INDORE TEXTILES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Petitioner No. 1, Indore Textile Limited, is a company owning a textile mill at Agar Road, Ujjain. Petitioner No. 2 is a Director of that company. By order dated 12th Aug. 1977, the Central Government, acting under Section 18AA of the Industries (Development and Regulation) Act, 1951, authorised the Madhya Pradesh State Textile Corporation to take over the management of the whole of the mill for a period of five years. This order was challenged by the petitioners in Misc. Petition No. 57 of 1977. It was contended in that petition by the petitioners that the power conferred on the Central Government by Section 18AA is quasi-judicial in nature. This contention was accepted. It was also contended in that petition that the Central Government should have given a hearing to the petitioners before passing the said order and in the absence of a prior hearing the order was invalid being contrary to the principles of natural justice. This contention was partly accepted. It was held by this Court that prior hearing is not necessary in all cases and that when immediate action is to be taken, a post decision hearing can meet the requirements of natural justice. It was on this basis that the Court by order dated 8th Sept. 1980 allowed the petition and directed the Central Government to give an opportunity within two months to the petitioner-company to show cause against the order under Section 18AA and to cancel the order if the petitioner was able to satisfy that the conditions requisite for making of the order did not exist. There was no appeal against the decision of this Court which has now been reported as Indore Textile Ltd. v. Union of India, 1981 MPLJ 236 : (1981 Lab IC 545).

(2.) The Supreme Court in Swadeshi Cotton Mills v. Union of India, AIR 1981 SC 818, had to consider the same question. The Supreme Court also took the iew that the power conferred under Section 18AA on the Central Government is quasi-judicial in nature and that the said power has to be exorcised consistent with the principles of natural justice. The Supreme Court, however, held that a pre-decisional hearing under Section 18AA is a must. But the Supreme Court did not quash the order made by the Central Government which was challenged in that case and directed the Central Government to give a full, fair and effective hearing to the owner of the undertaking on all aspects of the matter including those touching the validity and/or correctness of the order under Section 18AA and then after a review of all the materials and circumstances to take a fresh decision, and/or such remedial action as may be necessary, just, proper and in accordance with law. The direction that this Court issued against the Central Government in the case of the petitioners in the earlier writ petition, although not so elaborate, was in substance the same as was given by the Supreme Court in Swadeshi Cotton Mills' case.

(3.) In pursuance of the directions of this Court in the earlier writ petition, a telegraphic notice was issued to the petitioner-company to appear for hearing on 15th Nov. 1980. The petitioner company was heard by Shri R. Ram Krishna, Joint Secretary in the Ministry of Commerce (Department of Textiles). As no order after this hearing was communicated by the Central Government to the petitioners, they filed the present writ petition on 16th July 1981 for challenging the order dated 12% Aug. 1977 passed under Section 18AA on the ground that the directions issued in the earlier writ petition were not complied with. By an interim order made on 25th Nov. 1981, we directed the Central Government to pass an order in the light of the hearing given to the petitioner-company by the end of December 1981. The Central Government on 2nd January 1982 sent a communication to the petitioner-company that the Government came to the conclusion that conditions requisite for the making of the order of take over did exist and that the take over was justified in the facts and circumstances of the case. The petitioners then amended the petition for challenging the communication dated 2nd Jan. 1982. This document is Annexure C. This amendment was allowed on 12th Jan. 1982. One of the grounds raised for challenging the order of the Central Government was that it did not give any reasons in its order. On 16th Jan. 1982, this Court directed the Central Government to file a copy of the order passed by it. On 5th Feb. 1982, the Court was told that there was no other order except the one communicated to the petitioner-company. Thereafter, additional return was filed by the Central Government on 12th March 1982. It was seated in the additional return that the order was passed by the Minister for Commerce. It was also stated that although the communication sent to the petitioner-company did not disclose reasons, all relevant matters were considered and the Central Government is now willing to communicate a reasoned order. It was further stated that it was awaiting the direction of this Court and then to pass a reasoned order if the Court so directed. On 23rd April 1982, the Court was told that the Minister's order contained reasons on which we directed that those reasons be conveyed to the petitioner-company within a month. Thereafter, an order signed by Shri V. K. Shunglu. Joint Secretary in the Ministry of Commerce (Department of Textiles) was issued. This order states that having regard to the facts and circumstances mentioned in the order, the take over of the undertaking was not only proper but necessary. This order briefly contains the reasons. It is Annexure 'D'. The petitioner then further amended the petition for challenging this order also. Thereafter the Central Government passed anther order on 11th Aug. 1982 under Section 18AA (2) read with Section 18A (2) continuing the take over for a further period of six months up to and inclusive of 11th Feb. 1983. This order was passed as the initial take over for five years was expiring on 11th Aug. 1982. This order is Annexure 'F' to the petition. The petition was then again amended to challenge this order also.