Bombay High Court: The present writ petition was filed under Article 226 of the Constitution challenging the constitutional validity of the Textile Undertakings (Nationalisation) Laws (Amendment and Validation) Act, 2014 (‘the 2014 Act’). It was also prayed that the Sick Textile Undertakings (Nationalisation) Act, 1974 (‘the 1974 Act’) and the Sick Textile Undertakings (Nationalisation) Act, 1995 (‘the 1995 Act’) as amended, be struck down as being invalid and violative of the provisions of the Constitution. The Division Bench of A.S. Chandurkar* and Jitendra Jain, JJ., held that the challenge to the 2014 Act as being manifestly arbitrary, transgressing the dividing line of separation of powers and seeking to nullify the decision of the Supreme Court in National Textile Corpn. Ltd. v. Nareshkumar Badrikumar Jagad, (2011) 12 SCC 695 (‘Nareshkumar-I Case’) could not succeed. Further, the Court held that the 2014 Act did not suffer from manifest arbitrariness nor was it violative of Article 14 of the Constitution.
Background
The trustees of Byramjee Jeejeebhoy Settlement Trust owned some premises for which an Indenture of Lease was executed between the said Trustees and Maneckjee Petit Manufacturing Company Ltd. for a period of 99 years. Thereafter, Digvijay Spinning and Weaving Mills Ltd. became successor in title of the said Company. A Deed of Conveyance was executed and Petitioner 1, Byramjee Jeejeebhoy Pvt. Ltd. became the absolute owner of the said property. In view of breaches committed of the terms of the lease deed, the petitioners issued a notice to the National Textile Corporation Ltd. (‘NTC’) and Digvijay Textile Mills Ltd. and terminated the lease deed. The petitioners filed a suit in the Small Causes Court seeking recovery of possession of the leased premises. The suit was decreed ex-parte, however, subsequently the ex-parte decree was set aside and the suit was restored.
In view of the provisions of the 1995 Act, the right, title, and interest of the owners of about sixteen textile mills stood transferred and vested absolutely in the Central Government. After such vesting, the same were transferred by the Central Government in favour of NTC. Meanwhile, the lease expired through the efflux of time. In 2000, the provisions of the Maharashtra Rent Control Act, 1999 (‘the 1999 Act’) came into force and thereafter, the petitioners issued a notice calling upon NTC to quit and vacate the subject property and handover its possession. Since there was no response, the petitioners filed a suit in the Small Causes Court seeking a decree of eviction. Thereafter, NTC filed a suit for specific performance and sought renewal of the lease deed.
The suit filed by the petitioners under provisions of the 1999 Act was decreed holding the petitioners entitled to possession and mesne profits and the appeal preferred by NTC challenging the aforesaid decree was dismissed. The petitioners sought determination of mesne profits pursuant to the decree passed by the Small Causes Court. The Small Causes Court determined the mesne profits and directed payment of the same to the petitioners. NTC sought stay of the execution of the order for payment of mesne profits. The Appellate Bench of the Small Causes Court refused to grant any stay, therefore, NTC preferred a Writ Petition challenging the order passed by the Appellate Bench refusing to grant any stay. Since no relief was granted by this Court, NTC preferred SLP before the Supreme Court, whereby this Court’s order was stayed. Thus, the present writ petition was filed by the petitioners challenging the vires and constitutional validity of the 2014 Act.
Analysis, Law, and Decision
The Court relied on Nareshkumar-I Case (supra), wherein though NTC sought to raise a plea that by virtue of the provisions of the 1995 Act, the tenancy stood vested in the Central Government, that plea was not entertained since there were no pleadings specifically taken in that regard. The Supreme Court held that NTC was merely a Government Company, and it was not the Government or a Government department.
Doctrine of Separation of Powers
The Court opined that the exercise of enacting the 2014 Act in no manner resulted in the legislature providing for exactly the opposite of what was held in Nareshkumar-I Case. The Court stated that what was done by the 2014 Act was the removal of the basis of the decision in Nareshkumar-I Case (supra) by providing that notwithstanding the transfer and vesting of any sick textile undertaking or textile undertaking with NTC under Section 3(2) of the 1995 Act, the lease-hold rights continued to vest in the Central Government.
The Court stated that the legislature’s competence to enact the 2014 Act was not questioned, and it was only the basis of the decision in Nareshkumar-I Case (supra) that was removed with retrospective effect. The Court opined that the enforcement of the 2014 Act resulted in rendering the decision in Nareshkumar-I Case (supra) to be ineffective by removing the basis on which it was held that NTC was merely a Government Company and that it could not be considered to be the Central Government.
The Court thus held that the 2014 Act as a validating legislation removes the basis of the decision in Nareshkumar-I Case (supra) and it did not amount to an encroachment on judicial power to hold that the 2014 Act offends the dividing line of separation of powers between the legislature and judiciary. The Court relied on Tirath Ram Rajindra Nath v. State of U.P., (1973) 3 SCC 585, and opined that amending the law retrospectively thereby removing the basis of an earlier decision could not be considered as an encroachment on judicial powers of Courts.
The Court opined that according to the legislature, it was always intended that the tenancy rights of the lessee stood transferred and vested absolutely in the Central Government and this was with the view to protect public investment in the acquired textile undertakings especially since the parent enactments sought to revive sick textile undertakings by making investments therein and undertake their nationalisation. The Court opined that the legislative’s exercise of amendment and validation was a permissible method of clarifying legislative intention by removing the basis of an earlier adjudication and the 2014 Act did not simplicitor set at naught the decision in Nareshkumar-I Case (supra). By clarifying the effect of vesting in the Central Government, the 2014 Act seeks to achieve the object behind enacting the 1974 Act and the 1995 Act. Thus, the Court held that it could not be said that by enacting the 2014 Act, the legislature breached the doctrine of separation of powers.
Validating Act
The Court relied on Amarendra Kumar Mohapatra v. State of Orissa, (2014) 4 SCC 583 (‘Amarendra Kumar Mohapatra Case’), and opined that the mode of validation could be resorted to when the legislature seeks to give its own meaning and interpretation to a law previously enacted and retrospective effect could be given to a validating law to bind even past transactions. The Court observed that in view of the decision in Amarendra Kumar Mohapatra Case (supra), it was held that notwithstanding absence of any adjudication by the Supreme Court in Nareshkumar-I Case (supra) declaring any provisions of the 1995 Act to be invalid, it was permissible to undertake the exercise of enacting a validating law. Hence, since no defect in the 1974 Act or the 1995 Act was pointed out by the Supreme Court in Nareshkumar-I Case (supra), enactment of the 2014 Act could not be questioned on that count.
Ground of manifest arbitrariness
The Court noted that the petitioners challenged the 2014 Act on the basis that it lacked an “adequate determining principle” and that its purpose “was not in consonance with constitutional values”. The petitioners contended that the object behind the enactment was to nullify decrees for eviction passed against NTC from leasehold premises of textile undertakings inasmuch as Section 2 of the 2014 Act was ex-facie and directly contrary to Section 3(1) and 3(2) of the 1995 Act as interpreted in Nareshkumar-I Case (supra).
The Court opined that it was permissible for the legislature to come up with the 2014 Act to clarify the effect of vesting under Sections 3(1) and 3(2) of the 1995 Act. The Court relied on Amarendra Kumar Mohapatra Case (supra), wherein it was held that even in the absence of a judicial pronouncement declaring an Act or provision to be invalid, validation legislation could seek to remove even a perceived invalidity. The Court opined that it could not be said such legislation was arbitrary or capricious enacted only with the intent of nullifying decrees passed by Court and such decrees stood legally unenforceable by a legal fiction as observed in National Textile Corpn. Ltd. v. Nareshkumar Badrikumar Jagad, (2019) 18 SCC 630 (‘Nareshkumar-II Case’).
The Court opined that the real purpose behind enacting the 2014 Act was to achieve the objects sought to be arrived at by the 1974 Act and the 1995 Act, thus, applying the test of manifest arbitrariness as laid down in Assn. for Democratic Reforms (Electoral Bond Scheme) v. Union of India, (2024) 5 SCC 1 : (2024) 243 Comp Cas 115, it could not be said that the 2014 Act suffered from such vice.
Intention only to nullify eviction decrees
The Court noted that the petitioners contended that the 2014 Act was enacted only to nullify eviction decrees made against NTC in suits filed by lessors and this constituted class legislation without any determining principle. The petitioners challenged the validity of the 2014 Act also on the premise that, in a sense, it was a colourable piece of legislation enacted only to save NTC from being evicted.
The Court opined that in the present case, legislative competence of the legislature was not challenged and once the same was accepted, the relevance of any motive became insignificant, rather it could not be inquired into. Thus, it could not be said that the 2014 Act was enacted only with a view to nullify eviction decrees made against NTC, but it could be said that in view of the 2014 Act, the eviction decrees made against NTC had become unexecutable. The Court also opined that these legislations pertain only to sick textile undertakings as defined by Section 2(1)(j) of the 1974 Act, textile undertakings as defined by Section 2(1)(m) of the 1995 Act, and NTC as formed and registered under the Companies Act, 1956. Thus, as there were no other entities involved, it could not be said that the 2014 Act amounted to class legislation.
Conclusion
The Court held that the challenge to the 2014 Act as being manifestly arbitrary, transgressing the dividing line of separation of powers and seeking to nullify the decision of the Supreme Court in Nareshkumar-I Case (supra) could not succeed. The Court concluded as follows:
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The 2014 Act was intra vires and did not suffer from the vice of offending the doctrine of separation of powers. It was an amending and validating Act that did not simplicitor seek to provide for exactly contrary to what had been held by the Supreme Court in Nareshkumar-I Case (supra).
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The 2014 Act did not suffer from manifest arbitrariness nor was it violative of Article 14 of the Constitution.
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The challenge to the constitutionality of the 2014 Act thus failed.
[Byramjee Jeejeebhoy Pvt. Ltd. v. Union of India, 2024 SCC OnLine Bom 1619, decided on 10-06-2024]
*Judgment authored by: Justice A.S. Chandurkar
Advocates who appeared in this case:
For the Petitioners: Aspi Chinoy, Senior Advocate; Kishore Jain, Darshit K. Jain, Divya D. Jain, Udit Raghuwanshi, Advocates
For the Respondents: Devang G. Vyas, Additional Solicitor General; Advait M. Sethana, Shruti Vyas, S. Shah, Niyanta Trivedi, Sandeep Raman, Advocates
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