Public-interest takeover of management pending nationalisation upheld as a valid transitional economic measure.

A statute taking over the management of textile undertakings pending nationalisation was held to be a finite, transitional measure and therefore protected by Article 31A(1)(b). The Court read the Act's long title, preamble and scheme as showing an interim public-interest takeover of management, not an indefinite transfer of ownership. The inclusion of the mills in the statutory schedule was upheld because economic legislation enjoys a presumption of constitutionality and wider legislative latitude, and the classification had a rational relation to rehabilitation and nationalisation. The Article 19(1)(g) challenge also failed, as protection under Article 31A(1)(b) barred it and the management takeover was not unreasonable.

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Issues: (i) whether the impugned law provided only for taking over the management of the textile undertakings for a limited period within Article 31A(1)(b); (ii) whether the inclusion of the mills in the statutory schedule was arbitrary and violative of Article 14; and (iii) whether the taking over of management infringed Article 19(1)(g).

Issue (i): whether the impugned law provided only for taking over the management of the textile undertakings for a limited period within Article 31A(1)(b).

Analysis: The law was enacted to take over management in public interest pending nationalisation. The expression "pending nationalisation" was held to denote a finite and transitional period, because the management takeover was only an interim step until nationalisation was completed. The statute was read as a whole and its long title, preamble and scheme were treated as showing a temporary takeover of management rather than an indefinite acquisition of ownership.

Conclusion: The impugned Act fell within Article 31A(1)(b) and was a law for taking over management for a limited period.

Issue (ii): whether the inclusion of the mills in the statutory schedule was arbitrary and violative of Article 14.

Analysis: The Court applied the settled principles of presumptive constitutionality and the greater latitude accorded to economic legislation. It held that the Legislature was entitled to proceed on the basis of the financial condition of the undertakings and the need to protect public funds, workers' interests and the proposed nationalisation scheme. The High Court had erred in treating "mismanagement" as necessarily importing fraud or dishonesty and in undertaking an over-close factual review of the legislative basis for classification. The classification of the mills for takeover had a rational relation to the object of rehabilitation and nationalisation.

Conclusion: No violation of Article 14 was made out.

Issue (iii): whether the taking over of management infringed Article 19(1)(g).

Analysis: Once the legislation was held to be protected by Article 31A(1)(b), the challenge under Article 19(1)(g) could not succeed. In any event, the Court held that Parliament's choice to take over management directly, rather than proceed through other regulatory mechanisms, did not render the law unreasonable or unconstitutional in the context of a public-interest economic measure.

Conclusion: No infringement of Article 19(1)(g) was established.

Final Conclusion: The constitutional challenge failed, and the legislative takeover of management was upheld as a valid interim measure in aid of nationalisation and rehabilitation of the undertakings.

Ratio Decidendi: A statute taking over the management of undertakings in public interest pending nationalisation is protected by Article 31A(1)(b), and in reviewing such economic legislation the Court will defer to legislative classification unless it is shown to be palpably arbitrary or lacking any rational relation to the statutory object.

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