1951 (4) TMI 27 - HC - Companies Law

Summary

Issues Involved:
1. Legislative Competence
2. Constitutionality of the Ordinance and Act
3. Violation of Fundamental Rights
4. Jurisdiction of the Court
5. Validity of the Custodian's Orders
6. Proper Service of Notice
7. Right to be Heard
8. Validity of Requisition by Custodian

Issue-Wise Detailed Analysis:

1. Legislative Competence:
The petitioners challenged the legislative competence of the Legislature to enact the Ordinance and Act. The Court held that the legislative competence must be interpreted broadly, and all ancillary powers necessary to legislate on the main topic are included. The Court concluded that the Legislature had the competence to legislate on the custody, management, and disposal of evacuee property, including declaring what constitutes evacuee property.

2. Constitutionality of the Ordinance and Act:
The petitioners argued that the legislation violated fundamental rights. The Court examined the scheme of the Ordinance and Act, noting that the legislation aimed to manage and administer evacuee property, not to transfer ownership to the State. The Court found that the property vested in the Custodian for administrative purposes, and the ultimate destination of the property was not determined by the Ordinance. The Court concluded that the legislation did not violate fundamental rights and was constitutional.

3. Violation of Fundamental Rights:
The petitioners contended that the legislation violated their rights to property under Articles 19 and 31 of the Constitution. The Court analyzed whether the legislation resulted in deprivation or taking possession of property. The Court held that the legislation did not transfer ownership or beneficial use to the State but vested property in the Custodian for administrative purposes. The Court further noted that Article 31(5) exempted legislation dealing with evacuee property from the requirements of compensation and public purpose under Article 31(2). The Court concluded that the legislation did not violate fundamental rights.

4. Jurisdiction of the Court:
The petitioners argued that the Court had jurisdiction to question the legality of the Custodian's actions. The Court held that Section 28 and Section 43 of the Ordinance did not bar the Court's jurisdiction to issue writs under Article 226 of the Constitution. The Court emphasized that the High Court's powers under Article 226 were beyond legislative challenge and could correct orders passed without jurisdiction or in violation of fundamental principles of justice.

5. Validity of the Custodian's Orders:
The petitioners challenged the Custodian's orders as being in excess of jurisdiction. The Court examined the scheme of the Ordinance and the powers conferred on the Custodian. The Court held that the Custodian's orders were quasi-judicial and could be corrected by a writ of certiorari if they were in excess of jurisdiction or violated fundamental principles of justice.

6. Proper Service of Notice:
The petitioners argued that the notice issued by the Custodian was not properly served. The Court examined Rule 5 of the Ordinance, which prescribed the manner and contents of the notice. The Court held that the notice must state the grounds with sufficient clarity and particularity to enable the person to defend their case. The Court found that the notice in question did not comply with the requirements and was invalid.

7. Right to be Heard:
The petitioners contended that they were not given a proper hearing before the Custodian passed the order. The Court noted that the notices issued to the shareholders were returned undelivered, and the shareholders had no notice of the inquiry. The Court held that the Custodian's order was passed in violation of the fundamental principles of natural justice, as the shareholders were not heard.

8. Validity of Requisition by Custodian:
The petitioners challenged the requisition issued by the Custodian to call an extraordinary general meeting. The Court held that the Custodian had the power to issue the requisition under Section 10(2)(1) of the Ordinance, exercising the rights of the shareholders. The Court found that the requisition was valid and did not affect the petitioners' rights.

Conclusion:
The Court concluded that the Custodian's order and notification were invalid to the extent that they affected the first petitioner's shares. The Court set aside the order and notification concerning the first petitioner's shares and declared that the shares had not vested in the Custodian. The Court made no order as to costs and granted liberty to the petitioner to withdraw the deposited amount.