2001 Supreme(SC) 45

2001(1) Supreme 269
Supreme Court of India
(From Bombay High Court)
G.B. Pattanaik, S. Rajendra Babu, D.P. Mohapatra, Doraiswamy Raju and Shivaraj V. Patil, JJ.
Union of India —Appellant
versus
Elphinstone Spinning & Weaving Co. Ltd. & Ors. etc. —Respondents
Civil Appeal Nos. 2995-2997 of 1984
With
Civil Appeal Nos. 3301-3303 of 1984
And
Civil Appeal Nos. 3018-3020 of 1984
Decided on 10-1-2001
Counsel for the Parties :
For the Appearing Parties : Harish N. Salve, Solicitor General, Mukul Rohtagi, Additional Solicitor General, R.F. Nariman, Anil B. Divan, F.S. Nariman, Sr. Advocates, S.W.A. Qadri, S.K. Dewidi, Ms. Indira Jaisingh Pritesh Kapoor, A.S. Rawat, D.S. Mehra, Mrs. B. Sunita Rao, Ms. Niti Dixit, S.N. Terdol, Kailash Vasdev, Rauf Rahim, S. Ganesh, Ms. Bina Mohhawan, Ms. Indoo P. Verma, Zulfikar Kumar, P.H. Parekh, A.S. Bhasme, Ms. Kamini Jaiswal, Milind Sathe, Atul Dayal, Subhash Sharma, Ludo Verma, Advocates.
Intervenor-in-person (N.P.).

Important Points
1. There is always a presumption that the legislature does not exceed its jurisdiction and the burden of establishing that the legislature has transgressed constitutional mandates such as, those relating to fundamental rights is always on the person who challenges its vires. Unless it becomes clear beyond reasonable doubt that the legislation in question transgresses the limits laid down by the organic law of the constitution it must be allowed to stand as the true expression of the national will.
2. The necessary conditions for application of clause (b) of Article 31A are that the taking over in question must be for a limited period, as distinguished from any indefinite period and such taking over must be either in the public interest or in order to secure the proper management of the property, which of course require to be objectively established.
3. Once it is held that the law is one attracting Article 31A(1)(b) of the Constitution, then the validity of the said law cannot be assailed on the ground of violation of Articles 14 and 19 of the Constitution.

Headnote:(i) Textile Undertakings (Taking Over of Management) Act, 1983—Constitution of India—Articles 14 and 19(1)(g) and 31A—Constitutional validity of Act—Taking over of management of mills could not be said to be for a limited period—Management was taken over pending nationalisation of mills—Decision for nationalisation had already been taken—Act falls under Article 31A(1)(b)—Validity cannot be assailed on ground of violation of Articles 14 and 19—User of word mismanagement in pre­amble of Act not intended only to those mills whose financial condition was deplorable on account of mismanagement—Mills whose financial conditions were deplorable even though not on account of mismanagement were also intended to be covered by Act—High Court not ­justified in going behind apparent ­legislative intent.

       Clause (b) of Article 31A(1) provides for talking over the management of any property, movable or immovable, agricultural or non-agricultural for a limited period without being obliged to justify its action in a Court of law, with reference to Article 14 or 19. The necessary conditions for application of sub-clause (b), therefore are that the taking over in question must be for a limited period, as distinguished from any indefinite period and such taking over must be either in the public interest or in order to secure the proper management of the property, which of course require to be objectively established. That the facts and circumstances leading to the taking over of the management of the sick mills undoubtedly indicated that the same was in the public interest, but the only question remains to be answered is whether it can be said to be for a limited period. (Para 14)

       The Act itself stipulates that the management of the mill is being taken over pending nationalisation of the mill, therefore, the decision to nationalise the mills had already been taken. But as the process of nationalisation would take a considerable period and it was thought absolutely necessary in the public interest to take over the management of the mills immediately, the Parliament passed the impugned legislation. Having regard to the conditions of these mills at the time of taking over of the management and having regard to the decision of the Union Cabinet on the basis of data and materials to nationalise the mills falling under category III and the ultimate policy decision of the Government to achieve the process of nationalisation in two stages, first by taking over the management of the textile undertakings and thereafter, enact suitable legislation to nationalise the same, the ultimate legislation for taking over the management of the mills passed by the Parliament, cannot but be held to be a law providing for taking over of the management for a limited period in public interest and as such the said law comes within the purview of Article 31A(1)(b) of the Constitution. Once it is held that the law is one attracting Article 31A(1)(b) of the Constitution, then the validity of the said law cannot be assailed on the ground of violation of Articles 14 and 19 of the Constitution. (Para 14)

       The objects and reasons of the Act unequivocally indicated that the basic decision of nationalisation having been taken a genuine apprehension having arisen in the Government’s mind that unless the management of the concerned undertakings was taken over on immediate basis, there might be large scale flittering away of assets which would be detrimental to the public interest and it thus became urgently necessary for Government to take over the management of the undertakings in the public interest. The Act read as a whole unequivocally indicates that the Parliament was satisfied that the management of the Textile Undertakings specified in the First Schedule should be taken over pending nationalisation of such undertakings, and therefore, passed the impugned Act in public interest. The legislature nowhere expressed that fraud or dishonesty on the part of those who were in management of the mills had brought the mills to the acute financial crisis. That apart, when an Act has been made by the Parliament as the Parliament thought the taking over of the management of the 13 Textile Mills pending their nationalisation would be in the public interest, it was not open for a Court in exercise of its power of judicial review to have in depth examination of different facts and circumstances and record a conclusion, as has been done in the case in hand by the High Court concerned. The Parliament itself had already taken a decision to nationalise the Textile Mills which had undergone severe financial crisis and such mills could not be re-started without pumping in large amount of money from the public exchequer and, therefore, the legislation in question was passed to take over the management of the mills immediately as such take over was in the public interest. The argument advanced on behalf of the mills and the microscopic examination of datas by the Court for arriving at a conclusion as to the alleged violation of Article 14 of the Constitution is not permissible and will not override the legislative intent behind taking over of management of the mills in the larger public interest. As is apparent from the long title of the Act itself, that the decision to nationalise the mills had already been taken, but pending nationalisation the 13 mills in question including the mills of the three petitioners who filed Writ Petition Bombay High Court the management was taken over by the impugned legislation as otherwise there was imminent danger to the finance to be pumped in to the for its revival and revival was necessary to provide employment to the large number of mill workers. In the aforesaid premises, we have no hesitation to come to a conclusion on the materials on record the Parliamentary action in legislating the law and taking over of the management of all the 13 mills included in the First Schedule to the Act cannot be held to be discriminatory nor the High Court was justified in recording a conclusion about the true intention of the legislation that it is only the mis-managed mills whose financial condition had deteriorated, the management of those to be taken over and not others. On the other hand the sharp deterioration in the financial position lead to an irresistible conclusion that it was because of mis­management and nothing else and that is why in the preamble of the Act the legislature have indicated that the affairs of the Textile Undertakings specified in the First Schedule on account of mis-management have become wholly unsatisfactory. In other words while the Act of taking over of the management of the mills was in the public interest, the inference of mis-management was the inference of the Parliament duly arrived at from the fact that the financial condition of the mills had become wholly unsatisfactory even before the commencement in January 1982 and such financial condition has further deteriorated thereafter. This inference of the Parliament is not subject to a mathematical judicial scrutiny and the way in which the High Court has gone into this question in the impugned judgment is certainly not within the para meters of the power of High Court under Article 226 of the Constitution. In our view the High Court was wholly in error in striking down the taking over of the three petitioners mills before it on a supposed violation of Article 14 of the Constitution. (Paras 16 to 18)

       Though it is no doubt true that the Court would be justified to some extent in examining the materials for finding out the true legislative intent, engrafted in a Statute, but the same would be done only, when the Statute itself is ambiguous or a particular meaning given to a particular provision of the Statute, it would make the Statute unworkable or the very purpose of enacting the Statute would get frustrated. But by no stretch of imagination, it would be open for a Court to expand even the language used in the preamble to extract the meaning of the Statute or to find out the latent intention of the legislature in enacting the Statute. As has been stated earlier, in the case in hand, the Taking over of Management Statute of 1983, had been engrafted in the public interest as the legislature found that there is imperative need to take over of the management of the companies until the process of nationalisation is finalised. This is apparent from the long title of the Act itself and the preamble also indicates that to make the mills viable, it would be necessary for the public financial institutions to invest very large sum of money, so that the mills will be rehabilitated and the interest of the workmen, employed therein would be protected. The preamble further indicates that the process of acquisition would take a longer time and to enable the Central Government to invest large sum of money, it was necessary in the public interest to take over the management of the undertakings. Thus, the taking over of the management of the mills was in the public interest, the said public interest being to rehabilitate the mills by pumping in, huge sums of public money to protect the interest of the workers in the mills. The High Court in the impugned judgment, however gave a restricted meaning to the purpose of the act by interpreting the expression “Mismanagement” used in the first preamble to connote fraud and dis-honesty, and in our considered opinion, the High Court was wholly unjustified in going behind the apparent legislative intention as already stated and in coming to a conclusion which cannot be sustained either on the materials on record or applying the rules of interpretation of a Statute. The said conclusion of the High Court as to the spirit behind the Statute, therefore, cannot be sustained. (Para 19)

       The argument that the appropriate Government did not take any action under the provisions of the Companies Act, nor there had been any investigation as provided under Section 15 and 15A of the Industrial Development and Regulation Act, there was no urgent necessity for enacting a law and taking a drastic measure of taking over the management of the mills cannot be accepted since we have already discussed the public interest involved and how the Parliament thought of taking over the management of the mills without which, it would not be feasible to pump in, large sums of money from the public exchequer and leave the management with the erstwhile managers for whose mismanagement, the mills would not have been in the situation in which the law was enacted. The decision to take over the management of the mills with a view to implement the decision to nationalise the mills being the basis for enactment of the Taking Over of the Management of the Mills Act, question of taking recourse to the remedies available under the Companies Act or Industries Development and Regulation Act really do not arise and on that score it cannot be said that there has been a violation of Article 19(1)(g). We are, therefore, unable to persuade ourselves to accept the contention that the very fact that Government did not proceed with the remedies available under other Act and proceeded to enact a legislation for taking over of the management of the Mills would constitute an infraction of Article 19(1)(g) of the Constitution. We may reiterate that we are examining the enactment of a law by the Parliament itself and the wisdom of the Parliament in taking a decision to take over the management of the mills in the larger public interest and not an executive decision of the Government which could have taken recourse to some other remedial measure provided under the Industries Development and Regulation Act or the Companies Act. If Parliament decides to enact a law for taking over the management of the Textile Mills, pending completion of the process of nationalisation, on a genuine apprehension that there might be a large scale flittering away of assets if the management is not taken over and that would be grossly detrimental to the public interest it would not be open for the Court to examine the question whether other remedies could have been taken and not being taken there has been an infraction of Article 19(1)(g). In the aforesaid premises, we have no hesitation in coming to the conclusion that the High Court was in error to hold that there has been an infraction of Article 19(1)(g) in the case in hand. (Para 21)

       (ii) Interpretation of Statute—Challenge to validity of a legislation—Presumption that legislature does not exceed its jurisdiction—Burden of establishing transgression of constitutional mandate—Is on person who challenges its vires.

       A statute is construed so as to make it effective and operative. There is always a presumption that the legislature does not exceed its jurisdiction and the burden of establishing that the legislature has transgressed constitutional mandates such as, those relating to fundamental rights is always on the person who challenges its vires. Unless it becomes clear beyond reasonable doubt that the legislation in question transgresses the limits laid down by the organic law of the constitution it must be allowed to stand as the true expression of the national will. The aforesaid principle, however, is subject to one exception that if a citizen is able to establish that the legislation has invaded its fundamental rights then the State must justify that the law is saved. It is also a cardinal rule of construction that if one construction being given statute will become ultra vires the powers of the legislature whereas on another construction which may be open, the statute remains effective and operative then the Court will prefer the latter, on the ground that the legislature is presumed not to have intended an excess of jurisdiction. (Para 9)

       The Legislation in a modern State is actuated with some policy to curb some public evils or to effectuate some public benefit. The Legislation is primarily directed to the problems before the legislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arising in future. But from the very nature of things, it is impossible to anticipate fully, the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite reference are bound to be in many cases, lacking in clarity and precision, and thus giving rise to the controversial question of construction. (Para 12)

       (iii) Interpretation of Statutes—Legislative intent—Examination of particulars—Fundamental rule for—Judge should arrive at a solution striking a balance between letter and sprit of statute without acknowledging that they have in any way supplement the Statute—Preamble—Utility in interpretation—Long title preceding preamble—Is part of Act itself—Admissible as an aid to construction of enactment—Preamble is not to influence meaning otherwise ascribable.

       While examining a particular statute for finding out the legislative intent it is the attitude of judges in arriving at a solution by striking a balance between the letter and spirit of the statute without acknowledging that they have in any way supplement the statute would be the proper criteria. The duty of judges is to expound and not to legislate is a fundamental rule. There is no doubt a marginal area in which the courts mould or creatively interpret legislation and they are thus finishers, refiners and polishers of legislation which comes to them in a state requiring varying degrees of further processing. But by no stretch of imagination a Judge is entitled to add something more than what is there in the Statute by way of a supposed intention of the legislature. It is, therefore, a cardinal principle of construction of statute that the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed. Courts are not entitled to usurp legislative function under the disguise of interpretation and they must avoid the danger of determining the meaning of a provision based on their own preconceived notions of ideological structure or scheme into which the provision to be interpreted is somehow fitted. Caution is all the more necessary in dealing with a legislation enacted to give effect to policies that are subject to bitter public and parliamentary controversy for in controversial matters there is room for differences of opinion as to what is expedient, what is just and what is morally justifiable; it is the Parliament’s opinion in these matters that is paramount. When the question arises as to the meaning of a certain provision in a Statute it is not only legitimate but proper to read that provision in its context. The context means; the statute as a whole, the previous state of law, other statutes in pari materia, the general scope of the statute and the mischief that it was intended to remedy. An Act consists of a long title which precedes the preamble and the said long title is a part of an Act itself and is admissible as an aid to its construction. It has been held in several cases that a long title along with preamble or even in its absence is a good guide regarding the object, scope or purpose of the Act whereas the preamble being only an abbreviation for purposes of reference is not a useful aid to construction. The preamble of an Act, no doubt can also be read along with other provisions of the Act to find out the meaning of the words in enacting provisions to decide whether they are clear or ambiguous but the preamble in itself not being an enacting provision is not of the same weight as an aid to construction of a Section of the Act as are other relevant enacting words to be found elsewhere in the Act. The utility of the preamble diminishes on a conclusion as to clarity of enacting provisions. It is therefore said that the preamble is not to influence the meaning otherwise ascribable to the enacting parts unless there is a compelling reason for it. If in an Act the preamble is general or brief statement of the main purpose, it may well be of little value. Though it is no doubt true that the Court would be justified to some extent in examining the materials for finding out the true legislative intent, engrafted in a Statute, but the same would be done only, when the Statute itself is ambiguous or a particular meaning given to a particular provision of the Statute, it would make the Statute unworkable or the very purpose of enacting the Statute would get frustrated. But by no stretch of imagination, it would be open for a Court to expand even the language used in the preamble to extract the meaning of the Statute or to find out the latent intention of the legislature in enacting the Statute. (Paras 15 & 19)