2003 (2) TMI 540 - SC - Indian Laws

Summary

Issues Involved:
1. Legislative competence of the State of Bihar.
2. Overruling of the decision in Ishwari Khetan Sugar Mills (P) Ltd. by Synthetics & Chemicals Ltd.
3. Legislative power of the States to acquire distilleries.
4. Applicability of Entry 42 of List III to the Seventh Schedule to the Constitution.
5. Validity of the Act due to its failure to achieve objectives.

Detailed Analysis:

1. Legislative Competence of the State of Bihar:
The petitioners contended that the impugned enactment is beyond the legislative competence of the State of Bihar as the industries covered fall under Entry 52 of List I to the Seventh Schedule to the Constitution. The court referred to the decision in R.C. Cooper v. Union of India, which clarified that the power to acquire property is a separate, distinct, and independent power under Entry 42 of List III and not an incident of the power to legislate under other entries. Therefore, the State Legislature's power to legislate for the acquisition of property remains intact except where control of an industry is taken over by a specific legislation under Entry 52 of List I.

2. Overruling of Ishwari Khetan Sugar Mills (P) Ltd. by Synthetics & Chemicals Ltd.:
The petitioners argued that the decision in Ishwari Khetan Sugar Mills (P) Ltd. was overruled by Synthetics & Chemicals Ltd. The court found this argument untenable, stating that Synthetics & Chemicals Ltd. dealt with the levy of excise duty on alcohol not fit for human consumption, which is unrelated to the issues in the present case. Thus, the decision in Ishwari Khetan's case remains valid.

3. Legislative Power of the States to Acquire Distilleries:
The court addressed the inclusion of alcohol industries in the list of scheduled industries under the Industries [Development and Regulation] Act, 1951, and concluded that the power to legislate for acquisition of property is independent and not affected by the control and regulation of industries. The court held that the acquisition of distilleries by the State is valid and does not detract from the legislative power of the States.

4. Applicability of Entry 42 of List III:
The court reiterated that the power to legislate for the acquisition of property is exercisable under Entry 42 of List III, which includes the power to acquire an undertaking as a going concern. The court rejected the argument that a sugar undertaking is a going concern and cannot constitute property within the meaning of Entry 42 of List III.

5. Validity of the Act Due to Its Failure to Achieve Objectives:
The petitioners argued that the Act has failed to achieve its objectives and should be declared invalid. The court noted that the objectives of the Act could not be achieved due to interim orders and other legal challenges, making it hazardous to conclude that the Act has failed. The court distinguished this case from Malpe Vishwanath Acharya, where the law was declared invalid due to irrational and unjust provisions over time.

Additional Contentions:
- The court addressed the petitioners' argument that the valuation of sugar undertakings based on book value is unreasonable. The court found no material to support this contention and rejected it.
- In W.P.[C] No. 83 of 1986, the court examined the applicability of the Act to a distillery purchased by United Distilleries (P) Ltd. The court held that the distillery is covered by the Act and rejected the argument that the transfer of the distillery was not affected by the Act.
- The court rejected the argument that the acquisition of property by the State anterior to 29.9.1984 is arbitrary and violative of Article 14 of the Constitution.
- The court found no merit in the contention that the Act is arbitrary, unreasonable, confiscatory, and violative of Articles 14, 19(1)(g), 19(1)(f), and Article 31 or alternatively Article 300A.

Conclusion:
The court dismissed the writ petitions, upheld the validity of the Bihar Sugar Undertakings [Acquisition] Act, 1976, and rejected all contentions raised by the petitioners. The transfer cases and contempt petition were disposed of accordingly, and the special leave petition was delinked from the present batch of cases.