Inclusive definition of textile undertaking covers related assets, and substantial closure can exist despite a minor continuing unit

The article explains that, under the Act's inclusive definitions and deeming provision, a sick textile undertaking covers all assets, rights and property relating to the undertaking, so the hosiery section could be brought within takeover and nationalisation despite earlier separate treatment under another statute. It also states that closure of the spinning section, being the company's major and substantial activity, could amount in substance to closure of the textile undertaking even if a minor segment continued to operate, provided the materials did not show permanent closure beyond revival. On that basis, the takeover framework and nationalisation were upheld.

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Issues: (i) whether the hosiery section formed part of the sick textile undertaking and could be included in the takeover and nationalisation; (ii) whether closure of the spinning section, while the hosiery section continued, amounted to closure of the textile undertaking for the requisite period under the Act.

Issue (i): whether the hosiery section formed part of the sick textile undertaking and could be included in the takeover and nationalisation.

Analysis: The definitions of "textile", "textile company" and "textile undertaking" in the Act, read with the deeming provision in Section 4(3), showed that the sick textile undertaking included all assets, rights and property of the textile company relating to the undertaking. On that basis, the hosiery section, being an asset and property of the company in relation to the undertaking, could not be treated as outside the scope of the sick textile undertaking merely because it had been treated separately in earlier litigation under a different statute.

Conclusion: The hosiery section was included in the sick textile undertaking and was validly brought within the takeover framework.

Issue (ii): whether closure of the spinning section, while the hosiery section continued, amounted to closure of the textile undertaking for the requisite period under the Act.

Analysis: The spinning unit was the major and substantial activity of the company, and its closure meant that the principal textile activity had come to an end. The continued running of an insubstantial part of the undertaking did not prevent a finding that the undertaking had, in substance, closed down. The materials did not establish a permanent closure beyond revival, and the statutory setting supported treating the undertaking as closed for the purpose of Section 2(d)(ii).

Conclusion: The undertaking was correctly treated as having closed in substance for the requisite period, and the challenge on that ground failed.

Final Conclusion: The statutory takeover and nationalisation were upheld, and the writ petition was rejected.

Ratio Decidendi: Under a special statute with an inclusive definition and deeming provision, the whole undertaking may be treated as covered where the major and substantial activity has closed, even if a minor segment continues to operate.

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