1999 Supreme(Mad) 89

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P. SATHASIVAM
Somasundaram Corporation (Pvt.) Ltd. - Appellant
Versus
Govt. of T.N. and Others - Respondents
Writ Petn. Nos. 1979 of 1988, 13510/94, 20925/94 and 4455 of 1996
Decided On : 30 January 1999

The State Legislature has the legislative competence to enact a law for the acquisition of an undertaking included in Schedule to the IDR Act, 1951, as the acquisition of an undertaking included in Schedule to the IDR Act by an enactment of the State Legislature is permitted. The legislation in effect deals with transfer of ownership of such undertaking and the same would, in no way, come in conflict with any of the provisions of the IDR Act or would not trench upon any control exercised by the Union under the various provisions of the IDR Act.

Headnote:

SOMASUNDARAM SUPER SPINNING MILLS (ACQUISITION AND TRANSFER) ACT, 1986 - CONSTITUTIONALITY - LEGISLATIVE COMPETENCE OF STATE LEGISLATURE - INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 - ARTICLE 31-C OF THE CONSTITUTION OF INDIA - COMPENSATION - ARTICLE 14 AND 19(1)(G) OF THE CONSTITUTION OF INDIA - INDUSTRIAL DISPUTES ACT - TAMIL NADU RELIEF UNDERTAKING (SPECIAL PROVISIONS) ACT, 1969 - INTERPRETATION.

Fact of the Case:

The petitioner, Somasundaram Corporation (Private Limited), owners of Somasundaram Super Spinning Mills, challenged the constitutional validity of the Somasundaram Super Spinning Mills (Acquisition and Transfer) Act (The Tamil Nadu Act 81 of 1986) as invalid and ultra vires of the Constitution of India. East Ramnad District National Textile Workers Union (INTUC) filed Writ Petition No. 13510 of 94 challenging lay off Notice dated 1-6-94 and the closure order dated 15-7-1994 passed by the Tamil Nadu Textile Corporation, Coimbatore. Ramanathapuram District Panchalai Thozhilalar Sangam filed Writ Petition No. 20925 of 94 seeking to issue a writ of Certiorarified Mandamus calling for the records in G.O. No. 287, (Handlooms, Handicrafts, Textiles and Khadi (C2) Department dated 14-10-93 quash the same and forbear the respondents 1 to 3 therein from handing over the 4th respondent-Somasundaram Super Spinning Mills to P.S.S. Somasundaram Chettiar, Coimbatore. Anna Textile Workers Union in Writ Petition No. 4455 of 1996 challenges the Government Order (2D) No. 26, Handlooms, Handicrafts, Textiles and Khadi (C-2) dated 28-9-1995 published on 22-11-95 declaring the Tamil Nadu Textile Corporation as a Relief Undertaking.

Finding of the Court:

The Court upheld the constitutional validity of the Somasundaram Super Spinning Mills (Acquisition and Transfer) Act, 1986 (Tamil Nadu Act 81 of 1986) enacted by the State Legislature. The Court held that the State Legislature had the legislative competence to enact the impugned Act, and that the Act was not in violation of the Industries (Development and Regulation) Act, 1951. The Court also held that the Act was protected by Article 31-C of the Constitution of India, and that the compensation payable under the Act was not illusory or inadequate. The Court further held that the Act was not arbitrary or violative of Articles 14 and 19(1)(g) of the Constitution of India. The Court quashed the Government Order No. 287 (Handlooms, Handicrafts, Textiles and Khadi) Department dated 14-10-93, which sought to hand over the Somasundaram Super Spinning Mills to the erstwhile owner. The Court also dismissed the writ petition challenging the Government Order No. 26, (Handlooms, Handicrafts, Textile and Khadi) Department dated 28-9-1995, which declared the Tamil Nadu Textile Corporation as a Relief Undertaking, as the impugned order had already lapsed by efflux of time.

Issues: 1. Whether the State Legislature had the legislative competence to enact the Somasundaram Super Spinning Mills (Acquisition and Transfer) Act, 1986 (Tamil Nadu Act 81 of 1986)? 2. Whether the Act was in violation of the Industries (Development and Regulation) Act, 1951? 3. Whether the Act was protected by Article 31-C of the Constitution of India? 4. Whether the compensation payable under the Act was illusory or inadequate? 5. Whether the Act was arbitrary or violative of Articles 14 and 19(1)(g) of the Constitution of India? 6. Whether the Government Order No. 287 (Handlooms, Handicrafts, Textiles and Khadi) Department dated 14-10-93, which sought to hand over the Somasundaram Super Spinning Mills to the erstwhile owner, was valid? 7. Whether the Government Order No. 26, (Handlooms, Handicrafts, Textile and Khadi) Department dated 28-9-1995, which declared the Tamil Nadu Textile Corporation as a Relief Undertaking, was valid?

Ratio Decidendi: 1. The State Legislature had the legislative competence to enact the Somasundaram Super Spinning Mills (Acquisition and Transfer) Act, 1986 (Tamil Nadu Act 81 of 1986), as the acquisition of an undertaking included in Schedule to the IDR Act by an enactment of the State Legislature is permitted. The legislation in effect deals with transfer of ownership of such undertaking and the same would, in no way, come in conflict with any of the provisions of the IDR Act or would not trench upon any control exercised by the Union under the various provisions of the IDR Act. 2. The Act was not in violation of the Industries (Development and Regulation) Act, 1951, as the IDR Act does not deal with the ownership of industrial undertakings in declared industries. 3. The Act was protected by Article 31-C of the Constitution of India, as there was a direct and reasonable nexus between the law and the provisions of Article 39(b) and (c) of the Constitution of India. 4. The compensation payable under the Act was not illusory or inadequate, as the Act provided principles for determining compensation, and the adequacy or otherwise of compensation on the calculus made by applying the principle is beyond the judicial review. 5. The Act was not arbitrary or violative of Articles 14 and 19(1)(g) of the Constitution of India, as the Act came under the protective Umbrella of Article 31-C of the Constitution. 6. The Government Order No. 287 (Handlooms, Handicrafts, Textiles and Khadi) Department dated 14-10-93, which sought to hand over the Somasundaram Super Spinning Mills to the erstwhile owner, was not valid, as the Government was not justified in passing the impugned order after acquiring the Mill by a valid Legislation, for valid reasons. 7. The Government Order No. 26, (Handlooms, Handicrafts, Textile and Khadi) Department dated 28-9-1995, which declared the Tamil Nadu Textile Corporation as a Relief Undertaking, was not valid, as the one year period mentioned in the Government order had already lapsed and nothing survived for adjudication.

Final Decision: The Court dismissed Writ Petition No. 1979 of 88, challenging the constitutional validity of the Somasundaram Super Spinning Mills (Acquisition and Transfer) Act, 1986 (Tamil Nadu Act 81 of 1986). The Court dismissed Writ Petition No. 13510 of 94, challenging the lay off Notice dated 1-6-94 and the closure order dated 15-7-1994 passed by the Tamil Nadu Textile Corporation, Coimbatore. The Court allowed Writ Petition No. 20925 of 94, challenging the Government Order No. 287 (Handlooms, Handicrafts, Textiles and Khadi) Department dated 14-10-93, and quashed the impugned order. The Court dismissed Writ Petition No. 4455 of 1996, challenging the Government Order No. 26, (Handlooms, Handicrafts, Textile and Khadi) Department dated 28-9-1995, as the impugned order had already lapsed by efflux of time.