Statutory takeover of sick textile undertakings upheld; no prior hearing or compensation-based challenge succeeded.

Statutory specification of textile undertakings as sick units did not require a prior hearing, because the Act treated inclusion in the Schedule as conclusive for takeover purposes and no individual adjudication was contemplated. The legislative identification of undertakings on statutory criteria did not amount to an impermissible exercise of judicial power, so the separation of powers and basic structure challenge failed. The nationalisation scheme also could not be attacked merely for alleged inadequacy or illusory compensation, as it was treated as implementing the constitutional policy then protecting such measures. The takeover and nationalisation framework was therefore upheld.

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Issues: (i) Whether the company was entitled to a pre-decisional hearing before the management of its textile undertakings was taken over as sick textile undertakings. (ii) Whether the legislative specification of the undertakings in the First Schedule violated the doctrine of separation of powers and the basic structure of the Constitution. (iii) Whether the nationalisation could be challenged on the ground that the compensation specified for acquisition was inadequate or illusory.

Issue (i): Whether the company was entitled to a pre-decisional hearing before the management of its textile undertakings was taken over as sick textile undertakings.

Analysis: The undertakings were expressly specified in the First Schedule as sick textile undertakings and the statutory scheme itself treated such specification as conclusive for takeover purposes. The criteria in the definition of sick textile undertaking did not require the executive to make an individual adjudication after hearing the owner. The inclusion of a unit in the Schedule was therefore not a case attracting the principles of natural justice in the manner contended.

Conclusion: The company was not entitled to a prior hearing, and this challenge failed.

Issue (ii): Whether the legislative specification of the undertakings in the First Schedule violated the doctrine of separation of powers and the basic structure of the Constitution.

Analysis: The legislative act of identifying sick textile undertakings in the Schedules was undertaken on the basis of the statutory criteria laid down in the Act and was not a judicial or quasi-judicial determination. The specification did not create finality beyond challenge in court where the statutory tests were not met. Since the Legislature had not usurped an adjudicatory function with binding conclusiveness, there was no infringement of the separation of powers or the basic structure principle.

Conclusion: The challenge based on separation of powers and basic structure was rejected.

Issue (iii): Whether the nationalisation could be challenged on the ground that the compensation specified for acquisition was inadequate or illusory.

Analysis: The Court held that the validity of the Nationalisation Act could not be assailed merely on the ground of inadequacy of compensation in the circumstances then governing the constitutional scheme. The Act was treated as giving effect to the policy underlying Article 39(b) and falling within Article 31C as then applicable. On the facts, the amount fixed could not be treated as illusory.

Conclusion: The challenge to the compensation provision failed.

Final Conclusion: The takeover and nationalisation measures were upheld, and the writ petition was dismissed in full.

Ratio Decidendi: Where a statute itself specifies undertakings as sick units on the basis of legislative criteria, the owner is not entitled to a pre-takeover hearing merely to contest that specification, and a statutory nationalisation scheme protected by the constitutional policy framework cannot be invalidated solely for alleged inadequacy of compensation.

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