1980 (4) TMI 304 - SC - Indian Laws

U.P. Sugar Undertakings Act upheld as constitutional. Legislative competence confirmed, compensation valid. No violation of fundamental rights.

ISHWARI KHETAN SUGAR MILLS (P) LTD. Versus STATE OF UP.

The court upheld the constitutional validity of the U.P. Sugar Undertakings (Acquisition) Act, 1971, dismissing the appeals and special leave petitions. ... - Issues Involved:1. Legislative competence of the U.P. State Legislature to enact the U.P. Sugar Undertakings (Acquisition) Act, 1971.2. Violation of Article 31 of the Constitution regarding compensation.3. Breach of Articles 19(1)(f) and 19(1)(g) of the Constitution.4. Infringement of the guarantee of equality enshrined in Article 14 of the Constitution.Issue-wise Detailed Analysis:1. Legislative Competence of the U.P. State Legislature:The primary contention was whether the U.P. State Legislature had the legislative competence to enact the U.P. Sugar Undertakings (Acquisition) Act, 1971. The appellants argued that the sugar industry, being a declared industry under Entry 52 List I, was beyond the legislative competence of the State Legislature. The court examined the relevant entries in the legislative lists and concluded that the power to acquire property derived from Entry 42 in List III is an independent power. The impugned Act, being in pith and substance an Act to acquire scheduled undertakings, was within the legislative competence of the State Legislature. The court emphasized that the degree and extent of control assumed by the Union pursuant to the declaration under Entry 52 List I must be demarcated with precision. The court held that the impugned legislation did not conflict with the IDR Act and did not trench upon the field occupied by the Central legislation.2. Violation of Article 31 of the Constitution:The appellants contended that the compensation awarded for the acquisition was illusory and violated Article 31(2) as it stood prior to its amendment by the Constitution (Twenty-fifth Amendment) Act, 1971. The court examined the principles for determining compensation and concluded that the compensation provided was not illusory. The court referred to the decision in State of Gujarat v. Shantilal Mangaldas, which upheld the principle of awarding compensation based on the written-down value of used machinery. The court held that the principles specified for determining compensation were relevant and the compensation awarded was not illusory.3. Breach of Articles 19(1)(f) and 19(1)(g) of the Constitution:The appellants argued that the Act violated their rights under Articles 19(1)(f) and 19(1)(g) of the Constitution. The court did not find merit in this contention, as the Act was enacted in the larger public interest to address the serious problems created by the owners of certain sugar mills. The court emphasized that the acquisition was for a public purpose and the compensation provided was not inadequate.4. Infringement of Article 14 of the Constitution:The appellants contended that the Act violated Article 14 as it selectively acquired certain sugar undertakings while leaving out others that were similarly situated. The court examined the classification and found that the selection of sugar undertakings for acquisition was based on an intelligible differentia and had a rational relationship to the object sought to be achieved by the Act. The court noted that the classification was based on the economic situation of the sugar undertakings and their impact on the economy of the area. The court held that the classification did not violate Article 14.Conclusion:The court upheld the constitutional validity of the U.P. Sugar Undertakings (Acquisition) Act, 1971, and dismissed the appeals and special leave petitions. The court concluded that the State Legislature had the legislative competence to enact the Act, the compensation awarded was not illusory, the Act did not violate Articles 19(1)(f) and 19(1)(g), and the classification for acquisition did not infringe Article 14.