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TMI Blog1953 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... jit Lal Chowdhuri v. The Union of India and Others(2) is distinguishable and has no application here for the reasons mentioned by him. MAHAJAN J.--This is an appeal from the judgment and decree of the High Court of Judicature at Bombay 'passed on the 29th day of August, 1950, in Appeal No. 48 of 1950. The appeal concerns the validity of the same piece of legislation that was considered by this court in the case of Chiranjit Lad Chowdhuri ([1950] S. C. R. 869. 680). There, an ordinary shareholder of the defendant company holding one fully paid up share claimed relief under Art. 32 of the Constitution of India on the ground that the provisions of the Sholapur Spinning & Weaving Company (Emergency Provisions) Act, XXVIII of.1950 abridged his fundamental rights conferred under Articles 14, 19 and 31 of the Constitution. This Court by a majority of 3 to 2 dismissed the petition holding that the presumption in regard to the constitutionality of the Act had not been displaced by the petitioner and that it had not been proved that the impugned statute was a hostile or a discriminatory piece of legislation as against him, or that the State had taken possession of his share. The minority he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ordinance delegated all its powers to the Government of Bombay. The Government of Bombay then appointed certain directors who took over the assets and management of the Mills. On the 7th February, 1950, they passed a resolution making a call of Rs. 50 on each of the preference shares payable at the time stated in the resolution. Pursuant to this resolution a notice was addressed on the 22nd February, 1950, to the plaintiff in the suit, who held preference shares, to pay Rs. 1,62,000, the amount of the said call on or before the 3rd April, 1950. The plaintiff instead of meeting the demand, filed the present suit on the 28th March, 1950, in a representative capacity on behalf of himself and other preference shareholders against the company and the directors appointed by the Government of Bombay challenging the validity of the Ordinance and questioning the right of the directors to make the call. On the 19th April, 1950, a notice was given to the Attorney-General of India of the said suit and the Union of India was added as defendant No. 9 therein. The principal allegations in the suit were that the Ordinance was illegal, ultra vires and invalid as it contravened the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e :-- 1. Whether the provisions of the Ordinance for taking over the management and administration of the company, contravene the provisions of article 31 (2) of the Constitution; and 2. Whether the Ordinance as a whole or any of its provisions infringe articles 14 and 19 of the Constitution. In order to decide these issues it is necessary to examine with some strictness the substance of the legislation for the purpose of determining what it is that the legislature has really done; the court, when such questions arise, is not overpersuaded by the mere appearance of the legislation. In relation to constitutional prohibitions binding a legislature it is clear that the legislature cannot disobey the prohibitions merely by employing indirect method of achieving exactly the same result. Therefore, in all such cases the court has to look behind the names, forms and appearances to discover the true character and nature of the legislation. The preamble of the' Ordinance states :-- "On account of mismanagement and neglect a situation has arisen in the affairs of the Sholapur Spinning & Weaving Company, Ltd., which has prejudicially affected the' production of an essential commodity and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in such manner and offer Such security as they may deem fit. They are given the overriding power of cancelling and varying contracts and agreements entered into between the company and' any other person at any time if they are satisfied that the contract or the agreement is detrimental to the interests the company. Section 10 denies to the managing agents compensation for the' premature termination of the contract of management entered into by the company and it also says that no person shall be entitled to compensation in respect of a cancelled or varied contract under this. Ordinance, entered into with the company. The Ordinance thus confers powers on the directors of overriding all contracts and deprives persons who had entered into contracts with the company of their right under the ordinary law to, recover compensation, Sections 6, 7 and 8 of the Ordinance lay down, the method and' manner how the existing directors were to give charge of the company's affairs and properties. to the directors nominated by the Central Government under section 3 and any default in the matter of handing over charge is made punishable by imprisonment or other punitive action. The result of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany, the possession of the statutory directors could not, it is argued, be regarded in law as possession of the company so long as they are bound to act in obedience to the dictates of the Central Government and not of the company itself in the administration of its affairs. Possession of an agent, it is said, cannot juridically be the possession of the principal, if the agent is to act not according to the commands or dictates of the principal, but under the direction of an exterior authority. There can be no doubt that there is force in this contention." Mr. Justice Patanjali Sastri, as he then was held that the effect of the Act was that all the properties and effects of the company passed into the absolute power and control of the Central Government and the normal function of the company as a corporate body came to an end. Mr. Justice Das on this part of the case said as follows :- "It is, however, urged by the learned Attorney-General that the mills and all other assets now in the possession and custody of the new directors who are only servants or agents of the said company are, in the eye of the law, in the possession and custody of the company and have not really been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o above. In my opinion, these contentions. are not well founded. Reference to illustrative pieces of legislation designed on the same pattern is neither very happy nor apposite; on the other hand, it is apt to mislead because except in the case of the Court of Wards Act, all the laws to which reference was made were enacted after the enactment of the Ordinance in question. The different Court of Wards Acts being existing laws have been excepted from the fundamental right guaranteed by article31 (2). That being so, they can afford little assistance in judging the validity of the impugned law. In dealing with constitutional matters of this kind it is always well to bear in mind what Bradley, J., speaking for the court said in Boyd v United States(1) at page 635 :-- "Illegitimate and unconstitutional practices get their first footing in that way, namely, by silent approaches and slight deviations from legal modes of procedure. This can only be obviated by adhering to the rule that constitutional provisions for the security of person and property should be liberally construed. A close and literal construction deprives them of half their efficacy and leads to gradual depreciation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch. the company was incorporated with the capital of the company but through its own agents who take orders from it and are appointed by it and in the appointment and dismissal of whom the shareholders have absolutely no voice. The purpose of taking over the company's undertaking is a public purpose, namely, to keep the labour going and contended and to maintain the supply of essential commodity. The company is debarred from carrying on its business in the manner and according to the terms of its charter. Its old complexion stands changed by the terms of the Ordinance. The Ordinance overrides the directors, deprives the shareholders of their legal rights and privileges and completely puts an end to the contract of the managing agents. Without there being any vacancy in the number of directors new directors step in and old directors and managing agents stand dismissed. Exercise of any power by them under the articles is subject to heavy penalties. In this situation it is not possible to subscribe to the contention of the learned AttorneyGeneral that the effect of the Ordinance is that the Central Government has taken over the superintendence of the affairs of the company and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was contained in the Fifth Amendment of the Constitution of the United States of America. According to the learned Attorney-General, the true content of the fundamental right guaranteed by article 31 (1) was that a person could not be deprived of his property except by statutory authority, but once a law was made depriving a person of his property then the article afforded no further protection. Support for this contention was sought to be derived from the reasoning employed in Gopalan's case ( [1950] S.C.R. 88). There it was held that the freedoms relating to the person of a citizen guaranteed by article 19 assume the-existence of a free citizen and can no longer be enjoyed if a citizen is deprived of his liberty by the law of preventive or punitive detention. In like manner it was argued that the freedom relating to property guaranteed by article 19 also vanished as soon as a person was deprived of his property under a law enacted by an appropriate legislature. The learned Attorney-General suggested that the two clauses of article 31 were in the nature of two exceptions to the provisions of article 19 (1) (f). The first exception was that the guarantee of freedom given by articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, notwithstanding anything in this Constitution, the law so assented to shall not be called in question in any court on the ground that it contravenes the provisions of clause (2). (5) Nothing in clause (2) shall affect-- (a) the provisions of any existing law other than a law to which the provisions of clause (6) apply, or (b) the provisions of any law which the State may hereafter make- (i)for the purpose of imposing or levying any tax or penalty, or (ii) :for the promotion of public health or the prevention of danger to life or property, or (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the GoVernment of India and the Government of any other country, or otherwise, with respect to property, declared by law to be evacuee property. (6) Any law of the State enacted not more than eighteen months before the commencement of this Constitution may within three months from such commencement be submitted to the President for his certification; and thereupon, if the President by public notification so certifies, it shall not be called in question in any court on the ground that it contravenes the provisions of clause (2) of this ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the amendment of the Constitution certain kinds of laws have been exempted from the operation of the article or from the whole of Part III of the Constitution by the addition of articles 31A and 31B. Article 31(1) declares the first requisite for the exercise of the power of eminent domain. It guarantees that a person cannot be deprived of property by an executive fiat and that it is only by the exercise of its legislative powers that the State can deprive a person of his property. In other words, all that article 31(1)says is that private property can only be taken pursuant to law and not otherwise. A reference to Cooley's Constitutional Limitations fully bears out what the true content of article 31(1) is. This is what he has said at page 1119 (8th edn.) :- "Legislative authority requisite: The right to appropriate private property to public uses lies dormant in the State, until legislative action is had, pointing out the occasions, the modes, conditions and agencies for its appropriations. Private property can only be taken pursuant to law." Article 31 (2) defines the powers of the legislature in the field of eminent domain. It declares that private property shall not be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of property by the State without payment of compensation have 'been included within the ambit of the exception clause, while other forms of deprivation of property which are outside the ambit of the exception clause are inevitably within the mischief of clause (2) of the article. From the language employed in the different sub-clauses of article 31 it is difficult to escape the conclusion that the words "acquisition" and "taking possession" used in article 31 (2) have the same meaning as the word "deprivation" in article 31(1). The learned Attorney-General suggested that much weight could not be attached in construing article 31 to the provisions of clause (5) inasmuch as the saving clause had been introduced by the article merely by way of abundant caution. I am unable to accede to this contention as it seems to me that the Constitution while defining and delimiting fundamental rights would not introduce in the articles dealing with those rights some matter merely by way of abundant caution. To my mind, it was essential while delimiting and defining fundamental rights to fully define the field of the right and to say what was not included within that right. As already said, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere appear to me to be two objections to this suggestion. If that were the correct view, then clause (1) must be held to be wholly redundant and clause (2), by itself, would have been sufficient. In the next place, such a view would excludedeprivation of property otherwise than by acquisitionor taking of possession. One can conceive of circumstances where the State may have to deprive a person of his property without acquiring or taking possession of the same. For example, in any emergency, in order to prevent a fire spreading, the authorities may have to demolish an intervening building. This deprivation of property is different from acquisition or taking of possession of property which goes by the name of 'eminent domain' in the American law. The construction suggested implies that our Constitution has dealt with only the law of 'eminent domain', but has not provided for deprivation of property in exercise of 'police power'. I am not prepared to adopt such construction, for I do not feel pressed to do so by the language used in article 31. On the contrary, the language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may well be brought ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts requisition, on that construction of the article, are merely two modes of depriving a person of property and must be held to be included within the ambit of clause (1)of article 31, and clause (2) has not been drafted in the nature of an exception to the provisions of clause (1) of article 31. On this construction of clause (1) of article 31 the logical conclusion is that what has been done by this clause'is that it has declared a fundamental right in the State as against an individual. Such a construction of the article in Part III, in my opinion, has to be avoided, as the purpose of those articles is to declare the fundamental rights possessed by the citizens or other persons residing within the Union, rather than to declare the rights of the State against them. Secondly, my learned brother was oppressed with the idea that if a wide construction was not placed on the phraseology employed in clause (1), deprivation of property by the State in cases Of emergency, for instance, in order to prevent a fire from spreading, would also have to be paid for. It seems that in that case pointed attention was not drawn during arguments to the comprehensive provisions of the saving clause o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession of private property without payment of compensation and that too under the authority of law, provided there was a public purpose' behind that law. It is immaterial to the person who is deprived of property as to what use the State makes of his property or what title it acquires in it. The protection is against loss of property to the owner and there is no protection given to the State by the article. It has no fundamental right as against the individual citizen. Article 31 states the limitations on the power of the State in the field of taking property and those limitations are in the interests of the person sought to be deprived of his property. The question whether acquisition has a larger concept than is conveyed by the expression "taking possession" is really of academic interest in view of the comprehensive phraseology employed by clause (2)of article 3L As the matter was argued at some length, I propose to briefly indicate my opinion on that point. For the proposition that the expression "acquisition" has the concept of vesting of title in the State reliance was placed on the opinion of Latham C.J. in Minister of State for the Army v. Dalziel(68 C.W.L.R. 261. ). By v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e acquisition of n citizen's full title except upon just terms, it leaves it open to the legislature to seize possession and enjoy the full fruits of possession, indefinitely, on any terms it chooses, or upon no terms at all. In the case now before us, the Minister has seized and taken away from Dalziel everything that made his weekly tenancy worth having, and has left him with the empty husk of tenancy. In such circumstances, he may well say :-- 'You take my house, when you do take the prop That doth sustain my house; you take my life, When you do take the means whereby I live.'" In the present case nothing has been left with the company but the mere husk of title. In my judgment, the true concept of the expression "acquisition" in our Constitution as well as in the Government of India Act is the one enunciated by Rich J. and the majority of the court in Dalzie's case(68 C.W.L.R 261). With great respect I am unable to accept the narrow view that "acquisition" necessarily means acquisition of title in whole or part of the property. It has been tightly said that a close and literal construction of constitutional provisions made for the security of person and property deprives them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State that should be considered rather than its purely legal aspect. As already said, the correct approach in such cases should be this: what in substance is the loss or injury caused to the owner and not what manner and method has been adopted by the State in taking the property. That the view expressed by Bhagwati J. did not truly represent the intent of Parliament in drafting entry 9 of List II of the 7th Schedule becomes clear from what happened subsequent to this pronouncement. After this judgment was delivered, an Act was passed by Parliament ,amending the Government of India Act nullifying the effect of the judgment as regards requisition of property. The Indian (Proclamation of Emergency) Act, 1945, (9 & 10 Geo. 6, Ch. 23) was promulgated on February 14, 1946, the judgment of Bhagwati J. having been delivered on August 9, 1945, section 102 of the Government of India Act was amended and by it the Central Legislature, when a proclamation of emergency was in force, was empowered to make laws for a province or a part thereof, in respect of any matters not enumerated in any of the lists of the 7th Schedule. Reference was also made to certain observations of my brother Das in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was the company alone that could complain about the abridgement of its fundamental rights by the Ordinance in question. It was also contended that the plaintiff's fundamental right to property had not been infringed in any manner as his property in the share had not been taken possession of by the State. Finally it was said that on both these questions the majority decision of this court in ChiranJit Lal Chowdhuri's case(1) was conclusive. I am unable to sustain any one of these contentions. Undoubtedly the majority decision in Chiranjit Lal Chowdhuri's case (1) has binding force till it is reconsidered or overruled by this court. But this decision, in my opinion, has no apposite application to the facts and circumstances of this case and is clearly distinguishable. My reasons for saying so are these :-- 1. The decision in Chiranjit Lal Chowdhuri's case([1950] S.C.R. 869) was given on a petition presented to this court in exercise of its jurisdiction under article 32 of the Constitution. Inter alia, Chowdhuri's grievance was that his fundamental right under article 31(2)of the Constitution had been infringed by the impugned law, inasmuch as the State had taken possession of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preference shareholders that to a certain extent resulted in the making of the Ordinance. On the 5th October, 1949, the Government appointed a Controller to supervise the affairs of this ,company. On the 9th November, 1949, the Controller asked the directors of the company to make a call on the preference shareholders. Soon after the directors passed a resolution refusing to comply with the command. On the 9th January, 1950, the Ordinance was promulgated, i.e., soon after the refusal, and on the same day powers were delegated by the Central Government to the Bombay Government under the Ordinance. Next day on the 10th January, 1950, the Bombay Government appointed its nominees as directors of the company. On the 7th February, 1950, these directors passed a resolution to call up the uncalled capital and actually on the 22nd February, 1950, call was made and the plaintiff was called Upon to pay a sum of Rs. 1,62,000. In these circumstances, it cannot be held to be an unreasonable inference that one of the purposes of the Ordinance was to raise further finance for the business of the company so that it may start working. In any case, that was clearly the effect of the Ordinance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the call should not be made. The resolutions were, however, vetoed by the Government. All the preference shareholders are represented in this suit including some of the directors, the company has been impleaded as a defendant and the old directors of the company have made an application that they should be allowed tO support the appeal. On these facts the present case is clearly distinguishable from that of Chiranjit Lal Chowdhuri. 4. In any case, even if it is held that in view of the binding character of this court's decision in Chiranjit Lal Chowdhuri's case([1950] S.C.R. 869.) the point is concluded, that the State has not taken possession of the shareholders property, I am of the opinion that the plaintiff and the other preference shareholders are entitled in this suit to attack the validity of the Ordinance on the basis of the infringement of the fundamental right of the company. The plaintiff has every right to challenge the authority of the directors to make the call and to question their locus standi before they can fix a liability on him. The directors seek to derive authority from the Ordinance. If, however, the Ordinance is void as against the company obviously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 447), and is in these terms: "We have no power per se to review and annul acts of Congress on the ground that they are unconstitutional. That question may be considered only when the justification for some direct injury suffered or threatened, presenting a justiciable issue is made to rest upon such an act. Then the power exercised is that of ascertaining and declaring the law applicable to the controversy. It amounts to little more than the negative power to disregard an 'unconstitutional enactment, which otherwise, would stand in the way of the enforcement of a legal right. The party who invokes the power must be able to show, not only that the statute is invalid, but that he has sustained or is immediately in danger of sustaining some direct injury as the result of its enforcement, and not merely that he suffers in some indefinite way in common with people generally. If a case for preventive relief be prevented, the court enjoins, in effect, not the execution of the statute, but the acts of the official, the statute notwithstanding". The rule stated above has apposite application to this case. The plaintiff and the other preference shareholders are in imminent danger of sustain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d denial of constitutional rights involved only the rights of coloured persons and the vendor was a white person, yet it was held that the vendor was directly affected, because the courts below, in view of the Ordinance, declined to enforce his contract and thereby directly affected his right to sell his property. Reference was also made to the case of Darnell v. The State of Indiana (226 U.S. 388). That is the only case in which a shareholder was not heard to complaining Iris own name when the Ordinance infringed the fundamental right of the company, his own rights had not been infringed. In view of this decision my brother Das took the view that Chiranjit Lal who was merely a shareholder and did not suffer any direct injury by the result of the law was not entitled to complain. That may very well have been the correct view in the case of a fully paid up shareholder who had no further liability or who was not likely to suffer in any manner by the enforcement of the Ordinance but the situation of a partly paid up preference shareholder as in this case is quite different and distinguishable and in my judgment the apposite rule to apply to the present case is the one laid down in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invasion of the right to property of the company under article 31 was concerned. This is what the learned Judge said :-- "Whatever validity the argument may have in relation to the petitioner's claim based on the alleged invasion of his right of property under article 31, were can be little doubt that, so far as his claim based on the contravention of article 14 is concerned, the petitioner is entitled to relief in his own right." The learned Judge did not offer any opinion on the other questions. Mukherjea J. decided the question on grounds somewhat different from that taken by Fazl Ali 1. This what the learned Judge said :-- "A discussion of the fundamental rights of the company as such would be outside the purview of our enquiry. It is settled law that in order to redress a wrong done to the company, the action should prima facie be brought by the company itself. It cannot be said that this course is not possible in the circumstances of the present case. As the law is alleged to be unconstitutional, it is open to the old directors of the company who have been ousted from their position by reason of the enactment to maintain that they are directors still in the eye of law, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Government of India Act, 1935, and/or the Constitution of India. No oral evidence was adduced on either side. The matters in issue were argued with questions of law governed by the Constitution. The contention was that the Ordinance was inconsistent with or in derogation of the fundamental rights guaranteed by the Constitution. The suit was dismissed by the trial court and that dismissal was affirmed by the appeal court. The plaintiff has now come up on appeal before us after having obtained a certificate under article 132 (1)of the Constitution' from the High Court. The material facts leading up to the institution of the suit and the terms of the impugned Ordinance have been set out in detail in the judgments delivered by this court in the case of Chiranjitlal Chowdhuri v. The Union. of India([1950] S.G.R. 863) where this very Ordinance and the Act which replaced it were challenged as unconstitutional and also in the judgment just delivered and it is not necessary for me to recapitulate the same. The determination of the' matters in issue depends on the correct interpretation of article 19 (1) (f)read with article 19 (5), article 31 and article 14 of the Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f its own with rights and capacities; duties and obligations separate from those of its individual members. As the rights are different and inhere indifferent legal entities, it is not competent to one person to seek to enforce the rights of another except where the law permits him to do so. A well known illustration of such exception is furnished by the procedure that is sanctioned in an application for a writ of habeas corpus." And again at page 899 :-- "The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains of infraction of such rights and approaches the court for relief. This being the position, proper subject of our investigation would be what rights, if any, of the petitioner as a shareholder of the company have been violated by the impugned legislation. A discussion of the fundamental rights of the company as such would be outside the purview of our enquiry." At pages 904-909 the learned Judge discussed the question whether the impugned law had infringed any fundamental right of the shareholders under article 31 (2) or article 19(1) (f) and answered it in the negative. Kania C.J. agreed with the line of rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground that the fundamental rights of the company under articles 19 (1) (f) and 31 had been infringed. He had, therefore, to rely on the plea of infringement of his own fundamental rights. The majority of the court held that there had been no infringement of his rights as a shareholder under article 19(1)(f) or article 31 and that the petitioner consequently had to fail back on article 14 in order to support his plea of the unconstitutionality of the Ordinance and the Act. Even here the majority of the Bench took the view that the petitioner had not discharged the onus that was on him of showing that in fact there had been any discrimination against him and other shareholders of the company. Learned Attorney-General submits that in so far as the challenge to the validity of the law is, inthe present case, rounded on theinfringement of the company's fundamental rights,it is concludedby the decision in Chiranjitlal's case for the reasons adopted by the majority in that case apply equally to the case now before us and the same conclusion must be drawn, namely, that the present appellant, who is also. a shareholder, cannot be permitted to impugn the said Ordinance on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not obliged to make the call because they had taken possession of the property of the company or the other persons and that this imposition of liabilityor risk cannot, therefore, be said to be the direct or even indirect result of the State having through the directors appointed under the Ordinance taken possession of the property of the company or the other persons. It is then urged by him that, that being so, the preference shareholders cannot be allowed to complain of the infringment of the rights of the company or of the other persons which does not concern or affect them. This argurncnt, however, overlooks the purpose and scope of the suit filed by the appellant for himself and all other preference shareholders. The appellant is disputing his liability to pay the call made by the directors appointed under the Ordinance. He is, therefore, entitled to show that the directors who have made the call are not competent to do so. It is open to him to allege and prove, if he can, that the gentlemen who have purported to make the call are not competent to do so because they are not the directors of the company. Take the case of a company which is not governed by this Ordinance. If a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, have made the call the law is unconstitutional for breach of the former's fundamental rights then it follows that these persons are not, in the eve of the law, the directors of the company at all and if they are not in law the directors of the company, surely they cannot arrogate to themselves the right to exercise any of the powers of the directors of the company and to make any call. If the said Ordinance stands, the directors appointed thereunder will have authority to make the call which they have done and the appellant's liability to pay it will stand good. Therefore, the appellant as a preference shareholder is directly affected by the statute and this circumstance, in my opinion, distinguishes this case from Chiranjitlal's case(the [1950] S.C.R. 869) and it must be held that, in the circumstances of this case, the appellant, who is a preference shareholder and as such liable to pay the call, is entitled to challenge the Ordinance which dismissed the directors elected by the shareholders, authorised the appointment of directors by the State and made it possible for the directors so appointed to make the call and thereby impose a liability on all preference shareholders inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ordinance or the Act which replaced it has authorised the taking of possession of any property of the shareholders or of the company. As regards the property of the shareholders the position is the same as in Chiranjitlal's case(1). The shares still belong to them. They can hold them or dispose. of them. If any dividend is declared they will get them. If there is any winding up and if after payment of all liabilities there remains any surplus then they will participate in that surplus. It is true that from a practical point of view it-may be difficult for the shareholders, if they desire to sell the shares, to find a purchaser who will be willing to buy shares in a company which is governed by an Ordinance of this kind but, nevertheless, it cannot be said that the State has taken possession of the shares in the sense in which that expression used in article 31(2) has been explained by me in Subodh Gopal Bose's case([1954] S.C.R. 587. 727). It is said, as was done in Chiranjitlal's case(1 ), that certain valuable rights of the shareholders, e.g., the right of voting, the right to elect directors and the right to apply for the winding up of the company have been taken away. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter-position of this statutory management and control amounts to taking possession of the property and assets belonging to the company. It is fairly clear that his Lordship was inclined to the view that the company's properties had been taken possession of although he did not categorically an explicitly say so. I dealt with the matter at pages 926-927. After pointing out that the possession of directors who Were not obedient to or amenable to the company or its shareholders and are not liable to be dismissed or discharged by the company cannot, in the eye of the law, be regarded as the possession of the company I said: "In this view of the matter there is great force in the argument that the property of the company has been taken possession of by the State through directors who have been appointed by the State in exercise of the powers conferred by the Ordinance and the Act and who are under the direction and control of the State and this has been done without payment of any compensation ." Then after quoting a passage from the judgment of Holmes 1. in Pennsylvania Coal Company v. Mahon(260 U.S. 399) concluded: "Here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion either in this long title or in the body of the Act except in section 12 that the Act is intended only to be a temporary emergency measure. The object of the Ordinance was stated to be to provide employment to a large number of workmen and to keep up the production of an essential commodity. There is no doubt that section 12 of the Act provides that the property of the company and the management and administration of its affairs would be restored to the company or its directors elected by the shareholders but that is left entirely to the unfettered discretion of the Government. The provisions of the Ordinance and the Act are drastic in the extreme. The managing agents and the elected directors have been dismissed and new directors have been appointed by the State. So far as the company is concerned it has been completely denuded of the possession of its property. All that is left to the company is its bare legal title. The carrying on of a business demands many personal qualities and considerable business acumen and is much more complicated than collecting the rents of the estate of a disqualified proprietor. The impugned law has thrust upon the company a board of directors in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus of displacing that presumption being on him who impugns the law, the petitioner in that case had not discharged that onus and that, therefore, he could not complain of discrimination. In the present case there is nothing more than what there was before the court in Chiranjitlal's case. Indeed, the question of discrimination does not appear to have been argued before the trial court and the appeal court has rejected it by saying that the plaintiff had not shown that there were other companies which were guilty of the same conduct but had not been similarly dealt with. Learned Attorney-General has submitted that this court is not' bound by its previous decision and has pressed us to go behind the majority decision. Accepting that this court is not bound by its own decisions and may reverse a previous decision especially on constitutional questions the court will surely be slow to do so unless such previous decision appears to be obviously erroneous. But in view of the conclusion I have already arrived at on the other point I do not feel called upon to pursue this point of discrimination any further. In my judgment, therefore, this appeal should be allowed and the plaintiff's sui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff from acquiring and holding property. They actually did acquire property and they held it and nobody stopped them. The complaint is that they are now being deprived, in a manner not allowed by the Constitution, of the property which they were lawfully permitted to acquire and hold. That concerns article 31. Now article 31(1) says that no one shall be deprived of property save by authority of law. That to my mind is straight forward and simple. It means that no one's property can be taken away arbitrarily or by executive action. There must be legal sanction for every act of deprivation. Now an Act of the legislature is legal sanction, therefore it the rest of the article was not there a man could be deprived of his property by legislative enactment though not by executive action. But that brings in article 31(2). Restrictions are there placed even on the legislature. Unless the Act provides for compensation and either fixes the amount or specifies the principles on which, and the manner in which, it is to 'be determined it cannot be validly enacted. The only exceptions are ,those set out in clause (5). Therefore, 'to my ,mind, the simple question in this case is, do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is the best judge, but blankly and unashamedly because the furtherance of his interests affects "the production of an essential commodity" and, has caused "serious unemployment amongst a certain section of the community." If that is not "deprivation" it is difficult to know what is. One of the privileges of a democracy of free men is the right to mismanage one's own affairs within the confines of the law, and if A can mismanage his concerns in a particular way, so can B, C and D. The production of essential commodities and the employment of labour are matters for the State and statutory bodies to handle. They have the right, when the law so permits it, to take over this responsibility when the public interests so demand but if by doing so they deprive private individuals and non-statutory bodies their interests in property in the sense explained above they 'must pay compensation. They cannot evade their own duties by lathering their obligations on others' who are not responsible for carrying on the affairs of the State. My brother Mahajan has dealt with this at length and there is no need for me to add to what he has said. The only other point I need consider is the applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Act to pay Rs. 1,62,000 as the balance of the amount of the call. Thereupon he filed the suit in a representative capacity on behalf of himself and other preference shareholders challenging the validity of the Act. The suit was dismissed by the trial Judge whose decision was affirmed on appeal by the Division Bench of the Bombay High Court. My learned brother has analysed in detail the relevant provisions of the impugned Act and I have no hesitation in agreeing with him that the Act in substance robs the company of every vestige of right except what has been laconically called the husk of title. I agree, therefore, that the impugned Act oversteps the constitutional limits of the power conferred upon the State and offends against the provisions of article 31 and must, therefore, be held void. Article 31 finds a place in Part III of the Constitution which deals with fundamental rights. It is headed "Right to Property". Upon a simple and straightforward construction of its language and the context in which it stands and unhampered by the provisions of the American Constitution the article confers upon every person, whether a citizen or not, a fundamental right of protection of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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