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Issues: Whether the Nagaland legislation acquired shares of the company or impermissibly took over the management or control of an industrial undertaking in a declared industry, thereby violating section 20 of the Industries (Development and Regulation) Act, 1951.
Analysis: The legislation was examined in pith and substance and found to be one for acquisition of the company's shares, not a law authorising the State Government to take over management or control of the industrial undertaking. Section 20 of the Industries (Development and Regulation) Act, 1951 prohibits State action taking over management or control of an industrial undertaking, but does not bar legislation for acquisition of property under the State's legislative field. Any transfer of management or control that followed as an incident of the share acquisition was held to be consequential and not a direct assumption of control hit by section 20. The Court also held that the Constitution Bench ruling in Ishwari Khetan had consistently governed the field and did not call for reconsideration merely because additional arguments were suggested.
Conclusion: The impugned legislation was held to be within legislative competence and not contrary to section 20 of the Industries (Development and Regulation) Act, 1951.
Ratio Decidendi: A State law whose true character is acquisition of property is valid even if control or management of the undertaking passes only as a consequential incident, because section 20 of the Industries (Development and Regulation) Act, 1951 bars only direct takeover of management or control, not legislative acquisition of ownership.
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