Holding

The shares and the immovable properties vested in the Central Government under Sections 3 and 4 of the Swadeshi Cotton Mills Company Ltd. (Acquisition and Transfer of Undertakings) Act, 1986.

Summary

The Supreme Court considered multiple suits and special leave petitions concerning whether 10,00,000 shares in Swadeshi Polytex Ltd. and 17,18,344 shares in Swadeshi Mining & Manufacturing Ltd., held by Swadeshi Cotton Mills, along with certain immovable properties in Kanpur, vested in the Central Government under Section 3 of the Swadeshi Cotton Mills Company Ltd. (Acquisition and Transfer of Undertakings) Act, 1986. After analysing the language of Sections 3 and 4, the definition of "textile undertaking" in Section 2(k), and the purpose of the Act under Article 39(b) and (c) of the Constitution, the Court held that the shares and the properties did vest in the Central Government (through the National Textile Corporation). The Court also rejected the petitioners' request for production of Cabinet documents, deeming them privileged under Article 74(2). Consequently, the various SLPs and transferred cases were disposed of, the interim orders were vacated, and the 17th annual general meeting was ordered to be held under the chairmanship of Shri Jaswant Singh, recognising NTC as the rightful owner.

Issues considered

Whether the equity shares held by Swadeshi Cotton Mills in Swadeshi Polytex Ltd. and Swadeshi Mining & Manufacturing Ltd. vest in the Central Government under Section 3 of the Act.
Whether the bungalow No.1 and the Administrative Block in Kanpur vest in the Central Government under the same provision.
Whether the expressions "pertaining to", "in relation to" and "forming part of" in Section 4 should be given a narrow or expansive meaning.
Whether Sections 7 and 8 of the Act affect the scope of the vesting provisions.
Whether the documents sought for statutory interpretation are protected by the privilege under Article 74(2) of the Constitution.

Legislation cited

Companies Act, 1956s. 108
Constitution of Indias. Article 39(b), s. Article 39(c), s. Article 74(2)
Industries (Development and Regulation) Act, 1951s. 18AA
Swadeshi Cotton Mills Company Ltd. (Acquisition and Transfer of Undertakings) Act, 1986s. 10, s. 24, s. 25, s. 27, s. 28, s. 2(k), s. 3(1), s. 3(2), s. 4(1), s. 7, s. 8

Subjects

nationalisationvested propertystatutory interpretationacquisition and transfer of undertakingsshare vestingimmovable propertyArticle 39Article 74Cabinet privilegedeeming provisionpublic policy

Judgment

A DOYPACK SYSTEMS PVT. LTD. ETC.
v.
UNION OF INDIA & ORS., ETC.

FEBRUARY 12, 1988

B [SABYASACHI MUKHARJI AND G.L. OZA, JJ.]

Swadeshi Cotton Mills Company Limited (Acquisition and Trans- •
fer of Undertakings) Act, 198~Whether under section 3 thereof equity
shares in Swadeshi Polytex Limited and Swadeshi Mining and
Manufacturing Company vest in the Central Govt. and whether the
C immovable properties have also vested in the Govt. under the said
section.

What fell for consideration in all these matters, viz., (i) SLPs.
(civil) Nos. 4826 and 7045of1987, (ii) SLP (civil) No. 5240of1987, (iii)
C.M.Ps. Nos. 12029-31/87 (in CAs Nos. 577-79 of 1987), (iv) C.M.Ps.
D Nos. 16635 and 16918/87 (in S.L.P. (c) No. 4826/87) and (v) Transfer-
red Cases Nos. 13 and 14 of 1987 (with CMPs. Nos. 16887-89 and
17018/87), was a common question of law-whether equity shares in
two companies, i.e. 10,00,000 shares in Swadeshi Polytex Ltd. and
17, 18,344 shares in Swadeshi Mining and Manufacturing Company
Ltd., held by the Swadeshi Cotton Mills, vested iu the Central Govern-
E ment under section 3 of the Swadeshi Cotton Mills Company Ltd.
(Acquisition and Transfer of Undertakings) Act, 1986. The other sub- 'r
sidiary question was whether the immovable properties, namely,
bungalow No. l a,nd Administrative Block, Civil Lines, Kanpur, had
.....
also vested in the government.

F There were six original proceedings initiated by various parties <
which gave rise to these civil appeals, special leave petitions and trans-
ferred cases before this Court. These were: ~-

On 18th February, 1987, a suit was filed before the Delhi High
Court by one Naresh Kumar Barti against Dr. Raja Ram Jaipuria,
G Swadeshi Polytex and others, for an injunction restraining the company
from holding the 17th annual general meeting on the ground that 34%
shares in the Swadeshi Polytex vested in the National Textile Corpora·
tion (N. T.C.) in view of sections 3 and 4 of the Act. In the suit, an
application was also filed praying that in the event of the annual general
meeting of the company being allowed to be held, an independent
H Chairman should be appointed to conduct the meeting. The High Court
962
DOYPACK SYSTEMS v. U.0.1. 963

-( refused to pass any order (in view of an order already passed by the A
Allahabad High Court). Against this order of the Delhi High Court, two
special leave petitions were filed in this Court one by Doypack Systems
Pvt. Ltd. (defendant No. 10 in the Delhi Suit), which came to registered
as Civil Appeal No. 577 of 1987 after the grant of special leave, and the
other, by Naresh Kumar Barti, the plaintiff in the Delhi Suit, which
B
came to be registered as Civil Appeal No. 578 of 1987 aftt:r the grant
of special leave.

-I'-
..
"t
On 24th February, 1987, one Bari Prasad Aggarwal filed a suit in
the court of the Third Additional Civil Judge, Kanpur praying inter alia
that Shri Raja Ram Jaipnria should not preside over the l7th annual
general meeting of the company. The application for an interim injunc-
~tion filed in the suit was dismissed. In the appeal preferred by the
c
plaintiff before the Allahabad High Court, an order was passed by the
High Court on 2nd March, 1987, appointing Shri M.P. Wadhawan as
the Chairman of the said annual general meeting. Against this order
dated 2nd March, 1987, passed by the Allahabad High Court M Is.
D
,.-~
Doypack System Pvt. Ltd., preferred a special leave petition in this
Court, which after the grant of leave, was registered as Civil Appeal
No. 577 of 1987. The three special leave petitions were heard together as
Civil Appeals Nos. 577, 578 and 579 of 1987 and disposed of by this
Court by a common order on 6th March, 1987, appointing Shri Jaswant
Singh as the Chairman of the said annual general meeting.
'f E

- •
On 26th February, 1987, another suit-Suit No. 506 of 1987-was
filed in the Delhi High Court by Mukesh Bhasin for a declaration that
Swadeshi Cotton and Swadeshi Mining had no right in respect of 34% of
the share-holdings in Swadeshi Polytex and that the said shares were
)
vested in the N.T.C. by virtue of the said Act. By order dated 9th
March, 1987, the High Court disposed of that application aud granted F
.,_~injunction restraining defendants Nos. 3 and 4 in that suit from exercis-
ing any right whatsoever attached to the 34% shares of defendant No. 2
held by them and particularly any voting right in the annual general
meeting scheduled to be held on the 9th March, 1987, till the decision of
the suit. This order was brought to the notice of this Court by C.M.P.
' forming part of the Civil Appeals Nos. 577-579 of 1987. On 9th March, G
1987, on that C.M.P. this Court passed an order directing that NTC,
'f Swadeshi Cotton and Swadeshi Mining, all shall be entitled to vote at
" the .annual general meeting and the question as to who were the rightful
voters would be decided by the Chairman of the meeting, etc. This was
the Transferred Case No. 14of1987.
H
964 SUPREME COURT REPORTS [1988) 2 S.C.R.

A One Mukesh Jasmani, a shareholder in Swadeshi Polytex filed a 'r
writ petition in the Allahabad High Court. The High Court by its order
dt. 7th March, 1987, dismissed that writ petition, observing that
Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the
l 7th annual general meeting in respect of their shares which, according
to N.T.C., had vested in them. Against this order, Doypack Systems
B
preferred the Special Leave Petition (civil) No. 3I.12of1987. This Court
passed orders on this petition, directing that the meeting would be held +
under the chairmanship of Shri Jaswant Singh notwithstanding any
order made by any Court. This Court also vacated the operative portion
of the directions contained in the order dated 7th March, 1987 of the
Allahabad High Court.
c
On 6th April, 1987, M/s. Swadeshi Mining and Manufacturing·~
Company filed a civil writ petition-Writ Petition No. 2214 of 1987-in
the Allahabad High Court (Lucknow Bench) for stay of the operation of
the letters dated 24/30 March, 1987, addressed by NTC to Swadeshi
D Mining and Manufacturing Company and Swadeshi Cotton Mills Com-
pany Limited, calling for an Extraordinary General Meeting of the
Shareholders for removal of the Directors of Swadeshi Mining and
Manufacturing Company Ltd. The High Court passed an order on the
6th April, 1987, staying the operation of the said letters. Against that
order, M/s. Doypack Systems Pvt. Ltd. filed Special Leave Petition
E No. 4826 of 1987 and NTC also filed a Special Leave Petition No. 5240
of 1987 in this Court. By an order dated 5th May, 1987, this Court
directed that Suit No. 506 of 1987 in the Delhi High Court and the Writ
Petition No. 2214 of {987 in the Allahabad High Court be transferred to
this Court, which were registered in this Court as Transferred cases
-
Nos. 14 and 13of1987 respectively.
F
NTC filed a civil suit in the District Court Kanpur seeking decla· .
ration of its title in respect of the shrubbery property in Kanpur. The ,..J"
court refused any interlocutory injunction in the suit against which an
appeal was preferred before the High Court of Allahabad and the same
was dismissed. Consequently, NTC filed a Special Leave Petition
G No. 7045 of 1987 in this Court.

Disposing of the matters, the Court,

HELD: Swadeshi Mining and Manufacturing Co. Ltd. and
Others submitted that the shares in question did not vest in the Central
H Government. [976B)
DOYPACK SYS1EMS v. U.0.I. 965

By the Act- Swadeshi Cotton Mills Company Ltd. (Acquisition A
and Transfer of Undertakings) Act, 1986-<m the appointed day "every
textile undertaking" and the "right, title and interest of the company in
relation to every textile mill of such textile undertakings" were trans-
ferred to and vested in the Central Governm~nt and such textile under-

..
takings would be deemed to include "all assets". In the context of this
provision, the reliance on the decision of this Court· in Balkrishnan B
Gupta and Others v. Swadeshi Polytex Ltd. and Others, (1985] 2
S.C.R. 854, was not appropriate. (9780-E]

It appears from the written statement filed by NTC on 8th
February, 1987, in the suit filed by one G.G. Bakshi in Ghaziabad
Court, it was claimed that NTC was entitled to take over company's C
shares and investments. On 24/30th March, 1987, NTC issued notice
to the petitioners l and 2 stating that they were entitled to shares. It
was urged by Shri Nariman, counsel for Swadeshi Mining and Manu-
facturing Co. J.,td. & Ors., that this belated assertion indicated that the
shares were not intended to be taken over. The Court was unable to
accept this suggestion or to draw that inference. It did not logically D
follow. [979G-H; 980A]

Before dealing with the main question, the Court considered an
application made by Shri Nariman for the production of certain docu-
ments. The petitioner in Transferred Case No. 13 of 1987 had sought
production of the documents. It was contended inter alia that the E

- production of those documents was necessary to establish that the
shares were never intended to be taken over and these were never
considered as part of the textile undertaking, and that the documents
were definitely relevant as they would throw light on the merits of the
case. The production of the documents was resisted by the Attorney-
General on behalf of the Union of India on the ground that the docu- F
ments were not relevant and in any event most of them were privileged
being part of the documents leading to the tendering of the advice by the
Cabinet to the President, as contemplated by Article 74(2) of the
Constitution. [989B, C; 990A]

Having considered the facts and circumstances of the case as well G
as the decisions of this Court in a number of cases, the Court was of the
y opinion that the documents in question were not relevant, and also that
the Cabinet papers are protected from disclosure not by reason of their
contents but becanse of the class to which they belong; the Cabinet
papers also include papers brought int11 existence for the purpose of
preparing submission to the Cabinet, and it is the duty of this Court to H
966 SUPREME COURT REPORTS I19881 2 S.C.R.

prevent disclosure where Article 74(2) is applicable. The Court was
A
unable to accept the prayer of the petitioner to direct disclosures and
production of the documents sought for. [993F-G; 994H]

Coming to the main question involved, reading the provisions of·
section 3(1), section 4(1) and section 2(k) of the Act, each throwing light
B on the other, it follows that-(a) under the first limb of section 3(1) of
the Act, every textile undertaking; (b) under the second limb of section

-
3(2), every right, title and interest of the company iu relation to every
such undertaking, is transferred and vested, (c) the deeming provision
of section 4(1) amplifies and enlarges both the limbs of the vesting
section, being section 3(1), (d) the definition of the section is read into
these provisions, to give a wider meaning and scope to the vesting
c provision and to what is transferred or vested. [997G-H; 998A]

Sections 7 and 8 of the Act relied upon by the petitioners, being
provisions for payment of amounts and for the issue of shares by NTC
respectively, will have no bearing on the scope of the vesting provision.
D As to what properties have vested cannot proceed on the hypothesis that
there is a clear numerical or mathematical link between the quantum of
compensation and the items of property vested. This correlation with
regard to snch legislation is not available. [9988]

Section 8 refers to the payments of the amounts by Union of India
E to the company. It has no bearing either on the vesting section or on
section 7 except that the figure of Rs.24 crores 32 lakhs was introduced
into section 7. [998C-D I -
•
In this case, a nationalisation statute is concerned. Even with
other independent management statutes, in respect of textile under-
F takings a series of decisions have upheld the view that the shares vest in
the Government. See National Textile Corporation Ltd. v. Sitaram
Mills, [1986] Sopp. S.C.C. 117, Minerva Mills v. Union of India, [1986]
4 S.C.C. 222, Goverdhan Das Narasingh Das Daga v. Union of India,
[1986] 4 S.C.C. 276, Vidharba Mills Berar Ltd. v. Union of India,
[1986] 4 S.C.C. 248 and Fine Knitting Co. Ltd. v. Union of India,
G [ 1986] 4 S.C.C. 276. The above provide the informed basis on which the
Court makesconstrnctionofsections3 and 4ofthe Act. [998G-H; 999A-B] y
The expressions "and all other rights and interest in or arising out
of such property, as were immediately before the appointed day, in the
ownership, possession, power or control of the company in relation to
H the said undertakings'', appearing in sub-section (1) of section 4 of the
DOYPACK SYSTEMS v. U.0.1. 967

'( Act indicates that the shares which have been purchased out of the funds A
of the textile undertakings and which have been held for the benefit of
~ the said textile undertakings, would come within the scope of section 4
of the Act and thus would also vest in the Central Government under
section 3. The origin of these shares and their connection with the textile
undertakings had been fully corroborated. The textile-business was the
only business of the Swadeshi Cotton Mills. There was·inter-<:onnection B
t- and inter-relation between all the six undertakings. Investments

-
in Swadeshi Polytex Limited from the funds of Kanpur undertaking
were always made. Investments in Swadeshi Mining and Manu-
facturing Company Ltd. were always made from the funds of the
Kanpur undertaking. Assets/investments held and used for the benefit
of the textile business of SCM were carried on in its textile under-
. f' takings. [999B-E]
c
The words in the statute must Prima facie be given their ordinary
meaning. Where the grammatical construction is clear and manifest
and without doubt, that construction ought to pre':ail unless there are
some strong and obvious reasons to the contrary. Nothing was shown to D
warrant that literal construction should not be given effect to. See
Chandavarkar S.R. Rao v. Asha Lata, [1986] 4 S.C.C. 447 at 476,
approving 44 Halsbury's Laws of England, 4th ed. paragraph 856, p.
552, Nokes v. Doncaster Amalgamated Colliery Ltd., [1940] Appeal
Cases 1014 at 1022. It must be emphasised that interpretation must be
in consonance with the Directive Principles of the State Policy in Arti- E
des 39(b) and (c) of the Constitution. [999E-G]

The object of interpretation of a statute is to discover the intention
t of the Parliament as expressed in the Act. The dominant purpose in
constructing a statute is to ascertain the intention of the legislature as
expressed in the statute, considering it as a whole and in its context. F
·, That intention and, therefore the meaning of the statute are particu-
\,,..larly to be sought in the words used in the statute itself, which must, if
they are plain and unambiguous, be applied as they stand. In the pre-
sent case, the words used represented the real intention of the Parlia-
ment as the Court found not only from the clear words used but also
from the very purpose of the vesting of the shares. If the fact is borne in G
mind that these shares were acquired from out of the investments made
y by these two companies and furthermore that the assets of the company
as such minus the shares were negative and further the Act in question
was passed to give effect to the principles enunciated in clauses (b) and
(c) of Article 39 of the Constitution, no doubt was left that the shares
vested in the Central Government by operation of sections 3 and 4 of the H
968 SUPREME COURT REPORTS [1988] 2 S.C.R.

A Act. See in this connection, the observations of Halsbury's Laws of
England, 4th Edition, Volume 44, paragraph 856, p. 522 and the cases
noted therein. [999G-H; lOOOA-C I

There is no exact correlation between the figure of capitJ!I reserve
B and the figure of investments. That could not be. These could never be
equal. The submission of the petitioners failed to take into account the
fact the undertakings, other than the Kanpur undertaking, also had
capital reserve, even though there was no obligation that these were

C
excluded assets in respect of other undertakings and there were no
figures of investments therein. I I OOOD-E]

Contemporanea Expositio is a well~ttled principle or doctrine
which applies only to the construction of ambiguous language in old
statutes. Reliance might be placed in this connection on Maxwell, 13th · \
1

.
-
Ed. page 269. It is not applicable to modern statutes. Reference may be
made to G.P. Singh, Principles of Statutory Interpretation, 3rd Ed.
D pages 238,239. The leading case on Contemporanea expositio is Comp-
pell College Belfast v. Commissioner of Valuation for Northern lre-
land,_Ll96~] 1 W.L.R. 912, in which House of Lords made it clear that 'r,
the doctrine is to be applied only to the construction of ambiguous
language in the very old statutes. L_ord Watson said in Clyde Navigation
Trustees v .-Laird, [1983 I f A.C. 658 that Contemporanea expositio
could have no application to a modern Act. The Court, therefore, re-
E jected the attempt of the petitioners to lead the Court to this forbidden Y
track by referring to various extraneous matters. Furthermore, those
external aids sought before the Court did not support the petitioners' ,._.
approach to this question at all. [IOOOF-H; 1001AI

Sections 3 and 4 of the Act evolve a legislative policy and set out
r
F the parameters within which it has to be implemented: The Court could
not find that there was any special intention to exclude the shares in this ~ _,.-'
case, as seen fnm the existence of at least four other Acquisition Acts ~
which used identical ·phraseology in sections 3 and 4 and the other •
sections as well-Aluminium Corporation of India Ltd. (Acquisition
and Transfer of Aluminium Undertakings) Act, 1984, Amritsar Oil
G Works (Acquisition and Transfer of Undertakings) Act, 1982, °'
Britannia Engineering Company (Mohmeh Unit) and the ·.Arthur
Butler and Company (Muzaffarpore) Ltd. (Acquisition and Transfer y
of Undertakings) Act, 1978, and the Ganesh Flour Mills Com-
pany Limited (Acquisition and Transfer of Undertakings) Act,
H 1984. [1001E-F] -
DOYPACK SYSTEMS v. U.O.l. 969

It appeared to the Court that the expression "forming part or' A
'i appearing in section 27 could not be so read with section 4(1) as would
have the effect of restricting or cutting down the scope and ambit of the
vesting provisions in section 3(1). The expression "pertaining to" did
not mean "forming part or'. Even assuming that the expression "per-
taining to" appearing in the first limb of section 4(1) means "forming B
part or', it would mean that only such assets as had a direct nexus with
the textile mills, would fall under the first limb of section 4(1). The
t shares in question would still vest in the Central Government under the

-
second limb of section 4(1) of the Act since the shares were bought out
of the income of the textile mills and were held by the company in
relation to such mills. The shares would also fall in the second limb of
section 3( 1) being right and title of the company in relation to the textile C

r mills. [I002C-E)

On the construction of sections 3 and 4, the Court came to the
conclusion that the shares vested in the Central Government even if
sections 3 and 4 were read in conjunction with sections 7 and 8 of the
Act on the well--1iettled principles. The expression 'in relation to' has D
been interpreted to be words of the widest amplitude. See National
Textile Corporation Ltd. and Ors. v. Sitaram Mills Ltd. (supra). Sec-
tion 4 appears to be an expanding section. It introduces a deeming
provision, which is intended to enlarge the meaning of a particular
word or include matters which otherwise may or may not fall within the
main provisions. It is well~ttled that the word 'includes' is an inclu- E

-
sive definition and expands the meaning. [I002F-G]

To leave a company, the net wealth of which was negative at the
time of take-over of the management, with the shares held by it as
investment in the other company, was, in the Court's opinion, not only
defeat the principles of Articles 39(b) and (c) of the Constitution, but F
' toit would permit the company to reap the fruits of its mismanagement.
\,l That would be an absurd situation. It had to be borne in mind th11t the
T"net wealth of the company at the time of take-over was negative; hence
sections 3 and 4 could be meaningfully read if all the assets including the
shares were considered to be taken over by the acquisition. That was
y the only irresistible conclusion that followed from the construction of G
the documents and the history of the Act, which expressly recites that it
was to ensure the principles enunciated in clauses (b) and (c) of Article
Y 39 of the Constitution. The Act must be so read that it further ensures
such meaning and secures the ownership and control of the material
resources to the community to subserve the common good to see that the H
operatioo o(lhe ecooomicsysttm doeS not reUt in btjuslice. [1003F-H; too4AJ
970 SUPREME COURT REPORTS 11988) 2 S.C.R.

The shares vested in the _Central Government. Accordingly, the
A
shares in question were vested in the N. T.C. and it had right over the
said 34 per cent of the share-holdings. [10048)

The 10,00,000 shares in the Swadeshi Polytex Ltd. and 17, 18,344
in the Swadeshi Mining and Manufacturing Company Ltd. held hy the
B Swadeshi Cotton Mills vested in the Central Government under sections
3and4oftheAct. [1004B-C)
-+

c
In view of the amplitude of the language used, the immovable
properties, namely, the Bnngalow No. l and the Administrative Block,
Civil Lines, Kanpur, also vested in the NTC. II004C-D)

In that view of the matter, in Transferred Case No. 13 of 1987, the ~--
Writ Petition No. 2214 of 1987 was dismissed. All interim orders were· "' ·
-
vacated. This would dispose of the various other SLPs and CMPs con-
nected with the Lucknow writ petition, being SLP (Civil) No. 4826 of
1987 filed by Doypack Systems Pvt. Ltd., SLP (Civil) No. 5240 of 1987
D filed by NTC. CMPs 16918 and 16919 of 1987 in SLP No. 4826 of 1987
would stand disposed of in the above light. II004D-F)

In the Transferred Case No. 14 of 1987 (in Suit No. 506 of 1987),
the Court held that to lakhs and l 7 lakhs equity shares and the
Swadeshi House at Kanpur and all the rights, title and interest attached
E therewith, related to the textile undertaking of defendant No. 3
and they vested in NTC with effect from lst April, 1985, and defen-
dants Nos. 3 and 4 were restrained by a decree of permanent injunc-
tion from dealing with them in any manner whatsoever. Defendant
No. 2 was restrained by permanent injunction from recognising
--
defendants Nos. 3 and 4 as owners of the aforesaid shares and the
f Swadeshi House. II004F-G)

Defendant No. 2 was directed to enter the name of defendant-~
No. l, namely, NTC in its register of members and to treat the said
defendant No. l as its share-holder instead of defendants Nos. 3 and 4
in respect of the shares of defendant No. 2 held by them. In view of the
G provisions of law under section 108 of the Companies Act, as there was
transmission of shares by operation of law, rectification was not
necessary. [I004H; I005A-B) y
Civil Appeals Nos. 577 to 579 of 1987 were disposed of in the
above terms and it was directed that the l 7th annual general meeting be
H held in accordance with law after giving proper notice under the
DOYPACK SYSTEMS v. U.0.1. 971

Chairmanship ofShri Jaswant Singh. [1005C]
A
CMPs Nos. 12760 of 1987 in Civil Appeal No. 577 of 1987 would
stand disposed of in terms of the orders in the Transferred Case No. 14
of 1987 and it was directed that the Chairman should act in accordance
with the aforesaid decision and NTC should be considered to be entitled
to vote. CMP 16887of1987was rejected. [10050] B

CMP 16888 of 1987 was an application by Doypack Systems Ltd.

- to be impleaded as a party-respondent in the Transferred Case No. 13
of 1987. Doypack Systems was permitted to argue and was heard as a
party. No further order was necessary. I1DOSE]

~ CMPs Nos. 16889 and 17018 of 1987 were allowed. CMP No. C
f 18268 of 1987 was disposed of with the direction that no further docu-
ments needed to be inspected. In view of the orders, the other CMPs
were no longer necessary to be disposed of. I IOOSFJ

Irrespective of any order passed by any court, the 17th annual D
general meeting should be held in accordance with law, to be presided
over by Shri Jaswant Singh, recognising NTC as the rightful owner of
the disputed shares. [1005GJ

Balkrishan Gupta & Ors. v. Swadeshi Polytex Ltd. and Ors.,
'f [1985] 2 SCR 854; Swadeshi Cotton Mills v. Union of India, [1981] 2 E

- SCR 533; National Textile Corporation v. Sita Ram Mills, I1986] Suppl.
SCC l17; Minerva Mills. v. Union of India, [1986] 4 SCC 222; Gover-
dhan Das Narasingh Das Daga v. Union of India, [1986] 2 SCC 249;
Vidharba Mills Berar Ltd. v. Union of India, [1986] 4 SCC 248;
;. Kumari Sunita Ramachandra v. StatF of Maharashtra and another,
[1986] l SCR 697 at 704, c toe; Doctor (Mrs.) Sushma Sharma v. State F
· "-1. of Rajasthan, [1985] 3 SCR 243 at 263; Fine Knitting Co. Ltd. v. Union
>of India, [1986] 4 SCC 276; State of West Bengal v. Union of India,
[1964] 1SCR371at379, 380, 381and382; The Central Bank of India
. v. Their Workmen, [1960] l SCR 200 at 217; Babaji Kondaji Garad v.
Nasik Merchants Co_()perative Bank Ltd., Nasik and Others, [1984] 2
y SCC 50, Paragraphs 14 and 15; Sanjeev Coke Manufacturing Company G
v. Bharat Coking Coal Ltd. & another, [1983] l SCR 1000 at 1029;
Y K.P. Verghese v. The Income.Jax Officer, Emakulam and another,
[1982] 1 SCR 629; Chem Taong Shang & Another, etc. etc. v: Com-
mander S.D. Baijal & Ors., J.T. 1988 l S.C. 202; Auckland Jute Co.
Ltd. v. Tulsi Chandra Goswami, [1949] F.C.R. 201 at 244; RM
AR.AR.R.M.AR. Umayhal Achi v. Lakshmi Achi and Others, [1945] H
972 SUPREME COURT REPORTS [1988] 2 S.C.R.
y
A F.C.R. 1; Black_Clawson International Ltd. v. Papierwerke Waldhof
Achaffenburg A.G., [1975] A.C. 591 at 613; S.P. Gupta v. Union of f-
f ndia and others, I1982 I 2 S. C.R. 365 at 594; State of U. P. v, Raj
Narain, [1975] 3 SCR 333; The Elphinstone Spinning and Weaving
Mills Company Ltd. v. Union of India and others, writ petition No.
B 2401of1983; State of Bihar v. Kripalu Shankar, A.I.R. 1987 SC 1554 at
1559; Bachittar Singh v. State of Punjab, 11962) Suppl. 3 SCR 713; Air 1
Canada and others v. Secretary of Stal~ and another, [1983] 1 All E.R. l"

-
161 at 180; State Wakf Board v. Abdul Aziz, A.I.R. 1968 Madras 79, _
1
81; Nitai Charan Bagchi v. Suresh Chandra Paul, 66 C.W.N. 767;
Shyam Lal v. M. Shyamlal A.l.R. 1933 All. 649, 76 Corpus Juris
Secundum 621; R.C. Cooper v. Union of India, [1970] 3 SCR 530 at
C 567, 568, 635; Khajamian Wakf Estates, etc. v. State of Madras &: _i.,_
another, (1971] 2 SCR 790, at 796 B-E; Harakchand Ratanchand \
Banthiaandothers, etc. v. Unionoflndiaandothers, [1970] 1SCR479
at 496 P & G; Chandavarkar S.R. Rao v. Asha Lata, [1986] 4 SCC 447,
476; 44Halsbury's Laws of England 4th Ed. paragraph 856 at page 552;
Nokes v. Doncqster Amalgamated Colliery Limited, (1940] Appeal°
D Cases 1014, 1022; Campbell College Belfastv. CommissionerofValua- ,_,
tion for Northern Ireland, (1964] 1 W.L.R. 912; Clyde Navigation
Trustees v. Laird, [1933] 8 A.C. 658; The Corporation of the City of
Nagpur v. Its Employees, [1960] 2 SCR 942; Vasudev Ramchandra
She/at v. Pranlal Javanand Thakar and others, [1975] 1 SCR 534,
Palmer's Company Law 24th Ed. (1987) Page 608; Mahadeo Lal y
E Agarwala and another v. The New Darjeeling Union Tea Co. Ltd. and
others, A.I.R. 1952 Cal. 58 and Unity Company Pvt. Ltd. v. Diamond
Sugar Mills and others A.I.R. 1971 Cal. 18.

CIVIL APPELLAIB JURISDICTION: Special Leave Petition
-\
F (Civil) No. 4826 of 1987 etc.
,,i 1·/
From the Judgment and Order dated 6.4.1987 of the Allahab~
High Court in C.M.A. No. 4555 (W) of 1987 in W.P. No. 2214of 1987. ·

K. Parasaran, Attorney General, Milon K. Banerjee, Solicitor
G General, F.S. Nariman, Dr. Y.S. Chitale, H.L. Anand, K.K. Y
Venugopal, A.K. Ganguli, S.N. Kacker, Anil B. Diwan, A.K.
Sharma, Harish N. Salve, K.J. John, S. Swamp, T.V.S.N. Chari, y
Vrinda Grover, Miss A. Subhashini, A. Sobba Rao, R.B. Mehrotra,
B.B. Sawhney, N.K. Sharma, P.V. Kapur, P.P. Malhotra, Miss
Annoradha Dutt, P. Parmeshwaran, Navin Prakash and Naresh K.
H Sharma for the appearing parties.
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.J 973

1 The Judgment of the Court was delivered by
A
-1 SABY ASA CHI MUKHARJI, J. What falls for consideration in
all these matters is a common question of law, namely, whether equity
shares in the two companies i.e. 10,00,000 shares in Swadeshi Polytex
Limited and 17, 18,344 shares in Swadeshi Mining and Manufacturing
Company Limited, held by the Swadeshi Cotton Mills, vest in the B
Central Government under Section 3 of the Swadeshi Cotton Mills
t Company Limited (Acquisition and Transfer of Undertakings) Act,

- ,..
~1 1986 (hereinafter referred to as 'the Act'). The other subsidiary ques-
tion is whether the immovable properties, namely, the bungalow No. 1
and the Administrative Block, Civil Lines, Kanpur have also vested in
the Government. The question as to one more property known as
Shrubbery property whether it has been taken over or not is still to be c
argued and is not covered by this judgment.

In order to appreciate the question in these matters it has to be
borne in mind that there were six original proceedings initiated by
. -,
various parties which gave rise to these civil appeals, special leave
petitions and the transferred cases to this Court. These six original
D
proceedings are as follows:

(1) On 18th of February, 1987 Suit No. 418 of 1987 was filed
before the Delhi High Court by one N aresh Kumar Parti against Dr.
'r Raja Ram Jaipuria, Swadeshi Polytex and others, praying for an order E

- ~
of injunction restraining the company from holding the 17th annual
general meeting on the ground that 34% shares in Swadeshi Polytex
have vested i'n National Textile Corporation (briefly referred to as
NTC) in view of sections 3 and 4 of the said Act. In this suit an
application for grant of interim in junction was also filed praying that in
the event the annual general meeting of the company is allowed to be F
., held, an independent Chairman should be appointed to conduct the
~- meeting. Notice in respect of the said application was served upon the
respondents on 20th of February, 1987. On 4th March, 1987 the Delhi
High Court refused to pass any order in view of the order already
passed by the Allahabad High Court mentioned hereinafter. Against
y this order of the Delhi High Court, two special leave petitions were G
filed in this Court one by Doypack Systems Pvt. Ltd., which was
y defendant No. 10 in the Delhi suit. (Consequent upon grant of leave,
the special leave petitiorr came to be registered as Civil Appeal No.

- 577 of 1987). The other special leave petition was filed by the plaintiff
in the Delhi suit, Naresh Kumar Parti. (Consequent upon grant of
leave, the special leave peti!ion came to be registered as Civil Appeal H
974 SUPREME COURT REPORTS I1988] 2 S.C.R.
No. 578 of 1987). On 24th of February, 1987 one Hari Prasad Aggar-
A wal, filed a suit being Case No. 183 of 1987. in the Court of Third
Additional Civil Judge, Kanpur praying, inter alia, that Shri Raja Ram r-
Jaipuria should not preside over the 17th annual general meeting of
the Company. On 27th of February, 1987, the application for interim
injunction filed in the said suit was dismissed by the learned trial
B Judge. In appeal which is not yet numbered preferred by the plaintiff
before the Allahabad High Court an order was passed by the Court on
2nd March, 1987 appointing Shri M.P. Wadhawan as the Chairman of

c
the said annual general meeting. The consenting parties to the said
proceedings before the Allahabad High Court were Shri Raja Ram
Jaipuria and Swadeshi Polytex Limited. Against this order of 2nd
March, 1987 passed by the Allahabad High Court M/s. Doypack
Systems Private Limited preferred a special leave petition in this
Court. Leave was granted and as mentioned hereinbefore it was re·
-
gistered as Civil Appeal No. 577 of 1987. The three special leave
petitions were heard together as Civil Appeals Nos. 577, 578 and 579
of 1987 and were disposed of by a common order on 6th March, 1987
D by this Court appointing Shri Jaswant Singh as the Chairman of the
said annual general meeting.

On 26th of February, 1987 another suit being Suit No. 506 of
1987, was filed in the Delhi High Court by one Mukesh Bhasin pray-
ing, inter alia, for a declaration that Swadeshi Cotton and Swadeshi
E Mining had no right in respect of 34% of the shareholdings in Swadeshi y
Polytex and that the said shares were vested in NTC by virtue of the
said Act. By an order dated 9th March, 1987 the Delhi High Court
disposed of that application. The learned Judge in that case was prima
facie satisfied that the plaintiff in that case was entitled to an injunc·
tion claimed by him in the meeting to be presided over by Shri Jaswant
p Singh. He granted injunction restraining the defendants Nos.3 and 4 in
that suit from exercising any right whatsoever attached to 34% shares
of defendant No. 2 held by them and particularly any voting rights in
the annual general meeting which was scheduled to be held on 9th of
March, 1987 till decision of that suit. This order was brought to the
notice of this Court by CMP forming part of Civil Appeal Nos. 577-79
G of 1987. On 9th of March, 1987 on that CMP this Court passed an order
directing that NTC, Swadeshi Cotton and Swadeshi Mining, all shall
be entitled to vote at the annual general meeting and the question as to y
who were the rightful voters would be decided by the Chairman of the
meeting. It was further directed that the Chairman would keep these
votes separately. This is the Transferred Case No. 14 of 1987 herein.
H On 7th of March, 1987 one Mukesh Jasnani a shareholder .in Swadeshi
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.] 975

Polytex filed a writ petition in the Allahabad High Court (Lucknow A
1 Bench). The High Court by its order dated 7th of March, 1987 dismis-
_., sed that writ petition. The High Court in the said order observed that
Swadeshi Cotton and Swadeshi Mining would be entitled to vote at the
17th annual general meeting in respect of their shares which, according
to NTC had vested in,them. Against this order dated 7th March, 1987,
B
Doypack Systems preferred a special leave petition being SLP (Civil)
No. 3112 of 1987. On 9th March, 1987 this Court passed orders in this
t special leave petition directing that the meeting would be held under
the Chairmanship of Shri Jaswant Singh notwithstanding any order
made by any court, including the order dated 3rd March, 1987 passed
by the Division Bench of the Allahabad High Court. This Court also

t- vacated the operative portion of the directions contained in the order C
dated 7th March, 1987 passed by the Allahabad High Court.

-. . On 6th of April, 1987 M/s. Swadeshi Mining and Manufacturing
Company filed a civil writ petition No. 2214 of 1987 in the Allahabad
High Court (Lucknow Bench) praying, inter alia, for stay of the opera- D
tion of the letters dated 24/30th March, 1987 addressed by NTC to
Swadeshi Mining and Manufacturing and Swadeshi Cotton Mills Com-
pany Limited, calling for an Extraordinary General Meeting Of the
shareholders for removal of the Directors of Swadeshi Mining and
Manufacturing Company Limited. The Division Bench of the High
Court (Lucknow Bench) passed an order on 6th of April, 1987, staying
l' the operation of the said letters addressed by NTC to the companies. E

-
Against that order, M/s. Doypack Systems Pvt. Ltd. filed a Special
Leave Petition No. 4826 of 1987. NTC also filed a special leave peti-
tion against the said order, being SLP No. 524-0 of 1987 in this Court.
Both these petitions were heard by this Court on 5th May, 1987. By an
order passed on 5th May, 1987 this Court directed that Suit No. 506 of
i
1987 filed in the Delhi High Court and Writ Petition No. 2214 of 1987 F
• pending in the Allahabad High Court (Lucknow Bench) be transferred
"~to this Court, (subsequently, registered as Transferred Cases Nos. 14
and 13 of 1987.respectively). Consequent upon leave granted by this
Court by the order dated 2 lst of January, 1987 NTC filed a civil suit in
the District Court at Kanpur seeking a declaration of its title in respect G
r of Shrubbery property in Kanpur. The learned Trial Judge refused any
interlocutory injunction in the said suit against which an appeal was
y preferred before the High Court of Allahabad which was also declined
and, consequently, NTC filed Special Leave Petition No. 7045 of 1987
in this Court. This application is still pending and is awaiting disposal.
In this background these matters will have to be disposed of. H
976 SUPREME COURT REPORTS 11988) 2 S.C.R.

A Swadeshi Mining and Manufacturing Co. Ltd. and others submit- f"
led that these shares did not vest in the Central Government. The
main thrust of Shri Nariman's contention, who appeared on their r-
behalf, was that section 3 of the Act provided that every textile under-
taking and right, title and interest of the company, i.e. Swadeshi
Cotton Mills Company Limited vested in the Central Government.
B The "textile undertakings" mentioned in section 3 included all assets ,
'pertaining' to the textile undertaking as per section 4 of the Act. It is i •
common ground that whether a particular asset is part of the textile
undertaking' and vests under section 3 or not, has to be considered in -1-
the context of the Act with reference to the language used in section 4 •
of the Act. Shri N ariman submitted that there are different modes by
C which Parliament can resort to nationalisation. These modes, accord-
ing to him, are: ~-
(a) acquisition of 100% shares of the Company;

(b) all assets under the ownership, possession or control of the
D company being vested in the Government;

(c) only those assets in the ownership, possession or control of
the company in relation to the undertakings which are taken over
or "all propperties pertaining to the undertaking" vest in the
Government. According to him, the expressions "pertaining to"
E or ''in relation to" are expressions of limitation and restriction, 'f
in the absence of which each and every asset of the company
would have vested in the Government. The background and se- .._
quence of events leading to the enactment of this Act through
which Shri Nariman took us in detail and it is useless to set them .,
up in extenso, he submitted that the shares in question were all ,
F along being considered and treated as not comprising part of the
textile undertaking. ~/

He referred to the order dated 13th of April, 1978 issued by the
Central Government under section 18AA of the Industries (Develop-
ment and Regulation) Act, 1951 (hereinafter referred to as 'the IDR
G Act'). This order did no_t purport to take over those shares held in the "
two companies by the Swadeshi Cotton Mills Company Limited. He
also drew our attention to Volume III pages 53 and 54 of the present Y
volumes before us, which is the reply of the Minister of Law, Justice
and Company Affairs. It was clarified to the Parliament that the shares
were distinct from the undertakings of the company whose manage-
H ment was taken over. On 27th of March, 1979 in answer to a question
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.] 977

1 the Minister stated that apart from the six undertakings taken over and
A
~,
presently run by the National Textile Corporation Limited, the busi-
ness of the company comprised of:

(i) Investments in Swadeshi Polytex Limited, Ghaziabad.

(ii) Investments in Swadeshi Mining and Manufacturing Com- B
t pany Limited, a subsidiary company.

- -·

. ,.L
(iii) Land development business.

He drew our attention to the letter dated 9th of April, 1979 from
the Chairman, Cotton Mills Ltd. in answer to a letter by the Director,
Department of Company Affairs, stating that the shares ih question
c
'

t and the voting rights in respect thereof continued to vest in the corn-
rany, i.e. Swadeshi Cotton Mills Limited in spite of the taken over of
•
,;(
the management.

, ~
Before we proceed further we must deal with the decision of this D
Court in Balkrishan Gupta and others v. Swadeshi Polytex Ltd. and
others, [ 1985) 2 S.C.R. 854. There it was observed that the fact tbat
3,50,000 shares had been pledged in favour of the Government of
Uttar Pradesh would not make any difference. The contention that
r was urged on behalf of the appellant therein, namely Balkrishan
Gupta related to the effect of an order made by the Central Govero- E
.,..;. ment on 13th of April, 1978 under section 18AA(l)(a) of tbe IDR Act
taking over the management of Swadeshi Cotton Mills along with five
other industrial units belonging to the Company which was the subject
~
matter of dispute in Swadeshi Cotton Mills v. Union of India, [1981) 2
;I
S.C.R. 533 and the order of extension passed by the Central Govern-
ment on 26th November, 1983 which was the subject matter of dispute F
"~ in that case before this Court. It was urged in Balkrishan v. Swadeshi
Polytex (supra) on behalf of the appellants therein that on the passing
of the above orders under Section 18AA(l)(a), the Cotton Mills Com-
pany lost its voting rights in respect of the shares in question. This
Court held that was not so. This Court emphasised that what was taken
' over was the management of the six industrial units referred to therein
and not all the rights of the Cotton Mills Company. The shares
G
y belonged, it was observed, to the company and the orders referred to
above could not have any effect on these. In that context, it was
observed that the Department of Company Affairs, Government of
India rightly expressed its view in the letter written by the Director in
the Department of Company Affairs on 9th of April, 1979 to the H
978 SUPREME COURT REPORTS [1988) 2 S.C.R.

A Chairman of the Cotton Mills Company that the voting rights in 'r
respect of these shares continued to vest with the Cotton Mills Com-
pany and the manner in which those voting rights were to be exercised
was to be determined by the Board of Directors of the Cotton Mills
Company. Hence the passing of the orders under section 18AA(l)(a)
B of the ID R Act had no effect on the voting rights of the Cotton Mills
Company. It was further observed that the Polytex Company had in
that case rightly treated the registered holder i.e. the Cotton Mills -t

...
Company as the owner of the shares in question and to call the meeting
j-
in accordance with the notice issued under section 169 of the Com-
panies Act, 1956. Therefore, a challenge to the validity of the meeting
was negatived. As good deal of reliance was placed on behalf of the
C petitioners on this decision, it must be emphasised that the decision
must, however, be understood in the, context of the facts and the -.J., -
language used in the order passed under section 18AA of the IDR Act \
whereby only the management had been taken over and not the rights of
the company therein. But by the present Act in question on the
D appointed day "every textile undertaking" and "the right, title and
interest of the company in relation to every textile mill of such textile
undertaki,ngs" were transferred to and vested in the Central Govern-
ment and such textile undertakings would be deemed to include "all
assets" and so in the context of this provision the reference and the
reliance on the decision of the Balkrishan Gupta & Others v. Swadeshi
E Polytex Ltd. and others (supra) is not, in our opinion, appropriate. It is
true by the ID R Act only management was taken over, but a further
point was sought to be built up on behalf of the petitioners that the Act
in question was passed to regularise what was taken over. So because
of this decision shares were not taken over by the Act. In view of the
significant difference between the objects of taking over of the assets
F and the taking over of the management this submission has to be stated
to be rejected. ,
_i/ \
Reliance was also placed before us on the decision of the Delhi ~.
High Court in Writ Petition No. 408 of 1978. The Delhi High Court
held that the shares did not vest in the Government under the order
dated 13th of April, 1978 issued under section 18AA of the IDR Act.
G This judgment of the Delhi High Court was challenged in appeal be-
fore this Court. This Court in its judgment in Swadeshi Cotton Mills v.
Union of India (supra) set aside the order of take--0ver dated 13th y
April, 1978 for violation of the principles of natural justice. But this
Court did not give any finding or order with regard to the finding of the
H High Court that the shares were not included in the take--0ver order.
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.J 979

It was further urged before us that this Act was preceded by an A
ordinance namely, Swadeshi Cotton Mills Company Limited (Acquisi-
tion and Transfer of Undertakings) Ordinance, 1986 which was pro-
mulgated on 19th of April, 1986. Section 10 of the Ordinance entitled,
it was submitted, NTC to exercise control over the business of the
undertakings taken over. the Nl'C passed an order to this effect on
25th April, 1986, but did not purport to take over the shares, accord- B
ing to Shri Nariman. We cannot attach much significance to that fact as
Shri Nariman sought us to do.

- Shri Nariman referred us to the Statement of Objects and ./
Reasons appended to the Bill and urged that it was not intended that
the shares were included in the undertaking. He submitted that the C
,L Statement of Objects and Reasons showed that the acquisition of the
! ·undertaking had to be resorted to since the order of taking over the
1 management of the company issued under section 18AA of the IDR
Act could not be continued any further.

The preamble to the Act, however, reiterated that the Act pro- D
vided for the acquisition and transfer of textile undertakings and
reiterated only the historical facts that the management of the textile
undertakings had been taken over by the Central Government under
section 18AA of the IDR Act and further that large sums of money
had been invested with a view to making the textile undertakings
viable and it was necessary to make further investments and also to E

- acquire the said undertakings in order to ensure that interests of
general public are served by the continuance of the undertakings. The
Act was passed to give effect to the principles specified in clauses (b)
and (c) of Article 39 of the Constitution. In our opinion, this was
indicative of the fact that shares were intended to be taken over.
F
·., ·. Shri Nariman, however, contended that NTC on 17th June, 1986
..._had issued an order under section 6 of the Ordinance transferring four
of the textile undertakings to its subsidiary, the NTC, U .P. Limited.
According to him, the shares were not purported to be transferred
under this Order. This, however, in our opinion, is non sequirur.
• • G
It appears from the written statement filed by NTC on 8th of
y February, 1987 in the suit filed by one G.G. Bakshi in Ghaziabad
Court, it was claimed that NTC was entitled to take over company's
shares and investments. On 24/30th March, 1987 NTC issued notice to
the petitioners 1 and 2 stating that they were entitled to shares. It was
urged by Shri Nariman that this belated assertion indicated that the H
980 SUPREME COURT REPORTS 11988) 2 S.C.R.

A shares were· not intended to be taken over. We are unable to accept
this suggestion or to draw that inference. It does not logically follow.

On the date of the take--0ver of the undertakings, according to
Shri Nariman, 10,00,000 shares in Swadeshi Polytex Limited were
attached for recovery of electricity dues of Swadeshi Cotton Mills and
B 3,50,000 shares were already pledged with the State Government of
U .P. for securing the loans and advances made by the State Government
for payment of wages. These dues fall in Part II of the Schedule to the

-
Act and are not payable under section 25 of the Act by the Govern-
ment. Shri Nariman submitted that compensation payable under the
Act was not enough to pay all the dues falling in Part I. He drew our
attention to the Financial Memorandum of the Bill which showed that
c the Government would have to pay a further sum of Rs.15 crores over
and above the compensation amount. It could not have been the inten- ··
tion of the Act to discharge these encumbrances, according to him, if
1
they were to vest in the Central Government under section 3 of the Act
and the result of which would be that the State of U .P. and the Electri-
D city Board would not get anything towards their large dues. We are
unable to accept this submission. This, in our opinion, is not the
proper approach to the construction of the Act on the question
whether the shares were taken over or not.

Shri N ariihan submitted that while applying the rules of con-
E struction of contemporanea expositio, it must be held that the shares in 'f
question did not vest in the Central Government under section 3 of the
Act. This contention was to be supported from the external aids,
namely, the background and history of the legislation. There were
internal aids in the Act itself to support this contention. The internal
·-
aids, according to Shri Nariman, were-(a) long title of the Act which
F used the expression "certain textile undertakings" and "ensuring con-
tiuned manufacture, production and distribution of different varieties ,
of cloth and yam"; (b) the Preamble to the Act also emphasises, j /
according to Shri Narirnan, that the textile undertakings which were~
taken over under section 18AA should be continued for purposes of
manufacture, production and distribution of cloth and yarn; (c) He
G further s~bmitted that the Objects and Reasons appended to the Bill .,
also supported that view; (d) section 2(k) of the Act enumerated only
six textile undertakings which alone were taken over by the order
issued under section 18AA; (e) sections 7 and 8 also provided an Y
intrinsic aid to the construction of section 4, according to him. Section
7 provided 1hat an amount equal to the value of the assets which will
H vest in the NTC, would be deemed to be the Central Government's
DOYPACK SYS1EMS v. U.0.1. I MUKHARJI, J.] 981

_.., contribution to the equity capital of NTC and NTC shall issue shares to A
r the Government having a face value equal to the a!lJ.Ount specified in
section 8. The amount equal to the value of the assets w~s Rs.24.32
crores, which was the share capital of the Government in NTC. This
figure of Rs.24.32 crores does not take into account the value of the
shares and hence the shares did not vest under sections 3 and 4 of the
B
Act, according to him. (f) the expression "pertaining to" appearing in
section 4(1) means "forming part of". Therefore, only those assets
t which formed part of the textile undertakings could vest in the Central

- ~
Government, it was submitted by Shri Nariman. It was for this reason
that section 25 of the Act, while dealing with penalties, used the ex-
pression "assets forming part of' the textile undertakings.

Shri Nariman further submitted that Swadeshi Polytex Limited
·f . and Swadeshi Mining and Manufacturing Company Limited were two
c

, separate undertakings distinct from the six textile undertakings
belonging to Swadeshi Cotton Mills Company Limited. Acquisition of
these shares having controlling interests in the said two companies was
never intended and could never be said to be within the scope of the D
, .,. Act. The expression "in relation to the six textile undertakings"
appearing in sections 3 and 4 of the Act, was an expression of limita-
tion, according to him, indicative of the intention of acquiring of only
the textile undertakings and no other. There existed no public
purpose, according to Shri Nariman, for acquiring these shares. The
y public purposes mentioned in the Act with reference to Article 39(b) E

-1
and (c) related to the acquisition of only the textile undertakings of
Swadeshi Cotton Mills and not acquisition of the synthetic fibre under-
takings of Swadeshi Polytex or sugar undertakings of Swadeshi Mining
and Manufacturing Company Limited.

Dr. Chita)e appearing on behalf of Swadeshi Mining and F
· , Manufacturing Company Limited (as respondent in SLP (Civil)
"~No. 5240 of 1987 in which NTC is the petitioner) supported Shri
Nariman and advanced certain arguments. His main arguments were:

(1) Swadeshi Polytex Limited and Swadeshi Mining and
Manufacturing Company Limited were two distinct undertakings G
different from the six textile undertakings belonging to Swadeshi
Cotton Mills Company Limited. Section 3 ofthe Act, therefore,
according to him, could not be so construed as to enable the
Government to indirectly acquire altogether different under-
takings belonging to a different company.
H

'
982 SUPREME COURT REPORTS [1988] 2 S.C.R.

A (2) Swadei•hi Mining and Manufacturing Company Limited had 'r
also coal-mines. When Coal-mines (Nationalisation) Act, 1973
was passed with reference to sections 3 and 6 thereof, it were the !'--
coal-mines belonging to the said company along with the right,
title and interest of the owners in relation to the coal-mines
which vested in the Central Government by operation of the Act,
B
we were reminded.
t

-
(3) Dr. Chitale submitted that the Act with which we are con-
cerned uses the expression "pertaining to" in section 4, which
according to him is narrower than the expression "in relation to"
used in section 3 of the Coal-mines (Nationalisation) Act, 1973.
c When the coal-mines were nationalised, the sugar undertakings
of Swadeshi Mining were not taken over since these constituted. ,.Is;· ·
separate uudertakings distinct from the coal-mines. He referred '
to Entries 655, 656 and 657 of the Schedule to the Coal-mines
(Nationalisation) Act, 1973.
D
(4) Dr. Chitale submitted that the expression "investment" may
belong to a fund which may be created, the interests of which
may be m.ed for payment of gratuity or provident fund to the
employees. The expression "investment" cannot be applied in
the context of the shareholdings of a separate undertaking,
according to him.
E
Shri S.B. Mukerjee, appearing on behalf of Swadeshi Cotton
Mills had relied on the decision of the Delhi High Court, See Volume
III pages 64 to 169, which according to him, clearly held that the shares
in question were not part of the textile undertakings and, in fact, the •
said shares were not taken over along with the six textile undertakings
F belonging to Swadeshi Cotton Mills Limited, which we have discussed.
Shri Mukerjee further relied on the clarification given by the Company j /
Law Board which showed that the voting rights in respect of the shares1'111:
continued to vest in Swadeshi Cotton Mills and not in NTC. He refer-
red to the decis1ion in Balkrishan Gupta and others v. Swadeshi Polytex
Ltd. and another (supra), which has also been discussed. The expres-
G sion "relating to" and "pertaining to" are words of limitation and they
cannot be so construed as to take within their fold shares held by
Swadeshi Cotton Mills, an independent company doing its business, Y
according to him.

Learned Solicitor General of India appearing on behalf of the
H National Textile Corporation in all these cases submitted that the facts
DOYPACK SYSIBMS v. U.0.1. I MUKHARJI, J.J 983

stated by way of background and the sequence of events up to the date
A
of enactment of the Act were not relevant to the decision as to the
-'i scope, ambit and effect of the vesting provisions contained in sections
3 and 4 of the Act. The sequence of evellts narrated by the petitioners
prior to the enactment of the Act all related to the order of take-<>ver
of the undertakings of Swadeshi Cotton Mills Company issued on 13th
April, 1978 by the Central Government in exercise of its powers under B
t section 18AA of the IDR Act. The object and purpose of the said
order of take-<>ver of management of the textile undertakings was
-+ completely different from the object and purpose of the Act which
- related to acquisition and transfer of the undertakings. We agree. The
scope of the vesting provisions contained in section 3 of the Act would
have to be determined per force of its own language employed by
. ~ Parliament and not with reference to what transpired either before or c
f after the order of take-<>ver of the management dated 13th April, 1978
· passed under section 18AA of the IDR Act. Section 3 of the Act,
according to Solicitor General, contained the vesting provisions as was
evident from its own language and also from the marginal note
appended thereto. D

For determining the question involved in these matters, it is
necessary to bear in mind the relevant provisions of law. The preamble
to the Act in question provided as indicated before that this was an Act
for the acquisition and transfer of certain textile undertakings of the
Y Swadeshi Cotton Mills Company Limited with a view to securing the E

- proper management of such undertakings so as to subserve the in-
terests of the general public by ensuring the continued manufacture,
production and distribution of different varieties of cloth and yam.
The preamble further reiterated that it was to give effect to the policy
of the State towards securing the principles specified in clauses (b) and
(c) of Article 39 of the Constitution. It reiterated that large sums of F
·,L money had been invested with a view to making the said textile under-
~takings viable. It further reiterated that large sums of money were
necessary for the purpose of securing the optimum utilisation of the
available facilities.

Section 3 of the said Act provides for transfer and vesting of the G
textile undertakings. The material portions of sections 3 and 4 are as
y follows:

Tr~sferfand "3( 1) On the appointed day, every textile undertaking and
0
textiles under- th e n'ght , !I'I te and mterest
vesting · of the Company in relation to
takings. every such textile undertaking shall, by virtue of this Act, H
984 SUPREME COURT REPORTS [1988] 2 S.C.R.

A stand transferred to, and shall vest in the Central y
Government.

(2) Every such textile undertaking which stands vested in
the Central Government by virtue of sub-section (1) shall,
immediately after it has so vested, stand transferred to, and
B
vested in the National Textile Corporation.

Generaleffect4.(1) The textile undertakings referred to in section 3 shall i
ofvesting. be deemed to include all assets, rights, lease-holds, +-
pow~rs, authorities and privileges and all property, ·-
movable and immovable, including lands, buildings, work-
c shops, stores, instruments, machinery and equipment, cash
balances, cash on hand, reserve funds, investments and.~ .
book debts pertaining to the textile undertakings and all \
other rights and interests in, or arising out of such property
as were immediately before the appointed day in the
ownership, possession, power or control of the Company in
D
relalion to the said undertakings, whether within or outside
India, and all books of account, registers and all other ~· •
documents of whatever nature relating thereto.

(2) All property as aforesaid which have vested in the
Central Government under sub-section (1) of section 3
E
shall, by force of such vesting, be freed and discharged '(

·-
fron any trust, obligation mortgage, charge, lien and all
other encumbrances affecting it, and any attachment, in-
jum:tion or decree or order of any court or other authority
restricting the use of such property in any manner shall be
deemed to have been withdrawn.
F
(3) ... '' ' ....... ''

(4)

(5) ..... ' ... " . " '
G ...
(6)
y
Section '7 deals with the shares to be issued by the National
Textile Corporation for the value of the assets transferred to it by the
H Central Government. It reads as follows:
DOYPACK SYSTEMS v. U.O.l. I MUKHARJI, J.I 985

Shares to be "7. An amount equal to the value of the assets of the tex- A
issued by tile undertakings transferred to and vested in the National
National Tex- Textile Corporation under sub-section (2) of section 3 shall
:e <;'ri;;:ra-be deemed to be the contribution made by the Central
v:eo~f.;,.ts Government to the equity capital of the National Textile
transferred Corporation; and for the contribution so made, the
toitbythe National Textile Corporation shall issue (if necessary after B
Central amending its memorandum and articles of association) to
+ Government. the Central G overnment pai.d up shares, m . its
. eqmty. capi-.
-1 tal having a face value equal to the amount specified in
.... section 8."

Section 8 which is material provides as follows:
c
Payment of "8. For the transfer to, and vesting in, the Central Govern-
amount. ment, under section 3, of the textile undertakings of the
Company, and the right, title and interest of the Company
in relation to such undertakings, there shall be given by the
Central Government to the Company in cash and in the D
manner specified in Chapter VI, an amount of rupees
twenty-four crores and thirty-two lakhs."

Section 10 of the Act deals with the management etc. of the
textile undertakings. Section 12 of the Act deals with the provisions
relating to the employees of the textile undertakings. Section 24 of the E
Act provides that the provisions of this Act shall have effect notwith-
standing anything inconsistent therewith contained in any other law
for the time being in force or in any instrument having effect by virtue
of any law, other than this Act, or in any decree or order of any court,
tribunal or other authority. Section 25 provides for the assumption of
liability. It is the true effect and purport of these sections that requires F
·, ~ consideration and adjudication.

It appears to us that section 27 of the Act where the expression
"forming part of" is used, would have no bearing on the vesting provi-
sions and its wide language. The expression "forming part of' accord-
ing to the learned Solicitor General is merely descriptive of what is G
actually vested under the vesting provision. The properties which, on
y the appointed day, i.e. with effect from 1.4.1985, became part of the
taken over properties which might not be dealt with in any manner
contrary to the provisions of the Act.

Shri K.K. Venugopal, appearing on behalf of Doypack Systems H
986 SUPREME COURT REPORTS [1988] 2 S.C.R.

A Private Limited i~ Transferred Case No. 13 of 1987 submitted that the
present casc(is directly covered by several decisions of this Court. He
referred to the following decisions National Textile Corporation v. Sita
Ram Mills, [1986] Suppl. S.C.C. 117; Minerva Mills v. Union of India,
I 1986] 4 S.C.C. ;:22; Goverdhan Das Narasingh Das Daga v. Union of
India, 11986] 4 :5.C.C. 249; Vidharba Mills Berar Ltd. v. Union of
B India, 11986] 4 :5.C.C. 248 and Fine Knitting Co. Ltd. v. Union of
India, I 1986] 4 S.C.C. 276.
i
It was emphasised that section 3 of the Act provided that in 1--
addition to the textile undertaking "the right, title and interest of the -
company in relation to every such textile undertaking is to vest".
C Therefore, it was urged by Shri Venugopal that so applying the five
decisions cited earlier, if the shares were held for the benefit of and/or J._ .
utilised for the t1:xtile undertakings they would vest in the Government' \
under the provif:ions of section 3 of the Act itself. He emphasised like
others that "pertaining to" would mean "in relation to" in the species
of properties mentioned in section 4(1) of the Act. He further submit-
D ted that if the amount of compensation declared to be payable to the
erstwhile owners of the undertakings acquired, was a test for deciding '" •
whether a particular piece of property also stood acquired or not, then
it was submitted that it may be open to the erstwhile owners to contend
that even what is expressly stated to have been vested in the Govern-
ment, would not vest in the absence of compensation paid. That was
E untenable. '{

In any event as against the clear words, according to Shri
Venugopal, of section 3 and section 4 read with section 2(k), the
failure to provide for compensation for three out of the six under-
takings would not result in three out of six undertakings being not
F vested in the Government. Shri Venugopal submitted that the antece-
dent computation of value by the executive is wholly irrelevant for j ,1'
determining the intention of Parliament. Reference was made to~
Kumari Sunita Ramachandra v. State of Maharashtra and another, '
[1986] 1 S.C.R. 697 at 704, c toe and Doctor (Mrs.) Sushma Sharma v.
State of Rajasthan, [1985] 3 S.C.R. 243 at 263.
G
Shri Anil B. Diwan on behalf ofMukesh Bhasin, in Suit No. 506
of 1987 (Transferred Case No. 14 of 1987) submitted that the Objects y
and Reasons of the mover of the Bill are not admissible as aids to
construction since it is impossible to contend that the Objects and
Reasons in the minds of some officials of the Government before the
H matter is discussed by the Cabinet, would at all be relevant. Reference
DOYPACK SYSTEMS v. U.0.1. [ MUKHARJI, J.) 987

'( may be made to State of West Bengal v. Union of India, [1964] 1 S.C.R. A
371 at 379, 380, 381, 382; The Central Bank of India v. Their Work-
men, [1960] 1 S.C.R. 200 at 217. It was further submitted that subse-
quent documents and/or views of the officers of the Government are
not admissible as legitimate aids to the construction of a statute.
Reliance placed by the petitioners on the documents at pages 452-456
of VolUl1le II as an aid to the interpretation or construction of sections 3 B
f and 4 of the Act was totally misconceived. See the observations in
· Babaji Kondaji Garad v. Nasik Merchants Co_{)peratiw Bank Ltd.,

-
-~ Nasik and others, [1984] 2 S.C.C. 50 paragraphs 14 and 15 and Dr.
(Mrs.) Sushma Sharma and others v. State of Rajasthan and others
(supra). It was, therefore, urged that the material not availed by the
Parliament could never affect or influence the collective intention of
. ~ the Parliament. The authentic voice is only that of the Parliament.
C

I 'Reference may be made to the observations in Sanjeev Coke
Manufacturing Company v. Bharat Coking Coal Ltd. and another,
[1983] 1 S.C.R. 1000 at 1029. It was submitted that the documents
which were prepared for the submission to the Cabinet and which
related to the inner working of the Government were not admissible D
and/or legitimate aids to the construction of statute and therefore not
relevant in deciding which assets of SCM vested in the Central
Government under sections 3 and 4 of the Act. It was further sub-
mitted that etymological and plain meaning of the word "relation" is
relation by birth or relation by sacrament like marriage or relation in
r the form of busjness connection or dealings. It was further submitted
that an asset or investment which is created from the earnings of the
E

undertakings is clearly related to the undertakings by its inception or
birth. An asset or investment, according to Shri Anil B. Diwan, which
is utilised to preserve and/or give vitality to an undertaking is equally
) related or pertained to the same.
F
• '-1.. Shri A.K. Ganguli, counsel appearing on behalf of M/s .
.,... Doypack Systems Pvt. Ltd. in SLP (Civil) Nos. 4826 and 7045 of 1987
· submitted that even assuming (though not admitting) that the expres-
sions "pertaining to" and "in relation to" appearing in sub.section (1)
of section 4 of the Act have limited or restricted meaning, by the plain
language of section 3, which is the vesting provision read with sections G
2(k) and 4(1), the shares in question would also vest in the Central
Y Government. Under section 3 of the Act what vests in the Central
Gove.i:nment. on the appointed day are: (i) every textile undertaking;
and (u) ~e nght, tit!~ and interest of the company in relation to every
such textile undertakmg. The meaning, scope and effect of the expres-
sion "textile undertaking" appearing in section 3( 1) of the Act would H
988 SUPREME COURT REPORTS [1988] 2 S.C.R.

A have to be understood by a combined reading of sections 2(k) and 4(1) Y
of the Act. Section 2(k) while defining the eiqxession "textile under-
taking", identifies the textile mills concerned while section 4( 1), by Y~
adoption of deeming provisions, spells out the properties which vest
along wiih the concerned textile mills by reason of their direct nexus
with the p1ills. :
B
Tb,e expression "forming part of" appearing in section 27,
according to Shri Ganguly, is merely descriptive of the properties
already vested in the Central Government under section 3. Section
1(2) of the Act provided that the provisions of the Act including sec-
tions 3 and 4 shall be deemed to have come into force retrospectively
with effect from 1.4.1985 and sections 27 and 28 shall come into force at
C once. Thus the properties which stood vested in the Central Govern- '~\·
ment with effect from 1.4.1985 already "formed part of' the textile ,
undertakings on the date of the Act when section 27 came into force
(i.e. w .e.f. 30.5.1986). The properties which already stood vested and
formed part of the textile undertakings could not be dealt with in any
D manner other than those permissible under the Act. Section 27 con-
taining the penalty provisions could, therefore, validly and justifiably
be given effect to after it came into force on 30.5.1986 when the Act
was enacted. The meaning of the expression "pertaining to" appearing
in the first limb of section 4(1), therefore, cannot be gathered from the
language employed in section 27.
E
Shri Ganguli further submitted that the first part of section 7
provided that the amount equal to the value of the assets of the textile
,._
undertakings which is vested under section 3 would be the contribution
of Central Government made to the equity capital of the National
Textile Corporation. The second part of section 7 provided that for the (

F contribution so made by the Central Government, National Textile
Corporation shall issue to the Government paid-up shares in its equity
capital having a face value equal to the amount specified in section 8.

If the legislative intention, it was urged by Shri Ganguli, was that
the National Textile Corporation shall issue paid-up shares (in its
G equity capital) to the Central Government of the value equal to the
+
value of the assets, which was deemed to be the contribution of the
Central Government, then the language of the second part of this y
section would have been the same as used in the opening words of
section 7 itself.

H Shri S.N. Kacker elaborated the submissions of the petitioners
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.I 989

y mentioned hereinbefore and submitted that the shares could not have A
been intended in view of the facts and circumstances of the case, the
~ '1 language used and the data available to take over by sections 3 and 4 of
the Act.

Before we deal with the main question we have to consider the
application made by Shri Nariman for production of certain docu- B
ments. The production of the documents has been resisted by the
learned Attorney General on the ground that these· are not relevant
and in any event most of these documents are privileged being part of
the documents leading to the tendering of the advice by the Cabinet to
the President as contemplated by Article 74(2) of the Constitution.
The petitioner in Transferred Case No. 13 of 1987, has soughtproduc- C
----L. tion of certain documents enumerated at page 82, para 85 of Vol. IV,
f which are as follows:
( 1) Proposal of the Textile Ministry in respect of Nationalisation
of the six textile undertakings including the notes and memo-
D
.. randum specially in respect of calculation and determination of
assets and liabilities in respect of six textile undertakings of
Petitioner No. 2 in the year 1983--84 and the opinion of the Law
Department then obtained.

(2) Proposal of the Textile Ministry in respect of nationalisation
of the six textile undertakings in the year 1985-86 including all
notes and memorandum in respect thereof. E
,.
(3) Opinion of Law Department as rendered to the Textile
Ministry.
)
(4) Proposal of the Textile Ministry in respect of the drafting of
the Ordinance and the Act by the Legislative Ministry. F

(5) Details of properties taken into consideration for the
determination of amount under section 8 of the Ordinance/Act.

(6) Proposal of the Textile Ministry in the form of Cabinet Notes
for the approval of the Cabinet in the matter of promulgation of G
Ordinance/framing of the Act, and
y
(7) Notes and Memorandum prepared by the Ministry of Tex-
tile/Ministry of law at or before framing of the Ordinance/Act
and subsequent thereto relating to the acquisition of the textile
undertakings. · H
990 SUPREME COURT REPORTS (1988] 2 S.C.R.

It .was contended that production of these was necessary to i
·A establish that the shares were never intended to be taken over and
these were never considered as part of the textile undertaking. It was
urged !hat the shares were not taken into account in con mti 1g the
figure of compensation amounting to Rs.24.32 crores referred to in
section 8 of the Act. It was submitted that these documents arn defi-
B nitely relevant as they would throw light on the merits of the case. ...../.
They would ·advance the case of the petitioners and destroy, 'according 1
to the petitioners, the case of the respondent. It was submitted that 1
sections 7 and 8 of the said Act, were intrinsic aids to construe section I

4. The factual foundation necessary for the argument based on sec- ""'I
!ions 7 and 8 of the Act, was that the shares etc., were excluded in
computing the figures of 24.32 crores. It was submitted that these ·~
C documents were required· to establish this factual foundation. The /
petitioner alleged that shares had been excluded in the computation of
compensation and the petitioner had been so informed by the Hon'ble
Minister. In reply the Central Government asserted that compensation
has been computed lumpsum and not itemwise. Aceording to the
D petitioner, the stand of the Government that the compensation was
computed lumpsum, was not borne out by the documents. It was, ~
therefore, necessary to seek production of those documents. It was T
submitted by Shri Nariman that the submissions of the Solicitor
General in so far as these dealt with the balanCe-{;heet made it even
more important that the Government should be directed to produce ---1-·
E . these dociiments. The calculations made by the petitioner had merely
been denied by NfC which had in its possession the books of account as also
.. all 'balance-sheets prior to the balance-sheet as on April 1, 1985. It is
wrongly suggested that the calculations are hypothetical. It was urged
by the petitioner that the calculations made by the petitioners were not ~
. ·. hypothetical. The correctness or otherwise of the said figure, accord-
"···.F fog to the petitioners, would . be demonstrated from the said
··.,documents.

On behalf of the Union of India, the learned Attorney General
- submitted that records and documents whose production was sought
for, were not relevant for deciding the matters of controversy in the
G instant case. ·

In our opinion Sections 3 and 4 c;f the Act interpreted either on
their own language or along with sections 7 and 8, are not ambiguous;
so documents are not relevant. It was further urged, that even if to ,
consture the language is not clear and there is need to resort to aids of
H construction, it is clear that such aids can be either internal or external.
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.J 991

Y Internal aids of construction are definitions, exceptions, explanations, A
fictions, deeming provisions, headings, marginal notes, preamble,
provisos, punctuations, saving clauses, non-obstante clauses etc. The
notings in the files of various officials do not fall in the category of
internal aids for consideration. Dictionaries, earlier acts, history of
legislation, Parliamentary history, parliamentary proceedings, state of
law as it existed when the Act was passed, the mischief sought to be B
suppressed and the remedy sought to be advanced by the Act are
external aids. Documents which have been required to be produced do
not, in our view fall within the category of external aids as indicated.
Having considered the facts and circumstances of the case, we are
unable to accept the prayer of the petitioner to direct disclosure and
production of the documents sought for. In our opinion, the language
,L 1;1sed in section 4 of the Act, is clear enough read with section 3 of the c
I
I Act. We have set out the provisions of the said two sections. Section 3
states that "on the appointed day every textile undertaking and the
right, title and interest of the Company in relation to every textile
undertaking shall stand transferred to and shall vest in the Central
Government". Section 4 says that "section 3 shall be deemed to in- D
clude all assets, leaseholds, powers, authorities, privileges and all
properties, movable and immovable ... pertaining to the textile
undertakings and all other rights and interests in or arising out of such
property".

Francis Bennion in "Statutory Interpretation 1984 Edition page E
526 para 238 states that Hansard reports, and other reports of
parliamentary proceedings on the Bill which became the Act in ques-
tion, are of obvious relevance to its meaning. They are often of doubt-
ful reliability however. (emphasis supplied) The documents in question
) which are sought for do not relate to the enacting history or any past
enactment or the present ,enactment. The notings made in various F
Departments at various levels by the officers namely, the Under
ecretary, Deputy Secretary, Joint Secretary; Secretary etc., whatever
heir view might be, is not the view of the Cabinet. The ultimate
decision is taken by the Cabinet. So the notings cannot and are not
guides as to what decision the Cabinet took. See for example the Task
Force report referred to in National Textile Corporation Ltd. v. G
Sitaram Mills Ltd. & others (supra). This Task Force Report demon-
'( strated the irrelevancy of the documents summoned to be produced.
The Task Force Report manifested that certain mills were viable. But
from the circumstance under which managements of these mills were
taken over, it was clear that the Cabinet had taken the decision con-
trary to what was contained in the Task Force Report. But it appears H
992 SUPREME COURT REPORTS [1988] 2 S.C.R.

A that the decision of the Cabinet was different from the views of the y
Officers at various levels. As Bennion has stated at para 261 (page 560
of the same book) that in interpreting an enactment a two stage
approach is necessary. Here there is no real doubt on an informed
basis as we shall indicate hereafter about the real meaning of the
enactment. There is therefore no question of resolving the doubt. The
B i;econd stage does not arise here. ·

This Court in Sanjeev Coke Manufacturing Company v. Bharat
Coking Coal Ltd. and another (supra) held that no one may speak for
the Parliament and Parliament is never before the Court. After the
Parliament has said what it intends to say, only the Court may say what
C the Parliament meant to say. None else. See also in this connection Dr,
(Mrs.) Sushma Sharma and others v. State of Rajasthan and othets, .-1-
(supra). The objects and purposes of the person who initiated the Bill \
are not admissible as aids to construction since it is impossible to '
contend that such purposes in the minds of some officials of the
Government before the matter is discussed by the Cabinet, would at
D all be relevant. See in tbis connection State of West Bengal v. Union of
India (supra) where this Court reiterated that the Statement of
Objects and Reasons, accompanying when introduced in the Parlia-
ment cannot be used to determine the true meaning and effect of the
substantive provisions of the statute. Such statement cannot be used to
show that the legislature did not intend to take over any particular
E property. See also The Central Bank of India v. Their Workmen
(supra).

It has to be reiterated, however that the objects and reasons of
the Act should be taken into consideration in interpreting the provi-

F this Court in K.P. Verghese v. The Income_tax Officer, Emakulam and
another, [1982] 1 s·.c.R 629, where this Court reiterated that tbe
speech made by the Mover of the Bill explaining the reason for tbe
introduction of the Bill could certainly be referred to for the purpose
1
sions of the statute in.case of doubt. This is tbe effect of the decision of
'

of ascertaining the mischief sought to be remedied by the legislation
and the object and purpose for which the legislation was enacted. It
G has been reiterated that interpretation of a statute being an exercise in
the ascertainment of meaning, everything which is logically relevant
should be admissible. See in this connection the observations of this y
Court in Chern Taong Shang & anr. ·etc. etc. v. Commander S.D.
Baijal & Ors., J.T. 1988 1 S.C. 202. The documents now sought for by
the petitioner do not fall within this category. It is neither the object
H and scheme of the enactment nor the language used therein, that is
DOYPACK SYSIBMS v. U.0.1. I MUKHARJI, J.J 993

y sought for in the instljnt ease. It is certainly relevant to know the A
mischief that was intended to be remedied. But in the documents in
, ., question which the petitioner is seeking no such cotrelation has been
established. These are, therefore, not relevant. We reiterate that'no
officer of the Department can speak for the Parliament even after the
Act has been passed. This Court has to interpret the Act on the basis
of informed basis by applying external and internal aids if the language B
is ambiguous. In the words of Lord Scarman "We are to be governed
not by Parliament's intentions but by Parliament's enactments". See
Cross "Statutory Interpretation" 2nd Edition page 22. Blackstone in
his "Commentaries on the Laws of England" (Facsimile of lst edn.
' 1765, University of Chicago Press 1979) Vol. 1 at 59 suggests "The
fairest and most rational method to interpret the will of the legislator is C
,.l_ by exploring his intention at the time when the law was made, by signs
/ most natural and probable. And these signs are the words, the context,
' the subject matter, the effect and consequence, or the spirit and
reason of the law." The documents whose production is sought for are
none of these. So in our opinion these are not relevant. We must
further reiterate that the Members of Parliament had before them only D
~ -"< the Bill. The notings of the various officials in the files were not before
the Parliament. Therefore members could not be attributed with the
knowledge of the notings in the files. Therefore, the notings made by
the officials are not relevant. In this connection reliance may be placed
on the principles of interpretation as enunciated by the Federal Court
)- in Auckland Jute Co. Ltd. v. Tutsi Chandra Goswami, [l949] F.C.R. E
201at244. It is trite saying that the interpreter of the statute must take
' note of the well known historical facts. In conventional language the
interpreter must put himself in the arm chair of those who were,passing
the Act i.e. the Members of the Parliament. It is the collective will of
the Parliament with which we are concerned. See in this connection
the observations of the Federal Court in RM.AR.AR.R.M.AR. F
Umayhal Achi v. Lakshmi Achi and others, [1945] F.C.R. 1. We are
herefore, of the opinion that the documents sought for are not rele-
vant for the purpose for which they were sought for. In this case we are
concerned only with the construction of the statute to determine
whether the shares vested in the Government or not. As Lord Reid has
-+ said in Black_Clawson International Ltd. v. Papierwerke Waldhof G
Achaffenburg AG, 11975) A.C. 591 at 613 "We often say that we are
y looking for the intention of Parliament, but that is not quite accurate.
We are seeking the meaning of the words which Parliament used. We
are seeking not what Parliament meant but the true meaning of what
they said." See in this connection the discussion in Cross Statutory.
Interpretation-2nd Edition, pages 20-30. H
994 SUPREME COURT REPORTS [1988] 2 S.C.R.

A The next question for consideration is that by assuming that
these documents are relevant, whether the Union of India is liable to
disclose these documents. Privilege in respect of these documents has
been sought fo1 under Article 74(2) of the Constitution on behalf of
the Government by learned Attorney General.

B Shri Nariman however, submitted on the authority of the deci-
sion of this Court in S.P. Gupta v. Union of India and others, 11982] 2
S.C.R. 365 at page 594 that the documents sought for herein were not
privileged. The context and the nature of the documents sought for in
S.P. Gupta's case (supra) were entirely different. In this case the$e
·documents as we see are part of the preparation of the documents leading
to the formation of the advice tendered to the President of India and as
C such these are privileged under Article 74(2) of the Constitution which ~
provides that the question whether any, and if so what, advice was I
tendered by Ministers to the President shall not be enquired into in
any court. This Court is precluded from asking for production of these
documents. In S.P. Gupta's case (supra) the question was not actually
D what advice was tendered to the President on the appointment of

t udges. The question was whether there was the factum of effective
onsultation between the relevant constitutional authorities. In our
pinion that is not the problem here. We are conscious that there is no
sacrosanct rule about the immunity from production of documents an!!
the privilege should not be allowed in respect of each and every diX:u-
El ment. We reiterate that the claim of immunity and privilege has to be --{
based on public interest. Learned Attorney General relied on the
decision of this Court in the case of State of U.P. v. Raj Narain, (1975]
3 S.C.R. 333. The principle or ratio of the same is applicable here. We
may however, reiterate that the real damage with which we are con-
cerned would be caused by the publication of the actual documents of
F the Cabinet for consideration and the minutes recorded in its discus-
1
sions and its conclusions. It is well settled that the privilege cannot be
waived. In this connection, learned Attorney General drew our atten-
tion to an unreported decision in The Elphinstone Spinning and Weav-
•

ing Mills Company Ltd. v. Union of India and others, Writ Petition ·
No. 2401 of 1983. This resulted ultimately in Sitaram Mills's case i>--
G (supra). Tue Bombay High Court held that the Task Force Report was
withheld deliberately as it would support the petitioner's case. It is
well to remember that in Sitaram Mills's (supra) this Court reversed the 'r
judgment of the Bombay High Court and upheld the take over.
Learned Attorney General submitted that the documents there were
not tendered voluntarily /It is well to remember that it is duty of this
I
ll Court to prevent disclosure where Article 74(2) is applicable. We are
y
~· 'l
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.] 995

convinced that the notings of the .officials which lead to the Cabinet
note leading to the Cabinet decision formed part of the advice
tendered to the President as the Act was preceded by an ordinance
r
promulgated by the President. ·

We respectfully follow the observations in S.P. Gupta and others
v. Union of India and others (supra) at pages 607, 608 and 609. We B
may refer to the following observations at page 608 of the report:

"It is settled law and it was so clearly recognised in Raj
- Narain's case {supra) that there may be classes of docu·
ments which public interest requires should not be dis-
closed, no matter what the individual documents in those
... ,l_ classes may contain or in other words, the law recognises C
I that there may be classes of documents which in the public
interest should be immune from disclosure. There is one
such class of documents which for years has been recog·
nised by the law as entitled in the public interest to be
protected against disclosure and that class consists of docu· D
ments which it is really necessary for the proper functioning
of the public service to withhold from disclosure. The docu·
ments falling within this class are granted immunity from
disclosure not because of their contents but because of the
class to which they belong. This class includes cabinet
minutes, minutes of discussions between heads of depart· E
ments, high level inter-departmental communications and
despatches from ambassadors abroad (vide Conway v.
Rimmer, (1969] Appeal Cases 910 at pp. 952, 973, 979, 987
and 993 and Reg v. Lewes J.K. Ex parte Home Secretary,
[1973] A.C. 388 at 412. Papers brought into existence for
the purpose of preparing a submission to cabinet vide p
Lanyon Property Ltd. v. Commonwealth, 129 Common-
wealth Law Reports 650 and indeed any documents which
relate to the framing of government policy at a high level
(vide re. Grosvenor Hotel, London [1964) 3 All E.R. 354
(CA)''.
G
Cabinet papers are, therefore, protected from disclosure not by\
re. ason of their contents but because of the class to which they belong. '\
It appears to us that Cabinet papers also include papers brought into
existence for the purpose of preparing submission to the Cabinet. See ./
Geoffrey Wilion cases and Materials on Constitutional and Administra·
tive Law, 2nd Edition pages 462 to 464. At page 463 para 187, it was H
o!Jserved:
996 SUPREME COURT REPORTS (1988] 2 S.C.R.

"The real damage with which we are concerned would be y
A
caused by the publication of the actual documents of the
Cabinet for consideration and the minutes recording its y ~
discussions and its conclusions. Criminal sanctions should
apply to the unauthorised communication of these papers."

B See in this Connection State of Bihar v. Kripa/u Shankar, A.I.R. 1987
S. C. 1554 at page 1559 and also the decision of Bachittar Singh ".· State
of Punjab, [1962] Suppl. 3 S.C.R. 713. Reference may also be made to
the observations of Lord D~ning in Air Canada and others v. Secret-
ary of State and another, [1983] 1 All E.R. 161at180.

We therefore, reject the claim for production of these
c
·~
documents.

In view of the language used in the relevant provisions, it
appears to us that section 3 has two limbs: (i) textile undertakings; and
(ii) right, title and interest of the company in relation to every such
D · textile undertaking. The expression "textile undertaking" has been
defined in section 2(k) to mean the six textile undertakings of the r- ~
company specified therein. The definition of the said expression in
section 2(k) is, however, subject to the opening words of the section
which provide, "In this Act, unless the context otherwise requires". In
the context of the expression "textile undertakings" employed in
E section 3(1) of the Act, section 4(1) provides that the textile under- ~
takings referred to in section 3 shall be deemed to include all assets,
rights, leaseholds, powers, authorities and privileges and all property,
movable and immovable, including lands, buildings, workshops, stores
... investments and book debts pertaining to the textile undertakings
and all rights and interests in or arising out of such property as are, (
F immediately before the appointed day, in the ownership, possession,
power or control of the company in relation to all six undertakings. j./ '
The expressions "pertaining to", "in relation to" and "arising out of' ~-1,
used in the deeming provision, are used in the expansive sense, as per
decisions of courts, meanings found in standard 'dictionaries, and the
principles of broad and liberal interpretation in consonance with
G Article 39(b) and (c) of the Constitution. +
The words "arising out of" have been used in the sense that it y
comprises purchase of shares and lands from income arising out of the
Kanpur undertaking. We are of the opinion that the words "pertaining
to" and "in relation to" have the same wide meaning and have been
H used interchangeably for among other reasons, which may include
DOYPACK SYSTEMS v. U.0.1. [ MUKHARJI, J.] 997

avoidance of repetition of the same phrase in the same clause or
A
sentence, a method followed in good drafting. The word "pertain" is
synonymous with the word "relate", see Corpus Juris Secundum,
Volume 17, page 693.

The expression "in relation to" (so also "pertaining to"), is a
very broad expression which pre-supposes another subject matter. B
These are words of comprehensiveness which might have both a direct
significance as well as an indirect significance depending on the con-
, text, see State Wakf Board v. Abdul Aziz, A.I.R. 1968 Madras 79, 81
paragraphs 8 and 10, following and approving Nitai Charan Bagchi v.
Suresh Chandra Paul, 66 C.W.N. 767, Shyam Lal v. M. Shayamlal,
A.I.R. 1933 All 649 and 76 Corpus Juris Secundum 621. Assuming
~ that the investments in shares and in lands do not form part of the
c
/ 'undertakings but are different subject matters, even then these would
1 be brought within the purview of the vesting by reason of the above
expressions. In this connection reference may be made to 76 Corpus
Juris Secundum at pages 620 and 621 where it is stated that the term
"relate" is also defined as meaning to bring into association or connec- D
.' tion with. It has been clearly mentioned that "relating to" has been
held to be equivalent to or synonymous with as to "concerning with"
and "pertaining to". The expresssion "pertaining to,; is an expre'ssion
of expansion and not of contraction.

'r As to what an undertaking means, has been clarified in R. C. E
Cooper v. Union of India, 11970] 3 S.C.R. 530 at pages 567, 568, 635,
where the Act of 1969 was challenged. It was held that the meaning of
the expression "undertaking" is a going concern as distinct from its
assets and liabilities. It was also observed that it covered every corner
of property, right, title and interest therein. This Court rejected one of
the grounds of challenge as there was no evidence that the named F
~ banks held any assets for any distinct non-banking business, which
r finding gives an idea as to what could have been excluded from the
acquisition of the undertaking.

Reading the provisions of section 3(1), section 4(1) and section
2(k) of the Act, each throwing light on the other, it follows that-(a) G
under the first limb of section 3(1) of the Act every textile under-
taking; (b) under the second limb of section 3(2) every right, title and
interest of the company in relation to every such undertaking, is trans-
ferred and vested. (c) The deeming provision of section 4(1)'amplifies
and enlarges both the limbs of the vesting section, being section 3(1).
( d) The definition of section is read into these provisions, to give a H
998 SUPREME COURT REPORTS [1988) 2 S.C.R.

A wider meaning and scope to the vesting provision and to what is y
transferred or vested.
r-
Sections 7 and 8 of the Act relied upon by the petitioners, being
provisions for payment of amounts and for the issue of shares by NTC
respectively, will have no bearing on the scope of the vesting provi-
B sion. As to what properties have vested cannot proceed on the
hypothesis that there is a clear numerical or mathematical link bet- ~
ween the quantum of compensation and the items of property vested.
This correlation with regard to such legislation is not available. In this
connection reference may be made to the decision of this Court in
Khajamian Wakf Estates etc. v. State of Madras & another, [1971) 2
C S.C.R. 790 at page 796 B-E.

Section 8 refers to payments of amounts by the Union of India t~---\
the company. It has no bearing either on the vesting section or on
section 7 except that the figure of Rs.24 crores 32 lakhs mentioned
therein was introduced into section 7. The provisions of this section
D are no different from the provisions of the similar sections in the earlier
Act of 1974. For example, under section 8 of the Sick Textile Under- t '
takings Nationalisation Act, 1974 (page 59 of Vol. X), the amount
mentioned is specified in the first schedule as there are a number of
companies involved. This provision cannot be the starting point for
investigation as to which amount relates to which property or as a
E guide to construction. 1

It appears to us from the Delhi High Court decision (supra) and
the decision of this Court in Balkrishan Gupta's case (supra) as well as
the statement of the Minister in December, 1985 that there were legal
difficulties, in respect of taking over, under the 1951.IDR Act. The
F IDR Act was-(a) concerned with the management of scheduled in·
dustries in, inter alia, running of factories, where !.here was no deem- .....~/·
ing provision in such wide terms; (b) it was concerned with setting up-\
of machinery for imposing controls on industrial undertakings, see
Harakchand Ratanchand Banthia and others etc. v. Union of India and
others, [1970) 1 S.C.R. 479 at page 496 F and G.
G
We are further of the opinion that the decision in Harakchand
Ratanchand (supra) would not be applicable. In this case, the Court is "(
concerned with a nationalisation statute. Even with other independent
management statutes, in respect of textile undertakings a series of
decisions have upheld the view that the shares vest in the Government.
H See National Textile Corporation Ltd. v. Sitaram Mills (supra);
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.] 999

Minerva Mills Ltd. and others etc. etc. v. Union of India and others A
(supra); Govardhandas Narasinghdas Daga and others v. Union of
1 India and others (supra); Fine Knitting Mills Ltd. & Ors. v. Union of
India & Ors. (supra) and Vidharbha Mills Berar Ltd. v. Union of India
(supra). The above provide the informed basis on which we make tlte
construction of sections 3 and 4 of the Act.
B
The expression "and all other rights and interests in or arising
out of such property, as were immediately before the appointed day~ in
the ownership, possession, power or control of the company in rela-
tion to the said undertakings", appearing in sub-section (1) of section
4 of the Act indicates that the shares which have been purchased from
out of the funds of the textile undertakings and which have been held C
· -J......Jor the benefit of the said textile undertakings, would come within the
~ . scope of secion 4 of the Act and thus would also vest in the Central
· Governme'nt under section 3. The origin of these shares and their
connection with the textile undertakings have been fully corroborated.
The textile business is the only business of Swadeshi Cotton Mills.
There is inter-connection and inter-relation between all the six under- D
' ~ takings. Investments in Swadeshi Polytex Limited from the funds of
. Kanpur undertaking have always been made. Investments in Swadeshi
Mining and Manufacturing Company Ltd. were always made from the
funds of the kanpur undertaking. Assets/investments held and used for
-. the benefit of the textile business of SCM, were carried on in its textile
I undertakings. E

The words in the statute must, prima facie, be given their ordi-
nary meaning. Where the grammatical construction is clear and
manifest and without doubt, that construction ought to prevail unless
; there are some strong and obvious reasons to the contrary. Nothing
has been shown to warrant that literal construction should not be given F
'-._,__ ~effect to. See Chandavarkar S.R. Rao v. Asha Lata, [1986] 4 S.C.C.
r"'447 at page 476, approving 44 Halsbury's Laws of England, 4th Ed.
paragraph 856 at page 552, Nokes v. Doncaster Amalgamated Colliery
Limited, [1940] Appeal Cases 1014 at 1022. It must be emphasised that
interpretation must be in consonance with the Directive Principles of
State Policy in Article 39 (b) and (c) of the Constitution. G

'l It has to be reiterated that the object of interpretation of a sta-
tute is to discover the intention of the Parliament as expressed in the
Act. The dominant purpose in construing a statute is to ascertain the
intention of the legislature as expressed in the statute, considering it as
a whole and in its context. That intention, and therefore the meaning H
1000 SUPREME COURT REPORTS I1988) 2 S.C.R.
A of the statute, is primarily to be sought in the words used in the statute
itself, which inust, if they are plain and unambiguous, be applied as
they stand. In the present case, the words used represent the real
intention of the Parliament as we have found not only from the clear
words used but also from the very purpose of the vesting of the shares.
If we bear in mind the fact that these shares were acquired from out of
B the investments made by these two companies and furthermore that
the assets of the company as such minus the shares were negative and
further the Act in question was passed to give effect to the principles
enunciated in clauses (b) and (c) of Article 39 of the Constitution, we
are left with no doubt that the shares vested in the Central Govern·
ment by operation of sections 3 and 4 the Act. See in this connection
C the observations of Halsbury's Laws of England, 4th Edition, Volume .J..-
44. paragraph 856 at page 522 and the cases noted therein. ' ~

There is no exact correlation between the figure of capital
reserve and the figure of investments. That, in our opinion cannot be.
These can never be exactly equal. The submission of the petitioner
. D fails to ta~ into account the fact that the undertakings other than the )-
kanpur undertaking, also have capital reserve, even though there is no
allegation that these were excluded assets in respect of other under·
takings and there were no figures of investments therein. The covering
letter for these documents, page 408 of Volume II, itself stated that the
provisional balance-sheet shows investments which included these _,-
E shares as part of assets. With regard to the figure of Rs.11 lakhs taken
in the calculation filed by the petitioner, we find that the calculations
filed by the petitioner were not supportable.

Contemporanea Expositio, is a well- settled principle or doctrine
which applies only to the construction of ambiguous language in old (
F statutes. Reliance may be placed in this connection on Maxwell 13th~.
Ed. page 269. It is not applicable to modern statutes. Reference may_'
be made to G.P. Singh, Principles of Statutory Interpretation, 3rd'
Edn. pages 238 and 239. As noted in Maxwell on The Interpretation of
Statutes, 12th Edition at page 269 that the leading modem case on
contemporanea expositio is the case of Campbell College, Belfast v. +
G Commissioner of Valuation for Northern Ireland, 11964) 1 W.L.R. 912
in which House of Lords has made it clear that the doctrine is to be
applied only to the construction of ambiguous language in the very old ..,
statutes. It is therefore well to remember what Lord Watson said in
Clyde Navigation Trustees v. Laird, 11983) 8 A.C. 658 that contem-
poranea expositio could have no application to a modem Act. We,
H therefore, reject the attempt on the part of the petitioners to lead us to
DOYPACK SYSTEMS v. U.0.1. I MUKHARJI, J.] 1001

y this forbidden track by referring to various extraneous matters which . A
we have indicated before. Furthermore those external aids sought
~' before us do not support the petitioners' approach to this question at
all.

It appears that the shares held in SPL themselves were the sub-
ject matter of both pledge and attachment to secure loans from the B
U .P. State Government of about Rs.66 lacs for payment of wages to
workers of the Kanpur undertaking and Rs.95 lacs being electricity
dues of the Kanpur undertaking owing to the U.P. State Electricity
Board. From all these, the acceptance of the petitioner's case, would
mean that the State would pump in Rs.15 crores of public money to
release the shares from its liabilities and thereafter hand over the shares C
- ,.l._..free from such liability back to the company when the net worth of the
J company at the time of take over of management was negative and in
the teeth of the present financial liabilities built up by the company the
shares would inevitably have sold in discharge of its liabilities and in
any event the shares stood charged with the very liabilities which re-
lated to the .undertakings of the company which were taken over by the D
Government.

It appears to us that sections 3 and 4 of the Act evolve a legis-
lative policy and set out the parameter~ within which it has to be
implemented. We cannot find that there was any special intention to·
)- exclude the shares in this case as seen from the existence of at least E
four other Acquisition Acts which used identical phraseology in sec-
tions 3 and 4 and in the other sections as well. Reference was made to
the Aluminium Corporation of India Limited (Acquisition and Trans-
fer of Aluminium Undertakings) Act, 1984, the Amritsar Oil Works
(Acquisition and Transfer of Undertakings) Act, 1982, the Britannia
Engineering Company Limited (Mohameh Unit) and the Arthur F
'l.,... Butler and Company (Muzaffarpore) Limited (Acquisition and Trans-
f fer of Undertakings) Act, 1978 and the Ganesh Flour Mills Company
Limited (Acquisition and Transfer of Undertakings) Act, 1984.

In the present case we are satisfied that the shares in question
were held and utilised for the benefit of the undertakings for the G
reasons that (a) the shares in Swadeshi Polytex Limited were acquired
y from the income of the kanpur Unit. Reference may be made to page
23 of Compilation D-III, (ii) the shares held in Swadeshi Mining and
Manufacturing Company were acquired in 1955. Originally there were
four companies and their acquisition has been explained fully in the
Compilation D-III with index, (c) the shares held in SPL were pledged H
1002 SUPREME COURT REPORTS I1988) 2 S.C.R.

A or attached for running the Kanpur undertaking, for payment of ES! Y
and Provident Fund dues for the workers of the Kanpur undertaking,
for wages and for payment of electricity dues of the Kanpur under-
taking, (d) the shares held in SMMC were pledged for raising monies
and loans of Rs.150 lakhs from the Punjab National Bank for running
the Kanpur undertaking. These loans fall in category II of Part I of the
B Schedule which liabilities have been taken over by the Government,
(e) the shares held in SPL were offered for sale by SCM from time to ~
time and to utilise the sale proceeds thereof by ploughing them back
into the textile business for reviving the textile undertakings acquired
under the Act.

It appears to us that the expression "forming part of" appearing
-
c in section 27.cannot be so read with section 4(1) as would have th~
effect of restricting or cutting down the scope and ambit of the vesting
provisions in section 3(1). The expression "pertaining to" does not
mean "forming part of". Even assuming that the expression "pertain-
ing to" appearing in the first limb of section 4(1) means "forming part
D of", it would mean that only such a~sets which have a direct nexus with
the textile mills as would fall under the first limb of section 4(1). The
shares in question would still vest in the Central Government under
the second limb of section 4( 1) of the Act since the shares were bought
uut of the income of the textile mills and were held by the company in
relation to such mills. The shares would also fall in the second limb of
E section 3(1) being right and title of the company i.n relation to the i
textile mills.

On the construction of sections 3 and 4 we have come to the
conclusion that the shares vest in the Central Government even if we
read sections 3 and 4 in conjunction with sections 7 and 8 of the Act on
F the well settled principles which we have reiterated before. The expre-
ssion 'in relation to' has been interpreted to be the words of widest._\/
amplitude. See National Textile Corporation Ltd. and others v. Sitaram 'T
Mills Ltd. (supra). Section 4 appears to us to be an expanding section.
It introduces a deeming provision. Deeming provision is intended to
enlarge the meaning of a particular word or to include matters which 'r
G otherwise may or may not fall within the .nain provisions. It is well
settled that the word 'includes' is an inclusive definition and expands v
the meaning. See The Corporation of the City of Nagpur v. Its Emp- r
loyees, [1960) 2 S.C.R. 942 and Vasudev Ramchandra Shelatv. Pranlal
Javanand Thakar and others, I1975) 1 S.C.R. 534. The words 'all other
rights and interests' are words of widest amplitude. Section 4 also uses
H the words "ownership, possession, power or control of the Company
DOYPACK SYS1EMS v. U.0.1. I MUKHARJI, J.] 1003

y in relation to the said undertakings". The words 'pertaining to' are not A
restrictive as mentioned hereinbefore.

Section 8 provides for payment of compensation in lumpsum and
the transfer and vesting of whatever is comprised in section 3. As
section 4 expands the scope of section 3, the compensation mentioned
in section 8 is for the property mentioned in section 3 read with section B
~ 4. The compensation provided in section 8 is not calculated as a total
of the value of various individual assets in the Act. It is a lumpsum
~ } compensation. See in this connection the principles enunciated by this
- Court in Khajamian Wakf Estates etc. v. State of Madras and another
(supra). There, it was held that even if it was assumed that no compen-
sation was provided for particular item, the acquisition of the 'inam' is C
~valid. In the instant case section 8 provides for compensation to be
/ paid to the undertakings as a whole and not separately for each of the
interests of the company. Therefore, it cannot be said that no compen-
sation was provided for the acquisition of the undertaking as a whole.

Section 7 of the Act, in our opinion, neither controls sections 3 D
> · -t and 4 of the Act nor creates any ambiguity. It was highlighted before
us and in our opinion rightly that this sum of Rs.24.32 crores paid by
way of compensation comes out of the public exchequer. The paid-up
shares in its equity capital can necessarily have a face value only of the
amounts so paid, irrespective of whatever may be contended to be the
'r value of the assets and irrespective of whether any asset or property in E
relation to the undertakings, was taken into account. After providing
,,.- for compensation of Rs.24.32 crores to be paid to 'the Commissioner
for payments to discharge part I liabilities, Government has·to under-
" take an additional 15 crores at least for discharging those liabilities. To
leave a company, the net wealth of which is negative at the time of
take-over of the management, with the shares held by it as investment F
, . in other company, in our opinion, is not only to defeat the principles
'j-of Articles 39(b) and (c) of the Constitution but it will permit the
company to reap the fruits of its mismanagement. That would be an
absurd situation. It has to be borne in mind that the net wealth of the
company at the time of take--0ver, was negative, hence sections 3 and 4
can be meaningfully read if all the assets including the shares are G
considered to be taken over by the acquisition. That is the only
irresistible conclusion that follows from the construction of the docu-
ments and the history of this Act. We have to bear in mind the Pream-
ble of the Act which expressly recites that it was to ensure the princi-
ples enunciated in clauses (b) and (c) of Article 39 of the Constitution.
The Act must be so· read that it further ensures such meaning and H
1004 SUPREME COURT REPORTS [1988] 2 S.C.R,

A secures the ownership and control of the material resources to the y·
community to subserve the common good to see that the operation of
economic system does not result in injustice. r--..

We therefore, reiterate that the shares vested in the Central
Government. Accordingly the shares in question are vested in NTC
B and it has right over the said 34 per cent of the shareholdings.

In the aforesaid view of the matter we hold that the 10,00,000
shares in Swadeshi Polytex Limited and 17, 18,344 shares in Swadeshi
Mining and Manufacturing Company Limited held by the Swadeshi
Cotton Mills vested in the Central Government under sections 3 and 4
of the Act.
c
We are further of the opinion that in view of the amplitude of the
language used, the immovable properties, namely, the Bungalow
No. 1 and the Administrative Block, Civil Lines, Kanpur have also
vested in NTC.
D
In that view of the matter in Transferred Case No. 13 of 1987, we
dismiss the Writ Petition No. 2214 of 1987. All interim orders in the
said Writ Petition will stand vacated. This will dispose of the various
other SLPs and CMPs connected with the Lucknow Writ Petition
being SLP (Civil) No. 4826 of 1987 filed by Doypack Systems Pvt. Ltd.,
E against the order dated 6th April, 1987, SLP(Civil) No. 5240 of 1987
filed by NTC against the same order of 6th April, 1987 in the Lucknow
Bench and the order dated 6th April, 1987 in CMP No. 4555(W)
of 1987 in the Lucknow Bench of the Allahabad High Court. CMPs
Nos. 16918 and 16919of1987 being CMPs in SLP No. 4826 of 1987 will
stand disposed of in the above light.
F
In Transferred Case No. 14 of 1987 in Suit No. 506 of 1987, we ___j-'
hold that 10 lakhs and 17 lakhs equity shares mentioned hereinbefore (
and the Swadeshi House at Kanpur and all the rights, title and interest
attached therewith relate to the textile undertaking of defendant No. 3
and they vest in NTC with effect from lst of April, 1985 and defendant
G Nos. 3 and 4 are restrained by a decree of permanent injunction from
dealing with them in any manner whatsoever. Defendant No. 2 is v
restrained by permanent injunction from recognising defendant Nos. 3 r
and 4 as owners of the aforesaid shares and the Swadeshi House.

Defendant No. 2 'is directed to ehter the name of defendant
H No. 1 namely, NTC in its register of members and to treat the said
DOYPACK SYSIBMS v. U.0.1. I MUKHARJ!, J.J 1005

y defendant No. 1 as its shareholder instead of defendant Nos. 3 and 4 in
A
respect of the shares of defendant No. 2 held by them. In view of the
provisions of law under Section 108 of the Companies Act as there was
transmission of shares by operation of law, rectification is not neces-
sary. See in this connection Palmer's Company Law, 24th Ed. (1987)
page 608. See also in this connection Sahadeo Lal Agarwala and
another v. The New Darjeeling Union Tea Co. Ltd. and others, A.I.R. B
1952 Cal. 58 and Unity Company Pvt. Ltd. v. Diamond Sugar Mills
and others, A.I.R. 1971 Cal. 18.

- Civil Appeals Nos. 577 to 579 of 1987 stand disposed of in the
above terms and we direct that the 17th annual general meeting be
held in accordance with law after giving proper notice under the C
. ~ ChairmanshipofShriJaswantSingh.

I CMP No. 12760 of 1987 in Civil Appeal No. 577 of 1987, shall
stand disposed of in terms of the orders in Transferred Case No. 14 of
1987 and it is directed that the Chairman should act in accordance with
the aforesaid decision and NTC should be considered to be entitled to D
>-t vote. CMP No. 16887 of 1987 is rejected, on the grounds indicated in
the judgment.

CMP No. 16888 of 1987 is an application by Doypack Systems
Ltd. to be impleaded as a party-respondent in Transferred Case No.
13 of 1987. Doypack Systems has already been permitted to argue and E
has been heard as a party. No further order is necessary.

CMP No. 16889 of 1987 is allowed and delay condoned. CMP
No. 17018 of 1987 is allowed. CMP No. 18268 of 1987 is disposed of by
directing that no further documents need be inspected. In view of the
orders, the other CMPs are no longer necessary to be disposed of. F

We direct that irrespective of any order passed by any court the
17th annual general meeting should be held in accordance with law to
be presided over by Shri Jaswant Singh recognising NTC as the rightful
owner of the disputed shares.
G
In all these proceedings National Textile Corporation as well as
Union of India wherever they are parties herein will be entitled to
their costs from their respective opposite parties. The other parties will
pay and bear their own costs in these matters.

S.L.