Holding

The takeover order under s.18A and the Nationalisation Act are valid; the petitioners' challenges on natural‑justice and constitutional grounds fail.

Summary

Minerva Mills Ltd., a loss‑making textile undertaking, was investigated under s.15 of the Industries (Development and Regulation) Act, 1951. The Central Government, finding the mill’s management detrimental to public interest, ordered a takeover under s.18A of the same Act on 19 October 1971. Subsequently, the Sick Textile Undertakings (Nationalisation) Act, 1974 declared the mill a "sick textile undertaking" and vested its assets, including land, in the Central Government. The petitioners challenged the takeover order on grounds of lack of natural justice (non‑supply of the investigation report) and the constitutional validity of the Nationalisation Act under Articles 14, 19, 31A and 31C. The Supreme Court held that the investigation had justified the takeover, that the petitioners were given a hearing and were not prejudiced by the non‑supply of the report, and that the Nationalisation Act is saved by Article 31C and does not violate Articles 14 or 19. The Court also held that all property of the undertaking, including vacant land, falls within the definition of the undertaking under s.4(1) of the Nationalisation Act. All writ petitions were dismissed.

Issues considered

The validity of the order under s.18A of the Industries (Development and Regulation) Act, 1951, particularly whether it violated principles of natural justice.
Whether the absence of a direction under s.16 of the IDR Act invalidated the takeover order.
The constitutional validity of the Sick Textile Undertakings (Nationalisation) Act, 1974 in view of Articles 14, 19, 31A, 31C and the basic structure doctrine.
Whether vacant land within the mill compound forms part of the "sick textile undertaking" under s.4(1) of the Nationalisation Act.

Legislation cited

Constitution of Indias. Article 14, s. Article 19, s. Article 31A, s. Article 31C, s. Article 39, s. Article 3IC
Industries (Development and Regulation) Act, 1951s. 15, s. 16, s. 18A
Mysore State Aid to Industries Act, 1959s. 4
Sick Textile Undertakings (Nationalisation) Act, 1974s. 2(j), s. 3(1), s. 4(1)

Subjects

natural justicetakeover orderindustrial regulationsick textile undertakingnationalisationbasic structure doctrineArticle 31Cvested propertyconstitutional validity

Judgment

A

MINERVA MILLS LTD. & ORS. ETC. ETC.
v.
B UNION OF INDIA & ORS.

SEPTEMBER 9, 1986

[O. CHINNAPPA REDDY .AND MURARI Me>HON DUTT, JJ.]
~
Industrial (Development and Regulation) Act 1951, ss. 15 and
~
C !BA-Non-supply of Report of Investigation Committee-Whether fai-
lure of natural justice-Take over of management of undertaking-Grant
of loan by government to the undertaking-Whether sufficient to say that
order of'takeover' has no basis.
'i
-
·Sick Textile Undertakings (Nationalisation) Act, 1974-Validity of.
D
Constitution of India, Articles 14, 19, 31A and 3/C-Challenge
that basic or essential feature of Constitution is damaged or destroyed-
When can be raised.

Administrative Law-Natural justice-Failure of-Whether arises
E
in non-supply of copy of Investigation Committee Repori under s. ! 5
.· ....._
Industrial (Development and Regulation) Act.

The petitioner, Minerva Mills Ltd.-a textile undertaking iiad been
running at a 1°"8 and bad to be closed down. The Central Government
ordered an investigation into the affairs of the petitioner-company under
F s. 15 of the Industries (Development & Regulation) Act 1931. Thereafter, ~
the State Gove'rnment of Mysore sanctioned the guarantee to enable the
petitioner-company to raise a loan of Rs.20 lacs from the State Bank of
India. After the investigation was made, the Central Government passed
an order under s. 18Aofthe IDR Act taking over the management of the
undertaking of the Company on the ground that the Central Government
G was of opinioo that the undertaking was being managed in a manner
highly detrimental to public interest. During the pendency of the man-
agement of the 1111dertaking by the National Textile Corporation, the Sick
Textile Undertakings Ordinance of 1974 was promulgated, and it was
replaced later on by the Sick Textile Undertakings (Nationalisation) Act
1974.
H
718
MINERVA MILLS v. U.O.l. 719

The petitioners including the company unsuccessfully challenged A
before the High Court under Art. 227, the order dated October 18, 1971,
passed by the Central Government under s. 18A of the Industrial (De·
velopment and Regulation) Act as also the Nationalisation Act. Their
appeals were also summarily dismissed by the Division Bench of the High
Court.
B
The petitioner, Minerva Mills Ltd. and some of its creditors cha I·
Ienged before the Supreme Court under Art. 32 of the Constitution, the
legality of the aforesaid order as also the constitutional validity of Sick

- Textile Undertakings (Nationalisation) Act 1974.

Dismissing the writ petitions,

HELD: 1.1 The investigation that was made under s. 15 of the
c

Industrial (Development and Regulation) Act and the consequent find-
ings of the Government on the basis of which the management of the
undertaking of the Company was taken over under s. ISA of the Indus!·
D
rial (Development and Regulation) Act, was that the affairs of the under-
taking of the Company were being managed in a manner highly detri-
mental to public interest. The undertaking had been running' at a loss and
had to be closed down on January 2, 1970. This miserable condition of the
undertaking might be due to the mismanagement of its affairs. [723E-F]
E
1.2 The Government might have thought of assisting the Company
to raise a loan of Rs.20 lacs, but that fact or the fact that such proposal
for assistance was made for special reasons as provided in the second
proviso to s. 4 of the Mysore State Aid to Industries Act, 1959 is not,
sufficient to uphold the contention of the petitioners that there was no
basis or foundation fortheorderunders. 18A. [7BF-G]

l.3 The legislature had decided that the undertaking of the Com·
pany was a sick textile undertaking by including the same in the First
Schedule to the Nationalisation Act. There can be no doubt that the
legislative judgment should be looked upon with respect and it requires
very strong grounds to set it at naught. Jn the instant case, there is no
existence of any such ground. [724B-C I G

2. The petitioner-company was given a hearing by the Investiga-
~ ..
d
tion Committee and, therefore, it got ample opportunities to make re-
presentations against the proposed take-over. It is difficult to lay down
that non-supply of a copy of the report of investigation under s. 15 of the
H
720 SUPREME COURT REPORTS 11986] 3 S.C.R.

A Industrial (Development and Regulation) Act will always occasion a
failure of natural justice. Whether in a particular case there has been •
failure of natural justice or not will depend on the facts and circumst-
ances of that case. f7?5A-B]
I ,

In the instant case also, the petitioners were not in the least pre-
B judiced for the non-supply to them of a copy of the report. Moreover,
they never asked for a copy of the report. They did not also move against
the order under s, ISA before the undertaking was nationalised under the -Y
Nationalisation Act. It shows that the petitioners were not aggrieved by
the said order under s. ISA for they could not be as they had not the •
required minimum resources for running the mill. [725F-H] ';} -
c
3. I The Nationalisation Act has been enacted to give effect to the
policy of the State towards securing the principles specified in clause (b)
of Art. 39 of the Constitution. Indeed a declaration in that regard has
beenmadeins.39oftheNationalisation Act. [728C-D] 'f
D 3.2 The Nationalisation Act gives effect to the policy of the State
towards securing the ownership and control of the material resources of
the community, which are so distributed as best to subserve the common
good. In the circumstances, as the Nationalisation Act comes under the
protective umbrella of Article 3IC, the petitioners are not entitled to
challenge the constitutional validity thereof on the ground of violation of '-"(
E the provisions of Arts. I4 and I9 of the Constitution. '[728G·HI

4. Only constitutional amendments made on or after April 24,
I973 by which Acts or Regulations were included in the Ninth Schedule ;
can be challenged on the ground that they damage the basic or essential
features of the Constitution or its basic structure. But if any of such Acts ~
F and Regulations is saved by Art. 3 IA or by Art. 3 IC as it stood prior to
the amendment of the Constitution by the Forty-second Amendment, _..
such challenge on the ground that the constitutional amendment damages '
or destroy a basic or essential feature of the Constitution or its basic
structure as reftected in Art. I4 or Art. I9, will become otiose. [728A-C]

G 5. Under s. 4(I) of the Nationalisation Act, the sick textile under-
taking shall be deemed to include all properties, movable and inunov-
able, including lands, buildings, workshops, stores, etc., in the owner-
ship, possession, power or control of the owner of the sick textile under-
' taking. The question whether the vacant land has been in use, is not,
relevant for the purpose of s. 4(I). In view of the said provision, it is
H
MINERVAMILLSv. U.0.1. [DUTT,J.[ 721

difficult to accept the contention of tlie petitioners that the vacant land.is A
not a part of the undertaking. [731D-E]

In the instant case, the whole of the said 17.52 acres of land includ-
ing 4,37 acres thereof, is situate within the mill compound. The Court
cannot accept the contention of the petitioners that as the land is lying 8
vacant since the take over it does not form part of the undertaking. [732C-D]

>"f · ORIGINAL JURISDICTION: Writ Petition Nos. 356·361 of
1977
\:
-
..
Under Article 32 of the Constitution of Indi~.
c
R.F. Nariman, J. Peres, Mrs. A.K. Verma and S. I. Thakur for
the Petitioners.

B. Datta, Add.itional Solicitor General, T.V.S.N. Chari, Ms. V.
Grover, Ms. Sunita Mudigarda and W. Quadri for the Respondents.
D
The Judgment of the Court was delivered by

DUTI, J. In these Writ Petitions under Article 32 of the Constitu-
tion of India the petitioners, including the petitioner Minerva Mills Ltd.
and some of its creditors, have challenged the legality of the order dated
E
October 19, 1971 passed under section 18A of the Industries (Develop·
men! and Regulation) Act, 1951 (for short '!DR Act') taking over the
management of the textile undertaking of the petitioner, Minerva Mills
Ltd., and the constitutional validity of the Sick Textile Undertakings
(Nationalisation) Act, 1974 (for short 'Nationalisation Act').
F
On August 20, 1970, the Central Government appointed a Com·
mittee section 15 of the !DR Act to make a full and complete investiga·
lion of the affairs of the Minerva Mills Ltd., hereinafter referred to as
'the Company'. After the investigation was made the Central Govern-
ment by an order dated October 19, 1971, authorised the National
Textile Corporation to take over the management of the undertaking of
G
the Company. The petitioners did not challenge the order to take over
the management before any court of law. During the pendency of the
management of the undertaking by the National Textile Coporation, the
Sick Textile Undertakillgs Ordinance of 1974 was promulgated and it
was replaced by the Nationalisation Act. Section 3( 1) of the N ationalisa·
lion Act provides that on the appointed day, every sick textile underta k-
H
722 SUPREME COURT REPORTS [1986] 3 S.C.R.

A ing and the right, title and interest of the owner in relation to every such
sick textile undertaking shall stand transferred to, and shall vest abso-
lutely in, the Central Government. 'Sick textile undertaking' has been
defmed in section 2(j) of the Nationalisation Act as meaning, inter alia,
a textile undertaking, specified in the First Schedule, the management
of which has, before the appointed day, been taken over by the Central
B
Government under the IDR Act. The textile undertaking of the Com-
pany has been specified in the First Schedule of the Nationalisation Act.
So, in view of the said definition read with section 3(1) of the Act, the
undertaking had vested in the Central Government.

It has been urged by Mr. R.F. Nariman, learned Counsel appear-
c ing on behalf of the petitioners, that there was no justification for taking
over the management of the undertaking of the Company under section
18A of the IDR Act. In support of the said contention, the learned
Counsel has drawn our attention to certain facts which will be stated
presently. It appears that the Company had been running at a loss
during the years from 1956 to 1965. The condition of the mill further
D
deteriorated on account of recession in 1965 coupled with labour prob-
lems, and that continued till 1970. On January 2, 1970, the mill had to
be closed. It is the case of the petitioners that by dint of serious effort on
the part of the management and labour, an amicable agreement was
arrived at between them, and a phased programme for resumption of
production in three stages was drawn up by the management. The then
E State Government of Mysore was requested to sanction the guarantee of
a loan for Rs.20 lacs. By an order dated April 24, 1971 the Government
sanctioned the guarantee to enable the Company to raise a loan of Rs.20
lacs from the State Bank of India. In the said order it was inter alia
stated as follows:
F "The Government have carefully considered the various
factors leading to the present state of affairs of the Mills and
also the various recommendations made by the Investigation +
Committee constituted by the Government of India to go
into the affairs of this Mills and have come to the conclusion •
that the Mills should be assisted to raise finances required
G for working the Mills."

The said order was passed after the investigation under section 15
of the IDR Act. A few months thereafter, on October 19, 1971, the ). ..
order under section 18A of the IDR Act was passed taking over the
management of the undertaking of the Company on the ground that the I
H
MINERVAMILLSv. U.0.1. [DUTT,J.J 723

Central Government was of opinion that the undertaking was being A
~ managed in a manner highly·detrimental to public interest.

It is strenuously urged on behalf of the petitioners that the order
under section 18A dated October 19, 1971 was passed without any
application of mind, regard being had to the earlier order dated April B
24, 1971 sanctioning the guarantee of a loan. It is submitted that there
was no foundation for the finding of the Central Government that the
i undertaking of the Company was being managed in a manner highly
detrimental to public interest, for, if that was the condition of manage-

-- -~ ment, the Government could not sanction a guarantee for incurring a
loan of Rs.20 lacs. It is, accordingly, contended that the order under
section 18A was illegal and invalid. It is submitted that on this ground c
the nationalisation of the undertaking of the Company should be-held to
have no basis whatsoever, for, the Nationalisation Act has been made
~-
applicable to the undertaking of the Company in view of section 2U) of
the Nationalisation Act defining 'Sick textile undertaking'.
D
We are unable to accept the contention of the petitioners that the
order under section 18A of the IDR Act was illegal. It is true that the
Government sanctioned the guarantee of a loan for Rs.20 lacs on the
recommendation of the Director of Industries and Commerce of the
Government of Mysore. But, at the same time, we cannot ignore the
} investigation that was made under section 15 of the IDR Act and the E
consequent finding of the Government on the basis of which the man-
1 agement qf the undertaking of the Company was taken over _under
section 18A of the IDR Act, namely, that the_ affairs of the undertaking
"'- of the Company were being managed in a manner highly detrimental to

~--
public interest. It has been already found that the undertaking had been
, running at a loss and had to be closed down January 2, 1970. This F
qiiserable condition of the undertaking might be due to the mismanage-
I
ment of its affiars. The Government might have thought of assisting the
-+ Company to raise a loan of Rs.20 lacs, but that fact or the fact that such
proposal for assistance was m_ade for special reasons as provided in the
second proviso to section 4 of the Mysore State Aid to Industries Act,
1959 is not, in our opinion, sufficient to uphold the contention of the
G
petitioners that there was no basis or foundation for the order under
section 18A.

/.1.. Moreover, it does not appear that the petitioners were aggrieved
by the order under section 18A inasmuch as the same was not cha!-
lenged in any court of law. There is some force in the contention made H
724 SUPREME COURT REPORTS [1986] 3 S.C. R.

A by the learned Additional Soliciter General that after the lapse of .,._
several years from the date of the take-over of the management of the
undertaking, the petitioners should not be allowed to challenge the
validity of the order under section 18A. Apart from this technical
objection, the Legislature had decided that the undertaking of the
Company was a sick textile undertaking by including the same in the
B
First Schedule to the Nationalisation Act. There can be no doubt that
the legislative judgment should be looked upon with respect and it
requires very strong grounds to set it at naught. In our opinion, there is t-·
no existence of any such ground. '

c
The next ground of attack of.the petitioners to the validity of the
order under section 18A is that it was vitiated as there was no direction
by the Central Government 'under section 16 of the IDR Act. Section
16 authorises the Central Government to issue directions to the indust-
;J.
-
rial undertaking concerned for certain purposes as are mentioned in
clauses (a) to (d) of section 16 after an investigation under section 15 is r-
made and the Central Government is satisfied that action under sec-
D tion 16 is desirable. It is apparent from section 16 that it is not obligato-
ry on the Central Government to issue directions for all or any of the
purposes as mentioned in the said section. One of the two grounds for
taking over management of an industrial undertaking, as contained in
clause (a) of section 18A, is that the industrial undertaking has failed
to comply with the directions given under section 16. The other ground --..{
E is that, as contained in clause (b) of section 18A, an industrial under-
taking in respect of which an investigation has been made under sec-
tion 15 (whether or not any directions have been issued to the under-
taking in pursuance of section 16) is being managed in a manner highly
detrimental to the scheduled industry concerned or to public interest.
...'•
In the instant case, the undertaking of the Company had been taken over -...(
F \
under clause (b) of section 18A on the ground that it was being man-
aged in a manner highly detrimental to public interest. There is, there-
fore, no substance in the contention made on behalf of the petitioners t-
that the impugned order under section 18A was vitiated as no direction
under section 16 was issued by the Central Government.
""
G It is urged on behalf of the petitioners that as the Company was
not supplied with a copy of the report of investigation before the
impugned order under section 18A was passed, the respondents acted
illegally in violation of the principles of natural justice, and the im-
pugned order is liable to be struck down on that ground. In our opi-
nion, there is no substance in this contention. The Company was
H
MINERVA MILLS v. U.0.1. IDUTT, J.) 725

given a hearing by the Investigation Committee and, therefore, it got A
~ ample opportunities to make representations against the proposed
take-over. It is difficult to lay down that non-supply of a copy of the
report of investigation under section 15 of the IDR Act will always
occasion a failure of natural justice. Whether in a particular case there
has been failure of natural justice or not will depend on the facts and
B
circumstances of that case. As has been laid down by this Court in
KeshavMillsCo. Ltd.v. Unionoflndia, [1973]·JSCR380thatincertain
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, the non-supply of

- ~.
'
the report may invoke the application of the rules of natural justice. In
that case, it was contented by the appellants that they should have
been given further hearing by the Government before they took the
c
final decision to take over their undertaking under section 18A of the
!DR Act and that, in any event, they should have been supplied with a
-..( copy of the report of the Investigation Committee. One of the grounds
that weighed with this Court for rejecting the contention was that since
D
the appellants had received a fair treatment and also all reasonable
opportunities to make out their own case before the Government they
should not 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
undertaking should not be taken over or that they had not been
~- furnished with a copy of the report. In the instant case also, as has
been already noticed, the Company was given a reasonable opportu- E
nity of being heard by the Investigation Committee during the investiga- ,
tion under section 15 of the !DR Act. In our opinion, the petitioners
.... were not in the least prejudiced for the non-supply to them of a copy of

~
the report. The view we take, finds support from some other facts
stated hereafter.
F

-t It does not appear that the petitioners ever asked for a copy of
the report. They did not also move against the order under section 18A
before the undertaking was nationalised under the Nationalisation
Act. It is the case of the petitioners that they did not challenge the
impugned order under section 18A because the take-over of the man-
agement of the undertaking was for a limited period of five years and G
the petitioners were hopeful that they would get back the undertaking
after the expiry of the said period as provided in sub-section (2) of
-~ section 18A of the !DR Act. It shows that the petitioners were not
aggrieved by the said order under section 18A, for they could not be as
they had not the required minimum resources for running the mill. It is
H
726 SUPREME COURT REPORTS [1986] 3 S.C.R.

A stated in the counter affidavit of the respondents that the financial
position of the Company was adverse in all respects. The accumulated· ''r
losses as on 31.12.1969 was Rs.35.46 lakhs which did not include ar-
rears of depreciation amounting to Rs.44.06 lakhs. The worJ<\ing capi-
tal and net wealth assumed negative values. The outstanding secured
loans amounted to Rs.170.20 lakhs and unsecured loans to Rs.14.60
B
lakhs. There were defaults in payment of instalments and interest. It is
further stated that according to the Investigation Committee, the
reasons for this state of affairs was low capital base., heavy borrowings :.,
and consequent interest burden and paucity of working capital.

c
In this connection, it may be pointed out that sometime in June
1975, after the nationalisation of the undertakings, the petitioners
including the Company filed separate writ petitions under Article 226
of the Constitution in the High Court of Karnataka challenging the
-
order dated October 19, 1971 under section !SA of the !DR Act, and
also the constitutional validity of the Nationalisation Act. All these
Writ Petitions were dismissed by a learned Single Judge of the
D Karnataka High Court on July 8, 1976. The appeals preferred by some
of the petitioners including the Company were also summarily dismis-
sed by the Division Bench of the said High Court. By an order dated
March 25, 1977, the Division Bench also dismissed applications for
leave to appeal to this Court under Article 133 of the Constitution of
India. We are afraid, in view of the aforesaid facts the petitioners are
E not entitled to challenge the impugned order under section 18A.

We may now consider the challenge of the petitioners to the
constitutional validity of the Nationalisation Act. It is contended on
behalf of the petitioners that the provisions of sections 5(1), 19(3), 21
read with the Second Schedule, 25 and 27 impos.e restrictions on the
F exercise by the petitioners of their fundamental right; such restrictions
being arbitrary and excessive are not reasonable within the meaning of
Article 19(6) and are violative of Articles 14 and 19(1)(g) of the Con-
stitution. It is submitted that the Nationalisation Act containing the
said provisions alters or damages the basic structure of the Constitu-
tion as reflected in Articles 14 and 19 of the Constitution. Further, it is
G submitted that though the Nationalisation Act has been included in the
Ninth Schedule to the Constitution, yet, in view of the decision of this
Court in Waman Rao v. Union of India, 11981] 2 SCR I, as the inclu-
sion has been made after April 24, 1973, such challenge can be made.

We fail to understand hciw the provisions of the Nationalisation
H

'
MINERVA l\flLLSv. U.0.1. (DUIT, J.J 727

Act can alter or damage the basic structure of the Constitution. The A
basic structure of the Constitution can be altered or damaged by an
amendment of the provisiqns of the Constitution. The decision in Wa-
man Rao's case (supra) does not at all support the contention of the
petitioners. In that case, it has been observed as follows:
B
"Jn Keshvananda Bharati ([1973] Suppl. SCR 1) decided on
April 24, 1973 it was held by the majority that Parliament
has no power to amend the Constitution so as to damage or
destroy its basic or essential features or its basic structure.
We hold that ali amendments to the Constitution which
were made before April 24, 1973 and by which the 9th
Schedule to the Constitution was amended from time to c
time by the inclusion of various Acts and Regulations the-
rein, are valid and constitutional. Amendment to the Con-
stitution made on or after April 24, 1973 by which the 9th
Schedule to the Constitution was amended from time to
time by the inclusion of various Acts and Regulations the-
D
rein, are open to challenge on the ground that they, or any
one or more of them are beyond the constituent power of
the Parliament since they damage the basic or essential
features of the Constitution or its basic structure. We do
not pronounce upon the validity of such subsequent con-
stitutional amendments except to say that if any Act Regu-
lation i11cluded in the 9th Schedule by a Constitutional E
amendment made on or after April 24, 1973 is saved by
Article 31A, or by Article 31C as it stood prior to its
amendment by the 42nd Amendment, the challenge to the
validity of the relevant Constitutional Amendment by
which that Act or Regulation is put in the 9th Schedule, on
the ground that the Amendment damages or destroys a F
basic or essential feature of the Constitution or its basic
structure as reflected in Articles 14, 19 or 31, will become
otiose.

(3) Article 31C of the Constitution, as it.stood prior
to its amendment by section 4 of the Constitution (42nd G
Amendment), Act, 1976, is valid to the extent to which its
constitutionality was upheld in Keshvananda Bharati. Arti-
cle 31C, as it stood prior to the Constitution (42nd Amend-
ment) Act does not damage any of the b~ic or essential
features of the Constitution or its basic structure."
H
728 SUPREME COURT REPORTS [1986] 3 S.C.R.

A It is apparent from the above observation that only constitutional
amendments made on or after April 24, 1973 by which Acts or Regula-
tions were included in the Ninth Schedule can be challenged on the
ground that they damage the basic or essential features of the Con-
stitution or its basic structure. But if any of such Acts and Regulations
is saved by Article 31A or by Article 31C as it stood prior to the
B amendment of the Constitution by the Forty-Second Amendment. such
challenge on the ground that the constitutional amendment damages
or destroys a basic or essential feature of the Constitution or its basic
structure as reflected in Article 14 or Article 19, will become otiose.

The Nationalisation Act has been enacted to give effect to the
policy of the State towards securing the principles specified in clause
?
c (b) of Article 39 of the Constitution. Indeed, a declaration in that
regard has been made in section 39 of the Nationalisation Act. It was,
however, open to the petitioners to challenge this declaration, for, in
Keshvananda Bhartiv. State of Kera/a, [1973] Suppl. SCR l, this Court
by a majority struck down the second part of Article 31C of the Con-
D stitution, namely, "and no law containing a declaration that it is for
giving effect to such policy, shall be called in question in any court on
the ground that it does not give effect to such policy." No contention
has, however, been advanced before us on behalf of the petitioners
that the Nationalisation Act does not give effect to the policy of the
State towards securing the principles specified in clause (b) of Article ·-
E 39 of Constitution. The reason why no such contention has been made
is obvious in view of the objectives the Nationalisation Act seeks to
achieve. It cannot be gainsaid that textile industries constitute material
resources of the community and any setback or fall in the production

-~
of textile goods will have adverse effect on the national economy and
also cause hardship to the people. It is with a view to re-organising and
F rehabilitating the sick textile undertakings so as to subserve the in-
terests of the general public by the augmentation of the production
and distribution, at fair prices, of different varieties of cloth and yarn,
and for matters connected therewith or incidental thereto, as stated in
the preamble, that the Nationalisation Act has been enacted. We have
considered the different provisions of the Nationalisation Act and are
G satisfied that it gives effect to the policy of the State towards securing
the ownership and control of the material resources of the community,
which are so distributed as best to subserve the common good. In the
circumstances, as the Nationalisation Act comes under the protective
· umbrella of Article 3 lC, the petitioners are not entitled to challenge
the constitutional validity thereof on the ground of violation of the
H provisions of Articles 14 and 19 of the Constitution.
MINERVA MILLS v. U.0.1. IDUTT, J.I 729

The learned counsel for the petitioners, however, submits that in A
spite of the fact that the Nationalisation Act has been included in the
Ninth Schedule, the petitioners are entitled to challenge the constitu-
tional validity of the provisions of the.Nationalisation Act as violative
of Articles 14 and 19 of the Constitution. It has been already noticed
that the Nationalisation Act fall squarely within the ruµbit of Article
8
31C and, consequ·ently, none of its provisions can be challenged on the 1
ground of violation of Article 14 or Article 19 of the Constitution.
Much reliance has, however, been placed by the petitioners on a ma-
jority decision of this Court in Bhim Singhji v. Union of India. AIR
1981 SC 234. In that case, the question that has been considered re-
lates to whether the Urban Land (Ceiling and Regulation) Act, 1976
furthers the Directive Principles of State Policy in clauses (b) and (c) . c
of Article 39 of the Constitution. It has been held by the majority
consisting of Chandrachud C.J., P.N. Bhagwaii J. (as he then was) and
Krishan Iyer J. that the said Act implements or achieves the purposes
of clauses (b) and (c) of Article 39 and is valid except that section 27(1)
of the said Act in so far as it imposes a restriction on transfer of any
urban or urbanisable land with a buildin&_ or a portion only of such D
building, which is within the ceiling area, is invalid. It has been ob-
served by Chandrachud C.J., with whom Bhagwati, J. concurs, that
fuller reasons will follow later. Subsequently, a judgment has been
delivered by Chandrachud C.J., for himself and Bhagwati J. (AIR
1985 SC 1650) wherein it has been inter alia observed as follows:
E
"We have gone through Krishna Iyer J's judgment closely
and find that there is nothing that we can usefully add to
it."

In orther words, the learned Chief Justice and Bhagwati J. have
adopted the reasons given by Krishna Iyer J. F

The learned Counsel for the petitioners has drawn our attention
to the fact that none of the Judges constituting the majority, including
Krishna Iyer J. has given any reason for striking down the provision of
section 27(1) of the said Act. It is submitted that the majority judg-
ment is a precedent for the proposition that even though a statute G
comes within the purview of Article 31C of the Constitution, yet its
validity can be challenged on the ground of its violation of Article 14
or Article 19 of the Constitution. It is contended that in view of Bhim
\.
Singhji's case, we cannot take any view other than the view that such a
challenge can be made
H
730 SUPREME COURT REPORTS 119861 3 S.C.R.

A In support of the above contention, the learned Counsel for the
petitioners has placed reliance upon the decision of the Court of Ap-
peal in Harper and others v. National Coal Board, [19741 2 ALL ER
441. In that case, the Court of Appeal had to consider the propriety of
the judgment of the learned Trial Judge, who based his decision on the
speeches in the House of Lords in Central Asbestos Co. Ltd v. Dodd.
B [ 19721 2 ALL ER 1135. In Dodd's case the House of Lords by a
majority of 3 to 2 affirmed the majority decision of the Court of Appeal
that time did not begin to run against the plaintiff under section 1(3) of
the Limitation Act, 1963 until he discovered that he had a worthwhile
cause of action. Of the three Judges, who constituted the majority of
the House of Lords, two took the same view of the law as that taken by
c the majority of the Court of Appeal, while the third took another view
of the law which· in substance accorded with that of minority of the
House, that is, that time began to run under section 1(3) as soon as the
plaintiff knew of the facts on which his action was based. The question
that had to be considered by the Court of Appeal was whether it was
bound by the reasoning in the speeches of the House of Lords in
D Dodd's case. In that contention, Lord Denning MR observed as
follows:

"How then do we stand on the law? We have listened to a
most helpful discussion by counsel for the proposed
plaintiffs on the doctrine of precedent. One thing is clear.
E We can only accept a line of reasoning which supports the
actual decision of the House of Lords. By no possibility can
we accept any reasoning which would show the decision
itself to be wrong. The second proposition is that, if we can
discover the reasoning on which the majority based their
J
decision, then we should accept that as binding on us. The
F third proposition is that, if we can discover the reasoning
on which the minority base their decision, we should reject
it. It must be wrong be"cause it led ihem to the wrong result.
The fourth proposition is that if we cannot discover the
reasoning on which the majority based their decision we
are not bound by it. We are free to adopt any reasoning
G which appears to us to be correct, so long as it supports the
actual decision of the House."

We fail to understand how the above observation lend any sup-
port to the contention of the petitioners. The Court of Appeal was
considering the same point as was before the House of Lords in Dodd's
H
)111NERVAMILLSv. U.O.J. IDUTI,J.I 731

case. The question was whether the Court of Appeal was bound to A
adopt the same reasoning as in Dodd's case and it was held that since
there was no discernible ratio decidendi common to the speeches in
the House of Lords in Dodd's case, the Court of Appeal was not
bound by the reasoning in those speeches and was free to adopt any
reasoning which appeared to the Court to be correct provided that it B
supported the actual decision of the House. In the instant case, we are
not considering the question of the constitutional validity of section
{ 27(1) of Urban Land (Ceiling and Regulation) Act and, therefore, it is
quite irrelevant for our purpose whether any reason was given by the
majority in Bhim Singhji's case (supra) or not.

In view of our decision that the Nationalisation Act comes within c
the purview of Article 3 lC of the Constitution, we do not think we are
called upon to adjudicate upon the contention of the petitioners that
some of _the provisions of the Nationalisation Act are violative of Arti-
( cles 14 and 19 of the Constitution.
D
· . The only contention of the petitioners that remains to be con-
sidered is that the respondents have ill~gally taken over possession of
the vacant land belonging to the Company. It is the case of the
petitioners that out of the land, the mill premises comprises 34. 78
acres and the rest of the land measuring 17.5~ acres was and is vacant
~/ land. It is not in dispute that the said 17 .52 acres of land is situate
E
within the mill compound and except 4.37 acres thereof, the remaining
13.57 acres of land including the said 4.37 acres, is unrelated to and
unconnected with the undertaking of the Company and, accordingly, it
did not vest in the Central Government under the Nationalisation Act.
It is also pointed out on behalf of the petitioners that the vacant land
~has not been utilised by the National Textile Corporation for any
purpose of the undertaking. It is urged that as the vacant land was F
1
: illegally and wrongfully taken possession of by the National Textile
Corporation, although the same had not vested in the Central Govern-
ment, the same should be released and given back to the Company. In
any event, it is submitted on behalf of the petitioners that possession of
the said 4.37 acres of land which does not form part of the compact
block of the vacant land measuring 13.57 acres should be delivered G
back to the petitioners.

The respondents in their affidavit in opposition have denied and
disputed the contention of the petitioners that the said 17.52 acres or
the said 4.37 acres of land does not form part of the sick textile under-
H
732 SUPREME COURT REPORTS [1986) 3 S.C. R.

A taking. It is the case of the respondents that except the land measuring
4 acres 14 Gunthas (stated to be equivalent to 4.37 acres) the rest of
the land forms one compact block in which the buildings, office and
quarters of the undertaking are situate. Further it is said that the
National Textile Corporation has a programme for locating an institu-
B tion to train the technical personnel and to build quarters as a welfare
measure and, necessarily, such a complex must have vacant land to
implement the expansion programme. Accordingly, it is contended by
the respondents that even the vacant land measuring 4 acres 14
Gunthas form an integral part of the textile undertaking.
\

It has already been noticed that the whole of the said 17 .52 acres of )
c land including 4.37 acres thereof, is situate within the mill compound.
We are unable to accept the contention of the petitioners that as the
land is lying vacant since the take over, it does not form part of the
undertaking. Under section 4(1) of the Nationalisation Act, the sick ~
textile undertaking shall be deemed to include all properties, movable r
and immovable, including lands, buildings, workshops, stores, etc. in
D the ownership, possession, power or control of the owner of the sick
textile undertaking. In view of the said provision, it is difficult to
accept the contention of the petitioners that the vacant land is not a
part of the undertaking. It may be that the said 17 .52 acres of land or
the said portion of it measuring 4.37 acres has not been put to any use,
but that will not entitle the petitioners to claim that possession of the ~
E land should be delivered back to the Company. The question whether
the vacant land has been in use, is not, in our opinion, relevant for the
purpose of section 4(1). It is, therefore, difficult for us to accept the
contention of the petitioners that the vacant land is unrelated to and
unconnected with the textile undertaking.
The learned cousel for the petitioners has placed reliance upon -
F an observation of this Court in National Textile Corporation Ltd. and
others etc. v. Sitaram Mills Ltd. and Others, AIR 1986 SC )234. The
question that was involved in that case was whether surplus land in the
precinct of the taken-over undertaking was an asset in relation to the
undertaking. It was observed "The test is whether it was held for the
benefit of, and utilised for, the textile mill". Relying upon this obser-
G vation, it is contended by the learned counsel for the petitioners that as
the vacant land, in the instant case, has not been utilised for the
undertaking, it is not an asset of the undertaking. We do not think that
. in Sita ram Mills case this Court really meant to lay down a proposition )
that in order that a piece of land to be considered as the asset of the
textile undertaking, it must be held for the benefit of and utilised for
H
MINERVAMILLSv. U.0.1. [DUIT,J.J 733

the undertaking in question. Can it be said that a piece of land which is A
held for the benefit of but not utilised for the textile undertaking, as in
the instant case, is not an asset of the undertaking? The answer must
be in the negative. In Sitaram Mills case that observation was made in
the context of facts of that case, namely, that the surplus land was held
for the benefit of and also utilised for the textile undertaking.
B
We do not think that the said observation in the case of Sitaram
Mills case is of any help to the petitioners. We hold that tne whole of
the said 17 .52 acres of land forms part of the te~tile undertaking of the
Company. No other point has been urged in these writ petitions.

For the reas9ns aforesaid, all these writ petitions are dismissed. C
There will. however. be no order for costs.

M.L.A. Petitions dismissed.