------------ 544 ------------------------------------------------------------  1           2           3           4        5         6 ------------------------------------------------------------ vi)Company  67.53       68.45      59.44    59.44  On diesel                                                   generating

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                                                 sets    of                                                   Kanpur,                                                   Naini,                                                   Pondi-                                                      cherry,                                                   Maunath                                                   Bhanjan                                                   and Rae                                                     Bareilly                                                   Units. (vii)Udaipur Nil       25.00        25.00   25.00  On fixed                                                   assets  of                                                   Udaipur                                                   Unit   for                                                   gratuity                                                   fund. (viii)Naini  Nil        Nil         70.00   70.00  On fixed                                                   assets  of                                                   Naini  for                                                   gratuity. (ix) Kanpur, 106.20    75.31        50.67   15.97  On new      Rae                                          machinery      Bareilly                                     of Kanpur,      & Naini                                      Rae                                                   Bareilly &                                                   Naini                                                   Units                                                   under  de-                                                   ferred                                                   payment                                                   credit.           -------------------------------------------------              203.73   334.22         361.06  322.41 ------------------------------------------------------------      The  borrowings  of  the  Kanpur,  Pondicherry,  Naini, Udaipur, Maunath  Bhanjan and  Rae  Bareilly  Units  of  the Company as on March 31, 1978 against current assets were Rs. 256.78,  183.92,   271.05,  70.72,  47.98  and  55.82  lakhs respectively. All  the encumbrances  on fixed assets (except the encumbrances  of Rs.  70 lakhs  on the  fixed assets  of Naini Unit  for gratuity  funding  to  get  the  benefit  of Section 44A  of the  Income-tax Act)  were created  prior to March 31, 1976.      In  the   accounting  year   1976-77,  only   one   new encumbrance was  created by the Company on its fixed assets. The following  are statistics  of production  in each of the six units  of the  Company during the years 1975-76, 1976-77 and 1977-78: ------------------------------------------------------------ Name of  the Unit            1975-76     1976-77     1977-78                                  (figures in lakhs) ------------------------------------------------------------ Naini                     66.13 kgs.  65.76 kgs.  72.35 kgs. Udaipur                   18.51 kgs.  18.50 kgs.  18.60 kgs. Maunath Bhanjan           15.59 kgs.  16.63 kgs.  18.49 kgs. Rae Bareilly              12.09 kgs.  13.58 kgs.  14.00 kgs. Pondicherry              170.52 Mtrs 178.77 Mtrs 176.54 Mtrs Kanpur                   318.75 Mtrs 472.12 Mtrs 238.22 Mtrs ------------------------------------------------------------ 545      On April  13, 1978, the Government of India in exercise of its  power under clause (a) of sub-section (1) of Section 18AA of  the IDR  Act, passed an order (hereinafter referred to as the impugned order) which reads as follows:           "SO   265(E)/18AA/IDRA/78-Whereas    the   Central

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    Government is  satisfied from the documentary and other      evidence in  its possession, that the persons in charge      of the industrial undertakings namely,           (i)  M/s. Swadeshi Cotton Mills, Kanpur,           (ii) M/s. Swadeshi Cotton Mills, Pondicherry,           (iii)M/s. Swadeshi Cotton Mills, Naini,           (iv) M/s. Swadeshi Cotton Mills, Maunath Bhanjan,           (v)  M/s. Udaipur Cotton Mills, Udaipur, and           (vi) Rae Bareilly  Textile Mills,  Rae Bareilly of                M/s.  Swadeshi  Cotton  Mills  Company  Ltd.,                Kanpur (hereinafter  referred to  as the said                industrial under  takings), have, by creation                of encumbrances  on the  assets of  the  said                industrial  undertakings,   brought  about  a                situation which has affected and is likely to                further affect  the  production  of  articles                manufactured  or   produced   in   the   said                industrial undertakings  and  that  immediate                action  is   necessary  to   prevent  such  a                situation;           Now, therefore,  in exercise of power conferred by      clause (a)  of sub-section  (1) of  Section 18AA of the      Industries (Development  and Regulation)  Act, 1951 (65      of 1951),  the Central Government hereby authorises the      National  Textile   Corporation  Limited   (hereinafter      referred to  as the Authorised person) to take over the      management  of   the  whole   of  the  said  industrial      undertakings,  subject   to  the  following  terms  and      conditions, namely:-           (i)  The authorised  person shall  comply with all                the directions  issued from  time to  time by                the Central Government;           (ii) the authorised person shall hold office for a                period  of   five  years  from  the  date  of                publication of  this order  in  the  Official                Gazette;           (iii)the  Central  Government  may  terminate  the                appointment of  the authorised person earlier                if it considers necessary to do so. 546           This order  shall have effect for a period of five      years commencing  from the  date of  its publication in      the Official Gazette.                                         Sd/- R. Ramakrishna      Joint Secretary to the Govt. of India (Seal)."      On April  19,  1978,  three  petitioners,  namely,  the Company through  its Joint Secretary, Shri Bhim Singh Gupta, its  Managing   Director,  Dr.  Rajaram  Jaipuria,  and  its subsidiary company,  named Swadeshi Mining and Manufacturing Company, through its Directors and Shareholders filed a writ petition under  Article 226 of the Constitution in the Delhi High Court  against the  Union of  India  and  the  National Textile  Corporation   to  challenge  the  validity  of  the aforesaid Government  Order dated  April 13,  1978. The writ petition was  further supplemented  by subsequent affidavits and rejoinders.      The Union of India and the National Textile Corporation Ltd., who  has been  authorised to  assume management of the undertakings concerned  were impleaded,  as respondents. The writ petition  first came  up for  hearing before a Division Bench who  by its order dated August 11, 1978, requested the Chief Justice  to refer  it to  a larger Bench. The case was then heard  by a  three Judge Bench who by their order dated October 12, 1978, requested the Hon’ble the Chief Justice to

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constitute a  still larger  Bench to  consider the  question whether a  prior hearing  is necessary  to be  given to  the persons affected  before the  order under  Section  18AA  is passed. Ultimately,  the reference came up for consideration before a Full Bench of five Judges to consider the question, which was reframed by the Bench as under:           "Whether  in   construing  Section   18AA  of  the      Industries (Development and Regulation) Act, 1951, as a      pure question  of law  compliance with the principle of      audi alteram partem is to be implied. If so,           (a) whether  such hearing  is to  be given  to the      parties who would be affected by the order to be passed      under the  said Section  prior to  the passing  of  the      order; or           (b) whether  such hearing is to be given after the      passing of the order; and           (c) if  prior hearing  is to be normally given and      the order  passed under the said Section is vitiated by      not giving of such 547      hearing whether  such vice can be cured by the grant of      a subsequent hearing."      The Bench  by  a  majority  (consisting  of  Deshpande, C.J.,R. Sacher and M. L. Jain, JJ.) answered this three fold question as follows:           "(1) Section  18AA(1) (a)  (b) excludes the giving      of prior  hearing to the party who would be affected by      order thereunder.           (2) Section  18F expressly  provides for  a  post-      decisional hearing  to  the  owner  of  the  industrial      undertaking, the  management of  which  is  taken  over      under Section 18AA to have the order made under Section      18AA cancelled on any relevant ground.           (3) As the taking over of management under Section      18AA is  not vitiated  by the  failure to  grant  prior      hearing, the question of any such vice being cured by a      grant of a subsequent hearing does not arise." H. L. Anand and N. N. Goswamy, JJ, however dissented. In the opinion of  the minority,  in compliance with the principles of natural  justice, a  prior hearing  to the  owner of  the undertaking was required to be given before passing an order under Section  18AA, that  the second question did not arise as the  denial of a prior hearing would not cure the vice by the grant of subsequent hearing, but it would be open to the Court to moderate the relief in such a way that the order is kept alive  to the  extent necessary until the making of the fresh  order  to  subserve  public  interest,  and  to  make appropriate directions to ensure that the subsequent hearing would be  a full and complete review of the circumstances of the take-over  and for  the preservation  and maintenance of the property during the interregnum.      After the  decision of  the  reference,  the  case  was reheard on  merits  by  a  Bench  of  three  learned  Judges (consisting of  Deshpande, C.J.,  Anand and M. L. Jain, JJ.) who by  their judgment,  dated May  1, 1979, disposed of the writ-petition. The  operative part  of the judgment reads as under:           "In the  result,  the  writ-petition  succeeds  in      part, the  challenge to  the validity  of the  impugned      order  fails   and  to  that  extent  the  petition  is      dismissed. The  petition succeeds in so far as it seeks      to protect from the impugned order the corporate entity      of the  company, the corporate entity of the subsidiary      and its  assets, the  holding of the company in Polytex      and the  assets and  property of  the company which are

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    not referable  to any  of the  industrial undertakings.      The respondents  are  hereby  restrained  from  in  any      manner interfering 548      with the  corporate entity,  the  assets  and  property      which are  outside the  impugned order. The respondents      would release  from  its  control  and  custody  and/or      deliver possession  of any  assets or  property of  the      company, which  are not  referable  to  the  industrial      undertakings in terms of the observations made in paras      46 and  47 of  the judgment,  within a  period of three      months from  today  (May  1,  1979).  In  the  peculiar      circumstances the  parties would  bear their respective      costs."      On the application of the Company, the Delhi High Court certified under  Article 133  of the  Constitution that  the case was fit for appeal to this Court. Subsequently, on July 12,1979, a similar certificate was granted by the High Court to the  Union of  India and the National Textile Corporation Ltd. Consequently,  the Company,  the Union of India and the National Textile  Corporation have filed Civil Appeals 1629, 2087 and  1857 of 1979, respectively, in this Court. All the three appeals will be disposed of by this judgment.      The primary,  two-fold proposition posed and propounded by Shri  F. S.  Nariman, learned  counsel for the appellant- Company in Civil Appeal 1629 of 1979, is as follows:      (a) Whether  it is  necessary to  observe the  rules of natural justice  before  issuing,  a  notified  order  under Section 18AA, or enforcing a decision under Section 18AA, or      (b) Whether  the  provisions  of  Section  18AA  and/or Section 18F  impliedly  exclude  rules  of  natural  justice relating to prior hearing.      There were  other contentions also which were canvassed by the  learned counsel  for  the  parties  at  considerable length. But  for reasons mentioned in the final part of this judgment, we  do not think it necessary, for the disposal of these appeals to deal with the same.      Thus, the  first point for consideration is whether, as a matter  of law,  it is  necessary, in  accordance with the rules of  natural justice, to give a hearing to the owner of an undertaking before issuing a notified order, or enforcing a decision of its take-over under Section 18AA.      Shri Nariman  contends that  there is  nothing  in  the language, scheme or object of the provisions in Section 18AA and/or  Section   18F  which   expressly  or  by  inevitable implication, excludes  the application  of the principles of natural justice  or the  giving  a  pre-decisional  hearing, adapted to  the situation,  to the owner of the undertaking. It is  submitted that  mere use  of the  word "immediate" in sub-clause  (a)   of  Section  18AA  (1)  does  not  show  a legislative intent to exclude the 549 application of  audi alterm  partem rule,  altogether. It is maintained that  according to  the decision of this Court in Keshav Mills  Company Ltd.  v. Union  of India, even after a full investigation has been made under Section of the I.D.R. Act, the  Government has  to observe  the rules  of  natural justice and  fairplay, which  in the  facts of  a particular case, may  include the  giving  of  an  opportunity  to  the affected owner  to explain  the adverse findings against him in the  investigation report.  In support of his contention, that the  use of  the word "immediate" in Section 18AA(1)(a) does  not  exclude  natural  justice,  learned  counsel  has advanced these reasons:      (i) The word "immediate" in clause (a) has been used in

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contra distinction  to ’investigation’.  It only  means that under  Section  18AA  action  can  be  taken  without  prior investigation under  Section 15, if there is evidence in the possession of the Government, that the assets of the Company owning the undertaking are being frittered away by doing any of the  three  things  mentioned  in  clause  (a);  or,  the undertaking has  remained closed  for a  period of  not less than three  months and  the condition of plant and machinery is such that it is possible to restart the undertaking. This construction, that  the  use  of  the  word  "immediate"  in Section 18AA(1)(a)  only dispenses  with investigation under Section 15  and not with the principle of audi alterm partem altogether, is  indicated by the marginal heading of Section 18AA and  para 3  of the Statement of Objects and Reasons of the Amendment Bill which inserted Section 18AA, in 1971.      (ii) The word ’immediate’ occurs only in clause (a) and not in  clause (b)  of Section  18AA(1). It  would be odd if intention to  exclude this  principle of  natural justice is spelt out  in one  clause of the sub-section, when its other clause does not exclude it.      (iii) Section  18F does  not exclude  a  pre-decisional hearing. This section was there, when in Keshav Mills’ case, (ibid), it  was held  by this  Court, that even at the post- investigation stage,  before passing  an order under Section 18A, the  Government must  proceed fairly in accordance with the rules  of natural justice. The so-called post-decisional hearing contemplated  by Section  18F cannot  be-and is  not intended to  be-a substitute  for a  pre-decisional hearing. Section 18F,  in terms,  deals with  the  power  of  Central Government  to  cancel  an  order  of  take-over  under  two conditions, namely:  First when  "the purpose  of  an  order under Section  18A has  been fulfilled, or, second when "for any other  reason it  is not necessary that the order should remain in  force". "Any other reason" has reference to post- "take- 550 over" circumstances  only,  and  does  not  cover  a  reason relatable  to   pre-takeover  circumstances.   An  order  of cancellation  under   Section  18F   is   intended   to   be prospective. This  is clear  from the  plain meaning  of the expressions "remain  in force", "necessary" etc. used in the Section.      Section 18 incorporates only a facet, albeit qualified, of Section  21 of  the General  Clauses Act,  (Kamla  Prasad Khetan v.  Union of  India,  referred  to.)  Therefore,  the illusory right  given by  Section 18F to the aggrieved owner of the  undertaking, to make an application for cancellation of the  order, is  not a full right of appeal on merits. The language of  the Section impliedly prohibits an enquiry into circumstances that led to the passing of the order of "take- over", and under it, the aggrieved person is not entitled to show that on merits, the order was void ab initio.      As held  by a  Bench (consisting  of Bhagwati and Vakil JJ.) of  the  Gujarat  High  Court,  in  Dosabhai  Ratanshah Keravale v.  State of  Gujarat, a power to rescind or cancel an order,  analogous  to  that  under  Section  21,  General Clauses Act,  has to  be construed as a power of prospective cancellation, and  not of  retroactive obliteration.  It  is only the  existence of  a full right of appeal on the merits or the  existence of a provision which unequivocally confers a power  to reconsider, cancel and obliterate completely the original order, just as in appeal, which may be construed to exclude natural  justice or  a pre-decisional  hearing in an emergent situation.  (Reference on  this point has been made to Wade’s Administrative Law, 4th Edition, PP.464 to 468.)

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    (iv) ’Immediacy’ does not exclude a duty to act fairly, because, even  an emergent  situation can  co-exist with the canons of natural justice. The only effect of urgency on the application of  the principle  of fair-hearing would be that the width,  form  and  duration  of  the  hearing  would  be tailored to  the situation  and reduced  to  the  reasonable minimum so  that it does not delay and defeat the purpose of the contemplated action.      (v) Where  the civil consequences of the administrative action- as  in the  instant case-are grave and its effect is highly prejudicial to the rights and interests of the person affected and  there is nothing in the language and scheme of the  statute   which  unequivocally  excludes  a  fair  pre- decisional hearing, and the post-decisional hearing provided therein is not a real remedial hearing equitable to a full 551 right of  appeal, the  Court should  be  loath  to  infer  a legislative intent to exclude even a minimal fair hearing at the  pre-decisional  stage  merely  on  ground  of  urgency. (Reference in  this  connection  has  been  made  to  Wade’s Administrative Law, ibid, page 468 bottom.)      Applying the proposition propounded by him to the facts of the  instant case,  Shri Nariman  submits that  there was ample time  at the  disposal of  the Government  to  give  a reasonably short  notice to the Company to present its case. In this connection, it is pointed out that according to para 3 of  the further  affidavit filed  by Shri  Daulat  Ram  on behalf of  the Union  of India  and other  respondents,  the Central Government  had in  its  possession  two  documents, namely: (a)  copy of  the Survey  Report  on  M/s.  Swadeshi Cotton Mills  Company Ltd.,  covering the period from May to September, 1977  prepared  by  the  office  of  the  Textile Commissioner, and  (b) Annual  Report (dated  September  30, 1977) of  the Company for the year ending March 31, 1971. In addition, the  third circumstance mentioned in the affidavit of Shri  Daulat Ram  is, that  by an order dated January 28, 1978,  the  Central  Government  appointed  four  Government Officials, including  one from  the office  of  the  Textile Commissioner, to  study the  affairs of  the Company  and to make  recommendation.  This  Official  Group  submitted  its report on  February 16,  1978. It  is  submitted  that  this evidence on  the basis  of  which  the  impugned  order  was passed, was  not disclosed to the appellant Company till May 1978, only  after it had filed the writ petition in the High Court to challenge the impugned order. It is emphasised that if the  Survey  Report  was  assumed  to  contain  something adverse to  the appellants,  there was time enough-about six weeks between  the submission  of the  Survey Report and the passing of the impugned order for giving a short, reasonable opportunity  to   the  appellants  to  explain  the  adverse findings against  them. It  is urged  that even if there was immediacy, situational  modifications could  be made to meet the requirement  of fairness,  by  reducing  the  period  of notice; that  even the  manner and form of such notice could be simplified  to eliminate delay, that telephonic notice or short opportunity  for furnishing  their explanation  to the Company might  have satisfied  the requirements  of  natural justice. Such  an opportunity  of hearing  could  have  been given after the passing of a conditional tentative order and before  its   enforcement  under   Section  18AA.   For  the interregnum suitable  interim action  such as  freezing  the assets of   the  Company or  restraining  the  Company  from creating further  encumbrances, etc.  could be  taken  under Section 16. 552

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    Reference in  this connection  has been  made to Keshav Mills  case   (ibid);  Mohinder   Singh  Gill   v.  Election Commissioner of  India; Maneka  Gandhi  v.  Union  of  India Sukhdev Singh  & Ors.  v.  Bhagatram  Sardar  Singh;  A.  K. Kraipak v.  Union of  India; Ridge  v. Baldwin;  Heatley  v. Tasmanian Racing & Gaming Commission; Commissioner of Police v. Tanos;  Secretary of  State for  Education &  Science  v. Metropolitan  Borough  of  Tameside;  Wiseman  v.  Borneman; Nawabkhan Abbaskhan  v. State of Gujarat and State of Orissa v. Dr. Bina Pani Dei.      As against  this, Shri Soli Sorabji, learned Solicitor- General appearing  on behalf  of respondent 1, contends that the presumption in favour of audi alteram partem rule stands impliedly displaced  by the  language, scheme,  setting, and the  purpose  of  the  provision  in  Section  18AA.  It  is maintained that Section 18AA, on its plain terms, deals with situations where  immediate preventive  action is  required. The paramount concern is to avoid serious problems which may be caused  by fall  in production.  The purpose  of an order under Section  18AA is  not to  condemn  the  owner  but  to protect the scheduled industry. The issue under Section 18AA is not  solely between  the Government and the management of the industrial  under taking.  The object  of taking  action under this  Section is to protect other outside interests of the community  at large  and the workers. On these premises, it  is  urged,  the  context,  the  subject-matter  and  the legislative history  of Section  18AA negative the necessity of giving  a prior  hearing;  that  Section  18AA  does  not contemplate any  interval between  the making  of  an  order thereunder and  its enforcement,  because it  is designed to meet an  emergent situation  by immediate preventive action. Shri Sorabji  submits that this rule of natural justice in a modified form  has been  incorporated in  Section 18F  which gives an  opportunity of  a post-decisional  hearing to  the owner of the undertaking who, if he feels aggrieved, can, on his application,  be heard  to show  that even  the original order under  Section 18AA  was passed on invalid grounds and should be cancelled or rescinded. Thus, 553 Shri Sorabji  does not  go to  the length of contending that the principles  of natural justice have been fully displaced or completely excluded by Section 18AA. On the contrary, his stand is  that on  a true  construction of Section 18AA read with Section  18F, the  requirements of  natural justice and fair-play can  be read  into the  statute only "in so far as conformance to  such canons can reasonably and realistically be required  of it", by the provision for a remedial hearing at a subsequent stage.      Shri Sorabji  further submits  that since  Section  18F does not  specify  any  period  of  time  within  which  the aggrieved  party   can  seek   the  relief  thereunder,  the opportunity of  full, effective  and post-decisional hearing has to  be given  within a  reasonable time.  It is stressed that under  Section 18F,  the Central  Government  exercises curial functions,  and that Section confers on the aggrieved owner a right to apply to the Government to cancel the order of take-over.  On a  true construction this Section casts an obligation on  the  Central  Government  to  deal  with  and dispose of  an application  filed thereunder with reasonable expedition. Shri  Sorabji further concedes that on the well- settled principle of implied and ancillary powers, the right of hearing afforded by Section 18F carries with it the right to have  inspection and  copies of  all the  relevant books, documents, papers etc. and the Section obligates the Central Government to  take all  steps which  are necessary  for the

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effective hearing  and  disposal  of  an  application  under Section 18F.      Shri Sorabji has in connection with his arguments cited these authorities:  Mohinder Singh  Gill v.  Chief  Election Commissioner  (ibid);   In  re.  K.  (An  Infant),  Official Solicitor v. K. & Anr.; Collymore v. Attorney General; Union of India  v. Col.  J. N. Sinha; Judicial Review, 3rd Edn. by De Smith; Queen v. Davey; Gaiman v. National Association for Internal Revenue;  John  H.  N.  Fahey  v.  Paul  Millionee; Schwartz’s Administrative  Law’; Madhav  Hayawadanrao Hoskot v. Maharashtra;  Vijay Kumar  Mundhra  v.  Union  of  India; Joseph Kuruvilla Vellukumel v. 554 Reserve Bank  of India;  Corporation of Calcutta v. Calcutta Tramways and Furnell v. Whapgarei High School.      Before dealing  with the  contentions advanced  on both sides, it  will be  useful to  have a  general idea  of  the concept  of  "natural  justice"  and  the  broad  principles governing its  application or  exclusion in the construction or administration  of statutes  and the exercise of judicial or administrative  powers by  an authority  or tribunal   or constituted thereunder.      Well then what is "natural justice" ? The phrase is not capable of  a static  and precise  definition. It  cannot be imprisoned in  the straight-jacket  of a  cast-iron formula. Historically, "natural  justice" has  been  used  in  a  way "which implies  the existence  of moral  principles of self- evident and  unarguable truth.  In course  of  time,  judges nurtured in  the traditions  of British jurisprudence, often invoked it  in conjunction  with a  reference to "equity and good conscience".  Legal experts  of earlier generations did not draw  any  distinction  between  "natural  justice"  and "natural law".  "Natural justice"  was considered  as  "that part of  natural law  which relates to the administration of justice". Rules  of natural  justice are not embodied rules. Being means  to an  end and  not an end in themselves, it is not possible to make an exhaustive catalogue of such rules.      But two  fundamental maxims of natural justice have now become  deeply   and  indelibly   ingrained  in  the  common consciousness of  man kind,  as pre-eminently  necessary  to ensure that  the law is applied impartially, objectively and fairly. Described  in the  form of  Latin  tags  these  twin principles are  :(i) audi alteram partem and (ii) nemo judex in re  sua. For  the purpose of the question posed above, we are primarily  concerned with  the first. This principle was well-recognised even  in  the  ancient  world.  Seneca,  the philosopher, is  said to  have referred  in Medea that it is unjust to reach a decision without a full hearing. In Maneka Gandhi’s case,  Bhagwati, J.  emphasised that  audi  alteram partem is  a highly  effective rule devised by the Courts to ensure that a statutory authority arrives at a just decision and it  is calculated to act as a healthy check on the abuse or misuse  of power.  Hence its reach should not be narrowed and its applicability circumscribed.      During the  last two  decades, the  concept of  natural justice  has   made  great   strides   in   the   realm   of administrative law.  Before the epoch-making decision of the House of Lords in Ridge v. Baldwin, it was 555 generally thought  that the  rules of  natural justice apply only to judicial or quasi-judicial proceedings; and for that purpose, whenever  a breach  of the  rule of natural justice was alleged, Courts in England used to ascertain whether the impugned action  was taken  by the  statutory  authority  or tribunal in  the exercise  of its  administrative or  quasi-

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judicial power.  In India also, this was the position before the decision,  dated February  7, 1967, of this Court in Dr. Bina Pani  Dei’s case  (ibid); wherein it was held that even an administrative  order or  decision in  matters  involving civil consequences,  has to  be made  consistently with  the rules of  natural justice. This supposed distinction between quasi-judicial  and   administrative  decisions,  which  was perceptibly mitigated  in Bina  Pani Dei’s case, was further rubbed out to a vanishing point in A. K. Kraipak v. Union of India (ibid), thus:           "If the  purpose of these rules of natural justice      is to  prevent miscarriage  of justice one fails to see      why  those   rules  should   be  made  inapplicable  to      administrative enquiries. Often times it is not easy to      draw the  line that demarcates administrative enquiries      from   quasi-judicial    enquiries.....................      Arriving at  a just  decision is the aim of both quasi-      judicial enquiries as well as administrative enquiries.      An unjust  decision in  an administrative  enquiry  may      have more  far-reaching effect  than a  decision  in  a      quasi-judicial enquiry."      In A.  K. Kraipak’s  case, the  Court also  quoted with approval the  observations of  Lord Parker  from the  Queens Bench decision in In re H. K. (An Infant) (ibid), which were to the  effect, that  good administration  and an  honest or bona fide decision require not merely impartiality or merely bringing one’s  mind to  bear on  the  problem,  but  acting fairly. Thus  irrespective of whether the power conferred on a statutory  body or  tribunal is  administrative or  quasi- judicial, a  duty to act fairly, that is, in consonance with the  fundamental   principles  of   substantive  justice  is generally implied,  because the  presumption is  that  in  a democratic polity  wedded to  the rule  of law, the state or the Legislature  does not  intend that  in the  exercise  of their statutory powers its functionaries should act unfairly or unjustly.      In the language of V.R. Krishna Iyer, J. (vide Mohinder Singh Gill’s case, ibid.):           "Subject to  certain necessary limitations natural      justice is now a brooding omnipresence although varying      in its  play. Its essence is good conscience in a given      situation; nothing more-but nothing less." 556      The rules  of natural justice can operate only in areas not covered by any law validly made. They can supplement the law but  cannot supplant it (Per Hegde, J. in A. K. Kraipak, ibid). If  a statutory  provision either  specifically or by inevitable implication excludes the application of the rules of natural justice, then the Court cannot ignore the mandate of the  Legislature. Whether  or not  the application of the principles of  natural justice  in a  given  case  has  been excluded, wholly  or in  part, in  the exercise of statutory power, depends  upon the  language and  basic scheme  of the provision conferring the power, the nature of the power, the purpose for  which it  is conferred  and the  effect of  the exercise of  that power.  (See Union  of India v. Col. J. N. Sinha, ibid.)      The maxim  audi alteram  partem has many facets. Two of them are:  (a) notice  of  the  case  to  be  met;  and  (b) opportunity to  explain. This  rule is universally respected and duty  to afford  a fair  hearing in Lord Loreburn’s oft- quoted language, is "a duty lying upon every one who decides something", in  the exercise of legal power. The rule cannot be sacrificed  at the altar of administrative convenience or celerity;  for,  "convenience  and  justice"-as  Lord  Atkin

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felicitously put it- "are often not on speaking terms".      The next  general aspect to be considered is: Are there any exceptions  to the  application  of  the  principles  of natural justice, particularly the audi alteram partem rule ? We have  already noticed  that the  statute  conferring  the power, can by express language exclude its application. Such cases do  not present  any difficulty. However, difficulties arise  when  the  statute  conferring  the  power  does  not expressly exclude  this rule  but its exclusion is sought by implication due to the presence of certain factors: such as, urgency, where the obligation to give notice and opportunity to be  heard would obstruct the taking of prompt action of a preventive or  remedial nature.  It is  proposed to dilate a little on  this aspect,  because in  the instant case before us, exclusion  of this  rule of  fair hearing  is sought  by implication from  the use of the word ’immediate’ in Section 18AA(1). Audi  alteram partem  rule may be disregarded in an emergent situation where immediate action brooks no delay to prevent  some   imminent  danger  or  injury  or  hazard  to paramount public interests. Thus, Section 133 of the Code of Criminal  Procedure,   empowers  the  magistrates  specified therein to  make an  exparte conditional  order in  emergent cases, for  removal of  dangerous public  nuisances.  Action under Section  17, Land  Acquisition Act,  furnishes another such instance. Similarly, action on grounds of public safety public health  may justify  disregard of  the rule  of prior hearing. 557      Be that  as it  may, the  fact remains that there is no consensus of  judicial opinion  on whether more urgency of a decision is  a practical consideration which would uniformly justify non-observance  of even  an abridged  form  of  this principle of  natural justice.  In Durayappah  v.  Fernando. Lord Upjohn  observed that  "while urgency may rightly limit such opportunity timeously perhaps severely, there can never be a denial of that opportunity if the principles of natural justice are applicable.      These observations  of Lord Upjohn in Durayappah’s case were quoted  with approval  by this  Court in Mohinder Singh Gill’s case.  It is  therefore, proposed  to notice the same here.      In Mohinder  Singh Gill’s  case, the  appellant and the third  respondent   were  candidates   for  election   in  a Parliamentary Constituency.  The appellant alleged that when at the last hour of counting it appeared that he had all but won the  election, at  the instance  of respondent, violence broke out  and the  Returning Officer was forced to postpone declaration of  result. The  Returning Officer  reported the happening to  the Chief Election Commissioner. An officer of the Election Commission who was an observer at the counting, reported  about   the  incidents   to  the  Commission.  The appellant met  the Chief Election Commissioner and requested him to  declare the  result. Eventually,  the Chief Election Commissioner issued  a notification which stated that taking all circumstances  into  consideration  the  Commission  was satisfied that  the poll had been vitiated, and therefore in exercise  of   the  powers   under  Article   324   of   the Constitution, the  poll already  held was  cancelled  and  a repoll was  being ordered in the constituency. The appellant contended  that   before  making  the  impugned  order,  the Election Commission  had not  given  him  a  full  and  fair hearing and  all that  he had  was a  vacuous meeting  where nothing was  disclosed. The  Election  Commission  contended that a  prior hearing  has,  in  fact,  been  given  to  the appellant. In  addition, on  the question  of application of

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the principles  of natural  justice, it  was  urged  by  the respondents that  the tardy  process of  notice and  hearing would thwart  the conducting  of elections  with speed, that unless civil  consequences ensued, hearing was not necessary and that  the right  accrues to  a candidate only when he is declared elected.  This contention,  which had  found favour with the High Court, was negatived by this Court. Delivering the judgment  of the  Court, V. R. Krishna Iyer, J., lucidly explained the  meaning and  scope of  the concept of natural justice and  its role in a case where there is a competition between the necessity of taking speedy 558 action and  the duty  to act  fairly. It  will be  useful to extract those illuminating observations, in extenso:           "Once we  understand  the  soul  of  the  rule  as      fairplay in  action -  and it is so - we must hold that      it   extends   to   both   the   fields.   After   all,      administrative  power   in  democratic  set-up  is  not      allergic  to  fairness  in  action  and  discretionary,      executive justice  cannot  degenerate  into  unilateral      injustice. Nor  is there  ground to  be  frightened  of      delay, in  convenience and expense, if ’natural justice      gains  access.  For  fairness  itself  is  a  flexible,      pragmatic  and   relative   concept,   not   a   rigid,      ritualistic or  sophisticated abstraction.  It is not a      bull in  a china  shop, nor  a bee in one’s bonnet. Its      essence  is  good  conscience  in  a  given  situation;      nothing more  - but  nothing less.  The ’exceptions’ to      the rules  of natural  justice are a misnomer or rather      are but a shorthand form of expressing the idea that in      those exclusionary cases nothing unfair can be inferred      by not  affording an  opportunity to  present or meet a      case."      After referring  to several  decisions,  including  the observations of  Lord Upjohn  in Durayappah v. Fernando, the Court explained that mere invocation or existence of urgency does not  exclude the  duty of  giving a fair hearing to the person affected:           "It is  untenable heresy, in our view, to lock law      the  victim   or  act   behind  his  back  by  tempting      invocation of  urgency, unless  the  clearest  case  of      public injury  flowing from  the least  delay is  self-      evident. Even  in such cases a remedial hearing as soon      as urgent  action has  been taken is the next best. Our      objection  is   not  to   circumscription  dictated  by      circumstances, but  to annihilation  as an  easy escape      from benignant,  albeit  inconvenient  obligation.  The      procedural  pre-condition   or  fair  hearing,  however      minimal,  even   post-decisional,  has   relevance   to      administrative and judicial gentlemanliness."           "We may  not be  taken to....say  that situational      modifications to  notice  and  hearing  are  altogether      impermissible......... the glory of the law is not that      sweeping rules  are  laid  down  but  that  it  tailors      principles to practical needs. doctors remedies to suit      the patient  promotes not  freezes Life’s processes, if      we may mix metaphors."............. 559      The Court  further emphasised the necessity of striking pragmatic balance  between competing  requirements of acting urgently and fairly, thus:-           "Should the  cardinal principle  of  "hearing’  as      condition for decision-making be martyred for the cause      of administrative,  immediacy? We  think not.  The full      panoply may  not be  there but a manageable minimum may

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    make-do."           "In Wiseman  v. Borneman  there was  a hint of the      competitive claims  of hurry  and  hearing.  Lord  Reid      said: ’Even  where the  decision has to be reached by a      body acting judicially, there must be a balance between      the need  for expedition  and the  need  to  give  full      opportunity to  the defendant  to see  material against      him (emphasis  added). We  agree that the elaborate and      sophisticated methodology  of a  formalised hearing may      be injurious to promptitude so essential in an election      under way.  Even so,  natural justice  is pragmatically      flexible and  is  amenable  to  capsulation  under  the      compulsive  pressure  of  circumstances.  To  burke  it      altogether may  not be  a stroke  of fairness except in      very exceptional circumstances." The Court  further pointed  out that the competing claims of hurry and  hearing can  be reconciled  by making situational modifications in the audi alteram partem rule:           "Lord  Denning   M.R.,  in   Manward  v.  Boreman,      summarised the  observations of  the Law  Lords in this      form. No  doctrinaire approach  is  desirable  but  the      Court must  be anxious  to salvage the cardinal rule to      the extent  permissible in  a given case. After all, it      is not  obligatory that  counsel should  be allowed  to      appear ’nor  is it compulsory that oral evidence should      be adduced.  Indeed, it  is not  even  imperative  that      written statements  should be  called for disclosure of      the prominent circumstances and asking for an immediate      explanation orally  or otherwise  may, in many cases be      sufficient compliance.  It is  even conceivable that an      urgent meeting  with the  concerned parties summoned at      an hour’s  notice, or  in a  crisis, even  a  telephone      call, may  suffice. If  all that  is not possible as in      the case  of a  fleeing person whose passport has to be      impounded lest he should evade the course of justice or      a dangerous nuisance needs immediate abate- 560      ment, the action may be taken followed immediately by a      hearing for  the purpose of sustaining or setting aside      the action  to the  extent feasible. It is quite on the      cards that  the  Election  Commission,  if  pressed  by      circumstances may give a short hearing. In any view, it      is not  easy to appreciate whether before further steps      got under  way he could have afforded an opportunity of      hearing   the   parties,   and   revoke   the   earlier      directions...... All that we need emphasize is that the      content of natural justice is a dependent variable, not      an easy casualty."           "Civil consequence’  undoubtedly cover  infraction      of not  merely property or personal rights but of civil      liberties,  material   deprivations  and  non-pecuniary      damages. In  its comprehensive  connotation, everything      that affects  a citizen  in his  civil life  inflicts a      civil consequence." (emphasis added)      In Maneka  Gandhi, it  was laid  down that  where in an emergent situation,  requiring immediate  action, it  is not practicable to give prior notice or opportunity to be heard, the preliminary  action should  be soon  followed by  a full remedial hearing.      The High  Court of  Australia in Commissioner of Police v. Tanos,  ibid, held  that some  urgency, or  necessity  of prompt action  does not  necessarily exclude natural justice because a  true emergency  situation can  be properly  dealt with by  short measures.  In Heatley  v. Tasmanian  Racing & Gaming Commission,  ibid, the  same  High  Court  held  that

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without the  use of  unmistakable language in a statute, one would not  attribute to Parliament an intention to authorise the Commission  to order  a person  not to deal in shares or attend a  stock exchange  without observing natural justice. In  circumstances  of  likely  immediate  detriment  to  the public, it  may be appropriate for the Commission to issue a warning-off notice  without notice  or  stated  grounds  but limited to  a particular meeting, coupled with a notice that the Commission  proposed to make a long-term order on stated grounds and  to give  an earliest practicable opportunity to the person affected to appear before the Commission and show why the proposed long term order be not made.      As pointed out in Mohinder Singh Gill v. Chief Election Commissioner and  in Maneka  Gandhi v.  Union of India ibid, such cases  where  owing  to  the  compulsion  of  the  fact situation or  the necessity of taking speedy action, no pre- decisional hearing  is given but the action is followed soon by a full post decisional hearing to the 561 person  affected,   do  not,   in  reality,   constitute  an ’exception’ to  the audi  alteram partem  rule. To call such cases an  ’exception’ is  a misnomer  because  they  do  not exclude ’fair-play  in action’,  but adapt it to the urgency of the  situation by balancing the competing claims of hurry and hearing.      "The necessity  for speed",  writes Paul  Jackson, "may justify immediate  action, it  will, however, normally allow for a  hearing at  a later  stage. The possibility of such a hearing-and the  adequacy of  any later  remedy  should  the initial  action   prove   to   have   been   unjustified-are considerations to be borne in mind when deciding whether the need for  urgent action  excludes a right to rely on natural justice. Moreover,  however the  need  to  act  swiftly  may modify or  limit what  natural justice requires. it must not be thought  ’that because  rough, swift or imperfect justice only is  available that  there ought to be no justice’ Pratt v. Wanganui Education Board."      Prof. de Smith the renowned author of ’Judicial Review’ (3nd Edn.)  has at  page 170,  expressed his  views on  this aspect of the subject, thus:      "Can the absence of a hearing before a decision is made      be adequately  compensated for  by a  hearing  ex  post      facto ? A prior hearing may be better than a subsequent      hearing, but  a subsequent  hearing is  better than  no      hearing at  all; and in some cases the courts have held      that statutory  provision for  an administrative appeal      or  even   full  judicial  review  on  the  merits  are      sufficient to  negative the  existence of  any  implied      duty to  hear before the original decision is made. The      approach may  be acceptable where the original decision      does  not   cause  serious   detriment  to  the  person      affected, or  where there  is also a paramount need for      prompt action,  or where  it is impracticable to afford      antecedent hearings."      In short,  the general  principle-as distinguished from an absolute  rule of  uniform application-seems  to be  that where a  statute does  not in  terms, exclude  this rule  of prior hearing  but contemplates  a  post-decisional  hearing amounting to  a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely, if the statute conferring the power is silent with regard to the  giving  of  a  pre-decisional  hearing  to  the  person affected  and  the  administrative  decision  taken  by  the authority involves civil consequences of a grave nature, and

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no full  review or appeal on merits against that decision is provided, courts will be extremely reluctant to con- 562 strue such a statute as excluding the duty of affording even a minimal  hearing, shown  of all  its formal  trappings and dilatory  features  at  the  pre-decisional  stage,  unless, viewed pragmatically,  it would  paralyse the administrative process or  frustrate the  need or  utmost  promptitude.  In short, this rule of fairplay "must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands". The  court must  make every effort to salvage this cardinal  rule   to  the   maximum  extent   possible,  with situational modifications.  But,  to  recall  the  words  of Bhagvati, J.,  the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard  and the  hearing must  be a genuine hearing and not an empty public relations exercise.      Keeping the general principles stated above, let us now examine the  scheme content,  object and legislative history of the relevant provisions of the I.D.R. Act.      The I.D.R.  Act (Act 65 of 1951) came into force on May 8,1952 The Statement of Objects and Reasons published in the Gazette of India, dated March 26, 1949, says that its object is to  provide the  Central Government  with  the  means  of implementing their  industrial policy which was announced in their Resolution,  dated April  6, 1948, and approved by the Central Legislature.  The Act  brings under  Central Control the development  and regulation  of a  number  of  important industries specified  in its  First Schedule, the activities of which  affect the  country as a whole and the development of which  must be  governed by economic factors of all-India import. The  requirement with  regard to registration, issue or revocation  of  licences  of  these  specific  industrial undertakings has  been provided  in Chapter  II of  the Act. Section 3(d)  defines an  ’industrial undertaking’  to  mean "any undertaking  pertaining to a scheduled industry carried on in  one or  more factories  by any  person  or  authority including  Government":  Clause  (f)  of  the  same  section defines "owner" in relation to an undertaking.      Section 15  gives power  to the  Central Government  to cause investigation  to be made into a scheduled industry or industrial undertaking. The Section reads as follows:      "where the Central Government is of the opinion that-      (a)  in respect of any scheduled industry or industrial           undertaking or undertakings-         (i) there has been, or is likely to be a substantial      fall in  the volume  of production  in respect  of  any      article or class 563      of articles  relatable to that industry or manufactured      or  produced   in   the   industrial   undertaking   or      undertakings, as  the case  may be;  for  which  having      regard to  the economic conditions prevailing, there is      no justification, or          (ii)  there has  been, or is likely to be, a marked      deterioration in the quality of any article or class of      articles relatable  to that industry or manufactured or      produced in the industrial undertaking or undertakings,      as the  case may  be, which  could have  been or can be      avoided; or        (iii) there has been or is likely to be a rise in the      price of  any article or class of articles relatable to      that  industry  or  manufactured  or  produced  in  the      industrial undertaking or undertakings, as the case may      be, for which there is no justification; or

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       (iv) it  is necessary  to take any such action as is      provided in  this Chapter for the purpose of conserving      any resources of national importance which are utilised      in  the  industry  or  the  industrial  undertaking  or      undertakings, as the case may be; or         (b) any industrial undertaking is being managed in a      manner highly  detrimental to  the  scheduled  industry      concerned or to public interest.      the Central  Government may  make or cause to be made a      full and  complete investigation into the circumstances      of the case by such person or body of persons as it may      appoint for the purpose."      Section 16  empowers the  Central Government  to  issue appropriate  directions   to  the   industrial   undertaking concerned on  completion of  investigation under Section 15. Such directions  may be  for all  or any  of  the  following purposes:           "(a) regulating  the production  of any article or      class of  articles by  the  industrial  undertaking  or      undertakings and fixing the standards of production;           (b)  requiring   the  industrial   undertaking  or      undertakings  to   take  such   steps  as  the  Central      Government may  consider necessary,  to  stimulate  the      development of the industry to which the undertaking or      undertakings relates or relate; 564           (c)  prohibiting  the  industrial  undertaking  or      undertakings from  resorting to  any  act  or  practice      which might reduce its or their production, capacity or      economic value;           (d) controlling  the  prices,  or  regulating  the      distribution of  any article or class of articles which      have been the subject matter of investigation." Sub-section (2) enables the Central Government to issue such directions   to    the   industrial   undertakings   pending investigation.      In the  course, of  the working  of I.D.R. Act, certain practical difficulties  came to  light. One of them was that "Government  cannot   take  over   the  management   of  any industrial undertaking,  even in  a  situation  calling  for emergent action  without first  issuing directions to it and waiting to  see whether or not they are obeyed." In order to remove such  difficulties,  the  Amending  Act  26  of  1953 inserted Chapter  IIIA containing Sections 18A to 18F in the I.D.R.  Act.  Section  18A  confers  power  on  the  Central Government to  assume management or control of an industrial undertaking in  certain cases.  The  material  part  of  the Section reads as under:           "(1) If the Central Government is of opinion that           (a)  an industrial undertaking to which directions      have been  issued in pursuance of Section 16 has failed      to comply with such directions, or           (b)  an industrial undertaking in respect of which      an  investigation   has  been  made  under  Section  15      (whether or  not any directions have been issued to the      undertaking in  pursuance  of  Section  16),  is  being      managed in a manner highly detrimental to the scheduled      industry concerned or to public interest;      the  Central   Government  may,   by  notified   order,      authorise any  person or  body of  persons to take over      the  management  of  the  whole  or  any  part  of  the      undertaking or  to exercise  in respect of the whole or      any part  of the  undertaking such functions of control      as may be specified in the order.           (2)  Any notified  order issued  under sub-section

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    (1) shall  have effect  for such  period not  exceeding      five years as may be specified in the order." Section 18B  specifies the  effect of  notified order  under Section 18A Sub-section (1) of the section reads thus: 565           "On the  issue of  a notified  order under Section      18A authorising the taking over of the management of an      industrial undertaking-           (a)  all  persons  in  charge  of  the  management      including,  persons   holding  office  as  managers  or      directors of  the  industrial  undertaking  immediately      before the issue of the notified order, shall be deemed      to have vacated their offices as such;           (b)  any  contract   of  management   between  the      industrial undertaking  and any  managing agent, or any      director thereof  holding office  as  such  immediately      before the  issue of the notified order shall be deemed      to have been terminated;           (c)  the managing  agent, if  any, appointed under      Section 18A shall be deemed to have been duly appointed      as the  managing  agent  in  pursuance  of  the  Indian      Companies Act, 1913 (7 of 1913), and the memorandum and      articles of  association of the industrial undertaking,      and  the   provisions  of  the  said  Act  and  of  the      memorandum and  articles shall,  subject to  the  other      provisions contained  in this  Act, apply  accordingly,      but no such managing agent shall be removed from office      except  with   the  previous  consent  of  the  Central      Government;           (d)  the person  or  body  of  persons  authorised      under Section  18A to  take over  the management  shall      take all  such steps  as may  be necessary to take into      his or  their custody  or  control  all  the  property,      effects and  actionable claims  to which the industrial      undertaking is  or appears  to be entitled, and all the      property and  effects of  the  industrial  undertaking,      shall be  deemed to be in the custody of the person or,      as the  case may  be, the  body of  persons as from the      date of the notified order; and           (e)  the persons, if any, authorised under Section      18A to  take  over  the  management  of  an  industrial      undertaking  which  is  a  company  shall  be  for  all      purposes the  directors of  industrial undertaking duly      constituted under  the Indian Companies Act, 1913 (7 of      1913), and  shall alone be entitled to exercise all the      powers of  the directors of the industrial undertaking,      whether such  powers are  derived from  the said Act or      from the  memorandum or  articles of association of the      industrial undertaking or from any other source." 566 Section 18D  provides that  a person  whose office  is  lost under  clause   (a)  or  whose  contract  of  management  is terminated under  clause (b)  of Section  18B shall  have no right to  compensation for such loss or termination. Section 18F is material. It reads thus:           "If  at   any  time  it  appears  to  the  Central      Government on  the application  of  the  owner  of  the      industrial undertaking or otherwise that the purpose of      the order  made under Section 18A has been fulfilled or      that for  any other reason it is not necessary that the      order should  remain in  force, the  Central Government      may, by  notified order,  cancel such  order and on the      cancellation of  any such  order the  management or the      control,  as   the  case   may  be  of  the  industrial      undertaking  shall   vest   in   the   owner   of   the

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    undertaking."      By the  Constitution Fourth Amendment Act 1955, Chapter IIIA of  the I.D.R. Act was included as Item 19 in the Ninth Schedule of the Constitution.      Before we  may come to Section 18AA, we may notice here the  legislative   policy  with  regard  to  Cotton  Textile Industry, as  adumbrated in  the  Cotton  Textile  Companies Management of Undertakings and Liquidation or Reconstruction Act, 1967  (Act XXIX  of 1967). The Statement of Objects and Reasons for enacting this statute, inter alia, says:           "The cotton  textile industry  provides one of the      basic  necessities   of  life   and   affords   gainful      employment to  millions of  people. Over  the last  few      years, this  vital industry  has been  passing  through      difficult times.  Some mills have already to close down      and the continuing economic operation of many others is      beset with  many difficulties.  These difficulties have      been aggravated  in many  cases by  the heavy burden of      past debts. The taking over the management of the mills      for a  limited time and then restoring them to original      owners  has  not  remedied  the  situation.  Steps  are      therefore,  necessary   to  bring  about  a  degree  of      rationalisation  of   the  financial   and   managerial      structure  of   such  units   with  a   view  to  their      rehabilitation, so  that production  and employment may      not suffer." Textile Industry  is also  among the industries, included in the First Schedule to the I.D.R. Act. 567      The Amendment  Act 72  of 1971 inserted Section 18AA in the original  I.D.R. Act. The material part of the Statement of Objects  and Reasons  for introducing  this Bill  of 1971 published in  the Gazette  of  India  Extraordinary,  is  as follows:           "The industries  included in the First Schedule ..      not only substantially contribute to the Gross National      produce  of   the  country,  but  also  afford  gainful      employment to millions of people. For diverse reasons a      number of  industrial  undertakings  engaged  in  these      industries have  had to  close down  and the continuing      economic operation of many others is beset with serious      difficulties  affecting   industrial   production   and      employment.  .   .  During  the  period  of  take  over      Government  has   to  invest   public  funds   in  such      undertakings and  it must  be able  to  do  so  with  a      measure of  confidence about  the  continued  efficient      management of  the undertaking at the end of the period      of take over. In order to ensure that at the end of the      period of  take  over  by  Government,  the  industrial      undertaking is  not returned  to the  same hands  which      were responsible  for its  earlier misfortune,  it  has      been provided  in the  Bill  that  in  relation  to  an      undertaking taken  over by  them, Government  will have      the power  to move  for (i) the sale of the undertaking      at a  reserve price or higher (Government purchasing it      at the  reserve price  if no  offer  at  or  above  the      reserve  price   is  received),   action  being   taken      simultaneously for the winding up of the company owning      the industrial  undertaking; or (ii) the reconstruction      of the company owning the industrial undertaking with a      view to giving the Government a controlling interest in      it. .  . .  With a  view to  ensuring speedy  action by      Government, it  has been  provided in  the Bill that if      the Government  has evidence  to the  effect  that  the      assets of the company owning the industrial undertaking

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    are being  frittered away  or the  undertaking has been      closed for a period not less than three months and such      closure  is  prejudicial  to  the  concerned  scheduled      industry  and  that  the  financial  condition  of  the      company  owning  the  industrial  undertaking  and  the      condition of  the plant  and machinery installed in the      undertaking is  such that it is possible to restart the      undertaking  and   such  restarting-is  in  the  public      interest,  Government  may  take  over  the  management      without an investigation."                                            (emphasis added). 568      With the  aforesaid Objects  in view,  Section 18AA was inserted by  the Amendment  Act No. 72 of 1971. The marginal heading of the Section is to the effect: "Power to take over industrial undertakings  without investigation under certain circumstances". This  marginal heading,  it  will  be  seen, accords  with  the  Objects  and  Reasons  extracted  above. Section 18AA runs as under:           "Without prejudice  to any other provision of this      Act, if,  from the documentary or other evidence in its      possession, the  Central Government  is  satisfied,  in      relation to an industrial undertaking that-           (a)  the   persons  incharge  of  such  industrial      undertaking have,  by reckless  investments or creation      of  encumbrances   on  the  assets  of  the  industrial      undertaking, or  by diversion of funds, brought about a      situation which  is likely  to affect the production of      articles manufactured  or produced  in  the  industrial      undertaking, and  that immediate action is necessary to      prevent such a situation; or           (b) it  has been  closed for  a period of not less      than three  months (whether  by reason of the voluntary      winding  up   of  the  company  owning  the  industrial      undertaking or  for any  other reason) and such closure      is prejudicial  to the concerned scheduled industry and      that the  financial condition of the company owning the      industrial undertaking  and the  condition of the plant      and machinery  of such  undertaking are such that it is      possible to  re-start  the  undertaking  and  such  re-      starting is  necessary in  the interests of the general      public, it  may, by  a notified  order,  authorise  any      person (hereinafter  referred  to  as  the  ’authorised      person’) to  take over  the management  of the whole or      any part  of the  industrial undertaking or to exercise      in respect  of the whole or any part of the undertaking      such functions  of control  as may  be specified in the      order.           (2) The  provisions of  sub-section (2) of Section      18A shall,  as far as may be, apply to a notified order      made under  sub-section (1) as they apply to a notified      order made under sub-section (1) of Section 18A.           (3) Nothing  contained in sub-section (1) and sub-      section (2)  shall apply  to an  industrial undertaking      owned by  a company which is being wound up by or under      the supervision of the Court. 569           (4) Where  any notified  order has been made under      sub-section (1),  the person or body of persons having,      for the time being, charge of the management or control      of the  industrial undertaking, whether by or under the      orders of  any court  or any  contract,  instrument  or      otherwise, shall  notwithstanding anything contained in      such order,  contract, instrument or other arrangement,      forthwith  make   over  the  charge  of  management  or

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    control,  as   the  case  may  be,  of  the  industrial      undertaking to the authorised person.           (5) The  provisions of  Section 18-B  to 18-E (bot      inclusive) shall,  as far  as may  be, apply  to, or in      relation to  the industrial  undertaking in  respect of      which a  notified order has been made under sub-section      (1), as  they apply  to an  industrial  undertaking  in      relation to  which a  notified order  has  been  issued      under Section 18-A."      A comparison of the provisions of Section 18A(1)(b) and Section 18AA(1)(a)  would  bring  out  two  main  points  of distinction: First,  action under  Section 18A (1)(b) can be taken only  after  an  investigation  had  been  made  under Section 15: while under Section 18AA(1)(a) or (b) action can be taken  without such  investigation. The  language, scheme and setting of Section 18AA read in the light of the objects and Reasons  for enacting  this provision make this position clear beyond  doubt.  Second,  before  taking  action  under Section 18A(1)  (b), the  Central Government  has to form an opinion on  the basis  of the  investigation conducted under Section 15,  in regard  to the  existence of  the  objective fact, namely:  that  the  industrial  undertaking  is  being managed in  a manner  highly detrimental  to  the  Scheduled industry  concerned  or  to  public  interest;  while  under Section 18AA(1)  (a) the  Government has  to satisfy  itself that the  persons incharge  of the  undertaking have brought about a  situation likely  to cause  fall in  production, by committing any  of the three kinds of acts specified in that provision. This  shows that  the preliminary  objective fact attributable to  the persons  in charge of the management or affairs of the undertaking, on the basis of which action may be taken under Section 18A(1) (b), is of far wider amplitude than the circumstances, the existence of which is a sine qua non for  taking action  under Section  18AA(1).  The  phrase "highly detrimental  to the  scheduled  industry  or  public interest" in  Section 18A  is capable  of being construed to over a  large  variety  of  acts  or  things  which  may  be considered wrong  with the manner of running the industry by the management.  In contrast  with it,  action under Section 18AA(1) (a) can be taken only if the Central Gov- 570 ernment is  satisfied with  regard to  the existence  of the twin conditions specifically mentioned therein, on the basis of evidence in its possession.      From an  analysis of  Section 18AA(1)  (a), it  will be clear that as a necessary preliminary to the exercise of the power thereunder,  the Central  Government must be satisfied "from documentary  or other  evidence in  its possession" in regard to the co-existence of two circumstances:      (i) that  the  persons  in  charge  of  the  industrial undertaking have  by committing  any of  these acts, namely, reckless investments,  or creation  of incumbrances  on  the assets of  industrial undertaking, or by diversion of funds, brought about  a situation,  which is  likely to  affect the production of  the article  manufactured or  produced in the industrial undertaking, and      (ii) that immediate action is necessary to prevent such a situation.      Speaking for  the High  Court (majority),  the  learned Chief Justice  (Deshpande, C.J.) has observed that only with regard to  the fulfilment  of condition (i) the satisfaction of the  Government is  required to be objectively reached on the basis of relevant evidence in its possession; while with regard to  condition (ii),  that is,  the need for immediate action,  it   is  purely   subjective,  and  therefore,  the

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satisfaction of  the Government with regard to the immediacy of the situation is outside the scope of judicial review.      Shri Sorabji has in his arguments, forcefully supported this opinion  of the  High  Court.  He  maintains  that  the satisfaction of  the Government with regard to the existence of the  immediacy is  not  justiciable.  Reliance  has  been placed on the following passage in the judgment of Channell, J. in Queen v. Davey & Ors.:           "The general  principle of  law is  that an  order      affecting  his  liberty  or  property  cannot  be  made      against any  one without  giving him  an opportunity of      being heard;  the result is that, if general words used      in a  statute empowering the making of such an order as      this, it  must be made on notice to the party affected.      There are,  however, exceptions  to  this  rule,  which      arise where  it can be seen on the words of the statute      that it  was intended  that the order should be made on      an ex  parte application,  and the  case in which it is      easiest to see the propriety of the exception is where,      looking 571      at the  scope and  object of  the legislation,  it  was      clearly intended  that the  parties putting  the law in      force should  act promptly. Such a case is an order for      the destruction  of unsound  meat, which clearly may be      made ex  parte, because it is desirable in the interest      of the  public health  that it  should be acted upon at      once. The case of removing an infectious person, likely      to  spread  abroad  the  infection,  to  an  infectious      hospital is obviously of the same character." According  to   the  learned  Solicitor-General,  the  power conferred on  the Central  Government is in the nature of an emergency power,  that the  necessity for  taking  immediate action is  writ large  in Section  18AA(1) (a)-the provision being a  legislative response  to deal  with an economically emergent situation  fraught with national repercussions. The object of the exercise of this power is not to punish anyone but to  take  immediate  preventive  action  in  the  public interest.      On the  other hand,  Shri Nariman submits that the High Court was  clearly in error in holding that the satisfaction of the  Central Government  with regard  to the necessity of taking immediate  action was  not open to judicial review at all.  It  is  emphasised  that  the  very  language  of  the provision shows  that the  necessity  for  taking  immediate action is  a question of fact, which should be apparent from the relevant evidence in the possession of the Government.      We find  merit in  this contention.  It cannot  be laid down as  a  general  proposition  that  whenever  a  statute confers a power on an administrative authority and makes the exercise of  that power  conditional on  the formation of an opinion by  that authority  in regard to the existence of an immediacy, its opinion in regard to that preliminary fact is not open  to judicial  scrutiny at  all.  While  it  may  be conceded that  an element of subjectivity is always involved in the  formation of such an opinion, but as was pointed out by this  Court in  Bariam Chemicals (ibid), the existence of circumstances from  which the  inferences  constituting  the opinion, as  the sine  qua non  for action  are to be drawn, must  be   demonstrable,   and   the   existence   of   such "circumstances", if  questioned, must  be  proved  at  least prima facie.      Section  18AA(1)(a),   in  terms,   requires  that  the satisfaction of the Government in regard to the existence of the circumstances  or conditions  precedent set  out  above,

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including the  necessity of taking immediate action, must be based on  evidence in  the possession  of the Government. If the  satisfaction   of  the  Government  in  regard  to  the existence of  any of  the conditions, (i) and (ii), is based on  no   evidence,  or  on  irrelevant  evidence  or  on  an extraneous consideration, 572 it will vitiate the order of ’take-over’, and the Court will be justified  in quashing  such an illegal order on judicial review in  appropriate proceedings.  Even where  the statute conferring the  discretionary  power  does  not,  in  terms, regulate or hedge around the formation of the opinion by the statutory  authority   in  regard   to  the   existence   of preliminary jurisdictional  facts with  express checks,  the authority  has  to  form  that  opinion  reasonably  like  a reasonable person.      While  spelling   out  by  a  construction  of  Section 18AA(1)(a) the  proposition that the opinion or satisfaction of the  Government in  regard to  the  necessity  of  taking immediate action  could  not  be  the  subject  of  judicial review, the  High Court  (majority) relied on the analogy of Section  17  of  the  Land  Acquisition  Act,  under  which, according to them, the Government’s opinion in regard to the existence of  the urgency  is not  justiciable. This analogy holds good  only upto a point. Just as under Section 18AA of the  I.D.R.  Act,  in  case  of  a  genuine  ’immediacy’  or imperative necessity  of taking  immediate action to prevent fall in  production and  consequent risk  of imminent injury paramount public  interest, an  order of  ’take-over’ can be passed without  prior,  time-consuming  investigation  under Section 15  of the  Act, under  Section 17(1) and (4) of the Land Acquisition  Act, also,  the preliminary  inquiry under Section 5A  can be  dispensed with in case of an urgency. It is true  that the  grounds on which the Government’s opinion as to the existence of the urgency can be challenged are not unlimited, and  the power  conferred on the Government under Section 17(4)  of that Act has been formulated in subjective term; nevertheless, in cases, where an issue is raised, that the Government’s  opinion as to urgency has been formed in a manifestly arbitrary  or perverse  fashion without regard to patent, actual  and undeniable  facts, or  that such opinion has  been   arrived  at   on   the   basis   of   irrelevant considerations or  no material  at all,  or on  materials so tenuous, flimsy,  slender or  dubious that no reasonable man could  reasonably   reach  that  conclusion,  the  Court  is entitled to  examine the  validity of  the formation of that opinion by  the Government  in the context and to the extent of that issue.      In Narayan Govind Gavate v. State of Maharashtra & Ors. this Court  held  that  while  exercising  the  power  under Section 17(4)  of the  Land Acquisition Act, the mind of the officer or  authority concerned  has to  be applied  to  the question whether  there is  an urgency of such a nature that even the  summary proceedings  under Section  5A of  the Act should be eliminated. It is not just the existence of an 573 urgency but  the need  to dispense  with  an  inquiry  under Section 5A  of the  Act which  has to  be considered. If the circumstances on  the basis  of which  the Government formed its opinion  with regard to the existence of the urgency and the other conditions precedent, recited in the notification, are deficient or defective, the Court may look beyond it. At that stage,  Section 106, Evidence Act can be invoked by the party assailing  the notification  and if  the Government or the authority  concerned does  not disclose  such  facts  or

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circumstances especially  within its knowledge, without even disclosing a  sufficient reason  for their  abstention  from disclosure, they  have to  take the  consequences which flow from the  non-production of the best evidence which could be produced on behalf of the State if its stand was correct.      Again, in Dora Phalauli v. State of Punjab & Ors., this Court held  that where  the purported  order does not recite the satisfaction  of  the  Government  with  regard  to  the existence of  urgency, nor  the fact of the land being waste or arable  land, the  order was liable to be struck down and the mere direction, therein, to the Collector to take action on ground of urgency was not a legal and complete fulfilment of the requirement of the law.      Recently, in  State of  Punjab v.  Gurdial Singh, V. R. Krishna  Iyer,  J.,  speaking  for  the  Court,  made  these apposite observations:           "It is  fundamental that  compulsory taking  of  a      man’s property  is a serious matter and the smaller the      man the  more serious  the matter.  Hearing him  before      depriving him  is both  reasonable  and  preemptive  of      arbitrariness,  and   denial  of   this  administrative      fairness is  constitutional anathema  except  for  good      reasons. Save  in real  urgency where  public  interest      does not  brook even  the minimum time needed to give a      hearing,  land   acquisition  authorities  should  not,      having regard to Articles 14 (and 19), burke an enquiry      under Section 17 of the Act."      From these  decisions, it is abundantly clear that even under  Section   17  of   the  Land   Acquisition  Act,  the satisfaction or opinion of Government/authority in regard to the urgency  of taking  action thereunder, is not altogether immune from judicial scrutiny.      For the  reasons already  stated, it is not possible to subscribe to  the proposition  propounded by  the High Court that the satisfaction of the Central Government in regard to condition (ii), i.e. the exis- 574 tence of  ’immediacy’, though  subjective, is  not  open  to judicial review at all.      From a  plain reading of Section 18AA, it is clear that it does  not expressly in unmistakable and unequivocal terms exclude the  application of  the audi alteram partem rule at the  pre-decisional   stage.  The  question,  therefore,  is narrowed  down  to  the  issue,  whether  the  phrase  "that immediate  action  is  necessary"  excludes  absolutely,  by inevitable implication,  the application  of  this  cardinal canon of  fairplay in all cases where Section 18AA(1)(a) may be invoked.  In our  opinion, for  reasons that follow, the, answer to this question must be in the negative.      Firstly, as  rightly pointed  out by  Shri Nariman, the expression "immediate  action" in  the said phrase, is to be construed in  the light  of  the  marginal  heading  of  the Section, its context and the Objects and Reason for enacting this provision.  Thus construed,  the expression  only means "without prior  investigation" under  Section 15. Dispensing with the  requirement of  such prior  investigation does not necessarily indicate an intention to exclude the application of the fundamental principles of natural justice or the duty to act  fairly by  affording to the owner of the undertaking likely to be affected, at the pre-decisional stage, wherever practicable, a  short-measure fair hearing adjusted, attuned and tailored to the exigency of the situation.      At this stage, it is necessary to examine two decisions of  this  Court,  viz.,  Ambalal  M.  Shah  v.  Hathi  Singh Manufacturing Co Ltd.; and Keshav Mills Co. Ltd. v. Union of

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India (ibid),  because according  to the  High Court (as per Deshpande, C.J.,  who wrote  the leading  opinion) these two decisions-which are  binding on  the High Court-conclusively show that:-           "The  only   prior  hearing   consisted   of   the      investigation under  Section 15 read with Rule 5 before      action under  Section 18A  is taken. The very object of      Section 18AA is to enable action to be taken thereunder      without  being  preceded  by  the  investigation  under      Section 15.  On the  authority of the two Supreme Court      decisions in  Ambalal M. Shah and Keshav Mills that the      only hearing  prior to action under Section 18A was the      investigation under  Section 15,  it would  follow that      action under  Section 18AA  is to  be taken without the      investigation under  Section 15 and, therefore, without      a prior hearing." 575      Shri Nariman  maintains that  the High  Court  has  not correctly  construed   these  decisions.  According  to  the learned counsel,  the corollary  deduced by  the High Court, viz., that  exclusion of  the investigation under Section 15 includes exclusion  of the  audi alteram  partem rule at the pre-takeover stage,  is just  the contrary  of what was laid down by  this Court  in Keshav Mills in which Ambalal’s case was also  noticed. Indeed,  Shri Nariman  strongly relies on this decision  in  support  of  his  argument  that  if  the application of  this rule  of natural  justice at  the  pre- decisional  stage   is  not   excluded  even  where  a  full investigation has  been made,  there is  stronger reason  to hold that  it is  to be  observed in  a case where there has been no investigation at all.      We will  first notice  the case of Keshav Mills because that is  a  later  decision  in  which  Ambalal’s  case  was referred to.  In that  case, the validity of an order passed by the  Central Government under Section 18A was challenged. By that impugned order the Gujarat State Textile Corporation Ltd.  (hereinafter  referred  to  as  the  Corporation)  was appointed as  authorised controller  of the  Company  for  a period of  five years. The Company was the owner of a cotton textile  mill.  Till  1965,  the  Company  made  flourishing business. After  the year  1964-65, the Company fell on evil days and  the textile  mill of the Company was one of the 12 sick textile  mills in  Gujarat, which had to be closed down during  1966   and  1968.  On  May  31,  1969,  the  Central Government  passed  an  order  appointing  a  Committee  for investigation into  the affairs of the Company under Section 15 of  the I.D.R.  Act. After  completing the  inquiry,  the Investigating  Committee   submitted  its   report  to   the Government who  thereafter on  November 24, 1970, passed the impugned order under Section 18A authorising the Corporation to take  over the  management of the Company for a period of five years.  The Company challenged the order of ’take-over’ by a  writ-petition in  the High  Court of  Delhi. The  High Court dismissed  the petition.  The main  contention of  the Company before  the High  Court was  that the Government was not competent  to proceed  under  Section  18A  against  the Company without  supplying before hand, a copy of the report of the  Investigating  Committee  to  the  Company.  It  was further contended that the Government should also have given a hearing  to the Company before finally deciding upon take- over under  Section 18A.  This  contention  was  pressed  on behalf  of  the  Company  in  spite  of  the  fact  that  an opportunity had been given by the Investigating Committee to the management and the employees of the Company for adducing evidence and for making representation before the completion

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of the  investigation. On  the  contentions  raised  by  the Company and 576 resisted  by   the  respondent,  in  that  case,  the  Court formulated the following questions:      (1) Is  it necessary  to observe  the rules  of natural justice before enforcing a decision under Section 18A of the Act?      (2) What  are the  rules of  natural justice  in such a case?      (3)(a) In  the present  case,  have  the  rules  to  be observed once  during the investigation under Section 15 and then again,  after the investigation is completed and action on the  report of  the Investigating  Committee taken  under Section 18A?      (b)  Was   it  necessary  to  furnish  a  copy  of  the Investigating Committee’s  Report before passing an order of take-over?      Mukherjea, J.  speaking for  the Court,  answered these questions, thus:           (1) "The first of these questions does not present      any difficulty.  It is  true  that  the  order  of  the      Government of  India that  has been  challenged by  the      appellants was  a purely  executive order  embodying on      administration  decision.  Even  so,  the  question  of      natural justice does arise in this case. It is too late      now to  contend that  the principles of natural justice      need not  apply to administrative order or proceedings;      in the  language of  Lord Denning  M.R.  in  Regina  v.      Gaming Board,  exparte Beniam "that heresy was scotched      in Ridge v. Baldwin"           (2) "The  second question, however, as to what are      the principles  of natural justice that should regulate      an administrative act or order is a much more difficult      one to  answer We  do not  think it  either feasible or      even desirable  to lay down any fixed or rigorous yard-      stick in  this manner.  The concept  of natural justice      cannot be  put into  a straight  jacket. It  is futile,      therefore, to  look for  definitions  or  standards  of      natural justice  from various decisions and then try to      apply them  to the  facts of  any given  case. The only      essential point  that has  to be  kept in  mind in  all      cases is  that  the  person  concerned  should  have  a      reasonable opportunity  of presenting his case and that      the  administrative   authority  concerned  should  act      fairly,    impartially     and    reasonably.     Where      administrative officers  are concerned, the duty is not      so much  to act  judicially as  to act fairly. See, for      instance, the observations of Lord Parker in In re 577      H.K. (an  infant). It  only means  that such measure of      natural justice  should be  applied as was described by      Lord Reid in Ridge v. Baldwin as insusceptible of exact      definition but  what a reasonable man would regard as a      fair procedure  in particular  circumstances.  However,      even  the   application  of  the  concept  of  fairplay      requires real  flexibility. Everything  will depend  on      the actual facts and circumstances of a case."           (3) (a) "For answering that question we shall keep      in mind  .... and  examine the  nature and scope of the      inquiry that  had been carried out by the Investigating      Committee set  up by  the  Government,  the  scope  and      purpose  of   the  Act   and  rules   under  which  the      Investigating Committee was supposed to act, the matter      that  was  being  investigated  by  the  Committee  and

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    finally  the  opportunity  that  was  afforded  to  the      appellants  for   presenting  their   case  before  the      Investigating Committee."      (After noticing  the object, purpose and content of the relevant provisions, the judgment proceeded):           "In fact,  it appears  from a  letter addressed by      appellant No. 2 Navinchandra Chandulal Parikh on behalf      of the  Company to Shri H. K. Bansal, Deputy Secretary,      Ministry of Foreign Trade and Supply on 12th September,      1970 that  the appellants  had come  to know  that  the      Government  of   India  was  in  fact  considering  the      question of  appointing an  authorised controller under      Section 18A  of the  Act in  respect of  the appellants      undertaking. In  that letter  a detailed account of the      facts and  circumstances under which the mill had to be      closed down  was given. There is also an account of the      efforts made  by the Company’s Directors to restore the      mill. There  is no  attempt to  minimise the  financial      difficulties of  the Company  in that  letter ....  The      letter specifically  mentions the company’s application      to the  Gujarat State  Textile  Corporation  Ltd.,  for      financial help...  the Corporation ultimately failed to      come to  the succour  of the  Company. Parikh requested      Government not  to appoint an authorised controller and      further prayed  that the Government of India should ask      the State  Government and  the  Gujarat  State  Textile      Corporation Ltd.,  to give a financial guarantee to the      Company..."           "Only a  few days  before  this  letter  had  been      addressed, Parikh,  it appears,  had an  interview with      the Minister of 578      Foreign Trade  on 26th  August, 1970, when the Minister      gave him,  as a  special case,  four weeks’  time  with      effect from  26th August,  1970 to obtain the necessary      financial guarantee from the State or the Gujarat State      Textile  Corporation  without  which  the  Company  had      expressed its  inability to reopen and run the mill. In      a letter  of 22 September, 1970, Bansal informed Parikh      in clear  language that if the Company failed to obtain      the  necessary   guarantee  by   26   September   1970,      Government was proceeding to take action under the Act.      It is  obvious, therefore,  that  the  appellants  were      aware all  long that  as a  result of the report of the      Investigating Committee  the Company’s  undertaking was      going to be taken up by Government, Parikh had not only      made written  representations but  had  also  seen  the      Minister of  Foreign Trade and Supply. He had requested      the Minister  not to  take over the undertaking and, on      the contrary,  to lend  his good  offices so  that  the      Company could  get financial  support from  the Gujarat      State Textile  Corporation or  from the  Gujarat  State      Government." (emphasis added)           "All these  circumstances leave  in no  manner  of      doubt that  the Company  had full opportunities to make      all  possible  representations  before  the  Government      against  the  proposed  take-over  of  its  mill  under      Section 18A. In this connection, it is significant that      even after  the writ petition had been filed before the      Delhi High  Court the Government of India had given the      appellants at  their own  request one  month’s time  to      obtain the  necessary funds  to commence the working of      the mill. Even then, they failed to do so ....."           "There are  at least  five features  of  the  case      which make  it impossible  for us to give any weight to

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    the appellants  complaint that  the  rules  of  natural      justice have  not been  observed. First  on  their  own      showing they  were perfectly  aware of  the grounds  on      which Government had passed the order under Section 18A      of the  Act. Secondly,  they are  not in  a position to      deny (a)  that the  Company has  sustained  such  heavy      losses  that   its  mill   had  to   be   closed   down      indefinitely, and  (b) that  there was not only loss of      production of  textiles but  at least  1200 persons had      been  thrown   out  of   employment.  Thirdly,   it  is      transparently  clear   from  the  affidavits  that  the      Company was not in a position 579      to raise the resources to recommence the working of the      mill.  Fourthly,  the  appellants  were  given  a  full      hearing at  the time  of the  investigation held by the      Investigating   Committee    and   were    also   given      opportunities to  adduce evidence.  Finally, even after      the Investigating  Committee had  submitted its report,      the appellants  were in  constant  communion  with  the      Government and were in fact negotiating with Government      for such  help as  might enable them to reopen the mill      and to  avoid a  take-over of  their undertaking by the      Government. Having  regard  to  these  features  it  is      impossible for  us to  accept the  contention that  the      appellants did  not get  any reasonable  opportunity to      make  out   a  case  against  the  take-over  of  their      undertaking or  that the Government has not treated the      appellants  fairly.   There  is   not   the   slightest      justification in this case for the complaint that there      has been any denial of natural justice."           "In  our   opinion,  since   the  appellants  have      received a  fair  treatment  and  also  all  reasonable      opportunities  to   make  out  their  own  case  before      Government they cannot be allowed to make any grievance      of the  fact that  they were  not given a formal notice      calling upon  them to  show cause why their undertaking      should not  be taken  over or  that they  had not  been      furnished with  a copy of the report. They had made all      the representations  that they could possibly have made      against  the  proposed  take-over.  By  no  stretch  of      imagination, can  it be  said that  the order for take-      over took  them by  surprise. In  fact, Government gave      them ample  opportunity to  reopen and  run the mill on      their own  if they  wanted to  avoid the take-over. The      blunt fact is that the appellants just did not have the      necessary resources  to do  so.  Insistence  on  formal      hearing in such circumstances is nothing but insistence      on empty formality."  (emphasis added)           (3) (b)  "In our opinion it is not possible to lay      down any  general  principle  on  the  question  as  to      whether the  report of  an  investigating  body  or  an      inspector  appointed  by  an  administrative  authority      should be  made available  to the  persons concerned in      any given  case before  the authority  takes a decision      upon that report. The answer to this question also must      always depend  on the  facts and  circumstances of  the      case. It  is not  at all  unlikely that  there  may  be      certain cases where unless the report is 580      given the  party concerned  cannot make  any  effective      representation about  the action  that Government takes      or proposes  to take  on  the  basis  of  that  report.      Whether the  report should  be furnished  or  not  must      therefore, depend  in  every  individual  case  on  the

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    merits of  that case.  We have  no doubt  that  in  the      instant case,  non-disclosure  of  the  report  of  the      Investigating Committee  has not  caused any  prejudice      whatsoever to the appellants. (emphasis added)      It will be seen from what has been extracted above that in Keshav  Mills case,  this Court did not lay it down as an invariable  rule  that  where  a  full  investigation  after ’notice to  the owner of the industrial undertaking has been held under  Section 15,  the  owner  is  never  entitled  on grounds of  natural justice,  to a copy of the investigation report and  to an  opportunity of  making  a  representation about the action that the Government proposes to take on the basis of  that report.  On the contrary, it was clearly said that this  rule of  natural justice will apply at that stage in  cases  "where  unless  the  report-is  given  the  party concerned cannot make any effective representation about the action that  Government takes  or proposes  to take  on  the basis of  that report."  It was held that the application or non-application of  this  rule  depends  on  the  facts  and circumstances of  the particular  case. In the facts of that case,  it   was  found   that  the   non-disclosure  of  the investigation report  had not  caused any prejudice whatever because the  Company were  "aware all along that as a result of the  report of  the Investigating Committee the Company’s undertaking was going to be taken (over) by Government", and had full opportunities, to make all possible representations before the  Government against the proposed take-over of the Mill.      Shri Sorabji  submitted that  the observations  made by this Court  in Keshav  Mills case,  to the  effect, that  in certain cases  even at  the post-investigation  stage before making an  order of  take-over under  Section 18A, it may be necessary to  give another opportunity to the affected owner of the  undertaking to  make a  representation, appear to be erroneous. The argument is that the Legislature has provided in Sections  15 and  18A  of  the  Act  and  Rule  5  framed thereunder, its measure of this principle of natural justice and the  stage at  which it  has to  be observed.  The  High Court, therefore,  was not  right in  engrafting any further application of  the rule  of natural  justice  at  the  post investigation stage.  According to  the  learned  Solicitor- General for  the decision  of the case, it was not necessary to go beyond the 581 ratio of  Shri  Ambalal  M.  Shah  &  Anr.  v.  Hathi  Singh Manufacturing Co.  Ltd which  was followed  in Keshav  Mills case.      In our  opinion, the  observations  of  this  Court  in Keshav Mills  in regard  to the  application of this rule of natural justice  at the  post-investigation stage  cannot be called obiter dicta. There is nothing in those observations, which  can  be  said  to  be  inconsistent  with  the  ratio decidendi of  Ambalal’s case.  The main  ground on which the order of  take-over under  Section  18A  was  challenged  in Ambalal’s case  was that on a proper construction of Section 18A, the  Central Government had the right to make the order under that  Section on the ground that the Company was being managed in  a manner  highly detrimental to public interest, only where  the investigation  made  under  Section  15  was initiated on  the basis  of  the  opinion  as  mentioned  in Section 15(b),  whereas in  the present case (i.e. Ambalal’s case), the  investigation ordered  by the Central Government was initiated on the formation of an opinion as mentioned in clause (a) (i) of Section 15. It was urged that in fact, the Committee appointed  to investigate  had  not  directed  its

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investigation  into  the  question  whether  the  industrial undertaking was being managed in the manner mentioned above. The High  Court came  to the  conclusion that  on a  correct construction of  Section 18 A(1) (b) it was necessary before any order  could be  made thereunder  that the investigation should have  been initiated  on the  basis  of  the  opinion mentioned in  Section 15(b) of the Act. It also accepted the petitioner’s contention  that no investigation had, in fact, been held  into the  question whether  the  undertaking  was being managed  in a  manner  highly  detrimental  to  public interest.      On appeal  by special  leave, this  Court reversed  the decision of  the High Court, and held that the words used by the Legislature  in Section 18A (1) (b) "in respect of which an investigation  has been  made under Section 15" could not be cut  down by  the restricting phrase "based on an opinion that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest";  that Section  18A (1)  (b)  empowers  the Central Government  to authorise  a person  to take over the management of an industrial undertaking if the one condition of an investigation made under Section 15 had been fulfilled irrespective of  on  what  opinion  that  investigation  was initiated and  the further  condition is  fulfilled that the Central Government  was of opinion that such undertaking was being  managed   in  a  manner  highly  detrimental  to  the scheduled industry  concerned or to public interest. In this Court, it 582 was urged on behalf of the Company that absurd results would follow if  the words  "investigation  has  been  made  under Section 15"  are held  to include investigation based on any of the opinions mentioned in Section 15(a). Asked to mention what the absurd results would be, the counsel could only say that an  order under Section 18A (1) (b) would be unfair and contrary to  natural justice  in such cases, as the owner of an industrial  undertaking would  have no  notice  that  the quality of  management was  being  investigated.  The  Court found no  basis for  this assumption because in its opinion, the management  could not  but be  aware that  investigation would be  directed in  regard to  the quality of management, also. It is to be noted that the question of natural justice was casually and halfheartedly raised in a different context as a  last resort. It was negatived because in the facts and circumstances of that case, the Company was fully aware that the quality  of the  management was also being inquired into and it  had full opportunity to meet the allegations against it during investigation.      The second  reason-which is more or less a facet of the first-for holding  that the mere use of the word "immediate" in the  phrase "immediate  action is  necessary",  does  not necessarily and  absolutely exclude the prior application of the audi  alteram partem  rule, is that immediacy or urgency requiring swift action is a situational fact having a direct nexus with  the likelihood  of adverse  effect  on  fall  in production. And,  such likelihood  and the urgency of action to prevent it, may vary greatly in degree. The words "likely to affect  production" used  in Section  18AA  (1)  (a)  are flexible enough  to comprehend a wide spectrum of situations ranging from  the one  where the likelihood of the happening of the apprehended event is imminent to that where it may be reasonably  anticipated  to  happen  sometime  in  the  near future. Cases  of extreme urgency where action under Section 18AA(1) (a)  to prevent  fall in  production and  consequent injury to public interest, brooks absolutely no delay, would

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be rare. In most cases, where the urgency is not so extreme, it is practicable to adjust and strike a balance between the competing claims of hurry and hearing.      The audi  alteram partem  rule, as already pointed out, is a  very flexible,  malleable  and  adaptable  concept  of natural justice.  To adjust and harmonise the need for speed and obligation  to act  fairly, it  can be  modified and the measure  of   its  application   cut  short   in  reasonable proportion to  the exigencies of the situation. Thus, in the ultimate analysis,  the question,  (as to what extent and in what measure)  this rule  of fair  hearing will apply at the pre-decisional stage will depend upon the degree of urgency, if any,  evident from  the facts  and circumstances  of  the particular case. 583      In  the   instant  case,  so  far  as  Kanpur  Unit  is concerned, it  was lying  closed for  more than three months before the  passing of  the impugned  order.  There  was  no ‘immediacy’ in  relation to  that unit,  which could absolve the Government  from the  obligation of complying fully with the audi  alteram partem  rule at the pre-decisional or pre- takeover stage.  As regards  the other  five  units  of  the Company, the question whether on the basis of the evidential matter before  the Government  at the  time  of  making  the impugned order,  any reasonable person could reasonably form an opinion  about a likelihood of fall in production and the urgency of taking immediate action, will be discussed later. For the purpose of the question under consideration we shall assume that  there was  a likelihood  of fall in production. Even so, the undisputed facts and figures of production of 2 or 3 years preceding the take-over, relating to these units, show that  on the  average, production  in these  units  has remained fairly constant. Rather, in some of these units, an upward trend  in production  was discernible.  Be that as it may, the  likelihood of fall in production or adverse effect on production in these five units, could not, by any stretch of prognostication  or feat  of imagination,  be said  to be imminent, or  so urgent  that it could not permit the giving of even  a minimal  but real  hearing to  the Company before taking-over these  units. There was an interval of about six weeks between  the Official  Group’s Report,  dated February 16, 1978  and the  passing of the impugned order dated April 13, 1978.  There was  thus sufficient  time available to the Government to  serve a  copy of that report on the appellant Company and  to give  them a  short-measure  opportunity  to submit their reply and representation regarding the findings and recommendations  of the  Group Officers and the proposed action under Section 18AA(1).      The third  reason for  our  forbearance  to  imply  the exclusion of  the audi alteram partem rule from the language of  Section   18AA(1)  (a)   is,  that  although  the  power thereunder is  of a drastic nature and the consequences of a take-over are  far-reaching and its effect on the rights and interests of  the owner  of the  undertaking  is  grave  and deprivatory, yet  the Act does not make any provision giving a full right of a remedial hearing equitable to a full right of appeal, at the post-decisional stage.      The High Court seems to be of the view that Section 18F gives a  right of  full post-decisional  remedial hearing to the aggrieved  party. Shri  Soli  Sorabji  also  elaborately supported that  view of  the High Court. In the alternative, the learned  counsel has  committed himself on behalf of his client, to the position, that the Central Government will if required, give  the Company  a  full  and  fair  hearing  on merits,

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584 including an opportunity to show that the impugned order was not made on adequate or valid grounds.      Shri Nariman  on the  other hand  contends-and we think rightly-that  the   so-called  right  of  a  post-decisional hearing available  to the aggrieved owner of the undertaking under Section 18F is illusory as in its operation and effect the power  of  review,  if  any,  conferred  thereunder,  is prospective, and not retro-active, being strictly restricted to and dependent upon the post-takeover circumstances.      By virtue  of sub-section  (2)  of  Section  18AA,  the reference to Section 18A in Section 18F will be construed as a reference to Section 18AA, also. The power of cancellation under Section  18F can  be exercised  only on  any of  these grounds :  (i) "that  the purpose  of the  order made  under Section 18A has been fulfilled", or (ii) "that for any other reason it  is not  necessary that the order should remain in force". These  ‘grounds’ and  the language in which they are couched is  clear  enough  to  show  that  the  cancellation contemplated thereunder cannot have the effect of annulling, rescinding or  obliterating  the  order  of  take-over  with retro-active force;  it can  have only a prospective effect. Section 18F  embodies  a  principle  analogous  to  that  in Section 21 of the General Clauses Act. The first ‘ground’ in Section 18F  for the  exercise of  the power, obviously does not cover  a review of the merits or circumstances preceding and existing at the date of passing the order of ‘take-over’ under Section  18AA(1). The  words "for any other reason" if read in isolation, no doubt, appear to be of wide amplitude. But their  ambit has been greatly cut down and circumscribed by the contextual phrase "no longer necessary that it should remain in  force". Construed in this context, the expression "for any other reason" cannot include a ground that the very order of  take-over was invalid or void ab initio. Thus, the post-decisional hearing  available to the aggrieved owner of the undertaking is not an appropriate substitute for a fair- hearing at  the  pre-decisional  stage.  The  Act  does  not provide any adequate remedial hearing or right of redress to the aggrieved  party even  where his  under-taking has  been arbitrarily taken-over  on insufficient grounds. Rather, the plight  of   the  aggrieved  owner  is  accentuated  by  the provision in  18D which  disentitles him  and other  persons whose officers  are lost  or whose contract of management is terminated as a result of the ‘take-over’, from claiming any compensation whatever for such loss or termination.      Before we conclude the discussion on this point, we may notice one more argument that has been advanced on behalf of the respondents.  It is  argued that this was a case where a prior hearing  to  the  Company  could  only  be  a  useless formality because the impugned action has been 585 taken on  the basis  of evidence, consisting of the Balance- sheet,  account-books  and  other  records  of  the  Company itself,  the  correctness  of  which  could  not  have  been disputed by  the Company. On these premises, it is submitted that non-observance  of the rule of audi altrem partem would not prejudice the Company, and thus make no difference.      The contention  does not  appear  to  be  well-founded. Firstly, this  documentary evidence, at best, shows that the Company was  in debt  and the  assets of some of its ‘units’ had been  hypothecated or  mortgaged as  security for  those debts. Given an opportunity the Company might have explained that  as   a  result  of  this  indebtedness  there  was  no likelihood of  fall in  production,  which  is  one  of  the essential conditions  in regard to which the Government must

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be satisfied  before taking  action under  Section 18(1)(a). Secondly, what  the rule  of natural justice required in the circumstances of  this case,  was not  only that the Company should  have  been  given  an  opportunity  to  explain  the evidence against  it, but also an opportunity to be informed of the  proposed action of take-over and to represent why it be not taken.      In the  renowned case,  Ridge v. Baldwin & Ors. (ibid), it was  contended before  the House  of Lords that since the appellant police  officer had  convicted himself  out of his own mouth,  a prior  hearing to  him by  the Watch Committee could not  have made  any difference; that on the undeniable facts of  that case,  no reasonable  body of  men could have reinstated the  appellant. This  contention was  rejected by the House  of  Lords  for  the  reason  that  if  the  Watch Committee had  given the police officer a prior hearing they would not  have acted wrongly or unreasonably if they had in the exercise  of their  discretion decided  to take  a  more lenient course than the one they had adopted.      A similar  argument was  advanced in  S. L.  Kapoor  v. Jagmohan &  Ors to  which decision  two of  us (Sarkaria and Chinnappa Reddy,  JJ.)  were  parties.  In  negativing  this argument, this  Court, inter  alia, quoted with approval the classic passage,  reproduced below,  from  the  judgment  of Megarry, J. in John v. Rees & Ors.           "As everybody  who has anything to do with the law      well knows, the path of the law is strewn with examples      of open  and shut  cases which,  somehow, were  not; of      unanswerable  charges   which,  in   the  event,   were      completely answered;  of inexplicable conduct which was      fully   explained;    of    fixed    and    unalterable      determinations that,  by discussion, suffered a change.      Nor are those with any knowledge of human 586      nature who pause to think for a moment likely to under-      estimate the  feelings of  resentment of those who find      that a  decision against  them has  been  made  without      their being  afforded any  opportunity to influence the      course of events."      In General  Medical Council  v. Spackman,  Lord  Wright condemned the  oft-adopted attitude  by tribunals  to refuse relief on  the ground that a fair hearing could have made no difference to  the result.  Wade in  his Administrative Law, 4th Edn., page 454, has pointed out that "in principle it is vital that  the procedure  and the  merits  should  be  kept strictly apart,  since otherwise the merits may be prejudged unfairly".      In Maxwell  v. Department  of Trade  & Industry, Lawton L.J. expressed  in the same strain that "doing what is right may still  result in  unfairness if  it is done in the wrong way." This  view is  founded  on  the  cordinal  canon  that justice must not only be done but also manifestly be seen to be done.      Observance of  this fundamental  principle is necessary if the  courts and  the  tribunals  and  the  administrative bodies are to command public confidence in the settlement of disputes  or  in  taking  quasi-judicial  or  administrative decisions affecting  civil rights or legitimate interests of the citizens.  The same  proposition was propounded in R. V. Thames Magistrates’  Court ex  p. Polemis,  by Lord  Widgery C.J. at  page 1375;  and by  the American  Supreme Court  in Margarita Fuentes et al., v. Tobert L. Shevin.      In concluding  the discussion  in regard to this aspect of the  matter, we  can do no better than reiterate what was said by  one of  us (Chinnappa Reddy, J.) in S. L. Kapoor v.

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Jagmohan (ibid) :           "In our  view the  principles of  natural  justice      know of  no exclusionary  rule dependent  on whether it      would have  made any  difference if natural justice had      been observed. The non-observance of natural justice is      itself prejudice  to any  man and  proof  of  prejudice      independently of  proof of denial of natural justice is      unnecessary. It  ill comes from a person who has denied      justice that  the person who has been denied justice is      not prejudiced." 587      We, therefore, over-rule this last contention.      In sum,  for all  the reasons  aforesaid, we are of the view that  it is not reasonably possible to construe Section 18AA(1) as  universally excluding,  either expressly  or  by inevitable intendment,  the application  of the audi alteram partem rule  of natural  justice at  the pre-takeover stage, regardless of  the facts and circumstances of the particular case. In  the circumstances of the instant case, in order to ensure  fairplay   in  action  it  was  imperative  for  the Government to  comply substantially  with  this  fundamental rule of  prior hearing before passing the impugned order. We therefore,  accept   the  two-fold   proposition  posed  and propounded by Shri Nariman.      The further  question to be considered is : What is the effect of  the non-observance  of this fundamental principle of fairplay?  Does the  non-observance of  the audi  alteram partem rule, which in the quest of justice under the rule of law, has  been considered universally and most spontaneously acceptable  principle,  render  an  administrative  decision having civil  consequences, void  or voidable  ? In England, the outfall  from the  watershed decision,  Ridge v. Baldwin brought with it a rash of conflicting opinion on this point. The majority  of the House of Lords in Ridge v. Baldwin held that the  non-observance of this principle, had rendered the dismissal of  the Chief Constable void. The rationale of the majority view  is that  where there is a duty to act fairly, just like  the duty to act reasonably, it has to be enforced as an  implied statutory  requirement, so  that  failure  to observe it means that the administrative act or decision was outside  the   statutory  power,  unjustified  by  law,  and therefore ultra  vires and  void. (See Wade’s Administrative Law, ibid,  page 448). In India, this Court has consistently taken the  view  that  a  quasi-judicial  or  administrative decision rendered  in violation  of the  audi alteram partem rule, wherever  it can  be read as an implied requirement of the law, is null and void. (e.g. Maneka Gandhi’s case, ibid, and S.  L. Kapoor  v. Jagmohan,  ibid).  In  the  facts  and circumstances of  the instant  case, there  has been  a non- compliance with such implied requirement of the audi alteram partem rule  of natural justice at the pre-decisional stage. The impugned  order  therefore,  could  be  struck  down  as invalid on  that score  alone. But we refrain from doing so, because the  learned Solicitor-General  in all fairness, has both orally  and in his written submissions dated August 28, 1979, committed  himself to  the position that under Section 18F, the  Central  Government  in  exercise  of  its  curial functions, is  bound to  give  the  affected  owner  of  the undertaking taken-over, a "full and effective hearing on all aspects touching  the validity  and/or  correctness  of  the order and/or action of take- 588 over", within  a reasonable  time after  the take-over.  The learned Solicitor  has assured the Court that such a hearing will be  afforded to  the appellant Company if it approaches

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the Central  Government for  cancellation  of  the  impugned order. It is pointed out that this was the conceded position in  the   High  Court   that  the  aggrieved  owner  of  the undertaking had a right to such a hearing.      In view of this commitment/or concession fairly made by the learned  Solicitor-General, we refrain from quashing the impugned order,  and allowing Civil Appeal 1629 of 1979 send the case  back to  the Central Government with the direction that it  shall, within  a reasonable time, preferably within three months  from today,  give a  full, fair  and effective hearing to the aggrieved owner of the undertaking, i.e., the Company, on  all aspects  of  the  matter,  including  those touching the  validity and/or  correctness of  the  impugned order and/or  action of take-over and then after a review of all the relevant materials and circumstances including those obtaining on the date of the impugned order, shall take such fresh decision,  and/or  such  remedial  action  as  may  be necessary, just, proper and in accordance with law.      In view  of the  above decision,  no separate  order is necessary in Civil Appeals 1857 and 2087 of 1979.      All the  three appeals are disposed of accordingly with no order  as to  costs. Since the appeals have been disposed of on  the first  and foremost point canvassed before us, in the manner  indicated above,  it is  not necessary to burden this judgment  with a  discussion of the other points argued by the counsel for the parties.      CHINNAPPA REDDY,  J. I have the misfortune to be unable to agree  with the  erudite opinion  of my  learned  brother Sarkaria  on  the  question  of  the  applicability  of  the principles of  natural justice.  I do so with diffidence and regret.      The first  of the  submissions of  Shri F.  S. Nariman, learned counsel for the appellant company was that there was a  violation  of  the  principles  of  natural  justice.  He submitted that the provisions of the Industries (Development and Regulation)  Act did  not rule  out natural  justice and that there  were several  occasions in  the march  of events that led to the passing of the order under Sec. 18AA when an opportunity could  have been  given to  the Company  and the principles of natural justice observed but the Government of India refrained  from doing  so. He urged that the immediate action contemplated  by Sec.  18AA(1)  (a)  was  not  to  be construed as negat- 589 ing natural justice but as intended merely to distinguish it from action  under Sec. 18A which was to be taken only after investigation under  Sec. 15.  He drew  inspiration for this argument from  the marginal  note to  Section 18AA  which is "power  to   take  over   industrial  undertakings   without investigation under  certain circumstances".  He also  urged that  Sec.  18F  contemplated  a  post-decisional  situation necessitating cancellation of the order of take-over but did not contemplate  cancellation of  the order  of take-over on the ground that such order ought never to have been made. He urged that the scope of Sec. 18F was very narrow and did not entitle the party affected to a fair hearing. In any case he argued that  the remedy  such as it was provided by Sec. 18F was not  an answer  to the  claim to  pre-decisional natural justice. His  submission was that natural justice was not to be excluded except by the clear and unmistakable language of the statute,  though the  "quantum" of natural justice to be afforded in an individual case might vary from case to case.      Shri Soli  Sorabji, learned  Solicitor  General,  while conceding that  statutory silence on the question of natural justice  should   ordinarily  lead   to  an  implication  by

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presumption that  natural justice  was to be observed, urged that  the   presumption  might  be  displaced  by  necessary implication, as  for instance  where compliance with natural justice  might   be  inconsistent   with  the   demands   of promptitude, and  delayed action might lead to disaster. The presumption of  implication of natural justice was very weak where action was of a remedial or preventive nature or where such action  concerned property  rights only. In appropriate situations  post-decisional   hearing  might  displace  pre- decisional natural  justice. The  statute itself  might well provide for  a post-decisional  hearing as  a substitute for pre-decisional  natural   justice  in  situations  requiring immediate action.  Sec. 18-F  of the  Industries Development and Regulation  Act expressly  provided  for  such  a  post- decisional  hearing   and  the   urgency  of  the  situation contemplated  by   Sec.  18AA   necessarily  excluded   pre- decisional natural  justice. There was no reason to belittle the scope of Sec. 18F, so, to exclude a fair post-decisional hearing  at   the  instance   of  the   party  affected  and consequently, to imply pre-decisional natural justice.      Both the  learned  counsel  invited  our  attention  to considerable case-law.  I do not propose to discuss the case law as  my brother Sarkaria has referred to all the cases in great detail.  Before I  consider  the  submissions  of  the learned counsel as to the applicability of the principles of natural justice,  a few  prefatory remarks, however, require to be made. 590      Natural justice, like Ultra Vires and Public Policy, is a branch  of the Public Law and is a formidable weapon which can be  wielded to  secure justice  to the  citizen.  It  is productive of  great good as well as much mischief. While it may be  used to protect certain fundamental liberties, civil and political  rights, it  may be used, as indeed it is used more often  than not,  to protect  vested interests  and  to obstruct the  path of  progressive change. In the context of modern welfare  legislation, the  time has  perhaps come  to make an  appropriate distinction  between natural justice in its  application   to  fundamental   liberties,  civil   and political rights  and natural  justice in its application to vested  interests.   Our   Constitution,   as   befits   the Constitution of  a Socialist  Secular  Democratic  Republic, recognises the  paramountcy of  the  public  weal  over  the private  interest.  Natural  justice,  Ultra  Vires,  Public Policy, or  any other rule of interpretation must therefore, conform, grow  and be  tailored to serve the public interest and respond to the demands of an evolving society.      In Ridge  v. Baldwin,  it was thought by Lord Reid that natural justice  had no  easy application where questions of public interest  and policy  were more  important  than  the rights of individual citizens. He observed :           "If a  Minister is  considering whether  to make a      scheme for,  say, an  important new  road, his  primary      concern  will   not  be   with  the  damage  which  its      construction will do to the rights of individual owners      of land.  He  will  have  to  consider  all  manner  of      questions of  public interest  and, it may be, a number      of alternate  schemes.  He  cannot  be  prevented  from      attaching more  importance to  the  fulfilment  of  his      policy than to the fate of individual objectors, and it      would be  quite wrong  for the  Courts to  say that the      Minister should or could act in the same kind of way as      a board  of works  deciding whether  a house  should be      pulled down." And, as  pointed out  by a contributor in 1972 Cambridge Law

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Journal at page 14 :           "...... the  safeguarding of  existing rights  can      after all  in some  circumstances amount to little more      than  the  fighting  of  a  rear-guard  action  by  the      reactionary element in society seeking only to preserve      its own vested position."      The United  States Supreme  Court  has  recognised  the distinction between  cases where  only property  rights  are involved and  cases where  other civil  and political rights are involved. In cases where only 591 property rights  are involved  postponement of  enquiry  has been held not to be a denial of due process, vide : Annie G. Phillips v.  Commissioner of Internal Revenue, John H. Fahey v. Paul  Mallonee, Margarita  Fuentes v.  Robert L.  Shevin, Attorney General  of Florida, and Lawrence Mitchell v. W. F. Grant Co.      In the first case (75 L.Ed. 1289), Brandeis J observed:           "Where only  property rights  are  involved,  mere      postponement of the judicial inquiry is not a denial of      due process,  if the opportunity given for the ultimate      judicial determination  of the  liability is  adequate.      Delay in  the judicial determination of property rights      is not uncommon where it is essential that Governmental      needs be  immediately satisfied.  For the protection of      public  health,   a  state   may  order   the   summary      destruction of  property by  administrative authorities      without antecedent  notice or  hearing. Because  of the      public  necessity  the  property  of  citizens  may  be      summarily seized  in war  time. And  at any  time,  the      United States  may acquire  property by eminent domain,      without  paying,  or  determining  the  amount  of  the      compensation before the taking."      The principles  of natural justice have taken deep root in the  judicial  conscience  of  our  people,  nurtured  by Binapani, Kraipak,  Mohinder Singh  Gill, Maneka Gandhi etc. etc. They  are  now  considered  so  fundamental  as  to  be "implicit in the concept of ordered liberty" and, therefore, implicit  in   every  decision   making  function,  call  it judicial, quasi  judicial or administrative. Where authority functions under  a statute  and the statute provides for the observance  of  the  principles  of  natural  justice  in  a particular manner,  natural justice will have to be observed in that  manner and  in no  other. No  wider right than that provided by  statute can  be claimed  nor can  the right  be narrowed. Where  the statute  is silent about the observance of the principles of natural justice, such statutory silence is taken  to imply compliance with the principles of natural justice.  The   implication   of   natural   justice   being presumptive it  may be  excluded by express words of statute or by  necessary intendment.  Where the  conflict is between the  public   interest  and   the  private   interest,   the presumption must  necessarily be weak and may, therefore, be readily displaced.  The presumption  is also weak where what are involved  are mere property rights. In cases of urgency, particularly where  the public  interest is  involved,  pre- emptive 592 action may  be a  strategic necessity.  There may then be no question of  observing natural  justice. Even  in  cases  of preemptive action.  if the  statute so  provides or  if  the Courts so deem fit in appropriate cases, a postponed hearing may  be  substituted  for  natural  justice.  Where  natural justice is  implied, the  extent of  the implication and the nature of  the hearing  must  vary  with  the  statute,  the

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subject and  the situation.  Seeming judicial ambivalence on the question  of the  applicability  of  the  principles  of natural justice  is generally  traceable to the readiness of judges to  apply the  principles of natural justice where no question of  the public  interest is  involved, particularly where rights  and interests  other than  property rights and vested interests  are involved  and the reluctance of judges to apply  the principles  of natural justice, where there is suspicion of  public mischief  and only  property rights and vested interests are involved.      In the light of these prefatory remarks, I will proceed to  consider   the  relevant   statutory   provisions.   The Industries  (Development  and  Regulation)  Act,  1951,  was enacted pursuant  to the  power given to Parliament by Entry 52 of List I of the Seventh Schedule to the Constitution. As required by that Entry Section 2 of the Act declares that it is expedient  in the  public interest  that the Union should take under its control the industries specified in the First Schedule to  the Act.  Item 23  of the First Schedule to the Act relates  to Textiles  of various  categories, Sec.  3(d) defines "Industrial  undertaking" to  mean "any  undertaking pertaining to a scheduled industry carried on in one or more factories by  any person or authority including Government". The expression  undertaking is  not, however,  defined  Sec. 3(f)  defines   "Owner",  "in   relation  to  an  industrial undertaking" as "the person who, or the authority which, has the ultimate  control over  the affairs  of the undertaking, and, where  the said  affairs are  entrusted to  a  manager, managing director or managing agents, such manager, managing director or  managing agent  shall be deemed to be the owner of the  undertaking". Sec.  3(j)  provides  that  words  and expressions not  defined in  the  Act  but  defined  in  the Companies Act  shall have  the meaning  assigned to  them in that Act.  Sec.  10  obliges  the  owner  of  an  industrial undertaking to  register the  undertaking in  the prescribed manner. Sec.  10A authorises  the revocation of registration after giving  an opportunity to the owner of the undertaking in certain circumstances. Sec. 11 provides for the licensing of the  new industrial undertaking and Sec. 11A provides for the licensing  of the  production and manufacture of the new articles. Sec. 13 provides, among other things, that, except under, and  in accordance  with, a  licence issued  in  that behalf by  the Central Government, no owner of an industrial undertaking shall effect any substantial expansion or 593 change  the  location  of  the  whole  or  any  part  of  an industrial undertaking.  Sec. 14  provides for  a  full  and complete investigation  in respect  of applications  for the grant of licence or permission under Sections 11, 11A, 13 or 29B. Sec.  15 authorises  the Central  Government to make or cause to  be made a full and complete investigation into the circumstances of  the case  if the  Central Government is of the opinion that :           (a)  in  respect  of  any  scheduled  industry  or      industrial undertaking  or undertakings  (i) there  has      been, or  is likely  to be,  a substantial  fall in the      volume of  production.... for  which, having  regard to      the  economic   conditions  prevailing,   there  is  no      justification; or  (ii) there has been, or is likely to      be, a  marked  deterioration  in  the  quality  of  any      article........... which  could have  been  or  can  be      avoided; or  (iii) there  has been or is likely to be a      rise in  the price  of any article..... for which there      is no  justification; or  (iv) it  is necessary to take      any such  action for  the  purpose  of  conserving  any

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    resources of national importance; or           (b) any industrial undertaking is being managed in      a manner  highly detrimental  to the scheduled industry      concerned   or    to   public   interest.   After   the      investigation  is   made  under  Sec.  15,  Sec.  16(1)      provides, if  the Central  Government is satisfied that      such action  is desirable,  it  may  issue  appropriate      directions for           (a)  regulating  the  production  of  any  article                ......and fixing the standards of production;           (b)  requiring the  industrial undertaking to take                such steps  as  the  Central  Government  may                consider   necessary,    to   stimulate   the                development of the industry;           (c)  prohibiting resort  to any  act  or  practice                which   might    reduce   the   undertaking’s                production, capacity or economic value;           (d)  controlling the  prices,  or  regulating  the                distribution of any article. Sec. 16(2) also provides for the issue of interim directions by the  Central Government  pending investigation under Sec. 15. Such directions are to have effect until validly revoked by the Central Government. 594      Chapter III-A  consisting of Sections 18A, 18-AA. 18-B, 18-C, 18-D,  18-E and  18-F deals with "direct management or control of  Industrial Undertakings by Central Government in certain cases".  Sec.  18-A  which  is  entitled  "Power  of Central Government  to assume  management or  control of  an industrial undertaking  in certain  cases" provides that the Central Government  may, by  notified order,  authorise  any person or body of persons to take over the management of the whole or  any  part  of  an  industrial  undertaking  or  to exercise in  respect  of  the  whole  or  any  part  of  the undertaking such functions of control as may be specified in the order, if the Central Government is of opinion that :           (a)  an industrial undertaking to which directions                have been  issued in pursuance of Sec. 16 has                failed to comply with such directions, or           (b)  an industrial undertaking in respect of which                an investigation  has been made under section                15  is  being  managed  in  a  manner  highly                detrimental   to   the   scheduled   industry                concerned or to public interest. Sec.  18-AA   refers  to  "Power  to  take  over  industrial undertakings    without    investigation    under    certain circumstances". It  enables  the  Central  Government  by  a notified order to authorise any person or body of persons to take over  the management  of the  whole or  any part  of an industrial undertaking or to exercise in respect of whole or any part of the undertaking such functions of control as may be specified  in the  order, if,  without prejudice  to  any other provisions  of the  Act, from the documentary or other evidence  in  its  possession,  the  Central  Government  is satisfied in relation to the industrial undertaking, that           "(a) the  persons   incharge  of  such  industrial                undertakings have, by reckless investments or                creation of encumbrances on the assets of the                industrial undertaking,  or by  diversion  of                funds, brought  about a  situation  which  is                likely to  affect the  production of articles                manufactured or  produced in  the  industrial                under taking,  and that  immediate action  is                necessary to prevent such a situation; or           (b)  it has  been closed  for a period of not less

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              than three  months (whether  by reason of the                voluntary winding  up of  the company  owning                the industrial  undertaking or  for any other                reason) and  such closure  is prejudicial  to                the concerned scheduled industry and 595                that the  financial condition  of the company                owning the  industrial  undertaking  and  the                condition of  the plant and machinery of such                undertaking are  such that  it is possible to                re-start the undertaking and such re-starting                is necessary  in the interests of the general                public". Sec. 18-AA(5) stipulates that the provisions of Sections 18- B to  18-E shall be applicable to the industrial undertaking in respect  of which  an order  has been made under s. 18-AA even as  they apply  to an industrial undertaking taken over under Sec.  18-A.  Sec.  18-B  specifies  the  effect  of  a notified order  under Sec. 18-A. Sec. 18C empowers the Court to cancel  or vary  contracts made  in bad faith etc. by the management of  an undertaking  before  such  management  was taken by  the Central  Government. Sec.  18-D provides  that there shall  be no  right to compensation for termination of office or contract as a result of the ‘take over’. Sec. 18-E deprives the  shareholders and the Company of certain rights under  the   Indian  Companies   Act.  if   the   industrial undertaking whose  management is  taken over  is a  Company. Sec. 18-F empowers the Central Government on the application of the  owner of  the industrial undertaking or otherwise to cancel the  order made  under Sec. 18-A if it appears to the Central Government  that the  purpose of  the order has been fulfilled or  that for  any other reason it is not necessary that the  order should remain in force. Sec. 18FD(3) enables the Central Government to exercise the powers under Sec. 18- F in relation to an undertaking taken over under Sec. 18-AA.      The question  for consideration  is whether  Sec. 18-AA excludes  natural  justice  by  necessary  implication.  The development and  regulation of  certain key  industries  was apparently considered  so basic  and vital to the economy of our country  that Parliament,  in its wisdom, thought fit to enact the  Industries Development  & Regulation  Act,  after making the declaration required by Entry 52 of List I of the Seventh Schedule  to the Constitution that it was expedient, in the public interest, that the Union should take under its control the industries specified in the schedule to the Act, as earlier  mentioned by us. Apart from making provision for the establishment  of a  Central Advisory  Council and other Development  Councils,   and  the   licensing  of  scheduled industries, the Act empowers the Central Government to cause a full  and complete investigation to be made where there is a substantial  fall in  the volume  of production  for which there is  no justification  having regard  to the prevailing economic conditions  or there is marked deterioration in the quality of the 596 goods produced  or the price of the goods produced is rising unjustifiably or where conservation of resources of national importance is  necessary or  the industrial  undertaking  is being  managed   in  a  manner  highly  detrimental  to  the scheduled industry  or to  public  interest  (Sec.  15)  and thereafter to  issue necessary and appropriate directions to the industrial  undertaking to  mend matters  suitably (Sec. 16). Where  the instructions  issued under  Sec. 16  are not complied with  or where  the investigation  reveals that the industrial undertaking  is being  managed in a manner highly

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detrimental to  the scheduled  industry  or  to  the  public interest the  Central Government  may take over the industry under Sec.  18-A. Whether  there is an investigation or not, the Central  Government may  also ‘take over’ the management of the  industry under  Sec. 18-AA, if consequent on certain wilfull acts of commission on the part of the management the production is likely to be effected but immediate action may prevent such  a situation, or the industrial undertaking has been closed  for a  period of not less than three months and the closure is prejudicial to the scheduled industry. Action under Sec.  18-AA is  thus preventive  and  remedial.  Where there is  an apprehension  that production  is likely  to be affected as  a result  of the wilfull acts of the management or where  the production  has already  come to a stand-still because of  the closure  of the  undertaking for a period of not  less  than  three  months  the  Central  Government  is authorised to  intervene to  restore production.  The object clearly is  to take  immediate action to prevent a situation likely to  affect production or to restore production. There was some  argument at the Bar that the expression ‘immediate action’ was  not to  be found in Sec. 18-AA(1) (b). I do not think that  the absence  of the expression "immediate action in Sec.  18-AA(1)(b) makes  any difference. Sec. 18-AA(1)(a) refers to  a situation where immediate preventive action may avert  a   disaster,  whereas   Sec.  18-AA  contemplates  a situation where  the disaster  has occurred  and  action  is necessary to  restore normalcy.  Restoration  of  production where production has stopped in a key industry or industrial undertaking is  as  important  and  urgent,  in  the  public interest, as  prevention of a situation where production may be affected. Immediate action is, therefore, as necessary in the situation  contemplated by  Sec. 18-AA(1)(b)  as in  the situation contemplated by Sec. 18-AA(1)(a).      It is  true that  the marginal note refers to the power to  take   over  without   investigation  but  there  is  no sufficient reason  to suppose  that the  word ‘immediate’ is used only  to contra-distinguish  it from  the investigation contemplated by  Sec. 15  of the  Act, though,  of course  a consequence of  immediate action  under Sec. 18-AA may be to dis- 597 pense with  the enquiry  under Sec. 15. In fact, facts which come to  light during  the course  of an investigation under Sec. 15 may form the basis of action under Sec. 18-AA(1)(a). Where in  the course of an investigation under Sec. 15 it is discovered that the management have, by reckless investments or creation  of encumbrances on the assets of the industrial undertaking  or  by  diversion  of  funds  brought  about  a situation which  is likely  to affect  the production of the articles  manufactured   or  produced   in  the   industrial undertaking, if  the Government  is satisfied that immediate action is necessary to prevent such a situation, there is no reason why the Central Government may not straight away take action under Sec. 18-AA(1)(a) without waiting for completion of  investigation   under  Sec.  15.  Parliament  apparently contemplated  a   situation  where   immediate  action   was necessary, and  having contemplated  such a situation, there is no  reason to  assume that Parliament did not contemplate situations which  brooked not a moments delay. If Parliament also contemplated  situations which did not brook a moment’s delay, it  would be  difficult to  read natural justice into Sec. 18-AA.  The submission  of Shri  Nariman was  that  the immediacy of  the situation  would be relevant and relatable to the  quantum of natural justice and not to a total denial of natural justice. According to him the scope and extent of

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the opportunity to be given to the party against whom action is taken  may depend  upon the  situation but  nothing would justify a negation of a natural justice. He pointed out that in a  situation of  great urgency which brooked no delay, an order under Sec. 18-AA might be made, the situation could be so frozen  that  the  persons  incharge  of  the  industrial undertaking might  do no  more mischief  and the  Government could then, without giving further effect to the order under Sec. 18-AA,  give a  notice to  the person  incharge to show cause why  the order  under Sec.  18-AA should  not be given effect. In  another given  case, according  to Shri Nariman, notice of,  say two  weeks, might  be given before making an order, if  the making of an order was not so very urgent. He suggested that  the opportunity  to be given might vary from situation to situation but opportunity there must be, either before the  decision was  arrived at or so shortly after the decision was  arrived at and before any great mischief might result from  the order.  The argument  of Shri Nariman would vest in  the Government  a power to decide from case to case the extent  of opportunity  to be  given in  each individual case and,  as a  corollary, a  corresponding  right  in  the aggrieved party  to claim  that the opportunity provided was not enough.  Such a  procedure may  be possible, practicable and desirable  in situations  where there  is  no  statutory provision enabling  the decision making authority to review, or reconsider its decision. Where there is a 598 provision in  the statute itself for revocation of the order by the  very authority making the decision, it appears to us to be unnecessary to insist upon a pre-decisional observance of natural  justice. The  question  must  be  considered  by regard to the terms of the statute and by an examination, on the  terms   of  the   statute,  whether   it  is  possible, practicable and  desirable to observe pre-decisional natural justice  and   whether   a   post   decisional   review   or reconsideration provided  by the  statute itself  is  not  a sufficient substitute.      The likelihood  of production  being jeopardized or the stoppage of  production in a key industrial undertaking is a matter of  grave  concern  affecting  the  public  interest. Parliament has taken so serious a view of the matter that it has authorised  the Central  Government  to  take  over  the management of the industrial undertaking if immediate action may prevent  jeopardy to  production or  restore  production where it  has already  stopped. The  necessity for immediate action  by   the   Central   Government,   contemplated   by Parliament, is  definitely indicative  of the  exclusion  of natural justice. It is not as if the owner of the industrial undertaking is  left with no remedy. He may move the Central Government under  Sec. 18-F  to cancel  the order made under Sec. 18-AA.  True some mischief affecting the management and top executives  may have  already been  done. On  the  other hand, greater  mischief affecting the public economy and the lives of many a thousand worker may have been averted. While on the  one hand  mere property  rights are involved, on the other vital  public interest  is affected. This ......again, in the  light of  the need for immediate action contemplated by Parliament,  is a  clear  pointer  to  the  exclusion  of natural justice.  It was  submitted by  the learned  counsel that Sec.  18-F  did  not  provide  any  remedy  but  merely provided for  cancellation of  an order  of take over on the fulfilment of  the purpose  of the order of take over or for any other reason which rendered further continuance in force of  the  order  unnecessary  because  of  the  happening  of subsequent events.  According to  the  learned  counsel  the

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basic assumption  of Sec. 18-F was the validity of the order under Sec. 18-A or Sec. 18-AA. All that Sec. 18-F did was to prescribe conditions  for the  exercise of the general power which every  authority had  under Sec.  21  of  the  General Clauses Act  to cancel  its own  earlier order.  It was said that if Sec. 18-F could be said to impliedly exclude natural justice there  is then no reason not to hold that Sec. 21 of the General  Clauses Act  similarly excluded natural justice in every  case. I  am unable to agree with these submissions of the  learned counsel. Neither Sec. 18-F of the Industries (Development and  Regulation) Act nor Sec. 21 of the General Clauses  Act,  by  itself,  excludes  natural  justice.  The exclusion of  natural justice,  where such  exclusion is not express, has to be implied by reference 599 to the  subject, the  statute and  the statutory  situation. Where an  express provision  in the  statute itself provides for a  post decisional  hearing the  other provisions of the statute will  have to be read in the light of such provision and the  provision for  post  decisional  hearing  may  then clinch  the   issue  where  pre-decisional  natural  justice appears to  be excluded  on the  other terms of the statute. That a  post-decisional hearing may also be had by the terms of Sec.  21 of  the General  Clauses Act may not necessarily help in  the interpretation of the provisions of the statute concerned. On  the other  hand even  the  general  provision contained in  Sec. 21  of the  General Clauses  Act  may  be sufficient to  so interpret  the terms of a given statute as to exclude  natural justice.  As I  said it  depends on  the subject, statute and the statutory situation.      I am,  therefore,  satisfied  that  the  principles  of natural  justice   are  not   attracted  to  the  situations contemplated by  Sec. 18-AA  of the  Industries (Development and Regulation)  Act. In  view of  the order  proposed by my learned brothers  Sarkaria and Desai JJ. I do not propose to consider the other questions.                            ORDER      As per majority decision, the appeals are allowed. N. K. A.                                    Appeals allowed. 600