Minerva Mills Ltd. and Ors. vs Union of India and Ors.

Minerva Mills Ltd. and Ors. vs Union of India and Ors.

Case Name: Minerva Mills Ltd. and ors vs Union of India and ors

Decided On: 09/09/1986

Citations: AIR 1986 SC 2030,

Judges Involved: M.M. Duttand O. Chinnappa Reddy, JJ.

 

Introduction:

Minerva Mills Ltd. and ors vs Union of India and ors is a landmark judgement enshrined as one of the most significant judgements to shun the parliament from amending the basic structure of the constitution.  

The BASIC STRUCTURE DOCTRINE lists certain features of the constitution which are worth the very axis to the constitution and its sustenance. Coined by M.K. Nambiar while arguing for the petitioners in Golaknath vs State of Punjab case of 1967, the term BASIC STRUCTURE gets its way into the constitution and legal recognition through the Supreme Court’s majority judgement in the landmark case of 1973, Keshavanandha Bharti VS State of Kerala.

As making and interpretation of law is a dynamic process, the doctrine of Basic Structure in its further analysis through the case of Keshvanandha Bharti went in the context of amending powers of the parliament under article 368 and conundrum in fixing the supremacy between Fundamental Rights and Directive Principles of State Policy (DPSP).

Also Read : National Legal Services Authority V. Union of India & ORS.

Issues Raised:

  1. To decide the constitutional validity of Section 4 and section 55 of the 42nd Amendment act 1976.
  2. Supremacy dispute between Directive Principles of State Policy and Fundamental Rights.
  3. Legality and Constitutional validity of the order passed by the Central Government on October 19th, 1971 to take over the control of Minerva Mills Ltd.
  4. Constitutionality of Sections 5(b), 19(3), 21(read with second schedule), 25 and 27 of the Sick Textile Undertakings (Nationalization) Act, 1974.

 

Facts of the Case:

With a purpose of summum bonum, the parliament decided to pass a law restructuring those companies which are of great importance to the general public and are running in loss due to poor management and asset handling.

The Sick Textile Undertakings (taking over of management) Act was passed on December 24, 1974, vesting the power to take over the management of the mismanaged companies on the parliament. The act was considered a panacea for the impending problem of companies running in losses consequently.

Minerva Mills Ltd., a limited company dealing in textiles was situated in the state of Karnataka. On August 20, 1970, the Central Government, working under the provisions of Section 15 of the Industries (Development and Regulation) Act 1952 or the IDR Act, appointed a committee to completely investigate the workings and affairs of the Minerva Mills Ltd.

The report submitted in 1971, showed discrepancies in the working and management of the company to such an extent which can affect the general public. On scrutinizing the reports, the Central government empowered the National Textile Corporation to take over the management of the company.

Minerva Mills did not object to this move before any court of law. While the undertaking of the management was under process, the Sick Textile Undertakings Ordinance 1974 was promulgated and was replace by the Nationalization Act [Indian Kanoon].

Section 3[1] of the Nationalization Act transfers the title of the owner to and vests the interest in the Central government. Section 2[j] of the Nationalization Act terms a textile undertaking, management of which has been usurped by the Central Government as per the provisions of the IDR act as ‘Sick Textile Industry’.

The textile undertaking of Minerva Mills Ltd has been specified in the first schedule of the Nationalization Act, hence the control of the undertaking shall be transferred to the Central government.

Also Read: Maneka Gandhi V. Union of India – Analysis

Through the 39th Constitutional (Amendment) Act, 1975, Nationalization Act, 1974 was put into the ambit of 9th schedule, making it immune from judicial review. This facet of the 39th schedule had the privilege of not being able to be challenged as per the provisions of the 42nd amendment. 42nd amendment was a tool used by parliament to attain supreme authority after failing to do so earlier in Indira Gandhi VS Raj Narain.

Thereafter, the petitioners [Minerva Mills Ltd and its shareholders] moved to the Karnataka High Court, only to get their petition dismissed. Following this, the petitioners moved to the Supreme court seeking justice through a writ petition under article 32 of the Indian Constitution.

The legal Counsel appearing on behalf of the petitioners, Mr. R.F. Nariman goaded to the court that taking over the management of the undertaking of Minerva Mills Ltd under section 18A of IDR Act was unjustified and unwarranted. To underpin the assertion, he brought certain facts into the consideration of the court, which are mentioned hereafter.

The company was running at a loss since 1956, which got worsened in 1965 in lieu of recession coupled with labour problems. On January 2, 1970, it was decided that the mill shall be closed. However, to the persistent efforts by the management, an agreement was entered into with the labour.

A programme for the production to be resumed in 3 steps was drawn up. The then State Government of Mysore, through an order dated April 24, 1971, nodded to the request of a loan of Rs 20 lacs. State Bank of India (SBI) was mandated to sanction a loan of the same amount.

The Mysore Government, while considering the request for the loan, investigated the affairs of the company under the purview of Section 18A of the IDR Act, coupled with the recommendations made by the Investigation committee constituted by the Government of India.”

∙Surprisingly, hardly a few months thereafter, an order under the same Section of the IDR Act was passed to take over the management of the company as the Government of India found its operations to be in such a manner that is highly detrimental to public interest.

Also Read: M.C. Mehta v. Union of India and Ors.

Judgement:

The issues pertaining to the legality of the order passed under section 18A of the IDR Act and constitutionality of certain provisions(sections) of Sick Textile Undertaking (Nationalization) Act were briefed in a judgement passed on September 9, 1986. Judges who passed the judgement were Justice M.M. Dutta and Justice O. Chinnappa Reddy.

The hon’ble Supreme Court signified the delay of seven long years in approaching the court after the order dated October 19, 1971 was passed by the Central Government. As the investigation committee submitted its report, the Central government authorized the National textile corporation to take over the management of the company. During the implementation of the same, the Sick Textiles Undertaking Ordinance was passed and replaced by the Nationalization Act. The court recognized the findings of the investigation committee a significant factor not to be neglected.

The apex court also reasoned that although the Mysore Government might have assisted the company with the loan, but such proposals are governed under the provisions of the Mysore Aid to Industries Act, 1959, which are insufficient to validate the assertion of the petitioners.

The issues questioning the constitutionality of sections 4 and 55 of the 42nd Amendment Act and the question whether Directive Principles of State Policy were to enjoy a supremacy over the Fundamental rights were addressed in a separate judgement delivered on July 31st, 1980.

The court in the decision dated July 31st, 1980, declared sections 4 and 55 of the 42nd Constitution (Amendment) Act 1976 as unconstitutional. Eventually the Basic Structure doctrine of the constitution got guarded by the judgement.

 

-Mrutyunjay Saramandal

(Writer, The Legal State)

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