9911796707
TMI Blog1951 (5) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... 25/26 Waterloo Street, Calcutta, in the State of West Bengal. It is stated in the petition that the Company had & still has its registered office at Calcutta & branch offices at, inter alia, Kanpur & London. The words "inter alia" appear to have been used, whether deliberately or not, only to conceal the fact that the Company also functions at Karachi in Pakistan. 3. The main business this Company appears to have been carrying on is that of importing machinery from abroad and repairing & reconditioning it. For this purpose it used to maintain two establishments, one at Kanpur & the other at Calcutta. Though it is alleged in the petition that the Hindu share-holders were numerically more than the Muslim share-holders of the Company, yet it would appear that the value of the shares held by the Hindu members of the Company at the time of the petition was negligible as compared with that held by the Muslim share-holders. 4. The Company's case is that inasmuch as its head office is situate in the State of West Bengal it is not subject to any of the provisions of the Administration of Evacuee Property Act as that State is exempt from the operation of the Act. It is claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them by mala fide, wrongful & arbitrary considerations. It is further averred that respondents 1 to 5 have initiated proceedings against the Company which are now pending before respondent 4 under Section 7 of the Evacuee Property Act for adjudication of the Muslim share-holders of the Company as evacuees. To these proceedings it is stated that the Company is not a party nor has any notice been served upon it to appear in person. The clear object of these proceedings is to take over . the assets & properties of the petitioner on the strength of the adjudication of such share holders as evacuees. It is urged that the initiation of these proceedings constitutes a violation of the principles of natural justice & of recognised rules, practice & procedure. 6. A further plea which has been advanced is that the Evacuee Property Act itself is illegal, it being inconsistent with the fundamental rights guaranteed to the petitioner under the Constitution. 7. Originally, the Company which is a private limited concern had both Hindu & Muslim share-holders in the proportion of 50-50, the 50 per cent. Hindu shares being held by what may be called the Lall group & the 50 per cent. Muslim sares b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate bench of the original side of the Calcutta High Court & an ad interim stay order was made in those proceedings on 3-5-1949 by Harries C. J. & N.C. Chatterji J. On 12-7-1919 Shri S. Lall 0on of Shri K. Lall, returned to India from the United Kingdom. He was appoint- ed as General Manager by his father in exercise of the powers vested in him under the Articles of Association with authority to him to operate on certain Banking accounts. This authority was given to Shri S. Lall, it is alleged, without notice to the other Directors. It is alleged that large sums were withdrawn in pursuance of that authority by the Lall group On 13-8-1949 the appeal filed by the Amin Brothers Ltd. was allowed & the winding up order was set aside on the ground that the debt was a hotly disputed one & the assessment had by that time been substantially reduced, there being possibilities of further deduction in future On 17-8-1849 the deed of hypothecation dated 20-11-1947 was renewed by another deed in favour of Amin Agencies Ltd. & it was registered under 8. 109, Companies Act, with the Registrar of Joint Stock Companies, West Bengal. " The amount due to the Amin Agencies Ltd. was over ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been refused possession on 5-10-1949, the Deputy Custodian intervened with the Lall group. He took over possession, made over the same to the Lall group & by a letter of that date declared the company as evacuee. On 18-10-1949 the Administration of Evacuee Property Ordinance which contained for the first time restrictions on transfers in U. P. in respect of properties of evacuees or intending evacuees came into force. It may be mentioned that under the previous Provincial Ordinance no such provision existed. It was confined to permitting the Custodian to take over a property which had been abandoned. It is important to note that from the operation of the Central Ordinance West Bengal & Assam were expressly excluded. 9. On 28-10-1949 the liquidator made a complaint to the Custodian, Shri R.P. Verma, against the action of the Deputy Custodian. The Custodian on that date declared by his letter that the taking over of the factory & refusal to make over possession to the liquidator by the Deputy Custodian on the ground that some of the share-holders were evacuees & the whole property had become evacuee property & vested in the Custodian was wrongful & illegal. It is important to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter on the 26th December the receiver who had taken charge of the Company gave up possession of the property he had taken hold of. Thereafter, in January 1950 it is alleged that fresh proceedings were initiated by the respondents under the Evacuee Property Ordinance, XXVII of 1949. It is alleged that Kundan Lall, after he had effected the settlement at Calcutta, returned to Kanpur & influenced the Custodian of Evacuee Property to issue notice upon the Company & its share-holders. On 3-1-1950 fresh proceedings were initiated by the respondents. The Deputy Custodian declared that the shares of the evacuees vested in the Custodian & also demanded securities on that basis. This notice was followed up on 11-1-1950 by the Deputy Custodian by attachment of Kanpur properties. The Resident Director, Bhalwala, raised objections to that notice on behalf of Amin Agencies Ltd. whose nominee he was on 18-1-1950. On 8-2-1950 a Manager-cum-Accountant was appointed by the Custodian. To the appointment of the Manager-cum-Accountant objection was raised by the Company on 17-2-1950. On 8-9-1950 & 20-9-1950 there were fresh demands for securities on the part of the Custodian. On the 5th December an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Indian Companies Act to conceal the real nature of their operations. While admitting that the Company has its registered Office in Calcutta, it is alleged that the Company's principal place of business & the Office are at Kanpur. The case, as put forward by the respondents, is that the Directors & share-holders of the Company have from time to time been taking steps, in a skilful manner, to transfer the assets of the Company outside the Indian Union. While it is not denied that the Hindu share-holders are numerically more numerous than the Muslim share-holders, it is pointed out that the 12 Hindu share-holders of the Company hold only 12 shares, while the Muslim share-holders hold 1200 shares & that it is only as recently as February 1950 that the Hindu share-holders came to be allotted even these 12 shares. The respondents' main contention is that the petitioner Company is liable to be treated as an evacuee under the E. P. Act & they deny that the Company does not carry on business elsewhere than in the Indian Union. It is asserted that the share-holders & Directors of the Company have been taking steps to transfer the assets of the Company to Pakist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erty Act. The position is admitted that proceedings have been initiated against the evacuee share-holders of the petitioner Company under Section 7, Evacuee Property Act, & that the petitioner Company is not a party to the aforesaid proceedings. But it is denied that these proceedings are against any principle of natural justice or against any recognised rule of practice or procedure. It is asserted that these proceedings were initiated after the Custodian had got reliable information that the Directors & shareholders were committing various acts calculated to transfer their assets to Pakistan. Other pleas taken by the respondents are that the allegation that the proceedings under the Evacuee Property Act are illegal, wrongful, ultra vires or without jurisdiction is wholly without foundation. The position taken up by the opposite party is that notices can be issued under the Evacuee Property Act. The allegation that the Evacuee Property Act is ultra vires the Constitution or that Sections 4, 46, 47 or any part of it is ultra vires the Constitution is denied, it being claimed that the Constitution specially provides for such legislation. It is asserted that the Evacuee Property Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholders are evacuees; that the E. P. Act cannot apply to the property of a person not ordinarily resident in West Bengal; that the situs of the shares being in Calcutta, the Custodian has no jurisdiction to take control of them; & that, in any case, the Evacuee Property Act is invalid on the ground of its inconsistencies with Arts. 14 & 19 (f) of the Constitution. On the side of the respondents it is urged that the petitioners have misrepresented facts in their applications & affidavits; that this fact alone disqualifies them from getting any relief from this Court; that the E, P. Act covers a limited Company, the Directors or share-holders of which have become, according to the Custodian, evacuees; that the fact that the situs of the shares is in Calcutta is immaterial; & that the Act is not inconsistent with the Constitution. 14. Before dealing with the main argument which was advanced in this case, we should like to say a few words on the arguments that were addressed to us regarding the powers which this Court enjoys under Article 226 of the Constitution & the principles which should guide it in granting the various writs, directions or orders indicated in the Article. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve a house in London with a view to residing there instead of going to hotels or staying with friends, but that she became aware that if she took a house she would become liable to taxation & to that the objected. She took legal advice to the effect that if she was merely a guest in her brother's house, she would not be liable to assessment to income-tax. Accordingly, she made an arrangement with her brother by which he became the nominal purchaser & the rated occupier of the house, & her name was not to appear but she paid for the house, the furniture, servants & general expenses of the house. The brother was what we would call in this country her benamidar. The position in regard to the house was that, except for the fact that the house had been purchased in her brother's name, she was in fact the owner & occupier of the house. Her ease in the affidavit in reply was that the arrangement with her brother was that she should be there as a guest in his house; that is, she was to be a guest in a house which she had brought with her own money, which was kept up & furnished with funds supplied by her. It was obviously impossible in those circumstances for the Court to accept he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, that the injunction must fall to the ground." Lord Cozens-Hardy went on to observe that "on an ex parte application uberrima fide! is required, and unless that can be established. If there is anything like deception practised on the Court, the Court ought not to go into the merits of the case, but simply say "we will not listen to your application because of what you have done." He did not think that, the fact that there could not be a second application for a writ of prohibition except in the case of a purely formal defect, such as a mistake in the jurat of the affidavit or something of that kind, should be a consideration for refusing to give effect to the salutary rule of practice, namely, refusing to grant prohibition where in cases there has been a misstatement of material facts. 16. It was further pointed out that the case was one in which the Kensington Commissioners had no jurisdiction to make the assessment but it could have been made by the Commissioner for the city of London. Nevertheless he felt that Court was entitled to say: "we refuse the writ of prohibition without going into the merits of the case on the ground of the conduct of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day had been obtained by suppressing material facts. But in my view this case comes nowhere near a case where excess of jurisdiction is obvious on the face of the record." 19. We have quoted passages from the judgment of the learned Judges of the Court of Appeal on which reliance has been placed by the learned counsel for the respondents in order to indicate how important it is in ex parte applications where a party is asking for an injunction or stay to be completely honest with the Court. It is incumbent on the Court in its own interest in order to protect itself against passing an unjust or erroneous order to insist upon an absolute standard of truthfulness on the part of those who approach it with ex parte applications of the nature we are dealing with. No doubt, a party is not required to state unessential & irrelevant facts to overload his application & affidavit, but it does strike us that there should be no suppression of material facts going to show that the party bad any time acquiesced either willingly or under protest in any order or any arrangement which it wanted to be interfered with by an injunction or a writ by this Court. It is in the light of the law laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Asiatic Engineering Co. Ltd., Kanpur were attached by the Deputy Custodian, Evacuee property. We have also pointed out that after some correspondence between the Deputy Custodian & the Custodian, the official liquidator who had been appointed by the Calcutta High Court in the winding-up petition brought by the Amin group was handed over possession of the assets of the company on 31-10-1949 under a direction of the Custodian, dated 20-10-1949. We have also pointed out that the winding up proceedings terminated in the Calcutta High Court as the result of a compromise between the parties in favour of the company & that Mr. Kundan Lall's sharee were first taken over by Mr. Abdul Jalil & later transferred by him to the Amin Agencies Ltd. We have also indicated that the liquidator gave up his possession on 27-12-949 & that the new proceedings were initiated on 3-1-1950. It was on 3-1-1950 that notice was issued to the Director/Proprietor, Occupant/Manager of the property that it was intended by the Deputy Custodian to take over the company's property as evacuee property & that an enquiry will be held by the Deputy Custodian (Judicial, & objections, if any, might be filed befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen from this letter that the suggestion that a Manager-cum-Accountant should be appointed by the Deputy Custodian to exercise an overall supervision over the company which should be allowed to be run by the Directors came on behalf of the Directors from the resident Director, Mr. Bhalwala himself. It is perfectly true that had there been no Evacuee Property Act & had no action been contemplated under it fey the Evacuee Property Department against the company, the question of appointment of a Manager-cum-Accountant for the company by the Deputy Custodian, Evacuee Property Department would never have arisen. Nevertheless, the Deputy Custodian might or might not have been right in his estimate of the powers that he enjoyed in relation to the company under the E. P. Act. But the point nevertheless remains that the appointment of a Manager-cum-Accountant was the way out for the situation which was being created for the company by the line that the Deputy Custodian had taken emanated from the resident-Director of the company. On 6-1-1950, the resident-Director, Mr. Bhalwala, wrote a second letter to the Deputy Custodian, intimating that he was leaving Calcutta with the notice in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on the 4th of January is as follows : "The matter wag discussed at length in which discussion I also participated. The Deputy Custodian gave us to understand that if the company conveys its agreement in writing to the appointment of a Manager-cum-Accountant to control & supervise the business of the company at Kanpur on behalf of the ''Custodian, Mr. Bhalwala will be allowed to be in charge of the business of the company, in which case, the custodian will not take over the assets of the company. The letter dated 4-1-1950 addressed to the Deputy Custodian contains in the third para the informal agreement arrived at with him for future conduct of the business of the company. The letter was required immediately by the Deputy Custodian it was handwritten in his office & handed over to him personally for his orders. To the best of my recollection, the offer to agree to the appointment of a Manager-cum-Accountant by the Custodian was not given by Mr. Bhalwala voluntarily & as stated above was given at the instance of the Deputy Custodian." 24. What we gather from Mr. Aiyar's statement is that the Custodian, Evacuee Property was, as is clear from the notice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sstatement is that in Sub-paragraph (b) of para. 9 of the petition it is stated that the Assistant Custodian demanded & compelled the Director in charge of the company's Kanpur office to furnish security. It appears that on 10/11th January, 1950, the Assistant Custodian wrote to Mr. Bhalwala that he must furnish security to the extent of ₹ 3,01,000 representing the approximate valuation of the assets in his concern at a very early date. 27. On 18-1-1950, Mr. Bhalwala wrote a letter to the Deputy Custodian, Evacuee Property, in which he gave him information about the various Muslim share-holders, namely, (1) Abdul Jail (2) Abdul Razzak (3) Ghulam Mohi Uddin (4) Saliha Begum (5) Salma Begum (6) Mohammad Amin & (7) Amin Agencies Ltd. & pointed out that Messrs. Abdul Jalil, Abdul Razzak, Ghulam Mohi Uddin, Saliha Begum & Salma Begum were permanent residents of the Indian Union & were permanently residing at Calcutta, that Mohammad Amin was in Karachi & was looking after his business there & that Messrs. Amin Agencies was a limited company incorporated in East Bengal on 18-10-1947 i.e. , after the partition & that it had a branch office at Calcutta where it was carrying on it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand you a balance sheet showing the true state of affairs as soon as the same is ready & handed over to me by the auditors, Messrs. Aiyar & Co., New Delhi who are the auditors of the company & agree to increase or decrease the security given as per your direction. 3. I agree to the appointment of an Accountant by you at the company's cost for scrutiny of the accounts & to give you true state of affairs for your information & necessary direction. 4. That you will release the property b allow normal functioning. Thanking you, Yours faithfully, For Asiatic Engineering Co., Ltd., Sd. D. BHALWALA, Director." 29. From the above letter, it is quite apparent that Mr. Bhalwala had a satisfactory interview on the 18th with the Deputy Custodian & that as a result of his discussions with him, the orders referred to in that letter were passed & that they had met his & the company's points of view & that he & the company were very grateful for them. We cannot understand how in the face of this letter, read with previous correspondence it can be said that Mr. Bhalwala & the company did not agree, in order to ensure that there was no further deterioration of the situation by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the principle agreed upon between the company & the Deputy Custodian that security should be furnished. What we can read in this letter is a vague suggestion that the Deputy Custodian had changed the previous order, to which they had agreed, regarding the nature of the security required from the company inasmuch it was insisted upon that the property for the security must be situate in Kanpur. On the 8th of February, Mr. D.D. Sethi was appointed a temporary Manager-cum-Accountant on a salary of ₹ 250 per month. On 17-2-1950, Mr. Bhalwala wrote a letter to the Assistant Custodian intimating the company's approval of the appointment of Mr. Sethi subject to the decision of the Custodian to whom representations & objections had been made on that date. On the same date, that is; the 17th of February, Mr. Bhalwala wrote another letter to the Assistant Custodian expressing surprise that the order of the Deputy Custodian had been superseded by him & that there was no reason & no law under which property situate only in Kanpur should be given as security & this was particularly objectionable as India was one Dominion consisting of several parts. He also wrote to say that he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; the company's property at Kanpur could not be declared as evacuee property. He further requested the Deputy Custodian to allow him to discuss & finalise the points of difference which had arisen between the company & the Deputy Custodian regarding the duty chart which the Deputy Custodian had prepared for the Manager-cum-Accountant. On 2-6-1950, Mr. Bhalwala wrote to the Assistant Custodian a letter in which, among other things, he added that he had given a further undertaking that when the final accounts were audited & assets determined by the Auditor, he was prepared to increase or decrease his security in proportion to the final value of the shares held by the Muslim shareholders. He added, however, that even the security already furnished by him was neither necessary nor should it have been insisted upon by him in view of the fact that he had imposed the burden of a Manager-cum-Accountant on them. He pointed out that it was not proper to increase the security to an imaginary figure in the case of a limited private company registered in East Bengal where the Evacuee Property Act does not apply. Finally he requested the Assistant-Custodian to help him in the disposal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 2-8-1950 regarding furnishing of security was not traceable on his file. He wanted him to send a copy of the letter at an early date. He further requested him to deposit the necessary security within four days, that is to say, by 30th of August. He added that in case there was any difficulty about the security, he could send his representative to understand the position from him. On 8-9-1950, the Assistant Custodian informed him that the Custodian, Uttar Pradesh had been pleased to order that a security of ₹ 2,00,000 should be obtained from him & that he had furnished security for a sum of ₹ 1,20,000 which was pending verification. What was needed now was that he should furnish a security for an additional sum of ₹ 30,000 by 19-9-1950 duly verified. He said that the security would be rejected if it was not duly verified. On 20-9-1950, the Deputy Custodian again wrote to the company pointing out that security to the extent of ₹ 2,00,000 had to be furnished by him duly verified & registered by the 22nd of September, otherwise a Manager-cum-Accountant would be appointed for such time as the security was not furnished or the case was not finally di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the security. In view of this correspondence, the fact is apparent that it took the company eight months to make up its mind to file a writ application on the basis that the Assistant Custodian demanded & compelled the Director in charge of the Kanpur office, Mr. Bhalwala, to furnish security to the extent of ₹ 1,20,000 & had, therefore, arbitrarily raised the security in spite of protest & reasonable explanation to the extent of ₹ 2,00,000. It is quite clear from the correspondence that in the matter of furnishing security to the extent of ₹ 1 20,000, the company was, for the reasons detailed in its letter of the 19th January, a willing party. It was only later after the 6th of February that disputes regarding the quantum of security &, more particularly, the nature of the security arose between the parties. In fairness to this Court & to the Bench of which one of us was a member which issued the interim order, the attitude that the company had adopted initially should have been stated & the controversy which arose subsequently in regard to the two matters referred to by us should have been mentioned in the petition. All that the company states is that the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late as 8 12-1950, Mr. Bhalwala repeated in para 7 of his affidavit that after the security was furnished the respondents insisted on the registration of the same after a lapse of over seven months & Shri Bhalwala thereupon agreed to have the same registered & in fact, asked the Assistant Custodian, Evacuee Property, for particulars thereof by his letter dated 22-7-1950. No reply was ever sent to the said letter of Mr. Bhalwala & on the contrary, the said respondents served a notice on him that a Manager-cum-Accountant would be appointed. We find that the position taken up by the petitioner company even in the affidavit which was filed by Mr. Bhalwala on 8-12 1950 is not of much help, There is no doubt that right upto 8-12-1950, letters or documents which go to show that the petitioner company had either itself suggested or had agreed willingly to the appointment of a Manager-cum-Accountant had not been produced. We also note that the letters of the 4th and 19th of January 1950, which go to show that the proposal for the appointment of a Manager cum-Accountant or personal security was made either by the Company or was the result of an agreement between the Company & the Evacuee Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are that the suggestion that a Manager-cum-Accountant should be appointed emanated from the Company itself through its Resident-Director, Mr. Bhalwala, that it agreed to the furnishing of security & that the disputes at a subsequent date related to the extent & nature of that security. There are no doubt indications in the correspondence that the Company wanted an overall settlement of the points in dispute. But we do not think that the word "harassment" is really a proper word to use in connection with these controversies & it appears to us that it was only after a certain date that the Company's attitude under. went a change. We think, therefore, that the position, in regard to the various orders & the appointment of the Manager-cum-Accountant has not been fairly or fully stated in the petition. 32. We now come to another point & that is that the fact that the Company had an office in Karachi has been suppressed in para. 2 of the petition. That paragraph stated that the Company had its registered office at Calcutta & inter alia, at Kanpur & London. The words "inter alia" suggest that it had branch offices at places other than Kanpur & London. On this poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karachi (Pakistan). The inference to be drawn from the heading & the invoice address is that the company's branch office was situate in part of the building occupied by Messrs Pakistan Commercial & Industrial Enterprises Limited. Our attention has not been drawn to any statement which contains any categorical denial, in any of the affidavits of the fact that the company had a branch office in Pakistan. In the absence of any satisfactory explanation the only inference, as to why the words "inter alia" were used to conceal the fact, is that the company tried to mislead the Court into believing that the company had no business in Pakistan, that it had some fear that further investigation might lead the respondents to come into possession of some evidence which might show that the company had acquired some interest in Evacuee property in Pakistan & that that fact might enable an argument to be addressed that the company had become an evacuee. 33. We may point out that another statement which the company has made is that it has had its business all along confined to the Indian Union. Appendix 'B' which is a letter dated 5-1-1950 by Mr. Bhalwala to the Assistant C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into which we do not feel we would be justified, on the materials before us, in recording a finding. 35. We now come to a more important point which has reference to the permanent residence of Muslim share-holders. They are all stated to be permanent residents of West Bengal. From a pedigree to be found attached to Appendix 'C' of the papers filed by the respondents, it would appear that according to the information available, Messrs, Mohammad Amin, Ghulam Mohi Uddin, Abdul Jalil, Abdul Razzak, Abdul Latif & Shrimati Salima Begum are descended from a family which originally had property at Kanpur, Agra & in the province of Delhi. We do not look upon this fact as sufficient to indicate that the petitioners are residents of Uttar Pradesh & attach no importance to the fact that this was not brought out in the petition or the papers accompanying the petition. We have already indicated that, in one sense, the present proceedings against the company can be said to have started on 3-1-1950. Our attention has been drawn to a letter dated 1-12-1950 by Mr. Bhalwala to the Assistant Custodian from which it appears that a complete inventory of the property & the assets of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees & that that fact justified their taking over their assets & also that of the Company virtually vested in them. It may be that the Company is distinct in law from its share-holders & that the fact that its Directors reside in Pakistan is immaterial from the point of view of the commercial domicile of the Company. But the question of their exact position in relation to the Indian Union should have been clearly stated & we find that there has been an attempt to get over the fact that their usual place of residence is Pakistan. 38. We may now point out that an allegation which has been made in a reckless manner is that the respondents have a personal bias against the company & its share-holders. One of the respondents is the Deputy Custodian (Judicial). He has very properly not taken any interest in these proceedings as, if the case goes against the company, he will have to deal with the question whether the company is an evacuee whose property can be taken over or not. We have failed to discover any evidence of any personal bias which the respondents are alleged to have against the company. We feel from the admitted facts of this case that the Custodian was in touch with Mr. Kund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Custodian be deal with the property of the applicant Company & therefore, any suppressions, misrepresentation & misleading statement in the application or the affidavits or papers filed in support of the application would not justify a dismissal of the application without consideration on merits. 40. We have, however, not found it possible to hold that, in this case, there is any patent want of jurisdiction. It appears to us that the various points urged on behalf of the applicant Company merely raise a question of latent want of jurisdiction in the Custodian. The point that the Company is a distinct legal person different from its shareholders & that the fact that its shareholders, or directors are evacuees or intending evacuees is irrelevant for the purpose of determining whether the Company is an evacuee or of determining whether the assets of the Company can be evacuee property which has to be decided in the light of the special provisions of the Evacuee Property Act & not merely on a consideration of the position of an incorporated company under the Indian Companies Act. The correctness of the proposition that a limited company has an independent corporate existence distin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therein. The main definition of evacuee property uses the words 'any right or interest' & further goes on to elaborate that right or interest by using the words, 'whether personally or as a trustee or as a beneficiary or in any other capacity.' The use of the words, 'any right or interest in any other capacity' appears to make the definition of evacuee property very wide. It has been argued on behalf of. the respondents that this definition is wide enough to cover the right or interest which a share-holder may have in the assets of an incorporated company. It is true that, under the Indian Companies Act, it has been held that the properties or assets of a company belong to the company & not to its individual share-holders. In E. B. M. Co., Ltd. v. Dominion Bank, A. I. R. (24) 1937 P. C. 279, Lord Russel pointed out that "the distinction should be clearly marked, observed & maintained between an incorporated Company's legal entity & its actions, assets, rights & liabilities on the one hand, & the individual share-holders & their actions, assets, rights & liabilities on the other hand." In In re George Newman & Co., (1895) 1 Ch. 674 at p. 683, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n possession without compensation & the right under Article 19(f) of the Constitution has been infringed, it would be for the company to come forward or its agents & not every individual share-holder. 45. It was sought to be argued on behalf of the applicant Company on the basis of this case law that a share-holder has no right or interest in the assets of a Company &, therefore, the Custodian, in the present case, was not justified in proceeding against the assets of the Company if the share-holders only had become evacuees whereas the Company as such was not an evacuee. It appears to us that this argument completely ignores the language used in the definition of evacuee property which has been mentioned above. All the cases which have been cited above really deal with the question whether a shareholder has a right or interest in the assets of a Company in the sense of possessing some ownership rights in those assets. The proposition that the assets of a Company belong to the Company itself & net to its share-holders is the only proposition that is laid down in the cases cited above. They do not go further so as to lay down that a share-holder cannot have "any right or inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al incidents of the share. A share is not a sum of money settled in the way suggested, but is an interest measured by a sum of money & made up of various rights contained in the contract, including the right to a sum of money of a more or less amount." He went on to say: "It is impossible to treat a share as being an interest in the company's assets, or an aliquot share in the company's capital, & to regard the contract arising from & contained in the company's articles of association as a separate & independent thing. That contract & the rights & liabilities that flow from it are of the very essence of the share: When, therefore, the owner of a share dies, what passes upon his death & what has to be valued for the purpose of estate duty is nothing more than the totality of his rights & liabilities as they exist under the provisions of the Companies Act & the constitution of the particular company." These remarks show that a share was treated as being an interest in the company's assets or an aliquot share in the company's capital subject to the contract arising from & contained in the company's articles of association. The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany, it would necessarily lead to the conclusion that a share-holder has no right or interest of any kind, & in any capacity, in the assets of the company. It cannot, therefore, be said on this ground that there was a patent want of jurisdiction in the Custodian to treat the assets of the Company as evacuee property in proceedings against the share-holders. 47. The second contention, on the basis of which it is argued that there was patent lack of jurisdiction, is that, under the Evacuee Property Act, only a human being can be declared to be an evacuee or an intending evacuee & that an incorporated company cannot be held to be an evacuee at all. Evacuee has been defined under this Act as follows: "(d) 'Evacuee' means any person-- (i) Who, on account of the setting up of the Dominions of India & Pakistan or on account of civil disturbances or the fear of such disturbances, leaves or has on or after 1-3-1947, left, any place in a State for any place outside the territories now forming part of India, or (ii) Who is resident in any place now forming part of Pakistan & who for that reason is unable to occupy, supervise or manage in person his property in any part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 It has been contended on behalf of the respondents that inasmuch as there was a dispute between India & Pakistan relating to evacuee property the Courts would be justified in looking behind the corporate veil & discovering for themselves where the actual control of the company rests in determining the commercial domicile of a private limited company. In the present case, the respondents have come with the allegation that the majority of the directors of the applicant Company have now become residents of Pakistan and, therefore, the effective control of the affairs of the company is being exercised from Pakistan. Whether this is actually so or not, it is not possible to determine without a full enquiry into the facts which will not be justified in these summary proceedings for issue of writs under Article 226 of the Constitution. In any case, we cannot see our way to agree with the contention of the learned counsel for the applicant Company that there can be no change of residence or domicile by a company or that a company cannot leave any place in a State for any place outside the territories forming part of India. Sub-clauses (ii) & (iii) of Clause (d) of Section 2, Evacuee Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt want of jurisdiction. 49. In these circumstances, it is our opinion that the applicant company has disentitled itself to a writ of mandamus or prohibition by its conduct in making misleading statements & by suppression & misrepresentation of facts in the application & the affidavit filed in support of it. The attempt to conceal the fact that the company had its office in Pakistan was obviously made in order to meet a possible argument that the company had obtained a right to or interest in or benefit from property which was being treated as evacuee or abandoned property in Pakistan. Clearly the suppression in this respect was relevant to the question of determination of the Custodian to take action against the property of the Company. Similarly, misleading statements were made & inaccurate information was given about the residence of the share-holders & the directors of the Company. We have already pointed out that the majority of the directors of the company have shown their permanent residence as Dacca in East Pakistan. These suppressions & misleading statements were obviously included in the application & the affidavits for the purpose of avoiding any contention by the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustodian. 51. In our opinion, the salutary principle laid; down in the cases quoted above should appropriately be applied by Courts in our country when parties seek the aid of the extraordinary powers, granted to the Court under Article 226 of the Constitution. A person obtaining an ex parte order or a rule nisi by means of a petition for exercise of the extraordinary powers under Article 226 of the Constitution must come with clean hands, must not suppress any relevant facts from the Court, must refrain from making misleading statements & from giving incorrect information to the Court. Courts, for their own protection, should insist that persons invoking these extraordinary powers should not attempt, in any manner, to misuse this valuable right by obtaining ex parte orders by suppression, misrepresentation or misstatement of facts. Applying this principle to the pre sent case, we feel that, in this case, the petitioner Company has disentitled itself to ask for a writ of prohibition by material suppressions, misrepresentations & misleading statements which have been found by us above. Two different proceedings were pending. One set of proceedings were initiated against the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act under Article 226 of the Constitution, notwithstanding the fact that Section 28 & Clauses. (a), (b), (c) & (d) of Section 46, Evacuee Property Act, are worded in very general terms & are couched in language which bars the jurisdiction of civil & revenue Courts. We think it unnecessary to labour this point any further. Suffice it to say that, in our opinion, those sections cannot take away rights under Article 226 of the Constitution. 54. The question whether any case has been made out for the grant of any of the writs, orders or directions claimed is, however, a different one & has to be considered with reference to the facts of this particular case. The terms of Article 226 of the Constitution are very wide. They enable this Court to issue, in suitable cases writs, directions or orders including the writs of habeas corpus, certiorari, prohibition, mandamus and quo warranto for the enforcement of any of the rights conferred by Part III of the Constitution & for any other purpose. It strikes us that the fact that the Constituent Assembly has vested this Court with such vast powers imposes a heavy responsibility upon it to use them with circumspection. We must not be understood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects the rights of an individual, provided there is no more appropriate remedy." To the same effect is our decision in Indian Sugar Mills Association v. Secretary to Govt. U.P., A. I. R. (38) 1951 ALL 1 where, when dealing with the issue of a writ of mandamus, we said : "The powers under this Article (that is Article 226) should be sparingly used & only in those clear cases where the rights of a person have been seriously infringed & he has no other adequate & specific remedy available to him." 58. Certiorari originated in Britain as an original writ issuing out of Chancery or the King's Bench, to Judges or officers of inferior Courts, commanding them to return the records of a cause pending before them. Initially it was a writ for the rectification of errors on the criminal side. It later became a remedial measure in civil cases at common law. At the present moment what certiorari or what the Court by the writ of certiorari does is to require the record of proceedings in some cause or matter pending before an inferior Court, judicial tribunal or quasi-judicial tribunal to be brought before it so that it may deal with it & ensure speedy justice. It has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . North, (1927) 1 K B. 491. Attention may be drawn to the observations of Scrutton L. J. in that case where both the facts & the law applicable to it are discussed. 61. Lord Scrutton L. J. observes : "A faculty having been granted to the vicar & churchwardens of the parish of Eye to do certain work in the church in connection with a war memorial, an existing fresco was distempered over, the obliteration not being provided for by the faculty. The daughter of the gentleman who had painted the fresco, not unnaturally, felt aggrieved. Whether the vicar was responsible for that improper proceeding is not a matter which we have here to decide. This is not an appeal from the Chancellor's decision. It is an application to the secular Court to prohibit further proceedings on an order of the Consistory Court on the ground that that order was made without jurisdiction, & that application has nothing to do with the merits of the case. There seems to be no doubt that if a special citation had been issued to the vicar by name reciting a petition that a faculty should issue ordering him to restore at his own expense the fresco which had been obliterated, the matter would have been e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that it is based on discrimination in the sense that it reserves evacuees for separate treatment not applicable to all classes. In the first place he says that the evacuee cannot be looked upon as a class; he can be only looked upon as an individual. In the second place, he urges that there, is discrimination as the Act applies only to certain parts & does not apply to other parts of the country. It is said that the powers given under the various sections of the Evacuee Property Act are vast in nature. They enable the Custodians to declare a person as an intending evacuee. They set up & establish new Courts. 66. It is obvious that in order that a law may be invalid, the opposition between the Constitution & the law must be of the clearest nature possible. It is a well established principle that it is incumbent on the Court to adopt such a construction of a statute as will, without doing violence to the language of the statute or the words used, reconcile it with the Constitution. We may refer to chap. 15 of Cooley on Constitutional Law at p. 198 where that learned author quotes with approval the following observations made in the case of Ogden v. Saunder, 12 wheat 213 at p. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey described the rule of law as one of the characteristics of the British Constitution. Of this rule of law one of the main features is, according to that great writer, 'equality before the law.' Professor Dicey contrasts it with the idea of droit administratif, or administrative law, which exists in many continental countries & concluded that by the expression 'equality before the law' which is one of the features of the rule of law, is meant, the equal subjection of all classes to the ordinary law of the land administered by the ordinary law Courts; the 'rule of law' in this sense excludes the idea of any exemption of officials or others from the duty of obedience to the law which governs other citizens or from the jurisdiction of the ordinary tribunals: there can be with us nothing really corresponding to the "administrative law" (droit administratif) or the "administrative tribunals', (tribunaux administratifs) of France" (See Ch. XII and Cf. Intoo pp lxvii, ante & Jennings, The Law and the Constitution, Edn. 2, 1948, App. 11), The notion which lies at the bottom of the 'administrative law' known to foreign countries is, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Legislatures & was intended to assist the Negroes who had been freed from slavery. Actually its application to all classes is regarded as one of the most important fundamental freedoms secured by the American Constitution. It has been the subject-matter of interpretation in numerous cases by the Supreme Court, & the process of interpretation which has been a long drawn out one cannot be said to be yet complete as new cases frequently crop up under the Article. Now on a superficial view, the guarantee assured by this clause might seem to require absolute uniformity in the treatment of all persons but actually this is not so. According to the interpretation given to it by American Courts, a considerable degree of variation permitting classification which is not arbitrary, unfair or based on unwarranted discrimination is allowed. What we mean to say is that where a reasonable basis can exist for treating one class of people in a different manner from others, the Courts uphold the classification. For example, it has been held that persons with large incomes & inheriting sizable estates can be made to pay more in aggregate taxes at a rate which becomes progressively higher. Notwiths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The emphasis is laid upon the words 'within the territory of India.' It is said that classification on a territorial basis is ruled out by the above words. We are unable to look upon these words as laying down that while classification is permissible in other spheres, the legislature must proceed upon the assumption that conditions in all parts of the country are indentical & make no distinction based upon territorial considerations if reasonable grounds exist for doing so. There may be circumstances which may justify differentiation between different parts of the territory. We can imagine restrictions being imposed on movement of persons in a disturbed area which it would be unjust to apply to other parts of the country. Similarly, it is possible for us to imagine cases where divergent economic conditions such as famine necessitate divergent economic orders on the basis of territorial classification. Famine conditions in one part may require restrictions & controls that may be considered unnecessary in other parts. The Constitution itself contemplates the possibility of different laws being passed for different States by their separate legislatures. Thus there is a territ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow according to Section 2(d) which we have already quoted, an evacuee is a person who according to Clause (1) left any place in a State for any place outside the territories now forming part of India for any of the three reasons given below: (i) on account of the setting up of the Dominions of India & Pakistan or, (ii) on account of civil disturbances, or (iii) the fear of such disturbances. 80. We fail to see anything unreasonable in this definition. After all it is a historical fact that there were disturbances & that on account of these disturbances or fear of them people did leave this country on or after 1-3-1947 The class of persons who are covered by the term 'evacuee' including those who were residents, in any place now forming part of Pakistan who for that reason are unable to occupy, supervise or manage in person their property. Obviously, the persons, who had ceased to occupy or were unable to occupy, supervise or manage in person their property, have to be cared for. We see nothing wrong with this definition. 81. We now come to the third clause. According to this clause, the evacuee is a person who has, after 14-8-1947 obtained, otherwise than by way of purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pporting the constitutionality of the Act. The presumption certainly is that legislatures act reasonably & full effect will be given to Acts passed by them unless they are so unreasonable, having regard to all the circumstances of the case, that no reasonable man could say that they could be reasonable. While the Courts have the ultimate responsibility of deciding whether the classification can be reasonable or not or whether the category of the classification can be reasonable or not, the Courts are bound to attach the greatest weight possible to the opinion of the legislature. On this part of the case we may quote the observations of Marshall C. J. in the famous case of Fletcher v. Peck 6 Granoh, 87, known as the Yazoo Land Fraud Case: "The question whether a law be void for its repugnancy to the Constitution is, at all times, a question of such delicacy which ought seldom, if ever, to be decided in the affirmative in a doubtful case. The Court, when impelled by duty to tender such a judgment, would be unworthy of its high station could it be unmindful of solemn obligation which that station imposes. But it is not on slight implication & vague conjecture that the legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bes its limits. Article 19(f) recognizes that human personality can develop only if all citizens have an equal right to be property holders. It guarantees that all citizens shall be equally free to hold, acquire or dispose of any property. In this sense the words "a citizen shall have the right to "must be interpreted as equal to" a citizen shall not suffer any disability from exercising his free choice to acquire, hold or dispose of property." 87. Dealing with Article 19 one of us said in Moti Lal's case: "Viewed in this light, these rights are in the nature of an absolute guarantee to the effect that there shall be no interference, by way of regulation, restriction or control, of any profession, trade or business They ate, it strikes me, rather intended to assure citizens that subject to such restriction, as the State may, at any time deem to be in the public interest by legislation, all persons shall have an equal right to carry on any profession, trade or business." (See Moti Lal v. Uttar Pradesh, A. I. R. (38) 1951 All. 257.) 88. Mr. Dhawan has argued that the idea underlying fundamental rights is that man has certain inalienable rights by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to exercise our discretion in favour of a party which has not been frank in its statement of the facts. 91. As regards prohibition, we should not be understood to have held that a Custodian is entitled to take possession of the property on the ground that some or all of the share-holders of the Company are evacuees or that for the purposes of the Evacuee Property Act a share holder in a Company must be deemed to have an interest in the property of the Company as defined by that Act. All that we hold is that in view of the language of the Evacuee Property Act it cannot be said that there was a patent lack of jurisdiction in the Custodian. We have already held that under Article 226 of the Constitution it is not possible to urge that any party has a right to a writ of prohibition as a matter of course & we are not entitled to disbar him from his remedy on the ground that he has deliberately tried to mislead the Court. In the circumstances we are satisfied that the application in regard to prohibition also must fail. 92. As regards the application by the Amin Agency Limited (writ Application NO. 288 of 1950) we have pointed out that under the Evacuee Property Act it is possible u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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