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PETITIONER: CHIRANJIT LAL CHOWDHURI

       Vs.

RESPONDENT: THE UNION OF INDIA AND OTHERS.

DATE OF JUDGMENT: 04/12/1950

BENCH: KANIA, HIRALAL J. (CJ) BENCH: KANIA, HIRALAL J. (CJ) FAZAL ALI, SAIYID SASTRI, M. PATANJALI MUKHERJEA, B.K. DAS, SUDHI RANJAN

CITATION:  1951 AIR   41            1950 SCR  869  CITATOR INFO :  F          1951 SC 318  (19)  RF         1952 SC  59  (5)  F          1952 SC  75  (8,21,43,54,70)  RF         1952 SC 123  (45)  RF         1952 SC 252  (101,106)  E          1953 SC 215  (6)  F          1953 SC 404  (7)  R          1954 SC  92  (5)  D          1954 SC 119  (1)  E          1954 SC 314  (4)  F          1955 SC  74  (7)  R          1955 SC 191  (5)  R          1956 SC  20  (13)  F          1956 SC 246  (50,65)  E          1956 SC 479  (5)  F          1957 SC 503  (15,16)  R          1957 SC 877  (16)  D          1957 SC 927  (9)  E          1958 SC 538  (11,12,17)  RF         1958 SC 578  (211)  R          1958 SC 731  (15)  RF         1958 SC 956  (15)  R          1959 SC 648  (26)  RF         1959 SC 725  (11,12)  F          1960 SC 356  (8)  R          1960 SC 457  (9)  R          1960 SC 554  (9)  D          1960 SC1080  (28)  R          1962 SC 458  (21)  F          1962 SC1044  (5)  R          1963 SC 222  (22)  R          1963 SC 864  (27)  F          1963 SC1241  (84)  HO         1963 SC1811  (13,28,84,104,105,112)  RF         1965 SC 190  (4)  F          1970 SC 564  (16,54,78)  E          1970 SC2182  (7)  F          1971 SC1594  (7,8,9)  R          1971 SC1737  (45)  RF         1973 SC 106  (11)  RF         1973 SC1461  (227,265,2130)  RF         1973 SC2720  (9)

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R          1974 SC 849  (10)  RF         1974 SC1389  (251)  R          1975 SC 583  (39)  R          1978 SC 327  (6)  F          1978 SC 597  (189)  F          1978 SC 771  (44)  R          1980 SC 161  (10)  RF         1983 SC   1  (168)  F          1983 SC  75  (5)  F          1984 SC 866  (4)  R          1984 SC1707  (17)  RF         1986 SC1370  (77,78)  R          1988 SC1487  (31)  RF         1991 SC 672  (33)  RF         1992 SC   1  (132,133)  R          1992 SC1277  (22,85,87,96)

ACT:     Sholapur Spinning and Weaving Company (Emergency  Provi- sions) Act (XXVIII of 1950)--Act dismissing managing  agents of  a company, removing its  directors, authorising  Govern- ment   to  appoint new directors, and curtailing  rights  of shareholders in the matter of voting, etc.--Validity--Wheth- er infringes fundamental rights--Right not to be deprived of property  save by authority of law--Right to  acquire,  hold and  dispose  of  property--Right  to  equal  protection  of law--Constitution of India, Arts. 14, 19 (1) (f), 19(5),  1, 32--"  Deprivation  of property ", "Property.,  ,,  acquisi- tion",  "taking possession., "equal protection  ",  meanings of--Right  to  apply under Art. 32--Corporation’s  right  to apply--Shareholders’ right.

HEADNOTE: The  Governor-General of India, finding that on  account  of mismanagement  and  neglect a situation had  arisen  in  the affairs  of the Sholapur Spinning and Weaving  Company  Ltd. which had prejudicially affected the production of an essen- tial commodity and had caused serious unemployment amongst a certain section of the community, and that an emergency  had thereby  arisen which rendered it necessary to make  special provision  for the proper management and  administration  of the said company, promulgated an Ordinance, which was subse- quently  reenacted in the form of an Act of the  Legislature called  the sholpur Spinning and Weaving Company  (Emergency Provisions)Act,  1950, the net result of which 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 appoint  new directors,  the  rights of the shareholders of  the  company were  curtailed  in the matters of  voting,  appointment  of directors,  passing of resolutions and applying for  winding up,  and power was also given to the Government  to  further modify  the Indian Companies Act in its application  to  the company; and in accordance with the provisions of the  Ordi- nance  new  directors were appointed by the  Government.   A shareholder of the company made an application under Art. 32 of the Constitution for a declaration that the Act was  void and  for enforcement of his fundamental rights by a writ  of mandamus  against the Central Government, the Government  of Bombay  and the directors, restraining them from  exercising any  powers  under  the Act and from  interfering  with  the management  of the company, on the ground that the  Act  was

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not within the Legislative competence 870 of  the  Parliament  and infringed  his  fundamental  rights guaranteed by Arts. 19 (1) (f), 31 and 14   of the Constitu- tion  and  was  consequently void under  Art.  13.       The company was made a respondent and opposed the petition.  Held  per KANIA C.J., FAZL ALI, MUKHERJEA and  DAS  JJ.- (i)  that the impugned Act did not infringe any  fundamental right  of  the petitioner under Art. 31 (1), as if  did  not deprive  the company or the petitioner of any property  save under authority of law;   (ii) that the impugned Act did not infringe any  fundamen- tal right guaranteed by Art. 31 (2.) inasmuch as it did  not authorise  the "acquisition" of any property of the  company or  of  the shareholders or "the taking possession"  of  the property of the petitioner, namely, the shares which he held in the company, though he was disabled from exercising  some of  the  rights which an ordinary shareholder in  a  company could  exercise in respect of his shares, such as the  right to vote, to appoint directors, and to apply for winding  up; and,  if the Act had authorised the "taking  possession"  of the property of the company, the petitioner was not entitled to any relief on that score under Art. 32;     (iii)  that, as the Act did not impose any  restrictions on the petitioner’s right "to acquire, hold and dispose  of" his  shares, there was no infringement of Art. 19  (1)  (f); and  assuming that the restrictions imposed on the right  of voting etc. were restrictions on the right to acquire,  hold or dispose of property within Art. 19 (1) (f), such restric- tions were reasonable restrictions imposed in the  interests of  the public, namely, to secure the supply of a  commodity essential to the community and to prevent serious  unemploy- ment  amongst  a section of the people, and  were  therefore completely protected by cl. (5) of Art. 19.     Held  also per KANIA C.J., FAZL ALI, and  MUKHERJEA  JJ. (PATANJALI SASTRI AND DAS JJ. dissenting).--that though  the Legislature  had proceeded against one company only and  its shareholders, inasmuch as even one corporation or a group of persons can be taken to be class by itself for the  purposes of legislation, provided there is sufficient basis or reason for  it and there is a strong presumption in favour  of  the constitutionality/of  an  enactment, the burden was  on  the petitioner  to  prove that there were also  other  companies similarly situated and this company alone had been discrimi- nated against, and as he had failed to discharge this burden the impugned Act cannot be held to have denied to the  peti- tioner the right to equal protection of the laws referred to in Art. He and the petitioner was not therefore entitled  to any relief under Art. 32.     Per  PATANJALI  SASTRI J.--As the impugned  Act  plainly denied  to the shareholders of this particular  company  the protections of the law relating to incorporated Joint  Stock Companies  as embodied in the Indian Companies Act.  it  was Prima facie within      871 the  inhibition of Art. 14; and, even though when a  law  is made  applicable  to a class of persons or  things  and  the classification  is  based on differentia having  a  rational relation  to the object sought to be attained, it can be  no objection  to its constitutional validity that its  applica- tion is found to affect only one person or thing. since  the impugned Act selected a particular company and imposed  upon it  and  its shareholders burdens and  disabilities  on  the ground  of mismanagement and neglect of duty on the part  of those  charged with the conduct of its undertaking no  ques-

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tion  of  reasonable classification arose and  the  Act  was plainly discriminatory in character and within the constitu- tional  inhibition of Art. 14.  Whilst all  reasonable  pre- sumptions must undoubtedly be made in favour of the  consti- tutional  validity of a law made  competent legislature,  no such presumption could be raised in this case as on the face of  it the Act was discriminatory and the  petitioner  could not  be  called  upon to prove  that  similar  mismanagement existed  in other companies. The issue was not  whether  the impugned  Act was ill-advised or not justified by the  facts on  which it was based but whether it transgressed  the  ex- plicit  constitutional  restriction  on  legislative   power imposed by Art. 14.     Per  DAs J.--The impugned Act, ex facie, is nothing  but an  arbitrary  selection  of a particular  company  and  its shareholders for discriminating and hostile treatment,  and, read  by itself, is palpably an infringement of Art.  14  of the  Constitution.  Assuming that mismanagement and  neglect in  conducting  the affairs of a company can be a  basis  of classification  and that such a classification would bear  a reasonable relation to the conduct of all delinquent  compa- nies and shareholders and may therefore create no  inequali- ty,  a  distinction cannot be made  between  the  delinquent companies inter se or between shareholders of equally delin- quent  companies,  and one set cannot he  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. The argument that the  pre- sumption being in favour of the Legislature, the onus is  on the  petitioner to show that there are other individuals  or companies  equally  guilty  of  mismanagement  prejudicially affecting  the  production  of an  essential  commodity  and causing serious unemployment amongst, 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 its 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 particulars similarly situated.  In any event the petitioner, 872 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 classification which,  by its  very nature, cannot be exclusively applicable  to  this company  and its shareholders but which may be  equally  ap- plicable  to other companies and their shareholders and  has penalised  this  particular company  and  its  shareholders, leaving  out other companies and their shareholders who  may be  equally guilty of the alleged vice of mismanagement  and neglect  of  the  type referred to in the  preamble  in  the Ordinance.     Per  PATANJALI  SASTRI, MUKHERJEA and  DAS  JJ.  (KANIA, C.J,, dubitante).--In so far as the petitioner’s rights as a shareholder  were  curtailed he was entitled  to  apply  for relief  under Art. 30, in his own right on the  ground  that the  Act denied to him the equal protection of the laws  and therefore  contravened Art. 14 even though the other  share- holders did not join him in the application.

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   Per  MUKHERJEA J.--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,  com- pels the inference that they are applicable only to  natural persons.  An incorporated company, therefore, can come up to the Supreme Court for enforcement of its fundamental  rights and so may the individual shareholders to enforce their own; but as the company and its shareholders are in law  separate entities, it would not be open to an individual  shareholder to complain of a law which affects the fundamental right  of the  company  except to the extent that  it  constitutes  an infraction of his own rights as well.  In order to redress a wrong  to  the  company the action  should  prima  facie  be brought by the company itself.     Article 32 of the Constitution is not directly concerned with  the  determination of the constitutional  validity  of particular enactments, what it aims at is the enforcement of fundamental  rights  guaranteed by the Constitution  and  to make  out  a case under the Article it is incumbent  on  the petitioner  to establish not merely that the law  complained of  is beyond the competence of the Legislature but that  it affects or invades his fundamental rights guaranteed by  the Constitution,  of  which  he could seek  enforcement  by  an appropriate writ or order.     Under Art. 32 the Supreme Court has a very wide  discre- tion  in the matter of framing writs to suit the  exigencies of  particular  cases and an application under  the  article cannot  be thrown out simply on the ground that  the  proper writ or direction has not been prayed for.     In  the context in which the word "acquisition" is  used in  Art.  31 i2) it means and implies the acquiring  of  the entire  title of the expropriated owner whatever the  nature or extent of that right might be,      873     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.   It  means only that there  should  be  no discrimination between one person and another if as  regards the subject-matter of the legislation their position is  the same.         Quaere  :  Whether the word "property"  in  Art.  31 means the totality of the rights which the ownership of  the property connotes, and whether clause (1) of Art. 31 contem- plates  only  confiscation  or destruction  of  property  in exercise of what are known as police powers in American  law for which no compensation is necessary.     DAS  J.--The  question  whether an Act  has  deprived  a person of his "property" must depend on whether it has taken away  the  substantial bulk of the rights  constituting  his property.  Where the most important rights possessed by  the shareholders of a company are still preserved by an Act even though certain privileges incidental to the ownership of the shares have been put in abeyance, the shareholders cannot be said to have been deprived of their "property" in the  sense in which that word is used in Art. 19(1) (f) and Art. 31.     If on the face of the law there is no classification  at all,  or at any rate none on the basis of any apparent  dif- ference  specially peculiar to the individual or  class  af- fected  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

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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 it is  actually  and palpably unreasonable and arbitrary and thereby  discharging the initial onus.     The  right to vote, to elect directors, to pass  resolu- tions  and  to present an application for  winding  up,  are privileges incidental to the ownership of a share, but  they are  not  by  themselves apart from  the  share,  "property" within the meaning of Art. 19 (1) (f) and Art. 31; and  even assuming that they are "property" such rights cannot be said to have been acquired or taken possession of by the  Govern- ment  in  this  case within Art. 31 (2).   The  language  of clause (1) of Art. 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 and in such  a case no question payment of compensation arises.    FAZAL  ALI  MUKHERJEA and DAS JJ.--Except in  the  matter writs in the nature of habsas corpus no one but those  whose rights are directly affected by a law can raise the question of  the  constitutionality of a law and claim  relief  under Art. 39.  A corporation being a different  entity  from  the shareholders, a 112 874 share-holder  cannot complain on the ground that the  rights of the company under Arts. 19 (1) (f) or 31 are infringed.      FAZL  ALl J.--A 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 hear a reasonable and lust relation to the  things in respect of which it is proposed.  But 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 constitutional principles. Though  Art. 14 lays down an important  fundamental  ’right, which  should be closely and vigilantly guarded,  a  doctri- naire approach which might choke all beneficial  legislation should not be adopted, in construing it. i      A.K. Gapalan v. The State ([1950] S.C.R. 87),  Minister of State for the Army v. Dalziel (68 C.L.R 261), Yick Wo  v. Hopkins (118 U.S. 356), Southern Railway Co. v. Greene  (216 U.S. 400), Gulf C. & S.F. Co.  Ellis (165 U.S. 150), Middle- ton v. Texas Power and Light & Co. (249 U.S. 152), Badice v. New York (264 U.S. Pennsylvania Coal Co. v. Mahon (960  U.S. 3931, McCabe v. Archison (235 U.S. 151), Jeffrey Manufactur- ing Co. v. Blang (935 U.S. 571), Newark Natural Gas and Fuel Co.  v.  City of Nework U.S-403), Truax v. Raich  (939  U.S. 33), Buchanan v. W’arley (245 U.S. 60) Darnell v. The  State of  Indiana (226 U.S. 388), Lindely v. Natural Carbonic  Gas Co.  (220 U.S. 618), and Barbier v. Connolly (113  U.S.  27) referred to.

JUDGMENT: ORIGINAL JURISDICTION: Petition No. 72 of 1950. Petition under article 32 of the Constitution of India for a writ of mandamus.      V.K.T.  Chari, J.S. Dawdo, Alladi Kuppuswami, and  C.R. Pattabhi Raman, for the petitioner.      M.C. Setalvad, Attorney-General for India (G. N.  Joshi with him) for opposite party Nos. 1 and 2. G.N. Joshi, for opposite party Nos. 3 to 5 and 7 to 10.      1950.  December  4.  The Court  delivered  Judgment  as

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follows.    KANIA  C.J.--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. 1,000 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 v.  Atchison(1),   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

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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 u.s. 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). p.579. 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

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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 v. Texas  Power and Light Company(1), 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-

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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) 248 U.S.  1152,157. 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

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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  13,000 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, pp.2394 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

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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 v. Connally. 113 U S. 27. 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.

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   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. 1,000 each,  20  fully paid  up ordinary shares of Rs. 500 each and :32,000  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

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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

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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

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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 b‘e 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

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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

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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 result]t, 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 32,000 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

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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 Provisions)Act 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

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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

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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

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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

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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

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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

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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 31(2).  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 Australia,(1) 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

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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 v. Dalziel, 68 C L.R. 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

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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  19(1)(f)  of  the Constitution.     Article  19(1)  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  19(1)(f) 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  his.right to  acquire, hold or dispose of property within the  meaning of article 19(1)(f) 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

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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 (5)of 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

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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 v. Hopkins, 118 U.S. at 369 (2) Southern Raliway Company v. Greene, 216 U.S 400,412. 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 delinquency(2)."   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 invalid(3).     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. &  S. F.R. Co. v. Ellis. 163 U.S, 150, at 159. (3) Southern Railway Co. v. Greene, 216 US. 400, 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 v.  Texas Power  and  Light Company(1), ’It must be  presumed  that  a Legislature  understands  and  correctly  appreciates    the

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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 u.s. 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 clearest"(1). We should (1) Radics, v. New York, 264 U.S. 915 bear in mind that a corporation, which is engaged in produc-

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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

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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 C.J.  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-

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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 19(1)(f) 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 (1)(f)  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) [1950] S.C.R. 88 920 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

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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  19(1) (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 v. 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

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or upon no terms at all." (1) (1943-1944) 68 C,L.R. 261. 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

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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  (2)o[  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 (1).must  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

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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 company(1).  In this view of the

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(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 v. Mahon(1),  "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) 260 U,S. 393. 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   v. Atchison(1) 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  v.  Blagg(2), Hendrick  v.  MaCyland(3) and Newark Natural  Gas  and  Fuel

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Company  v. The City of Newark(1).  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 v. Raich(5) and  in  Bu- chanan  v. Warley(5) 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 u.s. 151.      (4) 242 u.s. 403.      (2) 235 u.s. 571.      (5) 239 u.s. 33.      (3) 235 U.S. 610       (6) 245 u.s. 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 v. The State of  Indi- ana(1).  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) 226 U.S. 388. 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

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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 v. Indiana(1), 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.S. 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 the.company.     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

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Southern Railway Company v. Greene (1), "means subjection to equal laws, applying (1) 216 U.S. 400 932 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 v. Greene(1) :---"  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 v. Texas  Power  and   Light Company(1)   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 v. Natural Carbonic Gas Company(2) 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-

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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 v.W.H. Ellis (3),  while good faith (1}  249 U.S. 152.      (2) 220 U.S. 61.      (3) 165  U.S.. 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

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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 13(1)  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

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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 itself.is 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 community;And 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

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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

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prayer (3) of the petition with costs.                           Petition dismissed. Agent  for the petitioner: M.S.K. Aiyengar. Agent for opposite party Nos. 1 & 2:P.A. Mehta. Agent  for opposite party Nos. 3 to 5 and 7 to 10:             Rajinder Narain.