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High Court Of Madhya Pradesh
G. P. Singh, C. J. and J. S. Verma, J.
MANOHARSINGH - Appellant
Versus
CALTEX OIL REFINING (INDIA) LTD. - Respondents
Misc. Petn. 881 Of 1978
Decided On : 10/07/1980
CONSTITUTIONAL LAW - ARTICLE 19 (1) (F) - ARTICLE 14 - ARTICLE 31-C - CALTEX (ACQUISITION OF SHARES OF CALTEX OIL REFINING (INDIA) LIMITED AND OF THE UNDERTAKINGS IN INDIA OF CALTEX (INDIA) LIMITED) ACT, 1977 - SECTIONS 7 (3) AND 9 (3) - VALIDITY - NATIONALISATION OF PETROLEUM PRODUCTS - RENEWAL OF LEASE - POWER OF CENTRAL GOVERNMENT - PROTECTION UNDER ARTICLE 31-C - TRANSFER OF UNDERTAKINGS TO GOVERNMENT COMPANY - AMALGAMATION OF GOVERNMENT COMPANIES - EXERCISE OF POWER UNDER SECTION 7 (3) - PREMATURE NOTICE.
Fact of the Case:
The Caltex Petroleum Corporation, a foreign company, had two subsidiaries in India: Caltex Oil Refining (India) Limited, which refined crude oil and produced petroleum products, and Caltex (India) Limited, which marketed and distributed petroleum products. The President of India promulgated an Ordinance in 1976, which was replaced by an Act in 1977, acquiring the shares of Caltex Oil Refining and the undertakings of Caltex (India) in India. The Act also conferred power on the Central Government to renew or continue leases and tenancies in relation to the acquired undertakings. The Central Government vested the undertakings of Caltex (India) in Caltex Oil Refining, which was a Government company. Subsequently, Caltex Oil Refining and Hindustan Petroleum Corporation Limited were amalgamated, and the undertakings of Caltex Oil Refining were transferred to Hindustan Petroleum. The petitioners, who were the owners of a plot of land leased to Caltex (India) for a petrol pump, challenged the validity of Sections 7 (3) and 9 (3) of the Act and sought a declaration that the renewal of the lease by Caltex Oil Refining was invalid.
Finding of the Court:
The Court held that Sections 7 (3) and 9 (3) of the Act were valid and that the renewal of the lease by Caltex Oil Refining was valid. The Court found that the Act was protected by Article 31-C of the Constitution, which provides that no law giving effect to the policy of the State towards securing the principles specified in Clause (b) or Clause (c) of Article 39 shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by Article 14, Article 19 or Article 31. The Court also found that the power conferred on the Central Government by Section 7 (3) to renew or continue leases and tenancies was not arbitrary and that the exercise of this power by Caltex Oil Refining was not premature.
Issues: 1. Whether Sections 7 (3) and 9 (3) of the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of Caltex (India) Limited) Act, 1977 are violative of the petitioners' fundamental rights under Article 19 (1) (f) and Article 14 of the Constitution? 2. Whether the Act is protected by Article 31-C of the Constitution? 3. Whether the Central Government can transfer the undertakings of Caltex (India) to a Government company under Section 9 (3) of the Act? 4. Whether the amalgamation of Caltex Oil Refining and Hindustan Petroleum Corporation Limited is valid? 5. Whether the exercise of the power under Section 7 (3) by Caltex Oil Refining was premature?
Ratio Decidendi: 1. The power conferred on the Central Government by Section 7 (3) of the Act to renew or continue leases and tenancies is not arbitrary and is protected by Article 31-C of the Constitution. 2. The Act is protected by Article 31-C of the Constitution as it gives effect to the policy of the State towards securing the principles specified in Clause (b) of Article 39 of the Constitution. 3. The Central Government can transfer the undertakings of Caltex (India) to a Government company under Section 9 (3) of the Act. 4. The amalgamation of Caltex Oil Refining and Hindustan Petroleum Corporation Limited is valid. 5. The exercise of the power under Section 7 (3) by Caltex Oil Refining was not premature.
Final Decision: The petition was dismissed.
( 1 ) THE Caltex Petroleum Corporation is a foreign company incorporated in the state of Delaware in the United States of America. One of its subsidiaries, namely, the Caltex Oil Refining (India) Limited (an Indian Company), hereinafter referred to as the Caltex Oil Refining, was carrying on the business of refining crude oil and producing petroleum products in India. Another subsidiary of the Caltex Petroleum Corporation, namely, the Caltex (India)Limited (a foreign company) incorporated in Bahamas Islands, hereinafter referred to as the Caltex (India), was carrying on through its undertakings in india the business of marketing and distributing petroleum products. The president of India, on 30th Dec. 1976 promulgated the Caltex (Acquisition of shares of Caltex Oil Refining (India) Limited and of the Undertakings in India of caltex (India) Limited) Ordinance, 1976. The Ordinance was replaced by an Act (Act No. 17 of 1977) bearing the same name. The Act was enacted on 23rd Jan. 1977 but was given retrospective effect from 30th Dec. 1976. By Section 3 of the Ordinance and the Act all the shares in the capital of Caltex Oil Refining stood transferred to and vested in the Central Government from 30th Dec. 1976. The Caltex Oil Refining thus became a Government Company. Section 5 of the ordinance and the Act had also the effect of transferring and vesting in the central Government with effect from 30th Dec. 1976 the right, title and interest of Caltex (India) in relation to its undertakings. In India the effect of vesting of the undertakings of Caltex (India) in the Central Govt. is dealt with in Sections 6 and 7. Briefly stated, all rights and liabilities of the Caltex (India) in relation to its undertakings in India vested in the Central Government. Section 7 made it clear that the rights vested in the Central Government included the right under any lease. Power was also conferred on the Central Government to renew or continue a lease on the same terms and conditions by Sub-section (3) of section 7. Section 9 of the Ordinance and the Act conferred power on the central Government to direct vesting of the undertakings of the Caltex (India)in a Government company. The provisions of Sections 5 to 7 are to apply in relation to such Government company as they apply in relation to the Central government. Sections 7 and 9 are material for our purposes and they read as follows : "7. Special provisions as to certain rights and interests held by Caltex (India) before the appointed day.-- (1) Every right or interest in respect of any property in India (including a right under any lease or under any right of tenancy or any right under any arrangements to secure any premises for any purpose) which Caltex (India) held immediately before the appointed day, shall, notwithstanding anything contained in any other law or in any agreement or instrument relating to such right or interest, vest in, and be held by, the Central Government on and after the appointed day on the same terms and conditions on which Caltex (India) would have held it, if no negotiations had taken place for the acquisition by the Central government of the undertakings of Caltex (India) in India or, as the case may be, if this Act had not been passed. (2) If at any time after the 2nd Feb. , 1974 (being the date on which the Central Government's policy for acquiring undertakings engaged in the production, marketing or distribution of petroleum products was made known) and before the commencement of this Act, Caltex (India) surrendered or otherwise relinquished any right or interest in respect of any property in India (including a right under any lease or under any right of tenancy or a right under any arrangement to secure any premises for any purpose), then, for the purposes of this act, notwithstanding anything contained in any other law or in any agreement or instrument relating to such right or interest, the Central government shall, on and after the appointe
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