Minerva Mill Ltd. And Ors V Union Of India And Ors. (AIR 1980 SC 1789)

-By Abhijeet Shekhawat, Bba.Llb(H)

Gujarat National Law University

 

INTRODUCTION

Minerva Mills Ltd. and Ors v Union of India and Ors is considered as one of the most dominant judgments which safeguarded the ‘basic structure’ of the Constitution form being amended by the parliament. The constitutionality of § 4 and 55 of the 42nd Amendment Act, 1986 provided the parliament with ‘unlimited powers to amend the constitution and hence were declared unconstitutional by the Hon’ble Supreme Court.

BENCH:

  • V. Chandrachud (Chief Justice), P.N. Bhagwati, A.C. Gupta, N.L. Untwalia & P.S. Kailasam

AUTHOR:

  • Decision By: Y.V. Chandrachud (Chief Justice)
  • Dissent By: P.N. Bhagwati

BRIEF FACTS

  • Minerva Mills Ltd. (referred to as petitioner no. 1/ the Corporation) is a limited company based in Karnataka that specializes in textiles. The other petitioners are Minerva Mills shareholders.
  • August 20, 1970- The Central Government, concerned about a significant drop in Minerva Mills production, constituted a committee under section 15 of the Industries (Development & Regulation) Act, 1951 (hence referred to as the IDR Act) to investigate the company’s activities.
  • October 19, 1971- Following the submission of the committee’s report, the Central Government issued an order under section 18A of the 1951 Act authorizing the National Textile Corporation Ltd. to take over the Mills’ management due to mismanagement of the company’s business. As a result, under the provisions of the Sick Textile Undertakings (Nationalisation) Act, 1974, (hereinafter referred to as the Nationalization Act). This undertaking was nationalized and taken over by the Central Government.
  • Thereafter, the petitioners challenged this order before the High Court. The High Court, however, dismissed their petition.
  • The petitioners, therefore, filed a writ petition before the Hon’ble Supreme Court under article 32 of the Constitution of India, 1950.
  1. They challenged the constitutionality and validity of the following;
    5(b), 19(3), 21 (read with 2nd schedule), 25 and 27, of the Sick Textile Undertakings   (Nationalisation) Act, 1974
  2. Order of the Central Government dated October 19, 1971
  3. 4 and 55 of the Constitution (Forty Second Amendment) Act, 1976; and
  4. The primacy is given to the Directive Principals of State Policy over the Fundamental Rights.

 

ANALYSIS OF THE JUDGMENT

On September 9, 1986, a bench of Justice M. M. Dutta and Justice O. Chinnappa Reddy issued a judgment disputing the validity and constitutionality of some provisions of the Sick Textile Undertaking (Nationalization) Act, 1974, and a central government order under section 18 A of the Industrial (Development & Regulation) Act, 1961. The remaining two concerns were handled in the judgment of Justice V. Y. Chandrachud, Justice P. N. Bhagwati, Justice A. C. Gupta, Justice N. L. Untwalia, and Justice P. S. Kailasam delivered in July 31, 1980.

1). The Judgment delivered on September 9, 1986

The petitioners, Minerva Mill Ltd., and certain of its creditors challenged the Central Government’s order dated October 19, 1971, issued under section 18 A of the IDR Act, 1961, on the following grounds:

  1. Following the completion of the investigation, the Central Government sanctioned a guarantee by an order dated April 24, 1971, to enable the company to raise a loan of Rs. 20 lacs to the company. Following that, in October, the central government issued the above-mentioned order, handing over management of the company to National Textile Corporation.
  2. The petitioners alleged that the Central Government failed to provide them with a copy of the Investigation report, resulting in a situation that was unfair to them.
  • The petitioners challenged the validity of § 5(b), 19(3), 21 (read with 2nd schedule), 25 and 27 of the Nationalization act on the ground that it violated their fundamental rights and the ‘basic structure of the constitution.

1.2) Analysis of this Judgment

  1. The Supreme Court correctly noted that the petitioners approached the court approximately seven years after the Central Government’s directive was issued on October 19, 1971. The government approved the National Textile Corporation to take over management of the Company’s enterprise after the Investigation Authority presented its findings on the company’s management. The Sick Textile Undertakings Ordinance of 1974 was enacted while the National Textile Corporation was in the process of taking over control of the enterprise, and it was later replaced by the Sick Textile Undertakings Act (Nationalization Act). The Nationalization Act under section 2(j) defines a “Sick Textile Undertaking” as an undertaking listed in the first schedule whose administration has been transferred to the Central Government under section 18 A of the IDR Act. The court correctly pointed out that the investigation’s findings should not be overlooked, since they revealed that the corporation was mismanaged in a way that was very damaging to the public interest. ‘The Government might have thought of supporting the Company in raising finance, but the fact that such application for assistance was made for exceptional reasons as stipulated in the proviso to section 4 of the Mysore State Aid to Industries Act, 1959, is not sufficient to uphold the contention of the petitioners,’ the court said.
  2. The petitioners’ claim that section 16 of the IDR Act requires the government to offer directions to the affected industrial undertakings following an investigation was rejected by the court on the grounds that the instructions were not “obligatory” for the government to give.
  3. Furthermore, the court dismissed the petitioners’ claim of prejudice based on the non-supply of a copy of the investigation report for two reasons: 1. the petitioners did not request one; and 2. the petitioners were given adequate opportunities to object to the planned takeover, but they failed to do so.
  4. The court’s decision on the petitioners’ claim that the Nationalization Act is unconstitutional because it violates fundamental rights and the basic structure of the constitution was also rejected on the following grounds: 1. an alteration to the Constitution’s provisions can harm the basic structure of the Constitution. The court underlined that in the Kesavananda Bharati case, only constitutional amendments made on or after Aug 24, 1973, by which actions or regulations were incorporated in the 9th Schedule, might be challenged. However, if the challenge is protected by Articles 31 A and 31C (as it was before the 42nd Amendment Act), it will be dismissed. 2. Section 39 of the Nationalization Act stated that it gave effect to the State’s policy in implementing the principles set forth in Article 39(b). Furthermore, the petitioner made no counter-argument to this declaration of purpose. 3. Because the Nationalization Act is covered by Article 31 C, the petitioners were found unable to challenge its constitutional validity on the basis of violations of Articles 14 and 19 of the Constitution.
  5. Judgment of Supreme Court delivered on July 31, 1980

2.1 Issues Raised before the Court

  1. Whether § 4 and 55 of the 42nd Amendment Act, 1986 are constitutional?
  2. Whether the Directive Principles of State Police should be given supremacy over the fundamental rights?

2.2. Analysis of the Judgment

  1. Section 4 of the Constitution (42nd Amendment) Act 1976 replaced the clause “the principles specified in clause (b) or clause (c) of article 39” with “all or any of the principles laid down in Part 4,” giving parliamentary approval to any law or regulation passed to achieve any goal set forth in the Directive Principle of State Policy, regardless of whether it violated article 13 read with articles 14 and 19.
  2. Section 55 added sub-clauses (4) and (5) to Article 368 of the Constitution, giving the legislature unrestricted power to change it.
  3. One of the main aspects of the Indian Constitution is that it has limited amending power. As a result, the constraints on that authority cannot be removed, and the right to repeal or abrogate it cannot be considered constitutionally valid. The spirit and meaning of Article 13 will be lost. The court was asked to rule on constitutional amendments that infringed on people’s fundamental rights.
  4. The petitioners questioned whether the Keshvanandi Bharti case allowed parliament to pass an amendment that prioritized the DPSP over fundamental rights. The answer is that if Article 19 and 14 are part of the constitution’s core framework, they cannot be changed. The DPSP is necessary for the people’s welfare, but undermining part 3 of the constitution’s fundamental guarantees is to undermine the constitution’s basic framework.
  5. Fundamental rights have been variably termed as “transcendental,” “inalienable,” and “primordial,” and, as stated in the Kesavananda Bharati case, they represent the Constitution’s spirit. Fundamental Rights and Directive Principles of State Policy are the chariot’s two wheels and the twin formula for achieving social change.
  6. Because the Indian Constitution seeks to preserve a balance between fundamental liberties and the DPSP, granting unlimited predominance to one would disrupt the harmony and balance envisioned by the founding fathers of our cons. The preamble has weaved the threads of this harmony very effectively. On the one hand, it reflects on India’s idea of being a socialist state that provides social justice to all of its citizens, while on the other, it empowers each and every citizen with the freedom of thought, faith, belief, worship, and the right to maintain dignity and fraternity, as well as equality of opportunity and status and the right to maintain human dignity, in order to provide an individual ideal opportunity and freedom to endeavor to be the version of him.
  7. Part 4’s objectives are to be met by the use of the mean, not at the expense of basic liberties. These two should support each other. Article 14 and 19 of the Constitution are abrogated by section 4 of the 42nd amendment act, which applies to the group of laws mentioned in article 31 C. As a result of this revision, no matter how much a legislation breaches the spirit of article 13 read with 14 and 19, it will not be challenged in court as long as it aims to fulfill the goals outlined in section 4 of the DPSP.
  8. The argument that not all legislation fall under the purview of article 31 C is insufficient to justify the abolition of the fundamental freedoms provided by articles 14 and 19. There are some laws that do not fall under the authority of the above-mentioned article, although they do not constitute a significant component of the law.
  9. Article 38 declares that the state shall try to promote the welfare of the people by establishing and protecting a social order in which social, economic, and political justice shape all aspects of national life as effectively as possible.
  10. There are two points to consider: this article undoubtedly has a wider interpretation, but the article does not necessarily substantiate it, and second, it is clear to infer that no law seeking to give effect to this article can be contradictory to the constitution’s ideals, therefore there is no need to amend the constitution’s basic structure.
  11. The key objective of adding this article is to get away with such legislation that are in violation of Articles 19 and 14 of the Indian Constitution. Articles 14 and 19 are not frills, but basic and fundamental human rights that first appeared in the UDHR in 1948, and if legislatures are given the ability to impose unjustified restrictions on these rights, the constitution’s entire spirit will be crushed. Section 4 of the Forty-second Amendment discovered a simple way to get around Article 32(4) by completely removing the protection of Articles 14 and 19 in respect of a vast category of laws, ensuring that there will be no violations to complain about and remedies available under Article 32.
  12. The ability to remove Article 14 protection is the ability to discriminate without a legitimate justification for classification. Furthermore, article 14 allows for acceptable classification to promote social welfare, and article 19 contains reasonable limits that can be imposed to promote a just and fair society, which is the DPSP’s main goal. As a result, the article was amended to assure the realization of DPSP to the point where any abrogation of these fundamental rights would not be challenged in court.
  13. Laws with immunity can be passed, restricting citizens from exercising their freedom to freely migrate across India’s territory. As a result, this amendment violates the constitution’s core principles. Article 12 of the constitution defines the term “state” as “the Government and Parliament of India, as well as the Government and Legislature of each of the States, and all local or other authorities within India’s territory or under the Government of India’s administration.” As expansive as Article 31C’s text is, Article 12’s definition of the word “State” gives Article 31C the most scope. Even if a State Legislature makes legislation to give effect to a local government’s policy aimed at safeguarding a directive principle, the bill will be immune from the prohibitions of Articles 14 and 19.
  14. The claim that this amendment tries to strengthen democracy by fulfilling state policy aspirations is untrue, because every democracy has certain aims to accomplish, and attempting to accomplish that goal in a disciplined manner while protecting fundamental rights protections is what makes the means of accomplishing state goals democratically. If Article 14’s discipline is removed, and protection from its operation is bestowed not only on legislation passed by the Parliament but also on laws passed by state legislatures, political pressures exerted by numerically large groups can tear the country apart by allowing the legislature to pick and choose preferred areas and categories for special consideration.
  15. Since the amendment to Article 31C was clearly made with the intent of enabling legislatures to enact laws of a particular description even if that legislation violates the decorum of Articles 14 and 19, it is impossible to hold that the court should nonetheless save Article 31C from unconstitutionality challenges by reading into that Article words that destroy that Article’s rationale and an intendment which is plainly contrary to its proclaimed purpose.

 

DECISION OF THE COURT

  • The court in the judgment dated July 31, 1980, by the majority of 4:1 held the § 4 and 55 of the 42nd (Amendment) Act 1986 unconstitutional.
  • Further, the writ petition challenging the constitutionality of the § 5(b), 19(3), 21 (read with 2nd schedule), 25 and 27, of the Sick Textile Undertakings (Nationalisation) Act, 1974, was dismissed.

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