What are the 'circumstances' under which the Central Government can assume management or control of an industrial undertaking without any investigation into circumstances or notice to the management? Whether it violates

Section 18AA of the Industries (Development and Regulation) Act, 1951 empowers the Central Government to take over industrial undertakings without investigation under certain circumstances. Section 18AA of the Act empowers the Central Government to authorise, by a notified order, any person or body of persons to take-over the management of whole or part of any industrial undertaking and to exercise prescribed functions of control, provided the Government is satisfied on the basis of documentary or other evidences in its possession that: the persons in charge of such industrial undertaking have, by reckless investments or creation of encumbrances on the assets of the industrial undertaking, or by diversion of funds, brought about a situation which is likely to affect the production of articles manufactured or produced in the industrial undertaking and that immediate action is necessary to prevent such a situation; or it has been closed for a period of not less than three months (whether by reason of the voluntary winding up of the company owning the industrial undertaking or for any other reason) and such closure is prejudicial to the concerned scheduled industry and that the financial condition of the company owning the industrial undertaking and the condition of the plant and machinery of such undertaking are such that it is possible to restart the undertaking and such restarting is necessary in the interests of the general public. In the case of Swadeshi Cotton Mills v. Union of India AIR (1981) SC 818 , the Supreme Court held that in respect of such take overs without investigation, hearing at pre-decisional stage must be given and the rule of audi alterem partem could not be dispensed with. The principles of natural justice consist of two basic elements, namely (i) audi alteram partem (Opportunity of being heard) and (ii) nemo debet esse judex in propria causa (Nobody should be a judge in his own cause). Irrespective of whether the power conferred on a statutory body or tribunal is administrative or quasi-judicial, a duty to act fairly, that is, in consonance with the fundamental principles of substantive justice is generally implied, because the presumption is that in a democratic polity wedded to the rule of law, the State or the Legislature does not intend that in the exercise of their statutory powers, its functionaries should act unfairly and unjustly. The Court thus concluded that a hearing should be given to the undertaking concerned before passing an order under Section 18AA. Observance of this fundamental principle is necessary if the courts and tribunals and the administrative bodies are to command public confidence in the settlement of disputes or in taking quasi-judicial or administrative decisions affecting civil rights or legitimate interests of the citizens.