TMI Blog1950 (12) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case and particularly when one of the respondents is the company which opposes the petition, challenge the validity of the Act on the ground that it is a piece of discriminatory legislation, creates inequality before the law and violates the principle of equal protection of the laws under article 14 of the Constitution of India. The second is whether in fact the petitioner has shown that the Act runs contrary to article 14 of the Constitution. In this case having regard to my conclusion on the second point, I do not think it is necessary to pronounce a definite opinion on the first point. I agree with the line of reasoning and the conclusion of Mr. Justice Mukherjea as regards the second point relating to the invalidity of the Act on the ground that it infringes article 14 of the Constitution and have nothing more to add. 4. In my opinion therefore this petition fails and is dismissed with costs. Saiyid Fazl Ali, J. 5. I am strongly of the opinion that this petition should be dismissed with costs. 6. The facts urged in the petition and the points raised on behalf of the petitioner before us are fully set forth in the judgments of my brethern, Sastri, Mukh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to say is that I adopt his conclusions, without committing myself to the acceptance of all his reasonings. 8. The only serious point, which in my opinion, arises in the case in whether article 14 of the Constitution is in any way infringed by the impugned Act. This article corresponds to the equal protection clause of the Fourteenth Amendment of the Constitution of the United States of America, which declares that no State shall deny to any person within its jurisdiction the equal protection of the laws . Professor Willis dealing with this clause sums up the law as prevailing in the United States in regard to it in these words :- Meaning and effect of the guaranty - The guaranty of the equal protection of the laws means the protection of equal laws. It forbids class legislation, but does not forbid classification which rests upon reasonable grounds of distinction. It does not prohibit legislation, which is limited either in the objects to which it is directed or by the territory within which it is to operate. 'It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and conditions both in the privileges conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to unless approved by the Central Government. (c) No proceeding for the winding up of the company or for the appointment of a receiver in respect thereof shall lie in any court unless by or with the sanction of the Central Government. 11. Prima facie, the argument appears to be a plausible one, but it requires a careful examination, and, while examining it, two principles have to be borne in mind :- (1) that a law may be constitutional even though it relates to a single individual, in those cases where on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (2) that it is the accepted doctrine of the American courts, which I consider to be well-founded on principle, that the presumption is always in favour of the constitutionality of an enactment, and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. A clear enunciation of this latter doctrine is to be found in Middleton v. Texas Power and Light Company 248 U.S. 152, 157, in which the relevant passage runs as follows :- It must be presumed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the managing agents. It also revealed that the persons who were responsible for the mismanagement were guilty of certain acts and omissions which brought them under the purview of the law. The Bombay Government accepted the report of the inspectors and instructed the Advocate-General of Bombay to take legal proceedings against certain persons connected with the management of the company. Thereafter, the Government of India was approached by the Provincial Government and requested to take special action in order to secure the early opening of the mill. The Government of India found that they had no power to take over the management of a particular mill, unless its working could be ensured through the existing management acting under the direction of a Controller appointed under the Essential Supplies Act, but they also found that a peculiar situation had been created in this case by the managing agents themselves being unable or unwilling to conduct the affairs of the company in a satisfactory and efficient manner. The Government of India, as a matter of precaution and lest it should be said that they were going to interfere unnecessarily in the affairs of the company and were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also one lakh yards of cloth. It was working two shifts when it was closed down on the 29th August, 1949. The closure of the mill meant a loss of 25 lakhs yards of cloth and one and a half lakhs pounds of yarn per month. Prior to 1947, the highest dividend paid by the company was ₹ 525 per share and the lowest ₹ 100, and, in 1948, when the management was taken over by the managing agents who have been removed by the impugned Act, the accounts showed a loss of ₹ 30 lakhs, while other textile companies had been able to show very substantial profits during the same period. 16. Another fact which is brought out in the proceedings is that the managing agents had acquired control over the majority of the shares of the company and a large number of shareholders who were dissatisfied with the management had been rendered powerless and they could not make their voice heard. By reason of the preponderance of their strength, the managing agents made it impossible for a controller under the Essential Supplies Act to function and they also made it difficult for the company to run smoothly under the normal law. 17. It was against this background that the Act was passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e locality is affected is not proof of denial of the equal protection of the laws. For such proof it must be shown that there is no reasonable basis for the classification. [Constitutional Law by Prof. Wills (1st Edition) p. 580] 19. In this particular case, the Government initially took control of the Sholapur Company by means of an Ordinance (Ordinance No. II of 1950), of which the preamble runs as follows :- Whereas on account of mismanagement and neglect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudicially affected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community; And whereas an emergency has arisen which renders it necessary to make special provision for the proper management and administration of the aforesaid Company; Now, therefore............. 20. In the course of the Parliamentary debate, reference was made to the fact that the country was facing an acute cloth shortage, and one of the reasons which apparently influenced the promulgation of the Ordinance and the passing of the Act was that the mismanagement of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputes arose recently between the management and the employees, and in or about August, 1949, the mills were temporarily closed and the company, which was one of the largest producers of cotton textiles, ceased production. Thereupon, the Governor-General intervened by promulgating on the 9th January, 1950, an Ordinance called the Sholapur Spinning and Weaving Company (Emergency Provisions) Ordinance (No. II of 1950), which empowered the Government of India to take over the control and management of the company and its properties and effects by appointing their own Directors and to delegate all or any of their powers to the Provincial Government. In exercise of the powers thus delegated, the Government of Bombay appointed respondents 3 to 9 as Directors to take charge of the management and administration of the properties and affairs of the company. Subsequently, on 10th April, 1950, the Ordinance was repealed and was replaced by an Act of Parliament containing similar provisions, namely the Sholapur Spinning and Weaving Company (Emergency Provisions) Act (No. XXVIII of 1950) (hereinafter referred to as the impugned Act ). 27. The petitioner complains that the impugned Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecurity as they think fit, to carry out necessary repairs to the machinery or other property in their custody and to employ the necessary persons and define the necessary conditions of their service. Section 12 provides for the restoration of the management to directors nominated by the shareholders when the purpose of the Government's intervention has been fulfilled. Section 13 is important and reads thus : 13. Application of the Companies Act. - (1) Notwithstanding anything contained in the Companies Act or in the memorandum or articles of association of the company (a) it shall not be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company; (b) no resolution passed at any meeting of the shareholders of the company shall be given effect to unless approved by the Central Government; (c) no proceeding for the winding up of the company or for the appointment of a receiver in respect thereof shall lie in any Court unless by or with the sanction of the Central Government. (2) Subject to the provisions contained in sub-section (1) and to the other provisions of this Act, and subject to such exceptions, restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a binding contract, so that neither the company nor the shareholders have the power of doing anything inconsistent therewith. The basic right of the shareholders to have their undertaking managed and conducted by the directors of their own choice is ensured by section 83B. Their right to exercise control and supervision over the management by the directors by passing resolutions at their general meeting is regulated by various provisions of the Act. The important safeguard of winding up the company in certain unfavourable circumstances either through court or by the shareholders themselves voluntarily is provided for in sections 162 and 203. All these rights and safeguards, on the faith of which the shareholders embark their money in their undertaking, are abrogated by the impugned Act in the case of the shareholders of this company alone. In fact, the Central Government is empowered to exclude, restrict or limit the operation of any of the provisions of the Companies Act in relation to this company. It is thus plain that the impugned Act denies to the shareholders of this particular company the protection of the law relating to incorporated joint stock companies in this country a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the impugned Act was ill-advised or not justified by the facts on which it was based, but whether it transgresses the explicit constitutional restriction on legislative power imposed by article 14. 32. It is obvious that the legislation is directed solely against a particular company and shareholders and not against any class or category of companies and no question, therefore, of reasonable legislative classification arises. If a law is made applicable to a class of persons or things and the classification is based upon differentia having a rational relation to the object sought to be attained, it can be no objection to its constitutional validity that its application is found to affect only one person or thing. For instance, a law may be passed imposing certain restrictions and burdens on joint stock companies with a share capital of, say, ₹ 10 crores and upwards, and it may be found that there is only one such company for the time being to which the law could be applied. If other such companies are brought into existence in future the law would apply to them also, and no discrimination would thus be involved. But the impugned Act, which selects this particular comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords, he should be called upon to establish that this company and its shareholders were arbitrarily singled out for the imposition of the statutory disabilities. How could the petitioner discharge such a burden ? Was he to ask for an investigation by the Court of the affairs of other industrial concerns in India where also there were strikes and lock outs resulting in unemployment and cessation of production of essential commodities ? Would those companies be willing to submit to such an investigation ? And even so, how is it possible to prove that the mismanagement and neglect which is said to have prompted the legislation in regard to this company was prevalent in the same degree in other companies ? In such circumstances, to cast upon the petitioner a burden of proof which it is as needless for him to assume as it is impracticable to discharge is to lose sight of the realities of the case. 34. Lastly, it was argued that the constitutionality of a statute could not be impugned under article 32 except by a person whose rights were infringed by the enactment, and that, inasmuch as there was no infringement of the individual right of a shareholder, even assuming that there was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered holder of one single ordinary share in the company. 38. It appears that on July 27, 1949, the directors of the company gave a notice to the workers that the mills would be closed, and pursuant to that notice, the mills were in fact closed on the 27th of August following. On January 9, 1950, the Governor-General of India promulgated an Ordinance which purported to make special provisions for the proper management and administration of the company. It was stated in the preamble to the Ordinance that on account of mismanagement and neglect, a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company Limited which has prejudicially affected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community , and it was on account of the emergency arising from this situation that the promulgation of the Ordinance was necessary. The provisions of the Ordinance, so far as they are material for our present purpose, may be summarised as follows: 39. Under section 3 of the Ordinance, the Central Government may, at any time, by notified order, appoint as many persons as it thinks fit, to be directors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers exercisable under the Ordinance to the Government of Bombay. On the next day, the Government of Bombay appointed respondents 3 to 7 as directors of the company in terms of section 3 of the Ordinance. On the 2nd of March, 1950, the respondent No. 9 was appointed a director and respondent No. 5 having resigned his office in the meantime, the respondent No. 8 was appointed in his place. On the 7th of April, 1950, the Ordinance was repealed and an Act was passed by the Parliament of India, known as the Sholapur Spinning and Weaving Company (Emergency Provisions) Act which re-enacted almost in identical terms all the provisions of the Ordinance and provided further that all actions taken and orders made under the Ordinance shall be deemed to have been taken or made under the corresponding provisions of the Act. The preamble to the Ordinance was not however reproduced in the Act. 41. The petitioner in his petition has challenged the constitutional validity of both the Ordinance and the Act. As the Ordinance is no longer in force and all its provisions have been incorporated in the Act, it not be necessary to deal with or refer to the enactments separately. Both the Ordinance and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The first point relates to the scope of our enquiry in the present case and raises the question as to what precisely are the matters that have to be investigated and determined on this application of the petitioner. The second point relates to the form of relief that can be prayed for and granted in a case of this description. 45. Article 32(1) of the Constitution guarantees to everybody the right to move this court, by, appropriate proceeding, for enforcement of the fundamental rights which are enumerated in Part III of the Constitution. Clause (2) of the article lays down that the Supreme Court shall have the power to issue directions or orders or writs including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari whichever may be appropriate for the enforcement of any of the rights conferred by this part. 46. Thus anybody who complains of infraction of any of the fundamental rights guaranteed by the Constitution is at liberty to move the Supreme Court for the enforcement of such rights and this court has been given the power to make orders and issue directions or writs similar in nature to the prerogative writs of English law as might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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, the 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. 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 on that footing the majority of shareholders can also assert the rights of the company as such. None of them, however, have come forward to institute any proceeding on behalf of the company. Neither in form nor in substance does the present application purport to be one made by the company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Emergency Provisions) Act, has been to take away from the company and its shareholders, possession of property and other interests in commercial undertaking and vest the same in certain persons who are appointed by the State, and the exercise of whose powers cannot be directed or controlled in any way by the shareholders. As the taking of possession is not for any public purpose and no provision for compensation has been made by the law which authorises it, such law, it is said, violates the fundamental rights guaranteed under article 31 of the Constitution. 50. To appreciate the contention, it would be convenient first of all to advert to the provisions of the first two clauses of article 31 of the Constitution. The first clause of article 31 lays down that no person shall be deprived of his properly save by authority of law . The second clause provides : No property, movable or immovable, including any interest in, or in any company owing, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to acquisition of the entire interest of the previous holder by transfer of title and I have no hesitation in holding that there is no such acquisition either as regards the property of the company or of the shareholders in the present case. The question, therefore, narrows down to this as to whether the legislation in question has authorised the taking of possession of any property or interest belonging to the petitioner. 53. It is argued by the learned Attorney-General that the taking of possession as contemplated by article 31(2) means the taking of possession of the entire bundle of rights which the previous holder had, by excluding him from every part or item thereof. If the original holder is still left to exercise his possession with regard to some of the rights which were within the folds of his title, it would not amount to taking possession of the property for purposes of article 31(2) of the Constitution. Having laid down this proposition of law, the learned Attorney-General has taken us through the various provisions of the impugned Act and the contention advanced by him substantially is that neither the company nor the shareholders have been dispossessed from their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of such property attached to it. Ordinarily, he is entitled to enjoy the income arising from the shares in the shape of dividends; the share like any other marketable commodity can be sold or transferred by way of mortgage or pledge. The holding of the share in his name gives him the right to vote at the election of directors and thereby take a part, though indirectly, in the management of the company's affairs. If the majority of shareholders sides with him, he can have a resolution passed which would be binding on the company, and lastly, he can institute proceedings for winding up of the company which may result in a distribution of the net assets among the shareholders. 56. It cannot be disputed that the petitioner has not been dispossessed in any sense of the term of the shares he holds. Nobody has taken the shares away from him. His legal and beneficial interest in respect to the shares he holds is left intact. If the company declares dividend, he would be entitled to the same. He can sell or otherwise dispose of the shares at any time at his option. The impugned Act has affected him in this way that his right of voting at the election of directors has been kept i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sound the contention put forward by the learned Attorney-General that the word property as used in article 31 of the Constitution connotes the entire property, that is to say the totality of the rights which the ownership of the object connotes. According to Mr. Setalvad, if a shareholder is not deprived of the entirety of his rights which he is entitled to exercise by reason of his being the owner or holder of the share and some rights, however insignificant they might be, still remain in him, there cannot be any dispossession as contemplated by article 31(2). It is difficult, in my opinion, to accept the contention formulated in such broad terms. The test would certainly be as to whether the owner has been dispossessed substantially from the rights held by him or the loss is only with regard to some minor ingredients of the proprietary right. It is relevant to refer in this connection to an observation made by Rich J. in a Full Bench decision of the High Court of Australia, [See Minister of State for the Army v. Dalziel 68 C.L.R. p. 261], where the question arose as to whether the taking of exclusive possession of a property for an indefinite period of time by the Commonwealth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) and (2) of article 31 relate to exercise of different kinds of powers or they are to be taken as cumulative provisions in relation to the same subject-matter, namely, compulsory acquisition of property. If the word deprived as used in clause (1) connotes the idea of destruction or confiscation of property, obviously no such thing has happened in the present case. Again if clauses (1) and (2) of article 31 have to be read together and deprivation in clause (1) is given the same meaning as compulsory acquisition in clause (2), clause (1), which speaks neither of compensation nor of public purpose, would not by itself, and apart from clause (2), assist the petitioner in any way. If the two clauses are read disjunctively, the only question that may arise in connection with clause (1) is whether or not the deprivation of property is authorised by law. Mr. Chari has raised a question relating to the validity of the legislation on the ground of its not being covered by any of the items in the legislative list and to this question I would advert later on; but apart from this, clause (1) of article 31 of the Constitution seems to me to be altogether irrelevant for purposes of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner undoubtedly has been precluded from exercising his right of voting at the election of directors so long as the statutory directors continue to manage the affairs of the company. He cannot pass an effective resolution in concurrence with the majority of shareholders without the consent or sanction of the Central Government and without such sanction, there is also a disability on him to institute any winding up proceedings in a court of law. 63. In my opinion, these are rights or privileges which are appurtenant to or flow from the ownership of property, but by themselves and taken independently, they cannot be reckoned as property capable of being acquired, held or disposed of as is contemplated by article 19(1)(f) of the Constitution. I do not think that there has been any restriction on the rights of a shareholder to hold, acquire or dispose of his share by reason of the impugned enactment and consequently article 19(1)(f) of the Constitution is of no assistance to the petitioner. In this view, the other point does not arise for consideration, but I may state here that even if it is conceded for argument's sake that the disabilities imposed by the impugned l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, as a shareholder of the company, has as much right to complain as the company itself, for his complaint is that apart from the discrimination made against the company, the impugned legislation has discriminated against him and the other shareholders of the company as a group vis-a-vis the shareholders of all other companies governed by the Indian Companies Act who have not been treated in a similar way. As the discriminatory treatment has been in respect to the shareholders of this company alone, any one of the shareholders, whose interests are thus vitally affected, has a right to complain and it is immaterial that there has been no discrimination inter se amongst the shareholders themselves. 67. It must be admitted that the guarantee against the denial of equal protection of the laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions. As has been said by the Supreme Court of America, equal protection of laws is a pledge of the protection of equal laws [Yick Wo v. Hopkinas, 118 U.S. at 369], and this means subjection to equal laws applying ali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are various textile companies in India situated in a similar manner as the Sholapur company, against which the same charges could be brought and for the control and regulation of which all the reasons that are mentioned in the preamble to the Ordinance could be applied. Yet, it is said, the legislation has been passed with regard to this one company alone. The argument seems plausible at first sight, but on a closer examination I do not think that I can accept it as sound. It must be conceded that the Legislature has a wide discretion in determining the subject matter of its laws. It is an accepted doctrine of the American Courts and which seems to me to be well founded on principle, that the presumption is in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a transgression of constitutional principles. As was said by the Supreme Court of America in Middleton v. Texas Power and Light Company 249 U.S. 152, at p. 157, It must be presumed that a Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion thereon as we had no opportunity of investigating them properly during the course of the hearing. At matters stand, no proper materials have been placed before us by either side and as I am unable to say that the legislature cannot be supported on any reasonable ground, I think it to be extremely risky to overthrow it on mere suspicion or vague conjectures. If it is possible to imagine or think of cases of other companies where similar or identical conditions might prevail, it is also not impossible to conceive of something peculiar or unusual to this corporation which led the legislature to intervene in its affairs. As has been laid down by the Supreme Court of America, The Legislature is free to recognise degrees of harm and it may confine its restrictions to those cases where the need is deemed to be the clearest [Radice v. New York, 264 U.S. 294. We should bear in mind that a corporation, which is engaged in production of a commodity vitally essential to the community, has a social character of its own, and it must not be regarded as the concern primarily or only of those who invest their money in it. If its possibilities are large and it had a prosperous and useful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Ordinance was that the managing agents of the said company were dismissed, the directors holding office at the time automatically vacated their office, the Government was authorised to nominate directors, the rights of the shareholders of this company were curtailed in that it was made unlawful for them to nominate or appoint any director, no resolution passed by them could be given effect to without the sanction of the Government and no proceeding for winding up could be taken by them without such sanction, and power was given to the Government to further modify the provisions of the India Companies Act in its application to the said company. 73. On the very day that the Ordinance was promulgated the Central Government acting under section 15 delegated all its powers to the Government of Bombay. On January 10, 1950, the Government of Bombay appointed Respondents Nos. 3 to 7 as the new directors. On March 2, 1950, Respondent No. 5 having resigned, Respondent No. 8 was appointed a director in his place and on the same day Respondent No. 9 was also appointed as a director. In the meantime the new Constitution had come into force on January 26, 1950. On February 7, 1950, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislative competence - (a) of the Governor-General to promulgate the Ordinance, or (b) of the Parliament to enact the Act, and (ii) that the Ordinance and the Act infringe the fundamental rights of the shareholders as well as those of the said company and are, therefore, void and inoperative under article 13. 76. Re : (i) - The present application has been made by the petitioner under article 32 of the Constitution. Sub-section (1) of that article guarantees the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part III of the Constitution. Sub-section (2) empowers this Court to issue directions or orders or writs, including certain specified writs, whichever may be appropriate, for the enforcement of any of the rights conferred by that Part. It is clear, therefore, that article 32 can only be invoked for the purpose of the enforcement of the fundamental rights. Article 32 does not permit an application merely for the purpose of agitating the competence of the appropriate legislature in passing any particular enactment unless the enactment also infringes any of the fundamental rights. In this case the claim is that the fundament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owing, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given. 79. Article 31 protects every person, whether such person is a citizen or not, and it is wide enough to cover a natural person as well as an artificial person. Whether or not, having regard to the language used in article 5, a corporation can be called a citizen and as such entitled to the rights guaranteed under article 19, it is quite clear that the corporation is protected by article 31, for that article protects every person which expression certainly includes an artificial person. 80. The contention of the petitioner is that the Ordinance and the Act the have infringed his fundamental right to property as a sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. 261, while dealing with section 31 (XXXI) of the Australian Constitution - Property, in relation to land, is a bundle of rights exercisable with respect to the land. The tenant of an unencumbered estate in fee simple in possession has the largest possible bundle. But there is nothing in the placitum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it is expropriating. 81. The learned Judge then concluded as follows at p. 286 :- It would, in my opinion, be wholly inconsistent with the language of the placitum to hold that whilst preventing the legislature from authorising the acquisition of a 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. 82. In my judgment the question whether the Ordinance or the Act has deprived the shareholder of his property must depend, for its answer, on whether it has taken away the substantial bulk of the rights constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticles I have mentioned ? These rights, as already stated, are, no doubt, privileges incidental to the ownership of the share which itself is property, but it cannot, in my opinion, be said that these rights, by themselves, and apart from the share are property within the meaning of those articles, for those articles only regard that as property which can by itself be acquired, disposed of or taken possession of. The right to vote for the election of directors, the right to pass resolutions and the right to present a petition for winding up are personal rights flowing from the ownership of the share and cannot by themselves and apart from the share be acquired or disposed of or taken possession of as contemplated by those articles. The second question is, assuming that these rights are by themselves property , what is the effect of the Ordinance and the Act on such property . It is nobody's case that the Ordinance or the Act has authorised any acquisition by the State of this property of the shareholder or that there has in fact been any such acquisition. The only question then is whether this property of the shareholder, meaning thereby only the rights mentioned abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session of property for a public purpose under any law, unless such law provides for payment of compensation. It is suggested that clauses (1) and (2) of article 31 deal with the same topic, namely, compulsory acquisition or taking possession of property, clause (2) being only an elaboration of clause (1). There 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 exclude deprivation of property otherwise than by acquisition or 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 supported in the United States of America as an exercise of police power . 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 suggeste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 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 taken possession of by the State. This argument, however, overlooks the fact that in order that the possession of the servant or agent may be juridically regarded as the possession of the master or principal, the servant or agent must be obedient to, and amenable to the directions of, the master or principal. If the master or principal has no hand in the appointment of the servant or agent or has no control over him or has no power to dismiss or discharge him, as in this case, the possession of such servant or agent can hardly, in law, be regarded as the possession of the company [See Elements of Law by Markby,6th Edition, Para. 371, p. 192]. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple that in order to justify the granting of this extraordinary relief, the complainants' need of it and the absence of an adequate remedy at law must clearly appear. The complaint cannot succeed because someone else may be hurt. Nor does it make any difference that other persons who may be injured are persons of the same race or occupation. It is the fact, clearly established, of injury to the complainant - not to others - which justifies judicial interference. 86. In that case there was no allegation that anyone of the plaintiffs had ever travelled on anyone of the rail roads or had requested any accommodation in any of the sleeping cars or that such request was refused. The same principle was laid down in Jeffrey Manufacturing Company v. Blagg 235 U.S. 571, Hendrick v. Maryland 235 U.S. 610 and Newark Natural Gas and Fuel Company v. The City of Newark 242 U.S. 403. In each of these cases the Court declined to permit the person raising the question of constitutionality to do so on the ground that his rights were not directly affected by the Law or Ordinance in question. On the other hand, in Truax v. Rich 239 U.S. 33 and in Buchanan v. Warley 245 U.S. 60, the Court allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration had property taxed within the State. This is in accord with the well established legal principle that a corporation is a legal entity capable of holding property and of using or being sued and the corporators are not, in contemplation of law, the owners of the assets of the corporation. In all the cases referred to above the question of constitutionality was raised in connection with the equal protection clause in the Fourteenth Amendment of the American Federal Constitution. If such be the requirements of law in connection with the equal protection clause which corresponds to our article 14, it appears to me to follow that only a person who is the owner of the property can raise the question of constitutionality under article 31 of a law by which he is so deprived of his property. If direct interest is necessary to permit a person to raise the question of constitutionality under article 14, a direct interest in the property will, I apprehended, be necessary to entitle a person to challenge a law which is said to infringe the right to that property under article 31. In my opinion, although a shareholder may, in a sense, be interested to see that the company of which he is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple does not apply here for this is not a suit, nor has it been shown that any attempt was made by the petitioner to induce the old directors to take steps nor do these proceedings purport to have been taken by the petitioner on behalf of himself and the other shareholders of the company. 88. The only other ground on which the Ordinance and the Act have been challenged is that they infringe the fundamental rights guaranteed by article 14 of the Constitution. Equal protection of the laws , as observed by Day J. in Southern Railway Company v. Greene 216 U.S. 400, means subjection to equal laws, applying alike to all in the same situation . The inhibition of the article that the State shall not deny to any person equality before the law or the equal protection of the laws was designed to protect all persons against legislative discrimination amongst equals and to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation. It does not, however, mean that every law must have universal application, for all persons are not, by nature, attainment or circumstances, in the same positions. The varying needs of differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of showing that it did not rest upon any reasonable basis but was essentially arbitrary. If there is a classification, the Court will not hold it invalid merely because the law might have been extended to other persons who in some respects might resemble the class for which the law was made, for the legislature is the best judge of the needs of the particular classes and to estimate the degree of evil so as to adjust its legislation according to the exigency found to exist. If, however, there is, on the face of the statute, no classification at all or none on the basis of any apparent difference specially peculiar to any particular individual or class and not applicable to any other person or class of persons and yet the law hits only the particular individual or class it is nothing but an attempt to arbitrarily single out an individual or class for discriminating and hostile legislation. The presumption in favour of the legislature cannot in such a case be legitimately stretched so as to throw the impossible onus on the complainant to prove affirmatively that there are other individuals or class of individuals who also possess the precise amount of the identical qualities which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke any the least difference in principle. If this petitioner has, by the Ordinance or the Act, been discriminated against and denied equal protection of the law, his fundamental right has been infringed and his right to approach this Court for redress cannot be made dependent on the readiness or willingness of other shareholders whose rights have also been infringed to join him in these proceedings or of the company to take substantive proceedings. To take an example, if any law discriminates against a class, say the Punjabis, any Punjabi may question the constitutionality of the law, without joining the whole Punjabi community or without acting on behalf of all the Punjabis. To insist on his doing so will be to put a fetter on his fundamental right under article 32 which the Constitution has not imposed on him. Similarly, if any law deprives a particular shareholder or the shareholders of a particular company of the ordinary rights of shareholders under the general law for reasons not particularly and specially applicable to him or them but also applicable to other shareholders of other companies, such law surely offends against article 14 and any one so denied the equal protectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut was essentially arbitrary. I have already said that if on the face of the law there is no classification at all or, at any rate, none on the basis of any apparent difference specially peculiar to the individual or class affected by the law, it is only an instance of an arbitrary selection of an individual or class for discriminating and hostile legislation and, therefore, no presumption can, in such circumstances, arise at all. Assuming, however, that even in such a case the onus is thrown on the complainant, there can be nothing to prevent him from proving, if he can, from the text of the law itself, that it is actually and palpably unreasonable and arbitrary and thereby discharging the initial onus. 92. The Act is intituled an Act to make special provision for the proper management and administration of the Sholapur Spinning and Weaving Company, Limited. There is not even a single preamble alleging that the company was being mismanaged at all or that any special reason existed which made it expedient to enact this law. The Act, on its face, does not purport to make any classification at all or to specify any special vice to which this particular company and its shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, create no inequality, for the delinquent companies and their shareholders from a separate class and cannot claim equality of treatment with good companies and their shareholders who are their betters. But a distinction cannot be made between the delinquent companies inter se or between shareholders of equally delinquent companies and one set cannot be punished for its delinquency while another set is permitted to continue, or become, in like manner, delinquent without any punishment unless there be some other apparent difference in their respective obligations and unless there be some cogent reason why prevention of mismanagement is more imperative in one instance than in the other. To do so will be nothing but an arbitrary selection which can never be justified as a permissible classification. I am not saying that this particular company and its shareholders may not be guilty of mismanagement and negligence which has brought about serious fall in production of an essential commodity and also considerable unemployment. But if mismanagement affecting production and resulting in unemployment is to be the basis of a classification for making a law for preventing mismanageme ..... 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