Case: Motipur Zamindari Co. Ltd Vs. The State Of Bihar And Another.Raja Jankinath Roy And Nare

The Motipur Zamindari Company Ltd., the appellant in Civil Appeal No. 62 of 1953, was incorporated in 1932 under the Indian Companies Act and has its registered office in Bengal. It supplies sugar-cane to a sister concern named Motipur Sugar Factory Ltd. Raja Jankinath Roy and Narendra Nath Roy and Co., Ltd., the appellant in C.A. No. 63 of 1953, was incorporated in 1933 under the Indian Companies Act and also has its registered office in Bengal. This company owns Zamindari properties in Purnea in the State of Bihar as well as in Malda in the State of West Bengal. It carries on business, amongst others, as banker andthe 30th December, 1949, a bill entitled the Bihar Land Reforms Bill was passed by the Bihar Legislature and having been reserved for the consideration of the President received his assent on the 11th September, 1950. The Act so passed and assented to was published in the Bihar Gazette on the 25th September, 1950, and was brought into force on the same day by a notification made by the State Government in exercise of powers conferred on it by section 1(3) of the Act. Many of the proprietors and tenureholders of Zamindari estates took proceedings against the State of Bihar for appropriate orders restraining the State Government from taking over the estates under the provisions of the Act which they claimed to be beyond the legislative competency of the Bihar Legislature and otherwise void. On the 12th March, 1951, a Special Bench of the Patna High Court held that the Act was unconstitutional on account of its contravention of article 14 of the Constitution. The State of Bihar appealed to this Court. Pending that appeal, the provisional Parliament passed the Constitution (First Amendment) Act, 1951. The respondents in the main appeal took proceedings in this Court, contending that the Act amending the Constitution was invalid. This Court, however on 5th October, 1951 upheld the validity of the amending Act. On 6th November, 1951, notifications were issued under section 3 of the Bihar Act declaring that certain Touzies belonging to the appellants specified in the notification had passed to and become vested in the State. Both the appellants made separate applications to the Patna High Court under article 226 of the Constitution praying for mandamus or suitable direction or order restraining the respondent from taking possession of their respective estates or tenures by virtue of the said notifications and for other ancillary reliefs. The appeals filed by the State of Bihar against the order of the Special Bench declaring the Act to be void came up for hearing before this Court and this Court upheld the validity of the Act, except as to a few provisions mentioned in the majority judgment which were held to be severable. Thereafter, the two applications made by the two appellants under article 226 before the Patna High Court came up for hearing and were dismissed by a Bench of that Court on the 22nd December, 1952. The present appeals have been filed with leave of the Patna High Court against the said dismissal.The question raised before the High Court was whether the Act was, on its true construction, intended to apply to Zamindari estates of companies incorporated under the Indian Companies Act. In support of the appellants contention that it was not, it was urged that the Bihar Legislature had no authority to legislate with respect to trading corporations or non-trading corporations whose objects were not confined to one State. Reference was made to entries 43, 44 and 45 of List I to show that it was Parliament alone which was authorized to make law with respect to matters set forth in those entries. The contention was that the Bihar Legislature in enacting the Act invaded the Union field and so the Act was invalid. This argument was sought to be reinforced by reference to the provisions of the Act and the winding up provisions of the Companies Act. The Patna High Court overruled this contention and Mr. P. R. Das appearing in support of these appeals has not challenged this part of the decision of the Patna High Court.

Court's reasoning:
We are unable to accept this contention. It is not disputed that a company can own an estate or a part of an estate and, indeed, the appellant companies are fighting these appeals only to protect the estates they own. Therefore, they come within the first part of the definition. The definition after stating what the word means proceeds to state what else the definition would include under specified circumstances, namely, the heirs and successor-in-interest etc. The word "heir" certainly is inappropriate with regard to a company, but there is nothing inappropriate in the company having a successor in-interest. It is pointed out that there is no provision in the definition of proprietor to include the directors, managing agents and, in case of winding up, the liquidator of the company. This circumstance does not appear to us to be a cogent reason for holding that the word "proprietor" as defined does not cover a company. It is to be noted that the agent or, in case of insolvency, the official assignee or receiver of an individual proprietor are also not included in the definition. Reference to proprietor who is a minor or of unsound mind or an idiot and his guardian etc., was obviously necessary because those proprietors suffer from legalIndeed, one cannot think of a company unless one has in view the provisions of the Companies Act, for a company is the creature of the Companies Act. Its existence, powers and rights are all regulated by that Act. The trend of the speeches of the noble Lords in the case relied on by Mr. P. R. Das is that the object of the particular Act under word "corporation" being included within the term "person" as used in that Act, and as we apprehend it, that decision lays down nothing beyond that.In support of his contention that a company owning an estate was never intended to be affected by the Act, Mr. P. R. Das draws our attention to the winding up sections of the Indian Companies Act and urges that it is not possible to fit in the scheme of winding up into the scheme of the Bihar Act. If the Zamindari assets of the company are taken over and compensation is paid by non-transferable bonds it will, he contends, be impossible to apply the law of winding up in case the company goes into liquidation. There will, according to him, be conflict of jurisdiction between the Court where the winding up is proceeding, which may conceivably be in another State, and the Bihar Government and its officers. We see no force in this contention. Upon a notification being issued under section 3, the Zamindari estate will vest in the State and the company will cease to have any interest in it. Its only right will be to receive compensation. In case of winding up the liquidator will have to pursue the remedy provided by this Act. He or the company will be in no worse position than the official assignee or official receiver of an individual proprietor who may happen to become insolvent in another State.A corporation, it is true, cannot be made liable for treason, felony or any misdemeanor involving personal violence or for any offence for which the only penalty is imprisonment or corporal punishment. (Halsbury, 2nd Edition, Volume IX, article 5, p. 14). Section 41 does not prescribe punishment by imprisonment only. Mr. P. R. Das suggests that the infliction of imprisonment or fine would depend upon the gravity of the offence and not on the character of the offender. This argument, however, would seem to run counter to the opinion of Lord Blackburn set forth at pages 867-870 of the report of the very case relied on by Mr. P. R. Das. The resent cases off Public Prosecutions v. Kent and Sussex Contractors Limited [[1944] 1 K.B.v. I.C.R. Haulage, Limited and Another [[1944] 1 K.B. 551]seem to indicate that a corporation may be convicted even of an offence requiring an act of will or a state of mind. Apart, however, from the consideration whether a company may be held guilty of wilful failure or neglect, as to which we need not express any definite opinion on this occasion, there can be no difficulty in applying the provisions of section 41 to the officers or agents of the company. On a notification under section 3(1) being published the estate vests in the State. Section 4 sets out the consequences of such vesting. Clause (g) of that section empowers the Collector by written order served in the prescribed manner to require any person in possession of such an estate or tenure or any part thereof to give up possession of the same by a date specified in the order and to take such steps or use such force as may be necessary for securing compliance with the said order. If any officer or agent of the company in the possession of the estate wilfully fails or ignores to comply with such lawful order, then surely he can be proceeded against under section 41. Likewise, under section 40, the officers therein mentioned are authorized at any time before or after the date of vesting by a written order served in the prescribed manner to require a proprietor or tenure-holder or any other person in possession of such an estate or tenure or any agents or employees of such proprietor, tenure-holder or other person to produce at a time and place specified in the order such documents, papers or registers or to furnish such information relating to such estate or tenure as such officer may from time to time require for any of the purposes of this Act. A wilful failure or neglect to comply with such order would clearly bring the recalcitrant officer or agent of the company with in the penalty provided under section 41. Section 41, therefore, does not necessarily preclude the application of the Act to incorporated companies.It cannot be denied that a company is competent to own and holdview of this purpose there is no reason to differentiate between an individual proprietor and a company which owns estates or tenures. Indeed, there is not only nothing repugnant in the subject or context of the Act which should prevent the inclusion of a company owning estate within the definition of "proprietor", such inclusion is necessary in order to give full effect to the very object of the Act.We do not think there is any substance in this argument. As stated by the High Court it is a simple case of apportionment of the revenue and also apportionment of the rent. The necessity for such apportionment cannot possibly affect the validity of the notification. For reasons stated above these appeals fail and must be dismissed with costs.