Spg. Mills Pvt. Ltd. & Anr Vs. Union
of India & Ors  INSC 97 (28 March 1989)
Rangnath Misra Rangnath Pathak, R.S. (Cj) Venkataramiah, E.S. (J) Venkatachalliah,
M.N. (J) Ojha, N.D. (J)
1989 AIR 1331 1989 SCR (2) 127 1989 SCC (2) 481 JT 1989 (2) 19 1989 SCALE
Textile Undertakings (Nationalisation) Act, 1974.
2(j), 3 and First Schedule--Entry 96--Applic a- bility of'Sick Textile
Undertaking'--Legislative determin a- tion of the petitioner Mills.
of India: 1950: Article 31-B and Ninth
Schedule-Sick Textile Undertakings (Nationalisation) Ac t,
1974---Constitutional validity of.
No. 1, Kothandran Spg. Mills Pvt. Ltd., w as taken over under the provisions of
the Sick Textile Unde r- takings (Taking Over of Management) Act, 1972 and
possession of the mill was taken by the National Textile Corporation,
respondent No. 2. Subsequently, the Sick Textile Underta k- ings (Nationalisation)
Act, 1974 came into force.
filed a writ petition under Article 32 of the Constitution challenging the vires
of the Sick Te x- tile Undertakings (Nationalisation) Act, 1974 and that t he
mills be restored to them. It was also submitted that t he establishment had
been closed down, and the Textile Under- taking had completely disappeared by
1969 and therefore t he aforesaid Act did not apply to it.
the writ petition,
1. The Sick Textile Undertakings (Nationalisatio n) Act, 1974 has been put into
the 9th Schedule of the Const i- tution by the 39th Amendment and, therefore,
has come und er the umbrella of protection provided under Article 31-B of the
Constitution. [130C-D] Minerva Mills Ltd. & Ors. v. Union of India & Ors .,  4 S.C.C. 222; Waman Rao
v. Union of India,  2 S.C.R. 1; Panipat Woollen and General Mills
Company Ltd. Anr. v. Union of India & 128 Ors.,  4
S.C.C. 368, applied.
First Schedule to the Act against Entry 96 shows the Petitioner's Mills. There
is a legislative determination that petitioner company came within the
definition of 'si ck textile undertaking' as provided in Section 2(j) of the Act.
petitioners have not alleged any malafides against Parliament and rightly.
[130B-C] & ORIGINAL JURISDICTION: Writ Petition No. 162 of 1977.
Article 32 of the Constitution of India. ) Jitendra Sharma for the Petitioners.
Chari for the Respondents.
Judgment of the Court was delivered by RANGANATH MISRA, J. This application
under Art. 32 of the Constitution is by two petitioners--petitioner no. 1, a
private company and the other a Director thereof. The pet i- tioners have
challenged the vires of the Sick Textile Under- takings (Nationalisation) Act,
1974 (57 of 1974) and have asked for a direction to the respondents to restore
t he Mills to the petitioners in the same condition as it was on 31.10.197 1
when it was initially taken over.
have alleged that the spinning mills prev i- ously belonged to one S.R. Narasimhachari
and three other s.
Chettiar, husband of the second petitioner, purchased the said Mills in 1965.
He was not at all aquainted with the working of spinning mills and soon found
that the affairs of the Mills were far from satisfactory and realised that he
had acquired a non-viable asset. In December 1967, Mahalingam issued notice of
closure to be effective from 3.1.1968, but as a fact by a subsequent notice
dated December 22, 1967, the Mill was closed down with
immediate effect. According to the petitioners the Mill had ceased to be a
"textile undertaking" by January 1968; t he workmen by numerous claim
petitions in the Labour Court of Madurai pressed for their various demands,
they took possession of the Mills and even obstructed Mahalingam's entry into
the premises. At one stage during that period Mahalingam had applied for a loan
of Rs.10 lakhs from the Government of India with the hope of restarting the
Mills after replacement of the machinery but that did not work out. The
establishment had thus closed down and according to 129 the petitioners the textile
undertaking had completely disappeared by 1969, and the Act did not apply to
it. Again, the 1974 Act was ultra vires the Constitution.
Sick Textile Undertakings (Taking Over of Management) Ordinance 9 of 1972 became
operative from 31.10.197 2.
41 of the First Schedule to the Ordinance mention ed petitioner no. 1 as one of
the textile undertakings who se management was to be taken over and possession
was, ther e- fore, taken by respondent no. 2 in terms of the provisions of s.
4(1) thereof. The Ordinance was replaced Y Act 72 of 1972 which received Presidential
assent on 23.12.1972 but was deemed to be in force from 31.10.1972. The
petitioners had challenged the validity of the Act by filing a writ petition before
the High Court of Madras but during the pendency of the writ petition the Sick
Textile Undertaking (Nationalisation) Ordinance, 12 of 1974, came into force
from 1.4.1974, and petitioner no. 1 featured as Item 96 in the Schedule to the
Ordinance. The pending writ petition, therefore, became infructuous and the
petitioners filed a fresh writ petition challenging the validity of the Ordinance
of 1974. The Ordinance was duly replaced by the Nationalisation Act 57 of 1974.
During the pendency of t he writ petition Emergency was proclaimed and the writ
petition was permitted to be withdrawn in December 1976, with liberty to
approach the Court again. That is how the present appl i- cation has been
2(j) defines a 'sick textile undertaking' to mean:
textile undertaking, specified in the First Schedule, t he management of which
has, before the appointed day, be en taken over by the Central Government under
the Industri es (Development and Regulation) Act, 195 1, or as the case m ay
be, vested in the Central Government under the Sick Texti le Undertakings
(Taking Over of Management) Act, 1972." It is not disputed that management
of petitioner no. 1 h ad been taken over under the 1972 Act and petitioner no.
1, therefore, came within the definition.
On the appointed day, every sick textile undertaking and the right, title and
interest of the owner in relati on to 130 :every such sick textile undertaking
shall stand transfer red to, and shall vest absolutely in, the Central Government.
Every sick textile undertaking which stands vested in the Central Government by
virtue of Sub-section (1) shall, : immediately after it has so vested, stand
transferred to, and vested in, the National Textile Corporation." The
First Schedule to the Act against Entry 96 shows t he petitioner's Mills.; There
is a legislative determination that petitioner no. 1 came Within the definition
of 'sick textile undertaking' as provided in s. 2(j) of the Act. The
petitioners have not alleged any mala-fides against Parliament and in our
opinion rightly. It is relevant to notice at this stage that the Central Act 57
of 1974 has been put in to the 9th Schedule of the Constitution by the 39th
Amendment and, therefore, has come under the umbrella of protection provided
under Art. 31-B of the Constitution. In the case of Minerva Mills Ltd. &
Ors. v. Union of India & Ors.,  4 SCC
222 challenge was raised against the vires of this Act.
Court dealt with the effect of the inclusion of the A ct in the 9th Schedule by
referring to the ratio in Waman Rao v. Union of India,  2 SCR 1 and
upheld its vires.
was the view of the Court in the case of Panipat Woollen and General Mills
Company Ltd. & Anr. v. Union of India
& Ors.,  4 SCC 368.
is no force in the two contentions raised on behalf of the petitioners and the
writ petition is, there- fore, dismissed. We direct the parties to bear their own
costs of the proceedings.