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PETITIONER: THE KESHAV MILLS COMPANY LTD. & ANR

       Vs.

RESPONDENT: UNION OF INDIA AND ORS.

DATE OF JUDGMENT08/12/1972

BENCH: MUKHERJEA, B.K. BENCH: MUKHERJEA, B.K. GROVER, A.N. MATHEW, KUTTYIL KURIEN

CITATION:  1973 AIR  389            1973 SCR  (3)  22  1973 SCC  (1) 380  CITATOR INFO :  E&F        1981 SC 818  (17,19,67,68,69,71,72,73)  F          1986 SC2030  (9)  R          1990 SC1402  (23)

ACT: Industries  (Development  and  Regulation)  Act  1951-S.18A- whether  it  is necessary to observe the  rules  of  natural justice once during the investigation and again when  action is taken under S. 18A.

HEADNOTE: The  Keshav  Mills  Co.  Ltd.  and  another  challenged  the validity  of  an order passed by the  Government  of  India, under S. 18-A of the Industries (Development and Regulation) Act,  1951  by which the Gujarat State  Textile  Corporation Ltd.  has  been appointed and authorised controller  of  the Company  for  a period of five years.  The  Company  is  the owner  of  a cotton textile mill and it was  established  in 1934.   Till  1965, the Company made  flourishing  business. After  the year 1964-65, the Company fell on evil  days  and the  textile  mill  of the company was one of  the  12  sick textile mills in Gujarat, which had to be closed down during 1966 and 1968.  On 31st May 1969, Government of India passed an  order appointing a Committee for investigation into  the affairs of the Company under the provisions of S. 15 of  the Act.   In due course, the Investigating Committee  completed its inquiry and submitted its report to the Government.   On 24th November, 1970, the Government of India passed an Order under  S.  18-A  of the Act authorising  the  Gujarat  State Textile  Corporation  to  take over the  management  of  the Company  for  a  period  of five  years  from  the  date  of publication of that order in the Official Gazette. The  Company filed a writ petition before the High Court  of Delhi  praying  for  appropriate  relief.   The  High  Court dismissed   the  petition.   The  main  contention  of   the appellants  before the Delhi High Court was that  Government of India was not competent to proceed under S. 18-A  against the  company  without supplying before hand, a copy  of  the report  of  the  Investigating  Committee  to  the  Company. Acocrding  to the appelants, the Government should not  only have  supplied  a  copy of the report to  the  Company,  but

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should  also  have  given a hearing to  the  Company  before finally deciding upon.taking over the company’s  undertaking under  S.. 18-A of the Act.  This contention was pressed  on behalf  of  the  appellants in spite of  the  fact  that  an opportunity had been given by the Investigating Committee to the management and the employees of the Company for adducing evidence and for making representation before the completion of the investigation. The only question that this Court had to decide was  whether after the undertaking had already been given an  opportunity of being heard at the time of investigation, the Company  is entitled  to  have  a copy of the report  and  to  make,  if necessary, further representation about that report before a final  decision is made by the Government under S.  18-A  of the  Act.  The answer depended on the  following  questions; (1) Is it necessary to observe the rules of n-atural justice before  enforcing a decision under S. 18-A of the  Act.  (2) What-are  the rules of natural justice in such a  case.  (3) (a) In the present case, have the rules to be observed  once during  the investigation under S. 15 and then again,  after the it)vestigation is completed and action on the report  of the Investigating Com 23 mittee taken under S. 18-A (b) Was it necessary to furnish a copy of the Investigating Committee’s Report before  passing an order of take over ? Dismissing the appeal, HELD  :  (i) Although the order of the Government  of  India taking  over  the management of the Company  was a  purely executive order, embodying an administrative decision,  even so, the question of natural justice does arise in this case. It is too late now to contend that the principles of natural justice  do not apply to administrative orders  or  proceed- ings. [29G] Regina v. Gaming Board, exparte Benaim [1970] 2 W.L.R. 1009, referred to. (ii) The  concept  of natural justice cannot be put  into  a straight  jacket.  It is futile to look for  definitions  or standards of natural justice.  The only essential point that has  to  be  kept in mind in all cases is  that  the  person concerned should have a reasonable opportunity of presenting his  case and administrative authority concerned should  act fairly, impartially and reasonably.  It only means that such measure  of  natural  justice  should  be  applied  as   was described   by   Lord   Reid  in  Ridge   v.   Baldwin,   as "insusceptible  of exact definition, but what  a  reasonable man   would  regard  as  a  fair  procedure  in   particular circumstarces."  However,  every thing will  depend  on  the actual facts and circumstances of the case. [30B] (iii)The  Act  was  passed to provide  for  development  and regulation of important industries, the activities of  which affect  the country as a whole and the development of  which must  be governed by economic factors of all  India  import. For  achieving  this purpose, the Act confers  cerpowers  on Government  to secure the planning of future development  on sound  and balanced line by the licensing of all  new  under takings  and  also by making rules for the  registration  of existing  undertakings  for regulation  and  production  and development of the industries and also in certain cases,  by taking over the control and management of certain industrial concerns.   Since  the  appellants  have  received  a   fair treatment and also all reasonable opportunities to make  out their own case before Government, they cannot be allowed  to make  any grievance of the fact that they were not  given  a formal  notice  calling upon them to show  cause  why  their

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undertaking  should not be taken over, or that they had  not been furnished with a copy of the report. [30H, 35H] (iv) In the present case non-disclosure of the report of the Investigating   Committee  has  not  caused  any   prejudice whatsoever to the appellants.  Under the circumstances,  the High Court’s Order is confirmed. [38F] Local Government Board v. Arlidge, [1915] A.C. 120, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1183  of 1972. Appeal  by special leave from the judgment and  order  dated March 3, 1972 of the Delhi High Court in Civil Writ No. 1366 of 1970. I.   N. Shroff for the appellants. 24 F.   S. Nariman Additional Solicitor General of India, P. P. Rao and B. D. Sharma for respondent No. 1. J.   L. Hathi, K. L. Hathi and P. C. Kapur for respondent Nos. 2    and 3. The  Judgment of the Court was delivered by Mukherjea,  J. This appeal by special leave from a  judgment and  order of the Delhi High Court arises out of a  petition under Articles 226 and 227 of the Constitution of India made by Keshav Mills Company limited (hereinafter referred to  as the  Company)  and Navin Chandra Chandulal Parekh who  is  a shareholder  and a Director of the Company  challenging  the validity  of an order dated 24 November 1970 passed  by  the Government  of  India  under  Sec.  18A  of  the  Industries (Development   and  Regulation)  Act,  1951  (65  of   1951) (hereinafter  referred to as the Act) by which  the  Gujarat State  Textile  Corporation  Ltd.  has  been  appointed  the authorised  controller of the Company for a period  of  five years.   The  Delhi High Court dismissed the  writ  petition after hearing the parties and hence this appeal.  The  facts and circumstances leading to the filing of the petition  are briefly stated as follows. The Company is the owner of a cotton textile mill at  Petlad known as Keshav Mills.  The Company was established in  1934 and,  as  far as one can judge from the  facts  and  figures cited in the petition, the Company made flourishing business between the years 1935 and 1965.  Indeed, if the appellants’ figures  are  to  be believed,-and there  is  no  reason  to disbelieve  them, each holder of the 250 ordinary shares  of the Company seems to have received Rs. 33,685 in course of a period of 30 years between 1935 and 1964-65 as profit on  an initial  investment of Rs. 1,000 only.  On top of  this  the Company’s  capital block was increased from Rs. 10.62  lakhs in  1935  to Rs. 78,38,900 at the end of the  year  1964-65. All these profits, however, went to a close group of people, since 80 per cent of the share capital belongs to petitioner Parekh,  his family members, relations and friends and  only 20 per cent share-capital is in the hands of the members  of the  public.  The Company, however, fell on evil days  after the year 1964-65 and the textile mill of the Company was one of.  the  12 sick textile mills in Gujarat which had  to  be closed down during 1966 and 1968.  We are not here  directly concerned with the various causes which were responsible for this  sudden  reversal  of the  fortunes  of  this  Company. Suffice  it  to say that on 31 May 1969  the  Government  of India   passed   an  order  appointing   a   committee   for investigating  into  the affairs of the  Company  under  the

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provisions of Sec. 15 of the Act.  We shall hereafter  refer to this 25 Committee  as  the Investigating  Committee.   The  material portion  of  the order dated 31 May 1969  is  reproduced  as hereunder :- "S.O./15IDRA/69:-Whereas  the Central Government is  of  the opinion that there has been, or is likely to be  substantial fall  in  the  volume of production  in  respect  of  cotton textiles manufactured in the industrial undertaking known as the  Petlad  Keshav  Mills Co. Ltd.,  Petlad  (Gujarat)  for which,  having regard to the economic conditions  prevailing there is no justification. Now,  therefore,  in  exercise of the  powers  conferred  by Section  15 of the Industries (Development  and  Regulation) Act,  1951  (65  of 1951),  the  Central  Government  hereby appoints,  for  the  purpose of  making  full  and  complete investigation into the circumstances of the case, a body  of persons consisting of :- Chairman (1)  Shri  1.  C. Shah, (General Manager,  Ambica  Group  of Mills, Ahmedabad). Members (2)  Shri M. C. Mirchandani, Director (Technical), National Textile Corporation. (3)  Shri J. P. Singh, Director (.Finance), National Textile Corporation. (4)  Shri M. Sivagnanam, Industries Commissioner, Government of Gujarat, Ahmedabad. (5)  Shri V. A. Mahajan, Senior Accounts Officer, Office of the Regional Director, Company Law Board, Bombay. (6)  Shri Y. L. N. Achar, Inspecting Officer, Office of the Textile Commissioner, Bombay. In  this  connection  it may be relevant  to  set  out  some extracts from the communication that was sent out on 11 June 1969  by the Government of India to the various  members  of the aforesaid committee.  The communication which was in the nature of a 26 supplemental order by the Government of India detailing  the point of reference to the Investigating Committee was to the following effect "Subject:-Appointment of Investigation Committee for  Petlad Keshav Mills Co. Ltd.  Petlad (Gujarat) under the Industries (Development and Regulation) Act, 1951. Sir, I  am  directed to enclose a copy of order dated  31st  May, 1969, issued under Section 15 of the Industries (Development and  Regulation)  Act,  1951, setting  up’  a  committee  to enquire  into the affairs of Petlad Keshav Mills  Co.  Ltd., Petlad,  Gujarat for your information and necessary  action. The  investigation should also be directed to the  following specific points :- (a)  Reasons for the present state of affairs. (b)  Deficiencies, if any, in the existing machinery. (c)  Immediate   requirements,  under  separate   heads   of accounts, of working capital if any. (d)  Requirement      of     long-term      capital      for modernisation /rehabilitation. (e)  financial result of :- (i)  Immediate working without further investment on capital

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account. (ii) Working after further investment on capital account. (f)  Suggestion regarding source of funds required under (e) and (d) and security available for their repayment. I  am  further to request that 15 copies of the  report  may kindly be submitted to this Ministry at a very early date." In  due  course, the Investigating Committee  completed  its inquiry and submitted its report to the Government some time about  January,  1970.   On or about 24  November  1970  the Government  of India passed an order under Sec. 18A  of  the Act  authorising  the  Gujarat  State  Textile   Corporation (hereinafter to be referred to as the Authorised  Controller to take over the management of the whole of the  undertaking of the Company 27 for  a period of five years from the date of publication  of that  order in the Official Gazette.  The relevant order  is in following terms:- "S.O.-/18A/IDRA/70 Whereas the Central Government is of  the opinion   that  the  Keshav  Mills  Co.  Ltd.,  Petlad,   an industrial undertaking in respect of which an  investigation has   been   made  under  Section  15  of   the   Industrial (Development  and  Regulation) Act, 1951 (65  of  1951),  is being  managed  in  a manner highly  detrimental  to  public interest. Now,  therefore,  in  exercise of the  powers  conferred  by section  18A  of  the  said  Act,  the  Central   Government authorises    the   Gujarat   State   Textile    Corporation (hereinafter. referred to as Authorised Controller) to  take over  the  management of the whole of the  said  undertaking namely,  the Kesbav Mills Co. Ltd., Petlad, subject  to  the following terms and conditions, namely : (i)  The   Authorised  Controller  shall  comply  with   all directions   issued  from  time  to  time  by  the   Central Government; (ii) The  Authorised Controller shall hold office  for  five years from the date of publication in the official gaztte of this notified order; (iii)     The   Central   Government   may   terminate   the appointment  of  the  Authorised Controller  earlier  if  it considers necessary to do so. "This  order  will have effect for a period  of  five  years commencing from the date of its publication in the  official gazette." On 5 December 1970 one R. C. Bhatt, Assistant Secretary,  to the  Authorised Controller went to the Company’s  office  at Petlad   and   presented  a  letter  from   his   principals authorising him’ to take over possession of the mill of  the Company and requested’ the Company to hand over the keys  of the office buildings, godowns and other departments as  well as  the  office records, account books etc. to  Bhatt.   The Company handed over the keys of the Company’s premises to R. C.  Bhatt  under protest.  On 15 December 1970  the  Company filed a writ petition before the High, Court of Delhi under Articles  226 and 227 of the Constitution, of India  praying for "appropriate reliefs". Though several grounds were taken in the writ petition, the- main  contention  of the appellants before  the  Delhi  High Court  was that it was not competent for the  Government  of India to proceed under Sec. 18A against the Company  without supplying- 28 beforehand  a  _copy  of the  report  of  the  Investigating Committee  to the Company.  The appellants complained  that though the Investigating Committee had submitted a report to

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the Government of India in January, 1970 the Government  did not furnish the management of the Company with the  contents of  the report.  According to the appellants the  Government should  not only have supplied a copy of the report  to  the Company but should also have given a hearing to the  Company before  finally  deciding  upon taking  over  the  Company’s undertaking under Sec.. 18A of the Act.  This contention was pressed  on  behalf of the appellants in spite of  the  fact that  an  opportunity had been given  by  the  Investigating Committee  to  the  management and  the  employees  ,of  the Company  for  adducing evidence and  making  representations before three completion of the investigation.  Reliance  was placed  on behalf of the appellants on a Bench  decision  of the  Delhi High Court in Bharat Kumar Chinubhai v. Union  of India and others(1).  The correctness of that decision  was, however, .seriously questioned on behalf of the  respondents and the single .Judge before whom the instant petition  came up for hearing referred the matter to adjudication before  a Full  Bench of that ’High Court.  The question of  law  that was  referred for the decision of the Full Bench was  framed by the learned Judge in the ’following manner :- "Whether  in  view  of  Rule  5  of  the  Investigation   of Industrial Undertakings (Procedure) Rules of 1967  providing for  an opportunity of hearing before the  Investigator  and the  absence of any specific provision either in the Act  or in  the  Rules for supplying a copy  of  the  Investigator’s report to the management, the taking over of the  industrial undertaking, without supplying a copy of the  Investigator’s report is vitiated ?" The  Full  Bench of the Delhi High Court after  hearing  the parties  answered the above question of law in the  negative and  since this was the only ’question argued  before  them, dismissed the petition. The  whole  dispute between the parties is  in  substance  a question  regarding  the exact requirement of the  rules  of natural  justice  in the facts and situation  of  the  case. There  can  be no question that whenever  an  order  is-made under  Sec.  18A  against  a  company  it  has  far-reaching consequences   on   the   rights  of   that   company,   its shareholders,  its  employees  and  all  persons  who   have contractual dealings and transactions with that company.  It is  also  not seriously questioned that  before  passing  an order  of "take,over" under Sec. 18A it is incumbent on  the Government to give at some stage a reasonable opportunity to the undertaking con- (1)  Civil  Writ No. 560 of 1969: Judgment delivered  on  10 February 1970. 29 cerned  for  making  suitable  representations  against  the proposed  take-over.  In fact, under the  rule-making  power conferred by Sec. 30 of the Act the Government of India  has already made a rule viz.  Rule 5 which provides for such  an opportunity.  Rule 5 runs as follows :- "5. Opportunity for hearing.  The Investigator shall, before completion of his investigation, give the Management and the employees  of the undertaking or undertakings in respect  of which the investigation  is ordered, reasonable  opportunity               of being heard including opportunity to adduce               any evidence." The  only  question that we have to decide  now  is  whether after  the  undertaking  has  already  been  given  such  an opportunity  at the time of investigation it is entitled  to have a copy of the report and to make, if necessary, further representation about that report before a final decision  is made by the Government about taking action under Sec. 18A of

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the  Act.  Our decision on this question will depend on  our answers to the following questions :- (i)  Is it necessary at all to observe the rules of  natural               justice before enforcing a decision under Sec.               18A of the Act ? (ii) What are the rules of natural justice in such a case ? (iii)     (a) In the facts and circumstances of the  present case  have  the  rules  to  be  observed  once  during   the investigation  under  Sec.  15  and  then  again  after  the investigation  is complete and action on the report  of  the Investigating Committee taken under Sec. 18A ? (b)  Was it necessary to furnish a copy of the Investigating Committee’s Report before passing the order of take-over ? The   first  of  these  questions  does  not   present   any difficulty.  It is true that the order of the Government  of India  that  has  been challenged by the  appellants  was  a purely executive order embodying on administration decision. Even so the question of natural _justice does arise in  this case.  It is too late now to contend that the principles  of natural  justice need not apply to administrative orders  or proceedings; in the language of Lord Denning M.R. in  Regina v. Gaming Board ex-parte Benalm(1) "that heresy was scotched in Ridge v. Baldwin" (2) . (1)  [1970] 2 W.Z.R. 1009.                  (2) [1964]  A.C. 40. 30 The second question, however, as to what are the  principles of  natural justice that should regulate  an  administrative act  ,order is a much more difficult one to answer.   We  do not  this it either feasible or even desirable to  lay  down any  fixed rigorous yard-stick in this manner.  The  concept of natural justice cannot be put into a straight-jacket.  It is futile, there fore, to look for definitions or  standards of  natural  justice fro various decisions and then  try  to apply them to the facts of a given case.  The only essential point  that has to be kept in mind in all cases is that  the person  concerned  should have a reasonable  opportunity  of presenting  his case and that the  administrative  authority concerned  should  act fairly,  impartially  an  reasonably. Where administrative officers are concerned, the duty is not so  much  to  act judicially as to  act  fairly.   See,  for instance, the observations of Lord Parker in In re H. K.  (a infant)  (1).   It only means that such measure  of  natural justice  should be applied as was described by Lord Reid  in Ridge Baldwin(2) as "in susceptible of exact definition  but what  reasonable  man would regard as a fair procedure  in particular circumstances".  However, even the application of the  concept of fair play requires real flexibility.   Every thing  will depend the actual facts and circumstances  of  a case.   As  Tucker  L.  ,observed  in  Russell  v.  Duke  of Norfolk(3). "The  requirements  of natural justice must  depend  on  the circumstances  of the case, the nature of the  enquiry,  the rules under which the tribunal is acting, the subject matter that is being dealt with and so forth." We  now turn to the third and the last question which is  in two  parts.   For answering that question we shall  keep  in mind the observations of Tucker L. J. set out just now  and examine  the nature and scope of the inquiry that  had  been carried  out  by the Investigating Committee set up  by  the Government, the scope and purpose of the Act and rules under which  the Investigating Committee was supposed to act,  the matter  that  was being investigated by  the  Committee  and finally the opportunity that was afforded to the  appellants for   presenting   their  case  before   the   Investigating

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Committee. The Act was passed to provide for development and regulation of  important industries the activities of which,  according to  the Statement of Objects and Reasons of the  Bill  which resulted  in the Act "affect the country as a whole and  the development of which must be governed by economic factors of all-India import".   For achieving this  Purpose  the  Act confers certain (1) [1967]2 Q.B. 617.                   (2) [1964] A.C. 40. (3)  [1949] 1 All.  ER. 109 31 powers  on  Government  to secure  the  planning  of  future development on sound and balanced lines by the licensing  of all  new  undertakings  and also by  making  rules  for  the registration  of existing undertakings, for  regulating  the production  and development of the industries and  also,  in certain cases, by taking over the control and management  of certain  industrial concerns.  The various powers  conferred on  Government  as  aforesaid  are  to  be  exercised  after carrying  out  suitable investigations.  Sec. 2 of  the  Act states  categorically  that it is expedient  in  the  public interest  that the Union should take under its  control  the industries specified in the First Schedule.  No attempt  was made before us to question the expediency of control by  the Central  Government  over  any  industry  mentioned  in  the Schedule or any undertaking pertaining to such an  industry. The  industry engaged in the manufacture and  production  of ’textiles’  is  item 23 of the First Schedule  to  the  Act. Therefore,  we  start  from the  premise  that  the  Central Government as a matter of public policy is interested in the well-being  and efficient administration of any  undertaking relating  to  the textile industry and is also  entitled  to exercise  some degree of control over it.  Sec. 15  empowers the  Government to cause. investigation to be made into  any scheduled  industry or industrial undertaking under  certain circumstances, namely (i) if there has been or is likely  to be a substantial fall in production of articles relatable to that  industry or produced by the undertaking concerned  for which, in the ’light of the economic conditions  prevailing, there is no justification; or (ii) if there has been or is a marked  deterioration  in  the  quality  of  the’   articles relatable  to that industry or produced by the  undertaking; or  (iii) if there is an unjustifiable rise in the price  of such articles; or (iV) Government considers it necessary for the   purpose  of  conserving  any  resources  of   national importance which are utilised in that particular industry or undertaking.    Central   Government  may  cause   such   an investigation  also  if an industrial undertaking  is  being managed  in a manner which is detrimental to  the  scheduled industry or to public interest.  Sec. 16 of the Act empowers the  Government  to  issue, appropriate  directions  to  the industrial  undertaking or undertakings concerned after  the investigation  under  Sec.  15  has  been  completed.   Such directions  may be given for the purpose of  regulating  the production  or  fixing the standards of  production  of  any article  or  articles or for taking steps to  stimulate  the development  of  the industry or for preventing any  act  or practice  which  might  reduce the  production  capacity  or economic  value of the industrial undertaking and,  finally, for controlling the price or regulating the distribution  of any article or class of articles which have been the subject matter  of  the investigation.  In certain  cases,  however, such  indirect control may not be enough and Government  may interfere  and take up the direct management or  control  of industrial undertakings.  Sec. 18A details the

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32 circumstances when the Government may impose such control by authorising  a  person or body of persons to take  over  the management  of  the whole or any part  of  the  undertaking. Before,  the Government assumes such management or  control, the  Government must be of the opinion that the  undertaking concerned  has failed to comply with the  directions  issued under Sec. 16 of the Act or that the industrial  undertaking regarding  which there has been an investigation under  Sec. 15  "is being managed in a manner highly detrimental to  the scheduled industry concerned or to public interest". In  the instant case, the Government of India came  to  hold the opinion that there was a substantial fall in the  volume of  production  in respect of the  Company’s  production  of cotton  textiles  for which Government apparently  found  no justification  having  regard  to  the  prevailing  economic conditions.  The Government was perfectly within its  rights to  appoint,  under the terms of Sec. 15,  an  investigating body   for   the  purpose  of  making  full   and   complete investigation  into the circumstances of the case.  This  is what the Government did and the appellants do not, as indeed they cannot, find fault with this action of the  Government. It  is the admitted case that for three years prior to  1969 the Company had been running into continual difficulties  as a result of which the Company suffered losses which amounted upto Rs. 56.76 lakhs.  In fact the mill had to be closed  by the end of 1968.  It was only on 31 May 1969 that Government of   India   appointed  the   Investigating   Committee   to investigate-  into the affairs of the Company’s  mill.   The appellants   do   not  make  any   grievance   against   the Investigating  Committee regarding the manner in which  they carried  out  the investigation.  It is  admitted  that  the Committee  gave to the Company a full opportunity  of  being heard  and also an opportunity of adducing evidence.   There can  therefore, be no complaint that upto this  stage  there was any failure to observe the rules of natural justice. In  January 1970 the report of the  Investigating  Committee was  submitted  to Government and, on  the  appellants’  own showing, they knew that there was a liklihood of  Government appointing  a  Controller under Sec. 18A to  take  over  the appellants  undertaking.  There can be no question that  the appellants  were fully aware of the scope and  amplitude  of the  investigation initiated by Government.  A copy  of  the letter  dated  1 June 1969 which had been addressed  to  the members of the Investigating Committee was sent also to  the Company at the time of setting up of the Committee.  We have already  set  out  this letter in  extenso.  The  Government clearly   indicated  in  that  letter  the  scope   of   the investigation ordered under Sec. 15.  It is not possible  to suggest that the appellants were not aware of the  Company’s distressing economic position about the middle of 1969.  The 33 terms of reference of the Committee would make it clear even to,  one not aware of the economic condition of the  Company that  the  Government  was  genuinely  concerned  about  its financial  position.   Even though the  enquiry  itself  was ordered  under the provisions of Sec. 15(a),  the  Committee and  the Government had authority to treat the report as  if it was also made under Sec. 15 (b) of the Act.  In the  case of Shri Ambalal M. Shah and Anr. v. Hathisingh Manufacturing Co., Ltd.(1) the Central Government made an order under Sec. 15  of  the Act by which a committee of  three  persons  was appointed  for  the purpose of making a  full  and  complete investigation  into the circumstances of the  case.   Before appointing  this committee the Government came to  hold  the

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opinion that there had been a substantial fall in the volume of production in respect of cotton textiles manufactured  by Hathisingh Manufacturing Co., Ltd. for which, having  regard to the economic conditions prevailing at that time there was according  to Government no justification.  After  the  com- mittee had submitted its report the Central Government  held the  opinion that the company was being managed in a  manner highly  detrimental  to public interest and  made  an  order under  Sec.  18A of the Act authorising Ambalal M.  Shah  to take over the management of the whole of the undertaking  of that  company.  The legality of the order was challenged  on the  ground  that the order under Sec. 18A could  have  been made  only  after the Central Government  had  initiated  an investigation on the basis of the opinion mentioned in  Sec. 15(b) that is to say on the strength of the opinion that the company was being managed in a manner highly detrimental  to public  interest.   It  was argued that in  so  far  as  the investigation   ordered  by  the  Central   Government   was initiated  on  the formation of an opinion as  mentioned  in clause  (a)  (i) of Sec. 15, the order  was  illegal.   This Court  held,  however,  the order  to  be  perfectly  valid, because  the words used by the legislature in Sec.  18A  (1) (b)  viz.   "in respect of which an investigation  has  been made under Sec. 15" could not be cut down by the restricting phrase "based on an opinion that the industrial  undertaking is  being  managed  in a manner highly  detrimental  to  the scheduled  industry concerned or to public interest".   Once an investigation has been validly made under Sec. 15 it  was held  sufficient  to  empower  the  Central  Government   to authorise  a  person  to  take over  the  management  of  an industrial undertaking irrespective of the nature or content of the opinion on which the investigation was initiated.  In view of this decision it is not possible for the  appellants to contend that they were not aware that as a result of  the report  of the Investigating Committee the Government  could pass an order under Sec. 18A(1)- (1) [1962] 3 S. C. R. 171. L63ISup.C.I./73 34 taking.   In  fact, it appears from a  letter  addressed  by appellant  No. 2 Navinchandra Chandulal Parikh on behalf  of the Company to Shri H. K. Bansal, Deputy Secretary, Ministry of  Foreign trade and Supply on 12 September 1970  that  the appellants had come to know that the Government of India was in fact considering the question of appointing an authorised controller  under  Sec.  18A of the Act in  respect  of  the appellants’ undertaking.  In that letter a detailed  account of the facts and circumstances under which that mill had  to be  closed down was given.  There is also an account of  the efforts made by the Company’s Directors to restore the mill. There  is no attempt to minimise the financial  difficulties of  the Company in that letter.  Parikh only seeks  to  make out  that the Company was facing a serious financial  crisis in common with other textile mills in the country which also had  to face closure.  He speaks of the  various  approaches made-  by  the  company to the  Government  of  Gujarat  for getting  financial  assistance.   The  letter   specifically mentions  the  company’s application to  the  Gujarat  State Textile  Cooperation  Ltd. for financial help.   It  appears clearly  from  this letter that though according  to  Parikh some  progress  had  been made in  the  matter  of  securing assistance  from the Gujarat State Textile Corporation  Ltd. the  Corporation ultimately failed to come to the succor  of the company.  Parikh requested Government not to appoint  an authorised controller and further prayed that the Government

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of  India  should ask the State Government and  the  Gujarat State Textile Corporation Ltd. to give a financial guarantee to  the Company.  Two things appear quite clearly from  that letter; first, that the appellants required a minimum sum of Rs.  20  lakh is as immediate aid and,  secondly,  that  the Company in spite of various approaches had not succeeded  in securing  the same.  Only a few days before this letter  had been  addressed, Parikh, it appears, had an  interview  with the  Minister  of Foreign Trade on 26 August 1970  when  the Minister gave him, as a special case, four weeks’ time  with effect from 26 August 1970 to obtain the necessary financial guarantee  from  the  State or  the  Gujarat  State  Textile Corporation  without  which the Company  had  expressed  its inability  to  reopen and run the mill.  In a letter  of  22 September 1970 Bansal informed Parikh in clear language that if  the Company failed to obtain the necessary guarantee  by 26  September 1970 Government was proceeding to take  action under   the  Act.   It  is  obvious,  therefore,  that   the appellants  were  aware all Ionia that as a  result  of  the report   of  the  Investigating  Committee   the   Company’s undertaking  was going to be up by Government.   Parikh  had not only made written representations but, had also seen the Minister of Foreign Trade and Supply.  He had requested  the Minister  not  to  take over the  undertaking  and,  on  the contrary, to lend his good offices so that the Company could get financial support from the Gujarat                                  35 State   Textile  Corporation  or  from  the  Gujarat   State Government. All these circumstances leave us in no manner of doubt  that the Company had full opportunities to make all possible  re- presentations  before  the Government against  the  proposed takeover of its mill under Sec. 18A.  In this connection  it is  significant that even after the writ petition  had  been filed  before the Delhi High Court the Government  of  India had  given the appellants at their own request  one  month’s time  to obtain the necessary funds to commence the  working of the mill.  Even then, they failed to do so. There are at least five, features of the case which make  it impossible  for  us to give any weight  to  the  appellants’ complaint  that the rules of natural _justice have not  been observed.   First, on their own showing they were  perfectly aware  of  the grounds on which Government  had  passed  the order under Sec. 18A of the Act.  Secondly, they are not  in a  position to deny (a) that the Company had sustained  such heavy   losses  that  its  mill  had  to  be   closed   down indefinitely,  and  (b)  that there was not  only  loss  of production  of textiles but at least 1200 persons  had  been thrown  out  of employment.  Thirdly,  it  is  transparently clear  from  the affidavits that the Company was  not  in  a position to raise the resources to recommence the working of the  mill.   Fourthly,  the appellants  were  given  a  full hearing  at  the  time  of the  investigation  held  by  the Investigating Committee and were also given opportunities to adduce  evidence.   Finally, even  after  the  Investigating Committee  had submitted its report, the appellants were  in constant  communion  with the Government and  were  in  fact negotiating  with Government for such help as  might  enable them  to reopen the mill and to avoid a take-over  of  their undertaking  by  the  Government.  Having  regard  to  these features  it is impossible for us to accept  the  contention that  the appellants did not get any reasonable  opportunity to   make  out  a  case  against  the  take-over  of   their undertaking  or  that  the Government has  not  treated  the appellants fairly.  There is not the slightest justification

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in  this  case  for the complaint that there  has  been  any denial of natural justice-. We must, however, deal with the specific point raised by the appellants that they should have been given further  hearing by  the  Government before they took the final  decision  of taking over their undertaking under Sec. 18A of the Act  and that,  in any event, they should have been supplied  with  a copy of the report of the Investigating Committee. In  our opinion, since the appellants have received  a  fair treatment and also all reasonable opportunities to make  out their  own case before Government they cannot be allowed  to make  any grievance of the fact that they were not  given  a formal 36 notice calling upon them to show cause why their undertaking should not be taken over or that they had not been furnished with  a  copy  of  the  report.   They  had  made  all   the representations  that they could possibly have made  against the- proposed takeover.  By no stretch of imagination,,  can it  be  said  that  the order for  take-over  took  them  by surprise.  In fact Government gave them ample opportunity to reopen and run the mill on their own if they wanted to avoid the  take-over.  The blunt fact is that the appellants  just did  not have the necessary resources to do so.   Insistence on  formal  hearing  in such circumstances  is  nothing  but insistence on empty formality. The  question  still  remains whether  the  appellants  were entitled  to  get  a copy of the report.   It  is  the  same question  which  arose  in  the  celebrated  case  of  Local Government Board v. Arlidge(1).  That was a case in which  a local  authority  made  a  closing order  in  respect  of  a dwelling  house  in their district on the  ground  that  the house  was  unfit for human habitation.  The  owner  of  the dwelling  house  who  had a right to  appeal  to  the  Local Government  Board  against the closing order  made  such  an appeal.   Sec. 39 of the Housing, Town Planning, & c.,  Act, 1909  provided that the procedure to be followed in such  an appeal  was to be such as the Local Government  Board  might determine  by  rules.  The section,  however,  required  the rules  to  provide  that the Board was not  to  dismiss  any appeal  without  having first made a public  local  enquiry. The  Local  Government  Board had made  such  rules  and  in conformity  with these rules held an enquiry in  the  appeal preferred  against  the  closing  order.   The   house-owner attended  ;the enquiry with his solicitor and  also  adduced evidence.   After  considering the facts  and  the  evidence given at the enquiry as well as the report of the  inspector who  inspected the house the Local Government Board  refused to  interfere with the decision, of the Borough Council  not to  determine the closing order.  The house-owner  thereupon obtained  an  order nisi for a writ of  certiorari  for  the purpose  of  quashing  of the closing  order.   One  of  the principal  grounds urged by the house-owner was that he  was entitled to see the report of the appellant’s inspector  but the  report had not been shown to him.  A  Divisional  Court discharged the, order nisi but the Court of Appeal  reversed the  decision and ordered the writ of certiorari  to  issue. The  matter then went up to the House of Lords  who  allowed the  appeal and upheld the closing order.  Viscount  Haldane L.C.,  in his judgment held that though the decision of  the Board  must be come to in the spirit and with the  sense  of responsibility  of a tribunal whose duty it is to  mete  out justice it does not follow that the procedure of every  such tribunal must be the same.  In the absence of a  declaration to the contrary, the

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1 [1091] A. C. 120 37 Board  was  intended by Parliament to follow  the  procedure which  is its own and is necessary if the administration  is to  be capable of doing its work efficiently.  AR  that  was necessary  for  the Board was to act in good  faith  and  to listen fairly to both sides. (Emphasis is ours).  As to  the contention that the report of the inspector should have been disclosed, his Lordship observed :- .lm15 "  It might or might not have been useful to  disclose  this report,  but I do not think that the Board was bound  to  do so,  any more than it would have been bound to disclose  all the  minutes  made  on the papers in  the  office  before  a decision was come to". Lord Moulton in his judgment observed that since the  appeal provided  by the legislature is an appeal to  an  administr- ative department of a State and not to a be judicial body it was  enough  if  the  Local  Government  Board  preserved  a judicial temper and performed its duties consciously with  a proper  feeling of responsibility.  On the question  whether it  was  necessary  ’to disclose the  report,  his  Lordship observed :- "Like every administrative body, the Local Government  Board must  derive its knowledge from its agents, and I am  unable to  see  any reason why the reports which they make  to  the department should be made public.  It would, in my  opinion, cripple   the   usefulness  of  these   enquires........   I dissociate  myself from the remarks which have been made  in this  case in favour of a department making reports of  this kind  public.   Such  a practice would, in  my  opinion,  be decidedly mischevious." In  a  later case namely Danby & Sons Ltd.  v.  Minister  of Health(1)  the  law  stated in  Local  Government  Board  v. Arlidge  (2)  was reaffirmed.  Indeed, the  law  in  England still stands unchanged. The  law  relating to observation of the  rules  of  natural justice  has, however, made considerable strides  since  the case   of  Local  Government  Board  v.  Arlidge(2)   .   In particular,  since  the decision in Ridge  v.  Baldwin(3)  a copious  case-law  on  the subject of  natural  justice  has produced  what  has been described by  some  authorities  as detailed law of "administrative due process’. in India  also the  decisions of this Court have extended the  horizons  of the rules of natural justice and their application.  I  See, for instance the judgement of this Court in Kraipak and (1) [1936] 1 K.B. 337. (2) [1915] A.C. 120. (3)  [1964] A.C. 40. 38 Others v. Union of India(1).  The problem has also  received considerable attention from various tribunals and committees set   up   in  England  to  investigate   the   working   of administrative tribunals and, in particular, the working  of such administrative procedures as the holding of an  enquiry by  or  on behalf of a Minister.  In fact,  a  parliamentary committee  known as the Franks Committee was set up in  1955 to examine this question.  This Committee specifically dealt with  the  question  of what is  described  as  "Inspectors’ Reports".  The Committee mentions that the evidence that the Committee received, other than the evidence from  Government departments was overwhelmingly in favour of "some degree  of publication"  of  such reports.  After  summarising  various arguments  given  in  favour  of  as  well  as  against  the publication  of the reports, the Committee recommended  that

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"the  right course is to publish the  inspectors’  reports". The  Committee also recommended that the  parties  concerned should  have  an opportunity if they so desired  to  propose corrections  of  facts  stated in the reports.   It  may  be mentioned,   however  that  these  recommendations  of   the Committee were not accepted by the British Government. In  our opinion it is not possible to lay down  any  general principle  on  the question as to whether the report  of  an investigating  body  or  of an  inspector  appointed  by  an administrative  authority  should be made available  to  the persons  concerned  in any given case before  the  authority takes  a  decision  upon that report.  The  answer  to  this question   also  must  always  depend  on  the   facts   and circumstances  of the case.  It is not at all unlikely  that there may be certain cases where unless the report is  given the party concerned cannot make any effective representation about  the action that Government takes or proposes to  take on  the basis of that report.  Whether the report should  be furnished  or not must therefore depend in every  individual case  on the merits of that case.  We have no doubt that  in the  instant  case  non-disclosure  of  the  report  of  the Investigating  Committee  has  not can  used  any  prejudice whatsoever to the appellants. In this view of the matter We confirm the order of the Delhi High  Court  and  dismiss this appeal.   In  the  facts  and circumstances  of the case we direct that the  parties  will bear their respective costs. S.C. Appeal dismissed. (1) [1970] 1 S.C.R. 457. 39