- (1.) THE Gwalior Rayons Silk Manufacturing (Wvg.) Company ltd. , Mavoor a Private Limited Company and one of its shareholders, are the two petitioners in this writ petition. THEy challenge the recent Gwalior Rayons (Rayon Pulp Division) Taking over of Management Ordinance, 1978 (Ordinance No. 14 of 1978) promulgated by the Governor. THE Company is registered under the companies Act with its Registered Office at Nagda in Madhya Pradesh. Besides its factories at Nagda and Gwalior in Madhya Pradesh, the Company has two factories in Kerala State at Mavoor, near Calicut, and also its factories in harihar (Karnataka) and Bhiwani (Haryana) THE factories at Mavoor are engaged in the manufacture of rayon grade pulp from Bamboo and various other hard and soft woods, and staple fibre from the dissolving pulp. Apart from these two divisions, there is a paper division engaged in the manufacture of various types of paper. THE Rayon Pulp Division went into production in 1963. THE impugned Ordinance in effect provides for the taking over of the management and administration of the Company and entrusting the same to a Controller appointed by the Government. THE Ordinance is styled an Ordinance "to provide for the taking over of the management of the undertaking of the Rayon Pulp Division of the Gwalior Rayons and Silk Manufacturing and Weaving Company Limited for a limited period in order to secure the proper management thereof and for matters connected therewith or incidental thereto" THE Preamble recited that the rayon Pulp Division of the Company had not been working from the 30th November, 1977, and the production of rayon grade pulp had stopped, resulting in the unemployment of twenty thousand workers, and the interest of the unemployed workers and public interest made it necessary to take over the management of the Rayon Pulp division of the Company. S. 3 enables the Government by a notified order to appoint a person or body of persons as the Controller of the undertaking to take over the management thereof. THE order is to remain in force for a period not exceeding two years; but is liable to be extended. S. 4 provides for the effect of a take over under S. 3; all persons in charge of the management of the undertaking are to vacate office; and the Controller alone is entitled to be in management of the undertaking. Under S. 5, the Government can remove the controller and appoint another person or body of persons. S. 6 enacts that no person who is obliged to vacate (he office consequent on the take over shall be entitled to any compensation for the loss of office. S. 9 empowers the government to cancel a notification issued under S. 3. Under S. 9 all property of the Company is to be delivered to the Controller. S. 10 lays on the Company the obligation to furnish the necessary particulars to the Controller. S. 11 provides the penalty for furnishing false particulars. S. 14 provides immunity in respect of acts done in good faith against the Government or the Controller, under the Ordinance. S. 15 enacts that the provisions of the Ordinance shall have effect notwithstanding anything inconsistent therewith contained in any law other than the Ordinance. Such, in substance, are the provisions of the ordinance.
(2.) THE Ordinance has been attacked on the following grounds. (1) That the subject-matter of the Ordinance is beyond the legislative competence of the State, and therefore of the Ordinance making powers of the governor, and the Ordinance cannot be saved, as no Presidential assent has been obtained and no instructions obtained from the President before promulgating it. (2) Assuming the subject-matter of the Ordinance is within the legislative powers of the Legislature and therefore the Ordinance making powers of the governor, it violates the fundamental rights under Art. 14, 19 and 31 and is not saved by Art. 31-A of the Constitution for want of previous consultation with, and assent of, the President. (3) That the provisions of the Ordinance are repugnant to the provisions of several laws made by Parliament and should for that reason also, be void and of no effect. Art. 213 of the Constitution provides for the power of the Governor to promulgate Ordinances during the recess of the Legislature. The same reads; "213. Power of Governor to promulgate Ordinances during recess of Legislature.- (1) If at any time, except when the Legislative assembly of a State is in session, or where there is a Legislative Council in a state, except when both Houses of the Legislature are in session, the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinances as the circumstances appear to him to require: Provided that the Governor shall not, without instructions from the President, promulgate any such Ordinance if (a) a Bill containing the same provisions would under this Constitution have required the previous sanction of the President for the introduction thereof into the Legis-rature; or (b) he would have deemed it necessary to reserve a Bill containing the same provisions for the consideration of the President; or (c) an Act of the Legislature of the State containing the same provisions would under this Constitution have been invalid unless, having been reserved for the consideration of the President, it bad received the assent of the President. An Ordinance promulgated under this article shall have the same force and effect as an Act of the Legislature of the State assented to by the Governor but every such Ordinance (a) shall be laid before the legislative Assembly of the State, or where there is a Legislative Council in the State, before both Houses, and shall cease to operate at the expiration of six weeks from the reassembly of the Legislature, or if before the expiration of that period a resolution disapproving it is passed by the Legislative assembly and agreed to by the Legislative Council, if any, upon the passing of the resolution or, as the case may be, on the resolution being agreed to by the council; and (b) may be withdrawn at any time by the Governor. Explanation: Where the Houses of the Legislature of a state having a legislative Council are summoned to reassemble on different dates, the period of six weeks shall be reckoned from the later of those dates for the purposes of this clause. (3) If and so far as an Ordinance under this article makes any provision which would not be valid if enacted in an Act of the legislature of the State assented to by the Governor, it shall be void: Provided that, for the purposes of the provisions of this constitution relating to the effect of an Act of the Legislature of a State which is repugnant to an Act of Parliament or an existing law with respect to a matter enumerated in the Concurrent List, an Ordinance promulgated under this article in pursuance of instructions from the President shall be deemed to be an Act of the Legislature of the State which has been reserved for the consideration of the President and assented to by him. (4) Notwithstanding anything in this Constitution, the satisfaction of the Governor mentioned in clause (I) shall be final and conclusive and shall not be questioned in any court on any ground. ' Clause (3) of the above Article is clear that Ordinance making power of the Governor is co-terminous with the Legislature powers of the state. Sub-clause (c) of the proviso to clause (1), read with clause (3), in substance provides that where the State legislation requires the assent of the president it shall not be valid without such assent of the President, and without the President's previous instructions to the Governor. The proviso to sub-clause (3) of the Article contains a further provision that an Ordinance promulgated in pursuance of the instructions of the President shall be deemed to be an Act of the Legislature of the State which has been reserved for consideration of the President and assented to by him for the purposes of the provisions of the Constitution providing for repugnancy as between an Act of parliament and an existing law on a matter in the Concurrent List. It is an accepted fact that the Ordinance has not been promulgated under instructions of the President; nor has it received the assent of the President. The enquiry should therefore, in the first instance, be whether the subject-matter of the Ordinance was within the Legislative competence of the State, and therefore, of the Ordinance-making power of the governor. Next, it has to be seen whether the Ordinance offends the fundamental rights as claimed; and last, if it is repugnant to an Act of Parliament or to an existing law with respect to a matter in the Concurrent List.
(3.) AS far as the Legislative competence is concerned, the case was put thus: The Paper and Rayon Pulp Industries are covered by Entry 52 of List I of the VIIth Schedule to the Constitution and cannot fall either within Entry 24 of List II or within Entry 23 and 33 of List III as claimed for the State. For this reason, it was stated that there is total want of legislative competence for the State Legislature to legislate on the subject of taking over the management of the Rayon Pulp industry and for the Governor to promulgate an Ordinance relating thereto. We may extract the relevant entries of the Constitution, on which reliance has been placed. "52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. (List I of VIIth Schedule ). 24. Industries subject to the provisions of entires 7 and 52 of List 1. (List II of Schedule VII) 23 Social security and social insurance; employment and unemployment. (List III of Schedule VII) 33. Trade and commerce in, and the production, supply and distribution of, (a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products. (b) foodstuffs, including edible oilseeds and oils; (c) cattle fodder, including oilcakes and other concentrates; (d) raw cotton, whether ginned or unginned and cotton seed; and (e) raw jute. " (List III of Schedule VII) We may next refer to the Industries (Development and regulation) Act, 1951 (Act, No. 65 of 1951), passed by Parliament under Entry 52 of List I of the Constitution. S. 2 declared that it was expedient in the public interest that the Union should take over under its control the industries specified in the First Schedule. Item 24 of the First Schedule is the item with which we are here concerned. To appreciate the scope and the nature of the contentions raised, we may extract the relevant portion of the schedule and the entry: "the FIRST SCHEDULE (See S. 2 and 3 (i) ) Any industry engaged in the manufacture or production of any of the articles mentioned under each of the following headings or subheadings, namely: xx 24. Paper and Pulp including Paper Products. [1] Paper writing, printing and wrapping. [2] Newsprint. [3] Paper board and straw board. [4] Paper for packaging [corrugated paper, kraft paper, paper bags, paper containers and the like]. [5] Pulp wood pulp, mechanical, chemical, including dissolving pulp. xx xx xx" Regarding the scope of a Parliamentary declaration made in terms of entry 52 of List I it is now well-settled by at least three decisions of the Supreme Court that once Parliament has made a declaration in public interest in respect of any industry, so much of it is completely taken away from the jurisdiction of the State and allocated to the exclusive jurisdiction of the Parliament; so that, in respect of the area thus taken over, there is complete absence of Legislative jurisdiction for the State. The three Supreme court decisions which are authorities for this proposition are: The hingir-Rampur Coal Co Ltd. v. The State of Orissa (AIR 1961 SC 459)); State of orissa versus M. A. Tulloch & Co. (AIR 1964 S. C. 284); and Baijnath v. State of Bihar (AIR 1970 S. C. 1436 ). In the first of these cases (Hingir-Rampur Coal Co's case), it was observed: '23. The next question which arise is, even if the cess is a fee and as such may be relatable to Entries 23 and 66 in List II its validity is still open to challenge because the legislative competence of the state Legislature under Entry 23 is subject to the provisions of List I with respect to regulation and development under the control of the Union; and that takes us to Entry 54 in List I. This Entry reads thus: "regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest". The effect of reading the two entries together is clear. The jurisdiction of the State Legislature under entry 23 is subject to the limitation imposed by the latter part of the said entry. If Parliament by its law has declared that regulation and development of mines should in public interest be under the control of the Union, to the extent of such declaration the jurisdiction of the State Legislature is excluded. In other words, if a central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the State Legislature bad no jurisdiction to pass the law. The. limitation imposed by the latter part of entry 23 is a limitation on the legislative competence of the State Legislature itself. This position is not in dispute. " In Tulloch's case (AIR 1964 SC. 1284) it was observed: "it does not need much argument to realise that to the extent to which the Union Government had taken under "its control" "the regulation and development of mineral's so much was withdrawn from the ambit of the power of the State Legislature under Entry 23 and legislation of the State which had rested on the existence of power under that entry would to the extent of that "control" be superseded or be rendered ineffective, for here we have a case not of mere repugnancy between the provisions of the two enactments but of a denudation or deprivation of state legislative power by the declaration which Parliament is empowered to make and has made. " (p. 1287 ). In the last mentioned case, that is, Baijnath's case (AIR. 1970 SC. 1436), the principle of the two earlier decisions was affirmed as follows: 17 These two cases bind us and apply here. Since the Bihar state Legislature amended the Land Reforms Act after the coming into force of act 67 of 1957, the declaration in the latter Act would carve out a field to the extent provided in that Act and to that extent entry 23 would standout down. To sustain the amendment the State must show that the matter is not covered by the Central Act. The other side must, of course, show that the matter is already covered and there is no room for legislation. " In the instant case, the Parliamentary declaration read with the Industries (Development and Regulation) Act Schedule I, Item 24 covers the field of the Paper and Pulp Industry including paper products mentioned in sub-items 1 to 5 of item 24 of Schedule I. There was some attempt to confine the scope of the Entry to paper and paper products tad not to the manufacture of Rayon pulp. But this was rightly given up in view of the juxtaposition of Entry 24 and its sub-headings as related to the opening words superscribed in the First Schedule before the enumeration of the entries themselves. As this aspect of the matter, although taken in the counter-affidavit, was not seriously pressed before us, we refrain from referring to the scientific treatises on the subject to which our attention was called by counsel for the petitioners to show that dissolving pulp is actually used in paper production. For instance, counsel for the petitioners referred to the Wealth of India Dictionary of Indian Raw Materials and Industrial Products (Part VII), published by the Council of Scientific and Industrial Research (page 166); the United Nations Publication entitled "pre Investment survey of forest resources India-Pulp and paper studies by P. A Shagaev; etc. Counsel for the petitioners cited the decision in Harakchand v. Union of India (AIR 1970 SC. 453), where, in relation to the Entries in the First Schedule of the industries (Development and Regulation) Act, it was observed that the headings of the schedule did not follow any logical or scientific pattern, but are put in merely as devices for convenient grouping of the Industries. It was again repeated: "as we have already said that there is no scientific or logical scheme in the classification of first schedule of Act 65 of 1951 but it is a mere numeration and grouping of various items. We are unable to accept the argument of petitioners that the heading metallurgical industries should be construed as having a controlling effect on the meaning of item B (2)"semimanufactures or manufactures", " (p 1461), We have therefore no hesitation to fix the scope and content of item 24 of the First Schedule of the Industries (Development and regulation) Act in a wide and comprehensive sense so as the cover the main item and the sub items.;