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TMI Blog1951 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ained licences for the supply of electricity under the provisions of the Indian Electricity Act, 1910. The memorandum of association of the two companies authorised each company not only to carry on the business of electricity supply but also several other objects enabling the company to carry on trade or business of various kinds. In G.O. No. Misc. 3496, dated 18th September, 1950 the Government issued a notification under section 4(1) of the Act declaring that the undertaking of the Narasaraopeta Electric Corporation under the licence shall vest in the Government of the State of Madras from 25th January, 1951 and called upon the Corporation to appoint an accredited representative under section 8 of the Act and also to submit inventories and all other particulars required under section 17 of the Act. A similar notification dated 2nd September, 1950, under section 4(1) of the Act was issued by the Government in respect of the Rajahmundry Electric Supply Corporation, Ltd., also fixing the date of vesting. In the first of the petitions the petitioner prayed for the issue of a writ of mandamus or other appropriate writ or directions restraining the State of Madras from taking over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With this object in view, the Electric Supply Act of 1948 (Act LIV of 1948) was placed on the Statute Book in September, 1948, its main object being to constitute a central electricity authority and to enable the Provincial Governments to constitute electricity boards. The powers and duties of these boards were defined by the Act. In 1949, the Government of Madras felt that the supply of electricity should be nationalised in order to ensure supply to other areas and also to extend the benefit of the electric power to rural aras for agricultural and other purposes. The result was the passing of the Madras Electricity Supply Undertakings (Acquisition) Act (Madras Act XLIII of 1949) which is now impugned as invalid. It received the assent of the Governor-General on 18th January, 1950, and after the Constitution came into force, was also certified by the President under article 31(6) of the Constitution. The Act applies to all undertakings of licensees whether they belong to individual owners or firms or corporations or companies or local authorities. Section 4 of the Act empowers the Government to take over any undertaking by order in writing declaring that the undertaking shall ves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve may be removed for causes specified in sub-section (4) to section 8 and the remuneration is payable to him from the compensation deposited under the Act. Under sub-section (6) of section 8 all assurances conveyed, and all statements made, by such representative shall be binding on the licensee. Section 10 empowers the Government to deduct from the compensation payable to the licensee under the Act the loss incurred by it by reason of certain transactions which are not bona fide and effected after 1st October, 1947. Section 11 deals with the deductions from the compensation and section 15 relates to the termination of managing agency agreements between the licensee and the managing agent or managing director. Section 16 provides for the termination by the Government of the services of the existing staff after giving notice and section 17 relates to inventories to be prepared and section 18 confers power on any officer or servant authorised by the Government in that behalf to enter upon any land or premises in the possession of the licensee to make a survey or examination or investigation for the purposes of the Act after giving due notice. Section 19 deals with the penalties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislative List), List II (Provincial Legislative List) and List III (Concurrent Legislative List)." The language employed is, it may be noted, "with respect to any of the matters enumerated." In the British North America Act, the expression used is "in relation to all matters." The language of the Government of India Act is analogous to the language employed in section 51 of the Commonwealth of Australia Constitution Act where also the expression "with respect to" occurs. Notwithstanding this difference in language, the meaning of both the expressions is, in my opinion, not materially different. The matter enumerated in item 33 of the Federal Legislative List, List I of the VII Schedule to the Government of India Act, is "Corporations, that is to say, the incorporation, regulation and winding up of trading corporation, etc." The subject-matter, therefore, is "corporations" in item 33 of List I and "Electricity" in item 31 of the Concurrent List and these are the legislative subject-matters with which we are concerned. The consequential effects of legislation are not the same as the legislative subject-matter. A legislation may have many results but in order to determine the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ascertain the class of subject to which it really belongs'." Is this is a law substantially with respect to corporations, or is it a law substantially with respect to trade? The regulation of trade combination is "the primary matter dealt with" (to use the phrase of Russel v. Reg. ) As Lord Watson said during the argument of Attorney-General for Ontario v. Attorney General for Quebec: " 'that which it' (the Act) accomplished, and that which is its main object to accomplish, is the object of the Statute (as distinguished from the motives which influenced the Legislature)." In that case, one of the questions for consideration was whether the Commonwealth Parliament was within its powers in enacting Sections 5 and 8 of the Australian Industries Preservation Act, 1906, which undoubtedly interfered with the domestic trade in a State. It was claimed on behalf of the Commonwealth Parliament that it had such a power under placitum 20 of section 5 1 of the Commonwealth of Australia Constitution Act which is as follows: "Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth." It was held that this power did not carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and must be limited to the manner in which a corporation may be brought into existence and how its business is to be conducted and how it should be dissolved. The Indian Companies Act provides for these matters. The Constitution, the management and the winding up of the companies are within the purview of this item. The company may carry on any business which is within the objects of the memorandum of association, i.e., within its capacity, but a State Legislature may under the appropriate item impose restrictions regarding the method or the manner in which a particular business or businesses should be conducted. It might impose restrictions regarding licences in respect of particular businesses, may acquire part of the business and may provide for various other matters relating to its activities. The activities and the functions and the business of a corporation are outside its constitution and management and therefore not within the exclusive legislative power of the Central Legislature. Under this item the Federal Legislature has power to create, protect and destroy an artificial person put the power does not extend to its functions and activities. The law with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies which have not been incorporated in the Province from taking proceedings in the Courts of the Province in respect of contracts made within the Province and also imposed penalties if the company carried on business in the Province without obtaining a licence. The question that had to be determined was whether the particular legislation in the Province was valid under the British North America Act. The power of the Legislature to make laws in relation to matters in item II of section 92, viz., "incorporation of companies with provincial objects," cannot extend to a Dominion company, the objects of which were extra-provincial. The Parliament of Canada, as laid down in The Citizens Insurance Company of Canada v. Parsons had the undoubted power under the subject "regulation of trade and commerce," to prescribe the limitations on the powers of companies the objects of which extend to the entire Dominion and the Provinces can only legislate without depriving a Dominion company of its status and powers which were conferred upon it by a Dominion legislation. As observed by viscount Haldane, L.C, at pages 340 and 341 of John Deere Plow Co. v. Wharton: "They do not des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on their business of trading in the Province unless registered or licensed therein. The legislation of the Province was held invalid and ultra vires. Viscount Haldane, L.C., states the position at page 100 in these words: "If therefore in legislating for the incorporation of companies under Dominion law and invalidly endowing them with powers, the Dominion Parliament has by necessary implication given these companies a status which enables them to exercise these powers in the Provinces, they cannot be in terfered with by any Provincial law in such a fashion as to derogate from their status and their consequet capacities, or, as the result of this restriction, to prevent them from exercising the powers conferred on them by Dominion law. Their Lordships, however, observed that when a company has been incorporated by the Dominion Government with powers to trade in any Province it may nonetheless, consistently with the general scheme, be subject to Provincial laws of general application, such as laws imposing taxes, or relating to mortmain, or even requiring licences for certain purposes or as to the forms of contract; but they were careful not to say that the sanctions by which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Provincial Legislature has no power to enact a law which affects the status and capacity of a Dominion company and also to sterilize and nullify such company from exercising its functions and activities in pursuance of the powers conferred upon it by a Dominion legislation. The two things, the status and capacity of a company on the one hand and the powers and activities and functions which it can exercise, are different and the power of the Dominion Parliament to legislate on these subjects is derived from two different sources, the former under the general power under section 91 and the latter under the power to regulate trade and commerce. But these decisions do not really help the petitioners in their contention that the impugned Act deprives a part of the business of the companies and therefore it is ultra vires the Provincial Legislature, as the subject-matter of legislation is within the exclusive competence of the Central Legislature under item 33. The preamble to the impugned Act states that the object is to make provision for the acquisition of undertakings in the Province of Madras engaged in the supply of electricity. The objects and reasons of the bill as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the transaction of receiving from depositors bank deposits repaying such deposits to the depositors is within the purview of the legitimate business of banking. The pith and substance of the Act which was impugned in that case related to the business of banking and it was held ultra vires the Provincial Legislature. Of course, if the Subject-matter of the legislation in question is undoubtedly and in substance and in effect within the power exclusively assigned to the Dominion Legislature, it is not open to the Provincial Legislature to trench on such a field with immunity. A legislation which transgresses the limits of the Provincial field will undoubtedly be ultra vires. Of course, as pointed out by the Judicial Committee in Attorney-General for Alberta v. Attorney-General for Canada, it is not open to either the Dominion Parliament or the Province under the guise or the pretence of exercising a legislative power in relation to a subject or subjects assigned to their respective jurisdictions to carry out the object so as to trespass on the jurisdiction of another. It follows that the impugned Act is intra vires the Provincial Legislature. The next point for consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause it only requires that provision should be made for payment of compensation for the property acquired either by fixing the amount of compensation or at any rate specifying the principles and the manner in which it has to be determined. It is no doubt true as appears in the Joint Parliamentary Committee Report that the framers of the Government of India Act, 1935, originally intended that the power of acquisition should be confined only to public purposes. But while a limited restriction in respect of acquisition of land is imposed by sub-section (3) of that section, there is no express language requiring that the acquisition should be only made if it is required for a public purpose, a power analogous to the power of eminent domain under the American Constitution. If the contention is open, it should have necessitated the consideration of the question whether or not the acquisition is for a public purpose and whether the compensation should be just compensation as required under the Australian and American Constitutions. It has been held in Missouri Pacific Railway v. State of Nebraska, that taking by a State of the private property of one person or corporation without th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Limits on the power of acquisition are prescribed by sub-clause (2) of Article 31 and sub-clauses (3) and (4) of the same article. Under the present Constitution in List I, the Union List, item 33 relates to "acquisition or requisitioning of property for the purposes of the Union" and in the State List, item 36 "acquisition or requisitioning of property, except for the purposes of the Union, subject to the provisions of entry 42 in List III (the Concurrent List)." Item 42 of that list is "principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given." The legislative power to enact a law relating to acquisition of property is derived from these items in the various lists. A person may acquire for himself and hold and dispose of property subject to reasonable restrictions which may be imposed by legislation under sub-clause (5) of Article 19, but all this is subject to the overriding power of acquisition conferred and recognised by Article 31. The impugned Act is not in any manner inconsistent with the fund ..... X X X X Extracts X X X X X X X X Extracts X X X X
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