Acquisition law over industrial control: Ordinance upheld as a property measure with only incidental impact on management.

A law whose pith and substance is acquisition of property falls within the acquisition entry, even if it incidentally affects the management of a declared industry. The Ordinance was treated as a transfer and vesting of shares in the State Government, so section 20 of the Industries (Development and Regulation) Act, 1951 did not bar it, and the resulting impact on control was only incidental. The measure was also upheld as public-interest based, supported by evidence of operational disruption and compensation at the acquisition price. It was further held not to interfere unlawfully with pending writ proceedings or interim orders, because those orders were not final adjudications.

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Issues: (i) whether the impugned Ordinance was a law for acquisition of property under Entry 42 of List III or an impermissible law on the control and management of a declared industry under Entry 24 of List II, (ii) whether the Ordinance was hit by section 20 of the Industries (Development and Regulation) Act, 1951 or was a colourable exercise of legislative power, (iii) whether the Ordinance was arbitrary or unsupported by public interest and amounting to deprivation of property without justification, and (iv) whether the Ordinance unlawfully interfered with the pending writ proceedings and interim orders of the High Court.

Issue (i): whether the impugned Ordinance was a law for acquisition of property under Entry 42 of List III or an impermissible law on the control and management of a declared industry under Entry 24 of List II.

Analysis: The Ordinance provided for transfer and vesting of the shares held by the specified companies in the share capital of the corporation in the State Government. On its plain terms, it dealt with acquisition of property, namely shares, and therefore fell within Entry 42 of List III. The field of acquisition was not occupied by the Industries (Development and Regulation) Act, 1951, which concerns control, management, regulation and development of declared industries. The Court also treated the prior interim orders and surrounding documents as showing that the appellants had not in fact acquired management or control of the corporation when the Ordinance commenced.

Conclusion: The Ordinance was validly referable to Entry 42 of List III and not to Entry 24 of List II.

Issue (ii): whether the Ordinance was hit by section 20 of the Industries (Development and Regulation) Act, 1951 or was a colourable exercise of legislative power.

Analysis: Section 20 restrains executive action by a State Government or local authority in taking over control and management of an industrial undertaking. It does not bar a legislature from enacting a valid law of acquisition under a different legislative entry, even if a consequential transfer of management follows from the acquisition. Since the Ordinance was held to be an acquisition measure under Entry 42 of List III, its effect on management was only incidental and did not attract the statutory prohibition.

Conclusion: The challenge based on section 20 and colourable legislation failed.

Issue (iii): whether the Ordinance was arbitrary or unsupported by public interest and amounting to deprivation of property without justification.

Analysis: The record showed deterioration in production, disruption of operations, worker agitation, adverse impact on cement availability and on the State's finances after the attempted privatisation. The Ordinance also provided compensation at the same price at which the shares had been acquired. In that setting, the measure was treated as a public-interest acquisition and not as an arbitrary exercise of power.

Conclusion: The Ordinance was neither arbitrary nor lacking in public interest.

Issue (iv): whether the Ordinance unlawfully interfered with the pending writ proceedings and interim orders of the High Court.

Analysis: The interim orders of the High Court were not final adjudications and did not conclusively determine the rights of the parties. The Ordinance did not contradict any operative direction of the High Court and did not nullify the judicial orders passed during pendency of the writ petitions. Accordingly, the measure did not amount to an encroachment on judicial review.

Conclusion: The attack based on interference with pending proceedings and interim orders was rejected.

Final Conclusion: The constitutional and statutory challenges to the acquisition measure were repelled, and the appellant failed to dislodge the validity of the Ordinance.

Ratio Decidendi: A law whose pith and substance is acquisition of property falls within the acquisition entry and is not invalid merely because it incidentally affects management or control of a declared industry, or because a consequential transfer of control follows from the acquisition.

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