This article has been written by Suryanshi Bothra. It discusses in depth all aspects of the Swadeshi Cotton Mills v. Union of India. The Supreme Court’s interpretation of the principles guiding administrative decision-making played an important role in promoting fairness. It established clear precedence in cases of industrial takeovers. This case set clear rules for how to govern the relationship between the state and its citizens.
Table of Contents
Introduction
The Swadeshi Cotton Mills Case, or Swadeshi Cotton Mills Company Limited & Anr. vs. Union of India & Ors (1981) is a landmark case in India. Significant constitutional and industrial law issues were dealt with in the case. It is cited in many major discussions about the balance between governmental authority, industrial regulations, and individual property rights. The dispute arose under Section 18A, Section 18AA(1) and Section 18F of the Industries (Development and Regulation) Act, 1951. Section 18A empowered the Central Section 18F Government to take over the management of industrial undertakings in special circumstances. Section 18AA(1) and Section 18F of the Act were majorly disputed in the case. Section 18 AA (1) provides for taking over the management of the Company without any investigation. According to the Act, the Central Government or some person or body of persons authorised by the Central Government can take over the Company. This can be done in cases where the funds are diverted, encumbrances are created, and reckless investments are made by the person in charge. Section 18F provides for the cancellation of an order that is made under Section 18A. Cancellation can occur in case the purpose of the issued order is fulfilled by the owner.
The case involves a critical examination of the meaning and applicability of the rules of natural justice. Its interplay with the public interest and individual interest is extensively discussed. The judgement also delves into the complexity of the need for prompt governmental action and the essential requirement of providing a fair hearing. Moreover, how this complexity affects industries and those affected by the government actions at the pre-takeover stage. The decision made a lasting impact on the understanding of the application of natural justice in India. The case also underscored the judiciary’s role in safeguarding fundamental rights. It also sheds light on the judiciary’s role in ensuring accountability in the exercise of executive authority.
Details of Swadeshi Cotton Mills v. Union of India (1981)
Case Name
Swadeshi Cotton Mills Company Limited & Anr. vs. Union of India & Ors (1981)
Case No.
Civil Appeals Nos. 1629, 1857 and 2087
Judgement date
13 January, 1981
Parties to the case
Appellant
Swadeshi Cotton Mills
Respondent
Union of India
Represented by
Appellant
In CA 1629- F.S. Nariman and S.D. Parekh, Senie Advocates (V.D. Mehta, Lalit Bhasin, Vinay Bhasin and Vineet Kumar, Advocates, with him)
In CA 1857- V.M. Tarkunde, Senior Advocate (S. Ganesh, K. Vasdev and TS.N. Chari, Advocates, with him)
Respondent
Soli J. Sorabjee, Additional Solicitor-General and Girish Chandra for Respondent (UOI) (CA 1629
Equivalent Citations
1981 AIR 818; 1981 SCR (2) 533; 1981 SCC (1) 664; 1981 SCALE (1)90
Type of case
Civil Appeal
Court
Supreme Court of India
Act Involved
Industries (Development and Regulation) Act, 1951
Provisions and statutes involved
Section 15, Section 18A, Section 18 AA and Section 18F of the Industries (Development and Regulation) Act, 1951
Bench:
R. S. Sarkaria, D. A. Desai, J., O. Chinnappa Reddy, J.
Author of the Judgement
The majority judgement was delivered by Justice R. S. Sarkaria for himself and Justice D.A. Desai.
Dissenting opinion
The minority part was delivered by Justice Chinnappa Reddy.
Background of Swadeshi Cotton Mills v. Union of India (1981)
Swadeshi Cotton Mills was established in 1946 in Kanpur. It started as a single textile facility. The Company strategically expanded its operations between 1956 and 1973. It set up and acquired five more facilities in Pondicherry, Naini, Udaipur, Maunath Bhanjan, and Rae Bareilly. Each of these units was separately registered and complied with the provisions of Section 10 of the Industries (Development and Regulation) Act, 1951.
Additionally, the Company also held 97% shares of Swadeshi Mining and Manufacturing Company Ltd. The Company earned a substantial income from investments in its subsidiary and other shares and securities. Between 1957 and 1973, Swadeshi Cotton Mills witnessed significant financial progress. It marked substantial growth in key financial indicators such as fixed assets, reserves, and surplus. From 1957 to 1974, the Company’s reserves and surplus grew from ₹2.3 crores to ₹4.3 crores, and the Company’s fixed assets grew from ₹5.8 crores to ₹19 crores. However, this remarkable expansion of the Company’s asset base didn’t last long. It started with a marginal decrease in the fixed assets in the subsequent fiscal year (1976-77). From April 1973, the Company started maintaining different books for all its businesses and assets. They did the same for assets, including six industrial undertakings. After an audit, the consolidated accounts were presented to the investors and shareholders.
By 1976, the Company had suffered a significant loss of ₹294.82 lakhs. Furthermore, by 1977, the Company reported a loss of ₹200.34 lakhs. Due to these losses, the Company incurred several encumbrances on its fixed assets. Some notable encumbrances included those on all the six industrial undertakings. Mainly on the units in Pondicherry, Maunath Bhanjan, Udaipur, and Kanpur (ICICI). These encumbrances were in the form of loans, credit, and fund allocations. There was even a Company-wide encumbrance on diesel-generating sets. The total encumbrances grew to ₹322.41 lakhs by 1978. These were created to pay wages, provide gratuity funding and fulfil bank dues. This showed the poor condition of the Company, where they could not even generate working capital.
Facts of the case
On April 13, 1978, the Indian Government issued an order under clause (a) of sub-Section (1) of Section 18AA of the Industries (Development and Regulation) Act. This Section empowers the Central Government to immediately intervene and take control of the management of the industrial unit by itself or by some person or body of persons authorised by it if the management of an industrial undertaking jeopardises the Company’s functioning. Clause (1) of Section 18AA provides that if any irresponsible financial practices are noticed in the Company’s management or any risky investments are made, assets encumbered, or funds diverted, which affects the production of articles, and immediate action is required, Central Government can without investigation take control over the management of the industrial unit by itself, some person, or body of persons authorised by Central Government. In the present case, the primary reason for the order was the creation of encumbrances on its assets, which affected the production of the industry. The Central Government authorised the National Textile Corporation Limited to take over the management of the six industrial undertakings of Swadeshi Cotton Mills by passing an order. The Order also specified a few terms and conditions.
These terms included the following conditions:
- Compliance with government directions
- Five-year tenure for the authorised person, in this case, the national textile corporation.
- The Central Government may terminate the appointment of the authorised person earlier if they deem it necessary. This order was to come into effect on the date of its publication in the Official Gazette.
On April 19, 1978, three petitioners filed a writ petition under Article 226 of the Constitution of India. It challenged the validity of the government order authorising the takeover. The first petitioner was Swadeshi Cotton Mills Company Ltd., through its Joint Secretary, Shri Bhim Singh Gupta, its Managing Director. The second was Dr Rajaram Jaipuria; the third was its subsidiary, Swadeshi Mining and Manufacturing Company. The case went through various stages of hearings and referrals in the High Court. It ultimately reached a full bench of five judges in the Delhi High Court. The full bench considered a few questions:
- Whether compliance with the audi alteram partem principle should be applied while construing Section 18AA of the Industries Development and Regulation Act,1951?
- Whether hearing is to be given to the parties who would be affected by the order to be passed before the passing of the order?
- Whether a hearing can be given after the order is passed and whether the order passed under the said Section is vitiated by not giving such a hearing?
The Delhi High Court judgement came with a majority and a minority opinion. There were dissenting opinions on the interpretation of Section 18AA of the Industries (Development and Regulation) Act, 1951. The High Court interpreted Section 18AA(1)(a)(b) to exclude the Section 18AA requirement of giving a prior hearing to the party affected by the order. Section 18F was noted for providing a post-decisional hearing to the owner of the industrial undertaking.
The High Court judgement emphasised that as per Section 18AA, taking over the management of a company or its undertakings is not considered flawed. Additionally, the absence of a prior hearing too is justified. The government’s order was upheld by the High Court. On the other hand, the minority opinion stated that a prior hearing was necessary. Citing the principles of natural justice, the dissenting judges claimed that it was essential that the affected parties get a chance to present their cases before passing an order under Section 18AA.
The dissenting judge observed that the denial of a prior hearing wouldn’t be remedied by a post-decisional hearing. Giving a prior hearing to the owner was essential. Passing an order under Section 18-AA requires giving a pre-decisional hearing. They also stated that the second question of the post-decisional hearing would not arise. They believed granting a subsequent hearing could not replace the need for a prior hearing. The minority judges felt that the Court should ensure while moderating the relief that the order is kept alive only until the making of the fresh order. They should also keep the public interest in mind while ensuring that a full and complete hearing is provided. The Court should review all the circumstances of the takeover. They should also focus on the preservation and maintenance of the property when a decision is pending.
The five-judge bench discussed the above-mentioned matters of law. After deciding the reference case, the case was reheard on merits by the full bench of three judges.. The bench consisted of three learned judges. Chief Justice Deshpande, Justice Anand, and Justice M. L. Jain were on the bench. The challenge to the validity of the impugned order failed. However, the writ petition succeeded in part. It succeeded in protecting certain aspects of the impugned order to take over the corporate entity of the Company, the corporate entity of the subsidiary and its assets, the petition was allowed and the respondents, the Union of India and the authorised person were directed to release from its control and custody and/or deliver possession of any assets or property of the Company which were not referable to the industrial undertakings.
The Government and National Textile Corporation were restrained from interfering. They were not allowed to intervene with the corporate entity and assets outside the scope of the impugned order. Swadeshi Cotton Mills obtained a certificate under Article 133 of the Constitution, which indicated that the case was suitable for appeal to the Supreme Court. The Delhi High Court on July 12, 1979, granted a similar certificate to the Union of India and the National Textile Corporation Ltd., as well. Civil Appeals 1629, 2087, and 1857 of 1979 were filed in the Supreme Court by the Company, the Union of India, and the National Textile Corporation, respectively. All three appeals were disposed of by the Court by a single judgement in 1981.
Issues
The issues accepted by the Court were as follows:
- Whether it is necessary to follow the rules of natural justice to give a hearing to the owner of an undertaking before issuing an order of takeover under Section 18AA?
- Whether the provisions of Section 18AA and Section 18F impliedly exclude the rules of natural justice?
Arguments of the parties in Swadeshi Cotton Mills v. Union of India (1981)
Appellant’s Arguments
Shri Nariman represented the Appellants. He presented an analysis of the language, structure, or explanation of Sections 18AA and 18F and emphasised that there is no indication in the Sections to exclude the application of natural justice principles. It is neither expressed nor implied. The mere use of the term “immediate” in Section 18AA(1)(a) does not imply a legislative intent to completely disregard the audi alteram partem rule. He interprets that it allows for action without a prior investigation under Section 15.
The word “immediate” in clause (a) has been used in contradistinction to ‘investigation’. According to Section 18AA, action can be taken without prior investigation under Section 15 in special circumstances. These circumstances could be the following.
- If there is evidence in the possession of the Government, that the assets of the Company are being unfairly utilised by doing any of the three things mentioned in clause (a).
- The undertaking has remained closed for at least three months, and the condition of the plant and machinery is such that it is possible to restart it.
The term ‘immediate’ is used only in clause (a) of Section 18AA(1). It is absent in clause (b) of the same Section. He claimed that the use of the word “immediate” in Section 18AA(1)(a) only dispenses with the investigation under Section 15 and not with the principle of audi alterm partem. He claimed that the marginal heading of Section 18AA supports this interpretation of the said statute. The Statement of Objects and Reasons of the Amendment Bill in 1971 further supports the interpretation by the Appellants. The Appellants also point out how it is peculiar to exclude the principle of natural justice from one clause.
He goes on to emphasise the need for pre-decisional hearings. The learned counsel contends that the High Court’s suggestion of excluding the audi alteram partem rule at the pre-takeover stage under Section 15 contradicts the precedent set by this Court in Keshav Mills and Ambalal’s case. Shri Nariman highlights the Keshav Mills case to argue that if the rule of natural justice applies even after a full investigation, it should be observed when there has been no investigation. He puts special emphasis on the need for a pre-decisional hearing in cases of administrative actions. In cases where the consequences are grave and prejudicial to the rights of one entity, the need for a pre-decisional hearing increases. He discusses how urgency should not be the reason for Courts to assume that the legislation intended to exclude even a minimal hearing. Taking this argument forward, he argues that the government had enough time to give short notice to the Company. This would have enabled them to present a case in a fair hearing. He points out that the government’s evidence for passing the order was not disclosed to the Appellant until after the filing of the writ petition. He argued that situational modifications should have been made even if urgent action was required. These attempts should have been taken by the government to ensure fairness. Advocating for the need for a hearing, they said that the Appellant should have been provided an opportunity to explain the adverse findings.
Section 18F deals with the Central Government’s authority to annul a takeover. Two conditions are specified for the annulment in the Section 18F. The first condition states that there can be an annulment when the purpose of Section 18 A has been fulfilled. The second condition is if in some other case, there is no need for the order to stay in place. With the help of Section 18F, they tried to prove that post decisional hearing was not meant to replace a pre-decisional hearing. The use of the term “any other reason” applies only to the post-takeover circumstances. “Any other reason” does not include reasons related to pre-takeover circumstances. According to the act, complying with Section 18F, an order of cancellation is meant to be prospective. The language of the Section suggestively prohibits any inquiry into the circumstances leading to the takeover. The aggrieved person is not entitled to demonstrate that the order was void ab initio.
Respondent’s arguments
Shri Soli Sorabji, the Solicitor-General, was the counsel for the Union of India. He argued that the application of the audi alteram partem rule is implicitly displaced. He looked closely at Section 18AA and examined its language, structure, context, and purpose. He claimed that Section 18AA addresses situations that demand immediate preventive action. Additionally, he stated that the primary objective of that statute is to prevent the decline in production of the particular commodity. The purpose of the order was not to punish the owner. He believed that the order aimed to safeguard the industries and consumers from the problems that might arise from a decline in production. He also brought up the ideas of public interest. He contended that the matter under Section 18AA extends beyond the government and the management. Along with the interests of the consumer and the community, the order also aimed to protect the interests of the workers. He asserted that the subject matter eliminated the need for providing a prior hearing. The learned counsel objected to the claim that there should be an interval between the issuance of an order and its enforcement. He claimed that the enforcement should be immediate. Section 18AA is designed to ensure immediate preventive action. The Section aimed to address emergent situations.
Another part of the Respondent’s argument dealt with the principles of natural justice. He argued that a modified form of the natural justice rule is incorporated in Section 18F. According to his interpretation, that Section allows the owner to contest the original order. If they feel aggrieved under Section 18AA, they could challenge the order in a post-decisional hearing. Therefore, Sorabji contends that due to the presence of the natural justice principle in Section 18F, the important part of the principle is not entirely displaced. He also highlights how Section 18F does not prescribe a specific timeframe. He argues that for an effective application of natural justice principles, it is essential that the post-decisional hearing be provided within a reasonable timeframe. He later acknowledges that the Central Government exercises quasi-judicial functions under Section 18F. This Section provides the government with the authority to handle applications seeking quick relief fairly.
Judgement of the court
Firstly, the Court took upon the question of what the term ‘immediacy’ signifies. They rejected the contention that the term is not open to judicial review. The Court examined what that term could imply in these circumstances. The bench claimed that immediacy could not be the only ground to infringe individual property rights, and they cited multiple case laws to support this claim. The Court then provided an interpretation for Section 18AA. It held that Section 18AA(1) cannot be universally interpreted to exclude the application of the audi alteram partem rule. Using this interpretation, the Court believed that it was essential to ensure fair play in action before passing the impugned order. However, the Court refrained from quashing the impugned order. It directed the Central Government to provide a complete, fair, and effective hearing to the aggrieved owner. The Court insisted that the aggrieved party get a fair hearing within a reasonable timeframe. It highlighted that a review of all relevant materials and circumstances was essential. Only after a complete review should the Court take any fresh decision.
Later, the Court took up the question of the investigating committee’s report. They found that the committee didn’t need to furnish a copy to the owners and management. They also said that the government was under no obligation to provide the report before passing an order of takeover. The Appellants already knew the grounds on which the government had passed the order under Section 18AA. They also knew of the government’s considerations. The Company even tried to negotiate with the government proves that they had information on actions regarding the possible takeover of their undertakings. The Company requested some time to obtain the necessary funds to restart the mill. Upon this request, the government had given the Appellants additional time. The majority decision prevailed. It allowed the appeals and directed the Central Government to conduct a fair hearing within a specified time frame.
Cases cited in the judgement
Keshav Mills Company Ltd. v. Union of India
This case was cited by the Court to claim the High Court misunderstood or misapplied the principles of Keshav Mills (1972) in this case. This citation is part of an argument challenging the High Court’s interpretation of what public good entails. The interpretation of the connection between public good and its role in natural justice was also examined. The correct legal position of this case is restated by the Court. It also clarifies the Court’s stance on the timing of providing a hearing. It discusses when should the affected party be given a hearing in the context of takeover proceedings under the Industries (Development and Regulation) Act (I.D.R. Act). The case also deals with the question of furnishing a copy of the investigation report. It stated that the right to receive a copy of the investigation report is not confined to the pre-investigation stage. Keshav Mills recognized that it may be necessary to allow the affected owner a chance to present their case, even in the post-investigation stage. It suggested that an opportunity should be given before making an order of takeover under Section 18A.
Mohinder Singh Gill v. Election Commissioner of India
Mohinder Singh Gill v. Election Commissioner of India (1977) is used as a precedent in the Swadeshi Mills case. It is used in the context of the right to a fair hearing, even in situations requiring urgent action. Justice V. R. Krishna Iyer, in the Mohinder Singh Gill case, articulated the principles of natural justice. He discussed their application in situations where there is a tension between the need for speedy action and a duty to act fairly. The Court mentions “fair play in action.” is the essence of natural justice. This principle reflects that administrative power should not eclipse fairness and transparency. Additionally, it stated that executive justice should not result in unilateral injustice. The judgement in Mohinder Singh Gill stressed that fairness is a flexible and pragmatic concept. It should not be treated as a rigid abstraction. The Court added one unique and important aspect in the judgement. It emphasised that in situations requiring immediacy, they can limit the time for a hearing. However, a denial of a fair hearing should not be permissible.
A. K. Kraipak v. Union of India
A. K. Kraipak v. Union of India (1969) highlights the principles of natural justice. It talks about the need and enforcement of natural justice principles especially in the context of administrative actions and decisions. The case emphasises the abolition of the supposed distinction between quasi-judicial and administrative decisions. The Court in Kraipak explicitly stated that the rules of natural justice should apply to administrative inquiries. The Court discusses many far-reaching consequences of an unjust decision in an administrative inquiry. These effects may transcend just a quasi-judicial inquiry. The case clarifies that the rules of natural justice can only operate in areas not covered by any law validly made. It claims that if a statutory provision excludes the application of the rules of natural justice, the Court cannot ignore the mandate of the Legislature. This provides a framework for determining when natural justice principles are applicable.
Maneka Gandhi v. Union of India
The Maneka Gandhi v. Union of India(1978) case highlights the ‘audi alteram partem’ rule as a highly effective principle. It recognises that the principle was devised by the Courts to ensure a just decision. It acts as a system of checks and balances against the abuse or misuse of power. By citing this case, the Court sought to underscore the vital application of this natural justice principle. It was established that, in emergent situations requiring immediate action, the preliminary action should be followed by a full remedial hearing.
Dissenting opinion in Swadeshi Cotton Mills v. Union of India (1981)
Justice Reddy’s dissenting opinion revolves around the question of the applicability of the principles of natural justice. He discusses its applicability in cases involving the takeover of industrial undertakings. He acknowledges that natural justice is a fundamental principle in decision-making functions. Judicial, quasi-judicial, and administrative all of these are discussed in his opinion. The dissenting judge suggested the need for a distinction between the application of natural justice principles. It questioned the balance underscored by Section 18AA concerning fundamental liberties and its application to vested interests. According to him, in a socialist, secular, and democratic republic country like India, it is the responsibility of the Constitution to recognize the primacy of public welfare. He states that public welfare takes preeminence over private interests. In cases of urgency, especially where public interest is involved, preventive action may be necessary. In these cases, the principle of natural justice may not be observed. Justice Reddy cites Ridge v. Baldwin to further his argument that natural justice may not be as rigorously applied in situations where the public interest is of utmost importance. However, he did mention that if a government decision is challenged, it is the responsibility of the state to provide substantial grounds and reasons for its course of action.
He emphasised that the implication of natural justice is presumptive. He believes that it may be excluded by the express words of the statute or necessary intent. Justice Reddy refers to Annie G. Phillips v. Commissioner of Internal Revenue; John H. Fahey v. Paul Mallonee; etc. to distinguish cases where only property rights are involved. He distinguishes them from cases involving civil and political rights. He used these to argue that in cases that specifically involve property rights, the applicability of natural justice can be impacted. The judge disagrees with the notion that Section 18F merely provides for the cancellation of the order. Justice Reddy highlights the remedy available to the affected parties through Section 18F. He argues that it offers a post-decisional review. According to him, this makes it a sufficient substitute for pre-decisional natural justice.
Natural Justice and Fundamental Legal Maxims
Principles of natural justice are those rules which have been laid down by the Courts to protect the basic rights of individuals against arbitrary procedures. They provide minimum protection against the rules and laws that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent injustice. The rules of natural justice do not supplant the law of the land. They are there only to supplement it. Natural justice is deeply rooted in traditions and is the essence of fair adjudication. They are ranked as fundamental. There are two major Natural Justice Principles, Both principles are mentioned below:
Nemo judex in sua causa
It means no one should be a judge in their own cause. According to this principle, the decision-makers should be impartial. They should not have any personal or financial interest in the matter. Also, they shouldn’t have any preconceived notions about the parties involved or the subject matter. This principle is also known as the rule against bias. Another important natural justice principle is audi alteram partem. This rule has been widely discussed in the present case (i.e., Swadeshi Cotton Mills case).
Audi alteram partem
Audi alteram partem means “listen to the other side”. According to the principle, no person should be judged without a fair hearing. Every party is allowed to respond to the evidence against them. This natural justice principle has its roots in ancient history. The principle is said to have been referred to in Medea, where he claimed that it is unjust to decide without a full hearing. Bhagwati, J., in Maneka Gandhi’s case also advocated for this rule. He further clarifies that it was devised by the Courts to ensure that a statutory authority arrives at a just decision. It ensures that the acts by the government are not arbitrary, and it is calculated to act as a healthy check on the abuse or misuse of power. He, therefore, concluded that the reach of the principle should not be narrowed, and its applicability should not be circumscribed. Earlier it was thought that natural justice principles only apply to judicial or quasi-judicial proceedings. However, in Dr. Bina pani Die’s case, the Court held that this principle would apply even to an administrative order.
Impact of the judgment in Swadeshi Cotton Mills v. Union of India (1981)
The judgement contributes to the protection of the individual rights of those affected by the government’s actions. It protects the industries against arbitrary and unreasonable administrative actions. The case also sets a precedent protecting the rights of shareholders who are affected by the government’s decision. The Court intended that this case ensure that the government’s power to take over a company must be exercised judiciously. The case insists on a balance between fairness for individuals and the propagation of public interest. The essential requirement for relevant material to safeguard individuals from unjust government decisions is also highlighted in the case. It contributed significantly to the ongoing development of administrative law and jurisprudence in India. It added to the body of legal principles existing in place to take preventive immediate actions even in situations of encroachment of individual rights. While also helping shape the relationship between the state and individuals in the context of administrative actions.
The case placed the burden of proof on the state. It underscored the idea that the government must justify its actions and the Company should also be allowed to justify the findings. The Court also, in a way, determined which circumstances would be considered when determining if an industry was taken over for the public good. This case also helped the Court clarify the role of the judiciary in administrative matters. It emphasised that the judiciary is not expected to substitute its judgement for that of the government. It made a precedent that the judiciary is tasked with assessing the legality and procedural propriety of administrative actions. The case also insisted on a connection between the relevant material considered by the government and the subsequent action taken. It provides an opening that allows companies to seek predecisional hearings. It strikes the perfect balance while respecting the executive’s authority. These steps ensure that there is a rational nexus between the information or evidence considered and the decision made by the government.
Conclusion
The Supreme Court’s interpretation of the principles guiding administrative decision-making played an important role in promoting fairness. The emphasis on coherence with the public interest provides a framework for evaluating the legality of government action. The decisions need to be rooted in relevant material. This ensures procedural propriety of governmental actions. The case ensures that a balance between executive discretion and judicial review is maintained. The judiciary’s role in upholding the rule of law and providing justice in individual property rights matters is highlighted in the case. The application of natural justice principles must be flexible and adapted to the specific circumstances of each case. An opportunity for affected parties to present their case is promoted. It guarantees fairness in cases of industrial takeover. The Swadeshi Cotton Mills case played a significant role in shaping the evolution of legal standards. It established clear precedence in cases of industrial takeovers. The precedent set clear rules for how to govern the relationship between the state and its citizens.
Frequently Asked Questions (FAQs)
What is the Swadeshi Cotton Mills Company Limited Acquisition and Transfer of Undertakings Act 1986?
It was an Act to provide for the acquisition and transfer of certain textile undertakings of the Swadeshi Cotton Mills Company Limited. It was passed to secure the proper management of such undertakings. It was to subserve the interests of the general public. It was done to ensure the continued manufacture, production and distribution of different varieties of cloth and yarn. It gave effect to the policy of the State towards securing the principles specified in clauses (b) and (c) of Article 39 of the Constitution.
What is the history of Swadeshi mills?
Swadeshi Cotton Mills was established in 1946 in Kanpur. It started as a single textile facility. The Company strategically expanded its operations between 1956 and 1973. It set up and acquired five more facilities in Pondicherry, Naini, Udaipur, Maunath Bhanjan, and Rae Bareilly. Each of these units was separately registered and complied with the provisions of Section 10 of the Industries (Development and Regulation) Act, 1951.
Additionally, the Company also held 97% shares of Swadeshi Mining and Manufacturing Company Ltd. The Company earned a substantial income from investments in its subsidiary and other shares and securities.
What is the doctrine of post-decisional hearing?
Post-decisional hearings provide the aggrieved party with an opportunity to be heard. This opportunity is provided to the aggrieved parties after the decision is already taken. This doctrine is designed for cases of administrative action in urgent situations. It is related to the broader concept of natural justice. The doctrine is also known as a remedial hearing. It ensures procedural fairness for all parties involved in the conflict. The principle recognises that it may be impractical to provide a hearing before a decision is made in some situations. The doctrine of post-decisional hearing is also known as a remedial hearing.
What is natural justice?
Principles of natural justice are those rules laid down by the Courts to protect the basic rights of individuals against arbitrary procedures. They provide minimum protection against the rules and laws that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights. These rules are intended to prevent injustice. The rules of natural justice do not supplant the law of the land. They are there only to supplement it. Natural justice is deeply rooted in traditions and is the essence of fair adjudication. They are ranked as fundamental.
What is audi alteram partem?
Audi alteram partem means ‘listen to the other side’. According to the principle, no person should be judged without a fair hearing. Every party is allowed to respond to the evidence against them. This natural justice principle has its roots in ancient history. This rule includes the following. 1. Right to notice 2. Right to present case and evidence 3. Right to rebut adverse evidence 4. Right to cross-examination 5. Right to legal representation 6. Disclosure of evidence to the party 7. Showing the report of enquiry to the other party 8. Reasoned decisions or speaking orders
What is nemo judex in sua causa?
It means no one should be a judge in their own cause. According to this principle, the decision-makers should be impartial. They should not have any personal or financial interest in the matter. Also, they should not have any preconceived notions about the parties involved or the subject matter. This principle is also known as the rule against bias. This rule plays an important role in administrative proceedings. Any administrator exercising adjudicatory powers should not have any personal or proprietary interest in the outcome of the proceedings, or there should not be any reasonable ground for believing that there was the likelihood of bias in the given decision.
References
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