# • • THE ISHWARI KHETAN SUGAR MILLS (P.) LTD. & ANOTHER ETC v. THE STATE OF UTTAR PRADESH & ORS. ETC - **Citation:** [1980] 3 S.C.R. 331 - **Court:** Supreme Court of India - **Decided:** 1980-04-02 - **Bench:** V. R. Krishna Iyer, Murtaza Fazal Ali, D. A. Desai, 8 R. S. Pantrol of tho Central Government because the Corporation wonld be amenable co the authority and jurisdiction of the Central Government. Therefore, the.:a C i• no conJlict between the impugned legislation and the control exercised hy the Central Government under the provisions of the Central Act. [340 H-341 A;. 344 C-G, 345 DJ D G B There is no force in the argument that thlj power of acquisition under Entry 42, List ill is incidental to tho power to legilJlate in respect of various topic; in the lists and, therefore, when the Union assumed control over the· declared industry such control comprehends the power to acquire and henco the power of tho State Legislature to enact leg ## Text _Characters 0–39,912 of 90,205. This is a partial read: ask again with offset=39912 for what follows._ ,, f • • THE ISHWARI KHETAN SUGAR MILLS (P.) LTD. & ANOTHER ETC. v. THE STATE OF UTTAR PRADESH & ORS. ETC . April 2, 1980 331 [V. R. KRISHNA IYER, S, MURTAZA FAZAL ALI, D. A. DESAI, 8 R. S. PAntrol of tho Central Government because the Corporation wonld be amenable co the authority and jurisdiction of the Central Government. Therefore, the.:a C i• no conJlict between the impugned legislation and the control exercised hy the Central Government under the provisions of the Central Act. [340 H-341 A;. 344 C-G, 345 DJ D G B There is no force in the argument that thlj power of acquisition under Entry 42, List ill is incidental to tho power to legilJlate in respect of various topic; in the lists and, therefore, when the Union assumed control over the· declared industry such control comprehends the power to acquire and henco the power of tho State Legislature to enact legislation for acquisition of property of scheduled undertakings would be denuded. By the Constitution (Seventh· Amemmeni) Act, Entzy 33 in List I and Entry 36 in List II were deleted and a single comprehensive Entry 42 in List IIll (acquisition and requisitioninir of property) was added. The power to acquire property can now be exercised· concurrently by tho Union aud the States. After the substitution of Entzy 42 in List III it cannot be said that the power of acquisition and requisitioning of prOperty is incidental to the other power. It is an independent power provided foc in a specific entry. Therefore, both the Union and the State would have power of acquisition and requisition of property. [345 E-F; 346 B-EJ Thero is a long line of decisions whicll clearly establishes the proposition that power to legislate for acquisition of property is an independent and separa.t legislate for acquisition of property remains intact and untramelled except to the extent where on assumption of control of an industzy by a decla1Jttion .. envisaged in Entry 52, list I a further power of aajuisition is taken over by a specific legislation. [353 H354 A] . Ru.rtom Cavasjee Cooper v. Union of India [1970] 3 SCR 530 at 567, Rajamundry Electric Supply Corporation Ltd. v. State of Andlira Pradesh [1954] SCR 779. State of Bihar v. Maharajadhiraja Sir Kameshlvar Singh [1952) S.C.R. 88?, State of West Bengal v. Union of !11dia [1964] I S.C.R. 371, refe17ed to. The argument that the State legislature tack~d con1petence to enact the impugned legislation is without force. Legislative power of tho State under Entcy 24, List II is eroded only to the extent control -is assumed by the UniOn pursuant to a declaration made by the Parliament in respect of a declared. I • • " • t • • • ISHWARI KHETAN SUGAR MILLS V. U-P. STATE 333 industry as spelt out by the legislative .,.,actment and the field occupied by •uch A. enactment is the measure of erosion. Subject to such erosion, on the remainder tre Slate legislature will have power, to legislate in respect of " declared industry wi1hout in any way trenching upon the occupied field. State legislature, which is · otherwi!ie competent to deal with industry under Entry 24, List II, can du{ with that industry in exarcise of other powers enabling it to legislate under .till'«ent heads set out in Llsts II and Ill a<1d this power cannot be denied to the.State. [354 C, 352 E-F] S The contention. that the impugned Act is in violation of section 20 of the Central Act ha~ no merit. 'fhc impugned legislation was not enacted for taking ovel" tho management or control of any industrial undertaking by the Slate Government. In pith and substance it was enacted to acquire the 6cheduled undertakings. If an attempt was made to take over the management or control of any industrial undertaking in a declared industry the bar oll section 20 would C inhiltit exercise of such executive power. The inhibition of section 20 is on tlie M:ecutive pOWet" but if as a sequel tol an acquisition of an industrial under~ taking the management or control of the industrial undertakinlll stands transfe~ to the acquiring authority section 20 is not attracted. It does not preclude or fori>ld a State legislature rocercising legislative power under an entry other than Enl1l' 24 of List II and if in exercise of that legislative power the consequential :transfer of management or conttol over the industry or undertaking follows M: D an incident of acquisition such taking over of management or control pursuant to an exercise of legislative power is not within the inhibition of section 20. [355 F, A·El The challenge to the validity of the impugned legislation on the .gronnd of viQlation of Article 31 (2) must fail. At the time of acquisition the scheduled nnderiakings had a1 heavy backlog of carry forward losses, they failed I<> pay the J& growers the price of cane purchased, the labour was not paid as a result of which there was labour unrest. The situation did not improve etven when some of !he undertakings were taken over under the Central Act acd a drastic remedy was called for in public interest and while applying that drastic remedy of acquisition tho principles which are valid foc determining the value of machinery wero adopted. The adequacy or otherwise of compensation on thei calculus made by applying the principles is beyond iudicial review. [360 C, 359 H· p 360 Bl Rustom Cavasjee, Cooper v. Union of India [1970] 3 SCR 530 at 567, Vajra, velll Mudafiar v. Special Deputy Collector of Land Acquisition West Madras [19651 1 SCll 614, Union of India v. Metal Corpoi·aticn of India Ltd. & Anr. [1967] 1 sat 256, State of Guiarat v. Shanti/at Manga/das & Ors. [1969] 3 SCR 341 and His Holiness Kesavananda Bharati 'Sripadagaivaru v .. State of Kerala [1973] Suppl. SCR 1 referred to. G rathak & Koshal II (concurring in the result) It is not necessMy in' this case to express any opinion 1 on the question whether the declaration made by Parliament in section 2 of the Industries (Development arui Regulation) Act, 1951 in respect of the indust~ies specified in the Firsq iclteduie to that Act can be regarded as limited to removing from the scope of Enli:v 24 of List II of tho Seventh Schedule to the Constitution only so much of tire legislative field as is covered. by the subject matter and content of thlit Act or it can be reg&rded as effecting the removal from that entry of the H 334 SUPREME COURT REPORTS [1980] 3 S.C.R. A entire legislature field embracing all matters pertaining to the industries specified in the declaration.. The controversy in the prese1n.t case can be adeqUately disposed of on the ground that .the legislation falls within Entry 42 of rm m and cannot be related to Entj 52 of List I or Entry 24 of List n. [362 E-F, 363 BJ · B c D The Hingir Rar.zpur Coal Co. Ltd. and Others v. The State of Oris.ra and Other. [1961] 2 SCR 537, State of Orissa v. M. A. Tulloch and'Co. [1964] -4 SCR 461, Baijnath Kedia v. State of Bihar & Ors. and Stale of Haryana &: Anr~ v. Chanan Mal, etc. [1976] 3 SCR 688 held inapplicable. Civrr. APPELLATE JURISDICTION: Civil Appeal Nos. 1614, 1652 and 1637 of 1979. Appeals by Special Leave from the Judgment and Order dated 3-5-1979 of the Allahabad High Court in Civil Misc .. Writ Nos. 4170/71, ~130171 and 4193/71. AND PETITIONS FOR SPECIAL LEAVE TO APPEAL (CIVIL) Nos. 6246, 6252, 6373 & 8050/79. From the Judgment and Order dated 3-5-1979 of the Allahabad High Court in Civil Misc. Writ Nos. 4150, 4173, 4793 and 4422/71. · F. S. Nariman, Bhaskar Gupta, Rajesh Khaitan, Rohington Nariman and P. R. Seethrama for the Appellants in CA 1614/79. • A. K. Sen, Manoj Swarup, Miss I,alita Kohli and S. K. Srivastava for the Appellants in CA No. 1652/79 and SLPS. 6146 and 6373/79. ."" E R. A. Gupta for the Petitioner in SLP No. 6252/79. F G H N. N. Sharma and N. N. Kacker for the Petitioner in SLP No. · 8050/79. Lal Narain Sinha Att. GenL in C.A. 1614. Rishi Ram Adv. General, U.P. in C.A. 1652. Raju. Ramchandran and 0. P. Rana for the RespondentS in All the Appeals. Th~ Judgment of V. R. KriShna Iyer, S. Murtaza Fazal Ali and D. A. Desai, JJ. was delivered by Desai, J., R. S. Pathak, J. gave a separate Opinion on behalf of A. D. Koshal, J. and himsel[ DESAI, J.-Acquisition of industrial undertakings involved in .manufacturing sugar, a commodity satisfying the basic necessity, in larger public interest and the attempt of the owners of the undertakin~ to thwart the same, paints the famili_ar landscape in this group of appeals. As a sequel to the serious problems created by the owners of certain sugar mills in the State of Uttar. Pradesh for cane growers and labour employed in sugar mills, having an adverse impact on the general economy of tbe areas where these sugar mills were-situated and with a view to ameliorating the situation posing a threat to tlie economy, • f • f ' j • ISHWARI Kl!ETAN SUGAR MILLS v. U.P. STATE (Desai, J.) 335 the Governor of Uttar Pradesh promulgated an Ordinance on July 3, 1971, styled as U.P. Sugar Undertaking (Acquisition) Ordinance, 1971 (13 of 1971) ('Ordinance' ~ot short), with a view to transferring and vesting sugar undertakings set out in the Schedule to the Ordinance in the U.P. State Sugar Corporation Ltd. ('Corporation' for short), a Government Company within the meaning of s. 671 of the Companies Act, 1956. Subsequently, by U.P. Sugar Undertakings (Acquisition) Act, 1971, (U.P. Act 23 of 1971) ('Act' for short), the Ordinance was repealed and was replaced. Schedule to the Act enumerates 12 sugar undertakings (referred to as 'scheduled undertakings') and by the operation of s. 3, these scheduled undertakings stood transferred to and vested in the Corporation from the appointed day, i.e. July 3, 1971, the date on which the Ordinance was issued. On .the promulgation of the Ordinance 11 writ petitions were filed in the Allahabad High Court under Article 226 of the Constitution challenging the constitutional validity of the Ordinance and when the Act replaced the Ordinance effective from August 27, 1971, the writ petitions were amended incorporating the challeng(\ to the Act also. The Ordinance and the Act were challenged in the High Court on the following grounds : ( 1) The State legislature had no legislative competence to enact it; (2) The Act violated Art. 31 of the Constitution because the acquisition was not for a public purpose and the compensation proposed in the Act was illusory; (3) The Act was in breach of Art. 19(l)(f) and (g) of the Constitution; ( 4) The Act infringed the gurantee of equality enshrined in Art. 14 of the Constitution. A Division Bench of the High Court by a common judgment dated May 3, 1979, repelled the contentions on behalf of the petitioners and upheld the constitutional validity of the Act. Hence these appeals by the original petitioners, the owners ,of the scheduled undertakings . A B c D E Mr. F. S. Nariman, learned counsel who led on behalf of the G appellants, confined his attack to two grounds : (a) U.P. State legislature lacked legislative competence to enact the impugned Act; and (b) compensation awarded f.or acquisition in violative of Art. 31 (2) as it stood prior to its amendment by the Constitution (Twentyfifth Amendment) Act, 1971, which came in.to force on April 20, 1972. Mr. R. A. Gupta who appeared in SLP. 6252/79, canvassed an additional conH tention that the impugned Act is viplative of Art. 14 inasmnch as those similarly situated and similarly circum9tanced sugar undertakings have a c D E f G 336 SUPRE)'dE COURT. REPO)lTS 11980] 3 S.C.R. not been acquired and the petitioners' scheduled undertakings hav• ~=~ single~. d out for a drastic treatment of take-over by way of acqtlfsiThe m ·n thrust of the attack was that the U.P. Legislature Jack,ed legislative . ompetence to enact the impugned Act. There were two distinct limbs of this submission which would be examined separately. The first limb of the submission was that in exercise of legislative power flowing frr: Entry 52 Llst I the Parliament made the requisite declara~ tion ins. of the Industries (Development and Regulation) Act, 1951 ('IDR Ac for short), and in view of placitum 25 of the first schedule to the ID . Act sugar being a declared industry, that industry goes out pf Entry 24 List II, and hence U. P. State legislature was denuded of all legislative power to legislate in respect of sugar industry and as the impugned legislation is in respect of industrial undertaking in sugar industry, thel impugned legislation is void on account of legislative incompetence. 'Ij:e learned Attorney General countered it by saying that the power to acquire property derived from entry 42 in List III is an independent wwer and the impugned Act being in pith and substance an Act to acquire scheduled undertakings, meaning thereby the properties of the scheduled undertakings, the power of the State legislature to legislate in~·s behalf is referable to entry 42 and remains intact irrespective of the act that sugar is a declared industry, control of which is taken over by th, Union Government pursuant to the declaration made under s. 42 of the IDR Act. This necessitates an analytical examination of the relevant entries keeping in view legislative perspective and the historical background through which these entries have passed. Entry i in the Union List reads as under : "7.1 Industries declared by parliament by law to be necessary for the purpose of defence or for the prosecution of war." Entry f 2 in the same List reads : " 2. Indusries, the control of which by the Union is decla 1 d by parliament by law to be expedient in the public interest." Entry 24 in List II (State List) reads as under : "24. Industries subject to the provisions of entries 7 and - 52 o~ List I." H It may be noted here that entry 33 in List I, entry 36 in Llst II and entry 42 · Llst III were amended bys. 26 of the Constitution (Seventh Amendment) Act by which entry 33 of List I and entry 36 of List II • • ' I • • I • • ISHWARI KHETAN SUGAR MILLS V. U.P. STATE (Desai,/.) 337 were deleted and entry 42 in List Ill was. amended to read as set out liereinabove. Entry 33 in List I and entry 36 in List II conferred legislative power on the Union and the States respectively for acquisition or requisitioning of property for its own purpose. Constitution (Seventh Amendment) Act. 1956, which made the aforementioned amendment -was designed to clear the ambiguity about the power of acquisition and requisitioning of property being not a power incidental to any of the logislative powers but an independent power by itself. The object be- ·hind the amendment has been thus explained. "The existence of three entries in the legislative lists (33 of List I, 36 of List II and 42 of List III) relating to the essentially single subject of acquisition and requisitioning of property by the Government gives rise to unnecessary technical difficulties in legislation. In order to avoid these difficulties and simplify the constitutional position, it is propo'sed to omit the entries in the Union and State Lists and replace the entry in the concurrent list by a comprehensive entry covering the whole subject" (see Statement of Objects and Reasons in respect of Constitution (Seventh Amendment) Act, 1956). Having set out the historical background, attention may now be turned t_o the scope and content of legislative power of Union and the -States flowing from entry 52 in List I and entry 24 in List II in respect -0f the topic of 'industry.' The scope and content of entry 52, List I and entry 24, Llst II has to be demarcated with precision to avoid a possible confusion likely to emanate from an inter-dependence and interaction of the two entries. 'Industry' as a head of legislation is to be found in entry 24, List II with this limitation that it is subject to the provisions of entries 7 and 52, List I. The difference in the language in which entries 7 and 52 are couched has a bearing on the interruption of entry 52. In the former -case if a declaration is made by the Parliament that the particular industry is necessary for the purpose of defence or for prosecution of the war, parliament would be exclusively entitled to legislate in respect of that industry to the exclusion of State legislatures because the requisite .declaration will have the effect of taldng out that industry from entry 24, List 11 A declaration by the parliament by Jaw to assume control over any particular industry in public interest is a sine qua 1Wn to clothe Parliament with power under entry 52, List I to legisiate in respect of that industry because otherwise industry as a general head of · Jegislation is in the exclusive sphere of State legislative activity pursuant to entry 24, List II. Distribution of legislative powers as enacted in .Part XI and Art. 246 clearly demarcate the field of legislative activity J'eserved for parliament and for State legislatures and also the concurA • c D E G H A B c D I!' G H 338 SUPREME COURT REPO'.RTS {1980] 3 S.C.R •. rent list in respect of which both can legislate subject to other provisions. of part XI. Sub-art. (3) of Art. 246 provides that the State legislature has exclusive power to make laws with respect to any of the matters enumerated in List II in the Seventh Schedule. A fortiori, industry being the matter enumerated in List II the State legislature has exolni;ive power to legislate in respect of it and keeping aside for the time being the words 'subject Ip the provisions of entries 7 and 52 of List I', the State legislature alone can legislate in respect of the legislative head 'industry.' Ipso fqcto, parliament would not have power to legislate in respect of industry as a legislative head. Now, entry 52 , List I on its own language do·es not provide a field of legislative activity for the Union Parliament unless and until a declaration is made by parliament by law to assume control over specified industries. The embargo on the power of Parliament to legislate in respect of industry which is in List II would be lifted once a declaration is made by Parliam<:nt by l~w as envisaged by entry 52, List I. In the absence of a declaration as envisaged by entry 52, List I, it is incontrovertible that Parliament has no power to legislate on the t;opic of industry. Etitry 52, List I on its own language does not contemplate a bald declaration for assuming control over specified industries, but the declaration has to be by faw to assume control of specified industries in public interest. The legislation enacted pursuant to the power to legislate acquired by declaration must be for assuming control over the industry and the declaration has to be made by law enacted, of which declaration would be an integral part. Legislation for assuming control containing the declaration will spell out the limit of control so assumed by the declaration. Therefore, the degree and· extent of c:ontrol that would be acquired by Parliament pursuant to the declaration would necessarily depend upon the legislation enactect spelling out the degree of control assumed. A mere declaration unaccompanied by law is incompatible with entry 52, List I. A declaration for assuming control of specific industries coupled with Jaw assuming control is a pre-requisite for takllig legislative action under entry 52, List I. The declaration and the legislation pursuant to declaration to, that extent denude the power of State legislature to legislate under entry 24, List II. Thereilore, the erosion of the power of the State legislature to legislate in respect of declared industry would not occur merely by declaration but by the enactment consequent on the declaration prescribing the extent and scope of control. When a declaration is made as contemplated by entry 52, List I in respect Of any particular industry. it is contended that, that industry as a topic of legislation would be removed from the legislative sphere of the state. What is the effect of. a declaration made in respect of mines and minerals as contemplated by entry 54 has been succinctly laid down by a Constitution Bench of this • J_ I • r • ) l • • ) .. ,..... • ISHWARI KHETAN SUGAR MILLS v. U.P. STATE (Desai, J.) 3 39 Court in Baij11ath Kedia v. State of Bihar & Ors.,(') in the following A terms: "Once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. Any legislation by the .State after such declaration and trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative competence of the State Legislature .... The only dispute, therefore, can be to what extent the declaration by Parliament leaves any scope for legislation by the State legislai!ure. If the impugned legislation falls within the ambit of such scope it will be valid, if outside it, then it must be declared invalid." Sugar is a declared industry. Is it, however, correct to say that once a declaration is made as envisaged by entry 52 List I, that industry as a whole is taken out of entry 24, List II? In respect of an identical entry 54, List I in the passage extracted above it is said that to the extent declaration. is made and extent of control laid, that much and that much alone is abstracted from the legislative competence of the State legislature. It is, therefore, not correct to say that once a declaration is made in respect of an industry that industry as a whole is taken out of entry 24, List II. Similarly, in State of Haryana & Anr. o/. Chanan Mal, etc.(') while upholding the constitutional validity of the Haryana Minerals (Vesting of Rights) Act, 1973, after noticing the cleclaration made in s. 2 of the Mines & Minerals (Regulation and Development) Act, 1957, ('Mines & Minerals Act' for short), as envisaged by entry 54, List I it was held : "Moreover, power to acquire for purposes of development and regulation has not been exercised by Act 67 of 1957. The existence of power of Parliament to legislate on this topic as an incident of legislative power on another subject is one thing. Its actual exercise is another. It is difficult to see how the field of acquisition could become occupied hy a central Act in the same way as it had been in the West Bengal case even before Parliament legislates to acquire land in a State." These pronouncements demonstrably show that before State legislature B c D E F G is denuded of power to legislate under entry 24, List II in respect of H (I) [1970] 2S.C.R.1001tllJ. (2) [19761 J S. C. R. 688 at 700. 2-289SCI/80 A B c D E F G H 340 SUPREME COURT REPORTS [ 1980] 3 S.C.R. a declared industry, the scope of declaration and consequent control assumed by the Union must be demarcated with precision and. then proceed to ascertain whether the impugned legislation trenches upon the excepted field. The declaration made in s·. 2 of IDR Act reads as under : "It is hereby declared that it in expedient in the public interest that the Union should take under its control the industries specified in the First Schedule." The contention is that as there are no words of limitation to be found in s. '2 in respect of the control assumed by the declaration by the Union, the necessary concomitant of such declaration is that the State legislature is totally denuded of any power to deal with such declared industry. To buttress this argument reference was made to the declaration made by the Union pursuant to entry 54, List I, as set out in s. 2 of the Mines & Minerals Act which reads as under : "It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided." Absence of the expression "to the extent hereinafter provided" was pressed into service to point out that while in respect of mines and minerals the Union has assumed control to the extent provided in the Mines & Minerals Act, in the case of declared industries the control is absolute, unlimited, unfettered or unabridged and, therefore, everything that would fall within the connotation of the word 'control' would be within the competence of the Union and to the same extent and degree the State legislature would be denuded of its power to legislate in respect of that industry. It was said that in respect of declared industries total control is assumed by the Union and, therefore, entry 24, List II on its import must be read industry minus the declared industry because entry 24, List II is subject to entries 7 and 52, List I. Undoubtedly the Union is authorised to assume control in respect of any industry if parliament by Jaw considers it expedient in the public interest. The declaration has to be made by the Parliament, but the declaration has to be by law not a declaration simpliciter. The words of limitation on the power to make declaration are 'by law'. Declaration must be an integral part of law enacted pursuant to declaration. The declaration in this case is made in an Act enacted to provide for the development and regulation of certain industries. Therefore, the control was assumed not in abstract but for a specific and avowed object, viz., development • -.f ~ • { \ .. r ' • • j • ' ISHWARI KHETAN SUGAR MILLS v. U.P. STATE (Desai, J.) 341 and regulation of certain industries. The industries in respect of which contro1 was assumed for the purpose of their development and regulation have been set out in the Schedule. This control is to be exercised in the manner provided in the statute, viz., IDR Act. The declaration for assuming control is to be found in the same Act which provides for the limit of control. The deducible inference is that Parliament made the declaration for assuming control in respect of declared industries set out in the Schedule to the Act to the extent mentioned in the Act. It is difficult to accept the submission that s. 2 has to be read dehors the Act and not forming part of the Act. This would be doing violence to the art of legislative draftmanship. It is open to Parliament in view of entry 52, List I, to make a declaration in respect of industry or industries to the effect that the Union will assume its control in public interest. It is not to be some abstract control. The control has to be concrete and specific and the manner of its exercise has to be laid down in view of the well-established proposition that executive authority must have the support of law for its action. In a country governed by rule of Jaw, if the Union, an instrumentality for the governance of the country, has to exercise control over industries by virtue of a declaration made by Parliament, it must be exercised by law. Such law must prescribe the extent of control, the manner of its exercise and enforcement and consequence of breach. There is no such concept as abstract contro1. The control has to be concrete and the mode and method of its exercise must be regulated by law. Now, Parliament made the declaration not in abstract but as part of the IDR Act and the control was in respect of industries specified in the First Schedule appended to the Act itself. Sections 3 to 30 set out various modes and methodology, procedure and power, to effectuate the control which the Union acquired by virtue of the declaration contained in s. 2. Industry as a legislative head finds its place in entry· 24, List II. The State legislature can be denied legislative power under entry 24 to the extent Parliament makes declaration under entry 52 and by such declaration Parliament acquires power to legislate only in respect of those industries in respect of which declaration is made and to the extent as manifested by legislation incorporating the declaration and no more. The Act prescribes the extent of control and specified it. As the declaration trenches upon the State legislative power it has to be construed strictly. Therefore, even though the Act enacted under entry 54 which is to some extent in pari materi'a with entry 52 and in a parallel and cognate statute while making the declaration the Parliament did use the further expression "to the extent herein provided" while assuming control, the absence of such words in the declaration in s. 2 would not lead to the conclusion that the control assumed was to be something in abstract, total and unfettered and not as per various A B c D E F G H A B c D E G 342 SUPREME COURT REPO;ns [1980] 3 S.C.R. prp'Visions of the IDR Act. The lacuna, if any, is made good by hedging the power of making declaration to be made by Jaw. Legislative intention has to be gathered from the Act as a whole and not by piecemeal examination of its provisions. It would, therefore, be reasonable to hold that to the extent Union acquired control by virtue of declaration in s. 2 of the IPR Act as amended from time to time, the power of the State legislature under entry 24, List II to enact any legislation in respect of declared industry so as to encroach upon the field of control occupied by IDR Act would be taken away. This is clearly borne out not only by the decision in Baijnath Kedia's case (supra) where undoubtedly while referring to the control assumed by the Union by a declaration made in s. 2 of the Mines & Minerals Act, it was said that to what extent such a declaration would go is for Parliament to determine and this must be commensurate with public interest, and once this declaration is made and the extent laid down, the subject of legislation to the extent laid down becomes an exclusive subject for legislation by Parliament. It is not merely some abstract control but the extent of the control assumed by the Union by the provisions of IDR Act pursuant to declaration made by Parliament that the State Legislature to that extent, that is, to the extent the provisions of IDR Act occupies this field, is denuded of its power to legislate in respect of such declared industry. The respondents assert the validity of the impugned legislation contending that up.on its true construction and proper ascertainment of its object, it is a legislation for acquisition of scheduled undertakings and the power to acquire by legislation such scheduled undertakings by the State is derived from entry 42, List III. The controversy, therefore, centres round the question whether the impugned legislation is in respect of a declared industry referable to entry 24 or one for acquition of scheduled undertakings in exercise of the power of acquisition and requisitioning of property derived from entry 42, List III. Appellants contend that a reference to Objects and Reasons for enacting the impugned legislation would show that the owners of scheduled undertakings had created serious problems for the cane growers and labour which created an adverse impact on the general economy of the areas where these undertakings were situated, the legislation was enacted to acquire the undertaking and pay compensation and also pay cane growers and labour on high priority and to restart undertakings for crushing season. It was said that these are purely managerial functions discharged by owners of undertakings and if the impugned Act was ff devised and enacted primarily to assume these managerial functions, the Act would be beyond the legislative competence of the State legislature a8 it trenches upon the field occupied by IDR Act specifically • ~ r • f 1 • j • ISHWARI KHETAN SUGAR MILLS v. U.P. STATE (Desai,!.) 343 enacted to empower Union Government to provide effective control A over industrial undertakings in declared industry to prevent mismanagement, or to rectify the same by taking over management. When validity of a legislation i~ challenged on the ground of want of legislative competence and it becomes necessary to ascertain to which entry in the three lists the legislation is referable to, the Court has evolv8 ed the theory pf pith and substance. If in pith and substance a legislation falls within one entry or the other but some portion of the subjectmatter of the legislation incidentally trenches upon and might enter a field under another List, the Act as a whole would be valid not with standing such incidental trenching. This is well established by a catena of decisions [see Union of India v. H. S. Dhilkm,(I) and Kerala c State Electricity Board v. lndian Aluminium Co.(2 )]. After referring to these decisions in State of Karnataka & Anr. etc. v. Ranganatha Reddy & Anr. etc.(3) Untwalia, J. speaking for the Constitution Bench has in terms stated that the pith and substance of the Act has to be looked into and an incidental trespass would not invalidate the law. The challenge in that case was to the Nationalisation of contract carriages by D the Karnataka State, inter alia, on the ground that the statute was invalid as it was a legislation on the subject of interstate trade and commerce. Repelling this contention the Court unanimously held that in pith and substance the impugned legislation was for acquisition of contract carriages and not an Act which deals wiih intet-State trade and commerce. To start with, it is necessary first to ascertain in pith and substance to what entry in a particular list the impugned legislation is referable. If it is referable to entry other than 24, List II, such as entry 42, List III, it would be necessary to precisely ascertain whether it ·in any way trenches upon the field occupied by the declaration made by Parliament to assume control over sugar industry as manifested by the various provisions of the IDR Act. Section 3 of the Act provides for vesting of scheduled undertakings from the appointed day in the Corp,otation. Section 4 provides for consequences of vesting. Section 5 makes it obligatory on every person in whose possession or custody or under wh,ose control any ~ro perty or asset, book of account, register or other document comprised in that undertaking may be, to forthwith deliver the same to the Collector. Section 7 provides for determination and mode of payment of <::ompensation for acquisition of scheduled undertakings. Section 8 provide6 for claims to be satisfied ont of compensation payable to the (I) [1972] 2 S. C.R. 33. (2) [1976] 1 S. C.R. 552. (3) [1978] 1. S. C. R. 641. E p G n A B ' c D E F ' G H 344 SUPREME COURT REPORTS [1980] 3 S·C.R. owners of the undertakings. Section 9 provides for avoidance of certain secnred debts consequent upon acquisition. Section 11 provides for appeal and s. 12 provides for constitution of a Tribunal to perform the functions assigned to it by the Act. Section 13 provides for powers and procedure of the Tribunal. Section 14 provides for ouster of jurisdication of civil conrts in respect of any dispute arising from the implementation of the Act. Section 16 confers protection on the employees of the scheduled undertaking. The rest are only consequential sections. A comprehensive examination of all the provisions of the Act indisputably shows that in pith and substance the impugned Act is one Act for acquisition of scheduled undertakings and such acqaisition by transfer of ownership of the scheduled undertakings to the Corporation would in no way come in conflict with any of the provisions of the IDR Act or would not trench upon any control exercised by the Unipn under the various provisions of the IDR .Act. In fact the IDR Act, generally speaking, does not deal with the ownership of industrial undertakings in declared industries. The Act is primarily concerned with development and regulation of the declared industries. The Central Government has power under ss. 18A and 18AA of the IDR Act to assume direct management or control of industrial undertakings in certain cases and even after acquisition of scheduled undertakings under the impugned legislation the power of the Central Government under ss. ! SA and l SAA would remain intact. Even s. 1 SFA provides for taking over management or control of a company which is being wound up with the permission of the High Conrt and in such a situation the authorised perso'n appointed by the Central Government would be deemed to be Official Liquidator under sub-s. (4) of s. !SFA. Provision contained in Chapter IIIAC of IDR Act enables Central Goyt. to direct sale of the industrial undertaking under certain circnrnstances and in the situation as set out ins. 18FE(7) to pnrchase the same.