1986 (9) TMI 423 - SC - Indian Laws

Summary

Issues:
Challenge to the taking over of management under the Sick Textile Undertakings Act and the constitutional validity of the Act.

Detailed Analysis:

1. Taking Over of Management:
The petitioner challenged the taking over of management of its textile mills under the Sick Textile Undertakings Act. The mills were closed, and a provisional liquidator was appointed due to financial difficulties. The High Court directed the handover of the mills to a corporation to which the petitioner owed a significant sum. The mills were leased to another company, and the petitioner's undertakings were specified as sick textile undertakings under the Act. The petitioner argued that they should have been given an opportunity to be heard before the takeover. However, the court held that once an undertaking is specified as sick in the Act, the owner's right to be heard does not apply.

2. Constitutional Validity and Separation of Powers:
The petitioner contended that the legislature determining an undertaking as sick without allowing the owner to represent damages the separation of powers. They argued that legislative judgment should comply with principles of natural justice. The court disagreed, stating that the legislature's inclusion of undertakings in the Act's schedule is not a judicial or quasi-judicial determination. The criteria for a sick undertaking were laid down in the Act, and owners could challenge the inclusion in court. The court dismissed the argument that the separation of powers was compromised.

3. Inadequacy of Compensation under Nationalisation Act:
The petitioner challenged the Nationalisation Act's compensation for the acquisition of their undertakings as inadequate. The court held that since Article 31 of the Constitution was not repealed when the Act came into force, the validity cannot be challenged based on compensation. The court also noted that the Act aligns with the Constitution's directive principles. The compensation specified was deemed reasonable considering the company's financial history, and the challenge on inadequacy was rejected.

4. Conclusion:
The writ petition was dismissed, and the rule nisi was discharged. The court found no merit in the petitioner's arguments regarding the takeover, constitutional validity, or compensation under the Nationalisation Act. No costs were awarded in the matter.