Judgment

SEN, J. :- These appeals on certificate directed against the judgment and order of the Bombay High Court dated June 13, 1983 raise a question of far-reaching public importance. By the judgment under appeal, a Division Bench of the High Court on a petition under Art. 226 of the Constitution filed by Messrs Shree Sitaram Mills Limited, Bombay (for short the petitioners) while upholding the constitutional validity of the Textile Undertakings (Taking Over of Management) Act, 1983 insofar as it provides by S. 3(1) of the Act for the taking over by the Central Government of the management in the public interest of Messrs Shree Sitaram Mills a textile undertaking owned by it and specified in the First Schedule to the Act, held that the surplus land appurtenant to the Mill was not an asset in relation to the textile undertaking within the meaning of sub-s. (2) of S. 3 of the Act, on the ground that the business of real estate carried on by the Company was separate and distinct from the textile business, and accordingly directed the Central Government to restore possession of the said land to the Company. The issue involved must necessarily turn on the meaning of the words assets in relation to the textile undertaking appearing in sub-s. (2) of S. 3 of the Act.

2. In order to appreciate the nature of the controversy, it is necessary to state a few facts. The mill now known as Shree Sitaram Mills was established in 1875 under the management of Messrs Shapurji Broacha Mills Limited on a very large tract of land located in the heart of the metropolitan city of Greater Bombay. The only real estate that it acquired in the late 19th century comprised of 1,05,008 square yards which undoubtedly was an asset of the textile undertaking, although the actual mill precincts were spread over 50,749 square yards. Early in the 20th century it changed hands a few times and ultimately it was taken over by Tantias of Calcutta in 1955 as a grey unit. The Companys share capital comprised of equity shares of the value of Rs. 45 lakhs and cumulative redeemable preference shares worth Rs. 15 lakhs and these shares were closely held among the members of the Tantia family. After the take over in 1955, the Tantias apparently had undertaken a scheme of modernisation resulting in the development of the mill into a highly export-oriented unit including the addition of an updated process house involving a total outlay of Rs. 2 crores which was financed through loans taken from the National Industrial Development Corporation. During the 60s, the Companys performance had only been average, incurring losses for five years and making profits for the remaining five years with the result that in the overall balance the Company managed to, survive without substantially adding to its reserves. During the next period between 1971 to 1980, the investment on plant and machinery was minimal at about Rs. 42 lakhs and the only major scheme of modernisation that the Company planned was under the Soft Loan Scheme when in 1977 it made an application to the Industrial Development Bank of India (IDBI) since a substantial portion of its machinery was not in a state of good repairs. The Company had not declared any dividend on its shares for several years. In the early 70s i.e. during the years 1971-72, 1972-73 and 1973-74 which were profitable years for the textile industry as a whole, the Company made profits which were attributable to its textile undertaking.

3. Due to, unprecedented floods in 1914 and various other factors, the financial condition of the Company became precarious. As is reflected from its balance-sheets, the Company had been making continuous losses at an increasing rate from the year 1974-75 onwards. Even though the years 1978-79 and 1979-80 were comparatively good for the textile industry, the Company continued, making losses largely due to shortage of working capital and strained liquidity position. It had leased out its process house to Messrs Bhartiya El