Writ Petition No. 249 of 1987. Case: Rashtriya Mill Mazdoor Sangh Vs State of Maharashtra and Ors.. High Court of Bombay (India)
| Case Number | Writ Petition No. 249 of 1987 |
| Counsel | For Appellant: S.D. Thakur, Adv. and For Respondents: K.H. Deshpande, B.P. Jaiswal, Advs. and G.D. Patil, A.G.P., K.H. Deshpande and R.B. Puranik, Advs. |
| Judges | V.A. Mohta and W.M. Sambre, JJ. |
| Issue | Central India Spinning, Weaving and Manufacturing Company Limited, the Empress Mills Nagpur (Acquisition and Transfer of Undertaking) Act, 1986 - Sections 9(2), 10(2), 12(1) and 26; Constitution of India - Articles 14, 19 and 21 |
| Citation | 1988 (1) BomCR 188, 1987 MhLJ 955 |
| Judgement Date | August 05, 1987 |
| Court | High Court of Bombay (India) |
Judgment:
V.A. Mohta, J., (Nagpur Bench)
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The Empress Mills, Nagpur---A textile undertaking has been nationalised by the Central India Spinning, Weaving and Manufacturing Company Limited, the Empress Mills, Nagpur (Acquisition and Transfer of Undertaking) Act, 1986, ('the Act'). Constitutional validity of sections 9(2), 10(2), 12(1) and 26 of the Act is questioned in this petition by a representative union of the workers on the ground that they violates Articles 14, 19(1)(c) and 21 of the Constitution.
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This century old undertaking was the first venture of the famous industrialist Shri Jamsethji Tata. It consists of 5 units and a paper division. The backdrop against which the undertaking is nationalised is best laid out in the Statement of Objects and Reasons accompanying the Bill. We reproduce the same:
"The Central India Spinning, Weaving and Manufacturing Company Limited was established at Nagpur as far back as 1874 and was engaged in the production and manufacture of yarn, cloth and paper through its industrial undertaking. "The Empress Mills", Nagpur. It has installed capacity of 1,10,500 spindles and 2,140 looms and a paper manufacturing unit capable of manufacturing 2,000 tonnes of paper per annum. The performance of the company till 1984 showed that it was earning profits and gainfully employed more that 6,000 workers. Its working results showed losses during 1984 and it was also anticipated that the operation of the undertaking would result in huge loss in 1985. In 1985, the Industrial Development Bank of India (IDBI) initiated the efforts, at the request of the Company to rehabilitate the undertaking. The Industrial Development Bank of India studied viability thereof and concluded that its operations could be made viable. A rehabilitation package, consisting of reliefs from institutions, Banks and State Government was also prepared. The Industrial Development Bank of India, in fact sanctioned the loan of Rs. 3 crores in March 1986, but the management did not avail of this facility because it felt that on account of further deterioration in condition of working of the mills, additional assistance was required. While the Industrial Development Bank of India and some other Banks were prepared to consider revised package, the response of the management was not positive. Attempts were made to persuade the management to resume normal operations, by availing of concessions. It however, did not resile from its attitude and declared lock-out on 3rd May, 1986. As its earlier application for closure of the Unit was rejected by the Government under section 25O of the Industrial Disputes Act, 1947 on the ground that it operations are viable the company and its creditors took recourse to voluntary and compulsory winding up of the company. Though the creditors withdrew the petition for winding up, the company persisted in its course for voluntary winding up.
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The Company had filed the Petition No. 183 of 1986 for voluntary winding up under the Companies Act, 1956 in the Bombay High Court, on the ground that on account of continuous losses, the company was unable to run and manage the industrial undertaking further. The Bombay High Court passed an order on 14th May, 1986 in the said petition, appointing provisional liquidator. The Liquidator has been in possession of the properties of the Industrial undertaking.
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The undertaking had sizeable facilities to manufacture substantial production of yarn, cloth and paper. Its closure would have resulted in keeping idle these facilities and would have meant waste of national wealth, which could have been utilised viably for production of above-mentioned articles. Further, the industrial undertaking is the largest of its size in Nagpur and in the entire Vidarbha region which is industrially backward area in the State and therefore, economy of this region is linked up with the continuance of this undertaking. In order to avoid adverse consequences of closure of this undertaking on the economy of the region and on more than 6,000 workers, it was expedient to acquire the undertaking of the said company to ensure that the interest of the general public and of the employees of the undertaking are served by the continuance, by the undertaking of the said company, of the manufacture, production and distribution of textile and paper products which are essential to the needs of the country. Such acquisition was for giving effect to the policy of the State towards securing the principle specified in Clause (b) of Article 39 of the Constitution of India.
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As both Houses of the State Legislature were not in session and it was necessary to take immediate action to enact a law to achieve the objects stated above, the Governor of Maharashtra promulgated the Central India Spinning, Weaving and Manufacturing Company Limited, the Empress Mills Nagpur (Acquisition and Transfer of Undertaking) Ordinance 1986 on the 3rd October, 1986. This Bill is intended to replace the Ordinance by an Act of the State Legislature."
As the Preamble of the Act indicates, acquisition and transfer of undertaking is, ''with a view to securing the proper management of such undertaking so as to subserve the interest of the general public by ensuring the continued manufacture, production and distribution of textile and paper products which are essential to the needs of the economy of the country and for matters connected therewith or incidental thereto'' and therefore, ''for giving effect to the policy of the State towards securing the principle specified in Clause (b) of Article 39 of the Constitution. The Act has received the President's assent on 23rd December, 1986 and was first published on 26th December, 1986. It has come into force on 3rd October, 1986 when the Governor of the State promulgated the Central India Spinning, Weaving and Manufacturing Company Limited, the Empress Mills, Nagpur (Acquisition and Transfer of Undertaking) Ordinance, 1986 ('the Ordinance').
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The scheme of the Act:
Section 2 lists the definitions. The term 'appointed day' means the date of commencement of the Act; 'Corporation' means the Maharashtra State Textile Corporation, a Government Company registered under the Companies Act, 1956; 'new Government company' means a Government company (including a subsidiary Government company) formed and registered under the Companies Act, 1956, in which the undertaking is directed to vest under sub-section (1) of section 6; 'proprietors' means the Central India Spinning, Weaving and Manufacturing Company Limited; 'specified date' in relation to a provision of the Act means such date as the State Government may, by notification in the Official Gazette, specify for the purpose of that provision, and different dates may be specified for different provisions of the Act; 'undertaking' means the industrial undertaking known as the Empress Mills, Nagpur. Section 3 provides that on the appointed day, the undertaking and the right, title and interest of the proprietors in relation to the undertakings, shall stand transferred to and vest absolutely in, the State Government. Immediately thereafter the undertaking stands transferred to and vests in the Corporation. Section 4 gives the general effect of vesting. Section 5 makes the proprietors liable for the liabilities prior to the appointed day. Section 6 permits formation of a new Government company in which the undertaking may be vested by the State Government. Section 7 provides for payment of Rs. 6.10 crores to the proprietors for transfer and vesting. Reduction from the said amount to the extent of discharge of liability of the proprietors specified in the Schedule according to the order of priorities mentioned therein is permitted. Chapter IV deals with the subject of management, etc. of the undertaking. Section 9 provides for vesting of general superintendence, direction, control and management of the affairs and business of the undertaking in the State Government, the Corporation or a new Government company as the case may be. The Corporation or the new Government company shall be entitled to exercise all powers of the proprietors to the exclusion of all other persons. Section 9(2) specifically permits the Corporation or the new Government company to reorganise or restructure different units and offices with such strength of employees as it may deem fit. Section 9(2) reads thus:
''Notwithstanding anything contained in sub-section (1) or any other law for the time being in force, it shall be lawful for the Corporation or the new Government company to reorganise the functioning of the different units and offices of the undertaking and the employees employed therein and thereby restructure such units and offices with such strength of employees as the Corporation or such new Government company deem fit.''
Section 10(1) casts obligation upon the person in charge of the old management, including the liquidator appointed by the Court to deliver possession of the assets, account-books, etc. in their possession and control. Section 10(2) deals with the power of the State Government to issue directions from time to time about the manner and conduct of the management of the undertaking. It reads thus:
''The State Government may issue such directions as it may deem desirable in the circumstances of the case to the Corporation or new Government company, and such Corporation or new Government company may also, if it is considered necessary so to do, apply to the State Government at any time for instructions as to the manner in which the management of the undertaking shall be conducted or in relation to any other matter arising in the course of such management.''
Chapter V deals with the provisions relating to the employees of the proprietors. Section 12 reads thus:
''12. (1) Where service of a person who is a workman within the meaning or the Industrial Disputes Act, 1947, and who has been, immediately before the appointed day, employed...
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