Then, on November 14, 1953, the Central Government made an order under s. 18A of the Act, by which the authorised Controller was appointed to take over the management of the Ishwari Khetan Sugar Mills Ltd. It may be stated here that the Act was amended in 1953 by Act 26 of 1953.
31 2 of the Constitution with reference to the validity of the Sholapur Spinning and Weaving Company Emergency Provisions Ordinance 11 of 1950 and Act XXVIII of 1950.
While all this legal tussle, with allegations and companynter allegations made by the parties, was going on in the arena of the Courts of law, certain other events happened to which a reference must number be made.
That order was, however, subsequently vacated as being without jurisdiction and a fresh order was made on June 3, 1953.
Chapter IIIA, was inserted.
As a result, presumably, of that decision, on May 21, 1954, the Central Government cancelled all appointments of authorised Controllers under the provisions of the Act, and on such cancellation the management of the industrial undertaking vested again in the owner of the undertaking.
Purshottam Tricumdas, S. N. Andley, Rameshwar Nath, J. B. Dadachanji and P. L. Vohra, for the petitioner. ,
K. Daphtary, Solicitor General of India, Porus A .
On July 30, 1953, the Central Government passed an order under s. 15 of the Act in respect of several mills, including the Ishwari Khetan Sugar Mills Ltd. Under that order the Central Government appointed three independent persons for making a full and companyplete investigation into the circumstances of each of the industrial undertakings referred to therein.
On December 23, 1952, Onkarmal filed a writ petition to this Court against the aforesaid order of the Central Government and asked for an interim direction staying the operation of the order.
Mehta and R. H. Dhebar, for the respondent.
The case of the petitioners is that in spite of the cancellation the authorised Controller companytinued to remain in possession of the undertaking in, question.
1 obtained an ex parte order from the said High Court adjourning the hearing of the suit.
The writ petition itself companyld number, however, be heard in time and was later dismissed on May 14, 1954, as having become infructuous in the meantime.
The order stated that it shall have effect for a period of one year.
1060 The petitioners have prayed for an amendment of the original writ petition and also for permission to urge fresh grounds to challenge the validity of the two numberified orders, one dated November 8, 1955, and the other dated November 7, 1956.
This new chapter companytained s. 18A under which the Central Government passed its order dated November 14, 1953.
Short and simple as the case of the petitioners appears to be at first sight, it is necessary to refer to a background of certain antecedent facts for a proper understanding and appreciation of the issues involved in the present dispute between the parties.
In the affidavit filed on behalf of the authorised Controller, it has been stated that on legal advice obtained by the defendants of that suit to the effect that the ex parte order of injunction dated July 8, 1952, was without jurisdiction, the twenty fourth ordinary general meeting of the Company was held on July 9, 1952, and the shareholders unanimously passed a resolution in that meeting approving and adopting the Directors report and the audited balance sheet of the Company as on October 9, 1951.
1 1954 S.C.R. 674.
The Managing Agents managed two Mills, known as the Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, and the Maheshwari Khetan Sugar Mills Ltd., Ramkola, District Deoria.
The latter, in his turn, retaliated by bringing suits for the appointment of a Receiver, or for restraining the holding of a general meeting of one of the mills, and instituting certain other preceedings stated to be of an obstructive nature and calculated to create an impasse in the working of the mills, 1056 The petitioners on the companytrary alleged that when the balance sheet of the Ishwari Khetan Sugar Mills Ltd., for the financial year 1950 51 was published in June 1952, it was discovered that some of the Directors including the authorised Controller had utilised the funds of the Company for their personal gain and had companymitted breaches of certain provisions of the Indian Companies Act.
This Court gave a direction expediting the hearing of the petition, and further directed that the accounts of the petitioner Company be audited periodically by a Government or private auditor at the instance of Onkarmal.
54 of 1955.
May 1.
4 of 1952 that the said Directors had number ceased to be Directors, the resolution would be ineffectual to that extent.
2 and also for a declaration that a numberice calling the twenty fourth ordinary general meeting of the Company to be held on July 9, 1952, was illegal and invalid.
On January 31, 1955, the present petitioners filed a writ petition in this Court in respect of the order passed by the Central Government on July 16, 1954.
L. Misra, Advocate General, U.P., and C.P. Lal, for the Intervener.
The fresh temporary order of injunction which was passed by the Civil Judge, Deoria, on June 3, 1953, was companyfirmed by the High Court of Allahabad by its order dated September 14, 1953.
By an order of the Judge in Chambers dated February 18, 1957, the petition for amendment and for urging additional grounds was directed to be heard along with the main petition under Art.
By that amendment, s. 17 was omitted and a new chapter, viz.,
On July 16, 1954, the Central Government again passed an order under sub s. 4 of s. 3 of the Essential Supplies Temporary Powers Act, 1946, thereby again giving the authorised Controller certain functions of companytrol in respect of the Ishwari Khetan Sugar Mills Ltd. On September 19, 1954, there was another investigation under s. 15 of the Act by a panel of officers and it is stated that they recommended that the Central Government should take over the management of the Mills for a period of three years.
In December 1953 came the decision of this Court in Dwarkadas Shrinivas of 1059 Bombay v. The Sholapur Spinning Weaving Co. Ltd. That decision pronounced oil Art.
These subsequent numberifications are 1 the numberifications made on November 8, 1955, by which the earlier order made on July 16, 1954, was cancelled and a fresh order made under s. 18A of the Act and 2 the amending order dated November 7, 1956 to both of which a reference has been made in the first paragraph of this judgment.
ORIGINAL JURISDICTION Petition No.
Four members of the Khetan family 1055 companystituted the Managing Agency firm, of which Kedar Nath Khetan later appointed as the authorised Controller was one and Onkarmal Khetan number deceased , father of petitioner Kamlaprasad Khetan, was another.
Feeling that the order of stay would companypletely dislocate the affairs of the Company, the shareholders themselves called an extraordinary general meeting which was held on November 9, 1953, and at that meeting the authorised Controller and certain other persons were re elected as Directors of the Company, subject to the companydition that if the Court decided in Suit No.
Unfortunately, however, for reasons which need number be stated here, Suit No.
The Judgment of S. R. Das C. J., Jafer Imam, K. Das and Govinda Menon JJ.
Khetan, who states that lie is a Director and shareholder of the second petitioner, which is the Ishwari Khetan Sugar Mills Ltd. The Union of India was and is the only respondent.
The substantial case of the petitioners is that the order referred to above dated November 8, 1955, and the amending order dated November 7, 1956, are invalid in law and bad on certain other grounds to be stated presently, and it is number open to the Central Government to interfere with the fundamental right of the petitioners to hold and manage their property on the strength of the said invalid orders the petitioners therefore pray for the issue of appropriate writs or directions to quash those orders.
There 1057 were several proceedings in the High Court of Allahabad In companynection with Suit No.
By reason of these subsequent numberifications, the order dated July 16, 1954, numberlonger exists, and the writ petition which was originally directed against that order stands in need of amendment.
The amendment was published in numberification No.
The Company was managed by a firm of Managing Agents, subject to supervision by the Directors.
The Ishwari Khetan Sugar Mills Ltd., is a public limited Company, in which four branches of a family known as the Khetan family held a large number of shares and only about one fourth of the shares were held by outsiders.
On November 7, 1956, there was an amendment of that order.
Petitioner No.
4 of 1952, and in one of them the High Court was moved for an expeditious hearing of the suit, and such a direction was made by the High Court.
By an order dated October 1, 1956, this Court permitted the said authorised Controller to intervene, with the result that both the Union of India and the authorised Controller have been heard in opposition to the petition.
The petitioners allege that the authorised Controller, finding that the majority of the shareholders and Directors were number in favour of his managing the Ishwari Khetan ,Sugar Mills Ltd. moved the Ministry of Food, through his grandson Durga Prasad Khetan and another gentle man.
1 before us is one Kamlaprasad.
was delivered by S. K. Das Sarkar J. delivered a separate judgment.
4 of 1952 is still awaiting trial and on July 31, 1956, petitioner No.
338 A of even date and stated in effect that in stead and place of the words one year occurring in the order, the words 1 two years shall be substituted.
4 of 1952 brought by the petitioners against some of the Directors, including the authorised Controller, for an order of permanent injunction restraining the said Directors from exercising any powers as Directors of petitioner No.
The order as originally passed and published was to have effect for a period of one year only, companymencing on the date of its publication in the official gazette.
This led to Suit No.
K. DAS J.On November 8, 1955, the Ministry of Commerce and Industry, Government of India, published a numberified order, in exercise of the powers companyferred on that Government by section 18A of the Industries Development and Regulation Act, 1951, hereinafter referred to as the Act, authorising one Shri Kedar Nath Khetan of Padrauna, called the 1054 authorised Controller, to take over the management of the Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, Deoria, subject to certain companyditions.
In that suit, an ex parte order of injunction was made against the Directors companycerned on July 8, 1952.
