PILANI INVESTMENT CORPORATION LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution, the petitioners challenge two orders issued by the Central Government under section 18 F B (1) (b) of the Industries (Development and Regulation)Act, 1951 and four orders issued under section 18fb (2) extending the operation of the said orders upto 1st January 1981. The petitioners also challenge the constitutional validity of sections 18 F B and 29 D of the Act.

(2.) PETITIONER No. 1 is an investment holding company and carries on the business of investment and financing monies for business and commercial purposes. Petitioner No. 2 is a share-holder of the petitioner-company. Respondent No. 3 is a company having a factory at Worli, Bombay, and another factory at Ghaziabad in Uttar Pradesh. The respondent company carries on the business of manufacturing bicycles, auto-engines and bicycle parts. The said industry is a scheduled industry under the Act. In June 1970, the petitioner company advanced a clean loan of Rs. 8. 5 lacs to the respondent-company repayable on demand on interest at the rate of 10 per cent per annum. Another loan of Rs. 5 lacs was advanced by the petitioner-Company on the same terms in February 1971. Besides these loans the petitioner company in October 1970 executed a guarantee in favour of the State Bank of India upto limit of Rs. 15 lacs in respect of loans advanced by State Bank to the respondent company on cash credit facilities. By two orders passed on 3rd January 1974 under section 18a of the Act, the management of the whole of the undertakings of the respondent company at Bombay and ghaziabad was taken over for a period of five years. This period was extended from time to time. The undertakings of the respondent company are still managed by the Board of Management authorised under section 18a of the act by the Central Government. By two separate Orders issued on 29th january 1974, under section 18 FB (l) (b) of the Act, the Central Government suspended the operation of all contracts, agreements, etc. in force immediately before the date of issue of the orders (other than those relating to secured liabilities to banks and financial institutions) to which the said industrial undertakings of the respondent company or the company was a party for a period of one year. The orders in so far as relevant read as follows:-

(3.) THE Industries (Development and Regulation) Act, 1951, as originally enacted by Act No. 65 of 1951, came into force on 8th May 1952 by a notification of the same date issued under section 1 (3) of the Act. Chapter III-A of the Act which provides for direct management or control of industrial undertakings by the Central Government in certain cases, was inserted in the Act by No. 26 of 1953. Section 18a in this Chapter authorises the Central Government to assume management or control of an industrial undertaking in respect of which an investigation has been made under section 15. Chapter III-A was included at Item 19 in the Ninth Schedule to the Constitution by section 5 of the Constitution (Fourth Amendment) Act, 1955. The Act was again drastically amended by Act No. 72 of 1971 which came into force on 1st November 1974. This Act added section 18aa in chapter III-A authorising the Central Government to take over the management of industrial undertakings without investigation under section 15. The amending Act also added Chapter III-AA which contains section 18fa empowering the Central Government to authorise with the permission of the high Court to take over management or control of industrial undertakings owned by companies in liquidation. The Amending Act further added chapter III-AB which bears the heading "power to provide relief to certain industrial undertakings". Chapter III-AB so added consists of only one section, namely section 18fb which reads as follows: