TaxTMI 
TaxTMI 
1997 (10) TMI 320
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....t entered into between the late Shri Ram Gopal Saharia, father of the appellant, and the Government of Nagaland dated April 24, 1972, to establish a plywood factory in the territory of Nagaland on the terms and conditions stipulated therein, the company was incorporated. The authorised share capital of the company was Rs. 50,00,000 divided into (i) 20,000 (6 per cent, cumulative redeemable) preference shares of Rs. 100 each, (ii) 15,000 'G' class equity shares of Rs. 100 each, and (iii) 15,000 'S' class equity shares of Rs. 100 each. 'G' and 'S' class equity shares carried the same rights. It appears that the appellant's group, on the one hand and the Government of Nagaland on the other hand, subscribed 50 per cent, each of the equity shares. The company after obtaining the necessary certificate of commencement of business on July 22,1972, as required under the Central Act, commenced its business thereafter. The father of the appellant was the first managing director of the company. After the death of his father, the appellant became the managing director some time in 1975. A cabinet ranking Minister of the Government of Nagaland was the chairman of the company since its inception ....
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....trol pursuant to an exercise of legislative power is not within the inhibition of section 20 . . . 52. From the principles of catena of decisions enunciated in the decided cases, it is found that merely because an industry is a declared industry under entry 52, that by itself will not put an embargo on the State Legislature to pass legislation within its competence. It has further been found in many of the cases that mere incidental trenching does not warrant the striking down of an impugned Act. As regards the contention that Parliament having made the requisite declaration in section 2 of Schedule I thereof the State Legislature was denuded of its competence to enact the impugned provisions under entry 42 of List III it cannot be accepted. On examination of the various provisions of the Act there arises no doubt that it is for acquisition of property in 'S' class shares of the company and in pith and substance it falls under entry 42 of List III, and is not in conflict with entries 52 or 7 of List I." Undoubtedly, Mr. Sunil Gupta, learned counsel for the appellant, elaborately argued the matter and ultimately contended that the ruling of a Constitution Bench of this court in Is....
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....rst Schedule." Sch. I,, item 36(1 ).-"Any industry engaged in the manufacture or production of any of the articles mentioned under each of the following headings or sub-headings, namely :- . . . . 36. Timber products '. (1) Plywood." Section 20.- "After the commencement of this Act, it shall not be competent for any State Government or a local authority to take over the management or control of any industrial undertaking under any law for the time being in force which authorises any such Government or local authority so to do." Section 3 of the State Act-"(1) On the appointed day, all shares of the company other than the shares already held by the Government or its nominees in the company shall, by virtue of this Act stand transferred to, and vested in the State Government. (2) The State Government shall be deemed on and from the appointed day, to have been registered in the register of members of the company as the holder of each share which stands transferred to and vested in it by virtue of the provisions of sub-section (1). (3) All the shares which have vested in the State Government under sub-section (1), shall by force of such vesting, be freed and discharged of all tru....
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....t of the undertaking and not with its ownership. By acquiring ownership, incidentally, management and control of the company also vests with that, it will be incidental and such an exercise of legislative power is not prohibited under section 20 of the Central Act. Notwithstanding the taking over of the company by the State Government still if the Central Government finds scope to exercise their power under section 20 of the Central Act, it is open to them to do so. This is exactly what has been held by the Constitution Bench of this court in Ishwari Khetan's case, AIR 1980 SC 1955, 1970-71 : "There is thus a long line of decisions which clearly establishes the proposition that power to legislate for acquisition of property is an independent and separate power and is exercisable only under entry 42, List III and not as an incident of the power to legislate in respect of a specific head of legislation in any of the three lists. This power of the State Legislature to legislate for acquisition of property remains in fact and untrammelled except to the extent where on assumption of control of an industry by a declaration as envisaged in entry 52, List I, a further power of acquisition....
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....ection 20 has no merit." This judgment of the Constitution Bench has been followed and applied recently in Orissa Cement Ltd. v. State of Orissa [1991] Suppl. 1 SCC 430 ; Indian Aluminium Company Limited v. Karnataka Electricity Board [1992] 3 SCC 580 ; Dalmia Industries Ltd. v. State of U. P. [1994] 2 SCC 583 ; Ajay Kumar Singh v. State of Bihar [1994] 4 SCC 401 and Mahabir Sugar Mills Ltd. v. State of U. P. [1996] 10 SCC 259. The High Court also after elaborately discussing the matter and placing strong reliance on Ishwari Khetan's case, AIR 1980 SC 1955, rejected a similar contention advanced before it. In the circumstance, we do not think that there is any merit in the contention of learned counsel for the appellant that the ruling of this court in Ishwari Khetan's case, AIR 1980 SC 1955, requires reconsideration. Further, as submitted by learned senior counsel, Mr. K. Parasaran, the reason given by learned counsel for the appellant that certain aspects were not considered and those require reconsideration by a larger Constitutional Bench is not a ground for referring the matter to a larger Bench. In Smt. Somavanti's case, AIR 1963 SC 151,160, a Constitution Bench of this co....
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....argument whether there was infringement of article 19(1)(g), and clause ( f) of that article could not possibly be invoked. We are unable to hold that there is much substance in this argument. Banji Munji, AIR 1955 SC 41, and other decisions which followed it were based mainly on an examination of the inter-relationship between article 19(1)(f) and article 31(2). There is no question of any acquisition or requisition in Chapter IV-A of the Act. The relevant decision for the purpose of these cases was only the one given in Kpchuni's case, AIR 1960 SC 1080, after which no doubt was left that the authority of law seeking to deprive a person of his property otherwise than by way of acquisition or requisition was open to challenge on the ground that it constituted infringement of the fundamental rights guaranteed by article 19(1)(f). It was, therefore, open to those affected by the provisions of Chapter IV-A to have agitated before this court the question which is being raised now based on the guarantee embodied in article 19(1)(f) which was never done. It is apparently too late in the day now to pursue this line of argument. In this connection, we may refer to the observations of this ....