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Issues: (i) Whether the order taking over the management of the undertaking under section 18A of the Industries (Development and Regulation) Act, 1951 was illegal or vitiated for want of a direction under section 16 or for non-supply of the investigation report. (ii) Whether the Sick Textile Undertakings (Nationalisation) Act, 1974 was unconstitutional as offending Articles 14 and 19 or the basic structure doctrine. (iii) Whether the vacant land within the mill compound formed part of the textile undertaking and vested in the Central Government.
Issue (i): Whether the order taking over the management of the undertaking under section 18A of the Industries (Development and Regulation) Act, 1951 was illegal or vitiated for want of a direction under section 16 or for non-supply of the investigation report.
Analysis: The takeover was based on an investigation under section 15 and on a finding that the undertaking was being managed in a manner highly detrimental to public interest. Section 18A permitted takeover on that ground independently of any direction under section 16. The company had been heard by the Investigation Committee, and on the facts the non-supply of the report did not prejudice the petitioners or amount to a denial of natural justice. The long delay in challenging the order also weakened the challenge.
Conclusion: The takeover order under section 18A was upheld and the challenge failed.
Issue (ii): Whether the Sick Textile Undertakings (Nationalisation) Act, 1974 was unconstitutional as offending Articles 14 and 19 or the basic structure doctrine.
Analysis: The Act was held to give effect to the policy of the State under Article 39(b) and therefore to fall within the protective umbrella of Article 31C. Once protected by Article 31C, its provisions could not be struck down on the ground of violation of Articles 14 and 19. The Court also held that the basic structure challenge was misconceived because the doctrine operates against constitutional amendments, and the Act itself was an ordinary statute included in the Ninth Schedule through constitutional amendment. The challenge on this ground was therefore not maintainable.
Conclusion: The constitutional challenge to the Act failed.
Issue (iii): Whether the vacant land within the mill compound formed part of the textile undertaking and vested in the Central Government.
Analysis: Under section 4(1), the sick textile undertaking included all properties, movable and immovable, in the possession, power or control of the owner, including lands and buildings. The disputed land lay within the mill compound, and its present non-use did not exclude it from the statutory definition. The land was therefore treated as part of the undertaking and as having vested in the Central Government.
Conclusion: The vacant land was held to form part of the undertaking and the petitioners were not entitled to its return.
Final Conclusion: The writ petitions were rejected in entirety, and the takeover, nationalisation, and inclusion of the disputed land were all sustained.
Ratio Decidendi: A statute that gives effect to Article 39(b) and is protected by Article 31C cannot be invalidated on the ground of inconsistency with Articles 14 and 19, and property within the possession and control of the owner of a sick textile undertaking falls within the statutory vesting provision even if presently unused.
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