Swadeshi Cotton Mills vs. Union of India was a historic legal case in India in which issues regarding the right to property, eminent domain, and compensation for the acquisition of private property by the government came to the forefront. Spanning over a decade, this case involved several hearings, orders, and judgments which led to subsequent legal amendments over time.

This paper provides an in-depth analysis of the case, legal challenges, and key judgments made throughout the course of this legal battle, as well as the impact on Indian law and jurisprudence. The dispute in question arose when the Government of India, under Section 18AA of the Industries (Development & Regulations) Act, 1951, issued an order for the government to take over the management of the Kanpur and Pondicherry units of Swadeshi Cotton Mills for a period of 5 years.

The order was made following a statement of the Central Government that the Financial Corporations and Financial Institutions, which had lent substantial amount of funds and advances to the company, made a petition to the government, stating concerns about the management and functioning of the company. The impact of this case on Indian law and jurisprudence was significant, especially with regards to the fundamental right to property. The 44th amendment to the Constitution of India abolished the right to property as a fundamental right and substituted it as a mere constitutional right under Article 300A.

The Swadeshi Cotton Mills vs. Union of India case was a landmark legal dispute in India, having far-reaching implications on private property rights and the extent to which the government could exercise its powers of acquisition. It brought forth important questions of constitutional law and led to subsequent amendments that shaped the legal landscape of property rights in India. Overall, this case remains an essential point of reference for understanding the relationship between private property and state intervention in India.

Objective of the Study:
In this Project, the researchers' objective is to analyze the judgement of Swadeshi cotton mills v. Union of India along with the major legal maxims used in the case.

Significance of the Study:
After reading this project work, the reader will get to know about impact and legal maxims used in the case of Swadeshi cotton mills v. Union of India.

Scope of the Study:
The scope of this study is limited only to the judgement of Swadeshi cotton mills v. Union of India.

Literature Review:

• Case mine: The website consists of the summary of the judgement of the case of Swadeshi cotton mills v. Union of India but lacks in highlighting the legal principle evolved from the case and what impact it caused in the Indian Jurisprudence.
   
• The Fact Factor: the article gives a very brief summary of the legal principle held in the case but lacks a detailed analysis of the principle held in the case.

Research Methodology:
In this project work, the researcher will adhere to the doctrinal type of research. The researcher has used an analytical, descriptive, and explanatory approach to explain the study.

Mode of the Citation:

• 20th bluebook citation, Harvard law school

Research Questions:

1. Whether there is significant impact of Swadeshi Cotton Mills Vs UOI on Indian Jurisprudence?
2. Whether it consolidated the legal maxim of Audi Alterum Partum in India?

Case Analysis Of Swadeshi Cotton Mill V Union Of India
Swadeshi Cotton Mills v. Union of India
On 13 January 1981
Equivalent citations: 1981 AIR 818, 1981 SCR (2) 533
Author: O C Reddy
Bench: Reddy, O. Chinnappa (J), P.N. Bhagwati, Y.V. Chandrachud, N.L. Untwalia, A.C. Gupta.
Date of judgment-13/01/1981

Facts:
Background of Swadeshi cotton mills; In 1946, the firm had only one activity: a textile facility in Kanpur known as "The Swadeshi Cotton Mills, Kanpur." Between 1956 and 1973, the Corporation opened or acquired five additional Textile Units at Pondicherry, Naini, Udaipur, Maunath Bhanjan, and Rae Bareilly. In accordance with Section 10 of the Industries (Development and Regulation) Act of 1951, each of the Company's six Units or operations was individually registered. In addition to these six industrial operations, the Corporation is said to have other independent companies and assets.

Swadeshi Mining and Manufacturing Company Ltd., which operates two sugar mills, is 97% owned by it. The Company claims to have significant income from other businesses and activities, such as investments in its subsidiary and other shares and securities, including a substantial holding of 10,00,000 Equity Shares of Rs. 10/- each in Swadeshi Polytex Ltd., representing 30% of Swadeshi Polytex Ltd.'s total equity capital value, the intrinsic value of which exceeds Rs. 5 crores.

From 1957 until 1973, the company made significant success. The Company's reserves and surplus climbed from Rs. 2.3 crores in 1957 to Rs. 4.3 crores in 1973-74 but fell to Rs. 2.8 crores in 1976-77. The Company's fixed assets rose from 5.8 crores in 1957 to 19 crores in 1973-74, but then decreased to Rs. 18 crores, a slight decrease of Rs. 1 crore in 1976-77.

Factual events leading up to the legal dispute; The appellant, M/s. Swadeshi Cotton Mills, was taken over by the Government of India in April 13, 1978, while exercising the powers vested upon it under section (a) of sub-section (1) of section 18AA of the Industries (Development and Regulation) Act, 1951, citing the reason that the company had created a situation that had affected and is likely to further affect the production of articles manufactured or produced by it, and that immediate action is required.

The government granted permission to the National Textile Corporation Limited to take over administration, subject to the authorised person complying with any Central Government instructions issued from time to time and serving a five-year tenure. Appellant Mills contested the ruling, through a writ case filed in the High Court.

A full bench of five Judges was to determine whether compliance with the principle of Audi alteram partem is implied in construing section 18AA of the Industries Development and Regulation Act, 1951, and whether hearing is to be given to the parties who would be affected by the order to be passed prior to the passing of the order or whether hearing can be given after the order is passed and whether the order passe.

Legal issues:
Some of the primary issues raised in this case include:

1. Interpretation of 'public interest': The primary issue was whether taking over the management of a company could be justified as being in the 'public interest'. The court addressed this issue by evaluating if the action taken by the government was reasonable, rational, and aimed at safeguarding national security or public interest, such as preventing unemployment and ensuring fair wages to workers.
    
2. Validity of the executive action: The petitioners challenged the validity of the government's order under Section 18A of the IDR Act, 1951. The issue was to determine whether the provisions of the IDR Act allowed the government to acquire a company's management without the consent of its owners, and whether such provisions were constitutional.
    
3. Principles of natural justice: Another issue dealt with the allegation that the government's action violated the principles of natural justice. The court examined whether the owners of Swadeshi Cotton Mills had been given an opportunity to be heard before the government decided to take over the company's management.
    
4. Compensation for the acquired company: The court also addressed the issue of compensation to be paid to the owners whose company's management was taken over by the government, and if the compensation could be considered fair and adequate.

Held:
In the landmark judgment of Swadeshi Cotton Mills vs Union of India, the Supreme Court of India adjudicated on the legality and validity of government actions and interventions concerning the takeover and management of private industries.

The Court, in its ruling, laid down three fundamental principles that must be adhered to when the State is dealing with privately-owned industries. These principles are as follows:

1. The availability of relevant material
2. The existence of a nexus between the material and the action, and
3. The rationality of the action with respect to its overall objective.
    

The judgment posited that the administrative action of the Government must be rooted in "relevant material" to ensure that such actions are neither arbitrary nor unreasonable. Moreover, the Court emphasized the necessity of a connection between the relevant material and the resulting action, as well as the action's coherence with the goal of promoting public interest.

Additionally, the Supreme Court clarified that the burden of proof lies on the State for it to justify its actions, and any challenge brought forth by the aggrieved party must be based on substantial grounds. Lastly, the Supreme Court highlighted that the judiciary is not expected to substitute its judgment for that of the Government but only to assess the legality and procedural propriety of such actions.

In conclusion, the judgment of Swadeshi Cotton Mills vs Union of India stands as a critical precedent in the jurisprudence of State intervention in private industries. It underlines the importance of principled action, transparency, and rationality in situations where the Government exercises its power to take over and manage private entities. This judgment ensures that the delicate balance between public interest and private rights is maintained, and that the rule of law is upheld in the realm of administrative actions.

Cases cited in the judgement:
In the case of Swadeshi Cotton Mills vs Union of India (1981 AIR 818, 1981 SCR (2) 533), the Supreme Court of India made several references to previous cases while deliberating on the issues involved. Some of the cases cited by the Supreme Court in this judgment are:

1. M/s. Shree Meenakshi Mills Ltd., Etc., Etc. vs. Union of India[1]: This case was cited to discuss the principles governing the exercise of power under Article 256, 257 (1), 339 (2), and 356 of the Constitution of India, and the measures that can be taken in case of non-compliance with the Union Law.
    
2. Chiranjit Lal Chowdhury vs. Union of India[2]: This case was referred to discuss the concept of preventive detention and the scope of judicial review in cases of detentions.
    
3. M/s. Bengal Immunity Co. Ltd. vs. State of Bihar[3]: This case was cited for the proposition that Articles 301 to 305 of the Constitution are meant to maintain the unity and integrity of India, and they encompass not only restrictions on the freedom of trade, commerce, and intercourse between different States but also within a State.
    
4. R. C. Cooper vs. Union of India[4]: In this case, the Supreme Court struck down the impugned legislation for violating the fundamental right to carry on business. This case was cited in Swadeshi Cotton Mills vs Union of India to discuss the scope of the right to carry on business and the tests for determining the reasonableness of restrictions on this right.
    
5. A. K. Gopalan vs. State of Madras[5]: This case was cited to discuss the ambit of preventive detention and personal liberty, the safeguards provided by the Constitution for the exercise of the power of preventive detention and the validity of the Preventive Detention Act.
    
6. Rustom Cavasjee Cooper vs. Union of India[6]: This case was cited to discuss the ground of challenge of a law on the ground of violation of the rights guaranteed under Article 19 of the Constitution of India.
    
7. Kesavananda Bharati vs. State of Kerala[7]: The judgment in this case was discussed and referred to various times throughout the Swadeshi Cotton Mills vs Union of India case, making it one of the most important authorities in this case.

These are some of the notable cases referenced in the Swadeshi Cotton Mills vs Union of India case, providing the Supreme Court with precedents and legal principles to guide its decision in the matter.

THE IMPACT OF THE JUDGEMENT
The case had significant impacts on Indian jurisprudence in various ways:

1. Protection of shareholders' rights: The judgement highlighted the importance of protecting the rights and interests of the shareholders who are affected by the government's decision to take over a company. The Court held that the government's power to take over a company must be exercised judiciously and in the best interests of its stakeholders.
    
2. Limitation on government's powers: The judgement also put a limitation on the government's powers to take over a company's management. The Supreme Court stated that the government can only take control of a company if there is substantial public interest, and the reasons for the takeover must be well-defined and specific.
    
3. Principles of natural justice: The Swadeshi Cotton Mills vs. UOI judgement emphasized the need for the government to adhere to the principles of natural justice, which include providing a fair hearing, unbiased decision-making, and presenting proper evidence before taking any action against a company.
    
4. Foundation for future cases: The judgement in this case has laid a strong foundation for future cases involving similar disputes, where the rights of the shareholders need to be protected against arbitrary governmental takeover. The principles outlined in the judgement have been used as guidelines in several instances where the government's intervention in a company's affairs has been challenged in courts.

Overall, the impact of the Swadeshi Cotton Mills vs. UOI judgement has been significant in strengthening the protection of shareholders' rights, limiting the arbitrary use of government power, and laying down guidelines that ensure fair processes are followed when the government intervenes in a company's affairs.

LEGAL MAXIMS USED
The Swadeshi Cotton Mills vs Union of India (UOI) is cantered around two main legal maxims: "Actus Curiae Neminem Gravabit" and "Audi Alteram Partem".

1. Actus Curiae Neminem Grava bit: This Latin maxim means "An act of the court shall prejudice no one." In the Swadeshi Cotton Mills case, the court emphasized the importance of following natural justice and due process in the proceedings, and it was asserted that any action taken by the court, without fulfilling the requirements of natural justice, shall not cause harm, prejudice or disadvantage to any party involved in the case.
   
   In this case, the management of the Swadeshi Cotton Mills company was taken over by the government under Section 18A of the Industries (Development and Regulation) Act, 1951. The court found that the company was not provided with an adequate opportunity to be heard before the takeover, violating the principles of natural justice. Therefore, the court held that the order of the government, taking over the company, was null and void.
    
2. Audi Alteram Partem: This Latin maxim means "Hear the other side" or "Let both sides be fairly heard". The principle ensures that both parties in a dispute are given a fair hearing before a decision is made. In the Swadeshi Cotton Mills case, the court emphasized that the government's takeover action violated this principle of natural justice, as the company was not provided with the due opportunity to present its case and defend itself.
   
   The Supreme Court of India relied upon these legal maxims to emphasize the importance of natural justice and due process in administrative actions taken by the government. The court's decision in this case emphasized that the government's action must follow fair play and due process, and any actions taken in violation of these principles would be held invalid.

CONCLUSION
In conclusion, the judgment of Swadeshi Cotton Mills vs Union of India stands as a critical precedent in the jurisprudence of State intervention in private industries. It underlines the importance of principled action, transparency, and rationality in situations where the Government exercises its power to take over and manage private entities.

This judgment ensures that the delicate balance between public interest and private rights is maintained, and that the rule of law is upheld in the realm of administrative actions. In this landmark judgement, the Supreme Court of India highlighted the significance of legal maxims in ensuring fair and impartial proceedings. The Court emphasized the Latin legal maxim 'Audi Alteram Partem,' which translates to 'hear the other side,' as a fundamental principle of natural justice.

This maxim requires that both parties involved in a dispute be given adequate opportunities to present their case and be heard before a decision is made. Upon reviewing the case, the Supreme Court ruled that the government's actions in taking over Swadeshi Cotton Mills were indeed in violation of the principles of natural justice.

The Court observed that the company was not provided with a fair opportunity to present its case and that the government had made its decision based on one-sided information. As a result, the Court quashed the government's order of taking over the mills and directed the authorities to provide Swadeshi Cotton Mills with an opportunity to be heard.

The impact of the judgement resonates beyond the parties involved in this particular case. It reinforces the importance of adhering to the principles of natural justice in administrative and legal proceedings. Furthermore, the case sets a vital precedent for organizations and individuals alike to assert their right to a fair hearing when challenging administrative decisions that affect their rights and interests.

Overall, the Judgement of Swadeshi Cotton Mills v. Union of India underscores the integral role of legal maxims such as 'Audi Alteram Partem' in ensuring the transparency, fairness, and impartiality of legal proceedings in a just society. The case serves as a crucial reminder of the significance of natural justice in upholding individual rights and preserving the rule of law.

BIBLIOGRAPHY
Web Sources:

• Case mine: https://www.casemine.com
• The Fact Factor: https://www.thefactfactor.com
• Supreme Court of India Judgement: https://main.sci.gov.in/jonew/judis/10149

End-Notes:

1. M/s. Shree Meenakshi Mills Ltd., Etc., Etc. vs. Union of India AIR 1974 Supreme Court 366.
2. Chiranjit Lal Chowdhury vs. Union of India 1950 SCR 869.
3. M/s. Bengal Immunity Co. Ltd. vs. State of Bihar 1955 2 SCR 603.
4. R. C. Cooper vs. Union of India 1970 3 SCR 530.
5. A. K. Gopalan vs. State of Madras 1950 SCR 88.
6. Rustom Cavasjee Cooper vs. Union of India 1970 1 SCC 248.
7. Kesavananda Bharati vs. State of Kerala 1973 4 SCC 225.