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Kathiawar Industries Limited Vs. Custodian General of Evacuee Property, Government of India, Ministry of Rehabilitation and anr. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtPunjab and Haryana High Court
Decided On
Case NumberLetters Patent Appeal No. 48-D of 1965
Judge
Reported inAIR1967P& H337
ActsConstitution of India - Article 226; Administration of Evacuee Property Act, 1956 - Sections 10(2)(II)
AppellantKathiawar Industries Limited
RespondentCustodian General of Evacuee Property, Government of India, Ministry of Rehabilitation and anr.
Appellant Advocate P.D. Ahuja and; K.N. Kaura, Advs.
Respondent Advocate S.N. Shankar and; Vidya Dhar Mahajan, Advs.
DispositionAppeal dismissed
Cases ReferredConstitution. In Charanjit Lal v. Union of India
Excerpt:
- - the right that can be enforced under article 226 also shall ordinarily be the personal or individual right of the petitioner himself, though in the case of some of the writs like habeas corpus or quo warranto this rule may have to be relaxed or modified. all that is suggested is that the decision of the custodian on merits was wrong and erroneous, and failed to take account of the rights which the appellant-company had by virtue of the lien it held on the shares......share-holders being evacuees the question of their interest being taken over by the custodian of evacuee property, saurashtra, was taken up. originally, by a communication of 2nd of march, 1953 (annexure r/j/1) the custodian informed the ministry of rehabilitation new delhi, that the evacuee interest in the company being only 27 to 28 per cent the question of taking over 'possession of the concern does not arise'. eventually, a notice was issued to the appellant-company under clause (11) of sub-section (2) of section 10 of the administration of evacuee property act (hereinafter referred to as the act) on 14th of october, 1958 (annexure b) that 51 per cent of the shares of the 'kathiawar industries limited' being evacuee property and having vested in the custodian, the whole affairs of.....
Judgment:

1. This appeal under Clause 10 of the Letters Patent is from the Judgment of Mahajan J. dismissing the petition of the appellant Messrs. Kathiawar Industries Limited under Article 226 of the Constitution of India.

2. The appellant is a limited company and was incorporated under the former Junagarh State Companies Act. It seems that many of the share-holders of this company with a subscribed capital of 50 lacs migrated to Pakistan at the time of partition. On account of many share-holders being evacuees the question of their interest being taken over by the Custodian of Evacuee Property, Saurashtra, was taken up. Originally, by a communication of 2nd of March, 1953 (Annexure R/J/1) the Custodian informed the Ministry of Rehabilitation New Delhi, that the evacuee interest in the company being only 27 to 28 per cent the question of taking over 'possession of the concern does not arise'. Eventually, a notice was issued to the appellant-company under Clause (11) of Sub-section (2) of Section 10 of the Administration of Evacuee Property Act (hereinafter referred to as the Act) on 14th of October, 1958 (Annexure B) that 51 per cent of the shares of the 'Kathiawar Industries Limited' being evacuee property and having vested in the Custodian, the whole affairs of the company were being taken over by the Custodian. The relevant provisions of Section 10 read as under:--

10.(1) Subject to the provisions of any rules that may be made in this behalf the Custodian may take such measures as he considers necessary or expedient for the purposes of securing, administering, preserving and managing any property and generally for the purpose of enabling him satisfactorily to discharge any of the duties imposed on him by or under this Act and may, for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto.

(2) Without prejudice to the generality of the provisions contained in Sub-section (1), the Custodian may, for any of the purposes aforesaid ,--

x x x x x x x x(ll) in any case where the evacuee property which has vested in the Custodian consists of fifty-one per cent, or more of the shares in a company, the Custodian may take charge of the management of the whole affairs of the company and exercise, in addition to any of the powers vested in him under this Act all or any of the powers of the directors of the company notwithstanding that the registered office of such company is situate in any part of the territories to which this Act extends and notwithstanding anything to the contrary contained in this Act or the Indian Companies Act, 1913 (VII of 1913), or in the articles of association of the company:

Provided that the Custodian shall not take charge of such management of the company accept with the previous approval of the Central Government;

3. Though the full charge has not been taken over by the Custodian, the company challenged the decision taken by the Custodian under Clause (II) of Sub-section (2) of Section 10 of the Act by a petition under Article 226 of the Constitution of India. Mahajan J. dismissed this petition on the short ground that the company being a separate and distinguishable entity from its share-holders had no locus standi to challenge the decision on which he order was based that 51 per cent of the hare capital of the company had acquired an evacuee character.

4. Mr. Ahuja, the learned counsel for the appellant, has vehemently urged that the Bench decision of the Bombay High Court on which Mahajan J. placed reliance has not been correctly decided and, in any event, the appellant being vitally affected by the decision of the Custodian could challenge the same. In the case of Abdul Majid Haji Mahomed v. P.R. Nayak, AIR 1951 Bom 440, the question of the locus standi of the petitioner to challenge the decision of the Custodian arose in similar circumstances and in dealing with this argument the Division Bench of Chagla C. J. and Tendolkar J. observed thus at pages 458-59:

'The only other question that remains to be considered is whether on this petition the petitioner is entitled to have the order of the Custodian set aside as a whole or only to the extent that it affects his rights. It is rather carious and significant that no other shareholder excepting the first petitioner has challenged the order of the Custodian..... But for ought we know, the other shareholders may be evacuees, they may feel that there is no answer they have on the merits and they may not want a fresh hearing before the Custodian ....

Mr. Maneksha has also attempted to argue but with his usual discretion he has not pressed the point very strenuously, that the second petitioner is also affected by this order and at least at the instance of the second petitioner the whole of the order should be set aside. It is difficult to see how the second petitioner company can be in any way affected by the shares of its shareholders vesting in the Custodian. The company is a separate entity from Ss shareholders and the company has nothing to do with the personality of its shareholders, nor is it concerned as to in whom the shares are vested.'

5. When it is realised that the second petitioner referred to in the judgment of the Division Bench was the limited company itself, it becomes manifest that the argument which was not even seriously pressed by its learned counsel was brushed aside for reason which appears to be unanswerable and cogent. That a limited company has its own entity apart from the shareholders is a proposition which has not been disputed at the Bar and indeed cannot be contested. Once that position is accepted, us indeed it must, there is no escape from the conclusion that the limited company cannot set itself as a spokesman for the shareholders whose interests have been found to have merged in the Custodian as evacuee property. As observed by the Bench, the other shareholders who have become evacuees may feel that there is no answer they have on the merits. Mr. Ahuja says that the petitioner is represented by its directors who have chosen to contest the decision of the Custodian on the ground that the company has a lien over the shares which have been declared to be evacuee property. It is important to remember that the directors of the company represent the controlling interest and they cannot be equated with the company itself. The position remains that the company being different from the shareholders it has no locus standi to bring a petition on their behalf.

6. The principle that a petitioner under Article 226 of the Constitution must have a right to enforce has recently been reiterated by their Lordships of the Supreme Court in Calcutta Gas Co. (Proprietary) Ltd. v. State of West Bengal, AIR 1962 SC 1044. It was observed by Mr. Justice Subba Rao at p. 1047 that :--

'The first question that falls to be considered is whether the appellant has locus standi to file the petition under Article 226 of the Constitution. The argument of the learned counsel for the respondents is that the appellant was only managing the industry and it had no proprietary right therein and, therefore, it could not maintain the application.... In State of Orissa v. Madan Gopal, 1952 SCR 28: (AIR 1952 SC 12), this Court has ruled that the existence of the right is the foundation of the exercise of Jurisdiction of the Court under Article 226 of the Constitution. In Charanjit Lal v. Union of India, 1950 SCR 869: (AIR 1951 SC 41), it has been held by this Court that the legal right that can be enforced under Article 32 must ordinarily be the right of the petitioner himself who complains of infraction of such right and approaches the Court for relief. We do not see any reason why a different principle should apply in the case of a petitioner under Article 226 of the Constitution. The right that can be enforced under Article 226 also shall ordinarily be the personal or individual right of the petitioner himself, though in the case of some of the writs like habeas corpus or quo warranto this rule may have to be relaxed or modified.'

7. Applying the test laid down by their Lordships of the Supreme Court, the case of the petitioner regarding its locus standi becomes still more unarguable. The company cannot espouse the cause of the shareholders who have been declared to be evacuees. It is not seriously challenged before us that the decisions of the Custodian are final and unchallengeable in Courts provided the prerequisites for the exercise of jurisdiction were present. It is not disputed that the Custodian had jurisdiction to decide the matter. All that is suggested is that the decision of the Custodian on merits was wrong and erroneous, and failed to take account of the rights which the appellant-company had by virtue of the lien it held on the shares. These are not matters which may be open for review in writ petition when the locus standi itself of the challenger has not been successfully established.

8. This would be sufficient to dispose of this appeal but reference may also be made to another argument which has been submitted by the learned counsel for the appellant-company. Though it is admitted that the prior approval of the Central Government had been obtained under the proviso to Clause (11) of Sub-section (2) of Section 10 of the Act, it is pointed out that notice was not sent to the appellant-company before the Central Government was moved. It is not essential requirement of the statute that such notice should be sent. Moreover, this point had never been taken before the learned single Judge and cannot be permitted to be argued in letters patent appeal for the first time. There is apparently no breach of the provisions of the proviso and the argument which has now been urged is not prima facie available to the appellant.

9. In our view, there is no force in this appeal which fails and is dismissed with costs.


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