Facts: On the writ petition under Article 32 of the Constitution
of India the petitioners including Minerva Mills Ltd. and some creditors
challenged the legality of order for taking over the management of textile
undertaking of petitions. The writ petition had also included the validity of
Sick Textile Undertakings (Nationalisation) Act, 1974.
A Central Government appointed
Committee made a full and complete investigation of the affairs of the Minerva
Mills Ltd. and after investigation the Central Government authorized National
Textile Corporation to take over the management of the undertaking of the
company.
Issues: (1) Whether there was justification for taking over the
management of the undertaking of the company under section 18A of the
Industries (Development and Regulation) Act, 1951?
(2) Whether there was foundation
for the finding of the Central Government that where the undertaking of the
company was being managed in a manner highly detrimental to public interest,
the Government could not sanction a guarantee in such issues?
Decision: It was held that where the management of a textile
undertaking which was being run in loss and had to be closed down was taken
over by the Central Government after conducting enquiry on the ground that the
affairs of the undertaking were being managed in a manner highly detrimental to
public interest, the decision to take over the management would not be open to
challenge on the ground that prior to taking over of the management, the State
Government had given financial assistance to the undertaking especially when
the decision to take over the management was not challenged before any court of
law.
It was further held that Industries
(Development and Regulation) Act, 1956 could not be said to damage the basic
structure of the Constitution.
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