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TMI Blog1950 (12) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ami, C.R. Pattabhi Raman and M. S.K. Aiyengar for the Petitioner. M.C. Setalvad, G.N. Joshi, P.A. Mehta and Rajinder Narain for Opposite Parties. JUDGMENT Kama, CJ. This is an application by the holder of one ordinary share of the Sholapur Spinning and Weaving Co. Ltd. for a writ of mandamus and certain other reliefs under article 32 of the Constitution of India. The authorized capital of the company is Rs. 48 lakhs and the paid-up capital is Rs. 32 lakhs, half of which is made up of fully paid ordinary shares of Rs. 1,000. each. I have read the judgment prepared by Mr. Justice Mukherjea. In respect of the arguments advanced to challenge the validity of the impugned Act under articles 31 and 19 of the Constitution of India, I agree with his line of reasoning and conclusion and have nothing more to add. On the question whether the impugned Act infringes article 14, two points have to be considered. The first is whether one individual shareholder can, under the circumstances 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the law, with which I entirely agree, the scope of the discussion on this petition is greatly restricted at least in regard to the first two fundamental rights. The company and the shareholders are in law separate entities, and if the allegation is made that any property belonging to the company has been taken possession of without compensation or the right enjoyed by the company under article 19(1)( f ) has been infringed, it would be for the company to come forward to assert or vindicate its own rights and not for any individual shareholder to do so. In this view, the only question which has to be answered is whether the petitioner has succeeded in showing that there has been an infringement of his rights as a shareholder under articles 31 and 19(1)( f ) of the Constitution. This question has been so elaborately dealt with by Mukherjea, J., that I do not wish to add anything to what he has said in his judgment, and all that is necessary for me to say is that I adopt his conclusions, without committing myself to the acceptance of all his reasonings. The only serious point, which in my opinion, arises in the case is whether Article 14 of the Constitution is in any way infri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying this guarantee, I wish to lay particular emphasis on the principle enunciated by him that any classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must bear a reasonable and just relation to the things in respect of which it is proposed. The petitioner's case is that the shareholders of the Sholapur Company have been subjected to discrimination vis a vis the shareholders of other companies, inasmuch as section 13 of the Act subjects them to the following disabilities which the shareholders of other companies governed by the Indian Companies Act are not subject to : "( 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." Prima facie, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated it are clearly set out. I am aware that legislative proceedings cannot be referred to for the purpose of construing an Act or any of its provisions, but I believe that they are relevant for the proper understanding of the circumstances under which it was passed and the reasons which necessitated it. A reference to the Parliamentary proceedings shows that sometime ago, a representation was made on behalf of a section of the shareholders of the Sholapur Company to the Rigistrar of Joint Stock Companies in Bombay, against the conduct of the managing agents, and the Government of Bombay was moved to order a special inquiry into the affairs of the company. For the purpose of this inquiry, two special inspectors were appointed by the Bombay Government and their report revealed "certain astounding facts" and showed that the Mill had been grossly mismanaged by the Board of Directors and 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. If anything, it will mean the Government will have to waste money which belongs to the taxpayer on an uneconomic unit. (3)There must be a technical report as regards the condition of the plants, machinery, etc., which either as they stand, or after necessary repairs and reconditioning can be properly utilised. (4)Lastly, and this is of considerable importance there must be a proper enquiry held before Government take any action. The enquiry should show that the managing agents have so misbehaved that they are no longer fit and proper persons to remain in charge of such an important undertaking." (Pages 2394-5 of Vol. III, No. 14, Parliamentary Debates, 31st March, 1950). It appears from the same proceedings that the Sholapur Mill is one of the largest Mills in Asia and employs 13,000 workers. Per shift, it is capable of producing 25 to 30 thousand pounds of yarn, and 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 Rs. 525 per share and the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peculiar to that country, but are recognized in every modern civilized State. Professor Willis dealing with the question of classification in exercise of police power makes the following observations : "There is no rule for determining when classification for the police power is reasonable. It is a matter for judicial determination, but in determining the question of reasonableness the Courts must find some economic, political or other social interest to be secured, and some relation of the classification to the objects sought to be accomplished. In doing this the Courts may consider matters of common knowledge, matters of common report, the history of the times, and to sustain it they will assume every state of facts which can be conceived of as existing at the time of legislation. The fact that only one person or one object or one business or one 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." (Page 580 of "Constitutional Law", 1st Edition, by Professor Willis). In this particular case, the Government initially took control of the Sholapur Company by mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution seeking relief against alleged infringement of certain fundamental rights of the petitioner. The petitioner is a shareholder of the Sholapur Spinning and Weaving Co. Ltd., Sholapur, in the State of Bombay, (hereinafter referred to as "the company"). The authorised share capital of the company consisted of 1,590 fully paid up ordinary shares of Rs. 1,000 each, 20 fully paid up ordinary shares of Rs. 500 each and 32,000 partly paid up redeemable cumulative preference shares of Rs. 100 each of which Rs. 50 only was paid up. Of these, the petitioner held one ordinary share in his own name and 80 preference shares which, however, having been pledged with the Bank of Baroda Ltd., now stand registered in the Bank's name. The company was doing flourishing business till disputes 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 (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order appointing directors to be that (1) the old directors shall be deemed to have vacated their office, (2) the contract with the managing agents shall be deemed to have been terminated, (3) that the properties and effects of the company shall be deemed to be in the custody of the new directors who are to be "for all purposes" the directors of the company and "shall alone be entitled to exercise all the powers of the directors of the company whether such powers are derived from the Companies Act or from the memorandum or articles of association or otherwise." section 5 defines the powers of the new directors. They are to manage the business of the company "subject to the control of the Central Government" and shall have the power to raise funds offering such security 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. Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich thus affects the petitioner and his co-shareholders, while leaving untouched the shareholders of all other companies, including those engaged in the production of essential commodities, denies to the petitioner the equal protection of the laws under article 14 of the Constitution, The correct approach to this question is first to see what rights have been conferred or protection extended to persons similarly situated. The relevant protection is to be found in the provisions of the Indian Companies Act which regulates the rights and obligations of the shareholders of incorporated companies in India. Section 21 of that Act assures to the shareholders the protection of the stipulations contained in the memorandum and articles of association by constituting them 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 var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, possess large powers of distinguishing and classifying the persons or things to be brought under the operation of such laws, provided the basis of such classification has a just and reasonable relation to the object which the legislature has in view. While, for instance, a classification in a law regulating labour in mines or factories may be based on age or sex, it may not be based on the colour of one's skin. It is also true that the class of persons to whom a law is made applicable may be large or small, and the degree of harm which has prompted the enactment of a particular law is a matter within the discretion of the law-makers. It is not the province of the court to canvass the legislative judgment in such matters. But the issue here is not whether 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us nothing in the record even by way of allegation which the petitioner need take steps to rebut. Supposing, however, that the impugned Act was passed on the same grounds as were mentioned in the preamble to the repealed Ordinance, namely, mismanagement and neglect prejudicially affecting the production of an essential commodity and causing serious unemployment amongst a section of the community, the petitioner could hardly be expected to assume the burden of showing, not that the company's affairs were properly managed, for that is not his case, but that there were also other companies similarly mismanaged, for that is what, according to the respondents, he should prove in order to rebut the presumption of constitutionality. In other words, 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 lockouts resulting in unemployment and cessation of production of essential commodities ? Would those compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid up ordinary shares of Rs. 500 each and 32,000 partly paid up cumulative preference shares of Rs. 100 each. The present paid up capital of the company is Rs. 32 lakhs, half of which is represented by the fully paid up ordinary shares and the other half by the partly paid up cumulative preference shares. The petioner states in his petition that he holds in his own right three ordinary shares and eighty preference shares in tree company, though according to his own admission the preference shares do not stand in his name but have been registered in the name of the Bank of Baroda Ltd., with which the shares are pledged. According to the respondents, the petitioner is the registered holder of one single ordinary share in the company. 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 acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, unless it is sanctioned by the Central Government, and the Central Government would be competent to impose any restrictions or limitations as regards application of the provisions of the Indian Companies Act to the affairs of the company. The only other material provision is that contained in section 15, under which the Central Government may, by notified order, direct that all or any of the powers exercisable by it under this Ordinance may be exercised by the. Government of Bombay. In accordance with the provisions of section 15 mentioned above, the Central Government, by notification issued on the same day that the Ordinance was promulgated, delegated all its powers 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, respondent No. 9 was appointed a director and respondent No. 5 having resigned his office in the meantime, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the powers conferred upon them by the enactments. The third and the material prayer is for issuing a writ of mandamus, "restraining the respondents 1 to 9 from exercising or purporting to exercise any powers under the said Ordinance or Act and from in any manner interfering with the management or affairs of the company under colour of or any purported exercise of any powers under the Ordinance or the Act." The other prayers are not material for our purpose. Before I address myself to the merits of this application it will be necessary to clear up two preliminary matters in respect to which arguments were advanced at some lengths from the Bar. 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. 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. Cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it aims at, is the enforcing of fundamental rights guaranteed by the Constitution, no matter whether the necessity for such enforcement arises out of an action of the executive or of the legislature. To make out a case under this article, it is incumbent upon the petitioner to establish not merely that the law complained of is beyond the competence of the particular legislature as not being covered by any of the items in the legislative lists, but that it affects or invades his fundamental rights guaranteed by the Constitution, of which he could seek enforcement by an appropriate writ or order. The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains of infraction of such rights and approaches the court for relief. This being the position, the proper subject of our investigation would be what rights, if any, of the petitioner as a shere holder 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently the respondents cannot take their stand on this very Act to defeat the application for a writ in the nature of a mandamus. Any way, article 32 of the Constitution gives us very wide discretion in the matter of framing our writs to suit the exigencies of particular cases, and the application of the petitioner cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for. Proceeding now to the merits of the case, the first contention that has been pressed before us by the learned counsel for the petitioner is that the effect of the Sholapur Spinning and Weaving Company Limited (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. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the title to the property admittedly remains in the original holder, though he is excluded from possession or enjoyment of the property. Article 31(2) of the Constitution itself makes a clear distinction between acquisition of property and taking possession of it for a public purpose, though it places both of them on the same footing in the sense that a legislation authorising either of these acts must make provision for payment of compensation to the displaced or expropriated holder of the property. In the context in which the word "acquisition" appears in article 31(2), it can only mean and refer ta 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the property and assets belonging to the company. The point for our consideration is a short one and that is whether by virtue of the impugned legislation any property or interest of the petitioner himself, as a shareholder of the company, has been taken possession of by the State or an authority appointed under it, as contemplated by article 31(2) of the Constitution. The petitioner as a shareholder has undoubtedly an interest in the company. His interest is represented by the share he holds and the share is a movable property according to the Indian Companies Act with all the incidents 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcised to the fullest extent as long as the management by the State continues. Whether the restrictions are such as would bring the case within the mischief of article 19(1)( f ) of the Constitution, I will examine presently; but I have no hesitation in holding that they do not amount to dispossession of the shareholders from these rights in the sense that the rights have been usurped by other people who are exercising them in place of the displaced shareholders. In the view that I have taken it is not necessary to discuss whether we can accept as 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes of the present case to enter into a discussion on this somewhat debatable point which has been raised by the learned Attorney-General. In interpreting the provisions of our Constitution, we should go by the plain words used by the constitution-makers and the importing of expressions like "police power", which is a term of variable and indefinite connotation in American law can only make the task of interpretation more difficult. It is also not necessary to express any opinion as to whether clauses (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the petitioner do not amount to dispossession of him from any property in the eye of law. It is argued that "holding" includes enjoyment of all benefits that are ordinarily attached to the ownership of the peoperty. The enjoyment of the fruits of a property is undoubtedly an incident of ownership. The pecuniary benefit, which a shareholder derives from the shares he holds, is the dividend and there is no limitation on the petitioner's right in this respect. 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts is neither necessary nor profitable for our present purpose but we think we can cull a few general principles from some of the pronouncements of the American Judges which might appear to us to be consonant with reason and help us in determining the true meaning and scope of article 14 of our Constitution. I may state here that so far as the violation of the equality clause in the Constitution is concerned, the petitioner, 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. It must be admitted that the guarantee against the denial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ordinance, which was a precursor of the Act, expressly stated why the legislation was necessary. It said that owing to mismanagement and neglect, a situation had arisen in the affairs of the company which prejudicially affected the production of an essential commodity and caused serious unemployment amongst a certain section of the community. Mr. Chari's contention in substance is that 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 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction with this legislation which have been referred to by my learned brother Fazl Ali, J., in his judgment and which would go to establish that the facts connected with this corporation are indeed exceptional and the discrimination that has been made can be supported on just and reasonable, grounds. I purposely refrain from alluding to these facts or basing my decision thereon as we had no opportunity of investigating them properly during the course of the hearing. As 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 "peculiar1" 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Ordinance No. II of 1950, concerning the Sholapur Spinning and Weaving Co. Ltd., (hereafter referred to as the said company). The preambles and the provisions of the Ordinace have been referred to in the judgment just delivered by Mukherjea, J., and need not be recapitulated by me in detail. Suffice it to say that the net result of 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 Indian Companies Act in its application to the 'said company. 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 appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or the Act or from in any manner interfering with the management of affairs of the company under colour of or in purported exercise of any powers under the said Ordinance or Act. The validity of the Ordinance and the Act has been challenged before us on the following grounds: ( i ) that it was not within the 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. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his or its property by authority of law tinder article 31 for, if lie or it has been so deprived, then the question of his or its fundamental right under article 19(1)( f ) will not arise. The relevant clauses of article 31 run as follows : "(1)No person shall be deprived of his property save by authority of law. (2)No property, movable or immovable including any interest in, or in any company owning, 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." 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 cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation, of almost the entire rights of the owner leaving to him only a few subsidiary rights. This result could not, in my opinion, have been intended by our Constitution. As said by Rich, J., in Minister for State for the Army v. Dalziel 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." The learned Judge then concluded as follows at page 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensation and "which is, as such, an infraction of the shareholder's fundamental right to property under article 31(2). Two questions arise on this argument. Are these rights "property" within the meaning of the two articles 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form prohibiting the deprivation of property except by authority of law. It implies that a person may be deprived of his property by authority of law. Article 31(2) prohibits the acquisition or taking possession 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 circumstance 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the undertaking and assets of the company through the new directors appointed by it without paying any compensation and, therefore, such law is repugnant to article 31(2) of our Constitution. 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 Mark by, 6th Edition, para. 371, page 192). In this view of the matter there is great force in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice on account of race pursuant to an Oklahama Act known as "The Separate Coach Law," in upholding the dismissal of the suit. Hughes, J., observed : "It is an elementary principle 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 complainant 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." In that case there was no allegation that anyone of the plaintiffs had ever travelled on any one of the rail roads or had ever requested any accommodation in any of the sleeping cars or that such request was refused. The same principle was laid down in Jeffrey Manufacturing Co. v. Blagg, Hendrick v. Maryland and Newark Natural Gas and Fuel Co. v. The City of Newark. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it did not make any allowance, as it did in the case of Indiana Corporations, where the Corporation 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 suing 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 apprehend, 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her shareholders for redressing the wrong done to the company, but that principle 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. 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 Co. v. Greane "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 circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t carry the burden 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 protection of law may l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary. 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. The Act is intituled as " 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 shareholders are subject and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o inequality, for the delinquent companies and their share, holders form 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 mismanagement and securing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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