Subba Rao, C. J. - (1.) This appeal by certificate raises the question of the constitutional validity of the Metal Corporation of India (Acquisition of Undertaking) Act (No. XLIV of 1965), hereinafter called the Act.
(2.) The relevant facts lie in a small compass. The 1st respondent, The Metal Corporation of India Limited, hereinafter called the Corporation, was a limited company constituted under the Indian Companies Act, having for its objects, inter alia, the development of zinc and lead mines at Zawar in the State of Rajasthan and the construction of a zinc smelter and other connected works for producing electrolytic zinc and by-products. The Government was satisfied that it was necessary to acquire the said Corporation in public interest and on October 22, 1965, the President of India promulgated an Ordinance (No. 6 of 1965) providing for the acquisition of the Corporation by the Central Government. Pursuant to the said Ordinance, on or about October 23, 1965, the Central Government took over the possession, control and administration of the said Corporation. The Corporation, the 1st respondent and its Managing Director, the 2nd respondent filed a Writ Petition under Art. 226 of the Constitution in the High Court of Judicature for the State of Punjab, Circuit Bench at New Delhi, being Petition No. 631-D of 1965, challenging the validity of the said Ordinance. In the meantime, the Parliament passed the Act on the same terms as contained in Ordinance No. 6 of 1965:it received the assent of the President of India on December 12, 1965. The respondent filed another writ petition in the said High Court, being Writ Petition No. 832-D of 1965, for a declaration that the Act was ultra vires the Constitution. The said High Court held that the Ordinance and the Act contravened the relevant provisions of Art. 31 of the Constitution and. therefore, were constitutionally void. The present appeal is preferred against the said judgment of the High Court.
(3.) It will be convenient at this stage to, read the relevant provisions of the Act. The preamble and the relevant provisions of the Act read: "Preamble. An Act to Provide for the acquisition of the undertaking of the Metal Corporation of India Limited for the purpose of enabling the Central Government in the public interest to exploit, to the fullest extent possible zinc and lead deposits in and around the Zawar area in the State of Rajasthan and to utilise those minerals in such manner as to subserve the common good. Section 3. On the commencement of this Act, the undertaking of the company shall, by virtue of this Act, be transferred to, and vest in, the Central Government. Section 10. (1) The Central Government shall pay compensation to the company for the acquisition of the undertaking of the company and such compensation shall be determined in accordance with the principles specified in the Schedule and in the manner hereinafter set out, that is to say,- ********** (2) Notwithstanding that separate valuations are calculated under the principles specified in the Schedule in respect of the several matters referred to therein, the amount of compensation to be given shall be deemed to be a single compensation to be given for the undertaking as a whole. (3) ********** " THE SCHEDULE Principles for determining compensation for acquisition of the undertaking Paragraph I.-The compensation to be paid by the Central Government to the company in respect of the acquisition of the undertaking thereof shall be an amount equal to the sum total of the value of the properties and assets of the company on the date of commencement of this Act calculated in accordance with the provisions of Para. II less the sum total of the liabilities and obligations of the company as on the said date calculated in accordance with the provisions of Para. III. Paragraph II.-(a) The market value of any land or buildings; (b) the actual cost incurred by the company in acquiring any plant, machinery or other equipment which has not been worked or used and is in good condition and the written-down value determined in accordance with the provisions of the Income Tax Act, 1961 (XLIII of 1961), of any other plant, machinery or equipment; (c) the market value of any shares, securities or other investments held by the company (d) the total amount of the premiums paid by the company in respect of all leasehold properties reduced in the case of each such premium by an amount which bears to such premium the same proportion as the expired term of the lease in respect of which such premium shall have been paid bears to the total term of the lease (e) the amount of debts due to the company, whether secured or unsecured, to the extent to which they are reasonably considered to be recoverable. (f) the amount of cash held by the company, whether in deposit with a bank or otherwise. (g) the value of all tangible assets and properties other than those falling within any of the preceding clauses. Paragraph III. - The total amount of liabilities and obligations incurred by the company in connection with the formation, management and administration of the undertaking and subsisting immediately before the commencement of this Act." The gist of the said provisions may be given thus. The Act was made to acquire in public interest the undertaking of the Corporation. On the commencement of the Act, the undertaking was transferred and vested in the Central Government. Under S. 10 of the Act, the Government shall pay compensation to the undertaking as a whole but, in the absence of an agreement between the Government and the Corporation. The compensation, payable to the Corporation has to be ascertained. under the principles specified in the Schedule in respect of several in matters referred to therein. Paragraph l of the Schedule lays down the manner in which the compensation, is to be paid to the Corporation for the acquisition of the undertaking is to be ascertained. The said compensation shall be an amount equa1 to the sum total of the value of the properties and assets of the Corporation on the date of the commencement of the Act calculated in accordance with the provisions of paragraph II less the liabilities on the said date calculated in accordance with the provisions of paragraph III of the Schedule. Broadly. the said paragraph lays down the principles for ascertaining the value of lands, buildings machinery and equipment, amounts clue to the undertaking and other tangible assets and properties. The different clauses of the paragraph adopt different principles for valuation. But what is important for the present purpose is the principle embodied in Cl. (b) of para II. It is in two parts:the first provides for the valuation of plant machinery or other equipment which has not been worked or used and is in good condition and the second provides for the valuation of any other plant, machinery or equipment. The former has to be valued at the actual cost incurred by the Corporation in acquiring the same and the latter at the written-down value determined in accordance with the provisions of the Indian Income Tax Act, 1961.;