1986 (4) TMI 349 - SC - Indian Laws

Summary

Issues Involved:
1. Constitutional validity of the Textile Undertakings (Taking Over of Management) Act, 1983.
2. Whether the surplus land appurtenant to the mill was an 'asset in relation to the textile undertaking' within the meaning of sub-s.(2) of s.3 of the Act.

Summary:

Issue 1: Constitutional Validity of the Act
The High Court upheld the constitutional validity of the Textile Undertakings (Taking Over of Management) Act, 1983, insofar as it provides for the taking over by the Central Government of the management in the public interest of Messrs Shree Sitaram Mills, a textile undertaking specified in the First Schedule to the Act. The Court found that the Act was in furtherance of the Directive Principles of State Policy under Art.39(b) and (c) and aimed at reorganizing and rehabilitating the textile undertakings to protect the interests of the workmen and augment the production and distribution of cloth and yarn.

Issue 2: Surplus Land as an Asset in Relation to the Textile Undertaking
The High Court held that the surplus land appurtenant to the mill was not an 'asset in relation to the textile undertaking' within the meaning of sub-s.(2) of s.3 of the Act. It reasoned that the business of real estate carried on by the Company was separate and distinct from the textile business. However, the Supreme Court disagreed, stating that all assets, including surplus lands, were integrally connected with the textile business. The Court emphasized that the surplus lands were held for the benefit of the textile mill and were utilized to improve the liquidity and financial condition of the Company. The Supreme Court concluded that the surplus lands were indeed assets in relation to the textile undertaking, thereby reversing the High Court's decision.

Conclusion:
The Supreme Court allowed the appeals, reversed the High Court's judgment, and dismissed the Writ Petition filed by the respondents. The Court held that the surplus lands appurtenant to the mill were assets in relation to the textile undertaking and vested in the Central Government by reason of sub-s.(2) of s.3 of the Act.