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1979 Supreme(MP) 133
High Court Of Madhya Pradesh
G. P. Singh, C. J. and B. C. Varma, J.
PILANI INVESTMENT CORPORATION LIMITED - Appellant
Versus
UNION OF INDIA (UOI) - Respondents
Misc. Petn. 850 Of 1979
Decided On : 09/17/1979
A.M.MATHUR, ANIL BHATNAGAR, C.C.DWIVEDI, K.K.ADHIKARI, P.L.DUBEY, Praveen Kumar, S.C.JAIN, S.K.Dubey, S.S.RAY
The inclusion of an Act in the Ninth Schedule to the Constitution under Article 31B bars the argument that the Act infringes Articles 14, 19, and 31 of the Constitution.
Headnote:
INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 - SECTIONS 18FB AND 29D - CONSTITUTIONALITY - NINTH SCHEDULE TO THE CONSTITUTION - ARTICLE 31A - ARTICLE 31B - ARTICLE 14 - ARTICLE 19 - ARTICLE 31 - VALIDITY OF ORDERS PASSED UNDER SECTION 18FB(1)(B) - ARBITRARINESS AND UNREASONABLENESS.
Fact of the Case:
The petitioners, an investment holding company and a shareholder of the respondent company, challenged the constitutional validity of Sections 18FB and 29D of the Industries (Development and Regulation) Act, 1951, and four orders issued under Section 18FB(2) extending the operation of the said orders up to 1st January, 1981. The petitioners also challenged the validity of the orders passed under Section 18FB(1)(b) suspending the operation of all contracts, agreements, etc., in force immediately before the date of issue of the orders (other than those relating to secured liabilities to banks and financial institutions) to which the said industrial undertakings of the respondent company or the company was a party for a period of one year.
Finding of the Court:
The Court held that: 1. Sections 18FB and 29D of the Industries (Development and Regulation) Act, 1951, were protected by Article 31A of the Constitution and were not violative of Articles 14, 19, and 31 of the Constitution. 2. The inclusion of the Act at Item 88 in the Ninth Schedule by the Constitution (39th Amendment) Act, 1975, barred the argument that the Act infringed Articles 14, 19, and 31. 3. The amendment made in Section 18FB(2) by Ordinance No. 6 of 1978 and Act No. 17 of 1979, extending the aggregate period of extension from five years to eight years, was not unconstitutional and was protected by Article 31A(1)(b). 4. The impugned orders passed under Section 18FB(1)(b) were not violative of Articles 14, 19, and 31 of the Constitution and were protected by Article 31A. 5. The orders could not be struck down as arbitrary or unreasonable as the petitioners failed to make out a case that they were made without the satisfaction required under Section 18FB(1)(b).
Issues: 1. Whether Sections 18FB and 29D of the Industries (Development and Regulation) Act, 1951, were ultra vires and void as they took away the petitioners' fundamental rights under Articles 14, 19(1)(f), 19(1)(g), and 31 of the Constitution? 2. Whether the inclusion of the Act at Item 88 in the Ninth Schedule by the Constitution (39th Amendment) Act, 1975, was beyond the constituent power, as it damaged the basic structure or framework of the Constitution? 3. Whether the amendment made in Section 18FB(2) by Ordinance No. 6 of 1978 and Act No. 17 of 1979, extending the aggregate period of extension from five years to eight years, was unconstitutional? 4. Whether the impugned orders passed under Section 18FB(1)(b) were violative of Articles 14, 19, and 31 of the Constitution? 5. Whether the orders could be struck down as arbitrary or unreasonable?
Ratio Decidendi: 1. The Court held that Sections 18FB and 29D of the Industries (Development and Regulation) Act, 1951, were protected by Article 31A of the Constitution and were not violative of Articles 14, 19, and 31 of the Constitution. 2. The Court held that the inclusion of the Act at Item 88 in the Ninth Schedule by the Constitution (39th Amendment) Act, 1975, barred the argument that the Act infringed Articles 14, 19, and 31. 3. The Court held that the amendment made in Section 18FB(2) by Ordinance No. 6 of 1978 and Act No. 17 of 1979, extending the aggregate period of extension from five years to eight years, was not unconstitutional and was protected by Article 31A(1)(b). 4. The Court held that the impugned orders passed under Section 18FB(1)(b) were not violative of Articles 14, 19, and 31 of the Constitution and were protected by Article 31A. 5. The Court held that the orders could not be struck down as arbitrary or unreasonable as the petitioners failed to make out a case that they were made without the satisfaction required under Section 18FB(1)(b).
Final Decision: The petition was partly allowed. Section 29D of the Industries (Development and Regulation) Act, 1951, was declared unconstitutional and void. In all other respects, the petition failed and was dismissed. There was no order as to costs.
( 1 ) BY this petition under Article 226 of the Constitution, the petitioners challenge two orders issued by the Central Government under Section 18fb (1) (b) of the Industries (Development and Regulation) Act, 1951 and four orders issued under Section 18fb (2) extending the operation of the said orders up to 1st January, 1981. The petitioners also, challenge the constitutional validity of sections 18fb and 29d of the Act.
( 2 ) PETITIONER No. 1 is an investment holding company and carries on the business of investment and financing monies for business and commercial purposes. Petitioner No. 2 is a shareholder of the petitioner-company. Respondent No. 3 is a company having a factory at Worli, Bombay, and another factory at Ghaziabad in Uttar Pradesh. The respondent company carries on the business of manufacturing bicycles, auto-engines and bicycle parts. The said industry is a scheduled industry under the Act. In June 1970, the petitioner company advanced a clean loan of Rs. 8. 5 lacs to the respondent-company repayable on demand on interest at the rate of 10 per cent per annum. Another loan of Rupees 5 lacs was advanced by the petitioner-company on the same terms in February. 1971. Besides these loans the petitioner-company in october, 1970 executed a guarantee in favour of the State Bank of India up to limit of Rs. 15 lacs in respect of loans advanced by the State Bank to the respondent company on cash credit facilities. By two orders passed on 3rd january, 1974 under Section 18a of the Act, the management of the whole of the undertakings of the respondent company at Bombay and Ghaziabad was taken over for a period of five years. This period was extended from time to time. The undertakings of the respondent company are still managed by the board of Management authorised under Section 18a of the Act by the Central government. By two separate orders issued on 29th January, 1974, under section 18fb (1) (b) of the Act, the Central Government suspended the operation of all contracts, agreements, etc. in force immediately before the date of issue of the orders (other than those relating to secured liabilities to banks and financial institutions) to which the said industrial undertakings of the respondent company or the company was a party for a period of one year. The orders in so far as relevant read as follows:
"and whereas the Central Government is satisfied that in relation to the said industrial undertaking it is necessary so to do in the interests of the general public with a view to preventing fall in the volume of production of the scheduled industry, namely Bicycles and Bicycle chains industry; now, therefore, in exercise of the powers conferred by Clause (b) of sub-section (1) of Section 18fb of the Act, the Central Government hereby declares that the operation of all contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force immediately before the date of issue of this order (other than those relating to secured liabilities to banks and financial institutions) to which the said industrial undertaking or the owning such industrial undertaking is a party or which may be applicable to such industrial undertaking or company shall remain suspended for a period of one year and that all the rights, privileges, obligations and liabilities, accruing or arising thereunder before the said date shall remain suspended for the said period. "
The period of continuance of the aforesaid orders was extended from time to time up to 2nd January, 1979 under Section 18fb (2 ). By two orders passed on 1st January, 1979, the period of the operation of these orders was extended up to and inclusive of 1st January, 1980. On 19th January, 1975 the petitioner company filed a suit in the Court of the District Judge, Gwalior, against the respondent company for recovery of Rupees 19,22,260. 97, the amount due on the two loans. The District Judge by his order dated 30th July, 1977
