The main legal point established in the judgment is that the State Legislature had no legislative competence in regard to the subject-matter of the Ordinance, and the Governor had no authority to promulgate the Ordinance. The Ordinance violated Art.19(1)(f) and Art.31(2) of the Constitution and was not saved by Art.31-A thereof.

1. The Gwalior Rayons Silk Manufacturing (Wvg.) Company Ltd., Mavoor a Private Limited Company and one of its shareholders, are the two petitioners in this writ petition. They challenge the recent Gwalior Rayons (Rayon Pulp Division) Taking over of Management Ordinance, 1978 (Ordinance No. 14 of 1978) promulgated by the Governor. The Company is registered under the Companies Act with its Registered Office at Nagda in Madhya Pradesh. Besides its factories at Nagda and Gwalior in Madhya Pradesh, the Company has two factories in Kerala State at Mavoor, near Calicut, and also its factories in Harihar (Karnataka) and Bhiwani (Haryana) The factories at Mavoor are engaged in the manufacture of rayon grade pulp from Bamboo and various other hard and soft woods, and staple fibre from the dissolving pulp. Apart from these two divisions, there is a paper division engaged in the manufacture of various types of paper. The Rayon Pulp Division went into production in 1963. The impugned Ordinance in effect provides for the taking over of the management and administration of the Company and entrusting the same to a Controller appointed by the Government. The Ordinance is styled an Ordinance "to provide for the taking over of the management of the undertaking of the Rayon Pulp Division of the Gwalior Rayons and Silk Manufacturing and Weaving Company Limited for a limited period in order to secure the proper management thereof and for matters connected therewith or incidental thereto" The Preamble recited that the Rayon Pulp Division of the Company had not been working from the 30th November, 1977, and the production of rayon grade pulp had stopped, resulting in the unemployment of twenty thousand workers, and the interest of the unemployed workers and public interest made it necessary to take over the management of the Rayon Pulp Division of the Company. S.3 enables the Government by a notified order to appoint a person or body of persons as the Controller of the undertaking to take over the management thereof. The order is to remain in force for a period not exceeding two years; but is liable to be extended. S.4 provides for the effect of a take over under S.3; all persons in charge of the management of the undertaking are to vacate office; and the Controller alone is entitled to be in management of the undertaking. Under S.5, the Government can remove the Controller and appoint another person or body of persons. S.6 enacts that no person who is obliged to vacate (he office consequent on the take over shall be entitled to any compensation for the loss of office. S.9 empowers the Government to cancel a notification issued under S.3. Under S.9 all property of the Company is to be delivered to the Controller. S.10 lays on the Company the obligation to furnish the necessary particulars to the Controller. S.11 provides the penalty for furnishing false particulars. S.14 provides immunity in respect of acts done in good faith against the Government or the Controller, under the Ordinance. S.15 enacts that the provisions of the Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any law other than the Ordinance. Such, in substance, are the provisions of the Ordinance.

2. The Ordinance has been attacked on the following grounds. (1) That the subject-matter of the Ordinance is beyond the legislative competence of the State, and therefore of the Ordinance making powers of the Governor, and the Ordinance cannot be saved, as no Presidential assent has been obtained and no instructions obtained from the President before promulgating it. (2) Assuming the subject-matter of the Ordinance is within the legislative powers of the Legislature and therefore the Ordinance making powers of the Governor, it violates the fundamental rights under Art.14, 19 and 31 and is not saved by Art.31-A of the Constitution for want of previous consultation with, and assent of, the President. (3) That the provisions of the Ordinance ar