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PETITIONER: DWARKADAS SHRINIVAS OF BOMBAY

       Vs.

RESPONDENT: THE SHOLAPUR SPINNING & WEAVING CO.LTD., AND OTHERS.

DATE OF JUDGMENT: 18/12/1953

BENCH: SASTRI, M. PATANJALI (CJ) BENCH: SASTRI, M. PATANJALI (CJ) MAHAJAN, MEHR CHAND DAS, SUDHI RANJAN BOSE, VIVIAN HASAN, GHULAM

CITATION:  1954 AIR  119            1954 SCR  674  CITATOR INFO :  R          1954 SC  92  (26)  R          1954 SC 728  (25)  R          1955 SC  41  (6,7)  E          1957 SC 676  (6)  R          1958 SC 328  (9,10,34)  F          1958 SC 578  (158)  R          1959 SC 308  (6)  D          1959 SC 648  (38)  R          1960 SC 554  (7,28)  R          1960 SC1080  (23)  RF         1961 SC1684  (28,29)  R          1962 SC 305  (29)  D          1962 SC 458  (24)  R          1963 SC1811  (14)  RF         1967 SC 856  (9)  RF         1967 SC1643  (179,227)  RF         1968 SC 394  (10,13)  R          1970 SC 564  (16,55,75)  RF         1970 SC2182  (7)  R          1971 SC1594  (9)  R          1973 SC 106  (42)  RF         1973 SC1461  (1057)  R          1978 SC 597  (67,157)  R          1978 SC 803  (35)  RF         1980 SC1682  (66)  RF         1982 SC 149  (604)  E&R        1987 SC 180  (10)  RF         1988 SC1136  (27,29)  F          1989 SC1629  (15)

ACT:      Sholapur.  Spinning  and  Weaving  Company    (Emergency  Provisions)   Ordinance II of 1950, replaced by Act   XXVIII  of    1950--Whether   ultra   vires   art.   31    of    the  Constitution--Arts. 19 and 31-- Scope of--Whether different.

HEADNOTE:    The  Sholapur   Spinning  and Weaving   Co.,  Ltd.,  was incorporated  under  the  Indian  Companies Act, 1913,  with

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an  authorised capital of Rs. 48 lakhs  divided  into   1590 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  cumulative  preference  shares of Rs. 100 each, the paid up capital of the Company being Rs. 32 lakhs  comprised of Rs. 16  lakhs fully’ paid up  ordinary shares and Rs.  16 lakhs   partly  paid  up preference shares,   Rs.  50  being unpaid on each  of the 32,000 cumulative  preference shares. The  Company did good business and declared high   dividends for some time ;’but in the year 1949  there was accumulation of stocks  and financial difficulties.  On  the  27th  July, 1949, the Directors gave notice of 675 their  decision  to  close the Mills  to  the  workers,  and pursuant   to  this  notice the  Mills  were  closed.   This created  a labour problem and to solve it the Government  on he   5th  October,   1949,   appointed  a   Controller    to supervise   the affairs  of  the Mills  under the  Essential Supplies   Emergency   Powers   Act,   1946.   On  the   9th November,  1949,   the Controller in order to  resolve   the deadlock  decided  to call in more capital  and  asked   the Directors  of the Company  to    make a call  of  Rs. 50 per share, on the preference shareholders,  the amount remaining unpaid  on each of the preference shares.    The   Directors refused  to  comply  with  this  requisition,  as  in  their judgment,  this  was not in the interests  of  the  Company. Thereupon  the Governor-General  on the 9th  January,  1950, promulgated  the impugned Ordinance,  under which the  Mills could be  managed  and run  by  the  Directors appointed  by the Central  Government.  On  the  9th  January,  1950,  the Central  Government  acting  under  s. 15 of  the  Ordinance delegated  all its powers  to  the  Government   of  Bombay. The   Government   of  Bombay   then    appointed    certain Directors  who took  over  the assets  and management of the Mills.  On the 7th  February, 1950, they passed a resolution making  a call of Rs. 50  on each  of the preference  shares payable   at  the  time  stated in the resolution.  Pursuant to  this  resolution  a notice  was addressed on  the   22nd February,  1950,   to the plaintiff  in the suit   who  held preference  shares,  to pay Rs. 1,62,000 the amount  of  the said call on or before the 3rd  April,  1950.  The plaintiff instead  of meeting the demand, filed the present   suit  on the  28th   March,  1950, in a  representative  capacity  on behalf  of  himself   and  other   preference   shareholders against  the  Company  and the Directors  appointed  by  the Government  of  Bombay  challenging  the  validity   of  the Ordinance  and questioning the right  of the  Directors   to make  the  call.   It  was alleged in  the  suit  that   the Ordinance  was  illegal  and ultra vires and invalid  as  it contravened  the  provisions   of  Section  299(2)  of   the Government  of India Act, 1935,  and the provisions of  Part III  of the  Constitution  and that the resolution  of   the Directors  dated 7th  February,  1950,  making a  call   was illegal  and ultra vires as the law under  which  they  were appointed was itself invalid.  The suit was dismissed by the Trial  Judge  and his decision was affirmed on appeal  by  a Division   Bench of  the Bombay High Court by  the  Judgment dated  29th  August,  1950.  The  plaintiff   preferred  the present   appeal  to  the   Supreme   Court.   This   appeal concerns  the  validity  of the same Ordinance and  the  Act replacing  it  which were considered by the Supreme Court in the  case  of  Chiranjit Lal Chowdhuri  (1950  S.C.R.  869). There   an  ordinary shareholder  of the defendant   Company holding  one fully  paid up share challenged  the   validity of  the   Sholapur   Spinning  and  Weaving  Co.  (Emergency

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Provisions)   Ordinance II of 1950 and Act  XXVIII of  1950, seeking  relief under Article 32 of the Constitution on  the ground  that the said. Ordinance and the   Act abridged  his fundamental  rights conferred on him under Articles  14,  19 and  31 of the Constitution.  The Supreme  Court   dismissed the petition by a majority of 676 3  to  2  holding that the  presumption in  regard  to   the Constitutionality   of the Act had not  been  displaced   by the  petitioner  and that it had not been proved   that  the impugned  statute was a hostile or discriminatory  piece  of legislation as against  him  or  that the State  had   taken possession  of his  share. The minority  held that  impugned statute   was   void  as  it  abridged  the     petitioner’s fundamental rights  under  Article  14 of the  Constitution. This  decision  was delivered  on 4th December,  1950.   The suit  giving rise to the present  appeal was decided by  the Bombay  High  Court  during the pendency  of  Chiranjit  Lal Chowdhuri’s petition in  the  Supreme Court:    Held,   (pet’  PATANJALI  SASTRI  C.J.,  MAHAJAN,  BOSE, and  GHULAM HASAN JJ.) (i) that the  impugned Ordinance  and the Act replacing it authorise in effect  a deprivation   of the  property   of   the Company  within   the   meaning  of Article  31 without compensation and are not covered by  the exception   in  clause  (5)(b)(ii)of  that   Article.    The Ordinance  and the Act thus violate  the fundamental  rights of the Company  under Article 31(2) of the Constitution  and the  appellant  as  a preference  shareholder  who is called upon to pay the moneys unpaid on his shares  is entitled  to impugn their constitutionality.    (ii)  that   the  previous  decision  of   the   Supreme Court  in Charanjit Lal Chowdhuri v. The Union of India  and Others(1)  is distinguishable and has no application  to the present case. Per MAHAJAN J.    (i)  Constitutional   provisions  for the   security  of person and property should be liberally  construed.  A close and  literal   construction  deprives  them  of  half  their efficacy and leads to gradual depreciation of the right,  as if it consisted more  in sound than in substance.  It is the duty  of   Courts to be    watchful for  the  constitutional rights    of   the  citizen  and   against    any   stealthy encroachments thereon. Boyd v. United States (2) referred to.    By   promulgating  the  Ordinance,  the  Government  has not merely taken over the superintendence of the affairs  of the Company but has in effect  and substance taken over  the undertaking  itself.  In the situation’ the contention   has no  force  that the effect of  the  Ordinance is  that   the Central Government has taken over the superintendence of the affairs of the Company  and that the impugned legislation is merely  regulative   in  character.   In  the  present  case ’practically  all  incidents  of ownership have  been  taken over  by  the  Sate  and nothing’ has  been  left  with  the Company but the mere husk  of title  and in the premises the impugned  statute has overstepped the limits  of  legitimate Social   Control  Legislation  and   has    infringed    the fundamental   right   of   the  Company  guaranteed   to  it under: Article 31(2) of the Constitution and is,   therefore unconstitutional. (1) [1950] S.C.R. 869.    (2) 146 U.S. 616 677 (ii) It is  significant that Article 31  deals  with private property of persons residing in the  Union  of India,  while Article 19 only deals  with  citizens defined in Article   5

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of  the  Constitution. It is  obvious  that  the  scope   of these   two  Articles  cannot be the same   as   they  cover different   fields.  The true approach to this  question  is that  these  two  Articles really  deal with  two  different subjects  and  one  has no direct relation  with  the  other amely.  Article 31  deals with the field of eminent   domain and  the whole boundary of that field is demarcated by  this Article.    From the  language employed in the different sub-clauses of Article  31 it  is  difficult  to  escape the  conclusion that  the words "acquisition"  and "taking possession"  used in  Article  31(2)   have  the  same  meaning  as  the  word "deprivation" in Article 31(1).    (iii)  Article  31   is   a   self-contained   provision delimiting the field  of eminent  and clauses (1) and (2) of Article   31  deal  with  the  same  topic   of   compulsory acquisition of property.    Article  31  gives   complete  protection   to   private property   as against executive  action,  no matter by  what process a person is deprived of possession of it.  It   is   a narrow  view that  "acquisition"   necessarily means  acquisition   of  title in  whole  or  part   of  the property and cannot be accepted.  The  word    "acquisition" has  quite  a   wide   concept,  meaning  the  procuring  of property  or the taking of it permanently  or   temporarily. It   does   not  necessarily  imply  acquisition   of  legal title  by  the State in the property  taken  possession  of. Minister of State for the Army v. Dalziel (68  C.L.R.   261) referred to. Per Das J.    (I)   As the  appellant as a preference  shareholder  is directly   affected    by   the  impugned   statute,   which circumstance  distinguishes  this case  from Chiranjit Lal’s case,  it must be held that the appellant is   entitled   to challenge  the   Ordinance  which  dismissed  the  Directors elected by the shareholders,  authorised the appointment  of Directors  by  the   State  and made  it  possible  for  the Directors  so appointed to make the call and thereby  impose a  liability  on all preference shareholders  including  the appellant.    (II) The  provisions  of the  Ordinance and the Act  are drastic  in   the  extreme.  The  Managing  Agents  and  the elected  Directors  have been dismissed  and  new  Directors have been appointed by the State.  So far  as  the   Company is  concerned  it  has   been  completely  denuded  of   the possession  of its property.  All that has been left to  the Company   is its  bare legal title.  It  is   impossible  to uphold  this  law as an instance  of the  exercise   of  the State’s police power as  an emergency measure.  It has   far overstepped  the  limits  of  police  power   and  is,    in substance,   nothing short  of expropriation by  way of  the exercise  of the power of eminent  domain and as the law has not   provided  for any  compensation it must   be  held  to offend the provisions of Article 31(2). 678 Per Bose J.    The   words  "taken  possession of"  or  "acquired"   in Article  31(2)  have  to  be  read  along  with   the   word "deprived"  in clause (1).  The  possession and  acquisition referred  to  in clause (2) mean the  sort  of  "possession" and  "acquisition"  that amount to "deprivation" within  the meaning   of  clause (1).    No hard and fast rule  can   be laid   down.   Each  case  must       depend  on   its   own facts.   But   if there is substantial   deprivation,   then clause (2) is attracted.

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Per GHULAM HASAN J.    The  Act in substance robs the Company of every  vestige of right, except what has been laconically  called the  husk of   the   title.    The   impugned   Act   oversteps    the constitutional  limits  of  the power  conferred  upon’  the State  and offends against the provisions of Article 31  and must therefore be held to be void.    The   intention    underlying  Article  31   being   the protection  of property against invasion by the State,  both parts (1) and (2) of Article 31  should be  read together so as to harmonize that intention. The two parts of the Article form  an integral whole and cannot be dissociated from  each other.   Article  31 is wider than  Article  19(1)(f)  which confers  upon a citizen only the right to acquire, hold  and dispose of property and is different in scope and content.    Chiranjit   Lal   Chowdhuri v. The  Union of  India  and Others  ([1950]  S.C.R. 869)  distinguished,  The  State  of West  Bengal  v. Subodh  Gopal  Bose  and   Others   ([1954] S.C.R.   587),   Boyd  v.  United  States  (116  U.S.  616), Pennsylvania  Coal  Co.  v. Mahon (260   U.S.   322),   A.K. Gopalan v. The State of Madras  ([1950] S.C.R. 88), State of Bihar v. Maharajah Kameswar Singh and Others ([1952]  S.C.R. 889),   Minister  of   State for the Army  v.   Dalziel  (68 C.L.R.  261),  Tan Bug Tain v. Collector of  Bombay  (I.L.R. 1946  Bom. 517),  and  Jupiter  General  Insurance   Co.  v. Rajagopalan (A.I.R. 1952 Punjab 9), referred to.

JUDGMENT:     CIVIL  APPELLATE  JURISDICTION:   CIVIL  APPEAL No.  141 of 1952. Appeal  from  the Judgment and Order dated the  29th  August 1950   of  the   High   Court   of   Judicature   at  Bombay (Chagla   C.J.  and  Gajendragadkar  J.)  in Appeal  No.  48 of  1950 arising out of  the  Judgment and Decree dated  the 28th  June, 1950, of the said High Court  (Bhagwati J.)   in its   Ordinary Original  Civil Jurisdiction in Suit No.  438 of 1950.     M.P.  Amin (M. M. Desai and K.H. Bhabha, with  him)  for the appellant. 679       M.C. Setalvad,  Attorney-General  for  India  and  C.. K.  Daphtary,   Solicitor-General  for  India (G. N.  Joshi, with them)  for respondents Nos. 1 to 4 and  6  tO 8.      M.C.  Setalvad,   Attorney-General  for  India  (G.  N. Joshi and Porus A. Mehta, with  him)  for  respondent No. 9.      1953.   December  18.   The  following  Judgments  were delivered.     PATANJALI  SASTRI  C.J.--I  have  fully  discussed   and explained   the meaning and effect of articles 19 and 31  in my  Judgment   just  delivered in Civil Appeal  No.  107  of 1952--The  State  of  West Bengal v. Subodh Gopal  Bose  and Others.  On that view I agree with my learned brothers  that the impugned Ordinance authorises, in effect, a  deprivation of  the  property  of the Company  within  the  meaning   of article  31 without compensation and is not  covered      by the  exception in clause (5)(b). (ii) of that article.   The Ordinance   thus   violates  the fundamental  right       of the. Company under article31(2), and the appellant      as a preference shareholder who is now  called  upon      to  pay the  moneys  unpaid on his shares is  entitled    to  impugn the constitutionality of the Ordinance. I  also  agree  with my   learned  brother Mahajan  that  the  previous  of  this Court in  Chiranjit Lal Chowdhuri v. The Union of India  and

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Others(2) is distinguishable  and  has no application   here for  the reasons mentioned by him. MAHAJAN  J.--This  is an appeal from  the  judgment      and decree of the High Court of Judicature at  Bombay ’passed on the 29th day of  August, 1950, in Appeal No. 48 of 1950.     The  appeal concerns the validity of the same  piece  of legislation that was considered by this court in the case of Chiranjit Lad Chowdhuri (2). There, an ordinary  shareholder of the  defendant company  holding  one fully paid up  share claimed relief under Art. 32 of the  Constitution  of  India on   the  ground  that  the provisions   of   the   Sholapur Spinning  &  Weaving Company   (Emergency  Provisions)  Act, XXVIII  of (1) [1954] S. C. R 587.           (2) [1950] S. C. R. 869. 680 1950  abridged   his  fundamental   rights  conferred  under Articles 14,  19 and 31  of the Constitution.  This Court by a majority of 3 to 2  dismissed  the  petition holding  that the  presumption in regard  to the  constitutionality of the Act had not been displaced by the petitioner and that it had not  been proved that the impugned statute  was  a   hostile or  a  discriminatory  piece  of legislation as against him, or  that   the State had taken possession  of   his   share. The  minority  held  that the impugned  statute   was,  void as   it   abridged   the         petitioner’s    fundamental rights        under  Art.  14       of    the  Constitution. This      decision      was     delivered        on      4th December, 1950.   The  suit out of which this appeal arises was  decided  by the  High Court of Bombay during  the pendency of  Chiranjit Lal  Chowdhuri’s petition in this court.  Most of the  facts furnishing   the  cause of action  for the  suit  have  been detailed   in  the  judgment  of this court in  that   case, but   it  seems  necessary to  briefly re-state them from  a proper appreciation of the contentions that have been raised in the appeal.   The  Sholapur  Spinning  and  Weaving  Company  Ltd.,  was incorporated   under   the  Indian  Companies  Act  with  an authorized   capital  of  Rs.  48 lakhs  divided into  1,590 fully  paid up ordinary shares of Rs. 1,000 each,  20  fully paid  up   ordinary shares of 500 each,  and  32,000  partly paid  up  cumulative  preference  shares  of Rs.  100  each, the  paid  up  capital of the company  being  Rs.  32  lakhs comprised  of Rs. 16 lakhs  fully  paid up  ordinary  shares and Rs. 16  lakhs partly paid up preference shares,  Rs.  50 being  unpaid on each of the 32,000  cumulative   preference shares.  The   company did  good   business   and   declared high  dividends for some time;  but in the year 1949,  there was  accumulation of  stocks  and  financial   difficulties. In   order   to  overcome  this   situation   the  directors decided  to  close the Mills  and on the 27th  July,   1949, they  gave  notice  of  this  decision   to   the   workers. Pursuant   to  this notice  the Mills were  closed   on  the 27th August, 1949. This  created  a labour  problem and   to solve  it  the  Government  on   the   5th  October,   1949, appointed, a 681 Controller to supervise  the affairs  of the Mills under the Essential Supplies  Emergency  Powers  Act, 1946. On the 9th November,  1949,  the Controller in order  to  resolve   the deadlock  decided to call in more capital and he asked   the directors   of  the company  to make a call of  Rs.  50  per share  on the preference shareholders, the amount  remaining unpaid  on each of the preference  shares.   The   directors refused   to   comply  with this requisition,  as  in  their

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judgment  that  was not in the interest  of   the   company. Thereupon   the   Governor-General  on  the   9th   January, 1950,   promulgated the impugned Ordinance, under which  the Mills could be managed  and run  by  directors appointed  by the  Central  Government.  On  the  9th  January, 1950,  the Central   Government  acting  under   section   15  of   the Ordinance  delegated  all its powers to  the  Government  of Bombay.    The   Government   of   Bombay   then   appointed certain directors who took  over  the assets and  management of  the  Mills. On the 7th February, 1950,  they  passed   a resolution   making  a  call   of Rs. 50  on   each  of  the preference  shares  payable  at  the  time  stated  in   the resolution.   Pursuant  to  this  resolution a  notice   was addressed on  the 22nd February,  1950, to the plaintiff  in the suit,  who held preference shares, to pay Rs.  1,62,000, the  amount of the said call on  or before  the 3rd   April, 1950. The plaintiff instead of meeting the demand, filed the present  suit on the 28th March, 1950,  in a  representative capacity   on  behalf  of  himself  and   other   preference shareholders   against   the  company   and  the   directors appointed  by  the   Government of  Bombay  challenging  the validity   of the Ordinance and questioning  the  right   of the directors to make the  call.   On the 19th April,  1950, a  notice was  given to  the  Attorney-General  of India  of the   said   suit  and   the Union of  India  was  added  as defendant No. 9 therein.     The  principal  allegations  in the  suit were  that the Ordinance   was  illegal,  ultra vires  and  invalid  as  it contravened   the  provisions  of  section  299  (2)of   the Government  of  India Act, 1935,  and  all  the   provisions contained in Part III  of  the  Constitution,  and  that the resolution of the  directors  dated 7th February, 7--95 S.C. India/59. 682 1950,  making  a  call  was illegal and ultra vires, as  the law under which they were appointed was itself invalid.  The plaintiff  claimed  relief  in  the  form  of a  declaration regarding the invalidity of  the  Ordinance and prayed   for an  injunction   restraining   the  directors  from   giving effect   to   the  resolution.  The defendants  denied   the correctness    of  the  contentions   put  forward  by   the plaintiff.     Mr.   Justice  Bhagwati,  who tried  the  suit,   framed the following issues therein :-- 1.  Whether  by the  Ordinance  the  plaintiff  and  holders of   preference   shares   have  been   deprived   of  their interest in the Ist defendant   company by taking possession of  or  requisitioning or acquiring the same as  alleged  in para  6 of the plaint; 2. Whether s. 4 (d)  or’  the   Ordinance is  illegal, ultra vires, and void in law as alleged; and 3.  Whether   the   resolution  dated   the  7th   February, 1950,  made  by defendants 2 to 6 is illegal,  ultra  vires, void  and  inoperative  in  law  for  the  reasons mentioned in para  6 of the plaint or any of them. By his  judgment  dated  the 28th  June,  1950,  the learned Judges  answered  all the three issues in the  negative  and dismissed   the  suit,and  this  decision was  affirmed   on appeal.  It  was held that by  force of the  Ordinance   the State  had neither acquired  the property of the  plaintiff, nor of the company, nor had it taken possession  of it,  but that  the  title  to the property  and  its  possession were with  the   respective  owners,  and  the  State  was   only supervising   the  affairs  of   the  company  through   its nominated    directors.   It  was  further  held  that   the

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Ordinance  had not in any manner infringed  the  rights   of the   plaintiff   under  Art. 14 of   the  Constitution  and there  had been to him no denial of equality before the  law or equal protection  of  laws, as  the  Ordinance was  based on  a classification  which rested  upon  a  ground   having a fair  and  substantial  relation  to  the  object  of  the legislation  and  that it had a reasonable  basis  for  that classification.  It was  also held that the restrictions 683 imposed  on  the right of the appellant and the  company  to hold  his or its  property were imposed in the interests  of the general public. The principal  questions for  consideration  in  this appeal are :--   1. Whether  the provisions  of  the  Ordinance for  taking over   the  management and administration  of the   company, contravene   the  provisions   of  article  31  (2)  of  the Constitution; and   2.  Whether  the   Ordinance  as a whole  or  any  of  its provisions infringe articles  14 and 19 of the Constitution.     In   order  to decide  these  issues it   is   necessary to  examine  with  some  strictness  the  substance of   the legislation  for the purpose of determining what it is  that the  legislature  has really  done;  the  court,  when  such questions   arise,   is  not  overpersuaded   by   the  mere appearance    of   the   legislation.   In    relation    to constitutional  prohibitions binding  a  legislature  it  is clear  that the legislature cannot disobey the  prohibitions merely   by   employing   indirect    method   of  achieving exactly   the same  result.  Therefore,  in  all such  cases the  court  has  to  look   behind  the  names,  forms   and appearances to  discover  the  true  character and nature of the legislation. The  preamble  of the’ Ordinance states  :--      "On account of mismanagement  and  neglect a  situation has arisen in the affairs of the Sholapur Spinning & Weaving Company,  Ltd.,  which has  prejudicially   affected    the’ production   of  an  essential commodity  and   has   caused serious   unemployment  amongst  a certain  section  of  the community".     Section 3 is the most material  section  and is in these terms :--     "The  Central  Government  may at any  time  by notified order  appoint  as  many  persons as it  thinks  fit  to  be directors of the  company for the purpose of taking over its management and  administration  and may appoint one of  such directors to be the chairman." 684     The provisions of  this section are supplemented by what is  subsequently  provided for in section 12 which  provides that  notwithstanding anything  contained  in the  Companies Act  or in the memorandum or articles of association of  the company,  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,   that  no resolution   passed at any  meeting of the  shareholders  of the company  shall be given  effect  to unless  approved  by the   Central  Government, and that 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, and subject to such exceptions, restrictions and limitations as  the Central Government may by .notified  order  specify, the  Companies  Act  shall  continue to apply to the company in  the same manner as it applied thereto before  the  issue

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of  the notified  order under section 3. Section  .4  states the  effect  of  the  order  of  the   Central    Government appointing    directors.    It  provides   that    all   the directors   of   the  company who were  holding  office   as such  immediately  before  the issue of the notified   order shall   be  deemed  to  have vacated  their   offices.    In other  words,  the directors elected  and  appointed by  the shareholders  stand automatically dismissed  without   more. Not  only  do the  directors stand  automatically  dismissed by   legislative  action the  managing agents   also   share their fate  and  their contracts  come to  an end.   Section 4  directs  the persons appointed under section 3  to   take into  custody   and under  their control all  the  property, effects  and  actionable claims to which the company  is  or appears  to be entitled and to exercise all the  powers   of the   directors of the  company, whether those  powers   are derived  from the Companies Act or from  the  memorandum  or articles of association or from any other source. By section 5  these  nominated directors  are  given powers   to  raise funds  in such manner  and  offer  Such security   as   they may  deem fit.  They  are  given  the  overriding power   of cancelling  and  varying  contracts and  agreements 685 entered into  between the  company  and’ any other person at any  time  if they are satisfied that the  contract  or  the agreement  is  detrimental to  the  interests  the  company. Section  10  denies to the managing agents compensation  for the’  premature  termination of the contract  of  management entered into by the company and it also says that no  person shall be entitled to compensation  in respect of a cancelled or varied contract under this. Ordinance, entered into  with the  company.  The Ordinance  thus  confers  powers  on  the directors  of overriding all contracts and deprives  persons who  had  entered into contracts with the company  of  their right  under  the  ordinary law  to,  recover  compensation, Sections  6, 7  and 8 of the  Ordinance lay down, the method and’  manner how the existing directors were to give  charge of   the  company’s  affairs  and   properties.    to    the directors   nominated   by  the   Central  Government  under section  3  and any default in the matter  of  handing  over charge is made punishable by imprisonment or other  punitive action. The    result   of  these  provisions   is  that   all   the properties and effects of the company pass into the hands of persons  nominated  by the Central Government  who  are  not members of the company  or its  shareholders, or in any  way connected  with it,  and who are  merely the  creatures   of the   Central    Government  or its dummies.   The  combined effect  of the provisions of sections 3, 4 and 12  is   that the    Central   Government  becomes   vested    with    the possession,   control  and management of the  property   and effects   of  the  company, and the normal function  of  the company  under  its articles and the  Indian  Companies  Act comes  to an  end.  The  shareholders’  most valuable  right to  appoint directors to manage the affairs of  the  company and be in possession of its  property  and  effect is  taken away.   Resolutions   passed by  them  lose all  vigour  and become subject to the veto of the Central Government.  Their power of voluntarily winding up the company formed  by  them or  of winding it up through court also becomes  subject  to the   veto  of  the  Central   Government.   The     Central Government  by 686 executive   action  can  override,  if  it  likes,  all  the provisions   of  the Indian  Companies  Act.   In  substance

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therefore  by the provisions of this Ordinance  the  company and its shareholders as well as ’its directors and  managing agents  have  been  completely  deprived  of possession   of the   property   and effects  of  the  company,    and   its possession   has  been  taken  by  the  Central  Government, i.e.,  by  the Union of India. The undertaking  purports  to have been  taken  over for a public purpose, namely, to keep up  the production of an essential commodity, and  to  avoid serious  unemployment  amongst  a  certain  section  of  the people. The  majority  of  the court  in   Chiranjitlal  Chowdhuri’s case(1),  was  inclined to take the view that that  was  the true    effect   of  the  provisions   of   the   Ordinance. Mukherjea  1.  with whose views  Kania C.J., concurred,  and to  whose views to a certain extent Fazl Ali 1.  subscribed. on this part of the case said as follows :-    "Mr. Chaff,  on the other hand, has  contended  on behalf of the petitioner that after the management is taken over by the  statutory   directors,  it  cannot  be  said  that  the company  still   retains  possession  or  control  over  its property  and assets.  Assuming that this  State  management was imposed in the interests of the shareholders  themselves and   that   the   statutory  directors are  acting  as  the agents  of  the  company, the possession  of  the  statutory directors  could  not, it is argued, be regarded in  law  as possession of the company so long as they are bound  to  act in  obedience to the dictates of  the   Central   Government and  not of the company itself  in the   administration   of its   affairs.  Possession of an agent, it is  said,  cannot juridically be the possession of the principal, if the agent is to act not according to the  commands or  dictates of the principal, but under the direction of an exterior authority.     There  can  be  no doubt that there  is  force  in  this contention."     Mr.  Justice  Patanjali  Sastri, as he  then  was   held that the effect of the Act was that all  the properties  and effects of the company passed into the absolute (1) [1950] S.C.R. 869. 687 power  and control of the Central Government and the  normal function  of  the company as a corporate body came   to   an end.   Mr.  Justice Das on this part of  the  case  said  as follows :-     "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.  In  this  view of the matter there is great force in the argument that  the property of the company has been  taken possession of by the State   through  directors who have been  appointed  by  the State  in  exercise   of  the  powers   conferred  by    the Ordinance  and the Act and who are under the  direction  and control   of  the  State  and this has  been   done  without

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payment  of any   compensation   ......................Here, therefore,  it may well be argued  that  the property of the company  having been taken possession of by  the  State   in exercise   of  powers   conferred by a law  which  does  not provide  for payment of any  compensation,  the  fundamental right  of  the  company has, in the eye  of  the  law,  been infringed."     The  learned Attorney-General  combated  this  view  and strenuously argued that the Ordinance could not be construed in the manner  suggested above and on  its true construction its   effect   was   that the   Government  took  under  its superintendence  the affairs of the  company without in  any way  disturbing  its  title in the  property  and  that  the shareholders  have still to a certain extent  an   effective voice  in  its  affairs.  Illustratively 688 he  said  that’  the  company was in the  same  state  as  a disqualified  owner is under the provisions of the Court  of Wards  Act and that the provisions of the  Ordinance  should be   construed   in  that  light.  To  emphasize   the  same point of view reference was also made to the provisions   of the  Lunacy   Act,  the  provisions of  sections  52-A   and 52-B   introduced  in the Insurance Act by Act 47  of  1950, the provisions of the Railway  Companies  Emergency   Powers Act   (51  of 1951), and also to the provisions of  Act   65 of  1951  (Development  of  Industries  Act),  and  it   was contended  that the impugned  Ordinance  was  a   piece   of social control. legislation as were the provisions contained in the statutes referred to above.       In  my  opinion,  these  contentions. are   not   well founded.  Reference  to illustrative pieces  of  legislation designed   on the same pattern  is  neither very  happy  nor apposite;  on the other hand, it is apt to  mislead  because except  in the case of the Court of Wards Act, all the  laws to which reference was made were enacted after the enactment of the Ordinance in question.  The different Court of  Wards Acts  being  existing  laws  have  been  excepted  from  the fundamental  right  guaranteed by article31 (2). That  being so,  they  can  afford  little  assistance  in  judging  the validity   of   the   impugned   law.   In    dealing   with constitutional   matters of this kind it is always  well  to bear  in  mind  what  Bradley,  J., speaking for  the  court said in Boyd v United States(1) at page 635 :--      "Illegitimate   and   unconstitutional   practices  get their  first  footing  in  that  way,  namely,   by   silent approaches  and  slight  deviations  from  legal  modes   of procedure.   This  can only be obviated by adhering  to  the rule that  constitutional  provisions  for the  security  of person  and property  should be  liberally  construed.     A close  and literal construction deprives them of half  their efficacy and leads to gradual depreciation of the right,  as if  it consisted more in sound than in substance. It is  the duty of courts to be watchful for the constitutional  rights of  the  citizen  and  against  any  stealthy  encroachments thereon," (1) 116 U.S. 616. 689     These  illustrative pieces of’ legislation to which  the learned  Attorney-General  made  reference  may   well  have to  be  judged  in  the light  of  these  observations  when occasion   arises.  Reference  may  also  be  made  to   the observations   of  Holmes  C.J. in Pennsylvania Cod  Co.  v. Mahon(1), wherein that learned Judge said as follows :-     "As long  recognized,  some  values  were  enjoyed under an  implied  limitation and must yield to police  power  but

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obviously  the implied  limitation must have its  limits  or the contract  and due process  clauses  are gone.  One  fact for  consideration  in  determining  such  limits   is   the extent   of  the  diminution.  When  it reaches  a   certain magnitude, in most, if  not    in  all cases,  there must be an exercise of eminent   domain and compensation to  sustain the act."     In my judgment, in the determination of  all  such cases no  abstract standard or general rule can be laid  down  and the  question  is  really  one  of  degree  and  hence   its determination depends  on the facts-of each case.  In  these circumstances,  what is  to be  determined  here  is:whether the  provisions of the Ordinance have not  overstepped   the limits  of  social  legislation and whether they do not come within the ambit of article 31 (2).     The   Ordinance  in question is not a law of  a  general character and’ applicable  to  all companies  that  may fall in  a  particular category or class. It deals  only  with  a single   company    and  it  is  difficult   to   say   that mismanagement   is  a vice  peculiar to this  company  alone and  good  management ’is a virtue  possessed  by all  other incorporated companies. That being so, can it  be reasonably held  that  by  promulgating  this Ordinance the  Government has  merely taken over the superintendence of   the  affairs of the company ?  Or, has it in  effect and substance  taken over  the under  taking itself ?  Obviously,  the  field  of superintendence  has  to be’ demarcated from  the  field  of eminent  domain. It is one thing to superintend the  affairs of  a  concern and it is quite’ another thing to  take  over its  affairs (1) 260 U.S. 322 690 and  then  proceed  to carry on ,its trade   through  agents appointed   by  the  State  itself.  It  seems  to  me  that under the guise of superintendence the State is carrying  on the  business  or  trade   for   which.  the   company   was incorporated with the capital of the company but through its own  agents who take orders from it and are appointed by  it and   in  the  appointment  and   dismissal  of   whom   the shareholders  have  absolutely  no voice.  The  purpose   of taking over the company’s  undertaking is a public  purpose, namely,   to  keep the labour going and  contended  and   to maintain  the  supply  of  essential commodity.  The company is  debarred  from carrying on  its  business in the  manner and  according  to  the terms  of  its   charter.   Its  old complexion    stands changed by the terms of the  Ordinance. The  Ordinance  overrides   the   directors,   deprives  the shareholders   of  their  legal rights  and  privileges  and completely  puts  an  end to the contract  of  the  managing agents.  Without   there    being   any   vacancy   in   the number  of directors new directors step in and old directors and managing  agents  stand  dismissed.   Exercise  of   any power  by  them  under  the articles  is  subject  to  heavy penalties.   In  this   situation it  is  not  possible   to subscribe    to    the    contention    of     the   learned AttorneyGeneral that the effect of the Ordinance is that the Central  Government has  taken over  the superintendence  of the   affairs  of  the  company   and   that   the  impugned legislation  is  merely  regulative  in  character.  In  the present  case, practically all incidents of  ownership  have been  taken over by the  State and  all  that has been  left with  the company is mere paper ownership.  This  Ordinance, in  my judgment, is an apposite illustration of what  Holmes C.  J. had in mind when he made  the following  observations in the case already referred to :-

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    "Where    the   seemingly    absolute   protection   in respect  of private  property  given  by the Constitution is found  to  be qualified by the  police  power,  the  natural tendency  of  human  nature  is  to extend the qualification more    and   more   until   at   last    private   property disappears. We are  in  danger of forgetting that  a  strong public  desire  to  improve  the  public 691 condition is  not  enough  to  warrant  achieving the desire by  a shorter cut than the  constitutional  way   of  paying for  the  change  and that the general rule  is  that  while property  may be  regulated to a certain  extent but if  the regulation goes too far it will be recognized as a taking."     For  the reasons  given above I am of the  opinion  that the  impugned  statute   has  overstepped   the   limits  of legitimate social control legislation and has infringed  the fundamental  right  of the  company  guaranteed to it  under article   31(2)   of  the  Constitution  and  is   therefore unconstitutional.   Next     it   was   contended  that   the   Ordinance   in question  in  any  event could  not fall within the mischief of  article  31 (2)  because  the  State  had  not  acquired title    in  the  property   of  the   company   under   its provisions  and that  whatever  possession had   been  taken had  been  taken for the purpose of managing  the  company’s property on the company’s behalf and  that it had not   been requisitioned   for   any  State  purpose.   It   was   said that   unless   the   property  of  the   company   by   the provisions of  the  Ordinance  was  vested  in the State  or was  commandeered  by       the State  for  State  purposes, article   31  (2)   could  not  be  invoked  to  judge   the constitutionality   of the  Ordinance,  that article 31  (2) covered  within  its  ambit  only two  forms  of  taking  of property  by  the  State, namely, where the  State  acquired title  in  the  property  or  where  the  State  temporarily commandeered  it,  and that all other forms  of  taking  the property   were  outside the  fundamental right   guaranteed by  article 31 (2). It was  suggested that  the   scope   of the    protection  given   to   private  property  by    our Constitution  was not as large  as it was contained  in  the Fifth  Amendment of the Constitution  of the United   States of America.  According to the learned Attorney-General,  the true  content  of  the  fundamental   right  guaranteed   by article  31 (1)  was that a person could not be deprived  of his property except  by  statutory  authority,  but  once  a law   was made depriving  a  person  of his  property   then the  article afforded  no further protection.   Support  for this 692 contention  was  sought  to be derived  from  the  reasoning employed in Gopalan’s case (1). There  it was held that  the freedoms relating to the  person of a citizen guaranteed  by article   19 assume the-existence of a free citizen and  can no  longer  be enjoyed  if a citizen  is  deprived   of  his liberty by  the law of preventive or punitive detention.  In like  manner it was argued that the  freedom   relating   to property   guaranteed   by article  19  also   vanished   as soon   as  a person was deprived  of his property  under   a law  enacted  by an appropriate  legislature.  The   learned Attorney-General  suggested that the two clauses of  article 31  were in the nature of two exceptions  to the  provisions of  article  19 (1) (f). The first exception  was  that  the guarantee  of  freedom given by article 19 (1)(f)  could  be defeated  simply   by  enacting a statute   and  the  second exception  was that it could  also be defeated by the  State

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acquiring title’ in the property in exercise of its power of eminent;  domain’  within the limited  field  prescribed  by article   31 (2)  but  that  if  a certain  deprivation   of property  did not fail  within  the prescribed’ field     of article 31 (2)  and fell within article 31 (1), then     for such   deprivation  no  compensation  was  payable.       As regards  clause   (5) which excepted certain laws  from  the ambit  of article  31 (2),  it was argued that  this  clause had   been  inserted  in  the  article  by way  of  abundant caution.     In  my  judgment, none of these’  contentions  have  any validity.  The  construction  sought to  be  placed  by  the learned  Attorney-General  on the language of article 31  is neither  borne  out  by the  phraseology  employed  in  that article   nor  by   the   scheme   of   Part  III   of   the Constitution.  It seems  to me that our Constitution subject to    certain   exceptions  has    guaranteed   the  fullest protection  to private property.  It has not  only  provided that  no  person   can be  deprived   of  property  by   the executive  without   legislative   sanction   but   it   has further  provided  that even the legislature  cannot deprive a  person of his  property unless there is a public  purpose and’  then  only on payment of  compensation.  This  article provides as follows :-- (1) [1950] S.C.R. 88. 693     "31.  (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.     (3) No such law as is referred to in clause (2) made  by the  Legislature  of a State shall have effect  unless  such law,   having   been reserved for the consideration  of  the President,  has  received  his assent.    (4)   If  any Bill pending at the  commencement  of  this Constitution  in the legislature  of a  State has, after  it has  been  passed  by such  Legislature,  been reserved  for the  consideration  of the President and has  received   his assent, then, notwithstanding anything in this Constitution, the  law so assented to shall not be called in  question  in any  court on the ground that it contravenes the  provisions of clause (2). (5) Nothing in clause (2) shall affect--     (a) the provisions of any existing law other than a  law to which the provisions of clause (6) apply, or     (b) the provisions  of  any  law  which  the  State  may hereafter make-     (i)for  the  purpose of imposing or levying any  tax  or penalty,  or     (ii)  :for  the   promotion  of  public  health  or  the prevention of danger to life or property, or     (iii)  in  pursuance  of any   agreement  entered   into between  the  Government  of the Dominion of  India  or  the GoVernment  of  India   and  the  Government  of  any  other country, or otherwise, with respect to property, declared by law to be evacuee property. 694

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   (6) Any law of the State enacted not more than  eighteen months   before   the  commencement  of   this  Constitution may   within   three  months  from   such  commencement   be submitted   to the  President for  his  certification;   and thereupon,   if  the  President  by public  notification  so certifies, it shall not be called in question in  any  court on the ground that it contravenes  the provisions of  clause (2) of this article or  has contravened  the  provisions  of sub-section  (2)  of section 299 of the Government of  India Act,  1935."     It  bears   the  heading "Right  to  Property".   It  is significant  that  the different articles in Part  III  have been put  in several  groups,  each bearing a heading of its own.   These  headings  briefly  indicate  the   nature  and character of the fundamental rights thus grouped. The  first group  of articles 14 to 18,  bears the  heading "Right   to Equality".     The    fundamental   right   of  equality  in matters   of    law,  religion,  social   status   etc.   is mentioned  in the     different articles grouped under  this heading.  Articles  19  to 22  have  been grouped under  the heading "Right to  Freedom".  Not only are the   protections given against  deprecation of  personal freedom mentioned in this  group  but  it  also  mentions  cases  where  personal freedom  can  be   deprived by   certain   laws.  Similarly, other articles  in this  part have been  grouped  under  the headings      "Right  against exploitation",    "Educational rights"  and   "Constitutional remedies".  Under this scheme the  fundamental  right  regarding   property   apart   from personal  and property  freedoms  has  been  dealt with   in this part separately as a self-contained  provision and as a distinct  subject  from  the various  freedoms  declared  by article  19.  In considering article 31  it is   significant to  note  that  it deals with private  property  of  persons residing in the Union of India, while article 19 only  deals with  citizens defined in article 5 of the Constitution.  It is thus obvious that the scope of these two articles  cannot be  the  same  as  they  cover different fields.  It  cannot be  seriously argued  that so far as citizens are concerned, freedoms regarding enjoyment of property have been   granted in two articles of the Constitution, while the protection to property  qua all 695 other persons  has  been dealt with in article 31 alone.  If both  articles covered the same  ground, it was  unnecessary to  have   two  articles on the  same   subject.   The  true approach to this question is that these two articles  really deal  with  two  different subjects-and one  has  no  direct relation  with the other, namely, article 31 deals with  the field of eminent domain and the whole boundary of that field is demarcated by this article. In other words,  the  State’s power to take  the property of a person  is  comprehensively delimited   by this  article. The article has been split  up in   six  clauses.  Moreover,  by  the  amendment   of   the Constitution  certain kinds of laws have been  exempted from the operation of the article or from  the  whole of Part III of  the  Constitution by the addition  of articles  31A  and 31B.   Article 31(1)  declares the  first requisite for  the exercise  of the power  of eminent  domain.  It   guarantees that a person cannot be deprived of property by an executive fiat and that it is only by the exercise of its  legislative powers that  the State can deprive a person of his property. In   other  words,  all  that   article  31(1)says  is  that private  property  can  only  be taken pursuant  to law  and not  otherwise.  A  reference  to  Cooley’s   Constitutional Limitations   fully  bears  out what the   true  content  of

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article 31(1) is. This is what he has said at page 1119 (8th edn.) :-   "Legislative    authority    requisite:  The    right   to appropriate private property  to public uses  lies   dormant in   the   State,  until    legislative   action   is   had, pointing   out  the occasions,  the  modes,  conditions  and agencies   for  its appropriations.  Private  property   can only be taken pursuant to law."     Article 31 (2) defines the powers of the legislature  in the  field  of eminent domain.  It  declares  that   private property shall not be taken by the State under a law  unless the law provides  for compensation for the  property, taken. It is also implicit in the language of the article that such taking  can only be for public purposes. Clause (3)  of  the article  places  an  additional  limitation  on  State  laws enacted  on  this  subject  while  clause  (4)  limits   the justiciability   of the quantum  of compensation in  certain cases. Clause (5) is the saving clause. It saves 696 from  the  operation of clause  (2)  laws  made  on  certain subjects.   The  scope of the first clause being  merely  to save   private   property  from  being   taken   purely   by executive   action   and  the  only   clause   which  limits ’legislative  action  in the field of eminent  domain  being clause (2), the saving clause therefore concerns itself with clause (2) only.     As pointed out in Willis on Constitutional Law, at’ page 716, police power, power of taxation and eminent domain  are all  forms  of social control and probably include  all  the forms  of social control known to the law: but each  differs from the others; though  it is possible to distinguish  each from  the  others,  yet  each  has  characteristics    which resemble   the   characteristics  of others  and  there  are times when it is very difficult to draw a line  between  the one   and the others.  The saving clause (5) in  article  31 has  been designed with the express purpose of saving  to  a certain  extent laws made in exercise of the police power of the  State which may lead to deprivation property.  It   has also saved laws relating to tax. It has thus delimited  from the field of eminent domain the field of exercise of  police power  and the exercise of the power of taxation.  Not  only has  it saved from the mischief of clause (2) of article  31 provisions  of  laws  made for the purpose  of  imposing  or levying  any tax or penalty and the laws made for  promotion of  public health or the prevention  of danger  to life   or property,  but  it has also saved from the mischief  of  the clause  the  provisions of all existing laws  which  may  be construed  as  amounting to deprivation  of  property  of  a person  as  well as evacuee property  laws under  which  the State  takes  possession of properties of persons  who  have left  India   for   Pakistan.  In  the   result  the  saving clause  comprehensively   includes  within  the  ambit   all the  powers  of  the State in  exercise of  which  it  could deprive   a  person  of  property   without    payment    of compensation.  In other words,  all forms of deprivation  of property   by the State  without  payment  of   compensation have  ’been  included  within  the ambit of   the  exception clause,  while other forms of deprivation of property  which are outside the ambit of the exception 697 clause  are inevitably within the mischief of clause (2)  of the article.  From  the language employed in the   different sub-clauses  of article 31  it  is  difficult to escape  the conclusion   that   the  words  "acquisition"   and  "taking possession"   used in article 31 (2) have the  same  meaning

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as  the  word "deprivation"  in article 31(1).  The  learned Attorney-General  suggested  that  much weight could not  be attached   in  construing article 31  to the provisions   of clause  (5)   inasmuch   as  the  saving  clause  had   been introduced  by  the   article  merely  by  way  of  abundant caution.   I am unable to accede  to this contention  as  it seems   to  me  that the  Constitution  while  defining  and delimiting    fundamental rights would not introduce in  the articles   dealing with those rights some matter merely   by way      of abundant  caution.  To my mind, it was essential while  delimiting and defining fundamental rights  to  fully define  the  field of the right and to say   what   was  not included  within that  right. As already said,  the  article read  as  a  whole comprehensively   defines    the  State’s power   of  eminent domain as distinguished  from  all   its other powers  the  exercise of which  may     amount to  the taking  of  private   property.  The   argument  that  these exceptions  were  incorporated in article  31  by   way   of abundant   caution further stands negatived by the  contents of  sub-clause (5) (b) (ii) of the article. Only  laws  made for  the  promotion of public health or  for  prevention  of danger  to  life or property have been  excluded  from   the mischief  of  clause (2)  of the article, while  other  laws made in exercise  of power of social  control  which deprive a person of property have not been  saved from the operation of  clause  (2).  Illustratively,  laws made  by  the  State dealing  with  morality  and  which may lead to  deprivation of   property   are  outside  the ambit   of  the  exception clause.  A fortiori,  any  deprivation  of property  under a law   made for promotion of morality would fail  within  the mischief of clause  (2) of article 31.  It  is  thus   clear that  only  that form of legislation which  promotes  public health  or  prevention of danger to  life  or  property   is saved  from  the provisions  of article  31(2), while  other laws  made  in exercise of the power of social  control,  if they deprive a person of 8-95 S.C.I./59 698 property, are not saved from  the operation of clause (2) of article 31.     In support of his contention that the content of article 31(1)   was  larger  than  that  of article 31(2)  and  that except  in cases where the form of taking  private  property took  the  shape  of  acquisition  of  title  or requisition for  State uses, in all other cases the State could  deprive a      person  of  his  property  by  simply making a   law, the   learned   Attorney-General  placed reliance   on   the following observations  of my brother Das in  Chiranjit  Lal Chowdhuri’s case(1) :--     "Article 31 (1)  formulates  the fundamental  right in a negative 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   propetty,  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 excludedeprivation    of   property   otherwise   than    by

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acquisitionor taking  of possession.  One can  conceive   of circumstances  where the State may have to deprive a  person of his property  without  acquiring  or  taking   possession of  the same.  For  example,  in  any  emergency,  in  order to  prevent a fire spreading, the authorities  may  have  to demolish                   an  intervening  building.   This deprivation of property    is  different  from   acquisition or   taking   of possession  of  property  which   goes   by the  name  of  ’eminent domain’ in  the  American  law.  The construction  suggested implies  that  our Constitution  has dealt with  only the  law of ’eminent  domain’, but has  not provided for deprivation  of  property  in     exercise  of (1) [1950] S.C.R. 869. 699 ’police  power’.   I  am  not  prepared   to   adopt    such construction,  for  I do not feel pressed to do  so  by  the language   used   in article  31.  On  the   contrary,   the language of clause (1)  of article 31  is  wider than   that of  clause (2),  for deprivation  of property  may  well  be brought   about  otherwise  than  by  acquiring   or  taking possession   of  it.  I  think  clause  (1) enunciates   the general  principle that no person shall be deprived  of  his property  except  by  authority  of law,  which,  put  in  a positive   form,  implies that a person may be  deprived  of his property,  provided he is so deprived  by  authority  of law.   No  question  of  compensation  arises  under  clause (1).  The effect of clause  (2) is that only certain   kinds of deprivation of property,  namely, those brought  about by acquisition  or   taking  possession  of it,   will  not  be permissible under any  law,  unless such law  provides   for payment  of compensation.  If ’the deprivation  of  property is   brought   about  by  means other  than  acquisition  or taking  possession  of  it, no  compensation   is  required, provided that  such  deprivation is by authority of law."     Similar  observations  were made by my  brother  in  the Bihar  Zamindari case(1). Undoubtedly great weight  must  be given  to  the  opinion expressed on this  question  by   my learned   brother  and  had  I  not  felt’  convinced   that his   approach   to   this   question   was  illiberal   and restricted,   I  would  have  hesitated  to differ from  his views.  After a full consideration of the problem and  after giving due weight  to the reasoning of my  learned  brother, I  am unable, for reasons above stated,’ to agree with  him. The   objections  envisaged by my brother in  Chiranjit  Lal Chowdhuri’s  case  (2) against the suggestion  that  clauses (1)  and  (2)  of article  31 deal  with  the same topic  of compulsory  acquisition or taking of property-do not at  all oppress  me  and do not seem to me to be  insurmountable  or cogent.     On   the   assumption   that clauses  (1)  and  (2)   of article  31 deal with the same topic, it is not clear to  me why in that  context article 31(1) somehow becomes (1) [1952] S.C.R. 889. (2) [1950] S.C.R. 869. 700 redundant.  This  is the only clause in  the  article  which gives protection to private property from being taken  Under executive   orders  without   legislative   sanction  behind them.  The first requisite for the exercise of the power  of eminent domain  is that it can  only be exercised   pursuant to   law.  It was  necessary while delimiting the  field  of eminent domain to state that in the article.  If the   State had  been  entitled  by  clause (1)  to  take  away  private property merely by making a law, then no question of  paying compensation  would  arise, whether the taking  assumed  one

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form   or  another.  Acquisition   of   property   or    its requisition,   on  that  construction of the  article,   are merely two modes of depriving a person of property and  must be  held  to be included within the ambit  of  clause  (1)of article  31,  and  clause (2) has not been  drafted  in  the nature of an exception  to the provisions of clause (1)   of article  31.  On   this  construction  of  clause   (1)   of article 31 the logical conclusion is that what has been done by  this clause’is that it has declared a fundamental  right in   the    State   as  against  an  individual.    Such   a construction of the article in Part III, in my opinion,  has to be  avoided,  as  the  purpose of  those  articles  is to declare   the fundamental rights  possessed by the  citizens or other persons  residing within the  Union, rather than to declare the rights of the  State against them.    Secondly, my learned brother was oppressed with the  idea that   if  a  wide  construction  was  not  placed  on   the phraseology employed in clause (1), deprivation of  property by   the  State  in  cases  Of  emergency, for instance,  in order to prevent a  fire from  spreading, would also have to be  paid for. It seems that in that case  pointed  attention was   not  drawn  during  arguments  to  the   comprehensive provisions  of the saving clause of the article which  seems fully  to cover cases of that kind. The ConstitUtion  makers were  fully  alive  to   cases   of  that   character    and considering   that  all such cases, unless  excepted,  would fall  within  the  mischief of clause  (2),  they  purposely excepted them from the ambit of the clause. 701     The    majority   of   the   court   in  Chiranjit   Lal Chowdhuris   case(1)    refrained   from   expressing    any opinion  on   the   scope  of article 31  (1).   My  brother Mukherjea   made   a   reference   to   this   question  but declined  to  express any opinion on it. There  is  thus  no consensus  of  opinion on the scope of  the  provisions  ,of clause (1) of article 31 in this court and no final  opinion has been pronounced upon it so far.     The  result  of  the above discussion  is  that,  in  my opinion,    article  31   is  a   self-contained   provision delimiting  the  field  of eminent  domain  and  article  31 clauses   (1)  and  (2)  deal  with  the   same   topic   of compulsory acquisition of property.     The  contention  of  the  learned Attorney-General  that on  the  analogy   of   the  decision   of  this   court  in Gopalans  case(2) it should be held  that when  a person  is deprived  of  private  property by  authority  of  law  that deprivation  puts  an  end  to  all the  freedoms  regarding property guaranteed under article  19, does not require  any detailed examination in the light of the construction placed by me on  the language of article 31(1).  It was conceded by the  learned counsel that  that  decision  would  have   had no   application  once it was held that clauses (1) and  (2) of  article  31  dealt with the  same  topic  of  compulsory acquisition of property.     The next contention of the learned counsel that the word "acquisition"  in  article  31  (2)  means  the  acquisition of  title  by the State and that unless  the  State  becomes vested  with the property there can be no acquisition within the   meaning  of  the  clause  and  that   the   expression "taking    possession"    connoted the idea  of  requisition cannot  be  sustained and does not, to my mind,  affect  the decision   of  the  case.  As  above  pointed,  both   these expressions used in clause (2) convey the same meaning  that is conveyed in clause (1) ’by the expression  "deprivation". As   I read article  31, it gives  complete   protection  to

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private   property   as  against   executive   action,    no matter by what process a (1) [1950] S.C.R. 869. (2) [1950] S.C.R 88. 702 person  is deprived  of possession of it.  In  other  words, the   Constitution   declares  that  no   person  shall   be deprived    of   possession  of private   property   without payment     of   compensation  and  that   too   under   the authority   of law,  provided  there was a  public  purpose’ behind  that  law.  It is immaterial to the  person  who  is deprived of property as to what use the State makes of   his property  or  what title  it acquires in it.  The protection is  against loss of property to the owner and there  is   no protection  given  to  the  State  by  the article.  It  has no  fundamental  right as  against  the individual  citizen. Article 31 states the limitations on the power of the  State in the field of taking property and those  limitations   are in the interests  of the person sought to be deprived of his property. The question whether   acquisition  has  a  larger concept   than   is conveyed  by  the   expression   "taking possession" is really  of academic interest in view  of  the comprehensive    phraseology   employed   by  clause   (2)of article  3L  As  the matter was argued  at  some  length,  I propose to briefly indicate my opinion on that point.     For  the proposition that the expression   "acquisition" has the concept  of vesting  of title  in the State reliance was  placed  on the opinion  of Latham C.J. in  Minister  of State  for  the  Army  v. Dalziel(1  ).  By  virtue  of  the provisions   of   section  51,  placitum  (xxxi)    of   the Constitution  of  Australia,  the  Commonwealth   Parliament is  empowered to make laws with respect to "the  acquisition of property on just  terms from any state or person for  any purpose in respect of which the Parliament has power to make laws.", General  regulations styled as the National Security Regulations   were    made  under   the   national  Security Act,   1939-1943,   section   5-  Regulation  54 relates  to the   taking  of  possession  of land  by  the  Commonwealth and  other  regulations provide for  the  ascertainment  and payment   of  compensation for toss or damage   suffered  by reason  of things done in pursuance of the regulation.   The Supreme  Court  of  New South   Wales’ held  that     taking possession  of  land in pursuance  of  Reg.  54     amounted to   acquisition (1) 68 C.W.L.R. 261. 703 of  property within the meaning of section 51  (xxxi)of  the Constitution,   On  appeal  Latham C.J. made  the  following observations :-     "The   Commonwealth  cannot  be held  to  have  acquired land  unless  it  has become the owner of land  or  of  some interest   in  land.  If  the  Commonwealth becomes  only  a possessor   but  does  not  become  an owner of land,  then, though  the  Commonwealth may have rights  in   respect   to land,  which  land may be called property, the  Commonwealth has not in such a case acquired property  ........     Accordingly,  m  my opinion,  the facts  that  the right to   possession  n  is  the  most  valuable   attribute   of ownership,that  possession  is  prima  facie  evidence    of ownership,and    that    possession   may    develop    into ownership,do not justify any  identification  of  possession with  ownership,   but,   on the  contrary,   emphasize  the distinction   between   the  two ideas. The  fact  that  the Commonwealth is in possession of land as a result of  action under    the    Regulations   does   not   show   that   the

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Commonwealth has become  the    owner of the land or of  any estate in the land".   The majority of the court held    otherwise and  expressed the  opinion  that  the  taking  under  Regulation 54 of the National     Security   (General)    Regulations   by    the Commonwealth   for  an indefinite period  of  the  exclusive possession   of property  constituted  an   acquisition   of property   within   the  meaning  of section 51  (xxxi)   of the    Constitution.    This   is   what   Rich   J.   said, representing  the majority opinion :-     "It would,  in my opinion,  be wholly  inconsistent with the  language   of  the  placitum  to  hold   that,   whilst preventing   the   legislature    from   authorizing     the acquisition   of n citizen’s  full title  except upon   just terms,  it  leaves  it  open to  the  legislature  to  seize possession  and  enjoy   the  full  fruits  of   possession, indefinitely, on any terms it chooses,  or upon no terms  at all.   In  the case now before us, the Minister  has  seized and   taken away from Dalziel  everything  that   made   his weekly  tenancy  worth having, and has  left  him  with  the empty   husk  of tenancy.  In  such  circumstances,  he  may well say :-- 704 ’You   take my house,  when you do take  the prop That doth  sustain my house; you take my life, When you do take the means whereby I live.’"      In  the  present case nothing has been  left  with  the company but the mere husk of title.    In  my  judgment,  the true  concept  of  the  expression "acquisition"  in  our   Constitution as  well  as  in   the Government  of  India Act is the one enunciated  by Rich  J. and the  majority  of  the  court in  Dalzie’s case(1). With great respect  I am unable to accept the narrow  view   that "acquisition"    necessarily   means acquisition  of   title in whole  or part of the property. It has been tightly  said that a close  and literal  construction  of   constitutional provisions  made  for  the security of person  and  property deprives   them  of  half their efficacy   and   ends  in  a gradual   depreciation   of    the right  as  if  the  right consisted   more  in  sound than in  substance.   In   other words,   such   provisions  cannot be  construed  merely  by taking a  dictionary  in  hand. The word  "acquisition"  has quite  a wide  concept,  meaning. the procuring of  property or the taking of it ’permanently  or temporarily.  It   does not   necessarily imply the acquisition  of legal title   by the  State  in   the property  taken   possession  of.   The learned  Attorney  General combated this view and  contended that  such  a  wide  concept  of the meaning   of  the  word "acquisition"  was  contrary  to  legislative   practice  in India   which  practice   was  in  accord   with  the   view enunciated  by Latham C.J. in the case above cited.  It  was said that  the  decided cases  in India  supported that  con struction   of   the   word.  Reference  was   made   to   a decision  of  Bhagwati  1.  in Tan  Bug  Taim  v.  Collector Bombay(2). That case  concerned the requisition by the State of the premises of a leading Bombay Chinese restaurant.   On a  petition   presented to  court  under section 45  of  the Specific  Relief Act, Bhagwati 1. held that  having   regard to   the  principles  applicable  to  British  jurisprudence which  had  been enacted  in section 299 (1) and (2) of  the Government of India Act, (1) 68 C.W.L.R 261. (2) I.L.R. 1946 Born. 51. 705 requisition  of  land could  not be  considered   as   being

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included  either in item 9 or item 21 of List II of the  7th Schedule  of  the Act, that the word  "acquisition"  implied ownership  in  the  property  or  rights  in  or  over  such property,  while  "requisition"  implied  deprivation of the owner  of the property for the  time being  of the use   and possession   thereof   and  meant control of  the  property, and -that  there  was no warrant for holding that so far  as legislative    practice    in    India    was     concerned, "requisition"was  included  in "acquisition".  The   learned Judge   preferred  to  follow the view of  Latham  C.J.  and refused   to follow   the   majority judgment  in  Dalziel’s case(1).  Having  considered  the matter in full,  and  with respect  to the learned  Judge, I prefer to follow the  view of  the majority of the court, because it seems to me   that it  is more in consonance  with  juridical  principle   that possession  after all is nine-tenths of ownership, and  once possession   is  taken away,   practically   everything   is taken away, and that  in  construing  the  Constitution   it is   the  substance and the practical result of the  act  of the  State that should be considered rather than its  purely legal aspect.  As already said, the correct approach in such cases should be this:  what in  substance  is  the  loss  or injury  caused to the owner and not what manner and   method has been adopted by the  State in taking the property.   That   the view expressed by  Bhagwati  J. did  not  truly represent  the  intent of Parliament in drafting entry 9  of List   II   of  the 7th Schedule  becomes  clear  from  what happened  subsequent  to  this  pronouncement.  After   this judgment  was  delivered,  an  Act was passed by  Parliament ,amending the Government of India Act nullifying the  effect of the judgment as regards  requisition  of  property.   The Indian  (Proclamation  of  Emergency)  Act,  1945,  (9 &  10 Geo.  6, Ch. 23)  was  promulgated  on February   14,  1946, the  judgment  of  Bhagwati  J. having  been   delivered  on August  9, 1945, section 102 of the Government of India  Act was  amended  and  by it the  Central  Legislature,  when  a proclamation of emergency was in force, (1) 68 C.W.L.R. 261. 706 was   empowered   to  make  laws for a province  or  a  part thereof,  in respect  of any matters not  enumerated  in any of   the   lists of the 7th  Schedule.  Reference  was  also made    to  certain  observations  of  my  brother  Das   in Chiranjit    Lal Chowdhuri’s case(2) ’in which  the  opinion was      expressed    that   the  ’word  "acquisition"   had implicit     in  it  the  idea   of  vesting   of   property in  property  in the  State. For the reasons already  given, with great respect, I am unable to subscribe to that view.    Reference was also made to a decision of the Punjab  High Court   in   Jupiter  General Insurance Co.  v.  Rajagopalan (2). This  case concerned  the provisions of sections 52 and 52(a)  of  the  Insurance  Amendment Act,   1950.   It   was contended   there   that  those  provisions  abridged    the fundamental   rights  guaranteed by article   31(2)  of  the Constitution.  In  view of  the decision  of this  Court  in Chiranjit  Lal  Chowdhuri’s case(1), the Punjab  High  Court construed  the word "acquisition"  in the   narrower   sense and  held  that as the beneficial interest in  the  property remained   in the insurer the  provisions of   the  impugned section    did  not   amount   to   appropriation  of    the insurer’s  property  and  merely  amounted to  exercise   of police power.   It was further held that the  pith   and sub stance  of  the impugned legislation was the  regulation  of insurance  companies and  winding up such corporations,   if that   was  most  advantageous  to the general  interest  of

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policy  holders. It is unnecessary for the purpose  of  this case  to  say  anything  about  the   correctness  of   that decision.     In   the   light  of  these  different   decisions   the Constitution   employed  more  comprehensive  phraseology in article  31  than had been employed in the entries  of   the 7th   Schedule  appended  to  the Government of India   Act, 1935,    and    which   became  the   subject   matter    of construction   in  the  case decided  by Bhagwati   J.    In the   entries   of   the  7th  Schedule  appended   to   the Constitution    the  word   used  is "requisition"  but  the same  phraseology has not been employed purposely in  clause (2)of article 31, in all (1) [1950] S.C.R. 869. (2) A.I.R. 1952 Punjab 9, 707 probability  to avoid any  controversy on  the  scope of the article by  giving a limited  meaning to these two words.     On  the  finding  that the company’s   property  was  in effect   taken possession of under  the provisions   of  the Ordinance   by   the   State  and  that   the   company  was deprived of it, there is no escape from the conclusion  that the  impugned  Ordinance  and the statute  following it  are void  as both of them encroach on the  fundamental right  of the company  under article 31(2) of the Constitution.     It  was  then argued that even so the plaintiff  in  the suit   was not entitled  to the relief claimed by him as  it was  the  company   alone that could  complain   about   the abridgement  of its fundamental rights by the  Ordinance  in question.   It was  also  contended that   the   plaintiff’s fundamental right to property had not been infringed in  any manner  as   his property in  the share had not  been  taken possession  of by  the State.  Finally it was said  that  on both   these questions the  majority decision of this  court in  ChiranJit Lal Chowdhuri’s case(1) was conclusive.  I  am unable    to   sustain   any  one  of   these   contentions. Undoubtedly   the   majority   decision   in  Chiranjit  Lal Chowdhuri’s   case  (1)  has  binding  force  till   it   is reconsidered or overruled by this court. But this  decision, in   my   opinion,  has  no apposite   application  to   the facts   and   circumstances  of this case  and  is   clearly distinguishable. My  reasons for saying so are these :--   1. The   decision   in Chiranjit  Lal  Chowdhuri’s case(1) was given on a petition presented to this court in  exercise of  its jurisdiction under article 32  of the  Constitution. Inter    alia,    Chowdhuri’s   grievance   was   that   his fundamental right under article 31(2)of the Constitution had been  infringed  by the impugned law,  inasmuch     as   the State   had  taken  possession  of the company’s    property and  that  all  the  rights and privileges  annexed  to  his share  had  thereby been lost. The majority   of  the  court took the view that the petitioner was still  in   possession of  his  share and that he had power  to dispose   of   that share,  that  he  could (1) [1950] S.C.R. 869. 92 708 receive  a  dividend on that share, and that though  he  had lost some of the privileges  annexed to his share, it  could not  be   said that the  State had taken possession  of  his share  or was exercising the privileges which he enjoyed  as a   shareholder.   The  situation however   of  the  present plaintiff  and  of all the preference shareholders  whom  he represents  is  quite  different.  Chiranjit  Lal  was    an ordinary  shareholder  of  a  fully   paid   up  share.  The

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plaintiff  and the other preference shareholders are   in  a different  situation  from Chiranjit Lal. All of  them  hold partly  paid up preference shares on which  their  liability amounts  to  a sum  of Rs. 16 lakhs,  the  plaintiff   alone being   under  a  liability  of Rs. 1,62,000. In  case  this liability  is not met when it is sought to be enforced,  the shares  are  liable to forfeiture.  The  plaintiff  and  the other  preference shareholders   therefore  are in  imminent danger   of  losing  the  shares     themselves  or   losing valuable property  in  the nature of money  which they  will have  to  pay  out  in order to meet  the  call.   For   all practical   purposes  the plaintiff is in danger  of  losing valuable property which the  State  is  threatening to  take possession  of.  Not only will these shareholders lose their shares  and  be  deprived  of them  but they  will  also  be forced to pay large  sums of money  and all this will be  in exercise  of  the   powers   conferred   on  the   directors appointed   by  the  State  by the Ordinance   in  question. There   can thus be no comparison between  the  rights   and liabilities   of   Chiranjit   Lal  with  the   rights   and liabilities   of   the   present  plaintiff  and  the  other preference shareholders.     2.   The    rights   and   privileges    of   preference shareholders even in winding up and in earning dividends are somewhat   different from the rights  and privileges of  the ordinary   fully   paid  up  shareholders.   The  court   in Chiranjit  Lal Chowdhuri’s case(1) did  not  at  all  advert to  the case of preference shareholders and the effect   the Ordinance  had on their rights.  It is  evident that it  was the  refusal  of the directors to obey the  mandate  of  the Controller appointed  by  the  Central Government  to   make a call  on   the  preference (1) [1950] S.C.R. 869. 709 shareholders   that to a certain extent  resulted   in   the making  of  the  Ordinance. On the 5th  October,  1949,  the Government  appointed   a  Controller  to   supervise    the affairs of this  ,company.  On the 9th  November,  1949, the Controller  asked  the directors of the company to  make   a call   on   the preference  shareholders.  Soon  after   the directors   passed  a  resolution refusing  to comply   with the   command.  On  the  9th  January, 1950,  the  Ordinance was promulgated, i.e., soon  after the refusal,  and on  the same day powers  were delegated by the Central Government to the   Bombay Government under the Ordinance.  Next  day   on the 10th January,  1950, the  Bombay  Government   appointed its  nominees   as directors  of the  company.  On  the  7th February,  1950,  these directors  passed  a resolution   to call  up   the uncalled capital  and  actually on  the  22nd February,  1950, call was made and the plaintiff was  called Upon to pay a sum of Rs. 1,62,000.  In these  circumstances, it  cannot be held to be an unreasonable inference that  one of   the  purposes  of the Ordinance  was to  raise  further finance for the business of the company so that it may start working.  In any case, that was clearly  the effect  of  the Ordinance  on the property of the  preference  shareholders. In   these  circumstances, it  cannot be said  that  on  the rule of stare decisis the plaintiff is out of court in  view of that decision. 3. In the case  of  Chiranjit Lal Chowdhuri(1) the court was influenced   considerably   by. the  fact  that  a  solitary shareholder    was   trying  to   enforce   the    company’s fundamental right in the exercise of its jurisdiction  under article  32  and  that he could not do  so  unless  his  own fundamental right under article 31 (2)  had been  infringed.

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It was said that the complainant could not succeed   because somebody   else   was hurt  and  that it was  an  elementary principle  of law that in order to justify  the   grant   of extraordinary relief  the  complainant’s need of it and  the absence  of  an  adequate remedy   at   law   must   clearly appear.  Das  J.  also pointed out that article 32 can  only be invoked for the purpose of enforcement of the fundamental right and that  that article does not permit an  application merely (1) [1950] S.C.R. 869. 710   for   the  purpose  of agitating the   competence  of  the appropriate   legislature   in   passing   any    particular enactment  unless  the enactment also infringes any  of  the fundamental   rights.   The  learned  Judge  concluded    by saying--     "In  exceptional  cases where  the  company’s   property is injured  by  outsiders,   a  shareholder  may   under the English  law,  after making all endeavours to    induce  the persons  in charge of the affairs of  the  company  to  take steps,  file  a  suit  on  behalf  of  himself  and    other 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."  Here  it  is quite clear that the present contention  has been  raised in a suit  and  not in an application for   a  writ  under  article  32.    That itself   distinguishes   Chiranjit Lal  Chowdhuri’s  case(1) from  the  present.   It   is further clear  that   all  the necessary  steps   visualised   by my learned  brother  have been  taken  by the preference shareholders.  A requisition’ for calling  a  meeting of the shareholders of, the  company was  made on 3rd August,  1950, a meeting was actually  held on  28th September,  1950,  and on subsequent  days  and  on 5th November, 1950, resolutions  were passed that the   call should not be made. The resolutions were, however,    vetoed by  the  Government.  All the  preference shareholders   are represented  in this suit including  some of the  directors, the   company  has been impleaded as a   defendant  and  the old directors of the company have  made an application  that they should be allowed tO support the appeal. On these facts the  present  case is clearly distinguishable from  that  of Chiranjit Lal Chowdhuri(2).     4.  In any case, even if it is held that in view of  the binding  character of this  court’s decision  in   Chiranjit Lal  Chowdhuri’s  case(1) the point is concluded,  that  the State   has  not  taken  possession  of   the   shareholders property,  I  am  of  the  opinion  that     the  plaintiff    (1) [1950] S.C.R. 869. 711 and  the other  preference  shareholders  are   entitled  in this  suit  to attack the validity of the Ordinance  on  the basis  of the infringement of the fundamental right  of  the company.  The  plaintiff has every right  to  challenge  the authority of the directors to make the call and to  question their  locus standi before they can fix a liability on  him. The  directors seek to derive authority from the  Ordinance. If,  however, the Ordinance is void as against  the  company obviously  they are not to be regarded as the  directors  of the  company  and would thus have no authority to  make  the call.  It would indeed ’be a strange thing to hold that  the plaintiff  in a suit cannot question the authority  and  the

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credentials of the person who is seeking to enforce a demand against  him. Unless the person making the demand makes  out his  authority  or  his  credentials to do  so,  he  is  not entitled  to  enforce  the demand.  In  all  cases  where  a pecuniary  or  other  similar  liability  is  sought  to  be enforced  by  a  person, it is always  open  to  the  person challenging the liability to raise the question of the locus standi  and authority of the person making the  demand.  ’If that  person claims in the status of an agent of some  other person,  unless his  appointment is validly  made, he  would have no authority.  In this case the shareholders under  the articles  of association were under a contractual  liability to  meet  calls  made  by the  directors  of   the   company appointed by’ them.  They  never agreed to meet a call  made by  persons  appointed by an external     authority  and  in these  circumstances  they  are entitled   to  question  the authority    of  the   person  making  the       call.   The directors  appointed  by  the Government can only invoke  in aid the authority given to them by the Ordinance and if  the Ordinance  is void  as against the company,, they cannot  be held to be directors of the company and would therefore have no  authority to make the call.  In my judgment,  therefore, it  is  plain that the plaintiff is entitled to  succeed  on the  basis of the infringement of the company’s  fundamental right  under  article  31  (2), because  that  is  the  only authority    under   which    the   directors   have    been brought   into  existence  and  are  exercising  powers   by virtue of the provisions of the  Ordinance.  If they  are 712   not  the validly appointed agents of the company  qua  the company,  they   cannot  function  as   directors  qua   the shareholders. 5.  The  learned Attorney-General drew our  attention  to  a number of cases for the proposition that unless  there was a direct   infringement  of  the   fundamental  right  of  the shareholders  it was not open to them to take  advantage  of the breach  of a fundamental right of the company.  In these wide  terms I am unable to accede’ to this proposition.   In my opinion, the correct rule on  this point  has been stated in  Willoughby,  at  page  20,  on  the   authority  of  the decision in chusetts v. Mellon(1), and is in these terms:    "We  have  no power per se to review and  annul  acts  of Congress on the ground that they are unconstitutional.  That question may be considered only when the  justification  for some  direct injury  suffered  or threatened,  presenting  a justiciable  issue is made to rest upon such an  act.   Then the   power exercised is that of ascertaining and  declaring the  law  applicable  to the  controversy.   It  amounts  to little   more   than  the negative  power  to  disregard  an ’unconstitutional enactment, which otherwise, would stand in the  way of the enforcement of a legal right. The party  who invokes  the power must be able to show, not only  that  the statute  is  invalid,  but that  he has  sustained   or   is immediately  in danger of sustaining some direct  injury  as the  result  of  its enforcement, and  not  merely  that  he suffers  in  some indefinite  way in   common   with  people generally.    If   a  case  for   preventive    relief    be prevented,  the court enjoins, in effect, not the  execution of  the statute, but the acts of the official,  the  statute notwithstanding".      The rule stated above has  apposite application to this case.  The plaintiff and the other  preference  shareholders are  in imminent  danger of  sustaining  direct injury as  a result  of  the ’enforcement of this Ordinance,  the  direct injury  being  the amount of the call that they  are  called

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upon   to  pay  and  the   consequent  forfeiture  of  their shares. Not only would, they  lose (1) 262 U.S. 447. 713 their shares, if they do not meet the demand, but they would also  have  to pay the amount of the call.  My  brother  Das elaborately   dealt with this  question  in Chiranjit  Lal’s case(1),  and  made reference  to all  the cases  that  were cited by the Attorney-General on this subject, viz.,  McCabe v.  Atchison(2);   Jeffrey Manufacturing  Co.  v.  Blagg(3); Hendrick v. Maryland(4); -Newark Natural  Gas & Fuel  Co. v. The   City  of Newark (5); and in which the rule  laid  down was  that in order to justify the granting of  extraordinary relief  the complainant’s need of it and the absence  of  an adequate  remedy  at law must clearly appear  and  that  the complainant  cannot succeed because some one else was  hurt. He  also made  reference to the cases of Truax v. Raich (6), and Buchanan v. Warley (7). There the court allowed the plea to be raised because in both. these cases the person raising it  was  directly  affected. In the first of  the  two  last mentioned  cases an Arizona Act of 1914 requiring  employers employing  more  than five workers to employ not  less  than eighty  per cent. native born citizens was challenged by  an alien who had been employed as a cook in a restaurant.  That statute  made  a  violation  of  the  Act  by  an   employer punishable.    The fact that the employment was at  will  or that  the  employer  and not the  employee  was  subject  to prosecution did not  prevent the  employee  from raising the question   of  constitutionality  because  the  statute,  if enforced,  would  compel  the  employer   to  discharge  the employee and, therefore, the employee was directly  affected by  the   statute.   In the  second case  a  city  Ordinance prevented the occupation of a plot by a coloured person in a block  where a majority of the residences were  occupied  by white   persons.  A white  man sold his property in  such  a block  to a Negro under a contract which provided  that  the purchaser should not be required to accept a deed unless  he would  have a right, under the laws of the city, to  occupy. the same as ’a  residence.    The vendor sued for (1) [1950] S.C.R. 869.               (5) 242 U.S. 403. (2) 235 U.S. 151.                     (6) 939 U.S. 33. (3) 235 U.S. 571.                     (7) 245 ’U.S. 60. (4) 235 U.S. 610. 9--95 S.C.I./59 714 specific  performance and contended that the  Ordinance  was unconstitutional.    Although   the   alleged   denial    of constitutional   rights   involved  only   the   rights   of coloured persons and the vendor was a white  person, yet  it was held that the vendor was directly affected, because  the courts  below,  in  view  of  the  Ordinance,  declined   to enforce  his  contract  and thereby  directly  affected  his right  to  sell  his  property.  Reference  was  also   made to  the  case  of Darnell v. The State of Indiana (1).  That is  the only case  in which  a shareholder was    not  heard to  complaining Iris own name  when the Ordinance  infringed the fundamental right of the company, his own rights had not been infringed. In view of this decision my brother Das took the view that Chiranjit Lal who was merely a shareholder and did  not suffer any direct injury by the result of  the  law was not entitled to complain. That may very  well have  been the correct view in the case of a fully paid up  shareholder who had no further liability or who was not likely to suffer in  any manner by the enforcement of the Ordinance  but  the situation  of a partly paid up preference shareholder as  in

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this  case is quite different and distinguishable and in  my judgment  the apposite rule to apply to the present case  is the one laid down in the  cases   of Truax v. Raich (2)  and Buchanan v. WarIcy(3 ). The result is that the plaintiff  is entitled   to   challenge  the   constitutionality  of   the Ordinance  on  the  basis that  it  abridges  the  company’s fundamental  right under article 31 (2).  The  plaintiff  is thus entitled to succeed in this suit which should have been decreed in the terms in which it was laid.     I  am  further of the opinion that the question  of  the locus  standi  of the plaintiff to raise the pica  that  the Ordinance  being void against the company the directors  had no  authority  to   make the call, is   really  of  academic interest  in  this case because here the  company  has  been impleaded as a defendant.   Its  old  directors have made an application  to  this  court  supporting  the  case  of  the plaintiff on the ground that the Ordinance (1) 226 U.S. 388. (2) 239 U.S. 33. (3) 245 u.s. 60. 715 is  void   as it infringes the company’s  fundamental  right under article  31  (2).   The  learned Attorney-General when asked  about this  application  said  that  it   not  having been made in the High Court and having only been made at the last  stage  of the case should not be  entertained.  In  my view,   when  the  question  in  issue  is  one   concerning constitutional  rights, the matter cannot be  viewed  purely from  a technical angle and if in the  interests   of  doing substantial justice it is necessary to grant permission   to the   old   directors   to  have   their   say,    technical considerations  should not  stand  in  the way of doing  so. If  the Ordinance qua the company is void, I do not see  why the old  directors  should  be debarred from saying  so  and if it  is  void  qua the company,  it   can  certainly   not be   sustained qua the shareholders.  Some of the  directors who  are  preference shareholders  are also  represented  in the  suit as well.  In Chiranjit Lals case(1)  the  question of  his   locus standi was left open by the  Chief  Justice. This is what the learned Chief Justice said :--   "The   first   question    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  legislation  ..........   do not think .  it is  necessary to pronounce  a definite opinion on the  first point."     In that case Patanjali Sastri J., as he then was,  :also did  not  pronounce any  definite  opinion on  the  question so  far as the shareholder’s right to question the  invasion of  the right  to property of  the  company  under   article 31   was concerned.  This  is  what  the learned Judge  said :--     "Whatever   validity   the   argument   may   have    in relation  to the petitioner’s  claim  based on the   alleged invasion  of  his right of property under article  31,  were can  be little  doubt  that, so far as his claim  based   on the   contravention   of  article  14  is   concerned,   the petitioner is entitled to relief in his own right." (1) [1950] S.C.R. 869. 716    The learned Judge did not offer any opinion on the  other questions.  Mukherjea  J.  decided  the  question on grounds somewhat different from that  taken by Fazl Ali 1. This what

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the learned Judge said :--    "A  discussion of the fundamental rights of  the  company as such would be outside the purview of our enquiry.  It  is settled law that in order to redress a  wrong  done  to  the company,   the  action  should prima facie  be  brought   by the  company  itself.  It cannot be said that this course is not  possible in the circumstances  of  the  present   case. As   the  law  is alleged  to  be  unconstitutional,  it  is open  to  the old directors of  the company who   have  been ousted  from their position  by reason  of the enactment  to maintain  that they are directors still in the eye  of  law, and  on that  footing  the majority  of   shareholders   can also  assert  the  rights  of the company as such.  None  of them,   however,   have  come  forward   to   institute  any proceeding   on  behalf  of the  company.  Neither  in  form nor  in  substance  does  the  present  application  purport to   be   one  made  by the  company   itself.  Indeed,  the company   is  one  of  the  respondents,  and  opposes   the petition."      Even  on the basis of this reasoning the situation   of the  present  plaintiff,  as  already  explained,  is  quite different   and so is  that    of  the  company.  In   these circumstances  it  cannot     be  said  that  the   decision given in Chiranjit Lal’s case(1) is binding   on this point, as   even the judgments  of  the  Judges       forming   the majority did not speak with the same voice.     For the reasons given  above I would allow this  appeal, set  aside  the judgment’ of the High Court and  decree  the plaintiff’s   suit  with costs.  It  is  not   necessary  to give any decision on issue 2 in view of the decision reached above,    viz.,  whether  the  law  is   void  because    it infringes   the  fundamental rights  under articles  14  and 19.     DAS J.-I agree that this appeal  should  be  allowed but I prefer tO rest my decision’ on the grounds  and reasonings set   forth   in   detail  in  my  judgment  in (1) [1950] S.C.R. 869. 717     Appeal  No.  107 of 1952 [The State of  West  Bengal  v. Subodh Gopal Bose(1)].     This  is an appeal by the plaintiff in a suit  filed  in the   Bombay  High  Court on behalf  of  himself  and  other preference  shareholders  of the respondent  company praying for  a declaration that the power given to  the   defendants respondents   2  to  8  who  had  been  appointed  directors under   the    Sholapur   Spinning   and   Weaving   Company (Emergency  Provisions)  Ordinance II of  1950  (hereinafter referred to as  the  said Ordinance)  to make a call and the resolution passed by the defendants’ respondents  2 to 6  on the  7th  February, 1950,  for making a call  of Rs. 50  per each   preference share  are  illegal,  ultra  vires,   void and inoperative  in law.   The  plaintiff-appellant  is  the registered   holder  of  3,244  preference  shares  of   the respondent company of the face value of Rs.  100 per   share out of which only Rs. 50 had been paid  up and  consequently if   the call  has  been  duly  made,  he  will have to  pay Rs.  1,62,200   in respect  of his  holding.  The  plaintiff appellant.  resists   the   payment  of  the  call  on   the ground,  inter alia,  that  the  said Ordinance is  illegal, ultra  vires   and invalid  under  the  provisions  of   the Government  of India  Act, 1935,  and/or  the   Constitution of  India.  No oral evidence was  adduced  on either   side. The   matters in  issue were argued with questions   of  law governed  by   the Constitution.  The contention  was   that the   Ordinance was  inconsistent with  or   in   derogation

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of     the   fundamental    rights   guaranteed    by    the Constitution.   The   suit  was dismissed   by   the   trial court   and  that   dismissal  was affirmed  by  the  appeal court.  The plaintiff has now come up  on appeal before   us after  having obtained  a certificate  under   article   132 (1)of  the  Constitution’ from the High Court.    The material facts  leading up to the institution  of the suit  and the terms of the impugned Ordinance have been  set out  in detail  in the judgments  delivered  by this   court in   the  case of  Chiranjitlal  Chowdhuri v. The Union.  of India(2)   where this  very  Ordinance and  the  Act   which replaced it were challenged (1) [1954] S.C.R. 587. (2) [1950] S.G.R. 863. 718 as   unconstitutional   and  also  in  the   judgment   just delivered and it is not necessary for me to recapitulate the same.   The   determination  of  the’  matters   in    issue depends   on  the correct   interpretation  of  article   19 (1)  (f)read with article   19 (5), article 31  and  article 14 of the Constitution.        My  view  about the correlation  between  article  19 (1) (f) read with article 19 (5) and article 31 and the true meaning and    the  respective  scope and effect of  clauses (1)and  (2)  of article 31  have been set forth  in   detail in  my  judgment  in  Chiranjitlal’s case (1) and have  been more   fully  explained in  my’ judgment in Appeal  No.  107 of 1952  [The State of West Bengal v. Subodh Gopal Bose  and others(2)] and no reiteration of them is called for. In  the light  of  the conclusions reached  and   the   reasons   in support  thereof given by me in those  judgments  I  proceed to examine the  contentions advanced by the appellant.     The  appellant  seeks to question the  validity  of  the Ordinance on  the  ground that it infringes  the fundamental rights  of (a) the company,  (b) the shareholders,  (c)  the managing  agent%   (d)  the   directors   elected   by   the shareholders  and  (e)  persons  having  contracts with  the company.   The   first  thing  to  consider  is  whether  he can   raise   the  question   of  constitutionality  of  the Ordinance  rounded on the breach of the  fundamental  rights of anybody other than himself.     The  above   matter  was  agitated   in   Chiranjitlal’s case  (1).   There  Chiranjitlal  Chowdhuri,   who  was  the holder of one fully paid up ordinary share, applied to  this ,court   under   article 32  challenging  the   validity  of this   very Ordinance  which  is now questioned  before’  us and  the  Act  which  eventually replaced  it.  One  of  the grounds   of attack  was  that the Ordinance  had  infringed the  fundamental  rights  of the  company under  article  19 (1) (f)  and article 31 in  that it dismissed  the  managing agents   and  the directors and authorised  the   State   to appoint   new  directors  and authorised  the  directors  so appointed under the Ordinance  to  take  possession  of  the company’s  assets without  payment  of any compensation.  On the point (1) [1950] S.C.R, 869. (2) [1954] S.C.R. 587. 719 now    under    consideration    Mukherjea   J.    expressed himself  thus, at page 898:     "An   incorporated   company,  therefore, can   come  up to this court for enforcement of its fundamental rights  and so   may  be  individual   shareholders  to  enforce   their own;  but it would not be open to an individual  shareholder to   complain   of  an Act which  affects   the  fundamental

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rights   of  the  company  except to  the  extent   that  it constitutes   an  infraction of his own  rights   as   well. This   follows   logically  from  the rule of  law   that  a corporation has  a distinct legal personality  of  its   own with   rights   and  capacities;  duties   and   obligations separate   from  those  of  its individual members.  As  the rights are different and inhere indifferent  legal entities, it  is  not  competent to one person to seek to enforce  the rights   of another except where the law permits him  to  do so.  A  well  known  illustration   of  such   exception  is furnished  by  the  procedure  that  is   sanctioned  in  an application for a writ of habeas corpus."      And again at page 899 :--     "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, proper subject  of our investigation would  be what  rights,  if any,  of  the petitioner  as a shareholder of   the   company  have  been violated   by   the  impugned legislation.  A discussion of the fundamental rights of  the company   as  such  would be outside   the  purview  of  our enquiry."     At  pages  904-909  the  learned  Judge  discussed   the question   whether  the  impugned   law  had  infringed  any fundamental  right of the shareholders under article 31  (2) or article  19(1) (f) and answered it in the negative. Kania C.J.  agreed with the line of reasoning and  the  conclusion reached   by Mukherjea  J.  on  this point. Fazl Ali  J.  at page 876 referred to a passage in the judgment of Hughes  J. in  McCabe  v.  Atchison(1)and expressly held  that  no  one except those whose rights 720  were   directly   affected   by  a   law  could  raise  the question   of   the   constitutionality   of  the  law.  His Lordship said:     "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."    As  to   the   question   whether   the   petitioner  had succeeded   in showing that there had  been an  infringement of   his  own  rights  as  a  shareholder  under articles 31 and  19  (1) (f) his Lordship agreed with  and  adopted  the conclusions  arrived  at by  Mukherjea J. without committing himself to the acceptance of all the reasonings of Mukherjea J. My Lord  the present Chief Justice rested  his   decision on   article   14  and came  to   the  conclusion  that  the petitioner   as  a  shareholder   had  been    discriminated against.   Having  thus decided the question  arising  under article  14, he did not  think it necessary  to express  any opinion  on the questions  raised  under  articles   19  and 31.  .At  pages 927-930 I dealt  with the  question  whether the  shareholder could impugn  the  constitutionality of the law  on  the  ground  that  the fundamental  right  of   the company   had  been infringed.  After referring  to  several decisions  of the Supreme  Court of America  I came  to  the following conclusion at page 930:   "In my  opinion,  although a shareholder may, in a  sense, be   interested  to see  that  the  company of which he   is a  shareholder  is not  deprived  of its property he cannot,

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as  held in Darnell v. Indiana(1) be heard to   complain  in his  own name and on his own behalf, of the infringement  of the  fundamental right to property of the company,  for,  in law,  his own right to  property  has not been infringed  as he is not the owner of the company’s properties."   In  the  premises,  I think it is  quite  clear  that  the majority of the  members  of  the  Bench which  heard (1) 226 U.S. 388. 721 Chiranjitlal’s case(1)   held  that the petitioner was   not entitled    to   question   the  constitutionality  of   the Ordinance  and  the Act on the ground that  the  fundamental rights of the company  under articles 19 (1) (f) and 31  had been infringed.  He  had, therefore,  to rely on the plea of infringement   of his  own fundamental rights. The  majority of  the court held that there had been no  infringement   of his   rights   as a shareholder under article   19(1)(f)  or article 31  and that the petitioner consequently had to fail back  on  article  14 in order to support  his plea  of  the unconstitutionality   of  the Ordinance and the  Act.   Even here   the   majority of the Bench took the  view  that  the petitioner  had not discharged the onus  that was on him  of showing  that  in fact there had  been  any   discrimination against him and other shareholders of the company.       Learned Attorney-General submits that in so far as the challenge   to the  validity of the  law is,  inthe  present case,    rounded   on  theinfringement   of  the   company’s fundamental   rights,it   is  concludedby  the  decision  in Chiranjitlal’s  case(1)   for  the reasons  adopted  by  the majority  in  that case  apply  equally to  the   case   now before   us   and  the  same  conclusion  must   be   drawn, namely,  that   the present  appellant, who is      also.  a shareholder,  cannot  be permitted to impugn      the   said Ordinance    on   the   ground  that   it   infringes    the fundamental   rights   of   the  company,  or  the  managing agents  or the directors  or other persons having  contracts with  the company.  It is, on the other hand, contended   on behalf  of   the  appellant   that  the  present   case   is distinguishable   from  Chiranjitlal’s  case(1) in that  the question  here  arises in a regular suit  and  not   on   an application   under   article  32 for  the  enforcement   of fundamental  rights.  I do not  think that this,  by itself, is  a substantial  ground  of distinction at all.  I  cannot see  how  the  mere form of the proceeding  can  affect  the question. The true principle being that only a person who is directly  affected by a law can challenge  the  validity  of that  law   and  that   a  person   whose   own   right   or interest  has   not   been violated  or  threatened   cannot impugn the law on the ground that  somebody else’s right has been  infringed, (1) [1950] S.C.R. 869. 722 the same principle must prevail irrespective of the form  of the   proceeding in which the question of  constitutionality is raised.    Learned  counsel for  the appellant, however, urges  that although  on  a  parity  of  reasoning  there  has  been  no infringement   of the fundamental right  of  the  preference shareholders under article 19(1) (f) or article 31 (2),  the impugned   law,  if  it  stands,  certainly   subjects   the preference  shareholders  to the’ risk of being called  upon to  pay the  amount  of capital  remaining unpaid  on  their respective  shareholding.  Indeed, the  directors  appointed under the said  Ordinance have  made a call for the  payment of  Rs.  50 on  each preference  share and   the   plaintiff

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appellant   alone   will have  to pay Rs.  1,62,200  on  his shares. There was no such liability on  the  petitioner   in Chiranjitlal’s  case(1)  for  the was the holder of only one fully  paid  up ordinary share.  The   impugned   Ordinance, therefore,  directly affects  the  preference   shareholders by   imposing  on them this liability, or the risk   of  it, and  gives  them a sufficient  interest to   challenge   the validity   of   the  Ordinance.  It   is  quite   true,   as submitted  by  the learned  Attorney-General,  that the fact of   the property  of the company  or the  managing  agents, or  the directors  or   the  other persons  having contracts with  the company     having  been  taken  possession of  by the State through   the  directors  appointed  by the  State under  the  Ordinance has  no relation to or bearing on  the imposition   ’on  the  preference   shareholders   of    the liability  to pay  the call,  for  the  directors  were  not obliged   to  make   the   call  because   they  had   taken possession  of  the  property of  the  company  or the other persons   and  that  this  imposition  of  liabilityor  risk cannot,   therefore,   be  said to be  the  direct  or  even indirect  result  of the State having through the  directors appointed  under  the  Ordinance  taken  possession  of  the property of the company  or  the  other persons. It is  then urged   by  him  that,  that  being  so,   the    preference shareholders   cannot   be   allowed   to  complain  of  the infringment  of the rights of the company or of  the   other persons   which   does  not concern or  affect  them.   This argurncnt, however, overlooks the purpose (1) [1950] S.C.R. 869. 723 and scope of the suit filed by the appellant for himself and all   other  preference  shareholders.   The  appellant   is disputing   his  liability  to pay  the  call made   by  the directors  appointed under the Ordinance. He is,  therefore, entitled  to show that the  directors who have made the call are  not  competent to do so.  It is open to him  to  allege and  prove,   if  he  can,  that  the  gentlemen  who   have purported   to  make  the call  are not competent to  do  so because they are not the directors of the company. Take  the case  of a  company which is not governed by this Ordinance. If  a call is made on the shareholders  of such ’a  company, it is certainly open to a shareholder to resist the  payment of the  call by  proving,  if  he  can,  that  the   persons who have purported to make the call are not the directors of the  company.   This   he may  do by  showing   that   those persons have not the requisite  qualifications  or  have not been  duly  elected.  Likewise,  on a parity  of  reasoning, the appellant as a preference shareholder in the  respondent company   is   entitled   to  show,  if he   can,  that  the persons  who  have  made  the   call  are  really  not’  the directors   of the  company.  Certainly  he  can  show  that the  Ordinance  under  which   these   persons  have    been appointed   was   beyond   the   legislative competency   of the authority  which  made  it or  that the  Ordinance   had not  been duly    promulgated.  If  he can, with  a view  to destroy the locus standi of  the persons who have  made  the call,  raise  the  question   of  the   invalidity   of  the Ordinance  on  the grounds I have just  mentioned, I can see no valid  reason why for the self same  purpose,  he  should not  be   permitted  to  challenge  the  validity   of   the Ordinance   on  the  ground of its  unconstitutionality  for the breach of the  fundamental rights  of the company or  of other  persons.   He may not be interested in  or  concerned with the  facts which  constitute  the  unconstitutionality, e.g.,  the   taking  of possession of the  property  of  the

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company  or  of  the  other persons   but  he  is  certainly interested   in getting out of the law so as to destroy  the very foundation of the status  of the persons who  have made the  call and thereby  repel the attack  on  him  and avoid his  own   liability.   In   Chiranjitlal’s   case(1)   the (1) [1950] S.C.R. 869 724 petitioner  was  held to have suffered no loss  of  his  own fundamental  right  as  a  shareholder  and,  therefore,  by raising   the   question  of  unconstitutionality   of   the Ordinance  on  the ground of the breach of  the  fundamental rights of the company, or of the other persons he was really fighting  the battle  of the  company and the other  persons and not of his own.  Here  the position is different.   Here the  law has  made the imposition  of a  liability  on   him and  other  preference  shareholders  possible   and  he  is seeking   to resist that liability  and as in  the  premises he is  directly  affected by the statute he has   sufficient interest   to   challenge its validity.  If as  between  the company  or  the  other persons  and   these  persons   who, purporting  to act as directors,  have made  the  call   the law  is   unconstitutional   for  breach   of  the  former’s fundamental   rights then it follows that these persons  are not,  in the eve  of   the  law,  the         directors   of the  company  at all  and  if  they         are   not in law the   directors  of    the   company,          surely   they cannot  arrogate to themselves   the   right   to   exercise any   of  the powers  of the  directors  of the company  and to  make  any call.  If  the  said  Ordinance  stands,   the directors  appointed thereunder will have authority to  make the  call  which   they  have   done  and  the   appellant’s liability  to  pay  it will  stand  good.   Therefore,   the appellant    as  a  preference  shareholder   is    directly affected   by  the  statute and  this  circumstance,  in  my opinion, distinguishes this case from Chiranjitlal’s  case(1 )  and it must be held that, in the circumstances   of  this case, the  appellant, who is a preference shareholder and as such liable to pay the call,  is entitled to challenge   the Ordinance  which  dismissed  the directors  elected  by  the shareholders,  authorised  the  appointment of directors  by the  State   and  made  it possible  for  the  directors  so appointed to make the call and thereby impose a liability on all preference shareholders including the appellant.      On  the hypothesis that, with a view to resist his  own liability  to pay the call, it is open to the  appellant  to impugn  the Ordinance and the Act which has replaced it  and for  that  purpose to call in aid the  infringement  of  the fundamental  right  under  article  31 (2)  of  the (1) [1950] S.C.R. 869 725 company or of the other persons mentioned above, it has  yet to  be shown that there has in fact been such  infringement. Two   questions   will have to be  considered  and  decided, namely,  (1)  whether the impugned law  has  authorised  the taking   of possession  or acquisition of any  property  and (2) whether what has been taken possession  of  or  acquired is  "property"  within  the meaning of article 31(2). Taking the second question first,  there  cannot be     any   doubt that   the   mills, machineries,  stocks   etc.,   of    the respondent company are  "property"  within      the  meaning of articles 19 and 31.  A  contract  or     agreement  which a   person  may  have with  the  company  and which  may  be cancelled    by  the  directors  in  exercise   of    powers under  the Ordinance will undoubtedly be  "property"  within the meaning of the two articles. There may be some  argument

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as  to  whether  the office of managing  agents  or  of  the directors,  though each of such offices carries  substantial remuneration,  can  be said to be   "property"   which,   by itself,   can   be   acquired or  taken  possession   of  or disposed   of.  I need not  dilate on this further, for  the machinery  etc.,  of  the  company  and  the  benefits    of agreements  of persons having contracts   with  the  company are   certainly "property" within  those  articles   and  if those  have been taken possession  of or acquired that  will be  quite sufficient for the plaintiff appellant to  sustain his  challenge  to the constitutionality  of  the   impugned law,  whether or no the office  of the  managing  agents  or of   the  directors  is  "property"   or  has   been   taken possession of or acquired.       The  next  question is whether the  impugned  law  has authorised the taking  of possession or acquisition  of  the property  of the shareholders, or of the company. It may  be mentioned   at  the  outset that the impugned  law  has  not authorised   any acquisition  of any property in  the  sense of  divesting  the  shareholders  or  the   company  of  any property  and  vesting  that property in the  State  or  its nominee.  In other  words,  there has  been no transfer   of title,   voluntarily   or  by  operation  of  law.  It   is, therefore,   necessary  to enquire  and  as certain  whether the Ordinance or the Act which replaced it 726 has  authorised the taking of possession of any property  of the shareholders or of the company.     As regards the property of the shareholders the position is   the  same  as  in  Chiranjitlal’s case(1).  The  shares still  belong  to them.  They can hold them or  dispose.  of them.  If any  dividend is declared they will get them.   If there  is  any  winding  up and  if  after  payment  of  all liabilities   there  remains  any surplus   then  they  will participate  in  that   surplus.  It is  true  that  from  a practical   point   of  view  it-may be  difficult  for  the shareholders,  if they desire  to sell the shares,  to  find a  purchaser who will be willing to buy shares in a  company which  is  governed  by  an  Ordinance  of  this  kind  but, nevertheless,   it cannot be said that the State  has  taken possession   of  the  shares  in the  sense  in  which  that expression  used in article 31(2)  has  been  explained   by me  in   Subodh   Gopal Bose’s  case(2).  It  is  said,   as was   done  in   Chiranjitlal’s  case(1  ),   that   certain valuable rights  of the   shareholders,  e.g., the right  of voting, the right to elect directors and the right to  apply for the winding  up of the company have been taken away.  In the  first place, it is  doubtful if any of these right  can be   called "property"  within the meaning of article  31(2) for, by itself and apart from the shares,  none of them  can be acquired or  disposed    In the next place, the State has not  taken  possession of these  rights  as   explained   by Mukherjea   J. in Chiranjitlal’s case (1 ) at pages  904-906 and  by me at pages    923-924.  Therefore,  there has  been no  infringement      of   the    shareholders   right    to property   under article  31(2).    What  has  happened   is that these rights which are only incidents of the  ownership of  the shares have been suspended or kept in abeyance   and if    this  may  be  regarded  as  amounting   to   imposing restrictions on the exercise of the rights  of ownership  of the  shares it may possibly be  justified as an exercise  in any  emergency of the State’s police power under clause  (5) of    article   19    by   imposing   by   law    reasonable restrictions in the interests of the general public so as to secure  the supply of an essential commodity and to  prevent

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unempolyment. (1 [1950] S.C.R. 869.              (2) [1954] S.C.R. 587. 727    As  regards  the property of the company also  there  has been no transfer of title to any such property, voluntary or involuntary,  from the company to the State or  its  nominee and,  therefore,  no question  arises of any property of the company   having   been  "acquired".  The  question  remains whether  any  property  of  the  company  has  been   "taken possession  of"  by the State within the meaning of  article 31  (2) as explained by me in Subodh Gopal  Bose’s  case(1). In   Chranjitlal’s  case(2)  Mukherjea J. at  pages  903-904 said:     "Assuming   that tiffs State management was imposed   in the  interests of the shareholders themselves and  that  the statutory   directors   are  acting as  the  agents  of  the company,  the  possession of the statutory  directors  could not,  it  is  argued,  be regarded  in law as possession  of the company so long as  they are  bound to act in  obedience to  the dictates  of the Central Government and not  of  the company  itself  in  the  administration  of  its   affairs. Possession   of an agent, it is said, cannot  judicially  be the possession of the principal, if the agent is to act  not according to the commands  or dictates of the principal, but under the direction of an exterior authority.    There  can  be  no  doubt that there  is  force  in  this contention,   but as I have indicated at  the   outset,   we are  not  concerned in’ this  case with  the larger question as   to  how  far  the  inter-position  of  this   statutory management     and     control      amounts   to      taking possession  of the property  and assets  belonging  to   the company.    It is fairly clear that his Lordship was inclined to  the view   that   the  company’s  properties   had   been  taken possession  of  although   he  did  not  categorically    an explicitly   say so.  I dealt with the matter at pages  926- 927. After pointing out that the possession of directors who Were  not  obedient  to or amenable to the  company  or  its shareholders   and  are not liable  to   be   dismissed   or discharged by the company cannot, in the eye of the law,  be regarded  as  the possession  of the company I said: (1)[1954] S.C.R. 587.        (2) [1950] S.C.R. 869. 728     "In this view of the matter there is great force in  the argument   that the property  of the company has been  taken possession  of by the State through  directors who have been appointed by the  State in exercise of the powers  conferred by  the  Ordinance  and  the  Act  and  who  are  under  the direction   and  control  of  the State  and this  has  been done without  payment of  any compensation ." Then after quoting a passage from the judgment of Holmes  1. in   Pennsylvania  Coal  Company  v.   Mahon(1)   concluded:    "Here, therefore, it may well be argued that the property of the company having been  taken possession of by the State in  exercise  of powers conferred by a law  which  does  not provide  for  payment of any compensation,  the  fundamental right   of  the company,  has, in the eye of the  law,  been infringed."     It  is  quite  clear  that although I  used   the  words "there is great force in the argument"  and "it  may well be argued",   the then  inclination of my mind  was  definitely that the property  of the company had been taken  possession of  as   contemplated  by article 31  (2).  My  observations were much more  definite than those of Mukherjea J.     Learned  Attorney-General  contends that the  taking  of

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possession  of the property  of the  company that has  taken place  in this case is clearly not an exercise of the  power of    eminent   domain        within  article  31  (2)   but constitutes  an  exercise  of  police  power  under  article 31 (1).  Here,  according   to him, the State has not  taken possession  of the company’s  property  on  its own  account to  implement  a public purpose such as is  contemplated  by article  31  (2) but the State has taken possession  of  the company’s  property  to  prevent  the company from using its own property to the detriment of the interests of the public and  to  do for the company what the company  should  itself have   done.  In  order to determine to which category  this taking of possession falls, it is necessary to keep in  mind the  circumstances in which the Ordinance and the, Act  were passed   and  to  ascertain   from  their  language    their immediate (1) 260 U.S. 399. 729 purpose  and ultimate  aim and to consider their  effect  on the rights of the company. It should be remembered that  the Ordinance of 1950  was promulgated on the 9th January, 1950. The preamble  to the Ordinance recited as follows:      "Whereas  on   account  of  mismanagement   and neglect a  situation  has  arisen in  the affairs  of  the  Sholapur Spinning   and   Weaving  Company,  Limited,   which     has prejudicially     affected     the    production    of    an essential  commodity  and  has  caused serious  unemployment amongst  a      certain  section  of   the community."     Then came  the Act on the 10th April, 1950.  There is no preamble to the  Act.  Although the short title  of the  Act contains   a  reference  to  emergency  provisions the  full title of the Act is as follows:     An  Act   to  make  special  provision  for  the  proper management    and    administration   of     the    Sholapur Spinning and Weaving Company Limited.     There  is no suggestion either in this long title or  in the  body of the Act except in section 12  that the  Act  is intended  only  to be a temporary   emergency  measure.  The object  of  the  Ordinance  was  stated  to  be  to  provide employment  to  a  large number of workmen and  to  keep  up the production of an essential commodity. There is no  doubt that  section 12 of the Act provides that the  property   of the  company  and the management and administration  of  its affairs  would be restored to the company or its   directors elected by the  shareholders  but  that  is  left   entirely to   the  unfettered  discretion  of  the  Government.   The provisions   of  the Ordinance and the  Act are drastic   in the extreme.  The managing agents  and the elected directors have    been  dismissed   and  new  directors    have   been appointed  by the State. So far as the company is  concerned it  has been  completely  denuded  of  the   possession   of its property.  All  that is left to the company is its  bare legal  title.  The  carrying  on  of a business demands many personal  qualities   and  considerable business  acumen and is much more complicated  than collecting 10--95 S.C. India/59 730 the  rents of the estate of a disqualified  proprietor.  The impugned  law  has   thrust  upon the  company  a  board  of directors  in whose  business  capacity the Company and  its shareholders  may  have  no  confidence  and  over whom  the company has certainly no vestige of control    or  authority and  who  are not answerable  to them at all.   Although  in outward  form the directors are the officers of the  company and are bound to act under the articles of association in so

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far  as  they are not contrary to or inconsistent  with  the Ordinance  and  the  Act, nevertheless,  in effect   and  in substance,   they are  the  creatures  of the State and  are answerable  to  the  State and  it is  the  State  that  has through   these directors of its choice taken possession  of the  undertaking  of  the  company  and  has  been  carrying on an experiment in State management of business at the risk and expense of the company  and the shareholders. Indeed  we are  told that  under such State management which  is  going on for  pretty  nearly  four  years  the business  has  been running   at a loss.  At any rate no profit  has  been  made or  distributed as and by way of dividend during  this  long period--a   sad   commentary on  the   efficacy   of   State management  And nobody knows how long this state of  affairs will continue, for the Act does not  prescribe  any definite time  limit   to this  hazardous  experiment.  It   is,   in the   premises,  impossible   to  uphold  this  law   as  an instance of  the exercise of the State’s police power as  an emergency measure.  It has  far overstepped the  limits   of police  power  and  is,  in  substance,  nothing  short   of expropriation  by  way of the exercise  of  the   power   of eminent  domain   and as  the  law  has not   provided   for any compensation it must be held to offend the provisions of article 31 (2).     The  last  contention  of  the  appellant  is  that  the Ordinance  is  unconstitutional  and  void     in  that   it infringes    the    fundamental    rights    of          the shareholders  under article 14.  In Chiranjitlal’s   case(1] my  Lord  the present  Chief  Justice  and  I were  of  the’ opinion  that the Ordinance and the Act did not  proceed  on any  rational  basis  of  classification  and    that   this company  and  its  shareholders  had       been  arbitrarily (1) [1950] S.C.R. 869. 731 singled     out for discriminatory treatment  and  that   as equality   before  the  law  was denied to this company  and its    shareholders  the  Ordinance  and the  Act   offended the  equal  protection  clause  of  our  Constitution.   The majority  of the Bench,  however,  took the view that, there being  a presumption in favour of the constitutionality   of the  law  and that the onus  of displacing that  presumption being  on him who impugns the law, the petitioner   in  that case    had    not   discharged   that  onus    and    that, therefore, he could not complain of discrimination.  In  the present  case   there is  nothing more  than    what   there was before  the  court  in Chiranjitlal’s case(1 ).  Indeed, the  question  of  discrimination  does  not appear to  have been argued before  the  trial  court and the appeal   court has  rejected it by saying that the plaintiff had not  shown that  there  were other companies which were guilty  of  the same conduct but had not been similarly dealt with.  Learned Attorney-General   has  submitted  that this  court is  not’ bound  by its previous  decision and has pressed  us  to  go behind   the  majority  decision. Accepting that this  court is  not  bound  by  its own decisions   and  may  reverse  a previous  decision especially on  constitutional   questions the   court   will   surely be slow to  do  so  unless  such previous decision appears to be  obviously  erroneous.   But in view of the conclusion I have  already arrived  at on the other point I do not feel called  upon to pursue  this point of discrimination any further.  In my judgment,   therefore, this   appeal  should be allowed  and the  plaintiff’s  suit should   be  decreed.  The  Union  of  India  must  pay  the plaintiff his costs throughout.    BOSE  J.--1  agree  with  my  brother  Mahajan  that  the

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impugned  Ordinance  and  Act offend article  31  (2)of  the Constitution  and  so  are void. But I  prefer  to  rest  my decision  on simpler  foundations.  With the utmost  respect I  deprecate,  as I have  done in previous cases,  the   use of    doubtful    words   like    "police   power"   "social control",    "eminent   domain"   and   the   like.  I   say doubtful,   not  because  they are  devoid  of  meaning  but because   they  have  different   shades   of   meaning   in different countries and because they represent powers (1) [1950] S.C.R. 869. 732 which spring from widely differing sources.  In my  opinion, it  is  wrong  to  assume  that  these  powers  are inherent in  the  State   in  India  and then  to  see  how  far  the Constitution   regulates  and fits  in  with them.  We  have to  interpret  the  plain  provisions  of’ the  Constitution and  it  is for  jurists  and  students of  law,   not   for judges,   to  see  whether our  Constitution  also  provides for these powers and it is for them to determine whether the shape  which they take in India resemble any of the  varying forms which they assume in other countries.    Article  19 (1) (f)  confers a      certain   fundamental certain  freedom  on  all citizens  of  India,  namely,  the freedom  to acquire, bold and dispose of  property.  Article 31(1)  is  a  sort  of corollary,   namely  that  after  the property has been acquired  it  cannot be taken  away   save by authority of law.  Article  31  is wider  than article 19 because    it  applies  to everyone and is not restricted to citizens.   But  what  article  19 (1)(f)   means  is   that whereas    a law can be passed to  prevent persons  who  are not  citizens of  India from acquiring-and holding  property in  this  country  no such restrictions can  be  placed   on citizens.   But  in the absence  of such a law  non-citizens can also acquire property in India and if they do then  they cannot  be  deprived of it any more than citizens,  save  by authority of law. I  have put the matter broadly and ignored  for the:  moment the  restrictions  imposed  by  article  19 (5). The  rights conferred  by  article  19 (1)(f)’are  not unfettered    and the   State   can  impose  restrictions: provided  they  are (I) reasonable and (2) are in the’ interests  of either  the general public or for the protection of the interests of any Scheduled Tribe.  But we are not concerned with article   19 in this. case because no  one    has  prevented either   the company   or   the plaintiff  from  acquiring   and  holding property.  They actually   did  acquire  property  and  they held   it   and nobody stopped them. The complaint  is  that they are now being  deprived, in a manner not allowed by the Constitution,  of the property  which  they  were   lawfully permitted to acquire  and hold.  That  concerns article 31. 732 Now  article 31(1) says that no one shall be deprived     of property  save by authority  of  law.  That to  my  mind  is straight  forward   and  simple.  It  means  that  no  one’s property  can  be  taken away arbitrarily  or  by  executive action.   There  must  be  legal  sanction for every act  of deprivation.     Now  an  Act  of  the  legislature  is  legal  sanction, therefore  it  the rest of the article was not there  a  man could   be   deprived   of  his  property   by   legislative enactment  though not by  executive action. But that  brings in  article  31(2).  Restrictions are there placed  even  on the    legislature.    Unless   the    Act   provides    for compensation  and either fixes   the  amount  or   specifies the  principles on which, and the manner in which, it is  to

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’be  determined  it  cannot be validly   enacted.  The  only exceptions  are ,those  set out  in clause (5).   Therefore, ’to my ,mind,  the  simple  question in this case is, do the impugned Ordinance and Act fail foul of article 31 (2)  read with  clause  (5) ?  All we have to do is to  examine  these provisions. We   start  with           the  word  "property".  Are   the plaintiff’s   "interests"  in   this   company    "property" within  the  meaning         of  this  clause  ?    Property includes    any    interest"   in  "any    commercial     or industrial undertaking."  It  also includes any interest  in "any  ’company  owning"  any interest in any commercial   or industrial  undertaking. That is how I read  this   clumsily drafted    clause.  The  company  here  certainly   has   an interest   in  a  commercial  and   industrial   undertaking and  the  plaintiff   has  an  undoubted  interest   in  the company.  He also has a direct interest in  the  undertaking that    the   company   runs  because,   as   a   preference shareholder,   he is a member of the  company and would,  on liquidation,  be entitled to share  in the  distribution  of its assets.     Next,   have  these  interests   been "taken  possession of"   or  "acquired"?   Here again I have no  doubt.  In  my judgment,  the   provisions  in  the  Constitution  touching fundamental   fights   must   be  construed    broadly   and liberally  in favour of those  on whom the rights have  been conferred.  But  in any case,  in this instance, 734 these  words  have   to  be  read   along  with  the    word "deprived"   in clause (1). In  my opinion,  the  possession and  acquisition referred to in clause (2)mean the sort   of "possession"     and   "acquisition"   that    amounts    to "deprivation"  within  the  meaning of  clause (1). No  hard and  fast rule can be laid down. Each case must  depend   on its   own facts.  But if there is substantial   deprivation, then   clause  (2)   is,  in  my  judgment  attracted.    By substantial   deprivation  I mean  the sort  of  deprivation that   substancially   robs  a man of those  attributes   of enjoyment   which   normally   accompany rights  to,  or  an interest  in, property. The form is unessential. It  is  the substance that we must seek.     Has  that  happened  here  ?  Of  course,  it  has.  The plaintiff  and  the  company have been left with   the  mere husk of title  and not  only  has  every form  of  enjoyment which  normally  accompanies  an interest in  this  kind  of property  been  taken away from them but to  add  insult  to injury  the  plaintiff  has also been  called  upon  to  pay substantial sums of money; and for what ?--not in compliance with  any engagement  into which he  has  entered,   not  in fulfilment of any duty or obligation which he has  incurred, not in furtherance of his interests of which he is the  best judge,   but   blankly   and    unashamedly    because   the furtherance  of his  interests affects  "the  production  of an    essential  commodity"   and,  has   caused    "serious unemployment amongst  a certain  section of the  community." If   that is not "deprivation" it is difficult to know  what is.  One  of the privileges of a democracy of  free  men  is the  right  to  mismanage  one’s  own  affairs  within   the confines of the law,  and if A can mismanage his concerns in a  particular  way,  so can B, C and D.  The  production  of essential  commodities  and  the  employment of labour   are matters   for  the State  and statutory bodies   to  handle. They  have  the right, when the law so permits it,  to  take over this responsibility when the public interests so demand but  if  by doing so they deprive  private  individuals  and

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non-statutory    bodies   their interests  in  property   in the     sense    explained   above     they    ’must     pay compensation.   They   cannot evade  their  own  duties   by lathering  their  obligations 735 on  others’  who  are not responsible for  carrying  on  the affairs  of  the  State.  My  brother Mahajan has dealt with this at length and there is no need for me to add to what he has said.     The   only   other  point  I  need   consider   is   the applicability  of clause (5)of article 31.  The   exceptions to clauses (1)and (2)lie there. I am clear that none of  the exceptions  set  out  there  apply.  The  impugned Ordinance and   Act  have not  been made for the promotion  of  public health nor to prevent danger to life’ and property.     In    my   opinion,   Chiranjit   Lal’s    case(1)    is distinguishable.   I do not  think  it is  a bar  here.   My brother Mahajan has explained  this at length and as I agree with him I  need  say  no  more.  I  would  therefore  also, in   agreement   with my    learned   brother,    allow  the appeal  and  decree  the  plaintiff’s  claim  with costs.     GHULAM  HASAN  J.--I  have   had   the   advantage    of perusing  the  judgment  of  my learned brother  Mr. Justice Mahajan  and  I agree with his conclusion that  the   appeal should  be  allowed  and the plaintiff’s  suit decreed  with costs. I would like to add a few words.     This  appeal raises  the question of the  constitutional validity    of    the   Sholapur   Spinning   and    Weaving Company    (Emergency  Provisions)  Ordinance II   of  1950, subsequently   replaced  by  Act  XXVIII  of   1950,   which reproduced   substantially   the   same   provisions.   This question arose originally upon a petition under article   32 of the  Constitution filed  by  one Chiranjit Lal  Chowdhuri an ordinary  shareholder of the  company,  challenging   the Act  as  being in violation of his fundamental rights  under articles  14, 19 and 31 of the Constitution.  By a  majority of  3:2  it  was  held  that the petitioner  had  failed  to displace the presumption of the constitutionality of the Act or  that there had been any abridgement of  his  fundamental rights.  The minority declared the  impugned  Act  as   void as   it  violated   the    fundamental   rights     of   the petitioner under article 14 of the Constitution. (1) [1950] S.C.R. 869. 736     My learned brother has distinguished,  and if I may  say so         respect    successfully,    the    decision    in Chiranjit  Lal’s  case(1)and   has   explained   the   ratio decidendi   of   the  majority  view in that  case   and   I entirely  agree  with  him. That decision does  not,  in  my opinion,   conclude   the  matter so  far  as   the  present case is concerned and no question of invoking the  principle of stare decisis arises.     The  question which we are now invited to  consider  was raised  by the appellant,  a  preference shareholder holding 3,244 preference shares of the face value of Rs. 100 out  of which  he had  paid up Rs. 50 per share. He was called  upon by the statutory directors nominated by the Government under the  impugned Act to pay Rs. 1,62,000 as the balance of  the amount  of  the call.  Thereupon he  filed  the  suit  in  a representative  capacity  on  behalf of  himself  and  other preference shareholders challenging the validity of the Act. The suit was dismissed by the trial Judge whose decision was affirmed  on appeal  by the Division Bench  of   the  Bombay High Court.     My  learned brother has analysed in detail the  relevant

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provisions  of the impugned Act and I have no hesitation  in agreeing  with  him  that the Act  in  substance  robs   the company  of every  vestige  of  right except what has   been laconically  called the husk of title.  I agree,  therefore, that  the  impugned   Act  oversteps   the    constitutional limits   of the power conferred upon the State  and  offends against  the  provisions  of article 31 and must, therefore, be held void.     Article 31 finds a place in Part III of the Constitution which   deals   with  fundamental  rights.   It   is  headed "Right  to  Property".  Upon  a  simple  and straightforward construction of  its  language  and  the context in which it stands  and unhampered by the provisions  of  the   American Constitution   the   article  confers  upon  every   person, whether   a  citizen  or  not,  a  fundamental    right   of protection   of  property  against  encroachment     by  the executive without  the    authority of  law  and     against the  legislature unless  the law passed  by   it   satisfies the   two  essential  conditions [1950] S.C.R. 869. 737 laid  down  in (2) that there must be  public  purpose   for taking  away  private   property  and that   the   law  must provide for  compensation and either fix the  amount of such compensation   or  specify   the  principles  on  which  and the    manner      in  which   the  compensation  shall   be determined    and   given   Article  31  (1)   embodies    a categorical   declaration   proclaiming  the   right      of property  and  equally  categorically  prohibits  the  State from depriving the  owner  of that property by an  executive act  or without  being  backed  by  the authority   of  law. The    intention    underlying    the  article   being   the protection  of   property  against  invasion by  the  State, both  parts (1)and (2)of article 31 should be read  together so  as to harmonize  with  that intention.  Article 31,   in my opinion,  is wider  than article 19(1) (f) which  confers upon a citizen  only the right to acquire, hold  and dispose of  property and is  different in scope and content. Article 31  is  self contained  and (1) refers to   deprivation   of property      general.  Acquisition or taking possession  in (2)   are   different   modes   of  deprivation    and   are comprehensive  enough to include all forms  of  taking  away rights  of property.  Having  regard   to  the  setting   in which article 31 is placed, the word ’property’ used in  the article must ’be construed in the widest sense as con:noting a bundle  of rights  exercisable  ,by  the  owner in respect thereof  and  embracing within its purview  both   corporeal and   incorporeal   rights.   The  word  ’property’  is  not defined  in the Constitution and there    is no good  reason to  restrict  its  meaning.  Whether  the  ,facts in a given case:   amount  to  deprivation  of   property  within   the meaning  of article 31 will depend ’upon the   circumstances of each  case  and it  is  not  possible, in the nature   of things,  to  lay down any inflexible  test  which   may   be universally   applicable.  When it can be shown   that   the statute   substantially  interferes  with   the   right   of enjoyment   of property, it will, in my opinion, be  hit  by article  31 (2)  and declared void, unless  compensation  is provided.     I am not prepared to subscribe  to the  proposition that article  31  (1)   stands  by  itself  and  should  be  read separately from (2) and I cannot attribute an intention 738 to  our  Parliament   to deprive a person  of  his  property merely by passing  an Act. The two parts of the article form

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an   integral   whole  and  cannot  be   disassociated  from each other.      The  result is that I agree with the order proposed  by my learned brother.                         Appeal   allowed. Agent for the appellant: 1. N. Shroff.      Agent   for   respondents   Nos.  1 to 4 and  6  to  8: Rajinder Narain. Agent for respondent No. 9: G.H. Rajadhyaksha.