Case Note & Summary
The petitioners, M/s Shivraj Fine Art Litho Works, a partnership firm, challenged the constitutional validity of the Shivraj Fine Art Litho Works (Acquisition and Transfer of Undertaking) Act, 1984 (Maharashtra Act No. 36 of 1984) and alternatively sought striking down of various sections. The firm, engaged in lithography and printing and employing around 500 workers, had been embroiled in disputes among its partners leading to dissolution in January 1974 and filing of a suit for accounts and dissolution, wherein court receivers were appointed. The firm owned several properties, including the industrial undertaking and other non-business immovable properties. In 1980, the Central Government issued an order under Section 18-AA(1)(b) of the Industries (Development and Regulation) Act, 1951 authorizing the Development Corporation of Vidarbha Ltd. (DCVL) to take over management of the undertaking. This order was quashed by the Bombay High Court in 1982, and a special leave petition against that order was dismissed as infructuous in 1992. Meanwhile, the State Government promulgated an ordinance on 11 August 1984, which was later enacted into the impugned Act on 21 December 1984. A separate round of civil litigation concerning non-business properties resulted in a Single Judge of the High Court directing in 1980 that certain godowns be handed over to the receivers, a matter that also reached the Supreme Court and was partially implemented. In 2007, the High Court dismissed a petition challenging the taking over of non-business properties, holding that all firm properties were covered by the Act, but leaving the question of validity open for the present petitions. The petitioners contended that the Act was not protected by Article 31C of the Constitution because the acquisition did not subserve any policy towards the directive principles in Article 39(b) and (c) and was not for an egalitarian purpose. The respondents argued that the Act was indeed protected under Article 31C. The text of the oral judgment delivered on 26 February 2014 ends during the submissions and does not contain the court’s final decision.
Headnote
A) Constitutional Law - Protection Under Article 31C - Essential Conditions for Article 31C Shield - Constitution of India, Article 31C - Petitioners contended that protection under Article 31C is available only when the acquisition is for an egalitarian and noble purpose aimed at social reforms, social structuring or social engineering, and that there must be a clear and discernible policy of the State towards securing the directive principles in Article 39(b) and (c). The court heard arguments but did not render a final decision in the provided text. (Paras 10)
B) Constitutional Law - Validity of Acquisition Act - Scope of Article 39(b) and (c) - Constitution of India, Articles 39(b) and 39(c) - Petitioners argued that the Act lacked nexus with the policy of the State towards securing the directive principles mentioned in clauses (b) and (c) of Article 39, as the properties acquired had no connection with the industrial undertaking. No judicial determination was recorded in the available excerpt. (Paras 10)
Issue of Consideration
Whether the Shivraj Fine Art Litho Works (Acquisition and Transfer of Undertaking) Act, 1984 is unconstitutional? Whether the Act is protected under Article 31C of the Constitution of India? Whether the acquisition is for giving effect to the directive principles under Article 39(b) and (c) of the Constitution? Whether Sections 3, 4, 5, 7, 8, 12, 16, 18, 19, 20 and 24 of the Act should be struck down?
Case Details
2014 LawText (BOM) (02) 173
Writ Petition No. 1455 of 1999 and Writ Petition No. 1457 of 1999
B.R. Gavai, A.S. Chandurkar
S.V. Manohar, A.A. Naik, Smt. B.H. Dangre, Ms. U.R. Tanna
M/s. Shivraj Fine Art Litho Works, through Receivers Shri Amrut Shankarrao Dhantwatey and Shri Yeshowardhan Dhantatey (in WP 1455/1999), and Hamidullah Khan, Amrut Shankarrao Dhantwatey, Yeshowardhan Shivajirao Dhantatey (in WP 1457/1999)
The State of Maharashtra, Union of India, The Director Government Printing & Stationary Department, Development Corporation of Vidarbha Limited, Shamrao Dattaji Dhanwatey and other legal heirs of erstwhile partners
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Nature of Litigation
Constitutional challenge to a State acquisition act
Remedy Sought
Declaration that the Act is unconstitutional and void, alternatively striking down specific sections
Filing Reason
Enactment of the Shivraj Fine Art Litho Works (Acquisition and Transfer of Undertaking) Act, 1984 to acquire the firm's undertaking, allegedly without public purpose or nexus to directive principles
Previous Decisions
Central Government order under IDR Act quashed in 1982; Civil Court and High Court orders regarding possession of non-business properties; High Court decision in 2007 holding all properties covered by the Act but leaving validity open; SLP filed against 2007 decision pending as Civil Appeal No. 8222/2009
Issues
Whether the Shivraj Fine Art Litho Works (Acquisition and Transfer of Undertaking) Act, 1984 is unconstitutional
Whether the Act is protected under Article 31C of the Constitution
Whether the acquisition is for giving effect to the directive principles under Article 39(b) and (c)
Whether Sections 3,4,5,7,8,12,16,18,19,20,24 of the Act should be struck down
Submissions/Arguments
Petitioners argued that Article 31C protection is not available because the acquisition is not for an egalitarian or noble purpose and there is no clear State policy towards securing Article 39(b) and (c) directives; the properties acquired had no nexus with the industrial undertaking or the directive principles.
Respondents argued that the Act is protected under Article 31C as it is intended to give effect to the policy of the State towards securing the principles in Article 39(b) and (c).
Judgment Excerpts
By these petitions, the petitioners have approached this Court challenging validity of the Shivraj Fine Art Litho Works (Acquisition and Transfer of Undertaking) Act, 1984 (hereinafter referred to as “the Act”) being unconstitutional.
Shri Manohar, learned Senior Counsel for the petitioners, submits that protection of Article 31C of the Constitution of India would be available only when the acquisition is for egalitarian and noble purpose, which is aimed at social reforms, social structuring or social engineering.
Procedural History
In January 1974, the partnership firm M/s Shivraj Fine Art Litho Works was dissolved and a suit for dissolution and accounts (Special Civil Suit No. 9/1974) was filed, with receivers appointed over the firm’s properties. On 23 August 1980, the Central Government issued an order under Section 18-AA(1)(b) of the Industries (Development and Regulation) Act, 1951, authorising the Development Corporation of Vidarbha Ltd. (DCVL) to take over management of the industrial undertaking. The petitioners challenged this order in Writ Petition No. 2741/1980, which was allowed by the Bombay High Court on 28 April 1982, quashing the order. DCVL filed Special Leave Petition No. 5160/1983 before the Supreme Court, but the original take-over period expired on 22 August 1984, and the SLP was dismissed as infructuous on 4 February 1992. Meanwhile, on 11 August 1984, the State Government issued an Ordinance for acquisition, which was converted into the Shivraj Fine Art Litho Works (Acquisition and Transfer of Undertaking) Act, 1984 (Maharashtra Act No. 36 of 1984) on 21 December 1984. In 1994, an amendment inserted Section 6A. In parallel civil proceedings concerning non-business properties, the Civil Judge partly allowed a direction, and in revision, a Single Judge of the High Court on 15 December 1980 directed handing over of certain godowns to the receivers. DCVL challenged this in SLP No. 660/1981; stay was modified on 6 May 1981, and possession of the godowns was handed over. A subsequent petition challenging the taking over of non-business properties was dismissed by the High Court in 2007 (2007 (1) Mh.L.J. 68), holding that all properties were covered by the Act, but leaving the question of validity open. The appeal against that decision (Civil Appeal No. 8222/2009) is pending before the Supreme Court. The present writ petitions, filed in 1999, were heard on 26 February 2014.
Acts & Sections
- Shivraj Fine Art Litho Works (Acquisition and Transfer of Undertaking) Act, 1984: 3, 4, 5, 7, 8, 12, 16, 18, 19, 20, 24
- Industries (Development and Regulation) Act, 1951: 18-AA(1)(b)
- Constitution of India: Article 31C, Article 39(b), Article 39(c)
- Indian Partnership Act, 1932:
