JUDGMENT

DESAI, J. (On behalf of himself and V. R. Krishna Iyer and S. Murtaza Fazal Ali, JJ.) (Majority Judgment):— Acquisition of industrial undertakings involved in manufacturing sugar, a commodity satisfying the basic necessity, in larger public interest and the attempt of the owners of the undertakings to thwart the same, paints the familiar landscape in this group of appeals.

2. As a sequel to the serious problems created by the owners of certain sugar mills in the State of Uttar Pradesh for cane growers and labour employed in sugar mills, having an adverse impact on the general economy of the areas where these sugar mills were situated and with a view to ameliorating the situation posing a threat to the economy, the Governor of Uttar Pradesh promulgated an Ordinance on July 3, 1971, styled as U. P. Sugar Undertakings (Acquisition) Ordinance, 1971 (13 of 1971) (Ordinance for short) with a view to transferring and vesting sugar undertaking set out in the Schedule to the Ordinance in the U. P. State Sugar Corporation Ltd. (Corporation for short), Government Company within the meaning of S. 617 of the Companies Act, 1956. Subsequently, by U. P. Sugar Undertakings (Acquisition) Act, 1971, (U. P. Act 23 of 1971) (Act for short), the Ordinance was repealed and was replaced. Schedule to the Act enumerates 12 sugar undertakings (referred to as scheduled undertakings) and by the operation of S. 3, these scheduled undertakings stood transferred to and vested in the Corporation from the appointed day, i. e., July 3, 1971, the date on which the Ordinance was issued. On the promulgation of the Ordinance 11 writ petitions were filed in the Allahabad High Court under Article 226 of the Constitution challenging the constitutional validity of the Ordinance and when the Act replaced the Ordinance effective from August 27, 1971, the writ petitions were amended incorporating the challenge to the Act also. The Ordinance and the Act were challenged in the High Court on the following grounds:

"(1)The State legislature had no legislative competence to enact it;

(2) The Act violated Art. 31 of the Constitution because the acquisition was not for a public purpose and the compensation proposed in the Act was illusory;

(3) The Act was in breach of Art. 19 (1) (f) and (g) of the Constitution;

(4) The act infringed the guarantee of equality enshrined in Art. 14 of the Constitution." 1960

A Division Bench of the High Court by a common judgment dated May 3, 1979, repelled the contentions on behalf of the petitioners and upheld the constitutional validity of the Act. Hence these appeals by the original petitioners, the owners of the scheduled undertakings.

3. Mr. F. S. Nariman, learned counsel who led on behalf of the appellants, confined his attack to two grounds: (1) U. P. State legislature lacked legislative competence to enact the impugned Act; and (b) compensation awarded for acquisition is violative of Art. 31 (2) as it stood prior to its amendment by the Constitution (Twentyfifth Amendment) Act, 1971; which came into force on April 20, 1972. Mr. R. A. Gupta who appeared in S. L. P. 6252/79, canvassed an additional contention that the impugned Act is violative of Art. 14 inasmuch as those similarly situated and similarly circumstanced sugar undertaking have not been acquired and the petitioners scheduled undertakings have been singled out for a drastic treatment of take-over by way of acquisition.

4. The main thrust of the attack was that the U. P. Legislature lacked legislative competence to enact the impugned Act. There two distinct limbs of this submission which would be examined separately. The first limb of the submission was that in exercise of legislative power flowing from Entry 52, List I the Parliament made the requisite declaration in S. 2 of the Industries (Development and Regulation) Act, 1951 (IDR Act for short), and in view of placitum 25 of the first schedule to the IDR Act sugar being a declared industry, that industry goes out of Entry