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PETITIONER: THE ISHWARI KHETAN SUGAR MILLS (P) LTD. & ANOTHER ETC.

       Vs.

RESPONDENT: THE STATE OF UTTAR PRADESH & ORS. ETC.

DATE OF JUDGMENT02/04/1980

BENCH: DESAI, D.A. BENCH: DESAI, D.A. KRISHNAIYER, V.R. FAZALALI, SYED MURTAZA PATHAK, R.S. KOSHAL, A.D.

CITATION:  1980 AIR 1955            1980 SCR  (3) 331  1980 SCC  (4) 136  CITATOR INFO :  RF         1981 SC1863  (21)  F          1982 SC 697  (29)  F          1983 SC 937  (33)  R          1990 SC 123  (41)  RF         1991 SC1676  (43,47,48,50)  RF         1992 SC2169  (16)

ACT:      U.P. Sugar  Undertakings (Acquisition)  Act 1971 States legislature,  if  competent  to  enact  a  law  on  declared industry.      Constitution of  India Entry  52 List I, Entry 24, List II and Entry 42 of List III Scope of.

HEADNOTE:      By the U.P. Sugar Undertakings (Acquisition) ordinance, 1971 (which  later became  an Act) twelve sugar undertakings stood transferred  and vested  in a  Government. undertaking named  the   U.P.  State;  Sugar  Corporation  Limited.  The appellants’ writ  petitions before the! High Court impugning the constitutional validity of the Act were dismissed.      In appeal  to this  Court it was contended on behalf of the appellants that since sugar is a declared industry under the Industries  (Development and  Regulation) Act,  1951  in view of  entry 52  in Union List read with entry 24 in state list  further  read  with  Art.  246.  Parliament  alone  is competent to  pass the  law on the subject and not the State Legislature and,  therefore,  the  impugned  legislation  is void.      Dismissing the appeals, ^      HELD: Industry being a matter enumerated in entry 24 of List II  only the  State legislature has the exclusive power to legislate  in respect of it, but this power is subject to the provisions  of entries  7 and  52 of List I. While under entry 7,  if a  declaration is  made by  Parliament  that  a particular industry  is necessary  for defence  or  for  the prosecution of  war, Parliament,  to the  exclusion  of  the State legislature, would be entitled to legislate in respect

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of that  industry, a  declaration by  Parliament by  law  to assume  control  over  any  particular  industry  in  public interest in  a sine  qua non to clothe Parliament with power under entry  52, List  I to  legislate in  respect  of  that industry. The  declaration contemplated  by this  entry is a declaration by  law. A mere declaration unaccompanied by law is incompatible  with entry  52 of List I. But that does not mean that  once a  declaration is  made  in  respect  of  an industry that  industry as a whole is taken out of entry 24, List II. [337 F-H; 338 D, F; 339 E]      Baijnath Kedia  v. State  of Bihar  & Ors. [1970] 2 SCR 100 at  113 and  State of Haryana & Anr. v. Chanan Mal, etc. [1976] 3 SCR 688 at 700 referred to.      The control under section 2 of the 1951 Act was assumed for a  specific and  avowed object  namely  development  and regulation of  certain industries.  This control  has to  be exercised  in   the  manner   provided  under  the  statute. Therefore, Parliament,  has made  a declaration for assuming control in respect 332 of the  declared industries  set out  in the schedule of the Act only to the extent provided in the Act.      A conspectus  of the  provisions of  the  impugned  Act shows that  in pith  and substance it is one for acquisition of scheduled  undertakings and  such acquisition by transfer of ownership  of those undertakings to the Corporation would in no way come in conflict with any of the provisions of the Central Act  of 1951. The Central Act is primarily concerned with development  and regulation  of declared industries and is not  concerned with  ownership of industrial undertakings in declared industries, except to the extent of control over management  of   the  undertaking   by  the  owner.  By  the acquisition under  the  impugned  Act  aud  vesting  of  the undertakings in  the Corporation  they would  still be under the  control   of  the   Central  Government   because   the Corporation  would   be  amenable   to  the   authority  and jurisdiction of  the Central Government. Therefore, there is no conflict between the impugned legislation and the control exercised by  the Central Government under the provisions of the Central Act. [340 H-341 A. 344 C-G. 345 D]      There is  no force  in the  argument that  the power of acquisition under  Entry 42,  List II  is incidental  to the power to  legislate in respect of various topic in the lists and, therefore,  when the  Union assumed  control  over  the declared industry  such control  comprehends  the  power  to acquire and  hence the  power of  the State  Legislature  to enact legislation  for acquisition  of properly of scheduled undertakings would  be denude.  By the Constitution (Seventh Amendment) Act,  Entry 33  in List I and Entry 36 in List II were deleted and a single comprehensive Entry 42 in List III (acquisition and  requisitioning of property) was added. The power to  acquire property can now be exercised concurrently by the Union and the States. After the substitution of Entry 42 in  List  III  it  cannot  be  said  that  the  power  of acquisition and  requisitioning of property is incidental to the other  power. It is an independent power provided for in a specific  entry. Therefore,  both the  Union and the state would have power of acquisition and requisition of property. [345 E-F; 346 B-E]      There  is  a  long  line  of  decisions  which  clearly establishes the  proposition that  power  to  legislate  for acquisition of property is an independent and separate power and is  exercisable only under Entry 42, List III and not as an incident  of the  power to  legislate  in  respect  of  a specific head of legislation in any of the three lists. This

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power of  the State legislature to legislate for acquisition of property  remains intact  and untrammeled  except to  the extent where  on assumption  of control  of an industry by a declaration as envisaged in Entry 52, List I a further power of acquisition is taken over by a specific legislation. [353 H 354 A]      Rustom Cavasjee  Cooper v.  Union of India [1970] 3 SCR 530 at  567, Rajamundry  Electric Supply Corporation Ltd. v. State of Andhra Pradesh [1954] SCR 779      State of  Bihar v.  Maharajadhiraja Sir Kameshwar Singh [1952] S.C.R.  889 State  of West  Bengal v.  Union of India [1964]1 S.C.R. 371, referred to.      The  argument   that  the   State  legislature   lacked competence to  enact the  impugned  legislation  is  without force. Legislative  power of  the State under Entry 24, List II is  eroded only  to the  extent control is assumed by the Union pursuant  to a  declaration made  by the Parliament in respect of a declared 333 industry as  spelt out  by the legislative enactment and the field occupied  by such enactment is the measure of erosion. Subject  to   such  erosion,  on  the  remainder  the  State legislature will  have power  to  legislate  in  respect  of declared industry  without in  any way  trenching  upon  the occupied  field.   State  legislature,  which  is  otherwise competent to deal with industry under Entry 24, List II, can deal with that industry in exercise of other powers enabling it to  legislate under  different heads  set out in Lists II and III  and this  power cannot be denied to the State. [354 C, 352 E-F]      The contention that the impugned Act is in violation of section 20  of the  Central Act  has no  merit. The impugned legislation was  not enacted for talking over the management or control  of  any  industrial  undertaking  by  the  State Government. In  pith and substance it was enacted to acquire the scheduled  undertakings. If  an attempt was made to take over the management or control of any industrial undertaking in a  declared industry  the bar of section 20 would inhibit exercise of  such executive power. The inhibition of section 20 is  on the  executive power  but if  as a  sequel  to  an acquisition of  an industrial  undertaking the management or control of  the industrial undertaking stands transferred to the acquiring authority section 20 is not attracted. It does not  preclude  or  forbid  a  State  legislature  exercising legislative power under an entry other than Entry 24 of List II  and  if  in  exercise  of  that  legislative  power  the consequential transfer  of management  or control  over  the industry  or   undertaking  follows   as  an   incident   of acquisition  such  taking  over  of  management  or  control pursuant to  an exercise  of legislative power is not within the inhibition of section 20. [355 F, A-E]      The  challenge   to  the   validity  of   the  impugned legislation on the ground of violation of Article 31(2) must fail. At  the time of acquisition the scheduled undertakings had a  heavy backlog of carry forward losses, they failed to pay the  growers the price of cane purchased, the labour was not paid  as a  result of which there was labour unrest. The situation did not improve even when some of the undertakings were taken  over under  the Central Act and a drastic remedy was called  for in  public interest  and while applying that drastic remedy  of acquisition the principle which are valid for determining  the value  of machinery  were adopted.  The adequacy or  otherwise of  compensation on the calculus made by applying  the principles  is beyond judicial review. [360 C, 359 H- 360 1]

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    Rustom   Cavasjee Cooper v. Union of India [1970] 3 SCR 530 at  567, Vajravelu  Mudaliar v. Special Deputy Collector of Land  Acquisition West  Madras [1965]  1 SR 614, Union of India v.  Metal Corporation  of India   &  Anr. [1967] 1 SCR 256, State of Gujarat v. Shantilal Mangaldas & Ors. [1969] 3 SCR 341  and His Holiness Kesavananda Bharati Sripadagaivalu v. State of Kerala [1973] Suppl. SCR 1 referred to.      Pathak & Koshal JJ (concurring in the result)      It is not necessary in this case to express any opinion on the  question whether  the declaration made by Parliament in section  2 of the Industries (Development and Regulation) ct, 1951 in respect of the industries specified in the First schedule to  that Act can be regarded as limited to removing from the scope of Entry 2 of List II of the Seventh Schedule to the Constitution only so much of the legislative field as is covered by the subject matter. and content of that Act or it can  be regarded as effecting the removal from that entry of the 334 entire legislature field embracing all matters pertaining to the  industries   specified   in.   the   declaration.   The controversy in the preset case can be adequately disposed of on the  ground that the legislation falls within Entry 42 of Lt m and cannot be related to Entry 52 of List I or Entry 24 of List II. 352 E-F, 363 Bl      The Hingir Rampur Coal Co. Ltd. and others v. The State of Orissa and  others [1961] 2 SCR 57, State of orissa v. M. A. Tulloch  and C.  [964} 4 SCR 461, Baijnath Kedia v. State of Bihar  & ors.  and State of Haryana & Anr. v. Chanan Mal, etc. 1976 3 SCR 688 held inapplicable.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 1614, 1652 and 1637 of 1979. Appeals by Special Leave from the Judgment and order dated S 3-5-1979 of  the Allahabad  High Court  in Civil  Misc. Writ Nos. 4170/71, 4130/71 and 4193/71.                             AND PETITIONS FOR  SPECIAL LEAVE  To APPEAL  (CIVIL) Nos.  6246, 6252, 6373 & 8050/79.      From the  Judgment and  order  dated  3-5-1979  of  the Allahabad High  Court in  Civil Misc.  Writ Nos. 4150, 4173, 4793 and 442/71.      F. S. Nariman, Bhaskar Gupta, Rajesh Khaitan, Rohington Nariman and  P.  R.  Seethrama  for  the  Appellants  in  CA 1614/79.      A. K.  Sen, Manoj  Swarup, Mis  Lalita Kohli  and S. K. Srivastva for  the Appellants  in CA  No. 1652/79  and SLPS. 6146 and 637379.      R. A. Gupta for the Petitioner in SLP No. 6252/79.      N. N. Sharma and N. N. Kacker for the Petitioner in SLP No. 8050/79.      Lal Narain Sinha Att. Genl. in C.A. 1614.      Rishi Ram Adv. General, U.P. in C.A. 1652.      Raju Ramchandran  and o. P. Rana for the Respondents in All the Appeals.      The Judgment  of V.  R. Krishna  Iyer, S. Murtaza Fazal Ali and  D. A.  Desai, JJ. was delivered by Desai, J., R. S. Pathak, J.  gave a  separate opinion  on  behalf  of  A.  D. Koshal, J. and himself.      DESAI,  J.-Acquisition   of   industrial   undertakings involved in  manufacturing sugar, a commodity satisfying the basic necessity,  in larger  public interest and the attempt

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of the owners of the undertakings to thwart the same, paints the familiar landscape in this group of appeals.      As a  sequel to  the serious  problems created  by  the owners of  certain sugar mills in the State of Uttar Pradesh for cane  growers and labour employed in sugar mills, having an adverse  impact on  general economy  of the  areas  where these  sugar   mills  were  situated  And  with  a  view  to ameliorating the situation posing a threat to the economy, 335 the Governor  of Uttar  Pradesh promulgated  an ordinance on July  3,   to  1971,   styled  as   U.P.  Sugar  Undertaking (Acquisition) ordinance.  1971 (13 of 1971) (’ordinance’ for short), with  a  view  to  transferring  and  vesting  sugar undertakings set out in the Schedule to the ordinance in the U.P. State Sugar Corporation Ltd. (’Corporation’ for short), a Government  Company within  the meaning  of s.  671 of the Companies   Act,   1956.   Subsequently,   by   U.P.   Sugar Undertakings (Acquisition)  Act, 1971, (U.P. Act 23 of 1971) (’Act’ for  short),  the  ordinance  was  repealed  and  was replaced.  Schedule   to  the   Act  enumerates   12   sugar undertakings (referred  to as  ’scheduled undertakings’) and by the operation of s. 3, these scheduled undertakings stood transferred to  and  vested  in  the  Corporation  from  the appointed day,  i.e. July  3, 1971,  the date  on which  the ordinance was issued. On the promulgation of 7 the ordinance 11 writ  petitions were  filed in  the Allahahad  High Court under  Article  226  of  the  Constitution  challenging  the constitutional validity  of the  ordinance and  when the Act replaced the  ordinance effective  from August 27, 1971, the writ petitions  were amended  incorporating the challenge to the Act  also. The  ordinance and the Act were challenged in the High Court on the following grounds:           (1)  The  State  legislature  had  no  legislative                competence to enact it;           (2)   The Act violated Art. 31 of the Constitution                because the  acquisition was not for a public                purpose and  the compensation proposed in the                Act was illusory;           (3)   The Act  was in  breach of Art. 19(1)(f) and                (g) of the Constitution;           (4)   The Act  infringed the  gurantee of equality                enshrined in Art. 14 of the Constitution. A Division  Bench of  the High  Court by  a common  judgment dated May 37 1979, repelled the contentions on behalf of the petitioners and  upheld the  constitutional validity  of the Act. Hence  these appeals  by the  original petitioners, the owners of the scheduled undertakings.      Mr. F. S. Nariman, learned counsel who led on behalf of the appellants, confined his attack to two grounds: (a) U.P. State legislature lacked legislative competence to enact the impugned Act;  and (b)  compensation awarded for acquisition in violative  of  Art.  31(23  as  it  stood  prior  to  its amendment by  the Constitution (Twenty fifth Amendment) Act, 1971, which  came into  force on  April 20,  1972. Mr. R. A. Gupta who  appeared in SLP. 6252/79, canvassed an additional contention that  the impugned  Act is  violative of  Art. 14 inasmuch  as   those  similarly   situated   and   similarly circumstanced sugar under takings have 336 not   been   acquired   and   the   petitioners’   scheduled undertakings have  been singled  out for a drastic treatment of take-over by way of acquisition.      The main  thrust  of  the  attack  was  that  the  U.P. Legislature  lacked  legislative  competence  to  enact  the impugned  Act.   There  were  two  distinct  limbs  of  this

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submission which  would be  examined separately.  The  first limb of  the submission  was that in exercise of legislative power flowing  from Entry  52 List I the Parliament made the requisite declaration  in s. 2 of the Industries Development and Regulation) Act, 1951 (’IDR Act’ for short), and in view of placitum  25 of  the first  schedule to the IDR Act sugar being a  declared industry,  that industry goes out pf Entry 24 List II, and hence U. P. State legislature was denuded of all legislative  power to  legislate  in  respect  of  sugar industry and  as the  impugned legislation  is in respect of industrial  undertaking  in  sugar  industry,  the  impugned legislation is  void on account of legislative incompetence. The learned Attorney General countered it by saying that the power to  acquire property derived from entry 42 in List III is an  independent power  and the impugned Act being in pith and substance  an Act  to  acquire  scheduled  undertakings, meaning   thereby    the   properties   of   the   scheduled undertakings,  the   power  of   the  State  legislature  to legislate in  this behalf  is  referable  to  entry  42  and remains intact  irrespective of  the fact  that sugar  is  a declared industry,  control of  which is  taken over  by the Union Government  pursuant to  the declaration made under s. 42  of   the  IDR   Act.  This  necessitates  an  analytical examination  of   the  relevant   entries  keeping  in  view legislative  perspective   and  the   historical  background through which these entries have passed.      Entry 7 in the Union List reads as under:           "7. Industries declared by parliament by law to be      necessary  for  the  purpose  of  defence  or  for  the      prosecution of war."      Entry 32 in the same List reads:           "52. Industries, the control of which by the Union      is declared by parliament by law to be expedient in the      public interest "      Entry 24 in List II (State List) reads as under:           "24.  Industries  subject  to  the  provisions  of      entries 7 and 52 of List I." It may  be noted  here that  entry 33 in List I, entry 36 in List II  and entry  42 in  List III were amended by s. 26 of the Constitution (Seventh Amendment Act by which entry 33 of List I and entry 36 of List II 337 were deleted and entry 42 in List III was amended to read as set out hereinabove. Entry 33 in List I and entry 36 in List II conferred  legislative power  on the Union and the States respectively for  acquisition or  requisitioning of property for its  own purpose.  Constitution (Seventh Amendment) Act, 1956, which  made the  aforementioned amendment was designed to clear  the ambiguity  about the  power of acquisition and requisitioning of  property being  not a power incidental to any of  the legislative  powers but  an independent power by itself. The  object  behind  the  amendment  has  been  thus explained.  "The   existence  of   three  entries   in   the legislative lists  (33 of  List I,  36 of  List II and 42 of List III)  relating to  the essentially  single  subject  of acquisition and requisitioning of property by the Government gives  rise   to  unnecessary   technical  difficulties   in legislation.  In  order  to  avoid  these  difficulties  and simplify the constitutional position, it is proposed to omit the entries  in the  Union and  State Lists  and replace the entry in  the  concurrent  list  by  a  comprehensive  entry covering the  whole subject"  (see Statement  of objects and Reasons in  respect of Constitution (Seventh Amendment) Act, 1956).      Having set out the historical background, attention may

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now be  turned to the scope and content of legislative power of Union  and the States flowing from entry 52 in List I and entry 24 in List II in respect of the topic of ’industry.’      The scope and content of entry 52, List I and entry 24, List II  has to  be demarcated  with precision  to  avoid  a possible  confusion   likely  to   emanate  from  an  inter- dependence and interaction of the two entries. ’Industry’ as a head  of legislation  is to  be found in entry 24, List II with this limitation that it is subject to the provisions of entries 7  and 52, List I. The difference in the language in which entries  7 and  52 are  couched has  a bearing  on the interruption  of   entry  52.   In  the  former  case  if  a declaration is  made by  the Parliament  that the particular industry is  necessary for  the purpose  of defence  or  for prosecution of  the war,  parliament  would  be  exclusively entitled to  legislate in  respect of  that industry  to the exclusion  of   State  legislatures  because  the  requisite declaration will have the effect of taking out that industry from entry  24, List  II. A declaration by the parliament by law to assume control over any particular industry in public interest is  a sine  qua non to clothe Parliament with power under entry  52, List  I to  legislate in  respect  of  that industry because  otherwise industry  as a  general head  of legislation is  in the exclusive sphere of State legislative activity pursuant  to entry  24, List  II.  Distribution  of legislative powers  as enacted  in  Part  XI  and  Art.  246 clearly demarcate the field of legislative activity reserved for Parliament  and for  State  legislatures  and  also  the concur- 338 rent list  in respect of which both can legislate subject to other provisions  of part  XI.  Sub-art.  (3)  of  Art.  246 provides that  the State  legislature has exclusive power to make laws  with respect  to any of the matters enumerated in List. II in the Seventh Schedule. A fortiori, industry being the matter  enumerated in  List II the State legislature has exclusive power  to legislate  in respect  of it and keeping aside  for   the  time  being  the  words  ’subject  to  the provisions of  entries 7  and  52  of  List  I’,  the  State legislature  alone   can  legislate   in  respect   of   the legislative head  ’industry.’ Ipso  facto, parliament  would not have  power to  legislate in  respect of  industry as  a legislative head.  Now, entry 52, List I on its own language does not  provide a  field of  legislative activity  for the Union Parliament  unless and  until a declaration is made by parliament  by   law  to   assume  control   over  specified industries. The  embargo  on  the  power  of  Parliament  to legislate in  respect of  industry which is in List II would be lifted once a declaration is made by Parliament by law as envisaged  by  entry  52,  List  I.  In  the  absence  of  a declaration  as  envisaged  by  entry  52,  List  I,  it  is incontrovertible that  Parliament has  no power to legislate on the  topic of  industry. Entry  52, List  I  on  its  own language  does   not  contemplate  a  bald  declaration  for assuming  control   over  specified   industries,  but   the declaration has  to be by law to assume control of specified industries  in  public  interest.  The  legislation  enacted pursuant to  the power  to legislate acquired by declaration must be  for assuming  control over  the  industry  and  the declaration  has  to  be  made  by  law  enacted,  of  which declaration would  be  an  integral  part.  Legislation  for assuming control  containing the  declaration will spell out the  limit   of  control  so  assumed  by  the  declaration. Therefore, the  degree and  extent of  control that would be acquired by  Parliament pursuant  to the  declaration  would

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necessarily depend upon the legislation enacted spelling out the  degree   of  control   assumed.  A   mere   declaration unaccompanied by  law is incompatible with entry 52, List I. A declaration  for assuming  control of  specific industries coupled with  law assuming  control is  a pre-requisite  for taking legislative  action  under  entry  52,  List  I.  The declaration and  the legislation  pursuant to declaration to that  extent  denude  the  power  of  State  legislature  to legislate under entry 24, List II. Therefore, the erosion of the power  of the  State legislature to legislate in respect of declared  industry would  not occur merely by declaration but  by   the  enactment   consequent  on   the  declaration prescribing  the   extent  and  scope  of  control.  When  a declaration is  made as  contemplated by  entry 52 List T in respect of  any particular  industry, it  is contended that, that industry  as a  topic of  legislation would  be removed from the legislative sphere of the state. What is the effect of a  declaration made  in respect  of mines and minerals as contemplated by  entry 54 has been succinctly laid down by a Constitution Bench of this 339 Court in  Baijnath Kedia v. State of Bihar & Ors.J(1) in the following terms:           "Once this declaration is made and the extent laid      down, the  subject of  legislation to  the extent  laid      down becomes  an exclusive  subject for  legislation by      Parliament. Any  legislation by  the State  after  such      declaration and  trenching upon  the field disclosed in      the declaration  must necessarily  be  unconstitutional      because that  field is  abstracted from the legislative      competence of  the  State  Legislature  .  .  The  only      dispute,  therefore,   can  be   to  what   extent  the      declaration  by   Parliament  leaves   any  scope   for      legislation by  the State  legislature. If the impugned      legislation falls  within the  ambit of  such scope  it      will be  valid, if outside it, then it must be declared      invalid "      Sugar is  a declared  industry. Is it, however, correct to say that once a declaration is made as envisaged by entry 52 List  I, that  industry as  a whole is taken out of entry 24, List  II? In respect of an identical entry 54, List I in the passage  extracted above  it is  said that to the extent declaration is  made and  extent of  control laid, that much and that  much alone  is  abstracted  from  the  legislative competence of  the State  legislature. It is, therefore, not correct to say that once a declaration is made in respect of an industry  that industry  as a whole is taken out of entry 24, List  II Similarly, in State of Haryana & Anr. v. Chanan Mal, etc. while upholding the constitutional validity of the Haryana  Minerals  (Vesting  of  Rights)  Act,  1973,  after noticing the  declaration made  in  s.  2  of  the  Mines  & Minerals (Regulation  and Development)  Act, 1957, (’Mines & Minerals Act’  for short),  as envisaged by entry 54. List I it was held:           "Moreover,  power   to  acquire  for  purposes  of      development and  regulation has  not been  exercised by      Act 67 of 1957. The existence of power of Parliament to      legislate on  this topic  as an incident of legislative      power on  another subject  is  one  thing.  Its  actual      exercise is  another. It  is difficult  to see  how the      field of acquisition could become occupied by a central      Act in  the same  way as it had been in the West Bengal      case even  before Parliament legislates to acquire land      in a State." These pronouncements  demonstrably show  that  before  State

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legislature is denuded of power to legislate under entry 24, List II in respect of 340 a declared industry, the scope of declaration and consequent control  assumed  by  the  Union  must  be  demarcated  with precision and then proceed to ascertain whether the impugned legislation trenches upon the excepted field      The declaration made in s 2 of IDR Act reads as under:           "It is hereby declared that it in expedient in the      public interest  that the  Union should  take under its      control  the   industries  specified   in   the   First      Schedule."      The contention  is  that  as  there  are  no  words  of limitation to  be found  in s.  2 in  respect of the control assumed by  the declaration  by  the  Union,  the  necessary concomitant  of   such  declaration   is  that   the   State legislature is  totally denuded  of any  power to  deal with such declared  industry. To buttress this argument reference was made  to the  declaration made  by the Union pursuant to entry 54, List I, as set out in s. 2 of the Mines & Minerals Act which reads as under:           "It is hereby declared that it is expedient in the      public interest  that the  Union should  take under its      control the  regulation of mines and the development of      minerals to the extent hereinafter provided."      Absence of  the expression  "to the  extent hereinafter provided" was  pressed into  service to point out that while in respect  of mines  ind minerals  the  Union  has  assumed control to the extent provided in the Mines Minerals Act, in the case  of declared  industries the  control is  absolute, unlimited,  unfettered   or   unabridged   and,   therefore, everything that  would fall  within the  connotation of  the word ’control’  would be  within the competence of the Union and to  the same  extent and  degree the  State  legislature would be  denuded of  its power  to legislate  in respect of that industry.  It was  said that  in  respect  of  declared industries total  control  is  assumed  by  the  Union  and, therefore, entry  24, List  II on  its import  must be  read industry minus  the declared industry because entry 24, List II is  subject to  entries 7 and 52, List I. Undoubtedly the Union is  authorised to  assume control  in respect  of  any industry if  parliament by law considers it expedient in the public interest.  The declaration  has to  be  made  by  the Parliament, but  the declaration  has to  be by  law  not  a declaration simpliciter.  The words  of  limitation  on  the power to  make declaration are ’by law’. Declaration must be an integral part of law enacted pursuant to declaration. The declaration   in this  case is  made in  an Act  enacted  to provide  for  the  development  and  regulation  of  certain industries.  Therefore,  the  control  was  assumed  not  in abstract  but  for  a  specific  and  avowed  object,  viz., development 341 and regulation  of certain  industries.  The  industries  in respect of  which control  was assumed  for the  purpose  of their development  and regulation  have been  set out in the Schedule. This  control is  to be  exercised in  the  manner provided in  the statute, viz., IDR Act. The declaration for assuming control  is to  be found  in  the  same  Act  which provides for  the limit  of control. The deducible inference is that Parliament made the declaration for assuming control in respect of declared industries set out in the Schedule to the Act  to the extent mentioned in the Act. It is difficult to accept the submission that s. 2 has to be read dehors the Act and  not forming  part of  the Act.  This would be doing

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violence to the art of legislative draftsmanship. It is open to Parliament  in view  of entry  52,  List  I,  to  make  a declaration in  respect of  industry or  industries  to  the effect that  the Union  will assume  its control  in  public interest. It is not to be some abstract control. The control has to  be concrete  and specific  and  the  manner  of  its exercise has to be laid down in view of the well-established proposition that  executive authority  must have the support of law for its action. In a country governed by rule of law, if the  Union, an  instrumentality for the governance of the country, has  to exercise  control over industries by virtue of a declaration made by Parliament, it must be exercised by law. Such  law must  prescribe the  extent of  control,  the manner of  its exercise  and enforcement  and consequence of breach. There  is no  such concept  as abstract control. The control has  to be  concrete and  the mode and method of its exercise must  be regulated by law. Now, Parliament made the declaration not  in abstract  but as part of the IDR Act and the control  was in  respect of  industries specified in the First Schedule  appended to the Act itself. Sections 3 to 30 set out  various modes and methodology, procedure and power, to effectuate the control which the Union acquired by virtue of  the  declaration  contained  in  s.  2.  Industry  as  a legislative head  finds its  place in entry 24, List II. The State legislature  can be  denied  legislative  power  under entry 24  to the  extent Parliament  makes declaration under entry 52  and by  such declaration Parliament acquires power to legislate  only in respect of those industries in respect of which declaration is made and to the extent as manifested by legislation  incorporating the  declaration and  no more. The Act  prescribes the  extent of control and specified it. As the declaration trenches upon the State legislative power it has  to be construed strictly. Therefore, even though the Act enacted  under entry  54 which is to some extent in pari materia with  entry 52 and in a parallel and cognate statute while making  the declaration  the Parliament  did  use  the further expression  "to the  extent herein  provided"  while assuming  control,   the  absence   of  such  words  in  the declaration in  s. 2  would not  lead to the conclusion that the control  assumed was  to be something in abstract, total and unfettered and not as per various 342 provisions of  the IDR Act. The lacuna, if any, is made good by hedging  the power  of making  declaration to  be made by law. Legislative  intention has  to be gathered from the Act as  a   whole  and  not  by  piecemeal  examination  of  its provisions. It  would, therefore, be reasonable to hold that to  the   extent  Union   acquired  control   by  virtue  of declaration in  s. 2  of the IDR Act as amended from time to time, the  power of  the State  legislature under  entry 24, List II  to enact  any legislation  in respect  of  declared industry so  as  to  encroach  upon  the  field  of  control occupied by  IDR Act  would be  taken away.  This is clearly borne out  not only by the decision in Baijnath Kedia’s case (supra) where  undoubtedly while  referring to  the  control assumed by  the Union  by a  declaration made in s. 2 of the Mines & Minerals Act, it was said that to what extent such a declaration would go is for Parliament to determine and this must be  commensurate with  public interest,  and once  this declaration is made and the extent laid down, the subject of legislation to  the extent  laid down  becomes an  exclusive subject for legislation by Parliament. It is not merely some abstract control  but the  extent of  the control assumed by the  Union   by  the  provisions  of  IDR  Act  pursuant  to declaration made by Parliament that the State Legislature to

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that extent,  that is,  to the  extent the provisions of IDR Act  occupies  this  field,  is  denuded  of  its  power  to legislate in respect of such declared industry.      The respondents  assert the  validity of  the  impugned legislation contending  that upon  its true construction and proper ascertainment  of its object, it is a legislation for acquisition of  scheduled  undertakings  and  the  power  to acquire by  legislation such  scheduled undertakings  by the State is  derived from  entry 42, List III. The controversy, therefore, centers  round the  question whether the impugned legislation is  in respect  of a declared industry referable to entry  24 or  one for acquition of scheduled undertakings in exercise  of the  power of acquisition and requisitioning of property  derived from  entry 42,  List  III.  Appellants contend that a reference to Objects and Reasons for enacting the impugned  legislation would  show  that  the  owners  of scheduled undertakings  had created serious problems for the cane growers  and labour  which created an adverse impact on the general  economy of  the areas  where these undertakings were situated,  the legislation  was enacted  to acquire the undertaking and  pay compensation  and also pay cane growers and labour  on high priority and to restart undertakings for crushing  season.   It  was   said  that  these  are  purely managerial functions  discharged by  owners of  undertakings and if the impugned Act was devised and enacted primarily to assume these  managerial functions,  the Act would be beyond the legislative  competence of  the State  legislature as it trenches upon the field occupied by IDR Act specifically 343 enacted to  empower Union  Government to  provide  effective control over industrial undertakings in declared industry to prevent mismanagement, or to rectify the same by taking over management.      When validity  of a  legislation is  challenged on  the ground of  want of  legislative competence  and  it  becomes necessary to ascertain to which entry in the three lists the legislation is  referable to,  the  Court  has  evolved  the theory of  pith and  substance. If  in pith  and substance a legislation falls  within one  entry or  the other  but some portion   of   the   subject-matter   of   the   legislation incidentally trenches  upon and  might enter  a field  under another List,  the Act  as a  whole would  be valid not with standing such incidental trenching. This is well established by a  catena of  decisions [see  Union of  India  v.  H.  S. Dhillon,(1) and  Kerala State  Electricity Board  v.  Indian Aluminium Co.(2)].  After referring  to these  decisions  in State of  Karnataka &  Anr. etc.  v. Ranganatha Reddy & Anr. etc.(3) Untwalia, J. speaking for the Constitution Bench has in terms  stated that  the pith and substance of the Act has to be  looked into  and an  incidental  trespass  would  not invalidate the  law. The  challenge in  that case was to the Nationalisation  of  contract  carriages  by  the  Karnataka State, inter  alia, on  the  ground  that  the  statute  was invalid as it was a legislation on the subject of interstate trade and  commerce. Repelling  this  contention  the  Court unanimously held  that in  pith and  substance the  impugned legislation was  for acquisition  of contract  carriages and not an Act which deals with inter-State trade and commerce.      To start  with, it  is necessary  first to ascertain in pith and  substance to  what entry  in a particular list the impugned legislation  is referable.  If it  is referable  to entry other than 24, List II, such as entry 42, List III, it would be  necessary to precisely ascertain whether it in any way trenches upon the field occupied by the declaration made by Parliament  to assume  control  over  sugar  industry  as

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manifested by the various provisions of the IDR Act.      Section 3  of the Act provides for vesting of scheduled undertakings from  the appointed  day  in  the  Corporation. Section 4  provides for  consequences of  vesting. Section 5 makes it  obligatory on  every person in whose possession or custody or  under whose  control any property or asset, book of account,  register or  other document  comprised in  that undertaking may  be, to  forthwith deliver  the same  to the Collector. Section  7 provides for determination and mode of payment  of   compensation  for   acquisition  of  scheduled undertakings. Section  8 provides for claims to be satisfied out of compensation payable to the 344 owners of the undertakings. Section 9 provides for avoidance of  certain   secured  debts  consequent  upon  acquisition. Section 11  provides for  appeal  and  s.  12  provides  for constitution of a Tribunal to perform the functions assigned to it  by the  Act.  Section  13  provides  for  powers  and procedure of the Tribunal. Section 14 provides for ouster of jurisdiction of  civil courts  in  respect  of  any  dispute arising from  the implementation  of  the  Act.  Section  16 confers  protection   on  the  employees  of  the  scheduled undertaking. The  rest are  only consequential  sections.  A comprehensive examination  of all  the provisions of the Act indisputably shows  that in  pith and substance the impugned Act is one Act for acquisition of scheduled undertakings and such acquisition  by transfer  of ownership of the scheduled undertakings to  the Corporation  would in  no way  come  in conflict with  any of the provisions of the IDR Act or would not trench upon any control exercised by the Union under the various provisions  of the  IDR Act.  In fact  the IDR  Act, generally speaking,  does not  deal with  the  ownership  of industrial undertakings  in declared  industries. The Act is primarily concerned  with development  and regulation of the declared industries.  The Central Government has power under ss. 18A  and 18AA of the IDR Act to assume direct management or control  of industrial  undertakings in certain cases and even after  acquisition of  scheduled undertakings under the impugned legislation  the power  of the  Central  Government under ss.  18A and  18AA would  remain intact.  Even s. 18FA provides for  taking over management or control of a company which is  being wound  up with  the permission  of the  High Court  and   in  such  a  situation  the  authorised  person appointed by  the Central  Government would  be deemed to be Official Liquidator  under sub-s.  (4) of s. 18FA. Provision contained in  Chapter IIIAC of IDR Act enables Central Govt. to direct  sale of  the industrial undertaking under certain circumstances and  in the situation as set out in s. 18FE(7) to purchase  the same.  But these  powers  can  be  exercise irrespective of the fact who at the relevant time, the owner of the  undertaking is.  The IDR Act is not at all concerned with the  ownership of  industrial undertakings  in declared industries, except  to the extent of control over management of the undertaking by the owner. Owner is defined in s. 3(f) in relation to an industrial undertaking, to mean 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. This deeming  fiction  enacted  in  respect  of  the  concept  of ownership clearly  manifest the  legislative intention  that IDR Act  treats that  person to  be the  owner who  has  the ultimate control over the affairs of the under- 345

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taking and  if that  ultimate control is entrusted to even a manager, for  the purposes  of the IDR Act the manager would be the  owner. This  must be so in the very nature of things because the  IDR  Act  is  essentially  concerned  with  the control over  the management  of the industrial undertakings in  declared   industries.  By  the  acquisition  under  the impugned Act  and vesting  of the  scheduled undertakings in the Corporation  the scheduled  undertakings will  never the less be  under the  control of  the  Central  Government  as exercised by  the provisions  of the  IDR  Act  because  the Corporation would  be the owner and would be amenable to the authority and  jurisdiction of the Central Government as the provisions of  the IDR  Act would  continue to  apply to the scheduled undertakings, sugar being a declared industry, and scheduled undertakings  are industrial  undertakings  within the meaning  of the  IDR Act.  No provision from IDR Act was pointed out  to us to show that in implementing or enforcing such a  provision  the  impugned  legislation  would  be  an impediment. Therefore,  there is  no  conflict  between  the impugned  legislation  and  the  control  exercised  by  the Central Government  under the  provisions of the IDR Act and there is  not  even  a  remote  encroachment  on  the  field occupied by IDR Act.      The main thrust of the submission was that the power of acquisition under  entry 42,  List III is not an independent power but  it is  incidental to  the power  to legislate  in respect  of   the  various  topics  in  various  lists  and, therefore, when  by a  declaration made  by  the  parliament enacted in  s. 2  of the  IDR Act  the control over declared industry is  assumed by  the Union,  such control  will also comprehend the  power to  acquire and hence the power of the State legislature  to enact  legislation for  acquisition of property of  scheduled undertakings would be denuded as that power as  an internal  element of  control would vest in the Union Government. The focal point of controversy, therefore, is whether  the power  of acquisition  and requisitioning of property under entry 42, List III is an independent power by itself or  it is  an integral and inseparable element of the power of control over industry.      Constitution amending  process  bearing  on  the  three relevant entries  may be  noticed. Before  the  Constitution (Seventh Amendment)  Act, 1956,  which came  into  force  on November 1, 1956, Entry 33 in List I read:           "Acquisition or requisitioning of property for the      purpose of the Union." Similarly, Entry 36 in List II read:           "Acquisition or  requisitioning of property except      for the  purpose of the Union subject to the provisions      of entry 42 of List III." 346 At that time entry 42 in List III read:           "Principles on  which  compensation  for  property      acquired or requisitioned for the purposes of the Union      or of  a State or for any other public purpose is to be      determined, and  the form  and the manner in which such      compensation is to be given".      By the  Constitution (Seventh Amendment) Act, the three entries were  repealed. Entry  33 in  List I and entry 36 in List II  were deleted and a single comprehensive entry 42 in List  III   was  substituted   to  read:   ’Acquisition  and requisitioning  of  property’.  Accordingly,  the  power  to acquire property  could be  exercised  concurrently  by  the Union and the States. Even if prior to the deletion of Entry 33 in  List I  and entry  36 in  List II  an argument  could possibly have  been advanced that as power of acquisition of

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property was  conferred both  on Union  and the States to be exercised either  for the  purpose of  the Union  or for the State it  was incidental  to  any  other  legislative  power flowing from  various entries  in the three Lists and not an independent power,  but since  the deletion  of entry  33 in List I  and entry  36 in  List  II  and  substitution  of  a comprehensive entry  in List  III, it  could hardly be urged with  confidence   that  the   power  of   acquisition   and requisitioning of property was incidental to other power. It is an  independent power  provided for  in a specific entry. Therefore, both  the Union and the State would have power of acquisition and requisitioning of property. This position is unquestionably  established  by  the  majority  decision  in Rustom Cavasjee  Cooper v.  Union of India(1) where Shah, J. speaking for the majority of 10 Judges held as under:           "power to legislate for acquisition of property is      exercisable only  under entry 42 of List III and not as      an incident  of the  power to legislate in respect of a      specific head  of  legislation  in  any  of  the  three      lists." In  reaching   this  conclusion   reliance  was   placed  on Rajamundry Electric  Supply Corporation  Ltd.  v.  State  of Andhra  Pradesh.(2)   It  was,   however,  urged   that  the proposition  culled  out  from  Rajamundry  Electric  Supply Corporation case  by Shah,  J. in  R. C. Cooper’s(1) case is not borne  out by  the observation  in the  first  mentioned case. In  Rajamundry Electric Supply Corporation(2) case the challenge was  to the  Madras Electric  Supply  Undertakings (Acquisition) Act,  1949, on  the  ground  that  the  Madras legislature was  not  competent  to  enact  the  legislation because at  the relevant  time there  was no  entry  in  the Government  of  India  Act,  1935,  relating  to  compulsory acquisition of  any commercial  or  industrial  undertaking. This challenge failed in the High Court 347 but on  appeal the  challenge was accepted by a Constitution Bench of  this Court.  Now, it  must be  remembered that the impugned legislation  in that  case was  a  pre-Constitution legislation then  governed by  the Government  of India Act, 1935. The  challenge was  that the  State legislature had no power  to   enact  a   legislation  for  acquisition  of  an electrical undertaking.  On behalf  of the State the Act was sought to  be sustained  on the  ground that  the Act was in pith and  substance a  law with respect to electricity under entry 31  of the  Concurrent List  and, therefore, the State legislature  was   competent  to   enact  the   same.  After scrutinising the  Act this Court came to the conclusion that in pith  and substance  the  Act  was  one  to  provide  for acquisition of  electrical undertaking  and,  therefore  the State legislature  lacked competence to enact the same. Now, in that case the Advocate-General of Madras in his effort to save the  impugned legislation  advanced an  argument before the Constitution  Bench that:  ’There was  implicit in every entry in  the legislative  lists in  the Seventh Schedule to the Government of India Act, 1935, an inherent power to make a law  with respect  to a  matter ancillary or incidental to the subject-matter  of each entry.’ His further argument was that each  entry in  the list  carried with  it an  inherent power to  provide for  the  compulsory  acquisition  of  any property, land  or any commercial or industrial undertaking, while making  a law  under such  entry. This argument was in terms repelled  relying upon  an  earlier  decision  of  the Constitution Bench  in the State of Bihar v. Maharajadhiraja Sir Kameshwar  Singh(1): Repelling  this contention  of  the Advocate General  of Madras  would mean  that the  power  of

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acquisition of  property is  not ancillary  or incidental to the subject-matter  of each  entry but in substance it is an independent power  by itself.  This also  becomes clear from Maharajadhiraja Sir  Kameshwar Singh’s  case (supra) wherein Das, J.  in his concurring judgment repelled the argument of the  learned   Attorney-General  appearing   for  the  State contending that  the Bihar  Land Reforms  Act was a law made with respect  to matters  mentioned in entry 18, List II and not in  entry 36,  List II.  Entry 18 in List II read: ’Land and Land  tenures, etc.’  and  it  was  contended  that  the impugned legislation  was on the subject of land and tenures and would  cover acquisition  of land  also. Negativing this contention it  was held  that in that event entry 36 in List II would  become redundant.  The pertinent observation is as under:           "In my  opinion, to  give a meaning and content to      each of  the two  legislative heads  under entry 18 and      entry 36  in List  II the  former should  be read  as a      legislative category  or head  comprising land and land      tenures and all matters 348      connected therewith  other  than  acquisition  of  land      which should  be read  as covered  by entry  36 in List      II."      It thus  clearly transpires  that  the  observation  in Cooper’s case  supra extracted above that power to legislate for acquisition  of property is exercisable only under entry 42 of  List III  and not  as an  incident of  the  power  to legislate in  respect of  a specific  head of legislation in any of  the three  Lists,  is  borne  out  from  Rajamundary Electric Supply  Corporation case  and  Maharajadhiraja  Sir Kameshwar Singh’s cases (supra).      It was,  however,  urged  that  this  proposition  runs counter to  the decision  of a  Constitution  Bench  of  six judges in  State of  West Bengal  v. Union  of India. (1) In that case  the State of West Bengal filed a suit against the Union of  India challenging  the constitutional  validity of the Coal  Bearing Areas  (Acquisition and  Development) Act, 1957, on the ground that the Act to the extent it applied to the lands  vested in  or  owned  by  the  State  was  beyond legislative competence  of Parliament. Power to acquire coal bearing land  owned or possessed by the State of West Bengal was amongst others claimed as an integral element of control acquired by the Union pursuant to a declaration made in s. 2 of the  IDR Act  and  Mines  and  Minerals  Act  enacted  in exercise of  the legislative  power under  entries 52 and 54 respectively as  coal was  both a  declared industry  and  a specified mineral.  This contention  was partly  accepted to repel the  contention that the Union has no power to acquire the property  vested in  the State since the State itself is also a sovereign authority. The contention that the property of State  cannot be  acquired by the Union under entry 42 of List III  was repelled. In reaching this conclusion, another contention was  rejected which  was also advanced before us. viz.,  that  if  power  of  acquisition  is  treated  as  an independent power  both of the Union and the State and could be exercised  by the Union and the State with respect to the same property  it would  lead to such a confusion that there would be  no end  to it. A picture of fearful constitutional impasse was drawn urging that the State may acquire property of an  Industrial undertaking  of  a  declared  industry  in exercise of  the power  under entry  42, List  III, and  the Union may  exercise the same power after control is acquired pursuant to  declaration made  as envisaged  in entry  52 in respect of  an industry  and this merry-go-round needs to be

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averted by  harmonious construction  and  reconciliation  of power between  the Union and the States. Such a situation is beyond the realm of practical possi- 349 bility. His wild apprehension stands so effectively answered by West  Bengal case (supra) that we cannot improve upon it. Pertinent observation may be extracted:      "Power to acquire or requisition property may since the      amendment, be  exercised concurrently  by the Union and      the States. But on that account conflicting exercise of      the power  cannot be  envisaged.  Article  31(2)  which      deals with  acquisition of  all property  requires  two      conditions  to   be  fulfilled:   (1)  acquisition   or      requisitioning must  be for  a public  purpose, (2) the      law  under   which  the   property   is   acquired   or      requisitioned must  provide for payment of compensation      either  fixed   thereby,  or  on  principles  specified      thereby. By  cl. (3)  of Art.  31 no  such  law  as  is      referred to  in cl.  (2) made  by the  Legislature of a      State shall  have efficacy  unless such  law  has  been      reserved for the consideration of the President and has      received his  assent. As  the President  exercises  his      authority  with  the  advice  of  the  Union  Ministry,      conflict  by   the  effective   exercise  of  power  of      acquisition  in  respect  of  the  same  subject-matter      simultaneously by  the Union,  and the State, or by the      State following upon legislation by the Union cannot in      practice be  envisaged even  as a  possibility. Article      254 also  negatives the possibility of such conflicting      legislation. By  cl. (1)  of that Article if a law made      by the  legislature of  a State  is  repugnant  to  any      provision of  a law competently made by Parliament, the      State law  is, subject  to cl.  (2)  void,  clause  (2)      recognizes limited  validity of  a State law on matters      in the  Concurrent List  if that law is repugnant to an      existing or  earlier law  made by  Parliament, only  if      such law has been reserved for the consideration of the      President, and  has received his assent. By the proviso      authority is reserved to the Parliament to repeal a law      having  even  this  limited  validity.  Assent  of  the      President to  State legislation  intended to  nullify a      law enacted  by Parliament  for  acquisition  of  State      property for the purposes of the Union lies outside the      realm of practical possibility." Therefore, the  contention  that  power  of  acquisition  or requisitioning of property in entry 42, List III, if held to be an  independent power  wholly falling outside the control assumed by  the Union  pursuant to the declaration envisaged by  entry   52,  List   II,  would  lead  to  a  sort  of  a constitutional impasse, is more imaginary than real. 350 Further, in the minority judgment, Subba Rao, J. has in this context said:      "A declaration  under entry 52 of List I would no doubt      enable Parliament  to make  a  law  in  respect  of  an      industry, that  is to  say Parliament may make a law in      respect of an existing industry or an industry that may      be started subsequently. So too, before the declaration      a State legislature could have made a law in respect of      an industry  by virtue  of entry  24 of  List  II.  But      neither entry  24 of  List II  nor entry  52 of  List I      empowers  the   State  legislature   before  the   said      declaration or  the Parliament after such a declaration      to make  a law  for acquisition  of lands. If the State      legislature before  the declaration  or the  Parliament

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    after the declaration wanted to acquire the land it can      only proceed  to make  a law  by virtue  of entry 42 of      List III."      Reliance was,  however, placed on the following passage in  West   Bengal  case   (supra)  to  urge  that  power  of acquisition is  an integral  and inseparable  concomitant of control assumed by the Union:      "By making the requisite declarations under entry 54 of      List I,  the Union Parliament assumed power to regulate      mines and  minerals and thereby to deny to all agencies      not under  the control  of the Union, authority to work      the mines.  It could  scarcely  be  imagined  that  the      Constitution  makers   while  intending  to  confer  an      exclusive power  to work  mines and  minerals under the      control  of   the  Union,   still  prevented  effective      exercise  of   that  power   by  making  it  impossible      compulsorily to  acquire the  land vested  in the State      containing minerals.  The  effective  exercise  of  the      power would  depend-if such an argument is accepted-not      upon the  exercise of the power to undertake regulation      and control  by issuing  a notification under entry 54,      but upon  the will  of the  State in  the territory  of      which  mineral  bearing  land  is  situated.  Power  to      legislate for  regulation and  development of mines and      minerals under  the control  of  the  Union  would,  by      necessary implication  include  the  power  to  acquire      mines and  minerals. Power to legislate for acquisition      of property  vested in  the States  cannot therefore be      denied  to   the  Parliament   if   it   be   exercised      consistently with the protection afforded by Art. 31." This observation,  if properly understood, is in the context of the contention that State property could not be subjected to power of 351 eminent  domain   and,  hence,   Union  has   no  power   to compulsorily acquire  the same. Therefore, there is no inner conflict between  Cooper case  (supra) and  West Bengal case (supra) on  the  point  that  power  of  acquisition  is  an independent power  referable to entry 42, List III. However, even if there is a conflict between West Bengal case (supra) and Cooper  case on  this point, a later larger constitution Bench judgment  in Cooper  case would impliedly overrule the former to the extent of conflict.      There is on the contrary a good volume of authority for the proposition  that  the  control  assumed  by  the  Union pursuant to  declaration to  the  extent  indicated  in  the statute making the declaration does not comprehend the power of acquisition  if it  is not  so specifically spelt out. In Kannan Devan  Hills Produce  Company Ltd.  v. The  State  of Kerala & Another,(1) constitutional validity of Kannan Devan Hills (Resumption of Lands) Act, 1971, was challenged on the ground of legislative competence of Kerala State legislature to enact  the legislation.  It was urged that in view of the declaration made  in s.  2 of  the Tea  Act, 1853, Tea was a controlled industry  and, therefore,  the State  legislature was denuded  of any  power to deal with the industry. It was further contended  that tea  plantation  required  extensive land and that resumption of land by the impugned legislation would directly  and adversely  affect the control taken over by the  Union and,  therefore,  the  State  legislature  was incompetent  to   enact  the   impugned  legislation.   This contention  was   repelled   holding   that   the   impugned legislation was  in pith and substance one under entry 18 of List II  read with  entry 42,  List III.  In  reaching  this conclusion the Court held as under:

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    "It seems  to us  clear that  the State has legislative      competence to  legislate on entry 18, List II and entry      42 List  III. This power cannot be denied on the ground      that it has some effect on an industry controlled under      entry 52  List I.  Effect is  not  the  same  thing  as      subject-matter. If  a State  Act, otherwise  valid, has      effect on  a matter in List I it does not cease to be a      legislation with respect to an entry in List II or List      III. The  object of  ss. 4  and 5 seems to be to enable      the State  to acquire  all the  lands which do not fall      within the  categories (a),  (b) and  (c) of  s.  4(1).      These provisions  are really incidental to the exercise      of the power of acquisition. The State cannot be denied      a power to ascertain what land should be acquired by it      in the public interest". 352      This  conclusion   was  sought   to  be  buttressed  by reference to  the decision  of the Privy Council in Canadian Pacific Railway  Company v.  Attorney General,(1) wherein it is observed as under:           "The appellant,  the Canadian  Pacific  Rly.  Co.,      which owned  and managed the Empress Hotel in Victoria,      British Columbia, while not denying that the regulation      of hours  of work  was ordinarily a matter of "property      and civil  rights in  the province" under head 13 of s.      92  of   the  British  North  America  Act,  1867,  and      accordingly within  the legislative  competence of  the      provincial legislature, contended, inter alia, that the      company’s activities  had become  such an extensive and      important element  in the  national economy  of  Canada      that the  dominion Parliament  was entitled  under  the      general powers  conferred by the first part of s. 91 of      the Act  of 1867  to regulate  all the  affairs of  the      company,  even   where  that  involved  legislating  in      relation  to   matters  exclusively   reserved  to  the      provincial legislatures by s. 92".      It can, therefore, be said with a measure of confidence that legislative power of the States under entry 24, List II is eroded only to the extent control is assumed by the Union pursuant to  a declaration made by the Parliament in respect of declared  industry as  spelt out by legislative enactment and the  field occupied  by such enactment is the measure of erosion. Subject to such erosion, on the remainder the State legislature will  have power  to  legislate  in  respect  of declared industry  without in  any way  trenching  upon  the occupied  field.   State  legislature   which  is  otherwise competent to deal with industry under entry 24, List II, can deal with that industry in exercise of other powers enabling it to  legislate under  different heads  set out in Lists II and III  and this  power cannot  be denied  to the State. In this connection  it would be advantageous to refer to Chanan Mal case  (supra). In  that case  constitution  validity  of Haryana Minerals  (Vesting of Rights) Act, 1973, and the two notifications issued thereunder was challenged on the ground that the  Act and  the notifications  issued thereunder were repugnant to  the Mines  & Minerals  Act made  by Parliament after making a declaration as contemplated by Entry 54, List I.  The   challenge  was  that  the  State  legislature  was incompetent to  legislate on the topic of mines and minerals under entry  23, List  II in  view of  the declaration  made under entry  54, List  I and the enactment of Act 67 of 1957 (Mines & Minerals Act) 353 by the Parliament. By the impugned Act and the notifications issued thereunder  the State Government of Haryana purported

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to acquire rights to salt petre, a minor mineral in the land described in  the Schedule  appended to the notification and by the  second impugned  notification the  State  Government announced to  the general  public that  certain  salt  petre bearing areas  in the  State of  Haryana  mentioned  therein would be  auctioned on  the dates given there. Repelling the contention  regarding   legislative  incompetence   it   was observed that  it is  difficult to  see  how  the  field  of acquisition could  become occupied  by a  Central Act in the same way as it had been in the West Bengal case (supra) even before Parliament  legislates to acquire land in a State. At least until  Parliament has so legislated as it was shown to have done  by the  statute considered  by this  Court in the case  from   West  Bengal,  the  field  is  free  for  State legislation falling under the express provisions of entry 42 of List III. It was further observed as under:      "It seems  difficult  to  sustain  the  case  that  the      provisions  of   the  Central   Act  would   be  really      unworkable by mere change of ownership of land in which      mineral deposits  are  found.  We  have  to  judge  the      character of  the Haryana  Act  by  the  substance  and      effect of  its provisions and not merely by the purpose      given in  the statement  of reasons  and objects behind      it. Such  statements of  reasons are  relevant when the      object or  purpose of  an enactment  is in  dispute  or      uncertain. They  can never  override the  effect  which      follows logically  from the  explicit and  unmistakable      language of  its substantive provisions. Such effect is      the best  evidence of intention. A statement of objects      and  reasons  is  not  a  part  of  the  statute,  and,      therefore, not  even relevant  in a  case in  which the      language of  the operative  parts of  the Act leaves no      room whatsoever  as it  does not in the Haryana Act, to      doubt what  was meant  by the  legislators: It  is  not      disputed here that the object and effect of the Haryana      Act  was   to  acquire  proprietary  right  to  mineral      deposits in ’land"’.      There is  thus a  long line  of decisions which clearly establishes the  proposition that  power  to  legislate  for acquisition of property is an independent and separate power and is  exercisable only under entry 42, List III and not as an incident  of the  power to  legislate  in  respect  of  a specific head of legislation in any of the three lists. This power of  the State legislature to legislate for acquisition of property  remains intact  and untramelled  except to  the extent where on 354 assumption of  control of  an industry  by a  declaration as envisaged  in   entry  52,   List  I,  a  further  power  of acquisition is taken over by a specific legislation.      As already  pointed out,  in  pith  and  substance  the impugned legislation  is one  for acquisition  of  scheduled undertakings and  that field  of acquisition is not occupied by the  IDR Act  which deals  with  control  of  management, regulation and  development of a declared industry and there is no  repugnancy between  the impugned  legislation and the IDR Act. Both can co-exist because the power acquired by the Union under the IDR Act can as well effectively be exercised after the  acquisition of  the scheduled  undertakings as it could be  exercised before  the acquisition.  Therefore, the contention that  the State  legislature  lacked  legislative competence  to   enact  the  impugned  legislation  must  be negatived.      A faint  submission was  made that  nationalisation  of industry as a national policy will have to be determined and

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enforced by  the Union keeping in view its Industrial Policy Resolution  and   such  piece-meal   nationalisation   would certainly encroach  upon the  control assumed  by the Union. Impugned legislation  does not  purport to nationalise sugar industry in  Uttar  Pradesh.  And  there  is  no  bar  to  a Government owned  company or  Corporation to  set  up  sugar manufacturing  undertaking  under  an  appropriate  licence. Therefore, the impugned legislation on this account does not encroach upon the occupied field.      The second limb of the submission was that in any event the impugned legislation was designed and enacted to prevent mismanagement and  to take  over management of the scheduled undertakings as a sequel to acquisition and it trenches into the field  occupied by  the IDR  Act, a Central legislation, and to  the extent  acquisition enables  the Corporation  by vesting of  the scheduled  undertakings in  it to  take over control and  management of  the scheduled  undertakings, the impugned legislation  is void  and unenforceable. Section 20 of the  IDR Act was pressed into service to substantiate the submission.      Section 20 of the IDR Act reads as under:-      "20. After  the commencement  of this Act, it shall not      be competent  for  any  State  Government  or  a  local      authority to take over the management or control of any      industrial undertaking under any law for the time being      in force  which authorises any such Government or local      authority so to do". 355      Section  20   forbids  a   State  Government  or  local authority from  taking over the management or control of any industrial undertaking  in declared  industry. On  a correct interpretation, s.  20 precludes  any  State  Government  or local authority  from taking  over the control or management of any  industrial undertaking  under any  law for  the time being in force which authorises any such Government or local authority so to do.      The impugned  legislation was  not enacted  for  taking over management  or control of any industrial undertaking by the State  Government. In  pith and substance it was enacted to acquire  the scheduled  undertakings. If  an attempt  was made to  take over  management or  control of any industrial undertaking in  a declared  industry indisputably the bar of s. 20  would  inhibit  exercise  of  such  executive  power. However, if  pursuant to a valid legislation for acquisition of scheduled  undertaking the  management stands transferred to the  acquiring body  it cannot be said that this would be in violation  of s.  20. Section 20 forbids executive action of taking  over management  or  control  of  any  industrial undertaking under  any law  in force  which authorises State Government or  a local authority so to do. The inhibition of s. 20  is on  exercise of executive power but if as a sequel to  an   acquisition  of   an  industrial   undertaking  the management or  control of  the industrial undertaking stands transferred  to   the  acquiring  authority  s.  20  is  not attracted at  all. Section  20 does not preclude or forbid a State legislature  exercising  legislative  power  under  an entry other  than entry 24 of List II, and if in exercise of that legislative power, to wit, acquisition of an industrial undertaking  in   a  declared   industry  the  consequential transfer of  management or  control  over  the  industry  or undertaking follows  as an  incident  of  acquisition,  such taking over of management or control pursuant to an exercise of legislative  power is not within the inhibition of s. 20. Therefore, the  contention  that  the  impugned  legislation violates s. 20 has no merit.

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    And now  to the  oft beaten  track of legislation being void as  being in contravention of Art. 31(2) as it stood at the relevant  time. The  impugned legislation was put on the statute book on August 27, 1971. Therefore, Art, 31(2) as it stood on  the relevant  date may  be noticed. The Article as amended by  Constitution (Twentyfifth  Amendment) Act, 1971, will, therefore, not be attracted. Art. 31(2) as it stood at the relevant time reads as under:           "31(2). No property shall be compulsorily acquired      or requisitioned  save for a public purpose and save by      authority of  a law which provides for compensation for      the 356      property so  acquired or requisitioned and either fixes      the  amount   of  the  compensation  or  specifies  the      principles on  which, and  the  manner  in  which,  the      compensation is to be determined and given; and no such      law shall  be called  in question  in any court, on the      ground that  the compensation  provided by  that law is      not adequate."      Emphasis was placed on the word ’compensation’ retained in Art.  31(2)  after  its  amendment  by  the  Constitution (Fourth Amendment)  Act, 1955,  and a reference, was made to Vajravelu Mudaliar  v.  Special  Deputy  Collector  of  Land Acquisition, West  Madras, wherein it was held by this Court that even  after  the  amendment  of  Art.  31  (2)  by  the Constitution (Fourth  Amendment) Act, 1955, it still retains the   expression    ’compensation’   after    its   judicial interpretation by  this Court in several decisions, viz., to mean just  equivalent to  the expropriated  owner. Reference was then  made to  Union of  India v.  Metal Corporation  of India Ltd.  & Anr.,(2)  in which  this  Court  affirmed  the interpretation of  the  word  ’compensation’  to  mean  just equivalent. Approaching the matter from this angle the Court struck down  the Metal  Corporation of  India  (Acquisition) Act, 1965,  holding that  as the Act has laid down different principles for  ascertaining the value of different parts of the undertaking  and as  all the  principles so laid down do not provide  for the  just equivalent  of all  parts of  the undertaking mentioned  therein, the  sum total  also  cannot obviously be  a  just  equivalent  of  the  undertaking.  In reaching this  conclusion exception  was taken  to assessing the value of the used machinery on the basis of written down value arrived  at as  per the  provisions of  the Income Tax Act. This observation cannot be said to be any more good law in view  of the  decision of  a Constitution  Bench of  this Court in  State of Gujarat v. Shantilal Mangaldas & Ors.,(3) wherein  Shah,  J.,  speaking  for  the  Court  specifically overruled the  Metal Corporation  case (supra)  observing as under:           "The Court  then proceeded  to hold  that the  two      principles laid  down in cl. (b) of Paragraph II of the      Schedule to  the Act-(i)  that compensation  was to  be      equal to the cost price in the case of unused machinery      in good  condition, and  (ii)  written  down  value  as      understood in the Income-tax law was to be the value of      the used  machinery were  irrelevant to the fixation of      the  value   of  the   machinery  as  on  the  date  of      acquisition." 357           "We are  unable to  agree with  that part  of  the      judgment. The  Parliament had  specified the principles      for determining  compensation of the undertaking of the      company.  The   principles  expressly  related  to  the      determination of  compensation payable  in  respect  of

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    unused machinery  in good condition and used machinery.      The principles  were set out avowedly for determination      of compensation.  The principles were not irrelevant to      the determination  of compensation and the compensation      was not illusory."      It thus  appears well  settled that  if  a  legislation provides principles  for determining  compensation, to  wit, written down value as understood in Income-tax law to be the value of the used machinery, that principle could neither be said to  be irrelevant  for determining the compensation nor the compensation  so awarded could be styled as illusory. It was, however, said that this decision in Shantilal Mangaldas is overruled  in Cooper’s case and, therefore, the wheel has moved the  full circle and the expression ’compensation’ and principle for determining the compensation as interpreted in Vajravelu Mudaliar’s  case (supra)  is restored. This is not borne out  by the  pertinent observation  in  Cooper’s  case (supra) which may be extracted:      "Both the  lines  of  thought  which  converge  in  the      ultimate result,  support the  view that  the principle      specified by  the law for determination of compensation      is beyond  the pale  of challenge, if it is relevant to      the determination  of compensation  and is a recognized      principle   applicable    in   the   determination   of      compensation for property compulsorily acquired and the      principle is  appropriate in  determining the  value of      the class  of property  sought to  be acquired.  On the      application of  the  view  expressed  in  P.  Vajravelu      Mudaliar’s case  or in  Shantilal Mangaldas’s  case the      Act, in our judgment, is liable to be struck down as it      fails to provide to the expropriated banks compensation      determined according  to relevant principles. Section 4      of the  Act transfers  the undertaking  of every  named      bank to  and vests  it in  the corresponding  new bank.      Section 6(1)  provides for  payment of compensation for      acquisition of  the undertaking and the compensation is      to be  determined in  accordance  with  the  principles      specified in  the Second  Schedule. Section  6(2)  then      provides that  though separate  valuations are  made in      respect of  the several  matter specified in Sch. II of      the Act,  the amount of compensation shall be deemed to      be  a   single  compensation.  Compensation  being  the      equivalent in terms 358      of money  of the  property compulsorily  acquired,  the      principle for determination of compensation is intended      to award  to the  expropriated owner  the value  of the      property acquired. The science of valuation of property      recognizes   several    principles   or   methods   for      determining the value to be paid as compensation to the      owner for  loss of  his property:  there are  different      methods applicable  to different classes of property in      the determination of the value to be paid as recompense      for loss  of his  property. A method appropriate to the      determination of  value of one class of property may be      wholly  inappropriate   in  determining  the  value  of      another class  of property. If an appropriate method or      principle for determination of compensation is applied,      the fact  that by  the application of another principle      which  is   also  appropriate,  a  different  value  is      reached,  the   Court  will   not   be   justified   in      entertaining  the   contention  that  out  of  the  two      appropriate methods,  one more  generous to  the  owner      should have been applied by the legislature."      However, it  was pointed  out that  Shelat, J. speaking

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for himself  and Grover,  J.  in  His  Holiness  Kesavananda Bharati Sripadagalavaru  v. State  of  Kerala,(1)  in  terms observed as under:           "In State of Gujarat v. Shantilal Mangaldas & Ors.      the  decision   in  Metal   Corporation  of  India  was      overruled which itself was overruled by R. C. Cooper v.      Union of India."      The  question  is  whether  the  statement  of  law  in Shantilal Mangaldas  (supra) that  the principle of awarding compensation on  the basis  of written  down value  for used machinery is  a valid principle for determining compensation and whether  the compensation so awarded was illusory is not overruled by any observation in Cooper’s case.      Undoubtedly, in  Kesavananda Bharati case (supra) it is reiterated by  Hegde, J. speaking for himself and Mukherjea, J. that  it will  be for  the  aggrieved  party  to  clearly satisfy the  Court that the basis adopted by the legislature has no  reasonable relationship to the value of the property acquired or  that the amount to be paid has been arbitrarily fixed or  that the  same is illusory return for the property taken. Chandrachud,  J. (as he then was), while interpreting the expression  ’amount’ in  the amended Art. 31(2) observed as under:           "The specific obligation to pay an "amount" and in      the alternative  the use  of the  word "principles" for      determination of  that amount must mean that the amount      fixed or 359      determined to  be paid cannot be illusory. If the right      to property  still finds  a place  in the Constitution,      you cannot  mock at the man and ridicule his right. You      cannot tell  him  ’I  will  take  your  fortune  for  a      farthing’."      But in  the next  breath it has been observed that "the amount fixed  for being  paid to  the owner is wholly beyond the pale  of challenge that it is inadequate. The concept of adequacy is  directly co-related  to the market value of the property and  therefore, such  value  cannot  constitute  an element of that challenge." But this was the situation after amendment of  Art. 31(2)  by the  Constitution  (Twentyfifth Amendment) Act.  Even as  the article  stood at the relevant time it  was open  to the  legislature to  fix principle for determining compensation  and unless  it is  shown that  the principles are  irrelevant to the determination of the value of the property or by working out the compensation according to the  principles so  specified  the  compensation  becomes illusory, the  principles themselves  are beyond the pale of challenge before  a court  of law on the ground that they do not   provide   adequate   compensation.   Now,   here   the compensation is  worked out and specified in the schedule to the impugned  Act. The  compensation is  determined in round figure. This  Court has  in terms  accepted that  payment of compensation on  the basis  of written down value calculated according to  the Income-tax  law for  used machinery is not irrelevant as a principle for determining compensation. That principle appears  to have  been adopted  for  valuing  used machinery though  the legislation fixes compensation payable to each undertaking in round sum. And that was the only part challenged.      It was,  however, said that no principle is discernible because not  only none  was stated on the floor of the House but to  a specific  question the reply was that principle is not to  be disclosed.  Debate in legislature cannot conclude the point.  Here  the  principle  is  discernible  and  that appears to  be valid.  It represents  the collective will of

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the House.  To reject it would tantamount to saying that the majority   members    voted   without    understanding   and appreciating  the  principles.  However,  the  principle  is extracted in court room debate and it is a valid principle.      A peep  into the  background leading to the acquisition of  the  scheduled  undertakings  would  reveal  that  these scheduled undertakings  had a  heavy  back-load  of  carried forward loss,  that even  though they were taking sugar cane from cane growers, i.e. the farmers, they failed to pay them the price  of sugar  cane. There was labour unrest as labour was not paid. Generally speaking, they can be styled as 360 sick undertakings  and become  a drag  on the economy of the area. There  was no  scope for ploughing back the profits to rejuvenate the  machinery because  there was  no profit. The situation had  not improved even when managements of some of the undertakings  were taken  over under  the IDR  Act  and, therefore, this  desperate situation  called for  a  drastic remedy in  public interest  and while  applying that drastic remedy  of   acquisition  principles  which  are  valid  for determining  the   value  of  machinery  were  adopted.  The adequacy or  otherwise of  compensation on the calculus made by applying  the principle is beyond the judicial review. It would be  a day  time hallucination  to call  such principle irrelevant or  compensation illusory.  The challenge  to the validity of  the  impugned  legislation  on  the  ground  of violation of Art. 31 (2) must accordingly fail.      There remain  two minor and incidental points mentioned in passing. The submissions themselves lacked emphasis. They are,  that   (1)  no   compensation  is   provided  for  the agricultural land  taken over by the State; (2) good-will of the scheduled  undertakings was not evaluated as a component of compensation.      With reference  to Ishwari Khetan Sugar Mills (P) Ltd., it was  said that 36 acres of agricultural land belonging to the company  owning the scheduled undertaking was taken over without  compensation.  It  was  countered  by  saying  that agricultural land  is not  taken over.  It is not clear from the pleadings  and record  whether agricultural land outside the structures  of scheduled  undertakings has been acquired and has at all been taken over by the Corporation. It may be that between  various structures  of scheduled  undertakings there might be some open land but that is part and parcel of scheduled undertakings  because any other construction would show that  a passage or road between two constructions could not be acquired. Unless, therefore, it is specifically shown that while  acquiring  scheduled  undertakings  agricultural land belonging  to the company or the owner owning scheduled undertaking was either acquired or taken over as part of the acquisition it is not possible to accept the submission that there was acquisition of agricultural land without providing compensation for the same.      And as  for the  good-will, less  said the  better. The scheduled undertakings  were sick units and the sickness was chronic. A  manufacturing unit  with heavy  carried  forward loss and defaulting in payments, possibly facing appointment of Receivers  for realising  tax arrears,  asks compensation for the good-will generated by it. This good-will appears to be more  imaginary than  real or  an argument  to support an untenable submission. But the better answer is that there 361 cannot be  a good-will of a manufacturing undertaking but it can be  of a  company, a partnership, or a proprietor owning scheduled  undertaking  and  neither  the  company  nor  the partnership nor  the proprietory  unit,  if  any,  has  been

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acquired  under  the  impugned  legislation.  Therefore,  in evaluating compensation  of the scheduled undertakings there is no question of evaluating the good-will.      Mr. R.  A. Gupta  appearing in  SLP. 6252/79  raised an additional contention  that the impugned Act is violative of Art.  14   in  that   selection  of  petitioners’  scheduled undertakings for  acquisition is  wholly arbitrary and there is no  difference between those selected for acquisition and those left  out through  all such sugar, undertakings in the State of Uttar Pradesh were similarly situated and similarly circumstanced. Sustenance  was largely  sought to  be  drawn from the Report of Justice Bhargava styled as Sugar Industry Inquiry Commission,  1974, which  inter alia,  specified  17 sugar undertakings  in Uttar  Pradesh as  prima  facie  sick sugar mills.  After reading  out a  portion of the Report it was said  that classifying  the 12  sugar  undertakings  for acquisition is  not based  on any  intelligible  differentia between those  included in  the group  for  acquisition  and those left  out and  that this differential treatment has no rational relationship to the object sought to be achieved by the impugned  legislation. On  behalf of respondents learned Advocate-General for  the State  of Uttar  Pradesh countered this contention  by pointing  out that  before acquiring the scheduled undertakings  the Government had a close review of the condition  of the  sugar undertakings  done for  certain specific period  set out  in the  affidavit and  ascertained whether the situation had become desperate on account of the persistent default  in payment  of cane price, purchase tax, labour dues,  etc. The situation in Uttar Pradesh appears to be peculiar in that cane growers go on selling their cane to sugar undertakings  probably having  little or  no option in this behalf because it is a perishable commodity and must be disposed of  as early  as possible  and they  have to  await payment at  the sweet  will, whim  and caprice  of the sugar barons. Its  unhealthy effect  on marginal  farmers would be intolerable because  the cash  crop would not fetch any cash and destitution  may be  the inevitable  outcome.  And  this phenomenon was  repeated year after year. It was pointed out that a close scrutiny was applied to this persistent default and where the situation in respect of sugar undertakings was desparate they were classified together and they were sought to be  acquired. Can  it be said that this classification is not  based   on  any   intelligible  differentia.   Economic situation of  an industrial  undertaking may  be very  good, good, average,  bad, intolerable  and uneconomic  in  larger national perspective. 362 It would have been difficult for the Government to group all sugar undertakings  with such  as were  living  on  coramine doses. There  does appear to be the intelligible differentia by which  this classification  of those  in  an  intolerable condition has  been grouped together. Acquisition was for an avowed object of rejuvenating these undertakings and thereby improving the  economy of  the area by providing priority in payment to cane growers, labour, in respect of whom there is no  cushion   for   sufferance.   Thus,   this   differentia undoubtedly has a rational relationship to the object sought to be  achieved by  the Act. The challenge of Art. 14 was an argument of despair and must be repelled.      These were  all the  contentions in  these appeals  and special leave  petitions and  as there is no merit in any of them, the  appeals and  the special leave petitions fail and are dismissed with costs in one set.      PATHAK, J.-We  have had  the  benefit  of  reading  the judgment prepared  by our  brother Desai.  While we  broadly

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agree with  the final  conclusions reached  by  him  on  the several points debated before us, we would prefer to refrain from expressing  any opinion  on the  question  whether  the declaration made  by Parliament  in S.  2 of  the Industries (Development and  Regulation) Act,  1951 in  respect of  the industries specified  in the  First Schedule to that Act can be regarded  as limited  to removing from the scope of Entry 24 of  List II  of the  Seventh Schedule to the Constitution only so  much of  the legislative field as is covered by the subject matter and content of that Act or it can be regarded as effecting  the removal  from that  Entry  of  the  entire legislative field  embracing all  matters pertaining  to the industries specified in the declaration. It seems to us that the observations  made by  this court  in The  Hingir-Rampur Coal Co.,  Ltd. and  Others  v.  The  State  of  Orissa  and Others,(1) State  of Orissa  v. M.  A. Tulloch  and  Co.,(2) Baijnath Kedia  v. State  of Bihar  & Ors.(3)  and State  of Haryana  &   Anr.  v.  Chanan  Mal,  etc.(4)  cannot  be  of assistance in  this behalf.  In each  of  those  cases,  the declaration made  by Parliament  in the  concerned enactment limited the  control of  the regulation of the mines and the development of  minerals  to  the  extent  provided  in  the enactment. Whether  the terms  in which  the declaration has been framed  in s.  2 of  the  Industries  (Development  and Regulation) Act-a declaration not expressly limiting control of the specific indus- 363 tries to  the extent provided by the Act-can be construed as being so limited is a matter which, we think, we should deal with  in   some  more   appropriate  case.   The  range   of considerations encompassed  within the  field of  enquiry to which the  point is  amenable has  not, to  our  mind,  been sufficiently covered  before us.  And for  good reason.  The provocation was  limited. For the controversy in the present cases concerning  the legislative  competence of  the  State Legislature   to   enact   the   U.P.   Sugar   Undertakings (Acquisition) Act, 1971 can be adequately disposed of on the ground that  the legislation  falls within  Entry 42 of List III and  cannot be related to Entry 52 of List I or Entry 24 of List  II. When  the impugned enactment truly falls within Entry 42  of List  III-"acquisition  and  requisitioning  of property"-there is a reluctance to enter upon an examination of the  mutually competing  claims of Entry 52 of List I and Entry 24 of List II-entries which deal with "industries", an entirely different subject matter.      With  this   reservation,  we  have  no  hesitation  in agreeing  with  the  ultimate  conclusions  reached  by  our learned brother  on the  remaining points of controversy and in concurring  with the  order proposed  by him disposing of these appeals and special leave petitions. P.B.R.                                    Appeals dismissed. 364