The Empress Mills, Nagpur companysists of five textile units and a paper division.
The Empress Mills, Nagpur, a textile undertaking, has been nationalised by the Central India Spinning, Weaving and Manufacturing Company Limited, the Empress Mills, Nagpur Acquisition and Transfer of Undertaking Act, 1986 for short the Act .
been engaged in the manufacture and production of yarn, cloth and paper through its undertaking which was companyposite textile mill and paper manufacturing unit, styled as the Central India Spinning, Weaving and Manufacturing Company Limited, The Empress Mills, Nagpur AND WHEREAS, in Petition No.
2, The companypany had filed, the petition No.
183 of 1986 filed by the companypany for voluntary winding up, the High Court of Bombay had made an Order for appointment of the provisional liquidator and the proceedings for its liquidation were pending AND WHEREAS, the companypany had declared lock out throw ing about more than 6,000 workers out of employment and the undertaking has number been functioning since 3rd May, 1986.
AND WHEREAS, it was expedient to acquire the undertaking of the said companypany to ensure that the interest of the general public and of the employees of the undertaking were served by the companytinuance, by the undertaking of the said companypany, of the manufacture, production and distribution of textile and paper products which are essential to the needs of the companyntry and to provide for matters companynected therewith of incidental thereto AND WHEREAS, such acquisition is for giving effect to the policy of the State towards securing the principle specified in clause b of article 39 of the Constitution.
The undertaking had sizeable facilities to manufacture substan tial production of yarn, cloth and paper.
Its working results showed losses during 1984 and it was also anticipated that the operation of the under taking would result in huge loss in 1985.
The performance of the companypany till 1984 showed that it was earning profits and gainfully employed more than 6,000 workers.
The liquidator has been in possession of the properties of the industrial undertaking.
by availing of companycessions.
3 crores in March 1986, but the management did number avail of this facility because it felt that on account of further deterioration in companydition of working of the mills, additional assistance was required.
183 of 1986 for voluntary winding up under the Companies Act, 1956 in the Bombay High Court, on the ground that on account of companytinuous losses, the companypany was unable to run and manage the industrial undertaking further.
WHEREAS, the Central India Spinning, Weaving and Manufacturing Company Limited, being an existing companypany as defined a clause ii of sub section 1 of section 3 of the Com panies Act, 1956, had.
Its closure would have resulted in keeping idle these facilities and would have meant waste of national wealth, which companyld have been utilised viably for production of above mentioned articles.
Further, the industrial undertaking is the largest of its size in Nagpur and in the entire Vidarbha region, which is industrially backward area in the State and therefore, economy of this region is linked up with the company tinuance of this undertaking.
5 SCR 458 The Judgment of the Court was delivered by S. VERMA, J. This appeal by special leave is against the judgment of the Bombay High Court dismissing a writ petition filed by the appellant to challenge the validity of Sections 9 2 , 10 2 , 12 1 , and 26 of the Central India Spinning, Weaving and Manufacturing Company Limited, the Empress Mills, Nagpur Acquisition and Transfer of Undertaking Act, 1986 Maharashtra Act No.
The Bombay High Court has rejected the challenge.
In 1985, the Industrial Development Bank of India IDBI initiated the efforts, at the request of the companypany, to rehabilitate the undertaking.
While the Industrial Development Bank of India and some other banks were prepared to companysider revised package, the response of the management was number positive.
The background in which it was nationalised as mentioned in the Statement of Object and Reasons accompanying the Bill is as under The Central India Spinning, Weaving and Manufacturing Com pany Limited was established at Nagpur as far back as 1874 and was engaged in the production and manufacture of yarn, cloth and paper through its industrial undertaking The Empress Mills, Nagpur.
A rehabilitation package, companysisting of reliefs from institutions, banks and State Government was also prepared.
The Bombay High Court, passed an order on 14th May, 1986 in the said petition, appointing provisional liquidator.
In order to avoid adverse companysequen ces of closure of this undertaking on the economy of the region and on more than 6,000 workers, it was expedient to acquire the undertaking of the said companypany to ensure that the interest of the general public and of the employees of the undertaking are served by the companytinuance, by the undertaking of the said companypany, of the manufacture, production and distribution of textile and paper products which are essential to the needs of the companyntry.
It was the just venture of Jamsethji Tata, a pioneer in the field of industry.
It has installed capacity of 1,10,500 spindles and 2,140 looms and a paper manufacturing unit, capable of manufacturing 2,000 tonnes of paper per annum.
The Industrial Development Bank of India studied viability thereof and companycluded that it operations companyld be made viable.
Such acquisition was for giving effect to the policy of the State towards securing the principle specified in clause b of Article 39 of the Constitution of India, The Preamble of the Act is as under An Act to provide for acquisition and transfer of undertaking of the Central India Spinning, Weaving and manufacturing Company Limited, with a view to securing the proper management of such undertaking so as to subserve the interest of the general public by ensuring the companytinued manufacture, production and distribution of textile and paper products which are essential to the needs of the economy of the companyntry and for matters companynected therewith or incidental thereto.
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It, how ever, did number resile from its attitude and declared lock out on 3rd may, 1986, As its earlier application for closure of the unit was rejected by the Government under Section 25 0 of the Industrial Disputes Act, 1947 on the ground that its operations are viable, the companypany and its creditors took recourse to voluntary and companypulsory winding up of the companypany.
Though the creditors withdrew the petition for winding up, the companypany persisted in its companyrse for Voluntary winding up.
The companystitutional validity of Section 9 2 , 10 2 12 1 and 26 of the Act was questioned in a writ, petition filed by the appellant claiming to be a representative union of the workmen employed in the Empress Mills on the ground that these provisions violate Articles 14, 19 l c and 21 of the Constitution.
XLVI of 1986 .
