1962 (2) TMI 75 - SC - Companies Law

Supreme Court upholds dismissal, Oriental Gas Company Act valid under state jurisdiction

The Supreme Court upheld the dismissal of the petition, affirming the constitutional validity of the Oriental Gas Company Act, 1960. The appellant was ... Constitutional validity of the Oriental Gas Company Act, 1960 challenged - Held that:- Appeal dismissed. We agree with the High Court that the impugned Act was within the legislative competence of the West Bengal State Legislature and was validly made Issues Involved:1. Locus Standi of the Appellant2. Legislative Competence of the West Bengal Legislature3. Repugnancy with Central Legislation4. Validity under Entry 42 of List IIIIssue-Wise Detailed Analysis:1. Locus Standi of the Appellant:The primary issue was whether the appellant had the locus standi to file the petition under Article 226 of the Constitution. The respondents argued that the appellant, being merely a manager without proprietary rights, could not maintain the application. The Supreme Court held that Article 226 confers wide powers on the High Court to issue writs for the enforcement of any legal right. The Court cited previous rulings, stating that the existence of a legal right is the foundation for the exercise of jurisdiction under Article 226. The appellant had entered into an agreement with the Oriental Gas Company, giving it the right to manage the company for 20 years and receive remuneration. Section 4 of the impugned Act deprived the appellant of these rights for five years. Therefore, the Court concluded that the appellant's legal rights were infringed, granting it locus standi to file the petition.2. Legislative Competence of the West Bengal Legislature:The appellant contended that under Article 246 of the Constitution, Parliament has exclusive power to legislate on matters in List I, including the gas industry, which falls under entry 52 of List I. The Supreme Court examined the relevant entries in the Seventh Schedule. Entry 24 of List II covers industries, subject to entries 7 and 52 of List I, while entry 25 of List II specifically deals with gas and gas-works. The Court emphasized the principle of harmonious construction to reconcile overlapping entries. It concluded that entry 25 carves out gas and gas-works from entry 24, making it a specific industry within the exclusive legislative competence of the State. Thus, the impugned Act was within the legislative competence of the West Bengal Legislature.3. Repugnancy with Central Legislation:The appellant argued that the Central Act, the Industries (Development and Regulation) Act, 1951, already covered the field of gas industry regulation, making the State Act repugnant under Article 254(1) of the Constitution. The Supreme Court noted that the Central Act aimed at regulating scheduled industries, including fuel gases. However, the impugned Act was confined to the Oriental Gas Company and aimed at increasing gas production and improving its quality. The Court found that the Central Act did not cover the specific field occupied by the State Act. Therefore, there was no repugnancy, and the State Act was valid.4. Validity under Entry 42 of List III:The appellant argued that the High Court's view that the Act could be sustained under entry 42 of List III was incorrect. Entry 42 pertains to the requisitioning of property, which involves taking legal possession on behalf of the State. The impugned Act only transferred management and control for five years, without requisitioning the property. The Supreme Court did not find it necessary to delve into this argument, as it had already upheld the Act's validity under entry 25 of List II.Conclusion:The Supreme Court upheld the High Court's dismissal of the petition, affirming the constitutional validity of the Oriental Gas Company Act, 1960. The appeal was dismissed with costs to the respondents.