72 of 1950
Petition under article 32 of the Constitution of India for a writ of mandamus
VKT Chari JS Dawdo Alladi Kuppuswami and CR Pattabhi Raman for the petitioner
MC Setalvad Attorney General for India G N Joshi with him for opposite party Nos 1 and 2
GN Joshi for opposite party Nos
3 to 5 and 7 to 10 1950
December 4
The Court delivered Judgment as follows
KANIA CJ This is an application by the holder of one ordinary share of the Sholapur Spinning and Weaving Company Ltd for a writ of mandamus and certain other reliefs under article 32 of the Constitution of India
The authorized capital of the company is Rs 48 lakhs and the paid up capital is Rs 32 lakhs half of which is made up of fully paid ordinary shares of Rs 1000 each
875 I have read the judgment prepared by Mr Justice Mukher jea
In respect of the arguments advanced to challenge the validity of the impugned Act under articles 31 and 19 of the Constitution of India I agree with his line of reasoning and conclusion and have nothing more to add
On the question whether the impugned Act infringes article 14 two points have to be considered
The first is whether one individual shareholder can under the circum stances of the case and particularly when one of the re spondents is the company which opposes the petition chal lenge the validity of the Act on the ground that it is a piece of discriminatory legislation creates inequality before the law and violates the principle of equal protec tion of the laws under article 14 of the Constitution of India
The second is whether in fact the petitioner has shown that the Act runs contrary to article 14 of the Con stitution
In this case having regard to my conclusion on the second point I do not think it is necessary to pro nounce a definite opinion on the first point
I agree with the line of reasoning and the conclusion of Mr Justice Mukherjea as regards the second point relating to the inva lidity of the Act on the ground that it infringes article 14 of the Constitution and have nothing more to add
In my opinion therefore this petition fails and is dismissed with costs
FAZL ALI J
I am strongly of the opinion that this peti tion should be dismissed with costs
The facts urged in the petition and the points raised on behalf of the petitioner before us are fully set forth in the judgments of my brethren Sastri Mukherjea and Das JJ and I do not wish to repeat them here
It is sufficient to say that the main grounds on which the Sholapur Spinning and Weaving Company Emergency Provisions Act 1950 Act No XXVIII of 1950 which will hereinafter be referred to as the Act has been assailed is that it infringes three fundamental rights these being 876 1 the right to property secured by article 31 of the Constitution 2 the right to acquire hold and dispose of property guaranteed to every citizen by article 19 1 f and 3 the right to equal protection of the laws guaran teed by article 14
It has been held in a number of cases in the United States of America that no one except those whose rights are directly affected by a law can raise the question of the constitutionality of that law
This principle has been very clearly stated by Hughes J in McCabe vs Atchison1 in these words  It is an elementary principle that in order to justify the granting of this extraordinary relief the complainant s need of it and the absence of an adequate remedy at law must clearly appear
The complainant cannot succeed because someone else may be hurt
Nor does it make any difference that other persons who may be injured are persons of the same race or occupation
It is the fact clearly established of injury to the complainant not to others which justifies judicial interference
 On this statement of the law with which I entirely agree the scope of the discussion on this petition is greatly restricted at least in regard to the first two fundamental rights
The company and the shareholders are in law separate entities and if the allegation is made that any property belonging to the company has been taken possession of without compensa tion or the right enjoyed by the company under article 19 1 f has been infringed it would be for the company to come forward to assert or vindicate its own rights and not for any individual shareholder to do so
In this view the only question which has to be answered is whether the peti tioner has succeeded in showing that there has been an infringement of his rights as a shareholder under articles 31 and 19 1 f of the Constitution
This question has been so elaborately dealt with by Mukherjea J that I do not wish to add anything to what he has said in his judg ment and all that is necessary for me to say is that I adopt his conclusions 1 235 us 151
877 without committing myself to the acceptance of all his reasonings
The only serious point which in my opinion arises in the case is whether article 14 of the Constitution is in any way infringed by the impugned Act
This article corresponds to the equal protection clause of the Fourteenth Amendment of the Constitution of the United States of America which declares that no State shall deny to any person within its jurisdiction the equal protection of the laws
Professor Willis dealing with this clause sums up the law as prevail ing in the United States in regard to it in these words Meaning and effect of the guaranty The guaranty of the equal protection of the laws means the protection of equal laws
It forbids class legislation but does not forbid classification which rests upon reasonable grounds of distinction
It does not prohibit legislation which is limited either in the objects to which it is directed or by the territory within which it is to operate It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and condi tions both in the privileges conferred and in the liabili ties imposed  The inhibition of the amendment  was designed to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation 
It does not take from the states the power to classify either in the adoption of police laws or tax laws or eminent domain laws but permits to them the exercise of a wide scope of discretion and nullifies what they do only when it is without any reasonable basis
Mathematical nicety and perfect equality are not required
Similarity not identity of treatment is enough
If any state of facts can reasonably be conceived to sustain a classification the existence of that state of facts must be assumed
One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis  Having summed up the law in this way the same learned author adds  Many different classifications 1 Constitutional Law by Prof Willis 1st Edition
p579 878 of persons have been upheld as constitutional
A law apply ing to one person or one class of persons is constitutional if there is sufficient basis or reason for it
 There can be no doubt that article 14 provides one of the most valuable and important guarantees in the Constitution which should not be allowed to be whittled down and while ac cepting the statement of Professor Willis as a correct exposition of the principles underlying this guarantee 1 wish to lay particular emphasis on the principle enunciated by him that any classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must bear a reasonable and just relation to the things in respect of which it is proposed
The petitioner s case is that the shareholders of the Sholapur company have been subjected to discrimination visa vis the shareholders of other companies inasmuch as section 13 of the Act subjects them to the following disabilities which the shareholders of other companies governed by the Indian Companies Act are not subject to  a It shall not be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company
b No resolution passed at any meeting of the share holders of the company shall be given effect to unless approved by the Central Government
c No proceeding for the winding up of the company or for the appointment of a receiver in respect thereof shall lie in any court unless by or with the sanction of the Central Government
 Primafacie the argument appears to be a plausible one but it requires a careful examination and while examining it two principles have to be borne in mind  1 that a law may be constitutional even though it relates to a single individual in those cases where on account of some special circumstances or reasons applicable to him and not applica ble to others 879 that single individual may be treated as a class by himself 2 that it is the accepted doctrine of the American courts which I consider to be well founded on principle that the presumption is always in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles
A clear enunciation of this latter doctrine is to be found in Middleton vs Texas Power and Light Company1 in which the relevant passage runs as follows  It must be presumed that a legislature understands and correctly appreciates the need of its own people that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds
 The onus is therefore on the petitioner to show that the legislation which is impugned is arbitrary and unreasonable and there are other companies in the country which should have been subjected to the same disabilities because the reasons which led the Legislature to impose State control upon the Sholapur company are equally applicable to them
So far as article 14 is concerned the case of the share holders is dependent upon the case of the company and if it could be held that the company has been legitimately sub jected to such control as the Act provides without violation of the article that would be a complete answer to the petitioner s complaint
Now the petitioner has made no attempt to discharge the burden of proof to which I have referred and we are merely asked to presume that there must necessarily be other compa nies also which would be open to the charge of mismanagement and negligence
The question cannot in my opinion be treated so lightly
On the other hand how important the doctrine of burden of proof is and how much harm can be caused by ignor ing it or tinkering with it will be fully illustrated by referring to the proceedings in the Parliament in connec tion with the enactment of the 1 157
880 Act where the circumstances which necessitated it are clearly set out
I am aware that legislative proceedings cannot be referred to for the purpose of construing an Act or any of its provisions but I believe that they are relevant for the proper understanding of the circumstances under which it was passed and the reasons which necessitat ed it
A reference to the Parliamentary proceedings shows that some time ago a representation was made on behalf of a section of the shareholders of the Sholapur company to the Registrar of Joint Stock Companies in Bombay against the conduct of the managing agents and the Government of Bombay was moved to order a special inquiry into the affairs of the company
For the purpose of this inquiry two special inspectors were appointed by the Bombay Government and their report revealed certain astounding facts and showed that the mill had been grossly mismanaged by the Board of Direc tors and the managing agents
It also revealed that the persons who were responsible for the mismanagement were guilty of certain acts and omissions which brought them under the purview of the law
The Bombay Government accept ed the report of the inspectors and instructed the Advocate General of Bombay to take legal proceedings against certain persons connected with the management of the company
Thereafter the Government of India was approached by the Provincial Government and requiested to take special action in order to secure the early opening of the mill
The Government of India found that they had no power to take over the management of a particular mill unless its working could be ensured through the existing management acting under the direction of a Controller appointed under the Essential Supplies Act but they also found that a peculiar situation had been created in this case by the managing agents themselves being unable or unwilling to conduct the affairs of the company in a satisfactory and efficient manner
The Government of India as a matter of precaution and lest it should be said that they were going to interfere unnecessarily in the affairs 881 of the company and were not allowing the existing provisions of the law to take their own course consulted other inter ests and placed the matter before the Standing Committee of the Industrial Advisory Council where a large number of leading industrialists of the country were present and ultimately it was realized that this was a case where the Government could rightly and properly intervene and there would be no occasion for any criticism coming from any quarter
It appears from the discussion on the floor of the House that the total number of weaving and spinning mills which were closed down for one reason or other was about 35 in number
Some of them are said to have closed for want of cotton some due to overstocks some for want o capital and some on account of mismanagement
The Minister for Indus try who sponsored the Bill in explaining what distin guished the case of the Sholapur mill from the other mills against whom there might be charges of mismanagement made it clear in the course of the debate that certain condi tions had to be fulfilled before the Government can and should intervene and he set out these conditions as fol lows  1 The undertaking must relate to an industry which is of national importance
Not each and every undertaking which may have to close down can be taken charge of tempo rarily by Government
2 The undertaking must be an economic unit
If it appears that it is completely uneconomic and cannot be managed at all there is no sense in Government taking charge of it
If anything it will mean the Government will have to waste money which belongs to the taxpayer on an uneconomic unit
3 There must be a technical report as regards the condition of the plants machinery etc
which either as they stand or after necessary repairs and reconditioning can be properly utilised
4 Lastly and this is of considerable importance there must be a proper enquiry held before Government take any action
The enquiry should show that 113 882 managing agents have so misbehaved that they are no longer fit and proper persons to remain in charge of such an impor tant undertaking
1 It appears from the same proceedings that the Sholapur mill is one of the largest mills in Asia and employs 13000 workers
Per shift it is capable of producing 25 to 30 thousand pounds of yarn and also one lakh yards of cloth
It was working two shifts when it was closed down on the 29th August 1949
The closure of the mill meant a loss of 25 lakhs yards of cloth and one and a half lakhs pounds of yarn per month
Prior to 1947 the highest dividend paid by the company was Rs 525 per share and the lowest Rs 100 and in 1948 when the management was taken over by the managing agents who have been removed by the impugned Act the accounts showed a loss of Rs 30 lakhs while other textile companies had been able to show very substantial profits during the same period
Another fact which is brought out in the proceedings is that the
managing agents had acquired control over the majority of the shares of the company and a large number of shareholders who were dissatisfied with the management had been rendered powerless and they could not make their voice heard
By reason of the preponderance of their strength the managing agents made it impossible for a controller under the Essential Supplies Act to function and they also made it difficult for the company to run smoothly under the normal law
It was against this background that the Act was passed and it is evident that the facts which were placed before the Legislature with regard to the Sholaput mill were of an extraordinary character
and fully justified the company being treated as a class by itself
There were undoubtedly other mills which were open to the charge of mismanagement but the criteria adopted by the Government which in my opinion cannot be said to be arbitrary or unreasonable is not applicable 1 parliamentary Debates Volume III No 14 31st March 1950 pp2394 5 883 to any of them
As we have seen one of the criteria was that a mere allegation of mismanagement should not be enough and no drastic step such as is envisaged in the Act should be taken without there being a complete enquiry
In the case of the Sholapur mill a complete enquiry had been made and the revelations which were made as a result of such enquiry were startling
We are familiar with the expression police power which is in vogue in the United States of America
This expression simply denotes that in special cases the State can step in where its intervention seems necessary and impose special burdens for general benefit
As one of the judges has pointed out the regulations may press with more or less weight upon one than upon another but they are designed not to impose unequal or unnecessary restrictions upon anyone but to promote with as little individual inconvenience as possible the general good
1 It need not be emphasized that the principles underlying what is known as police power in the United States of America are not peculiar to that country but are recognized in every modern civilized State
Professor Willis dealing with the question of classification in exercise of police power makes the following observa tions There is no rule for determining when classification for the police power is reasonable
It is a matter for judicial determination but in determining the question of reasonableness the Courts must find some economic political or other social interest to be secured and some relation of the classification to the objects sought to be accomplished
In doing this the Courts may consider matters of common knowledge matters o common report tile history of the times and to sustain it they will assume every state of facts which can be conceived of as existing at the time Of legislation
The fact that only one person or one object or one business or one locality is affected is not proof of denial of the equal protection of the laws
For such 1 Per Field J in Barbier vs Connally  884 proof it must be shown that there is no reasonable basis for the classification
 In this particular case the Government initially took control of the Sholapur Company by means of an Ordinance Ordinance No II of 1950 of which the preamble runs 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 af fected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community And whereas an emergency has arisen which renders it necessary to make special provision for the proper manage ment and administration of the aforesaid Company Now therefore     In the course of the Parliamentary debate reference was made to the fact that the country was facing an acute cloth shortage and one of the reasons which apparently influenced the promulgation of the Ordinance and the passing of the Act was that the mismanagement of the company had gravely affected the production of an essential commodity
The facts relating to the mismanagement of this mill were care fully collected and the mischief caused by the sudden clos ing of the mill to the shareholders as well as to the gener al public were fully taken into consideration
Therefore it seems to me that to say that one particular mill has been arbitrarily and unreasonably selected and subjected to discriminatory treatment would be an entirely wrong propo sition
Article 14 of the Constitution as already stated lays down an important fundamental right which should be closely and vigilantly guarded but in construing it we should not adopt a doctrinaire approach which might choke all benefi cial legislation
The facts to which I have referred are to be found in a public document and though some of them may 1 Constitutional Law by Prof Willis 1st Edition p 580
885 require further investigation forming as they do part of a one sided version yet they furnish good prima facie grounds for the exercise of the utmost caution in deciding this case and for not departing from the ordinary rule as to the burden of proof
In the last resort this petition can be disposed of on the simple ground that the petitioner has not discharged the onus which lies upon him and I am quite prepared to rest my judgment on this ground alone
I think that the petitioner has failed to make out any case for granting the writs or directions asked for and the petition should therefore be dismissed with costs
PATANJALI SASTRI J This is an application under article 32 of the Constitution seeking relief against alleged infringe ment of certain fundamental rights of the petitioner
The petitioner is a shareholder of the Sholapur Spinning and Weaving Company Limited Sholapur in tim State of Bombay hereinafter referred to as the Company 
The authorised share capital of the Company consisted of 1590 fully paid up ordinary shares of Rs 1000 each 20 fully paid up ordinary shares of Rs 500 each and 32000 partly paid up redeemable cumulative preference shares of Rs 100 each of which Rs 50 only was paid up
Of these the petitioner held one ordinary share in his own name and 80 preference shares which however having been pledged with the Bank of Baroda Ltd now stand registered in the Bank s name
The company was doing flourishing business till disputes arose recently between the management and the employees and in or about August 1949 the mills were temporarily closed and the company which was one of the largest producers of cotton textiles ceased production
Thereupon the Gover nor General intervened by promulgating on the 9th January 1950 an Ordinance called the Sholapur Spinning and Weaving Company Emergency Provisions Ordinance No II  of 1950 which empowered tim Government of India to 886 take over the control and management of the company and its properties and effects by appointing their own Directors and to delegate all or any of their powers to the Provincial Government
In exercise of the powers thus delegated the Government of Bombay appointed respondents 3 to 9 as Direc tors to take charge of the management and administration of the properties and affairs of the company
Subsequently on 10th April 1950 the Ordinance was repealed and was re placed by an Act of Parliament containing similar provisons namely the Sholapur Spinning and Weaving Company Emergency Provisions Act No XXVIII of 1950 hereinafter referred to as the impugned Act
The petitioner complains that the impugned Act and the action of the Government of Bombay pursuant thereto have infringed the fundamental rights conferred on him by arti cles 11 19 and 31 of the Constitution with the result that the enactment is unconstitutional and void and the inter ference by the Government in the affairs of the company is unauthorised and illegal
He accordingly seeks relief by way of injunction and mandamus against the Union of India and the State of Bombay impfended as respondents 1 and 2 respec tively in these proceedings and against respondents a to 9 who are now in management as already stated
The company is irapleaded proforma as the 10th respondent
Before discussing the issues involved it is necessary to examine the relevant provisions of the impugned Act in order to see in what manner and to what extent the petition er s rights have been affected thereby
The preamble to the repealed Ordinance stated that on account of mis management 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 essen tial commodity and has caused serious unemployment amongst a certain section of the community and that an emergency has arisen which renders it necessary to make special provi sion for the proper management and administration of the aforesaid 887 Company This preamble was not reproduced in the impugned Act
Section a empowers the Central Government to appoint as many persons as it thinks fit to be directors of the company for the purpose of taking over its management and administration
 Section 4 states the effect of the order appointing directors to be that 1 the old directors shall be deemed to have vacated their office 2 the contract with the managing agents shall be deemed to have been termi nated 3 that the properties and effects of the company shall be deemed to be in the custody of the new directors who are to be for all purposes the directors of the compa ny and shall alone be entitled to exercise all the powers of the directors of the company whether such powers are derived from the Companies Act or from the memorandum or articles of association or otherwise
 Section 5 defines the powers of the new directors
They are to manage the busi ness of the company subject to the control of the Central Government and shall have the power to raise funds offering such security as they think fit to carry out necessary repairs to the machinery or other property in their custody and to employ the necessary persons and define the necessary conditions of their service
Section 12 provides for the restoration of the management to directors nominated by the shareholders when the purpose of the Government s interven tion has been fulfilled
Section 13 is important and reads thus 13
Application of the Companies Act 1 Notwith standing anything contained in the Companies Act or in the memorandum or articles of association of the company a it shall not be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company b no resolution passed at any meeting of the shareholders of the company shall be given effect to unless approved by the Central Government c no proceeding for the winding up of the company or for the appointment of a receiver in respect thereof shall lie in any Court unless by or with the sanction of the Central Government
2 Subject
888 to the provisions contained in sub section 1 and to the other provisions of this Act
and subject to such excep tions restrictions and limitations as the Central Govern ment 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 of the notified order under section 3
 By section 14 the provisions of the Act are to have effect notwithstanding anything inconsistent therewith contained in any other law or in any instrument having effect by virtue of any law other than this Act
 Section 16 provides for delegation of powers to the Govern ment of Bombay to be exercised subject to the directions of the Central Government and section 17 bars suits or other proceedings against the Central Government or the Government of Bombay or any director for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act
 As a result of these provisions all the properties and effects of the company passed into the absolute power and control of the Central Government or its delegate the Gov ernment of Bombay and the normal functioning of the company as a corporate body came to an end
The shareholders have been reduced to the position of interested if helpless onlookers while the business is carried on against their will and may be to their disadvantage by the Government s nominees
The declared purpose of this arrangement was according to the Preamble of the repeated Ordinance to keep up the production of an essential commodity and to avert serious unemployment amongst a certain section of the commu nity
The question accordingly arises whether the impugned Act
which thus affects the petitioner and his co sharehold ers while leaving untouched the shareholders of all other companies including those engaged in the production of essential commodities denies to the petitioner the equal protection of the laws under article 14 of the Constitution
The correct approach to 889 this question is first to see what rights have been con ferred or protection extended to persons similarly situated
The relevant protection is to be found in the provisions of the Indian Companies Act which regulates the rights and obligations of the shareholders of incorporated companies in India
Section 21 of the Act assures to the shareholders the protection of the stipulations contained in the memoran dum and articles of association by constituting
them a binding contract so that neither the company nor the share holders have the power of doing anything inconsistent there with
The basic right of the shareholders to have their undertaking managed and conducted by the directors of their own choice is ensured by section 83B Their right to exer cise control and supervision over the management by the directors by passing resolutions at their general meeting is regulated by various provisions of the Act
The important safeguard of winding up the company in certain unfavourable circumstances either through court or by the shareholders thems elves voluntarily is provided for in sections 162 and 203
All these rights and safeguards on the faith of which the shareholders embark their money in their undertaking are abrogated by the impugned Act in the case of the share holders of this company alone
In fact the Central Govern ment is empowered to exclude restrict or limit the opera tion of any of the provisions of the Companies Act in rela tion to this company
It is thus plain that the impugned Act denies to the shareholders of this particular company the protection of the law relating to incorporated joint stock companies in this country is embodied in the Companies Act and is primafacie within the inhibition of article 14
It is argued however that article 14 does not make it incumbent on the Legislature always to make laws applicable to all persons generally and that it is open to the Legis lature to classify persons and things and subject them to the operation of a particular law according to the aims and objects which that law is designed to secure
In the present case Parliament 114 890 it was said came to the conclusion on the materials placed before them that the affairs of the company were being grossly mismanaged so as to result in the cessation of production of an essential commodity and serious unemploy ment amongst a section of the community
In view if the detriment thus caused to public economy it was competent for Parliament to enact a measure applicable to this company and its shareholders alone and Parliament must be the judge as to whether the evil which the impugned Act was designed to remedy prevailed to such an extent in this company as to call for special legislation
Reliance was placed in support of this argument on certain American decisions dealing with the equal protection clause of the Fourteenth Amendment of the Federal Constitution
It is however unnecessary to discuss those decisions here for it is undeniable that equal protection of the laws cannot mean that all laws must be quite general in their character and application  A legislature empowered to make laws on a wide range of sub jects must of necessity have the power of making special laws to attain particular objects and must for that pur pose possess large powers of distinguishing and classifying the persons or things to be brought under the operation of such laws provided the basis of such classification has a just and reasonable relation to the object which the legis lature has in view
While for instance a classification in a law regulating labour in mines or factories may be based on age or sex it may not be based on the colour of one s skin
It is also true that the class of persons to whom a law is made applicable may be large or small and the degree of harm which has prompted the enactment of a particular law is a matter within the discretion of the law makers
It is not the province of the court to canvass the legislative judgment in such matters
But the issue here is not whether the impugned Act was ill advised or not justified by the facts on which it was based but whether it transgresses the explicit constitutional restriction on legislative power imposed by article 14
891 It is obvious that the legislation is directed solely against a particular company and shareholders and not against any class or category of companies and no question therefore of reasonable legislative classification arises
If a law is made applicable to a class of persons or things and the classification is based upon differentia having a rational relation to the object sought to be attained it can be no objection to its constitutional validity that its application is found to affect only one person or thing
For instance a law may be passed imposing certain restric tions and burdens on joint stock companies with a share capital of say Rs 10 crores and upwards and it may be found that there is only one such company for the time being to which the law could be applied
If other such companies are brought into existence in future the law would apply to them also and no discrimination would thus be involved
But the impugned Act which selects this particular company and imposes upon it and its shareholders burdens and disa bilities on the ground of mismanagement and neglect of duty on the part of those charged with the conduct of its under taking is plainly discriminatory in character and is in my judgment within the constitutional inhibition of article 14
Legislation based upon mismanagement or other miscon duct as the differentia and made applicable to a specified individual or corporate body is not far removed from the notorious parliamentary procedure formerly employed in Britain of punishing individual delinquents by passing bills of attainder and should not I think receive judi cial encouragement
It was next urged that the burden of proving that the impugned Act is unconstitutional lay on the petitioner and that inasmuch as he has failed to adduce any evidence to show that the selection of this company and its shareholders for special treatment under the impugned Act was arbitrary the application must fail
Whilst all reasonable pre sumption must undoubtedly be made in support of the consti tutional validity of a law made by a competent legislature the circumstances of the present case would seem to my 892 mind to exclude such presumption
Hostile discrimination is writ large over the face of the impugned Act and it dis closes no grounds for such legislative intcrvcntion
For all that appears no compelling public intercsts were involved
Even the preamble to the original Ordinance was omitted
Nor did respondents 1 and 2 file any counter statement in this proceeding explaining the circumstances which led to the enactment of such an extraordinary measure
There is thus nothing in the record even by way of allegation which the petitioner need take steps to rebut
Supposing howev er that the impugned Act was passed on the same grounds as were mentioned in the preamble to the repealed Ordinance namely mismanagement and neglect prejudicially affecting the production of an essential commodity and causing seri ous unemployment amongst a section of the community the petitioner could hardly be expected to assume the burden of showing not that the company s affairs were properly man aged for that is not his case but that there were also other companies similarly mismanaged for that is what according to the respondents he should prove in order to rebut the presumption of constitutionality
In other words he should be called upon to establish that this company and its shareholders were arbitrarily singled out for the impo sition of the statutory disabilities
How could the peti tioner discharge such a burden  Was he to ask for an inves tigation by the Court of the affairs of other industrial concerns in India where also there were strikes and lock outs resulting in unemployment and cessation of production of essential commodities Would these companies be willing to submit to such an investigation  And even so how is it possible to prove that the mismanagement and neglect which is said to have prompted the legislation in regard to this company was prevalent in the same degree in other companies  In such circumstances to cast upon the petitioner a burden of proof which it is as needless for him to assume as it is impracticable to discharge is to lose sight of the realities of the case
893 Lastly it was argued that the constitutionality of a statute could not be impugned under article 32 except by a person whose rights were infringed by the enactment
and that inasmuch as there was no infringement of the individ ual right of a shareholder even assuming that there was an injury to the company as a corporate body the petitioner was not entitled to apply for relief under that article
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 there 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 As has been pointed out already the impugned Act deprives the shareholders of the company of important rights and safeguards which are enjoyed by the shareholders of other joint stock companies in Indian under the Indian Companies Act
The petitioner is thus denied the equal protection of the laws in his capacity as a sharehold er and none the less so because the other shareholders of the company are also similarly affected
The petitioner is thereled to seek relief under article 32 of the Constitu tion
In this view it becomes unnecessary to consider the questions raised under articles 19 and 31 of the Constitu tion
In the resultt I would allow the application
MUKHERJEA J This is an application presented by one Chiranjitlal Chowdhuri a shareholder of the Sholapur Spinning and Weaving Company Limited hereinafter referred to as the company praying for a writ of mandamus and certain other reliefs under article 32 of the Constitution
The company which has its registered office within the State of Bombay and is governed by the provisions of the Indian Companies Act was incorporated with an authorised capital of Rs 48 lakhs divided into 1590 fully paid up ordinary shares of Rs 100 each 20 fully paid up ordinary shares of Rs 500 each and 32000 partly paid up cumulative preference shares of Rs 100 each
The 894 present paid up capital of the company is Rs 32 lakhs half of which is represented by the fully paid up ordinary shares and the other half by the partly paid up cumulative prefer ence shares
The petitioner states in his petition that he holds in his own right three ordinary shares and eighty prefercnce shares in the company though according to his own admission the preference shares do not stand in his name but have been registered in the name of the Baroda Bank Limited with which the shares are pledged
According to the respondents the petitioner is the registered holder of one single ordinary share in the company
It appears that on July 27 1949 the directors of the company gave a notice to the workers that the mills would be closed and pursuant to that notice the mills were in fact closed on the 27th of August following
On January 9 1950 the Governor General of India promulgated an Ordinance which purported to make special provisions for the proper man agement and administration of the company
It was stated in the preamble to the Ordinance that on account of mis management and neglect a situation has arisen in the af fairs of the Sholapur Spinning and Weaving Company Limited which has prejudicially affected the production of an essen tial commodity and has caused serious unemployment amongst a certain section of the community  and it was on account of the emergency arising from this situation that the promulga tion of the Ordinance was necessary
The provisions of the Ordinance so far as they are material for our present purpose may be summarised as follows Under section 3 of the Ordinance 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
Section 4 provides that on the issue of a notified order under section 3 all the directors of the company holding office as such immediately before the issue of the order shall be deemed to have vacated their offices
and any existing 895 contract of management between the company and any managing agent thereof shall be deemed to have terminated
The directors thus appointed shall be for all purposes the directors of the company duly constituted under the Compa nies Act and shall alone be entitled to exercise all the powers of the directors of the company
The powers and the duties of the directors are specified in section 5 and this section inter alia empowers the directors to vary or cancel with the previous sanction of the Central Government any contract or agreement entered into between the company and any other person if they are satisfied that such contract or agreement is detrimental to the interests of the company
Section 10 lays down that no compensation for premature termination of any contract could be claimed by the managing agent or any other contracting party
It is provided by section 12 that so long as the management by the statutory directors continues the shareholders would be precluded from nominating or appointing any person to be a director of the company and any resolution passed by them will not be effective unless it is approved by the Central Government
This section lays down further that during this period no proceeding for winding up of the company or for appointment of a receiver in respect thereof could be instituted in any court unless it is sanctioned by the Central Government and the Central Government would be competent to impose any restrictions or limitations as regards application of the provisions of the Indian Companies Act to be affairs of the company
The only other material provision is that contained in section 15 under which the Central Government may by notified order direct that all or any of the powers exercisable by it under this Ordinance may be exercised by the Government of Bombay
In accordance with the provisions of section 15 men tioned above the Central Government by notification issued on the same day that the Ordinance was promulgated delegat ed all its powers exercisable under the Ordinance to the Government of Bombay 896 On the next day the Government of Bombay appointed respond ents 3 to 7 as directors of the company in terms of section 3 of the Ordinance
On the 2nd of March 1950 the re spondent No 9 was appointed a director and respondent No 5 having resigned his office in the meantime the re spondent No 8 was appointed in his place
On the 7th of April 1950 the Ordinance was repealed and an Act was passed by the Parliament of India known as the Sholapur Spinning and Weaving Company Emergency ProvisionsAct which re enacted almost in identical terms all the provisions of the Ordinance and provided further that all actions taken and orders made under the Ordinance shall be deemed to have been taken or made under the corresponding provisions of the Act
The preamble to the Ordinance was not however repro duced in the Act
The petitioner in his petition has challenged the con stitutional validity of both the Ordinance and the Act
As the Ordinance is no longer in force and all its provisions have been incorporated in the Act it will not be necessary to deal with or refer to the enactments separately
Both the Ordinance and the Act have been attacked on identical grounds and it is only necessary to enumerate briefly what these grounds are
The main ground put forward by the petitioner is that the pith and substance of the enactments is to take posses sion of and control over the mills of the company which are its valuable assets and such taking of possession of proper ty is entirely beyond the powers of the Legislature The provisions of the Act it is said amount to deprivation of property of the shareholders as well as of the company within the meaning of article 31 of the Constitution and the restrictions imposed on the rights of the shareholders in respect to the shares held by them constitute an unjustifia ble interference with their rights to hold property and as such are void under article 19 1 f
It is urged that there was no public purpose for which the Legislature could authorise the taking possession or acquisition of 897 property and such acquisition or taking of possession with out payment of compensation is in violation of the funda mental rights guaranteed by article 31 2 of the Constitu tion
It is said further that the enactment denies to the company and its shareholders equality before the law
and equal protection of laws and thus offends against the provi sions of article 14 of the Constitution
The only other material point raised is that the legislation is beyond the legislative competency of the Parliament and is not covered by any of the items in the legislative lists
On these allegations the petitioner prays in the first instance
that it may be declared that both the Act and the Ordinance are ultra vires and void and an injunction may be issued restraining the respondents from exercising any of the powers conferred upon them by the enactments
The third and the material prayer is for issuing a writ of mandamus restraining the respondents 1 to 9 from exercising or purporting to exercise any powers under the said Ordinance or Act and from in any manner interfering with the manage ment or affairs of the company under colour of or any pur ported exercise of any powers under the Ordinance or the Act The other prayers are not material for our purpose
Before I address myself to the merits of this applica tion it will be necessary to clear up two preliminary matters in respect to which arguments were advanced at some length from the Bar
The first point relates to the scope of our enquiry in the present case and raises the question as to what precisely are the matters that have to be inves tigated and determined on this application of the petition er
The second point relates to the form of relief that can be prayed for and granted in a case of this description
Article 32 1 of the Constitution guarantees to every body the right to move this court by appropriate proceed ing for enforcement of the fundamental rights which are enumerated in Part 1II of the Constitution
Clause 2 of the article lays down that the 115 898 Supreme Court shall have the power to issue directions or orders or writs including writs in the nature of habeas corpus mandamus prohibition quo warranto and certiorari whichever may be appropriate for the enforcement of any of the rights conferred by this part
Thus anybody who complains of infraction of any of the fundamental rights guaranteed by the Constitution is at liberty to move the Supreme Court for the enforcement of such rights and this court has been given the power to make orders and issuue directions or writs similar in nature to the prerogative writs of English law as might be considered appropriate in particular cases
The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right compels the inference that they are applicable only to natural persons
An incorporated company there fore can come up to this court for enforcement of its fundamental rights and so may the individual shareholders to enforce their own but it would not be open to an individual shareholder to complain of an Act which affects the funda mental 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 in different 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 illustra tion of such exception is furnished by the procedure that is sanctioned in an application for a writ of habeas corpus
Not only the man who is imprisoned or detained in confine ment but any person provided he is not an absolute stranger can institute proceedings to obtain a writ of habeas corpus for the purpose of liberating another from an illegal imprisonment
899 The application before us under article 32 of the Con stitution is on behalf of an individual shareholder of the company
Article 32 as its provisions show
is not di rectly concerned with the determination of constitutional validity of particular legislative enactments
What it aims at is the enforcing of fundamental rights guaranteed by the Constitution no matter whether the necessity for such enforcement arises out of an action of the executive or of the legislature
To make out a case under this article it is incumbent upon the petitioner to establish not merely that the law complained of is beyond the competence of the particular legislature as not being covered by any of the items in the legislative lists but that it affects or invades his fundamental rights guaranteed by the Constitu tion of which he could seek enforcement by an appropriate writ or order
The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains I of infraction of such rights and approaches the court for relief
This being the position the proper subject of our investigation would be what rights if any of the petitioner as a 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
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 compa ny
Neither in form nor in substance does the present application purport to be one made by the company itself
Indeed the company 900 is one of the respondents and opposes the petition
As regards the other point it would appear from the language of article 32 of the Constitution that
the sole object of the article is the enforcement of fundamental rights guaranteed by the Constitution
A proceeding under this article cannot really have any affinity to what is known as a declaratory suit
The first prayer made in the petition n seeks relief in the shape of a declaration that the Act is invalid and is apparently inappropriate to an application under article 32 while the second purports to be framed for a relief by way of injunc tion consequent upon the first
As regards the third pray er it has been contended by Mr Joshi who appears for one of the respondents that having regard to the nature of the case and the allegations made by the petitioner himself the prayer for a writ of mandamus in the form in which it has been made is not tenable
What is argued is that a writ of mandamus can be prayed for for enforcement of statutory duties or to compel a person holding a public office to do or forbear from doing something which is incumbent upon him to do or forbear from doing under the provisions of any law
Assuming that the respondents in the present case are public servants it is said that the statutory duties which it is incumbent upon them to discharge are precisely the duties which are laid down in the impugned Act itself
There is no legal obligation on their part to abstain from exercising the powers conferred upon them by the impeached enact ment which the court can be called upon to enforce
These is really not much substance in this argument for according to the petitioner the impugned Act is not valid at all and consequently the respondents cannot take their stand on this very Act to defeat the application for a writ in the nature of a mandamus
Any way article 32 of the Constitution gives us very wide discretion in the matter of framing our writs to suit the exigencies of particular cases and the application of the petitioner cannot be thrown out simply on the 901 ground that the proper writ or direction has not been prayed for
Proceeding now to the merits of the case the first contention that has been pressed before us by the learned Counsel for the petitioner is that the effect of the Shola pur Spinning and Weaving Company Limited Emergency Provi sions Act has been to take away from the company and its shareholders possession of property and other interests in commercial undertaking and vest the same in certain persons who are appointed by the State and the exercise of whose powers cannot be directed or controlled in any way by the shareholders
As the taking of possession is not for any public purpose and no provision for compensation has been made by the law which authorises it such law it is said violates the fundamental rights guaranteed under article 31 of the Constitution
To appreciate the contention it would be convenient first of all to advert to the provisions of the first two clauses of article 31 of the Constitution
The first clause of article 31 lays down that no person shall be deprived of his property save by authority of law The second clause provides 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 posse sion 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
 It is a right inherent in every sovereign to take and appropriate private property belonging to individual citi zens for public use this right which is described as eminent domain in American law is like the power of taxation an offspring of political necessity and it is supposed to be based upon an implied reservation by Govern ment that private property acquired by its 902 citizens under its protection may be taken or its use con trolled for public benefit irrespective of the wishes of the owner
Article 31 2 of the Constitution prescribes a two fold limit within which such superior right of the State should be exercised
One limitation imposed upon acquisition or taking possession of private property which is implied in the clause is that such taking must be for public purpose
The other condition is that no property can be taken unless the law which authorises such appropriation contains a provision for payment of compensation in the manner laid down in the clause
So far as article S1 2 is concerned the substantial question for our consideration is whether the impugned legislation authorises any act amounting to acquisition or taking possession of private property within the meaning of the clause
It cannot be disputed that acquisition means and implies the acquiring of the entire title of the expropriated owner whatever the nature or extent of that title might be
The entire bundle of rights which were vested in the original holder would pass on acquisition to the acquirer leaving nothing in the former
In taking possession on the other hand the title to the property admittedly remains in the original holder though he is excluded from possession or enjoyment of the property
Article 31  of the Constitu tion itself makes a clear distinction between acquisition of property and taking possession of it for a public purpose though it places both of them on the same footing in the sense that a legislation authorising either of these acts must make provision for payment of compensation to the displaced or expropriated holder of the property
In the context in which the word acquisition appears in article 31 2 it can only mean and refer to acquisition of the entire interest of the previous holder by transfer of title and I have no hesitation in holding that there is no such acquisition either as regards the property of the company or of the shareholders in the present case
The question therefore narrows down to this as to whether the legisla tion in 903 question has authorised the taking of possession of any property or interest belonging to the petitioner
It is argued by the learned Attorney General that the taking of possession as contemplated by article 31 2 means the taking of possession of the entire bundle of rights which the previous holder had by excluding him from every part or item thereof
If the original holder is still left to exercise his possession with regard to some of the rights which were within the folds of his title it would not amount to taking possession of the property for purposes of article 31 2 of the Constitution
Having laid down this proposition of law the learned Attorney General has taken us through the various provisions of the impugned Act and the contention advanced by him substantially is that nei ther the company nor the shareholders have been dispossessed from their property by reason of the enactment
As regards the properties of the company the directors who have been given the custody of the property effects and actionable claims of the company are it is said to exercise their powers not in their own right but as agents of the company whose beneficial interest in all its assets has not been touched or taken away at all
No doubt the affairs of the company are to be managed by a body of directors appointed by the State and not by the company but this it is argued would not amount to taking possession of any property or interest within the meaning of article 31 2
Mr Chari 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 administra tion of its affairs
Possession of an 904 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 direc tion of an exterior authority
There can be no doubt that there is force in this con tention 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
The point for our consider ation is a short one and that is whether by virtue of the impugned legislation any property or interest of the peti tioner himself as a shareholder of the company has been taken possession of by the State or an authority appointed under it as contemplated by article 31 2 of the Constitu tion
The petitioner as a shareholder has undoubtedly an interest in the company
His interest is represented by the share he holds and the share is movable property according to the Indian Companies Act with all the incidence of such property attached to it
Ordinarily he is entitled to enjoy the income arising from the shares in the shape of divi dends the share like any other marketable commodity can be sold or transferred by way of mortgage or pledge
The hold ing of the share in his name gives him the right to vote at the election of directors and thereby take a part though indirectly in the management of the company s affairs
If the majority of shareholders sides with him he can have a resolution passed which would be binding on the company and lastly he can institute proceedings for winding up of the company which may result in a distribution of the net assets among the shareholders
It cannot be disputed that the petitioner has not been dispossessed in any sense of the term of the shares he holds
Nobody has taken the shares away from him
His legal and beneficial interest in respect to the shares he holds is left intact
If the company declares dividend he would be entitled to the same
He can sell or otherwise dispose of the shares at any 905 time at his option
The impugned Act has affected him in this way that his right of voting at the election of direc tors has been kept in abeyance so long as the management by the statutory director continues and as a result of that his right to participate in the management of the company has been abridged to that extent
His rights to pass resolutions or to institute winding up proceedings have also been restricted though they are not wholly gone these rights can be exercised only with the consent or sanction of the Central Government
In my opinion from the facts stated above it cannot be held that the petitioner has been dispossessed from the property owned by him
I may apply the test which Mr Chari himself formulated
If somebody had taken possession of the petitioner s shares and was clothed with the authority to exercise all the powers which could be exercised by the holder of the shares under law then even if he purported to act as the petitioner s agent and exer cise these powers for his benefit the possession of such person would not have been the petitioner s possession if he was bound to act not under the directions of the petitioner or in obedience to his commands but under the directions of some other person or authority
There is no doubt whatsoever that is not the position in the present case
The State has not usurped the shareholders  right to vote or vested it in any other authority
The State appoints directors of its own choice but that it does not in exercise of the share holders  right to vote but in exercise of the powers vested in it by the impugned Act
Thus there has been no dispos session of the shareholders from their right of voting at all
The same reasoning applies to the other rights of the shareholders spoken of above namely their right of passing resolutions and of presenting winding up petition
These rights have been restricted undoubtedly and may not be capable of being exercised to the fullest extent as long as the management by the State continues
Whether the restric tions are such as would bring the case within 116 906 the mischief of article 19 1 f of the Constitution 1 will examine presently but 1 have no hesitation in holding that they do not amount to dispossession of the shareholders from these rights in the sense that the rights have been usurped by other people who are exercising them in place of the displaced shareholders
In the view that I have taken it is not necessary to discuss whether we can accept as sound the contention put forward by the learned Attorney General that the word property as used in article 31 of the Constitution con notes the entire property that is to say the totality of the rights which the ownership of the object connotes
According to Mr Setalvad if a shareholder is not deprived of the entirety of his rights which he is entitled to exer cise by reason of his being the owner or holder of the share and some rights however insignificant they might be still remain in him there cannot be any dispossession as contem plated by article 312
It is difficult in my opinion to accept the contention formulated in such broad terms
The test would certainly be as to whether the owner has been dispossessed substantially from the rights held by him or the loss is only with regard to some minor ingredients of the proprietory right
It is relevant to refer in this connection to an observation made by Rich J in a Full Bench decision of the High Court of Australia1 where the ques tion arose as to whether the taking of exclusive possession of a property for an indefinite period of time by the Com monwealth of Australia under Reg
54 of the National Securi ty Regulation amounted to acquisition of property within the meaning of placitum 31 section 51 of the Commonwealth Constitution
The majority of the Full Bench answered the question in the affirmative and the main reason upon which the majority decision was based is thus expressed in the language of Rich J Property in relation to land is a bundle of rights exercisable with respect to the land
The tenant of an unencumbered estate in fee simple in possession has the largest possible bundle
But there is nothing in 1 See Minister of Stain for the Army vs Dalziel 68 C LR p 261 907 the placitum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it was expropriat ing
 It is not however necessary for my purpose to pursue the matter any further as in my opinion there has been no dispossession of the rights of a shareholder in the present case
Mr Chari in course of his opening relied exclusively on clause 2 of article 31 of the Constitution
During his reply however he laid some stress on clause 1 of the article as well and his contention seems to be that there was deprivation of property in the present case in contra vention of the terms of this clause
It is difficult to see what exactly is the contention of the learned Counsel and in which way it assists him for purposes of the present case
It has been argued by the learned Attorney General that clause 1 of article 31 relates to a power different from that dealt with under clause 2
According to him what clause 1 contemplates is confiscation or destruction of property in exercise of what are known as police powers  in American law for which no payment of compensation is neces sary
I do not think it proper for purposes of the present case to enter into a discussion on this somewhat debatable point which has been raised by the learned Attorney General
In interpreting the provisions of our Constitution we should go by the plain words used by the Constitution makers and the importing of expressions like police power  which is a term of variable and indefinite connotation in American law can only make the task of interpretation more difficult
It is also not necessary to express any opinion as to wheth er clauses 1 and 2 of article 31 relate to exercise of different kinds of powers or they are to be taken as cumula tive provisions in relation to the same subjectmatter namely compulsory acquisition of property
If the word deprived as used in clause 1 connotes the idea of de struction or confiscation of property obviously no such thing has happened in the present 908 case
Again if clauses 1 and 2 of article 31 have to be read together and deprivation in clause 1 is given the same meaning as compulsory acquisition in clause 2 clause 1 which speaks neither of compensation nor of public purpose would not by itself and apart from clause 2 assist the petitioner in any way
If the two clauses are read disjunctively the only question that may arise in connection with clause 1 is whether or not the depriva tion of property is authorised by law
Mr Chari has raised a question relating to the validity of the legislation on the ground of its not being covered by any of the items in the legislative list and to this question I would advert later on but apart from this clause 1 of article 31 of the Constitution seems to me to be altogether irrelevant for purposes of the petitioner s case
This leads me to the consideration of the next point raised by Mr Chari namely whether these restrictions offend against the provision of article 191f of the Constitution
Article 191 of the Constitution enumerates the dif ferent forms of individual liberty the protection of which is guaranteed by the Constitution
The remaining clauses of the article prescribe the limits that may be placed upon these liberties by law so that they may not conflict with public welfare or general morality
Article 191f guarantees to all citizens  the right to acquire hold or dispose of property  Any infringement of this provision would amount to a violation of the fundamental rights unless it comes within the exceptions provided for in clause 5 of the article
That clause permits the imposition of reasonable restrictions upon the exercise of such righ teither in the interests of the general public or for the protection of the interests of any Scheduled Tribe
Two questions therefore arise in this connection first whether the restrictions that have been imposed upon the rights of the petitioner as a shareholder in the company under the Sholapur Act amount to infringement of hisright to acquire hold or dispose of property within the meaning of article 191f of the Constitution and 909 secondly if they do interefere with such rights whether they are covered by the exceptions 1aid down in clause 5 of the article
So far as the first point is concerned it is quite clear that there is no restriction whatsoever upon the petitioner s right to acquire and dispose of any property
The shares which he holds do remain his property and his right to dispose of them is not lettered in any way
If to hold  a property means to possess it there is no infringe ment of this right either for as I have stated already the acts complained of by the petitioner do not amount to dispossession of him from any property in the eye of law
It is argued that holding  includes enjoyment of all benefits that are ordinarily attached to the ownership of a property
The enjoyment of the fruits of a property is undoubtedly an incident of ownership
The pecuniary benefit which a share
holder derives from the shares he holds is the dividend and there is no limitation on the petitioner s right in this respect
The petitioner undoubtedly has been precluded from exercising his right of voting at the elec tion of directors so long as the statutory directors contin ue to manage the affairs of the company
He cannot pass an effective resolution in concurrence with the majority of shareholders without the consent or sanction of the Central Government and without such sanction there is also a disa bility on him to institute any winding up proceedings in a court of law
In my opinion these are rights or privileges which are appurtenant to or flow from the ownership of property but by themselves and taken independently they cannot be reck oned as property capable of being acquired held or disposed of as is contemplated by article 19 1 f of the Constitu tion
I do not think that there has been any restriction on the rights of a shareholder to hold acquire or dispose of his share by reason of the impugned enactment and conse quently article 19 1 f of the Constitution is of no assistance to the petitioner
In this view the other point does not arise for consideration but I may state here that even if it is conceded for argument s sake that the 910 disabilities imposed by the impugned legislation amount to restrictions on proprietory right they may very well be supported as reasonable restraints imposed in the interests of the general public viz to secure the supply of a commodity essential to the community and to prevent a seri ous unemployment amongst a section of the people
They are therefore protected completely by clause 5of article 19
This disposes of the second point raised by Mr Chari
The next point urged on behalf of the petitioner raises an important question of constitutional law which turns upon the construction of article 14 of the Constitution
It is urged by the learned Counsel for the petitioner that the Sholapur Act is a piece of discriminatory legislation which offends against the provision of article 14 of the Constitu tion
Article 14 guarantees to all persons in the territo ry of India equality before the law and equal protection of the laws and its entire object it is said is to prevent any person or class of persons from being singled out as a special subject of discriminatory legislation
It is pointed out that the law in this case has selected one particular company and its shareholders and has taken away from them the right to manage their own affairs but the same treatment has not been meted out to all other companies or shareholders situated in an identical manner
Article 14 of the Constitution it may be noted corre sponds to the equal protection clause in the Fourteenth Amendment of the American Constitution which declares that no State shall deny to any person within its jurisdiction the equal protection of the laws
 We have been referred in course of the arguments on this point by the learned Counsel on both sides to quite a number of cases decided by the American Supreme Court where questions turning upon the construction of the equal protection  clause in the Ameri can Constitution came up for consideration
A detailed examination of these reports is neither necessary nor prof itable for our present purpose but we think we can cull a few general principles from some of the pronouncements of 911 the American Judges which might appear to us to be consonant with reason and help us in determining the true meaning and scope of article 14 of our Constitution
I may state here that so far as the violation of the equality clause in the Constitution is concerned the peti tioner as a shareholder of the company has as much right to complain as the company itself for his complaint is that apart from the discrimination made against the company the impugned legislation has discriminated against him and the other shareholders of the company as a group vis a vis the shareholders of all other companies governed by the Indian Companies Act who have not been treated in a similar way
As the discriminatory treat ment has been in respect to the shareholders of this company alone any one of the shareholders whose interests are thus vitally affected has a right to complain and it is immate rial that there has been nodiscrimination inter se amongst the shareholders themselves
It must be admitted that the guarantee against the denial of equal protection of the laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions
As has been said by the Supreme Court of America equal protection of laws is a pledge of the protection of equal laws  and this means subjection to equal laws applying alike to all in the same situation
 In other words there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is the same
I am unable to accept the argument of Mr Chari that a legislation relating to one individual or one family or one body corporate would per se violate the guarantee of the equal protection rule
There can certainly be a law applying to one person or to one group of persons and it cannot be held to be 1 Yick Wo vs Hopkins 118 US at 369 2 Southern Raliway Company vs Greene  412
912 unconstitutional if it is not discriminatory in its charac ter 1
It would be bad law if it arbitrarily selects one individual or a class of individuals one corporation or a class of corporations and visits a penalty upon them which is not imposed upon others guilty of like delinquency2
 The legislature undoubtedly has a wide field of choice in determining and classifying the subject of its laws and if the law deals alike with all of a cer tain class it is normally not obnoxious to the charge of denial of equal protection but the classification should never be arbitrary
It must always rest upon some real and substantial distinction bearing a reasonable and just rela tion to the things in respect to which the classification is made and classification made without any  substantial basis should be regarded as invalid3
The question is whether judged by this test the im pugned Act can be said to have contravened the provision embodiedin article 14 of the Constitution
Obviously the Act purports to make provisions which are of a drastic character and against the general law of the land as laid down in the Indian Companies Act in regard to the admin istration and management of the affairs of one company in indian territory
The Act itself gives no reason for the legislation but the Ordinance which was a precursor of the Act expressly stated why the legislation was necessary
It said that owing to mismanagement and neglect a situation had arisen in the affairs of the company which prejudicially affected the production of an essential commodity and caused serious unemployment amongst a certain section of the community
Mr Chari s contention in substance is that there are various textile companies in India situated in a simi lar manner as the Sholapur company against which the same charges could be brought and for the control and regulation of which all the reasons that are mentioned in the preamble to the Ordinance 1 Willis Constitutional Law p 580
2 Gulf C  section FR Co vs Ellis  at 159
3 Southern Railway Co vs Greene   at 412 913 could be applied
Yet it is said the legislation has been passed with regard to this one company alone
The argument seems plausible at first sight but on a closer examination I do not think that I can accept it as sound
It must be conceded that the Legislature has a wide discretion in determining the subject matter of its laws
It is an accepted doctrine of the American Courts and which seems to me to be well founded on principle that the presumption is favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a transgression of constitutional principles
As was said by the Supreme Court of America in Middleton vs Texas Power and Light Company1 It must be presumed that a Legislature understands and correctly appreciates the needs of its own people that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds
 This being the position it is for the petitioner to establish facts which would prove that the selection of this particular subject by the Legislature is unreasona ble and based upon arbitrary grounds
No allegations were made in the petition and no materials were placed before us to show as to whether there are other companies in India which come precisely under the same category as the Sholapur Spinning and Weaving Company and the reasons for imposing control upon the latter as mentioned in the preamble to the Ordinance are applicable to them as well
Mr Chari argues that these are matters of common knowledge of which we should take judicial notice
I do not think that this is the correct line of approach
It is quite true that the Legislature has in this instance proceeded against one company only and its shareholders but even one corporation or a group of persons can be taken as a class by itself for the purpose of legislation provided it exhibits some excep tional features which are not possessed by others
The courts should prima facie 1 219 us 152 at p 157
117 914 lean in favour of constitutionality and should support the legislation if it is possible to do so on any reasonable ground and it is for the party who attacks the validity of the legislation to place all materials before the court which would go to show that the selection is arbitrary and unsupportable
Throwing out of vague hints that there may be other instances of similar nature is not enough for this purpose
We have not even before us any statement on oath by the petitioner that what has been alleged against this particular company may be said against other companies as well
If there was any such statement the respondents could have placed before us the whole string of events that led up to the passing of this legislation
If we are to take judi cial notice of the existence of similar other badly managed companies we must take notice also of the facts which appear in the parliamentary proceedings in connection with this legislation which leave been referred to by my learned brother Fazl Ali J in his judgment and which would go to establish that the facts connected with this corporation are indeed exceptional and the discrimination that has been made can be supported on just and reasonable grounds
I purpose ly refrain from alluding to these facts or basing my deci sion thereon as we had no opportunity of investigating them properly during the course of the hearing
As matters stand no proper materials have been placed before us by either side and as I am unable to say that the legislature cannot be supported on any reasonable ground I think it to be extremely risky to overthrow it on mere suspicion or vague conjectures
If it is possible to imagine or think of cases of other companies where similar or identical condi tions might prevail it is also not impossible to conceive of something peculiar or unusual to this corporation which led the legislature to intervene in its affairs
As has been laid down by the Supreme Court of America The Legislature is free to recognise degrees of harm and it may confine its restrictions to those cases where the need is deemed to be the clearest1
We should 1 Radics vs New York 264 US 915 bear in mind that a corporation which is engaged in produc tion of a commodity vitally essential to the community has a social character of its own and it must not be regarded as the concern primarily or only of those who invest their money in it
If its possibilities are large and it had a prosperous and useful career for a long period of time and is about to collapse not for any economic reason but through sheer perversity of the controlling authority one cannot say that the legislature has no authority to treat it as a class by itself and make special legislation applicable to it alone in the interests of the community at large
The combination of circumstances which are present here may be of such unique character as could not be existing in any other institution
But all these I must say are matters which require investigation on proper materials which we have not got before us in the present case
In these circum stances I am constrained to hold that the present applica tion must fail on the simple ground that the petitioner made no attempt to discharge the primafacie burden that lay upon him and did not place before us the materials upon which a proper decision on the point could be arrived at
In my opinion  therefore the attack on the legislation on the ground of the denial of equal protection of law cannot succeed
The only other thing that requires to be considered is the argument of Mr Chari that the law in question is in valid as it is not covered by any of the items in the legis lative list
In my opinion this argument has no substance
What the law has attempted to do is to regulate the affairs of this company by laying down certain special rules for its management and administration
It is fully covered by item No 43 of the Union List which speaks inter alia of incor poration regulation and winding up of trading corporations
 The result is that the application fails and is dis missed with costs
DAS J
As I have arrived at a conclusion different from that reached by the majority of this Court I 916 consider it proper out of my respect for the opinion of my learned colleagues to state the reasons for my conclusions in some detail
On January 9 1950 the Governor General of India acting under section 42 of the Government of India Act 1935 promulgated an Ordinance being Ordinance No II of 1950 concenrning the Sholapur Spinning and Weaving Company Limited hereafter referred to as the said company
The preambles and the provisions of the Ordinance have been referred to in the judgment just delivered by Mukherjea J and need not be recapitulated by me in detail
Suffice it to say that the net result of the Ordinance was that the managing agents of the said company were dismissed the directors holding office at the time automatically vacated their office the Government was authorised to nominate directors the rights of the shareholders of this company were curtailed in that it was made unlawful for them to nominate or appoint any director no resolution passed by them could be given effect to without the sanction of the Government and no proceeding for winding up could be taken by them without such sanction and power was given to the Government to further modify the provisions of the Indian Companies Act in its application to the said company
On the very day that the Ordinance was promulgated the Central Government acting under section 15 delegated all its powers to the Government of Bombay
On January 10 1950 the Government of Bombay appointed Respondents Nos 3 to 7 as the new directors
On March 2 1950 Respondent No 5 having resigned Respondent No 8 was appointed a director in his place and on the same day Respondent No 9 was also appointed as a director
In the meantime the new Constitu tion had come into force on January 26 1950
On February 7 1950 the new directors passed a resolution sanctioning a call for Rs 50 on the preference shares
Thereupon a suit being Suit No 438 of 1950 was filed in the High Court of 917 Bombay by one Dwarkadas Shrinivas against the new directors challenging the validity of the Ordinance and the right of the new directors to make the call
Bhagwati J who tried the suit held that the Ordinance was valid and dismissed the suit
An appeal Appeal No 48 of 1950 was taken from that decision which was dismissed by a Division Bench Chagla CJ and Gajendragadkar J on August 29 1950
In the meantime on April 7 1950 the Ordinance was replaced by Act No XXVIII of 1950
The Act substantially reproduced the provisions of the Ordinance except that the preambles to the Ordinance were omitted
On May 29 1950 the present petition was filed by one Chiranjitlal Chowdhuri
The petitioner claims to be a shareholder of the said company holding 80 preference shares and 3 ordinary shares
The preference shares according to him stand in the name of the Bank of Baroda to whom they are said to have been pledged
As those preference shares are not registered in the name of the petitioner he cannot assert any right as holder of those shares
According to the respondents the petitioner appears on the register as holder of only one fully paid up ordinary share
For the purposes of this application then the petitioner s interest in the said company must be taken as limited to only one fully paid up ordinary share
The respondents are the Union of India the State of Bombay and the new directors besides the company itself
The respondent No 5 having resigned he is no longer a director and has been wrongly impleaded as respond ent
The reliefs prayed for are that the Ordinance and the Act are ultra vires and void that the Central Government and the State Government and the directors be restrained from exercising any powers under the Ordinance or the Act that a writ of mandamus be issued restraining the new direc tors from exercising any powers under the Ordinance or the Act or from in any manner interfering with the management of the affairs of the company under colour of or in purported exercise of any powers under the said Ordinance or Act
918 The validity of the Ordinance and the Act has been challenged before us on the following grounds i that it was not within the legislative competence a of the Gover nor General to promulgate the Ordinance or b of the Parliament to enact the Act and ii that the Ordinance and the Act infringe the fundamental rights of the shareholders as well as those of the said company and are therefore void and inoperative under article 13
Re i 
The present application has been made by the petitioner under article 52 of the Constitution
Sub section 1 of that article guarantees the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part 1 of the Constitution
Sub section 2 empowers this Court to issue directions or orders or writs including certain specified writs whichever may be appro priate for the enforcement of any of the rights conferred by that Part
It is clear therefore that article 32 can only be invoked for the purpose of the enforcement of the fundamental rights
Article 32 does not permit an applica tion merely for the purpose of agitating the competence of the appropriate legislature in passing any particular enact ment unless the enactment also infringes any of the funda mental rights
In this case the claim is that the fundamen tal rights have been infringed and therefore the question of legislative competence may also be incidentally raised on this application
It does not appear to me however that there is any substance in this point for in my opinion entry 33 of List I of the Seventh Schedule to the Government of India Act 1935 and the corresponding entry 43 of the Union List set out in the Seventh Schedule to the Constitu tion clearly support these pieces of legislation as far as the question of legislative competency is concerned
Sec tions 83A and 83 B of the Indian Companies Act can only be supported as valid on the ground that they regulate the management of companies and are therefore within the said entry
Likewise the provisions of the Ordinance and the Act relating to the appointment of directors by the 919 Government and the curtailment of the shareholders  rights as regards the election of directors passing of resolutions giving directions with respect to the management of the company and to present a winding up petition are matters touching the management of the company and as such within the legislative competence of the appropriate legislative authority
In my judgment the Ordinance and the Act cannot be held to be invalid on the ground of legislative incompe tency of the authority promulgating or passing the same
Re ii The fundamental rights said to have been in fringed are the right to acquire hold and dispose of property guaranteed to every citizen by Article 191f and the right to property secured by article 31 In Gapalan s case 1 1 pointed out that the rights conferred by article 19 1 a to e and g would be available to the citizen until he was under article 21 deprived of his life or personal liberty according to procedure established by law and that the right to property guaranteed by article 19 1f would likewise continue until the owner was under article 31 deprived of such property by authority of law
Therefore it will be necessary to consider first whether the shareholder or the company has been deprived of his or its property by authority of law under Article 31 for if he or it has been so deprived then the question of his or its fundamental right under article 19 1 f will not arise
The relevant clauses of article 31 run as follows 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 authorisingthe taking of such possession or such acquisition unless the law provides for compensation for the property taken posses sion of or acquired 1  920 and either fixes the amount of the compensation or speci fies the principles on which and the manner in which the compensation is to be determined and given
 Article 31 protects every person whether such  person is a citizen or not
and it is wide enough to cover a natu ral person as well as an artificial person
Whether or not having regard to the language used in article 5 a corpora tion can be called a citizen and as such entitled to the rights guaranteed under article 19 it is quite clear that the corporation is protected by article 31 for that article protects every person which expression certainly includes an artificial person
The contention of the peitioner is that the Ordinance and the Act have infringed his fundamental right to property as a shareholder in the said company
Article 31 like article 191 f is concerned with property 
Both the articles are in the same chapter and deal with fundamental rights
Therefore it is reasonable to say that the word property must be given the same meaning in construing those two articles
What then is the meaning of the word property It may mean either the bundle of rights which the owner has over or in respect of a thing tangible or intangible or it may mean the thing itself over or in respect of which the owner may exercise these rights
It is quite clear that the Ordinance or the Act has not deprived the shareholder of his share itself
The share still be longs to the shareholder
He is still entitled to the dividend that may be declared
He can deal with or dispose of the share as he pleases
The learned Attorney General contends that even if the other meaning of the word proper ty is adopted the shareholder has not been deprived of his property understood in that sense that is to say he has not been deprived of the entire bundle of rights which put together constitute his property 
According to him the property of the shareholder besides and apart from his right to elect directors to pass resolutions giving directions to the directors and to present a winding up petition consists in his right to participate 921 in the dividends declared on the profits made by the working of the company and in case of winding up to participate in the surplus that may be left after meeting the winding up expenses and paying the creditors
Those last mentioned rights he points out have not been touched at all and the shareholder can yet deal with or dispose of his shares as he pleases and is still entitled to dividends if and when declared
Therefore concludes the learned Attorney General the shareholder cannot complain that he has been deprived of his property for the totality of his rights have not been taken away
The argument thus formulated appears to me to be somewhat too wide for it will then permit the legisla ture to authorise the State to acquire or take possession without any compensation of almost the entire rights of the owner leaving to him only a few subsidiary rights
This result could not in my opinion have been intended by our Constitution
As said by Rich J in the Minister for State for the Army vs Datziel i while dealing with section 31 XXXI of the Australian Constitution Property in relation to land is a bundle of rights exercisable with respect to the land
The tenant of an unencurnbered estate in fee simple in possession has the largest possible bundle
But there is nothing in the placi tum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it is expropriating
 The learned Judge then concluded as follows at p 286  It would in my opinion be wholly inconsistent with the language of the placitum to hold that whilst preventing the legislature from authorising the acquisition of a citi zen 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 1  118 922 In my judgment the question whether the Ordinance or the Act has deprived the shareholder of his property must depend for its answer on whether it has taken away the substantial bulk of the rights constituting his property
In other words if the rights taken away by the Ordinance or the Act are such as would render the rights left un touched illusory and practically valueless then there can be no question that in effect and substance the property of the shareholder has been taken away by the Ordinance or the Act
Judged by this test can it be said that the right to dispose of the share and the right to receive dividend if any or to participate in the surplus in the case of winding up that have been left to the shareholder are illu sory or practically valueless because the right to control the management by directors elected by him the right to pass resolutions giving directions to the directors and the right to present a winding up petition have for the time being been suspended  I think not
The right still pos sessed by the shareholder are the most important of the rights constituting his property although certain privi leges incidental to the ownership have been put in abeyance for the time being
It is in my opinion impossible to say that the Ordinance or the Act has deprived the shareholder of his property in the sense in which that word is used in article 19 1 f and article 31
The curtailment of the incidental privileges namely the right to elect directors to pass resolutions and to apply for winding up may well be supported as a reasonable restraint on the exercise and enjoyment of the shareholder s right of property imposed in the interests of the general public under article 19 5 namely to secure the supply of an essential commodity and to prevent unemployment
Learned counsel for the petitioner however urges that the Ordinance and the Act have infringed the sharehold er s right to property in that he has been deprived of his valuable right to elect directors to give directions by passing resolutions and in case of apprehension of loss to present a petition for the winding 923 up of the company
These rights it is urged are by them selves property and it is of this property that the shareholder is said to have been deprived bythe State under a law which does not provide for payment of compensation and which is as such an infraction of the shareholder s funda mental right to property under article 31 2
Two ques tions arise on this argument
Are these rights property within the meaning of the two articles I have mentioned  These rights as already stated are no doubt privileges incidental to the ownership of the share which itself is property but it cannot in my opinion be said that these rights by themselves and apart from the share are proper ty within the meaning of those articles for those articles only regard that as property which can by itself be ac quired disposed of or taken possession of
The right to vote for the election of directors the right to pass reso lutions and the right to present a petition for winding up are personal rights flowing from the ownership of the share and cannot by themselves and apart from the share be ac quired or disposed of or taken possession of as contemplated by those articles
The second question is assuming that these rights are by themselves property  what is the effect of the Ordinance and the Act on such property
It is nobody s case that the Ordinance or the Act has autho rised any acquisition by the State of this property of the shareholder or that there has in fact been any such acquisi tion
The only question then is whether this property of the shareholder meaning thereby only the rights mentioned above has been taken possession of by the State
It will be noticed that by the Ordinance or the Act these particular rights of the shareholder have not been entirely taken away for he can still exercise these rights subject 0 course to the sanction of the Government
Assuming however that the fetters placed on these rights are tantamount to the taking away of the rights altogether there is nothing to indicate that the Ordinance or the Act has after taking away the rights from the shareholder 924 vested them in the State or in any other person named by it so as to enable the State or any other person to exercise those rights of the shareholder
The Government undoubtedly appoints directors under the Act but such appointment is made in exercise of the the powers vested in the Government by the Ordinance or the Act and not in exercise of the shareholder s right
As already indicated entry 43 in the Union List authorises Parliament to make laws with respect amongst other things to the regulation of trading corpora tions
There was therefore nothing to prevent Parliament from amending the Companies Act or from passing a new law regulating the management of the company by providing that the directors instead of being elected by the shareholders should be appointed by the Government
The new law has undoubtedly cut down the existing rights of the shareholder and thereby deprived the shareholder of his unfettered right to appoint directors or to pass resolutions giving direc tions or to present a winding up petition
Such depriva tion however has not vested the rights in the Government or its nominee
What has happened to the rights of the shareholder is that such rights have been temporarily de stroyed or kept in abeyance
The result therefore has been that although the shareholder has been for the time being deprived of his property assuming these rights to be property such property has not been acquired or taken possession of by the Government
If this be the result brought about by the Ordinance and the Act do they offend against the fundamental rights guaranteed by article 31  Article 31 1 formulates the fundamental right in a nega tive 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 prohib its 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 2o article 31 deal with the same topic namely compulsory acquisition or taking possession 925 of property clause 2 being only an elaboration of clause 1
There appear to me to be two objections to this sug gestion
If that were the correct view then clause 1must be held to be wholly redundant and clause 2 by itself would have been sufficient
In the next place such a view would exclude deprivation of property otherwise than by acquisition or taking of possession
One can conceive of 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 sup ported in the United States of America as an exercise of police power 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 police powers  
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 de prived of his property provided he is so deprived by au thority 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 926 authority of law
In this case as already stated although the shareholder has been deprived of certain rights such deprivation has been by authority of law passed by a compe tent legislative authority
This deprivation having been brought about otherwise than by acquisition or taking pos session of such rights no question of compensation can arise and therefore there can be no question of the infraction of fundamental rights under article 31 2
It is clear therefore that so far as the shareholder is concerned there has been no infringement of his fundamental rights under article 19 1 f or article 31 and the shareholder cannot question the constitutionality of the Ordinance or the Act on this ground
As regards the company it is contended that the Ordi nance and the Act by empowering the State to dismiss the managing agent to discharge the directors elected by the shareholders and to appoint new directors have in effect authorised the State to take possession of the undertaking and assets of the company through the new directors appoint ed by it without paying any compensation and therefore such law is repugnant to article 31 2 of our Constitution
It is however urged by the learned Attorney General that the mills and all other assets now in the possession and custody of the new directors who are only servants or agents of the said company are in the eye of the law in the possession and custody of the company and have not really been taken possession of by the State
This argument however overlooks the fact that in order that the posses sion 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 company1
In this view of the 1 See Elements of Law by Markby
6th Edition
Para 371
p 192
927 matter there is great force in the argument that the proper ty 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 compen sation
The appropriate legislative authority was no doubt induced to enact this law because as the preamble to the Ordinance stated on account of mismanagement and neglect a situation had arisen in the affairs of the company which had prejudicially affected the production of an essential com modity and had caused serious unemployment amongst a certain section of the community but as stated by Holmes J in Pennsylvania Coal Company vs Mahon1 A strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional
way of paying for the change
 Here there fore 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
If the fundamental right of the company has been in fringed at all who can complain about such infringement  Primafacie the company would be the proper person to come forward in vindication of its own rights
It is said that the directors having been dismissed the company cannot act
This however is a misapprehension for if the Act be void on account of its being unconstitutional the directors appointed by the shareholders have never in law been dis charged and are still in the eye of the law the directors of the company and there was nothing to prevent them from taking proceedings in the name of the company at their own risk as to costs
Seeing that the directors have not come forward to make the application on behalf of the company and in its name the question arises whether 1  928 an individual shareholder can complain
It is well settled in the United States that no one but those whose rights are directly affected by a law can raise the question of the constitutionality of that law
Thus in McCabe vs Atchison1 which arose out of a suit filed by five Negros against five Railway Companies to restrain them from making any distinction in service on account of race pursuant to an Oklahoma Act known as  The Separate Coach Law in uphold ing the dismissal of the suit Hughes J observed  It is an elementary principle that in order to justify the granting of this extraordinary relief the complainants  need of it and the absence of an adequate remedy at law must clearly appear
The complaint cannot succeed because some one else may be hurt
Nor does it make any difference that other persons who may be injured are persons of the same race or occupation
It is the fact clearly established of injury to the complainant not to others which justi fies judicial interference
 In that case there was no allegation that anyone of the plaintiffs had ever travelled on anyone of the rail roans or had requested any accommodation in any of the sleeping cars or that such request was refused
The same principle was laid down in Jeffrey Manufacturing Company vs Blagg2 Hendrick vs MaCyland3 and Newark Natural Gas and Fuel Company vs The City of Newark1
In each of these cases the Court declined to permit the person raising the question of constitutionality to do so on the ground that his rights were not directly affected by the law or Ordinance in ques tion
On the other hand in Truax vs Raich5 and in Bu chanan vs Warley5 the Court allowed the plea because in both the 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 citi zens was 1 235 us 151
4 242 us 403
2 235 us 571
5 239 us 33
3  6 245 us 60
929 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 en forced would compel the employer to discharge the employee and therefore the employee was directly affected by the statute
In the second of the two last mentioned cases a city Ordinance prevented the occupation of a plot by a colored 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 specific performance and contended that the Ordinance was unconstitutional
Although the alleged denial of con stitutional 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
It is therefore clear that the constitutional validity of a law can be challenged only by a person whose interest is directly affected by the law
The question then arises whether the infringement of the company s rights so directly affects its shareholders as to entitle any of its shareholders to question the constitutional validity of the law infringing the company s rights
The question has been answered in the negative by the Supreme Court of the United States in Darnell vs The State of Indi ana1
In that case the owner of a share in a Tennessee corporation was not allowed to complain that an Indiana law discriminated against Tennessee corporations in that it did not make any allowance as it did in the case of Indiana corporations where the corporation 1 119 930 had property taxed within the State
This is in accord with the well established legal principle that a corporation is a legal entity capable of holding pro perty and of suing or being sued and the corporators are not in con templation of law the owners of the assets of the corpora tion
In all the cases referred to above the question of constitutionality was raised in connection with the equal protection clause in the Fourteenth Amendment of the American Federal Constitution
If such be the require ments of law in connection with the equal protection clause which corresponds to our article 14 it appears to me to follow that only a person who is the owner of the property can raise the question of constitutionality under article 31 of a law by which he is so deprived of his property
If direct interest is necessary to permit a person to raise the question of constitutionality under article 14 a direct interest in the property will I apprehend be necessary to entitle a person to challenge a law which is said to infringe the right to that property under article 31
In my opinion 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 as held in Darnell vs Indiana1 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
An interest in the company owning an undertak ing is not an interest in the undertaking itself
The interest in the company which owns an undertaking is the property of the shareholder under article 31 2 but the undertaking is the property of the company and not that of the shareholder and the latter cannot be said to have a direct interest in the property of the company
This is the inevitable result of attributing a legal personality to a corporation
The proceedings for a writ in the nature of a writ of habeas corpus appear to be somewhat different for the 1 226 u
section 338 931 rules governing those proceedings permit besides the person imprisoned any person provided he is not an utter strang er but is at least a friend or relation of the imprisoned person to apply for that particular writ
But that special rule does not appear to be applicable to the other writs which require a direct and tangible interest in the appli cant to support his application
This must also be the case where the applicant seeks to raise the question of the constitutionality of a under articles 14 19 and 31
For the reasons set out above the present petitioner cannot raise the question of constitutionality of the impugned law under article 31
He cannot complain of any infringement of his own rights as a shareholder because his property has not been acquired or taken possession of by the State although he has been deprived of his right to vote and to present a winding up petition by authority of law
Nor can he complain of an infringement of the compa ny s right to property because he is not in the eye of law the owner of the property in question and accordingly not directly interested in it
In certain exceptional cases where the company s property is injured by outsiders a shareholder may under the English law alter 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 thecompany
The only other ground on which the Ordinance and the Act have been challenged is that they infringe the the fundamen tal rights guaranteed by article 14 of the Constitution Equal protection of the laws as observed by Day 3
in Southern Railway Company vs Greene 1 means subjection to equal laws applying 1  932 alike to all in the same situation
The inhibition of the article that the State shall not deny to any person equality before the law or the equal protection of the laws was designed to protect all persons against legislative discrim ination amongst equals and to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation
It does not howev er mean that every law must have universal application for all persons are not by nature attainment or circumstances in the same position
The varying needs of different class es of persons often require separate treatment and it is therefore established by judicial decisions that the equal protection clause of the Fourteenth Amendment of the Ameri can Constitution does not take away from the State the power to classify persons for legislative purposes
This classi fication may be on different bases
It may be geographical or according to objects or occupations or the like
If law deals equally with all of a certain well defined class it is not obnoxious and it is not open to the charge of a denial of equal protection on the ground that it has no applica tion to other persons for the class for whom the law has been made is different from other persons and there fore there is no discrimination amongst equals
It is plain that every classification is in some degree likely  to produce some inequality but mere production of inequality is not by itself enough
The inequality produced in order to encounter the challenge of the Constitution must be actually and palpably unreasonable and arbitrary
 Said Day J in Southern Railway Company vs Greene1   While reasonable classification is permitted without doing vio lence to the equal protection of the laws such classifica tion must be based upon some real and substantial distinc tion bearing a reasonable and just relation to the things in respect to which such classification is imposed and the classification cannot be arbitrarily made without any substantial basis
Arbitrary selection it has been said cannot be justified by calling it classification
Quite conceivably there may be a law 933 relating to a single individual if it is made apparent that on account of some special reasons applicable only to him and inapplicable to anyone else that single individual is a class by himself
In Middieton vs Texas Power and Light Company1 it was pointed out that there was a strong presumption that a legislature understood and correctly appreciated the needs of its own people that its laws were directed to problems made manifest by experience and that the discriminations were based upon adequate grounds
It was also pointed out in that case that the burden was upon him who attacked a law for unconstitutionality
In Lindsley vs Natural Carbonic Gas Company2 It was also said that one who assailed the classification made in a law must carry the burden of showing that it did not rest upon any reasonable basis but was essentially arbitrary
If there is a classi fication the Court will not hold it invalid merely because the law might have been extended to other persons who in some respects might resemble the class for which the law was made for the legislature is the best judge of the needs of the particular classes and to estimate the degree of evil so as to adjust its legislation according to the exigency found to exist
If however there is on the face of the stat ute no classification at all or none on the basis of any apparent difference specially peculiar to any particular individual or class and not applicable to any other person or class of persons and yet the law hits only the particular individual or class it is nothing but an attempt to arbi trarily single out an individual or class for discriminating and hostile legislation
The presumption in favour of the legislature cannot in such a case be legitimately stretched so as to throw the impossible onus on the complainant to prove affirmatively that there are other individuals or class of individuals who also possess the precise amount of the identical qualities which are attributed to him so as to form a class with him
As pointed out by Brewer J in the Gulf Colorado and Santa Fe Railway vs
WH Ellis 3 while good faith 1  2  3 165 US 150 934 and a knowledge of existing conditions on the part of a legislature was to be presumed yet to carry that presump tion to the extent of always holding that there must be some undisclosed and unknown reason for subjecting certain indi viduals or corporations to hostile and discriminating legis lation was to make the protecting clause a mere rope of sand in no manner restraining State action
The complaint of the petitioner on this head is formu lated in paragraph 8 iii of the petition as follows  The Ordinance denied to the company and its sharehold ers equality before the law and equal protection of the laws and was thus a violation of article 14 of the Constitution
The power to make regulations relating to trading corpo rations or the control or production of industries was a power which consistently with article 14 could be exercised only generally or with reference to a class and not with reference to a single company or to shareholders of a single company
 The Act is also challenged on the same ground in paragraph 9 of the petition
The learned Attorney General contends that the petitioner as an individual shareholder cannot complain of discrimination against the company
It will be noticed that it is not a case of a shareholder complaining only about discrimination against the company or fighting the battle of the company but it is a case of a shareholder complaining of discrimination against himself and other shareholders of this company
It is true that there is no complaint of discrimination inter se the share holders of this company but the complaint is that the share holders of this company taken as a unit have been discrim inated vis a vis the shareholders of other companies
Therefore the question as to the right of the shareholder to question the validity of a law infringing the right of the company does not arise
Here the shareholder is com plaining of the infringement of his own rights and if such infringement can be established I see no reason why the shareholder cannot come within article 32 to vindicate his own rights
The fact that these proceedings have been taken by 935 one single shareholder holding only one single fully paid up share does not appear to me to make any the least difference in principle
If this petitioner has by the Ordinance or the Act been discriminated against and denied equal protec tion of the law his fundamental right has been infringed and his right to approach this Court for redress cannot be made dependent on the readiness or willingness of other shareholders whose rights have also been infringed to join him in these proceedings or of the company to take substan tive proceedings
To take an example if any law discrimi nates against a class say the Punjabis any Punjabi may question the constitutionality of the law without joining the whole Punjabi community or without acting on behalf of all the Punjabis
To insist on his doing so will be to put a fetter on his fundamental right under article 32 which the Constitution has not imposed on him
Similarly if any law deprives a particular shareholder or the shareholders of a particular company of the ordinary rights of sharehold ers under the general law for reasons not particularly and specially applicable to him or them but also applicable to other shareholders of other companies such law surely offends against article 14 and any one so denied the equal protection of law may legitimately complain of the infringe ment of his fundamental right and is entitled as of right to approach this Court under article 32 to enforce his own fundamental right under article 14 irrespective of whether any other person joins him or not
To the charge of denial of equal protection of the laws the respondents in the affidavit of Sri Vithal N Chandavar kar filed in opposition to the petition make the following reply With reference to paragraph 6 of the petition I deny the soundness of the submissions that on or from the 26th January 1950 when the Constitution of India came into force the said Ordinance became void under article 131 of the Constitution or that the provisions thereof were inconsistent with the provisions of Part III of the said Constitution or for any of the other grounds mentioned in paragraph 8 936 of the said petition
 In the whole of the affidavit in opposition there is no suggestion as to why the promulgation of the Ordinance or the passing of the Act was considered necessary at all or on what principle or basis either of them was founded
No attempt has been made in the affidavit to show that the Ordinance or the Act was based upon any principle of classification at all or even that the particu lar company and its shareholders possess any special quali ties which are not to be found in other companies and their shareholders and which therefore render this particular company and its shareholders a class by themselves
Neither the affidavit in opposition nor the learned Attorney General in course of his arguments referred to the statement of the objects and reasons for introducing the bill which was eventually enacted or the Parliamentary debates as showing the reason why and under what circumstances this law was made and therefore apart from the question of their admis sibility in evidence the petitioner has had no opportunity to deal with or rebut them and the same cannot be used against him
The learned Attorney General takes his stand on the presumption that the law was founded on a valid basis of classification that its discriminations were based upon adequate grounds and that the law was passed for safeguard ing the needs of the people and that therefore the onus was upon the petitioner to allege and prove that the classi fication which he challenged did not rest upon any reasona ble basis but was essentially arbitrary
I have already said that if on the face of the law there is no classification at all or at any rate none on the basis of any apparent difference specially peculiar to the individual or class affected by the law it is only an instance of an arbitrary selection of an individual or class for discriminating and hostile legislation and therefore no presumption can in such circumstances arise at all
Assuming however that even in such a case the onus is thrown on the complainant there can be nothing to prevent him from proving if he can from the text of
the law itself that 937 it is actually and palpably unreasonable and arbitrary and thereby discharging the initial onus
The Act is intituled an Act to make special provision for the proper management and administration of the Sholapur Spinning and Weaving Company Limited
 There is not even a single preamble alleging that the company was being misman aged at all or that any special reason existed which made it expedient to enact this law
The Act on its face does not purport to make any classification at all or to specify any special  vice to which this particular company and its shareholders are subject and which is not to be found in other companies and their shareholders so as to justify any special treatment
Therefore this Act ex facie is nothing but an arbitrary selection of this particular compa ny and its shareholders for discriminating and hostile treatment and read by itselfis palpably an infringement of Article 14 of the Constitution
The learned Attorney General promptly takes us to the preambles to the Ordinance which has been replaced by the Act and suggests that the Act is based on the same consider ations on which the Ordinance was promulgated
Assuming that it is right and permissible to refer to and utilise the preambles do they alter the situation  The preambles were as follows  Whereas on account of mismanagement and ne glect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company Limited which has prejudi cially affected the production of an essential commodity and has caused serious unemployment amongst a certain section of the communityAnd whereas an emergency has arisen which renders it necessary to make special provision for the proper management and administration of the aforesaid compa ny  The above preambles quite clearly indicate that the justification of the Ordinance rested on mismanagement and neglect producing certain results therein specified
It will be noticed that apart from these preambles there is no material whatever before us establishing or even suggesting that this company and its shareholders have in fact been guilty of any 938 mismanagement or neglect
Be that as it may the only reason put forward for the promulgation of the Ordinance was mismanagement resulting in falling off of production and in producing unemployment
I do not find it necessary to say that mismanagement and neglect in conducting the affairs of companies can never be a criterion or basis of classifica tion for legislative purposes
I shall assume that it is permissible to make a law whereby all delinquent companies and their shareholders may be brought to book and all companies mismanaging their affairs and the shareholders of such companies may in the interest of the general public be deprived of their right to manage the affairs of their companies
Such a classification made by a law would bear a reasonable relation to the conduct of all delinquent compa nies and shareholders and may therefore create no inequal ity for the delinquent companies and their shareholders from a separate class and cannot claim equality of treatment with good companies and their shareholders who are their betters
But a distinction cannot be made between the delinquent companies inter se or between shareholders of equally delinquent companies and one set cannot be punished for its delinquency while another set is permitted to continue or become in like manner delinquent without any punishment unless there be some other apparent difference in their respective obligations and unless there be some cogent reason why prevention of mismanagement is more imperative in one instance than in the other
To do so will be nothing but an arbitrary selection which can never be justified as a permissible classiffication
I am not saying that this particular company and its shareholders may not be guilty of mismanagement and negligence which has brought about seri ous fall in production of an essential commodity and also considerable unemployment
But if mismanagement affect ing production and resulting in unemployment is to be the basis of a classification for making a law for preventing mismanagement and securing production and employment the law must embrace within its 939 ambit all companies which now are or may hereafter become subject to the vice
This basis of classification by its very nature cannot be exclusively applicable to any partic ular company and its shareholders but is capable of wider application and therefore the law founded on that basis must also be wide enough so as to be capable of being ap plicable to whoever may happen at any time to fall within that classification
Mismanagement affecting production can never be reserved as a special attribute peculiar to a particular company or the shareholders of a particular company
It it were permissible for the legislature to single out an individual or class and to punish him or it for some delinquency which may equally be found in other individuals or classes and to leave out the other individu als or classes from the ambit of the law the prohibition of the denial of equal protection of the laws would only be a meaningless and barren form of words
The argument that the presumption being in favour of the legislature the onus is on the petitioner to show there are other individuals or companies equally guilty of mismanagement prejudicially affecting the production of an essential commodity and causing serious unemployment amongst a certain section of the community does not in such
circumstances arise for the simple reason that here there has been no classification at all and in any case the basis of classification by its very nature is much wider and cannot in it application be limited only to this company and its shareholders and that being so there is no reason to throw on the petitioner the almost impossible burden of proving that there are other companies which are in fact precisely and in all particu lars similarly situated In any event the petitioner in my opinion may well claim to have discharged the onus of showing that this company and its shareholders have been singled out for discriminating treatment by showing that the Act on the face of it has adopted a basis of classifica tion which by its very nature cannot be exclusively ap plicable to this company and its shareholders but Which may be equally appplicable to other companies 940 and their shareholders and has penalised this particular company and its shareholders leaving out other companms and their shareholders who may be equally guilty of the alleged vice of mismanagement and neglect of the type referred to in the preambles
In my opinion the legislation in question infringes the fundamental rights of the petitioner and offends against article 14 of our Constitution
The result therefore is that this petition ought to succeed and the petitioner should have an order in terms of prayer 3 of the petition with costs
Petition dismissed
Agent for the petitioner MSK Aiyengar
Agent for opposite party Nos 1  2PA Mehta
Agent for opposite party Nos
3 to 5 and 7 to 10 Rajinder Narain


Summary:
On June 14 1958 the President of India promulgated an Ordinance to amend the 
By section 8 of the Ordinance the Statutes of the University were amended and in place of Statute NO 30 another statute was substituted which set up a  Screening Committee  to examine the cases of all persons holding teaching administrative or other posts in the University at the commencement of the Ordinance in respect of whom there was reason to believe that their continuance in office would be detrimental to the interests of the University and to forward its recommendations to the Executive Council to take such action as it may deem fit
The Ordinance was repealed by the Banaras Hindu University Amendment Act 1958 which re enacted Statute No 30
Under the re enacted Statute before any action could be taken by the Executive Council as referred to above the matter had first to be referred to the Solicitor General of the Government of India who if he was of the opinion that there was prima facie case for inquiry shall refer the case of the person concerned to a committee known as the Reviewing Committee
On receipt of the recommendations of the Reviewing Committee the Executive Council was to take such action thereon as it thought fit after giving the person concerned a reasonable opportunity for being heard
Apart from Statute No 30 added by Parliament the Executive Council could terminate the engagement of an employee by taking action under the terms of the agreement where such agreement existed or under Ordinance No 6 framed under the Act without assigning a cause on four months  notice or four months  salary in lieu of notice
The cases of the appellants who held posts under the Univer sity were considered in accordance with the procedure laid down in Statute No 30 by the Solicitor General who then sent up their cases to the Reviewing Committee
The appellants appeared before the Committee and made their representations
The Committee sent its findings in respect of the appellants except one to the Executive Council who then called upon four of them to show cause why their services should not be terminated in view of the 387 findings of the Committee that the continuance in office of those appellants was detrimental to the interests of the University
No notices however were sent to appellants 2 4 5 and 6
Appellants 1 3 7 and 8 having filed petitions in the High Court of Allahabad under article 226 of the Constitution of India for relief against the proposed action and proceedings having been stayed the Executive Council passed a resolution No 89 on May 15 1960 that the consideration of their cases was postponed till after the writ petitions were disposed of by the High Court
On the same day however the Executive Council passed resolutions Nos 90 94 to 96 and 99 to 102 terminating the services of all the appellants giving them four or six months  salary in lieu of notice
The appellants challenged the validity of the resolutions on the grounds inter alia 1 that the Executive Council could not take recourse to the provisions of Ordinance No 6 having started action under Statute NO 30 2 that Ordinance No 6 was subordinate to Statute NO 30 and could not prevail where Statute NO 30 applied 3 that action against respondents 1 3 7 and 8 was stayed by the High Court and resolution No 89 and that any action thereafter under the agreement or Ordinance No 6 was incompetent and 4 that in any case the action of the Executive Council was mala fide and a fraud upon the Univer sity Act and Statute NO 30
The case for the University authorities was that the Executive Council could take action under the terms of the agreements where such agreements existed or under Ordinance No 6 or Statute NO 30 at its option and that where alternative remedies were provided by law all or any of the remedies could be invoked Held that the impugned resolutions were ultra vires and should be quashed
The power of terminating services without notice could not be invoked in the present case where allegations of conduct detrimental to the interests of the University had already been made and scrutinised by the Solicitor General and the Reviewing Committee and the matter was pending before the Executive Council
The powers granted by the Ordinances were expressly subject to the Statutes and the Ordinances could not prevail over the Statutes
State of Keyala vs C M Francis and Co 1961 3 SCR 181 distinguished
The words  shall take such action thereon as it may think fit  in Statute No 30 gave liberty of action on the recommendations of the Reviewing Committee but lay a duty to form an opinion
The words did not give a discretion to take action outside the Statute
The action taken by the University authorities could only be questioned if it was ultra vires and proof of alien or irrelevant motive was only an example of the ultra vires character of the action
The court was not concerned so much with the motives 388 nor even with the justice of the action taken by a public body like the University as with its legality
Short vs Poole Corporation  relied on