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PETITIONER: MOTIPUR ZAMINDARI CO.  LTD.

       Vs.

RESPONDENT: THE STATE OF BIHAR AND ANOTHER.RAJA JANKINATH ROY AND NAREND

DATE OF JUDGMENT: 17/04/1953

BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ) MUKHERJEA, B.K. HASAN, GHULAM BHAGWATI, NATWARLAL H.

CITATION:  1953 AIR  320            1953 SCR  720

ACT:  Bihar  Land  Reforms  Act, 1950, ss. 2  (o)  and  (r),  3- Applicability  of  Act  to  companies-"Person"  "Proprietor" "tenure-holder",meanings of.

HEADNOTE:   The word " person " in the definitions of " proprietor  "" and  tenure-holder  "  contained in a. 2 (o) and  s.  2  (r) respectively  of the Bihar Land Reforms Act, 1950,  includes companies incorporated under the Indian Companies Act, 1913. There is nothing repugnant in the subject or context of  the Act  to prevent the inclusion of a company within the  terms proprietor  "  and " tenure-holder ". On the  contrary  such inclusion  is necessary in order to give full effect to  the object of the Act.    Pharmaceutical  Society  v.  The  London  and  Provincial Supply   Association,  Limited  (1880)  5  App.   Cas.   857 distinguished.

JUDGMENT:   CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos. 62  and 63   of  1953.   Appeals  under  Article  132  (1)  of   the Constitution of India from the Judgment and Order dated 22nd December,  1952,  of the High Court of Judicature  at  Patna (Ramaswami and Sarjoo Prosad JJ.) in Miscellaneous  Judicial Cases Nos. 238 and 242 of 1952.  P. R. Das (J. C.  Sinha and L. K. Chaudhry, with him) for the appellant in both the appeals.  M. C.  Setalvad, Attorney-General for India  (L.   N.Sinha and Bajrang Sahai, with him) for the respondents in both the appeals. 1953.  April 17.  The Judgment of the Court was delivered by S. R. DAB J. 721    DAS J.-This judgment disposes of Civil Appeals No. 62 of 1953 and No. 63 of 1953 which have been heard together.  The Motipur Zamindari Company Ltd., the appellant in Civil

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Appeal  No. 6.) of 1953, was incorporated in 1932 under  the Indian  Companies  Act  and has  its  registered  office  in Bengal.   It supplies sugar-cane to a sister  concern  named Motipur Sugar Factory Ltd.  Raja Jankinath Roy and  Narendra Nath  Roy  and Co., Ltd., the appellant in C. A. No.  63  of 1953,  was incorporated in 1933 under the  Indian  Companies Act  and  also has its registered office  in  Bengal.   This company owns Zamindari Properties in Purnea in the State  of Bihar  as well as in Malda in the State of West Bengal.   It carries   on  business,  amongst  others,  as   banker   and financier.  On the 30th December, 1949, a bill entitled the Bihar Land -Reforms Bill was passed by the Bihar Legislature and having been  reserved  for  the  consideration  of  the   President received his assent on the 11th September, 1950.  The Act so passed and assented to was published in the Bihar Gazette on the 25th September, 1950, and was brought into force on  the same  day by a notification made by the State Government  in exercise of powers conferred on it by section 1(3) of  the Act.  Many of the proprietors and tenure holders  of Zamindari estates took proceedings against   the  State   of Bihar   for   appropriate  orders  restraining   the   State Government from taking over the estates under the provisions of  the Act which they claimed to be beyond the  legislative competency of the Bihar Legislature and otherwise void.   On the  12th  March, 1951, a Special Bench of  the  Patna  High Court  held that the Act was unconstitutional on account  of its  contravention of article 14 of the  Constitution.   The State of Bihar appealed to this Court.  Pending that appeal, the  provisional Parliament passed the  Constitution  (First Amendment)  Act, 1951.  The respondents in the  main  appeal took  proceedings  in this Court, contending  that  the  Act amending the Constitution was invalid. This 722 Court however, on 5th October, 1951, upheld the validity  of the  amending  Act.  On 6th November,’  1951,  notifications were  issued under section3 of the Bihar Act declaring  that certain Touzies belonging to the appellants specified in the notification  had passed to and become vested in the  State. Both the appellants made separate applications to the  Patna High Court under article 226 of the Constitution praying for mandamus  or  suitable direction or  order  restraining  the respondent  from  taking  possession  of  their   respective estates  or tenures by virtue of the said notifications  and for other ancillary reliefs.  The appeals filed by the State of  Bihar against the order of the Special  Bench  declaring the Act to be void came up for hearing before this Court and this  Court upheld the validity of the Act, except as  to  a few provisions mentioned in the majority judgment which were hold to be severable. Thereafter, the two applications  made by  the  two appellants under article 226 before  the  Patna High Court came up for hearing and were dismissed by a Bench of  that  Court  on the 22nd December,  1952.   The  present appeals  have been filed with leave of the Patna High  Court against the said dismissal.   The question raised before the High Court was whether the Act  was,  on its true construction, intended  to  apply  to Zamindari estates of companies incorporated under the Indian Companies  Act.   In support of the  appellants’  contention that  it was not, it was urged -that the  Bihar  Legislature had  no  authority  to legislate  with  respect  to  trading corporations or non-trading corporations whose objects  were not  confined, to one State.  Reference was made to  entries 43, 44 and 45 of List I to show that it was Parliament alone which was authorized to make law with respect to matters set

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forth  in those entries.  The contention was that the  Bihar Legislature in enacting the Act invaded the Union field  and so  the  Act was invalid.  This argument was  sought  to  be reinforced by reference to the provisions of the Act and the winding up provisions of the Companies Act.  The Patna High 723 Court overruled this contention and Mr.P.R.Das appearing  in support of these appeals has not challenged this part of the decision of the Patna High Court.   The main point urged by Mr. P. R. Das is that even if the Bihar  Legislature could make a law for acquiring  Zamindari estates of incorporated companies it did not, by the Act, in fact  do so.  Section 3 authorises the State  Government  to declare  by  notification that the estates or tenures  of  a proprietor or tenure-holder have passed to and become vested in  the State.  It will be recalled that it was  under  this section that the State Government on the 6th November, 1951, issued the notifications with respect to the estates of  the appellants  situate  within  the State.   Mr.  P.  R.  Das’s principal contention is that the appellant companies do  not come within the terms, " proprietor" or " tenure holder"  as defined by the Act and consequently no part of their estates were  intended  ’to  be vested or did in fact  vest  in  the State.  " Proprietor" is defined by section 2(o) as  meaning a  person holding in trust or owning for his own benefit  an estate  or  a part of an state and includes  the  heirs  and successors-in-interest   of  a  proprietor  and,   where   a proprietor  is a minor or of unsound mind or an  idiot,  his guardian,  committee or other legal curator.   Tenure-holder is  defined  by section 2 (r) as meaning a  person  who  has acquired from a proprietor or from any tenure-holder a right to hold land etc.  The argument is that the word "person" in the  two  definitions  referred to above does  not,  in  the context of the Act, include a company.  It is conceded  that under  section  4(40) of the Bihar General Clauses  Act  the word "person" would ordinarily include a company, but it  is urged  by  Mr. P.R. Das that the definitions given  in  that section  apply only where there is nothing repugnant in  the subject  or context.  His contention is that the  definition of "proprietor" and "tenureholder" indicates that a  company which  owns Zamindaries is not covered by  that  definition. We are unable to accept this contention.  It is not disputed 94 724 that a company can own an estate or a part of an estate and, indeed,  the appellant companies are fighting these  appeals only to protect the estates they  own. Therefore, they  come within  the  first part of the definition.   The  definition after  stating  what the word means proceeds to  state  what else  the definition would include under  certain  specified circumstances,  namely, the heirs and  successor-in-interest etc.  The word "heir" certainly is inappropriate with regard to  a  company, but there is nothing  inappropriate  in  the company  having a successor in interest.  It is pointed  out that  there is no provision in the definition of  proprietor to  include the directors, managing agents and, in  case  of winding   up,   the  liquidator  of   the   company.    This circumstance does not appear to us to be a cogent reason for holding that the word "proprietor" as defined does not cover a company.  It is to be noted that the agent or, in case  of insolvency,   the  official  assignee  or  receiver  of   an individual   proprietor  are  also  not  included   in   the definition.   Reference to proprietor who is a minor  or  of unsound  mind  or  an  idiot  and  his  guardian  etc.,  was obviously  necessary because those proprietors  suffer  from

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legal disabilities.      Mr.  P. R. Das refers us to various sections and rules framed  under  section  43 of the Act  to  show  that’  only natural  persons  were intended to be affected by  the  Act, because,  ha urges, the company is not competent to  do  the acts therein referred to.  It is not ,disputed by Mr. P.  R. Das  that  there  is  no  difficulty  on  the  part  of   an incorporated  company to do all these acts by its  directors or  managing  agents  or other officers  empowered  in  that behalf by its articles of association, but his contention is that  the provisions of the Indian Companies Act should  not be imported into the consideration of the provisions of  his Act.   He  relies primarily on the  case  of  Pharmaceutical Society  v.  The London and Provincial  Supply  Association, Limited(1) whore it was held,that a corporation (1)  (1880) L.R. 5 App. Cas. 857. 725 did  not come within the word "person" used in the  Pharmacy Act, 1868 (31 & 32 Vic., Chapter 121).  Reliance was  placed upon  the  observations of Lord Selborne L.C. at  page  863. The preamble to that Act recited, amongst other things, that it was "expedient for the safety of the public that  persons keeping open shop for the retailing, dispensing or compound- ing of poisons, and persons known as chemists and  druggists should  possess  a competent practical  knowledge  of  their business."  This  clearly comtemplated  persons  skilled  in matters  pharmaceutical and not impersonal corporate  bodies which  would  know nothing about that  particular  business. Indeed,  Lord Blackburn in his speech in the House of  Lords in  the  Pharmaceutical Society’s case(1) referred  to  this preamble and observed at page 870:-     "Stopping there, it is quite plain. that those who used that   language  were  not  thinking  of  corporations.    A corporation may in one’ sense, for all substantial  purposes of  protecting the public, possess a competent knowledge  of its business,, if it employs competent directors,  managers, and  so  forth.   But it cannot possibly  have  a  competent knowledge  in  itself.  The metaphysical entity,  the  legal ’person’, the corporation, cannot possibly have a  competent knowledge.  Nor I think, can a corporation be supposed to be a ’person known as a chemist and druggist’."    His Lordship then referred to the provisions of sections 1  and  15 of that Act and came to the conclusion  that  the word  "person"  in that Act. meant a  natural  person.   The effect of ’that case is that whether the word "Person" in  a statute  can  be  treated as including  a  corporation  must depend  on a consideraiion of the object of the statute  and of  the enactments passed with a view to carry  that  object into  effect.  In view of the object of that Act as  recited in  the preamble there could be no manner of doubt that  the word  "person"  in that Act could not  possibly,  include  a corporation.   Lord  Selborne towards the end  of  page  863 indicated, by reference to the 18th (1)  (188o) L.R. 5 App.  Cas. 857 726 section, that the legislature by the word "person"  referred only  to individual persons as it was clearly  repugnant  to the subject of that Act to include a corporation within  the word  "person"  as used in ’that Act.  Mr. P. R.  Das  urges that  the judgment of Lord Selborne was founded on the  fact that the corporation could not come within the term "person" on  the  ground  that it could not make  an  application  in writing  signed by it.  From this Mr. P. R. Das  urges  that the  necessary implication of this part of the  judgment  of Lord  Selborne  is that it was not permissible to  take  the

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provisions  of  the  Companies Act  into  consideration  for construing another Act.  If that were the implication of the speech  of  Lord Selborne, with respect, we  are  unable  to accept  the  same.  Indeed, one cannot think  of  a  company unless one has in view the provisions of the Companies  Act, for  a  company is the creature of the Companies  Act.   Its existence, powers and rights are all regulated by that  Act. The  trend of the, speeches of the noble Lords in  the  case relied  on  by  Mr.  P. R. Das is that  the  object  of  the particular Act under consideration was entirely repugnant to the  word  "corporation"  being  included  within  the  term "Person"  as used in that Act, and as we apprehend it,  that decision lays down nothing beyond that.   In  support  of his contention that a company  owning  an estate  was never intended to be affected by the Act,  Mr.P. R. Das draws our attention to the winding up sections of the Indian  Companies Act and urges that it is not  possible  to fit in the scheme of winding up into the scheme of the Bihar Act.  If the Zamindari assets of the company are taken  over and compensation is paid by non-transferable bonds it  will, he  contends, be impossible, to apply the law of winding  up in  case  the company goes into  liquidation.   There  will, according  to him, be conflict of jurisdiction  between  the Court  where  the  winding  up  is  proceeding,  which   may conceivably  be in another State, land the Bihar  Government and  its  officers.  ’We see no force  in  this  contention. Upon a 727 notification  being  issued under section 3,  the  Zamindari estate will vest in the State and the company will cease  to have any interest in it.  Its only right will be to  receive compensation.   In  case of winding up the  liquidator  will have  to pursue the remedy provided by this Act.  He or  the company  will  be  in no worse position  than  the  official assignee  or official receiver of an  individual  proprietor who may happen to become insolvent in another State.     Finally, Mr. P. R. Das strongly relies on section 41 of the  Act  and  contends that that section  would  be  wholly inapplicable  to a company and that circumstance  by  itself would  indicate  that the Bihar Legislature did  not  intend that  a company owning an estate should be governed by  this Act.   A corporation, it is true, cannot be made liable  for treason,  felony  or  any  misdemeanour  involving  personal violence  or for any offence for which the only penalty  is. imprisonment or corporal punishment. (Halsbury, 2nd Edition, Volume IX, article 5, p. 14).  Section 41 does not prescribe punishment  by  imprisonment only.  Mr. P. R.  Das  suggests that  the  infliction of imprisonment or fine  would  depend upon the gravity of the offence and not on the character  of the  offender.   This argument, however, would seem  to  run counter to the opinion of Lord Blackburn set forth at  pages 869-870  of the report of the very case relied on by Mr.  P. R. Das.  The recent cases of Director of Public Prosecutions v. Kent and Sussex Contractors Limited(1) and Rex v.  I.C.B. Haulage,  Limited  and Another(2) seem to  indicate  that  a corporation may be convicted even of an offence requiring an act  of will or a state of mind.  Apart, however,  from  the consideration whether a company may be held guilty of wilful failure  or  neglect, as to which we need  not  express  any definite   opinion  on  this  occasion,  there  can  be   no difficulty  in applying the provisions of section 41 to  the officers or agents of the company.  On a notification  under section 3(1) being published the estate vests in the  State. Section 4 sets out the (1) [1944] I.K.B. 14  6.  (2) [1944] I.K.B. 551.

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728 consequences  of such vesting.  Clause (g) of  that  section empowers  the  Collector  by written  order  served  in  the prescribed  manner to require any person in  possession  of. such  an  estate or tenure  or any part thereof to  give  up possession of the same by a date specified in the order  and to take such steps or use such force as may be necessary for securing compliance with the said order.  If any officer  or agent  of  the  company  in the  possession  of  the  estate wilfully fails or ignores to comply with such lawful  order, then  surely he can be proceeded against under  section  41. Likewise, under section 40, the. officers therein  mentioned are  authorized  at  any time before or after  the  date  of vesting  by a written order served in the prescribed  manner to require a proprietor or tenureholder or any other  person in  possession of such an estate or tenure or any agents  or employees of such proprietor, tenure-holder or other  person to  produce at a time and place specified in the order  such documents,  papers or registers or to furnish such  informa- tion  relating to such estate or tenure as such officer  may from  time to time require for any of the purposes  of  this Act.  A wilful failure or neglect to comply with such  order would clearly bring the recalcitrant officer or agent of the company  within  the  penalty  provided  under  section  41. Section  41  therefore, does not  necessarily  preclude  the application of the Act to incorporated companies.  It cannot be denied that a company is competent to own and hold  property.   The whole. object of the impugned  Act  is thus stated by Mahajan J. in the State of Bihar v. Kameshwar Singh(1):   "  Now it is obvious that concentration of big blocks  of land  in the hands of a few individuals is contrary  to  the principle on which the Constitution of India is based.   The purpose of the acquisition contemplated by the impugned  Act therefore is to do away with the concentration of big blocks of  land  and  means of production in the  hands  of  a  few individuals  and to so distribute the ownership and  control of the (1)  [1952] S.C. R. 889 at p. 941. 729 material  resources which come in the hands of the State  as to  subserve the common good as best as possible.  In  other words,  shortly put, the purpose behind the Act is to  bring about a reform in the land distribution system of Bihar  for the general benefit of the community as advised."   In   view  of  this,  purpose  there  is  no  reason   to differentiate between an individual proprietor and a company which  owns estates or tenures.  Indeed, there is  not  only nothing repugnant in the subject or context of the Act which should  prevent  the inclusion of a  company  owning  estate within  the  definition of "proprietor", such  inclusion  is necessary in order to give full effect to the very object of the Act.   In  Appeal  No.  63  of 1953 Mr.  P.  R.  Das  raises  an additional point, namely, that the appellant company in that appeal  owns  estates  which are situate in  Purnea  in  the district  of  Bihar  and in Malda in the  district  of  West Bengal  but  it has to pay a single  Government  revenue  at Purnea.   It is further alleged that the  appellant  company has let out portions of the estates on Patni leases, each of the  Patnis comprising land situate both within and  outside Bihar.  The acquisition of that part of the estate, which is situate  in Bihar has made it difficult, if not  impossible, for the appellant company to pay its revenue or recover  its rent.   That part of the estate which is in Bihar cannot  be

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severed  from  the  rest  and  therefore  the   notification covering only the portion of the estate situate in Bihar  is invalid.   We  do not think there is any substance  in  this argument.   As stated by the High Court it is a simple  case of  apportionment of the revenue and also  apportionment  of the  rent.   The  necessity for  such  apportionment  cannot possibly affect the validity of the notification.   For  reasons stated above these appeals fail and must  be dismissed with costs.                                         Appeals dismissed. Agent for the appellants: B. B. Biswas. Agent for the respondents: G. H. Rajadhyaksha. 730