The main legal point established in the judgment is that the Parliament had the necessary legislative competence to enact the laws and provisions in question, and that the provisions did not violate Art.14 & 19(1)(g) of the Constitution.

Headnote:
Acquisition of Undertakings - Legislative Competence - Violation of Art.14 & 19(1)(g) - [Esso, Burmah Shell, Caltex] - [S.5(2), S.7(3)] - The judgment discusses the legislative competence of the Parliament to enact the Esso (Acquisition of Undertakings in India) Act, 1974, Act No.4 of 1974, and the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, Act No.2 of 1976. It analyzes the provisions of S.5(2) and S.7(3) in relation to the acquisition of foreign companies and the rights of landlords. The court concludes that the enactments and the provisions are within the legislative competence of the Parliament and do not violate Art.14 & 19(1)(g) of the Constitution.
Fact of the Case:

The case involved the nationalization of three foreign companies and the statutory provisions regulating the rights of landlords who had granted leases to these companies. The petitioners, as landlords, challenged the constitutionality of S.5(2) and S.7(3) in the two enactments, alleging legislative incompetence and violation of Art.14 & 19(1)(g) of the Constitution.
Finding of the Court:

The court found that the Parliament had the necessary legislative competence to enact the laws and provisions in question. It held that the provisions were ancillary and incidental to the main purpose of the Acts, which was the acquisition of foreign companies. The court also concluded that the provisions did not violate Art.14 & 19(1)(g) of the Constitution.
Issues: The main issues were the legislative competence of the Parliament to enact the laws and the alleged violation of Art.14 & 19(1)(g) of the Constitution by the provisions in question.
Ratio Decidendi: The court's decision was based on the interpretation of legislative competence under the Seventh Schedule of the Constitution, the scope of acquisition and requisitioning of property, and the protection provided under Art.31C. The court also emphasized that any challenge to the constitutionality of an enactment can only be made on the grounds of lack of legislative competence, infraction of fundamental rights, or violation of express provisions in the Constitution.
Final Decision: All the Original Petitions were dismissed by the court, but without costs. The court also refused the request for leave to appeal to the Supreme Court, as it found no substantial question of law of general importance in the case.

Judgment :-

1. Three enactments, within a span of three years, The Esso (Acquisition of Undertakings in India Act, 1974, Act No.4 of 1974, the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, Act No.2 of 1976, and the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited) Act, 1977, Act No.17 of 1977, nationalised three foreign companies, Esso Eastern Incorporated, the Burmah Shell Oil Storage and Distributing Company of (India) Ltd. and Caltex Oil Refining (India) Ltd., which carried on in India the business of distributing, marketing or refining and producing petroleum products having places of business in several parts of the country. The right, title and interest of these undertakings stood transferred to and were statutorily vested in the Central Government The acquisitions of these Companies are now complete and they are no longer in challenge and those foreign companies are also not before court.

2. The assets which thus vested in the Central Government include leases and tenancy rights held by these three companies. The petitioners in these writ petitions are persons who had granted leases of their premises to the Burmah Shell or to the Esso standard Companies. The rights of these landlords are regulated by two provisions, S.5(2) and S.7(3), identically worded in the two enactments, Act 4 of 1974 and Act 2 of 1976. These Acts provide that where any property is held in India by the two companies under any lease or under any right of tenancy, the Central Government shall be deemed to have become the lessee or tenant on and from the appointed day "as if the lease or tenancy in relation to such property had been granted to the Central Government" and thereupon "all the rights under such lease or tenancy shall be deemed to have been transferred to and vested in the Central Government". S.5(2), then, provided thus:

"5. Central Government to be lessee or tenant under certain circumstances.-(1) XXX

(2) On the expiry of the term of any lease or tenancy referred to in sub-section (1), such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the tease or tenancy was held by Burmah Shell immediately before the appointed day".

3. S.7(1) empowered the Government to direct the vesting of the undertakings, in Government company, by appropriate notifications and, S.7(2) stated that the government company, shall, on and from the date of such vesting, be deemed to have become the owner, tenant or lessee, as the case may be, in relation to the undertakings and all the rights and liabilities of the Central Government shall be deemed to have become the rights and liabilities of the Government company. The provisions of sub-section (2) of S.5 regarding the right to renew the original lease available to the Central Government are extended to the Government company as S.7(3) enacts thus:

"The provisions of sub-section (2) of S.5 shall apply to a lease or tenancy, which vests in a Government company, as they apply to a tease or tenancy vested in the Central Government and reference therein to the "Central Government" shall be construed as a reference to the Government company".

4. Notifications have been issued under S.7(1). The Government companies, impleaded in these proceedings, are at present the tenants of the premises held by the undertakings earlier under various landlords. These companies as tenants, sought to exercise their right of renewal conferred on them under S.5(2) and requested the petitioners to execute the renewal deeds or attempted to take other steps for obtaining renewal. S.5(2) and 7(3) thus prevent the landlords from terminating the leases on the expiry of the period, from enhancement of rent or from taking possession of the leased premises when the lease-hold right has to come to an end under the contracts. The petitioners are some of those landlords. They therefore challen

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1989 Supreme(Ker) 305

The main legal point established in the judgment is that the Parliament had the necessary legislative competence to enact the laws and provisions in question, and that the provisions did not violate Art.14 & 19(1)(g) of the Constitution.

Cases Referred (1)