Case: R.S. Seth Shanti Sarup Vs. Union Of India &amp; Ors

1. This is a petition under Art. 32 of the Constitution presented by one Seth Shanti Sarup, a partner of the firm of Messrs, Lallamal Hardeodas Cotton Spinning Mills Company, Hathras praying for appropriate writs to set aside and quash two orders, one dated, made by respondent 1, the Government of India, under S. 3(4), Essential Supplies (Temporary Powers) Act of 1946, and the other an earlier one passed by the second respondent on the, under S. 3(f), U. P. Industrial Disputes Act, 1947There is a further prayer for consequential relief in the shape of restoration of possession of the properties from which the petitioner and hiss are alleged to have been dispossessed in pursuance of the impugned orders and recovery of damages for the loss sustained in consequence thereof2. To appreciate the contentions that have been raised before us it would be necessary to narrate briefly the material facts in chronological order. The partnership firm known as Lallamal Hardeodas Cotton Spinning Mills Company, of which the petitioner is a partner, was started some time in the year 1921 at Hathras within the State of U. P. and it carried on, since then, the business of production and supply of cotton yarnThe partners numbering 16 in all were members of the same family and the capital supplied by them amounted to about 24 lakhs of rupees. The business was a fairly profitable one since its inception; but in 1944 differences arose between the partners and one of them named Raghunath Pershad instituted a suit, being suit No. 67 of 1944, for dissolution of the partnership, in the Court of the Civil Judge, AgraThat suit was dismissed on the preliminary ground that it was not maintainable by reason of there being an arbitration clause in the partnership agreement. Against this judgment an appeal was taken to the High Court at Allahabad and this appeal, being Appeal No. 121 of 1952, is still pending hearing. During the pendency of the suit and the appeal Receivers were appointed by the trial Judge and at a late stage by the High Court also who worked the mills under the directions of the Court and the business did vield some profits up to the year 1948In February, 1949, the Receiver reported that the mills could thenceforth be run only at a loss and thereupon on, the Court ordered the mills to be closed. It appears that on, a letter was received by the Court from the Deputy Secretary, Labour Department of the, U. P. Government wherein the Government expressed their desire of taking over these mills and running the same themselves under the Industrial Disputes ActThis fact was recorded by the Court in its order dated, and the learned Judge expressed his opinion that although Government was entitled to take over the mills if they so desired, yet as the parties raised objections to Government management the Government should keep in view the objections of the parties before they made any final decision in the matterThe order directed the said respondent to take over possession of the mills to the exclusion of the other partners, the Receiver and the managers and run the undertaking himself subject to the general supervision of the District Magistrate, Aligarh. He was allowed a pay of Rs. 1, 000 per month and a commission of 12 annas per cent. on the sale of goods produced and was given the the power to dispose of the funds and assets, both movable and immovableIt may be mentioned here that this order of appointment was assented to by 9 out of the remaining 15 partners and the consenting partners admittedly owned between themselves more than 50 per cent. of the share capital. The respondent 3 took possession of the mills on the strength of this order and carried on the undertaking for about a year which resulted in lossIn July 1950 the petitioner instituted a suit in the court of the Subordinate Judge at Aligarh praying for a declaration that the order of the U. P. Government mentioned above was illegal and ultra vires and not warranted by the provisions of the U. P. Industrial Disputes Act. There were prayers also for injunction and damages against the U. P. Government and respondent 3Soon after this suit was filed the U. P. Legislature passed an amending Act, being Act No. 23 of 1950, by which the provision of S. 3(c). Industria1 Disputes Act was amended by addition of cl. (cc) and two other sections to wit Ss.A and 3.B, were added3. In 1951 the petitioner filed in the High Court of Allahabad a petition under Art. 226 of the Constitution praying for appropriate writs to quash the order of the U. P. Government mentioned aboveDuring the pendency of this proceeding the Union of India (Ministry of commerce and industry) passed an order purporting to be made under S. 3(4). Essential Supplies (Temporary Powers) Act of 1946 by which the Central Government appointed the same person, namely respondent 3, as an authorised Controller under the provisions of that section and directed him to run the said undertaking on the same remuneration as before to the exclusion of all the other partners. managers, agents and Receivers, and respondent 3, was further authorised to dispose of the funds of the undertaking and to transfer properties, both movable and immovable, in such way as he considered properAfter the passing of the above order the Central Government was impleaded as respondent to the writ petition pending before the Allahabad High Court and a prayer was added for quashing of that order also. The U. P. Government it my be noted, gave an undertaking that if the order made by the Central Government was quashed, they would not claim possession of the mills4. By an order dated, the High Court dismissed the writ petition, being of opinion that in the circumstances of the case the discretionary powers under Art. 226 of the Constitution should not be exercised in favour of the petitioner who should be left to his remedy in the civil suit already filed by him and pending in the Aligarh CourtThe petitioner has now come to this Court under Art. 32 of the Constitution praying for quashing of the orders mentioned above and restoration of the properties and damages, alleging inter alia that the suit which is pending before the Aligarh Court, cannot afford him adequate, effective and expeditious remedy.

Court's reasoning:
10. These arguments of the learned counsel appear to us to be prima facie well founded and we are relieved from the task of examining them in detail as the learnedl appearing for the Central Government has fairly conceded that the impugned orders do not come within the purview of and are not warranted by the provisions of the Acts, under which they purport to have been passedHe has, therefore, made no. attempt to support the orders or the acts of possession exercised by the Government or their agents in pursuance thereof. The only point taken by him is a technical one and his contention is that even though the orders are invalid the petitioner cannot come before this Court under Art. 32 of the Constitution inasmuch as there was no. fundamental right in existence when the first order of the U. P. Government was passed in July 1949 and no. fresh act of dispossession has taken place since the Constitution came into forceWe do not think that there is any substance in this contention. In the first place, the order against which this petition is primarily directed is the order of the Central Government passed in October 1952 and whether or not the earlier order of the U. P. Government was formally withdrawn, it is this later order upon which the respondent 3 bases his right to retain possession of the propertiesThe order of the Central Government must therefore, be deemed to have deprived the petitioner of his property within the meaning of Art. 31 of the Constitution as construed by this Court. As has been said already, the U. P. Government made it clear before the Allahabad High Court in connection with the hearing of the writ petition that they were not asserting any rights of their own under the Industrial Disputes Act as soon as the Central Government took over the undertaking under the provisions of the Essential Supplies ActBut even assuming that the deprivation took place earlier and at a time when the Constitution had not come into force, the order effecting the deprivation which continued from day to day must be held to have come into conflict with the fundamental rights of the petitioner as soon as the Constitution came into force and become void on and from that date under Art. 13(1) of the ConstitutionWe have no. hesitation therefore in holding that the petitioner is quite within his rights in making this application under Art. 32 of the Constitution11. The result is that in our opinion the order of the Central Government dated, as well as the earlier order passed by the U. P. Government on, should be set aside and quashed. The respondents are certainly bound to restore the properties taken possession of by them under these orders to the petitioner and his. A difficulty, however, arises in this connection by reason of the fact that this petition is not on behalf of all the partners, nor is there any joint prayer by all of them claiming delivery of possession.