HUTHEESING MANUFACTURING COMPANY LIMITED Vs. AMBALAL M SHAH
LAWS(GJH)-1960-12-1
HIGH COURT OF GUJARAT
Decided on December 06,1960

HUTHEESING MANUFACTURING COMPANY LIMITED Appellant
VERSUS
AMBALAL M.SHAH Respondents


Referred Judgements :-

KAMLA PRASAD KHETAN VS. UNION OF INDIA [REFERRED]



Cited Judgements :-

BHARAT HIRALAL SHETH VS. JAYSIN AMARSINH SAMPAT [LAWS(BOM)-1997-2-11] [REFERRED TO]


JUDGEMENT

P.N.BHAGWATI - (1.)This petition raises an interesting question regarding the power of the Central Government to assume management or control of an industrial undertaking. The question turns on the interpretation of Section 18A of the Industries (Development and Regulation) Act 1951 to which we shall hereafter refer in this judgment as the Act. It is a question of considerable importance and having regard to the full and detailed arguments which have been presented before us on this question on both sides it is necessary to set out the facts in some fullness.
(2.)The first petitioner has an undertaking known as Hutheesingh Mills situated in Ahmedabad and the first petitioner carries on inter alia the business of spinning cotton yarn in the said undertaking. The second petitioner is the proprietor of the firm of Messrs. Maneklal Mansukhbhai & Company who are the Managing Agents of the first petitioner The second petitioner is also an ex-officio Director of the first petitioner and along with his mother he holds the majority of shares in the share capital of the first petitioner. The said undertaking is one of the oldest spinning units in the country having been established as far back as 1893 A. D. According to the petitioners the said undertaking is inherently an uneconomic unit since in order to be an economic unit a spinning unit must have at least 25 0 spindles whereas the said undertaking has only 14 120 spindles.
(3.)Since 1949 the said undertaking started suffering heavy losses and during the period from 1947 to 1958 there were not more than two years in which the said undertaking could make some profits. According to the petitioners the losses were by reason of the said undertaking being inherently an uneconomic unit. The losses were so heavy that as a result thereof the financial position of the first petitioner was considerably affected. At one time the Registrar of Companies Bombay requested the Central Government to authorize him to present a petition for winding up the first petitioner but the first petitioner made a representation to the Central Government not to grant permission to the Registrar of Companies to institute any winding up proceedings against the first petitioner inasmuch as the institution of such winding up proceedings would result in the unemployment of about 350 workmen who were employed in the said undertaking a result which the petitioners wanted to avoid as far as possible. Certain correspondence thereafter took place between the Central Government and the first petitioner and ultimately the Central Government did not authorize the Registrar of Companies to present any petition for winding up the first petitioner. The case of the petitioners is that the losses suffered by the said undertaking were entirely due to the said under taking being inherently an uneconomic unit and the first petitioner therefore made various representations to the Central Government during the past several years for permission to install looms so as to add a weaving unit in the said undertaking for the purpose of making the said undertaking an economic unit but no such permission was granted to the first petitioner and all the attempts of the petitioners to make the said undertaking an economic unit were rendered unsuccessful by the non-co-operative attitude on the part of the Government authorities.
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