BALAKRISHNA AYYAR

The petitioners, two in number, hold between them 100 ordinary shares in Parry and Co. Ltd. This company handles numerous lines of business and one such line is that of being managing agents to other companies. Parry and Co. Ltd. are the managing agents of the East India Distellries and Sugar Factories Ltd. On 18th October, 1955, the East India Distellries wrote to the directors of Parry and Co. on certain terms. The particulars of these are set out in annexure "A" to the counter filed by the deputy managing director of the East India Distilleries.

Here it is enough to say that the offer was to allot one fully paid share of $ 1 each in East India Distilleries for every five ordinary shares of Rs. 2 each in Parry and Co. Ltd. Alternatively for each ordinary share of Rs.2 in Parry and Co.Ltd. the East India Distilleries offered to pay Rs. 5-8-0 in cash. this offer, however, was subject to one proviso and it was that in the case of individuals holdings in excess of 1, 00, 000 ordinary shares the price would be only Rs. 4-8-0 per share. The shareholders of parry and Co. were also given the option of combining either of these two alternatives. The offer of shares was to be open only until the 20th February, 1956, and the offer of cash until the 25th February, 1956.

On 22nd October, 1955, the chairman of the board of directors of Parry and Co. Ltd. communicated copies of the letter that had been received from the East India Distilleries to all its ordinary shareholders. A covering letter was also sent recommending the acceptance of the offer. On 28th January, 1956, the chairman of the board of directors of Parry and Co. Ltd. sent to its ordinary shareholders, at the request of the East India Distilleries a copy of the report and accounts of the East India Distilleries for the year ended 10th September, 1955.

On 27th February, 1956, the East India Distilleries gave notice to the petitioners that up to 24th February, 1956, the offer had been approved by the holders of not less than three-fourths in value of the ordinary shares of Parry and Co.Ltd. and that in consequence the East India Distilleries in prusuance of section 153 B of the Indian Companies Act, 1913, desired to acquire the ordinary shares held by the petitioners in Parry and Co.Ltd. In that letter the East India Distilleries also told the petitioners that unless upon an application made to the court by them on or before the 27th March, 1956, the court thought fit to order otherwise, the East India Distilleries would be entitled and bound to acquire the shares held by the petitioners.

The petitioners who do not want tp part with their shares have taken out the present application for an order that "the first respondent is not bound or entitled to purchase the shares that the petitioners held" in Parry and Co. Ltd. Alternatively they want an order that the petitioners are not bound to sell the shares.

Mr. Balakrishna Aiyar, the learned advocate for the petitioners, first raised the contention that section 153 B of the Indian Companies Act, 1913, which the East India Distelleries claims entitled it to acquire the shares which the petitioners hold in Parry and Co. Lt6d., is ultra vires the Constitution. This is how he put his argument. Under article 19(I)(f) all citizens have the right to acquire, hold and dispose of the property as they think fit. The only limitation which the Constitution imposes on this right is that contained in article 19(5) which runs as follows :

"Nothing in sub-clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevents the State from making any law imposing, reasonable restrictions on the exercise of any rights conferred by the said sub- clauses either in the interest of the general public or for the protection of the interests of any Scheduled Tribe." The Scheduled Tribes do not come into the present controversy. The property of the petitioners is now sought to