Judgment

Patanjali Sastri, C.J.I.: I have fully discussed and explained the meaning and effect of Articles 19 and 31 in my judgment just delivered in --- State of West Bengal v. Subodh Gopal Bose , AIR 1954 SC 92 (A). On that view I agree with my learned brothers that the impugned Ordinance authorises, in effect a deprivation of the property of the Company within the meaning of Article 31 without compensation and is not covered by the exception in Clause (5) (b) (ii) of that article. The Ordinance thus violates the fundamental right of the Company under Article 31 (2), and the appellant as a preference share-holder who is now called upon to pay the moneys unpaid on his shares is entitled to impugn the constitutionality of the Ordinance. I also agree with my learned brother Mahajan that the previous decision of this Court in --- Charanjit Lal v. Union of India , AIR 1951 SC 41 (B) is distinguishable and has no application here for the reasons mentioned by him.

MAHAJAN, J. :

2. This is an appeal from the judgment and decree of the High Court of Judicature at Bombay passed on the 29th day of August 1950 in Appeal No. 48 of 1950.

3. The appeal concerns the validity of the same piece of legislation that was considered by this Court in --- AIR 1951 SC 41 (B) . there an ordinary shareholder of the defendant company holding one fully paid up share claimed relief under Art. 32 of the Constitution of India on the ground that the provisions of the Sholapur Spinning and Weaving Company (Emergency Provisions) Act, XXVIII of 1950 abridged his fundamental rights conferred under Articles 14, 19 and 31 of the Constitution.

This Court by a majority of 3 to 2 dismissed the petition holding that the presumption in regard to the constitutionality of the Act had not been displaced by the petitioner and that it had not been proved that the impugned statute was a hostile or a discriminatory piece of legislation as against him, or that the State had taken possession of his share. The minority held that the impugned statute was void as it abridged the petitioner s fundamental rights under Art. 14 of the Constitution. This decision was delivered on 4th December 1950.

4. The suit out of which this appeal arises was decided by the High Court of Bombay during the pendency of Chiranjit Lal Chowdhuri s petition in this court. Most of the facts furnishing the cause of action for the suit have been detailed in the judgment of this Court in that case, but it seems necessary to briefly re-state them for a proper appreciation of the contentions that have been raised in the appeal.

5. The Sholapur Spinning and Weaving Co. Ltd., was incorporated under the Indian Companies Act with an authorised capital of Rs. 48 lakhs divided into 1,590 fully paid up ordinary shares of Rs. 1,000 each, 20 fully paid up ordinary shares of 500 each and 32,000 partly paid up cumulative preference shares of Rs. 100 each, the paid up capital of the company being Rs. 32 lakhs comprised of Rs. 16 lakhs fully paid up ordinary shares and Rs. 16 lakhs partly paid up preference shares, Rs. 50 being unpaid on each of the 32,000 cumulative preference shares. The company did good business and declared high dividends for some time but in the year 1949, there was accumulation of stocks and financial difficulties.

In order to overcome this situation the directors decided to close the Mills and on the 27th July 1949 they gave notice of this decision to the workers. Pursuant to this notice the Mills were closed on the 27th August 1949. This created a labour problem and to solve it the Government on the 5th October 1949 appointed a Controller to supervise the affairs of the Mills under the Essential Supplies Emergency Powers Act, 1946. On the 9th November 1949, the Controller in order to resolve the dead-lock decided to call in more capital and he asked the directors of the company to make a call of Rs. 50 per share on the preference share-holders, the amount remaining unpaid on each of the preference shar