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TMI Blog2001 (1) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 14 of the Constitution and, therefore, qua them it was invalid. The High Court also further came to hold that the Act infringed the petitioners fundamental rights under Article 19(1)(g) and on that count qua the petitioner was equally invalid. In coming to the aforesaid conclusion the High Court after thorough discussion of the materials on record found that the Union Government failed to establish either directly or inferentially any mis-management on the part of the three companies and failed to establish from the material on record that there was any nexus between the main object or purpose of the Act, viz., to take over management of only those mills whose financial condition before strike was wholly unsatisfactory by reason of mis-management. The short facts leading to the promulgation of the Ordinance and replacement of the same by the Act are that the Textile Mills in and around Bombay had gone on strike with effect from 18.1.1982. On 15.2.1982 the Government of India declared its policy for nationalisation of all these Textile Industries. In October 1982, the Reserve Bank of India had called a meeting to discuss the situation arising out of the strike. Depending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Bombay High Court challenging the applicability of the Ordinance so far as those Mills are concerned. After replacement of the Ordinance by the Act the Writ Petitions were amended and thus the validity of the Act was challenged qua the three Writ Petitioners. Though the challenge was on three counts, namely, violation of Article 14, violation of Article 19(1)(g) and violation of Article 300A, but at the time of hearing the challenge in relation to violation of Article 300A was not pressed and, therefore, the High Court considered the challenge, so far as it relates to violation of Articles 14 and 19(1)(g) of the Constitution. The High Court in the impugned judgment made elaborate discussion of the materials on record as well as interpreted the different provisions of the Constitution and came to hold that the act with its object of only taking over the management cannot be considered to be law for taking over the ownership and control of the property, as required under Article 39(b), but would squarely fall under Article 31A (1)(b) and, therefore, Article 31(c) will have no application. The High Court also came to the conclusion that to protect a legislation under Article 31(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was arbitrary and, on the other hand, the figures given by the Union of India itself show that the financial position of the three Mills were far better than even the Mills which were in category II. Consequently, the High Court was of the opinion that the Government could not have, for taking over of the management of the petitioners Mills, classified those Mills as Mills whose financial condition was bad due to mis-management. The High Court, therefore, ultimately came to the conclusion that there has been a gross violation of Article 14 in clubbing the three Mills with other Mills in category three, enumerated in the Schedule appended to the Act and such inclusion violates the fundamental right guaranteed under Article 14 of the Constitution. The High Court also came to the conclusion that the impugned Act infringed the petitioners right under Article 19(1)(g) and on that count qua petitioners was equally invalid. Having come to the aforesaid conclusion the Writ Petitions were allowed and the order of taking over of the management of three Mills was set aside. But the operation of the order had been stayed for 8 weeks and certain restrictions had been imposed and the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 31A and the High Court was in error in concluding that the taking over was not for a limited period and, as such, Clause 1(b) of Article 31A will not get attracted. According to learned Solicitor General the Act in question was for a limited period and had been enacted in the public interest coming within the purview of Clause (1)(b) of Article 31A and, therefore, provisions of Article 14 or Article 19 cannot at all be attracted for assailing the validity of the action taken under the Act. The learned Solicitor General also further urged that the materials which were there before the Government before promulgation of the Ordinance and before the Parliament before enactment of the Act were sufficient for classifying the Mills into three categories and in fact by inclusion of the three Mills with which we are concerned in the present appeals with the group of 13, the Management of which was being taken over by the Act, by no stretch of imagination can be held to be discriminatory nor the conclusion of the High Court that there has been an infringement of Article 19(1)(g) of the Constitution is at all sustainable. The learned Solicitor General also placed reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule their financial condition became wholly unsatisfactory but the financial condition of these Mills had become so precarious and unsatisfactory as was found from the reports of different financial institutions including IDBI that mis-management is the natural inference and the preamble read as a whole would indicate that the Parliament thought it appropriate to take over the management of Textile Undertakings in the public interest pending nationalisation of such undertaking and in this view of the matter the High Court was hyper-technical in recording a finding that even though the financial condition become wholly unsatisfactory but the Government failed to establish the mis-management of the undertaking which had brought the financial condition to such unsatisfactory stage and, therefore, by including the three mills in question in the group of 13 there has been violation of Article 14. The learned Solicitor General also seriously commented upon the conclusion of the High Court and submitted that the High Court committed error in assuming mis-management as fraud and such fraud has not been established by the Union Government . According to learned Solicitor General the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid law permits take over only when the financial condition became unsatisfactory by reason of mis-management of the affairs of the Textile Undertakings. And, this being the position, if there is no material to establish that financial losses is on account of mis-management then the taking over of the management of the mill by taking recourse to the impugned Act must be held to be invalid and the High Court in fact has held it to be invalid. According to Mr. Nariman mere losses will not entitle to take over of the management of mill, inasmuch as, all the mills have suffered loss and, therefore, there must be some other factors on account of which it will be possible for the Government to take over the management of only 13 mills as included in the First Schedule to the Act. He also further urged that in view of the language of Article 31A (1)(b) the law for taking over of the management must be for a limited period and the expression pending nationalisation in the impugned Act cannot be construed to be a definite limited period and, therefore, the Act in question is not referable to Article 31A (1)(b). It is in this connection he cited the decision of Raman Lal as well as the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw. Mr. Nariman also contended that in view of Article 300A the law must be reasonable and fair and in view of the judgment of this Court in Dwarkadas Shrinivas of Bombay vs,. The Sholapur Spinning Weaving Co. Ltd. and others 1954 Supreme Court Reports 674, the impugned action is bad in law. Mr. RF Nariman also contended that it was open for the Writ Petitioners to place and establish that the legislative facts are incorrect and in fact the petitioners have discharged that burden by placing materials on record and the High Court, therefore, was fully justified in arriving at its decision on the materials produced. He placed reliance on the decision of this Court in Dr. K.R. Lakshmanan vs. State of T.N. and another (1996) 2 Supreme Court Cases 226 in support of aforesaid contention. According to Mr. Nariman the following facts establishes that the Elphinstone Mill was not a mis-managed mill and Parliament erroneously clubbed the same with other mis- managed mills. Those facts are :- (a) IDBI viability study report (b) Task Force Report (c) Approval of the Central Government itself to appoint a Managing Director (d) Sanction of loan by IRCI AND IDBI in September 1993 (e) No investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs of the Textile Undertakings which are sought to be specified in the First Schedule and management of those Mills are being taken over under the Act? 3. Has any case been made out by the Mills concerned to enable a Court that in fact by clubbing the three Mills in the group of 13 there has been the violation of the mandate under Article 14? 4. Was the High Court justified in recording a conclusion that there has been a violation of Article 19(1)(g)? 5. On the available materials on record was the High Court justified in going behind the legislative intent apparent on the face of the Act to find out the so called true intention and thereby coming to the ultimate conclusion that there has been a gross discrimination in clubbing the three mills with the other admitted mis-managed mills which are enumerated in the Schedule to the Act? But before examining the aforesaid questions it would be appropriate for us to notice the legal position on certain general principles relating to the challenge of a statute in the anvil of Articles 14 and 19 and the parameters of Courts jurisdiction to examine materials for arriving at the legislative intent behind a statute as well as the presump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y think was Parliaments object and all the facts and circumstances which in their view led to the legislation. When they do so, they do not speak for Parliament. No Act of Parliament may be struck down because of the understanding or misunderstanding of parliamentary intention by the executive Government or because their spokesmen do not bring out relevant circumstances but indulge in empty and self-defeating affidavits. They do not and they cannot bind Parliament. Validity of legislation is not to be judged merely by affidavits filed on behalf of the State, but by all the relevant circumstances which the court may ultimately find and more especially by what may be gathered from what the legislature has itself said. In the facts of that case the Court had held that We do not entertain the slightest doubt that the nationalisation of the coking coal mines and the specified coke oven plants for the above purpose was towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and there has been no discrimination or infringement of Article 14 of the Constitution Justice A.N. Sen in his separate judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... differentia which distinguishes those that are grouped together from others and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act. In the Doypack System Pvt. Ltd. vs. Union of India (1988) 2 Supreme Court Cases 299, the Court had observed that when the constitutionality of a legislation is being assailed before a Court it is the collective will of the Parliament with which the Court is concerned. No officer of the department can speak for the Parliament. The interpreter of the statute must take note of the well known historical facts. In conventional language the interpreter must put himself in the armchair of those who were passing the Act i.e. the Members of the Parliament. It is the collective will of the Parliament with which we are concerned. The aforesaid observation had been made in the context of an argument sought for by the petitioner for production of certain documents to ascertain the question whether the shares vested in the Government or not? In Bearer Bonds case (1981) 4 Supreme Court Cases 675, this Court held that it is a rule of equal importance that laws relating to economic activities should be viewed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited States Supreme Court in Secretary of Agriculture v. Central Reig Refining Company (94 L Ed 381: 338 US 604 (1950)) be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itself be a ground for invalidating the legislation, because it is not possible for any legislature to anticipate as if by some divine prescience, distortions and abuses of its legislation which may be made by those subject to its provisions and to provide against such distortions and abuses. Indeed, howsoever great may be the care bestowed on its framing, it is difficult to conceive of a legislation which is not capable of being abused by perverted human ingenuity. The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt materials could plausibly be construed to reflect. The latter approach is the proper one in economic regulation cases. The decisions dealing with economic regulation indicate that courts have used the concept of purpose and similar situations in a manner which give considerable leeway to the Legislature. This approach of judicial restraint and presumption of constitutionality requires that the Legislature is given the benefit of doubt about its purpose. How far a court will go in attributing a purpose which though perhaps not the probable is at least conceivable and which would allow the classification to stand depends to a certain extent upon its imaginative power and its devotion to the theory of judicial restraint. The Court further held: It would seem that in fiscal and regulatory matters the Court not only entertains a greater presumption of constitutionality but also places the burden on the party challenging its validity to show that it has no reasonable basis for making the classification. The Legislation in a modern State is actuated with some policy to curb some public evils or to effectuate some public benefit. The Legislation is primarily directed to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be for a limited period and the observations of this Court in Raman lal, must be construed in the context of the facts of the said case and will have no application to the facts and circumstances of the present case. According to the learned Solicitor General, the legislature on being satisfied about the financial instability of the mills and further substantial sum of money required to be pumped into the mills for running of the same, so that large number of employees will not be kept out of employment, it was necessary in the public interest to take over the management immediately, inasmuch as the process of nationalisation will take sometime, the conclusion is irresistible that the so-called taking over was for a limited period and not for ad infinitum, and is intended to over-come a particular crisis. That being the position, the High Court committed error in recording a finding that the taking over of the management was not for a limited period. Mr. Nariman, the learned senior counsel, appearing for one of the mills, on the other hand contended that the expression pending nationalisation, by no stretch of imagination can be held to be a definite period and this has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Agricultural Lands Act was under consideration before this Court. The said Act had been amended by Bombay Act 13 of 1956, which confers the power on the State Government to take over the management of any land on the ground that full and efficient use of the land had not been made for the purposes of agriculture and under the Act, it was contemplated that the land taken over could be returned to the land holder under certain contingencies. This Court considering the provisions of the Act and the rules made thereunder, came to the conclusion that even though there may be a possibility of return of the land to the original owner but that does not satisfy the requirement of Article 31A(1)(b), as the taking-over of the management was not for a limited period. The Court held that the scheme of the Act ought to have shown the limit of the period for which the management is being taken over and consequently, the protection of Article 31A(1)(b) cannot be invoked as the limit for the period of management had not been indicated. Having examined the ratio of the aforesaid decision to the case in hand, we are not in a position to hold that the taken over of the management in the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in public interest of the management of a textile undertaking under sub-section(1) thereof as a step towards nationalisation of such undertakings, which was clearly against the national interest. In dealing with similar legislation, this Court has always, adopted a broad and liberal approach. What has been observed above, while interpreting sub- section (2) of Section 3, should be borne in mind also while interpreting the expression for a limited period used in Article 31A(1)(b) and in our view the construction to the aforesaid expression made by Delhi High Court in its Judgment in The Indore Malwa United Mills Ltd. Ors. Vs. Union of India and Ors., I.L.R.(Delhi) 1974(1) 311, as well as the Bombay High Court in the impugned judgment, cannot be accepted. The Delhi High Court has no doubt in The Indore Malwa United Mills case, considered the applicability of Article 31A(1)(b) and held that taking over of the management, pending nationalisation cannot be held to be for a limited period, since there is no question of returning the property to the old management, but we are unable to accept this view of Delhi High Court and we hold that the views expressed therein are not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose financial condition was bad due to mis- management. In paragraph 203 of the impugned judgment the learned Judges came to the ultimate conclusion : In our view, therefore, all the circumstances mentioned above by the learned counsel for the Union of India do not bring out either directly or inferentially any mis-management on the part of the petitioner company, but on the contrary the fact that the said circumstances existed even in case of some of CAT I and CAT II Mills show that the Government could not have considered the said circumstances for concluding that the said Petitioners Mills were mismanaged or their financial condition was wholly unsatisfactory by reason of such mismanagement. The learned Judges then held that there was no nexus between the main object or purpose of the Act to take over the management of only those Mills whose financial condition before strike was wholly unsatisfactory by reason of mis-management., and as such, the rights of the Mills under Article 14 of the Constitution has been violated. At the outset it may be stated that the High Court committed serious error in recording a finding that the preamble and other provisions of the Act go to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l matters there is room for differences of opinion as to what is expedient, what is just and what is morally justifiable; it is the Parliaments opinion in these matters that is paramount. (see; Duport Steels Ltd. vs. Sirs, (1980) 1 All ER 529 at 541. When the question arises as to the meaning of a certain provision in a Statute it is not only legitimate but proper to read that provision in its context. The context means; the statute as a whole, the previous state of law, other statutes in pari materia, the general scope of the statute and the mischief that it was intended to remedy. An Act consists of a long title which precedes the preamble and the said long title is a part of an Act itself and is admissible as an aid to its construction. It has been held in several cases that a long title along with preamble or even in its absence is a good guide regarding the object, scope or purpose of the Act whereas the preamble being only an abbreviation for purposes of reference is not a useful aid to construction. The preamble of an Act, no doubt can also be read along with other provisions of the Act to find out the meaning of the words in enacting provisions to decide whether they are cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing provisions was clear and therefore not controlled by the preamble. (see; Burrakur Coal Co. Vs. Union of India AIR 1961 SC 954 at p. 957). This being the position, and the Textile Undertakings Taking Over of the Management Act, 1983, being an Act providing for taking over in the public interest of the Management of Textile Undertakings of the Companies specified in the First Schedule pending nationalisation of such undertakings and for matters connected therewith or incidental thereto as is apparent from the long title, use of the expression mis-management of the affairs in the preamble will not control the purpose of the Act, namely, the public interest and the Parliament having decided to take over the management of the Textile Mills which were in serious financial crisis, in the public interest it was not open for the Court to come to a conclusion by taking recourse to the use of the word mis-management in the preamble to hold that the Parliament intended only to take those Mills whose financial condition was deplorable on account of mismanagement and not in case of those mills where the financial condition may be deplorable but not on account of mis-management. Mr. R.F.Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it thus became urgently necessary for Government to take over the management of the undertakings in the public interest. In this state of affairs, we have no doubt in our mind that the decision in Madras Race Club case will have no application to the case in hand. In our considered opinion the impugned Act read as a whole unequivocally indicates that the Parliament was satisfied that the management of the Textile Undertakings specified in the First Schedule should be taken over pending nationalisation of such undertakings, and therefore, passed the impugned Act in public interest. So far as third question is concerned, we think it appropriate to discuss the same alongwith Fifth question as they are inter-linked. In the case in hand the High Court appears to have examined in detail the functioning of each of these three mills which had filed Writ Petition before it, for ascertaining whether the financial conditions of those mills had deteriorated because of the strike or on account of mis- management and on scrutiny of different materials came to hold that the Union Government has failed to establish the case of mis-management which in turn would mean a case of fraud and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation could out-weigh the conclusion of the legislature that the Act is intended to provide for the taking over of the management of the Textile Undertakings of the Companies specified in the First Schedule, pending nationalisation in the public interest. We are unable to agree with the arguments advanced on behalf of the counsel appearing for the respondents that by picking up the three mills who had approached the High Court and clubbing them together with other mills in the Fist Schedule the Government did not have germane considerations before it, in fact it is not the Executive Government but the Parliament itself had chosen to take over the management of the 13 mills included in the First Schedule to the impugned Act and for that purpose the impugned legislation was enacted and the management of the mills could be taken over by operation of law. As has been indicated in the judgment of this Court in the case of National Textile Corpn. Ltd. vs. Sitaram Mills Ltd. and others. 1986 (Suppl.) Supreme Court Cases 117, that the Textile Mills and the Textile Industry in India has played an important role in the growth of national economy. Its importance in the industrial field is bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in as much as the financial condition was such that it could not have revived without pumping in of large scale of money either from financial institutions or from the IDBI. The fact that in some of the Reports indicating viability of the mills on large scale money being pumped in would not in any way affect the ultimate conclusion of the Parliament in providing for a law to take over in the public interest the management of Textile Undertakings of the Companies specified in the First Schedule, as the danger of pumping in of large sum from the public exchequer without taking over the management of the mills would not have been a prudent action. As has been stated earlier, and as is apparent from the long title of the Act itself, that the decision to nationalise the mills had already been taken, but pending nationalisation the 13 mills in question including the mills of the three petitioners who filed Writ Petition Bombay High Court the management was taken over by the impugned legislation as otherwise there was imminent danger to the finance to be pumped in to the for its revival and revival was necessary to provide employment to the large number of mill workers. In the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enacting the Statute. As has been stated earlier, in the case in hand, the Taking over of Management Statute of 1983, had been engrafted in the public interest as the legislature found that there is imperative need to take over of the management of the companies until the process of nationalisation is finalised. This is apparent from the long title of the Act itself and the preamble also indicates that to make the mills viable, it would be necessary for the public financial institutions to invest very large sum of money, so that the mills will be rehabilitated and the interest of the workmen, employed therein would be protected. The preamble further indicates that the process of acquisition would take a longer time and to enable the Central Government to invest large sum of money, it was necessary in the public interest to take over the management of the undertakings. Thus, the taking over of the management of the mills was in the public interest, the said public interest being to rehabilitate the mills by pumping in, huge sums of public money to protect the interest of the workers in the mills. The High Court in the impugned judgment, however gave a restricted meaning to the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected thereby and the larger public interest sought to be ensured in the light of the object sought to be achieved, the necessity to restrict the citizens freedom, the inherent pernicious nature of the act prohibited or its capacity or tendency to be harmful to the general public, the possibility of achieving the object by imposing a less drastic restraint, and in the absence of exceptional situations such as the prevalence of a state of emergency national or local or the necessity to maintain essential supplies, or the necessity to stop activities inherently dangerous, the existence of a machinery to satisfy the administrative authority that no case for imposing the restriction is made out or that a less drastic restriction may ensure the object intended to be achieved. It is these observations on which Mr. R.F. Nariman strongly relied upon , since in the case in hand, the appropriate Government did not take any action under the provisions of the Companies Act, nor there had been any investigation as provided under Section 15 and 15A of the Industrial Development and Regulation Act, according to Mr. Nariman, obviously, those provisions are less drastic in nature t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fraction of Article 19(1)(g). In the aforesaid premises, we have no hesitation in coming to the conclusion that the High Court was in error to hold that there has been an infraction of Article 19(1)(g) in the case in hand. In view of our conclusions, as aforesaid, we do not propose to examine the contention of the learned Solicitor General, with regard to the applicability of Article 31C of the Constitution, which he had raised in course of his arguments. In the premises, these appeals are allowed. The impugned judgment of the Bombay High Court is set aside and the writ petitions, filed before the High Court stand dismissed. During the pendency of these appeals this Court had passed some interim orders with regard to possession of certain land and other assets as well as with regard to cars and telephone connections. In view of our decision setting aside the impugned judgment of Bombay High Court and in view of Section 3(2) of the Act all interim orders would stand vacated. But the Elphinstone Spinning Weaving Mills in its Writ Petition No. 2401 of 1983 having made a specific case that notwithstanding the Act being valid and the management of the mills can be taken over and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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