S.C.R.

SUPREME COURT REPORTS 1039

This objection, however, does not require a detailed consideration because the Sessions Judge clearly stated in his judgment that apart from the onus, he ws satisfied that the prosecution had fully established on the evidence that the appellant had failed to send a copy of the budget as required by law.

It was also pointed out that s. 65 does not provide for any imprisonment in default . of payment of fine, but the appellant was sentenced to 15 days simple imprisonment in default of payment of fine. Section 33 of the Code of Criminal Procedure read with ss. 40 and 67 of the Indian Penal Code appears to us to be a clear answer to this contention.

It was also pointed out that under s. 65 of the Act a sentence of fine extending upto five hundred rupees could be imposed for a second or for a subsequent offence. We need not, however, consider that matter in the present appeal as it was conceded on behalf of the appellant that the sentence of fine imposed upon him in the present case was for a first offence. ·

The appeal is accordingly dismissed.

Appeal dismissed.

UNION OF INDIA v.

CHAMAN L:(\.L LOONA (S. R. DAS C.J., JAFER IMAM, s. K. DAS, GoVINDA MENON and A. K. SARKAR J J.)

Partition of India-Distribution of rights and liabilities- Contract by Governor-General in Council, if and when for the purposes of Pakistan-Test-Such purpose, if can be modified by powers of control vested in /oint Defence Council-Adjudication of. rights and liabilities under such contract-Indian Independence (Rights, Property and Liabilities) Order, 1947, Arts. 8(1), 3(2)-/oint Defence Council Order, 1947, Art. B(c).

The correct test to determine whether a contract made before the partition of India on behalf of the Governor-General in Council comes within the purview of cl. (a) 'of Art. 8(1) of the Indian Independence (RightS; Property and Liabilities) Order,

B1JJhiruddi11 khmf

v..

Thi Stat• ef Bilw

Imam].

April 30.

Th• Unicn ef India

Chaman Lal L"ina

1947, so as to be deemed to have been made on behalf of the Dominion of Pakistan, is-either (I) if the contract was 1nade on AubTUSt I?,. 1947, it \V?ul<l have been a contract for the purposes of the Dom1n1on of Pakistan ; or (2) if Pakistan had existed on the day the contract was made, it would be a contract for. the purposes of Pakista1:. ·

Union of India '" Chinu Bhai feshingbhai, I.L.R. 1953 Bom. ll7, approved.

1he purpose of a contract is not to be confused with the Ultimate disposal of the goods supplied thereunder since such disposal can in no way detcnnine or modify it. Nor do the po\vers of control over military stores vested in the Joint l)cfencc Council by Art. 8(c) of the Joint Defence Council Order, J947, and saved by Art. 3(2) of the Indian Independence (Rights, Property and Liabilities) Order, 1947, whereby the goods might be transferred anywhere in India, make any difference and the rights and liabilities accruing from such contracts fall entirely to be adjudged by the provisions of the Indian Independence Order and not by the Joint Defence Council Order.

The concluding part of Art. 8( I) makes it quite dear that the Article makes no distinction between contracts \vhere the consideration is either executed or executory in nature and applies equally to both.

Elahi Bux v. Union of India, A.I.R. 1952 Cal. 471 and

Krishna~Ranjan v. Union of India, A.I.R. 1954 Cal. 623, approved.

Union of l:idia v.

Loke Nath,

A.LR. 1952 Cal. 140, disapproved.

Consequently, in a case where the Union of India was sought to be made liable on the basis oi a contract entered into on behalf of the Governor-General of India in Council for the supply of fodder to the Manager, Military Farms, Lahore Cantonment, which was in Pakistan on August 15, 1947, and the trial Court found for the Union of India but the High Court, taking the view that the fodder constituted military stores under the exclusive control of the Joint Defence Council on August 15, 1947, liable to be transferred anywhere in India, reversed that finding, , the contract, even assuming that view to be correct, must be held to be one exclusively for the purposes of Pakistan as from that date and the Union of India could not be made liable thereunder.

CIVIL APPELLATE

JURISDICTION : 24 of 1954.

Civil Appeal No.

Appeal under Article 132 re.ad with Article 147 and Article 133 (I) ( c) of the Constitution of India from the judgment and order dated July 17, 1952, of the Punjab High Court in First Appeal from Order No. Y of 1949 against the judgment and decree of the Sub-f udgc 1st

S.C.R.

SUPREME.COURT REPORTS 1041

Class, Fcrozepur dated February 9, 1949, in Civil Suit No. 134 of 1949.

Porus A. Mehta, R. Gopalakrishnan and R. H. Dhebar, for the appellant.

Hardayal Hardy, for the respondents.

1957. April 30. The Judgment of the Court was delivered by I

S. K. DAs J.-This is an appeal on the strength of a certificate granted by the High Court of Punjab at Simla. The appellant is the Union of India and the respondent Messrs. Chaman Lal Loona and Company, military contractors at Muktsar in the district of Ferozepur, now in the Indian State of Punjab.

The relevant facts are these. In the Court . of the senior Subordinate Judge at Ferozepur, in August, 1948, the respondent Company made an application, purporting to be an application under s. 8(2) and s. 20 of the Arbitration Act, 10 of 1940, wherein the respondent alleged that in 1945 the respondent had entered into a contract for the supply of "bhoosa" (fodder) to the military department of the then undivided India through the Manager, Military Farms, Lahore Cantonment. The contract. it was alleged, was signed by the Assistant Director. Military Farms, on behalf of the then Government of India. The agreement . between the parties was that the said Manager would also supply, on payment of price, wire coiis in connection with the supply of blwosa presumably for the purpose of tying the bundles of fodder. and on the supply being made and on return of the wire coils, the military department would give credit for the price of the coils already paid by the respondent. In November, 1945, the respondent supplied fodder and returned 152 bundles of wire coik The Manager, Military Farms, Lahore, informed the resoondent. however. that out of 152 bundles of wire cils. said to have . been sent, 24 bundles had not been received, though no note of such non-delivery was made at the time the consignment was received.

The respondent had also deposited Rs. 11,026 by way of security with the military department connection with the contract.

The agreement contained an

Union of India

Chaman Lal Loona

S. Jr. Das J.

1957 Union of India

Chaman Lal Loona

S. K. Das].

arbitration clause to the effect that if a dispute arose between the parties, it should be decided by the arbitrator named therein, viz., the District Commander concerned. The respondent so.id that he had a claim agai; ist the appellant for Rs. 720, the price of 24 bundles of wire coils at Rs. 30 per bundle, and for refund of Rs. 11,026, .and prayed in terms of s. 20 of the Arbitration 1\ct that the appel!ant be directed to file the agreement and other reievarrt documents, and that the Court do refer the dispute to the arbitrator named for the purpose of filing an award.

As required by sub-s. (2) of s. 20 of the Arbitration Act, the application was registered as a suit, and a notice was issued to the appellant to show cause. The appellant showed cause by a written statement filed on November 4, 1948, in which the two substantial pleas taken were-( 1) that by reason of the provisions of the India Independence (Rights, Property and Liabilities) Order, 1947, hereinafter referred to as the Independence Order, 1947, the Dominion of India, and later the Union of India, had no liability in respect of the contract in question, the purposes of which contract as from August 15, 1947, were purposes exclusively for the Dominion of Pakistan; and (2) the Court at Ferw, eporc had no jurisdiction to trv the suit. as the cause of action did not arise within its territorial jurisdiction.

The two issues which were tried by the learned Subordinate Judge were the aforesaid issues of liability and jurisdiction. On jurisdiction, he found in favour of the respondent, on the ground that the respondent was a 'displaced person' living in Muktsar which is in Ferozepore and therefore the Court at Ferozepore had jurisdiction to try the suit. The High Court affirmed this finding, and as nothing now turns upon this issue, we are not called upon to make any pronouncement thereon. The issue as to the liability of the appellant on the basis of the contract in question is, however, very much a live issue. The learned Subodinatc Judge found in favour of the appellant on this issue, and dismissed the application. The High Court reversed that finding, and allowed the appeal. In reversing the finning of the learned Subordinate Judge, the High

Court relied on the provisions of the Joint Defence Cou.ncil Order, 1947, to be referred to hereinafter as the Defence Order, 1947. The precise ground on which the High Court proceeded may best be put in the words of Khosla J. who gave the leading judgment. Khosla J. said:

"In the present case the Lahore Military farm is situated at Lahore and whether the fodder was supplied in 1945 or after the 15th of August 1947, the purpose will be deemed to be a purpose of the Dominion of Pakistan on account of the territorial situation of Lahore. But in the present case, the fodder was to be supplied to a Military Farm and the fodder, therefore, constituted Military Stores. Military Stores were kept joint and under the exclusive control of the Joint Defence Council who had the power of allocating these stores among the two Dominions and for transferring them from one place to another. Therefore, fodder lying in the Military Farm, Lahore, was not, on 15th August 1947, the exclusive property of the Dominion of Pakistan but was under the exclusive control of the Joint Defence Council.

This fodder could be transferred to a farm in India and thus could become the property of the Dominion of India. In the circumstances, it cannot be said that the contract for supply of fodder to the Military Farm, Lahore, was a contract exclusively for the purposes of the Dominion of Pakistan if the contract were viewed on the 15th of August 1947, and,· that .. being so, it must be held that the cntract was not a contract exclusively for the purposes of the Dominion -of Pakistan. The decision. of the learned trial Judge on this point must, therefore, be set as1de."

The principal question in this appeal is wl:ether the High Court is right in its view as to the true scope and effect of the relevant provisions of the Independence Order, 1947, and the Defence Order, 1947. Learned counsel for the appellant has challenged the correctness of that view, and has submitted-(1) that on a true construction of Art. 8 of the Independence Order, 1947, . the contract under consideration in this case was as from the appointed day (i.e., August 15, 1947), a conuact exclusively for the purposes of the Dominion of

U11ion of India v.

C!iaman Lal loona

S. K. Dar J.

Union of India

Chaman Lal Loono

S. K. Das].

Pakistan and si)all be deemed to have been made on behalf of that Dominion, and all rights aiid liabilities which have accrued or may accrue under such contract shall be .the rights and liabilities of the Dominion of Pakistan; (2) that the Defence Order, 1947, which set up a Joint Defence Council and provides for the exercise of certain powers of control by the said Council under Art. 8 of that Order did not in any way affect the rights and liabilities arising out of the contract, which rights and liabilities were governed by the relevant provisions of the Independence Order, 1947; and (3) that, in any view, the claim in the present case did not relate to military stores as the High Court wrongly assumed, and the Defence Order, 1947, had no application at .all to the facts of this case. •

On behalf of the respondent, the correctness of each of the above submissions has been seriously contested, and learned . counsel for the respondent has strongly contended that the view of the High Court as to the relevant articles of the Independence Order, 1947, and the' Defence Order, 1947, is correct. Learned counsel also raised a preliminary point of objection to the effect that on an application imder s. 20. Arbitration Act, the only point for decision was if there was an arbitration agreement ar.d the question of liability w_as one for the arbitrator and not for the Court to decide.

Ordinarily, that would be so.

When, however, we pointed out to learned counsel tha.t the Union of India .as such was admittedly not a party to the arbitration agreement and could not be dragged, therefore, to an arbitration proceeding on the strength of an agreement to which it was not a party unless by operation of law it was deemed to be a party to the agreement, learned counsel gave up his preliminary objection and conceded that the question of liability must be decided in this case with reference to the provisions of the Independence Order. 1947, and the Defence Order, 1947.

It is cnvenient at this stage to set out the relevant provisions of the two Orders. ..The Defence Order, 1947, was made in exercise of the powers. conferred by

sub-s. (1) of s. 9 and in pursuance ofsub-s. (1) of s. 11 of the Indian Independence Act, 1947, and was published

on August 11, 1947. The Independence Order, 1947, was made in exercise of the powers conrerred bv s. 9 of the Indian Independence Act, 1947, and' was published on August 14, 1947.

Both came into force at once. Article 3 of the Defence Order, 1947, states :

"(l) As from the 15th day of August, 1947, there shall be set up a Council to be known as the Joint Defence Council for India and Pakistan.

(2) The said Council, hereinafter referred to as the Joint Defence Council, shall consist of- ( i) the Governor-General . of India, (ii) the Defence Minister of India, (iii) the Defence Minister of Pakistan, and (iv) the Supreme Commander of His

Majesty's forces in India and Pakistan (hereinafter referred to as the Supreme Commander)." Article 8, so far as it is relevant, is' in these terms :

"The Joint Defence Council shall be in exclusive control of- ( a) the division of the Indian forces between the Dominions and their reconstitutions as two separate Dominion forces;

(b) the allocation, transfer and movement of officers and men belonging to the Indian forces for the purposes of such re-constitution : . ( c) the allocation, transfer and movement for the purposes of such reconstitution of plant, machinery equipment and stores held by the Governor-General in Council immediately before the 15th' day of August, 1947, for the purposes of the Indian forces; etc." The Independence Order, 1947. states in Art. 2 that the 'appointed day' means the fifteenth ,'\ugust,

1947. Artide 3 so far as it is relevant for our purpose, States : " ( 1) The provisions of this Order relate to the initial distribution of rights, property and liabilities consequential on the setting up of the Dominions of India and Pakistan, and shall have effect subject to any agreement between the two Dominions or the Provinces concerned and to any award that may be made by the Arbitral Tribunal. ·

(2) Nothing in this Order affects the powers of control over military plant, machinery, equipment

Union of India

C!iaman Lat LooTIJJ

S. K. Das].

Union of India

Chaman Lal Loona

S. K. Das].

and stores conferred on the Joint Defence Council by the Joint Defence Council Order, 1947. .. . . . . . . . . . . . . . . . . . . . .

Article 8(1), which is very important for our purpose, is in these terms :

" ( l) Any contract made on behal.f of the Governor-General in Council before the appointed day shall, as from that day,- . (a) if the contract is for purposes which as from that day are exclusively purposes of the Dominion of Pakistan, be deemed to have been made on behalf of the Dominion of Pakistan instead of the Governor- General in Council; and

(b) in any other case, be deemed to have been made on behalf of the Dominion of India instead of the Governor-General in Council; and all rights and liabilities which have accrued or may accrue under any such contract shall, to the extent to which they would have been rights or liabilities of the Governor-General in Council, be rights or liabilities of the Dominion of Pakistan or the Dominion of India, as the case may be."

The first question is, what is the true scope and effect of Art. 8(1) of the Independence Order, 1947?

Does it apply to the contract in question, and; if so, does the contract fall within the purview of cl. (a) or

cl. (b) ? At one stage of the argument, learned counsel for the respondent contended that Art. 8 ( l) did not apply to what is sometimes described as executed contracts; this point was also urged before the Kapur J. of the Punjab High Court (as he then was) and one of the reasons given by him for a reference of the case to a larger bench was the difficulty he felt if the contract in question which has been performed and executed long before August 15, 1947, so far as the respondent was concerned, attracted the operation of

cl. (a) 0£ Art. 8(1). It is necessJTy to appreciate clearly the distinction between the two classes of contracts where the consideration is either executed or executory. "An executed consideration consists of an act for a promise. It is the act which forms the consideration ...... No contract is formed unless and until the act

is performed, e.g., the-payment for a railway ticket, but the act stipulated for exhasts the consideration, so that any subsequent promise, without further consideration, is merely a nudum pactum ........ In an executed consideration the liability is outstanding on one side only ; it is " present as opposed to a future consideration.

In an executory consideration the liability is outstanding on both sides. It is in fact a promise for a promie ; one promise is brought by the other .......... The contract is concluded as soon_ as the promises are exchange<l. In mercantile oontracts this is by far the most common variety.

In other words, a contract becomes binding on the exchange of valid promises, one being the consideration for the other. It is clear, therefore, that there is nothing to prevent one of the parties from carrying out his promise at once, i.e., performing his part of the contract ; whereas the other party who provides the consideration for the act of or detriment to the first may not carry out his part of the bargain simultaneously with the first party."

(Chitty on Contracts, Vol. I, 21st Edn. pp. 43-44). On a plain reading of Art. 8(1) of the Independence Order, 1947, it is clear that it applies to both classes of cases ; it says, in its concluding part, that "all rights and liabilities which have accrued or may accrue under any such contract, shall. ....... be rights or liabilities of the Dominion of Pakistan or the Dominion of India, as the case may be." If the contract has been fully and completely performed on both sides, no question of any further rights and liabilities under the contract is likclv to arise. If. however, the contract is one in which the consideration is. xecuted on one side, there will be a right on one side and an outstanding liability on the other. If the consideration is cxecutory on both sides, there will be outstanding rights and liabilities on both sides. In talking of "all rights and liabilities which have accrued or may accrue" under the contract the Article clearly contemplates both classes of cases.

On this question, we approve of the view taken in Elahi Bu.-.: v. Union of India (1) and Krishna Ranian v.

(l)A.I.R. 1952 Cal. 471.

7~1 S. C. India/59

Union •f lttdia

Ckaman Lal Laona

S. K. Dru].

Union nf lndfr1.

Y• Clzaman Lr,! loo11a

Union of India ( 1) and disapprove of the view expressed by Roxburgh J. in Union of India v. Loke Nath (2).

It is further clear that the first part of Art. 8(1) creates a legal fiction.

The contract is actually made before August 15, 1947, (the appointed day) ; but as from that date, the contract shall be deemed to have been made on behalf of the Dominion of Pakistan, if the contract is for purposes which as from that day are exclusively purposes of the Dominion of Pakistan, and in anv other case it shall be decme<l to have been made on behalf of the Dominion of India.

What is the proper meaning of the expression "a contract for the exclusive purposes of the Dominion of Pakistan" ? We assent to the view expressed by Chagla C.J. in Union of India v. Chi nu Bhai feshingbhai (' ). .'3id the learned Chief Justice-

"lt is clear from the language tised in art. 8 that the test to be applied with regard to this contract is not whether the contract was for the purposes of the Dominion of Pakistan at the date when it was made.

Er /1ypothesi that test is clearly inapplicable.

All contracts contemplated by art. 8 must be contracts which when made were made by undivided India by the Governor-General in Council.

The test that must be applied is an artificial test and the test may be either if the contract had been entered into on August 15, 1947, whether it would have been a contract for the purposes of the Dominion of Pakistan, or if the Dominion of Pakistan had been in existence when the contract was entered into, whether it would have been a contract for the purposes of Pakistan."

This, we think, is the correct test to apply for determining the true scope and effect of Art. 8(1) of the Independence .Order, 1947, and applying this test, there is no doubt that the contract in question comes under

cl. (a) of the said Article.

The purpose of the contract was to supply fodder to the Manager, Military Farms, Lahore Cantonment, which farms were in Pakistan on the appointed {lay.

The contract was, therefore (II A.l.R. 1954 (; al. 623.

(2) A.J.R. 1952 Cal. 140.

13) l.L.R. 1953 Born. 117, 130.

. exclusively for the purposes of the Dominion of Pakistan as from the appointed day.

The second question is-do the provisions of the Defence Order, 1947, make any difference in the legal position ? The High Court thought, erroneously in our opinion, that they did. It is true that cl. (2) of Art. 3 of the Independence Order, 1947, says that nothing in that Order affects the powers of control over military plant, ma<Zhinery, equipment and stores conferred on the Joint Defence Council by the Defence Order, 1947.

Clause (3) of Art. 3 of the Independence Order, 1947, states that the powers of .control over property conferre_d upon each Dominion by the Order shall include all powers of use, consumption, management etc.

This, however, is subject to such powers of control as are given to the Joint Defence Council. Those powers of control are laid down in Art. 8 of the Defence Order, 1947, cl. ( c) of which relates to "the allocation, transfer and movement for the purposes of such reconstitution of plant, machinery, equipment and stores held by the GovernorcGeneral in Council immediately before the 15th day of August, 1947, for the purposes of the Indian forces." The point which is to be emphasised . is that what is saved by cl. (2) of Art. 3 of the Independence order, 1947, is 'powers of control' of the Joint Defence Council with regard to certain essential military equipment etc. including stores. There is no provision in the Defence Order. 1947, which affects the rights and liabilities of any of the two Dominions arising out of a contract, and those rights and liabilities are dealt with by the Independence Order, 1947. The learned Judges of the Hih Court thought that the Defence Order, 1947, made a difference in the legal position in so far as the purpose of the contract was concerned. They realised and said that ordinarily the purpose of supplying fodder to the Military Farms at Lahore was a purpose exclusively for the Dominion of Pakistan ; but they thought that on the assumption that 'bhoosa' was military store, the Joint Defence Council had powers of control over it and could send it wherever they wanted it to be sent ; therefore, they

1957 Union of India

Chaman Lal Loona

S.K. Das].

Union of /Mia

CAamon Lal lAona

S. K. DIUJ.

said that the purpose of the contract was not a purpose exclusively for the Dominion of Pakistan.

We say this with great respect, but this line of reasoning appears to us to be due to a lack of proper appreciation of the distinction between the "purpose of the contract" and the 'ultimate disposal of the goods"

supplied under the contract. The purpose of the contract is not determined nor modified by the ultimate disposal of the goods supplied under the .contract, nor even by the powers of control exercised over the goods after the contract had been performed by the respondent. \Vherever the goods might be ultimately sent, the: purpose of the contract remained what it was, that is, to supply fodder to the Manager, Military Farms, Lahore, which, on the test laid down by us, was clearly a purpose exclusively for the Dominion of Pakistan.

The Independence Order, 1947, determines the respective rights and liabilities under contracts. If, under the Defence Order, 1947, some goods the liability for the price of which under the Independence Order, 1947, falls on, say, India, are allotted to Pakistan, then the value thereof will have to be adjusted in accounts.

Such allotment does not alter the rights or liabilities determined uooer the Independence Order, 1947.

We are, therefore, of the view that the High Court of Punjab was in error in inferring that on the strength of certain provisions of the Defence Order, 1947, the contract in question came within cl. (b) of Art. 8(1 ), and not cl. (a). We think that the learned Subordinate Judge correctly held that cl. (a) applied and the Union of India had no liability under the contract.

Only a few words arc necessary to dispose of the third contention urged before us.

The claim in the present case was a Claim for a refund of the price paid for 24 bundles of wire coils and of the security deposit.

Such a claim <lid not relate to military stores, and the Defence Order, 1947, had no direct application to such a claim. It was only for examining the purpose of the contract that the question of 'bhoosa' bcin.~ military store arose.

The High Court assumed that 'bhoosa' was military store. Without deciding whether 'bhoosa' is military store or not, we have also proceeded on the

same assumption ; but even on that assumption, there is no difference in the legal position.

The purpose of the contract was still a purpose which, as from the appointed day, was a purpose exclusively for the Dominion of Pakistan.

It is worthy of note that cl. (c) of Art. 8 of the Defence Order, 1947, relates inter alia to stores held by the Governor-General in Council immediately before August 15, 1947. for the purposes of the Indian forces.

There was nothing in the record to show that the 'bhoosa' supplied by the respondent in 1945 was held bv the Governor-General . in Council immediately bef'Ord August 15'. 1947. so as to vest the power of control in the Joint Defence Council and thereby affect the purpose of the contract, assuming, though we do not so decide. that such power of control can affect the purpose of the contract.

The original contract was not produced in this case, as it was not available in the appropriate office in India.

The respondent did not even produce a copy thereof, but gave oral evidence as to the purpose of the contract.

The Courts below proceeded on that oral evidence, and the appeal was argued before us on that footing. We have determined the purpose of the contract as on August 15, 1947, on the basis of that evidence, without deciding the further question if oral evidence was admissible in this case as to the purpose of the contract.

For the reasons given above, we allow this appeal, set aside the judgment and decree of the High Court, and restore those of the learned Subordinate Judge.

The appeallant will get costs throughout.

Appeal allowed.

Union of India v.

Cluunan Lal Loo11a

. K. Das J.

s. 65

Section 33

Code of Criminal Procedure

ss. 40 and 67

Indian Penal Code

s. 65

UNION OF INDIA

CHAMAN L:(\.L LOONA (S. R. DAS C.J.

JAFER IMAM

GoVINDA MENON

A. K. SARKAR J

Arts. 8(1), 3(2)

Art. 8(1)

Union of India

Chinu Bhai feshingbhai

Art. 8(c)

Art. 3(2)

India

Art. 8( I)

Union of India

Pakistan

August 15, 1947

Article 132

Article 147

Article 133

Constitution of India

Porus A. Mehta

R. H. Dhebar

Hardayal Hardy

S. K. DAs

High Court of Punjab at Simla

Chaman Lal Loona

senior Subordinate Judge at Ferozepur

s. 8(2)

s. 20

Government of India

Lahore

Chaman Lal Loona

S. Jr. Das

S. K. Das

s. 20

s. 20

November 4, 1948

Dominion of India

Dominion of Pakistan

Ferw

Muktsar

Ferozepore

Court at Ferozepore

Khosla

15th of August 1947

15th August 1947

Art. 8

S. K. Dar

Chaman Lal Loono

Art. 8

s. 20

s. 9

s. 11

Indian Independence Act, 1947

August 11, 1947

s. 9

Indian Independence Act, 1947

August 14, 1947

Article 3

15th day of August, 1947

Article 8

15th' day of August, 1947

Art. 2

C!iaman Lat LooTIJJ

Chaman Lal Loona

Article 8(1)

Art. 8(1)

Art. 8

Kapur

Punjab High Court

Art. 8(1)

Art. 8(1)

Ckaman Lal Laona

Clzaman Lr

Roxburgh

Art. 8(1)

Chagla

art. 8

art. 8

Art. 8(1)

Lahore Cantonment

Art. 3

Art. 3

Art. 8

Art. 3

S.K. Das

CAamon Lal lAona

S. K. DIUJ

High Court of Punjab

Art. 8(1 )

Art. 8

August 15'. 1947

K. Das


May I,

SUPREME COURT REPORTS

KAMLA PRASAD KHET AN

THE UNION OF INDIA

(and connected petitions)

(S. R. DAS c. J., JAFER IMAM, s. K. DAS,

GoVINDA MENON and A. K. SARKAR J J.)

[1957)

Industrial undertaking, control of-Central Government taking over management by notified order-Atnendment of such order by another-Validity-'Like conditions', Meaning of-Appointment of Controller-Bona fides-The Industries (Development and Regulation) Act (LXV of 1951), as amenqed by Amrnding Act, 26 of 1953, ss. 18A, 15, 16-Gcneral Clauses Act (X of 1879), s. 21.

By a notified order dated November 8, 1955, the Government of India took over the managen1ent of certain Sugar Mills under s. 18A(l) (b) of the Industries (Development and Regulation) Act, 1951, for one year and vested it in a Controller.

This was preceded by an investigation under s. 15 of the Act and the Central Government had materials before it to be of the opinion that the management was being conducted in a manner highly detrimental to the undertaking and to public interest.

On November 7, 1956, this order was amended extending the Controller's management for a further period of two years.

It was contended on behalf of the petitioners that the requirement of s. 18A(l)(b) of the Act not having been satisfied before the amending order was made, the amendment was invalid and that, in any event. the appointment of the same person as the authorised Controller was not bona fide.

Held, per S. R. Das C. J., Jafer Imam, S. K. Das and Govinda Menon J J.-that s. 18A of the Industries (Development and Regulation) Act, 1951, read with ss. 15 and 16 of the Act and properly construed, leaves no doubt that the two conditions mentioned in cl. (b} of sub-s. (I) of s. 18A, relating to investigation and mismanagement, must relate to a period when the management of the undertaking was legally vested in its owne{

and once they are found to exist and the management is taken over by the Governme'nt, the conditions continue to exist by their very nature till the management goes back to the owner ; therefore, the amending order also fulfilled the same conditions subject to which the original order was made.

When a notified order under the section is sought to be amended by the application of s. 21 of the General Clauses Act, 'like conditions' mentioned in the latter section, to which such Order of amendment must be subject, are the two conditions relating to investigation and mismanagement mentioned in s. 18A(I} (b) of the Industries (Development and Regulation} Act,

Strawboard Manufacturing Co. v. Gutta Mill Workers' Union, ( 1953) S.C.R. 439, held inapplicable.

The appointment of a suitable person as the Controller rests entirely with the Central Government and unless an appointment can be show!). to have been made for any ulterior purpose contrary to what the Statute has in view, its bona fides is not open to question.

Consequently, in the instant case, both the original notification and its amendment were valid in law.

Per Sarkar J.-'Like conditions' mentioned in s. 21 ot the General Clauses Act, when applied to s. 18A of the Industries (Development and Regulation) Act, cannot mean the two conditions mentioned in cl. (b) of sub-s. (I) of that section on the fulfilment of which the Central Government has the right to issue a notification, but must mean the condition mentioned in sub-s. (2) of that section, subject to which afone the right to issue a notification can be exercised, namely, that a notified order cannot have effect for more than five years and, consequently, the amending order in questi!?n which satisfied that condition must be valid in law.

ORIGINAL JuRrSDICTION : Petition No. 54 of 1955.

Petition under Article 32 of the Constitution of India for the enforcement of fundamental rights.

Purshottam Tricumdas, S. N. Andley, Rameshwar Nath, f. B. Dadachanji and P. L. Vohra, for the petitioner.

C. K. Daphtary, Solicitor-General of India, Porus A. Mehta and R.H. Dhebar, for the respondent.

M. L. Misra, Advocate-General, U. P., and C. P. Lal, for the Intervener.

1957. May 1. The Judgment of S. R. Das C.- J. Jafar Imam, S. K. Das and Govinda Menon JJ. was delivered by S. K. Das J. Sarkar J. delivered a separate judgment.

19!i7.

Kamla PrtJJad

Khetan

The Union.ef India

S. K. DAs J.-On November 8, 1955, the Ministry s. K Da.s J. of Commerce and Industry, Government of India, published a notified order, in exercise of the powers conferred on that Government by section ISA of the Industries (Development and Regulation) Act, 1951, hereinafter referred to as the Act, authorising one Shri Kedar Nath Khetan of Padrauna, called the

Kt11r.fo Prasad

KMtan

Tltt Union of India

S IC Dai .1

authorised Controller, to take over the management of the Ishwari Khetan Sugar Mills Ltd., Lakshrniganj, Deoria, subject to certain conditions. The order as originally passed and published was to have effect for a period of one year only, commencing on the date of its publication in the official gazette. On November 7, 1956, there was an amendment of that order. The amendment was published in notification 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 'two years' shall be substituted.

Petitioner No. l before us is one Kamlaprasad Khetan, who states that he 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. 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 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 not 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 co quash those orders.

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.

The Ishwari Khetan Sugar Mills Ltd., is a public limited Company, in which four branches of a family known as the Khetan familv held a large number of shares and only about one-fourth of the shares wae held by outsiders.

The Company was managed by a firm of Managing Agents, subject to supervision by the Directors.

Four members of the Khetan family

constituted the Managing Agency firm, of which Kedar Nath Khetan (later appointed as the authorised Controller) was one and Onkarmal Khetan (now deceased), father of petitioner Karola Prasad Khetan, was another.

The Managing Agents managed two Mills, known as the Ishwari Kheian Sugar Mills Ltd., Lakshmiganj, and the Maheshwari Khetan Sugar Mills

T l., Ramkola, District Deoria.

We are concerned in. the present case with the Ishwari Khetan Sugar Mills Ltd. The Managing Agents were also partners in the firms of managing agents of certain other companies, namely, Morarji Gokul Das Spinning and Weaving Mills, Bombay, and Laxmidevi Sugar Mills Ltd., Deoria. In the affidavit in opposition filed on behalf of the authorised Controller, it is stated that the Khetan famiily was in the beginning a mere trading family, but "due to the initiative, business acumen and imagination of Rai Bahadur Kedar Nath Khetan, various manufacturing concerns including several sugar factories grew up" ; and it was under his direction that the other members of the family, including Onkarmal Khetan, were put in charge of the day-t<>- day routine administration of one business or the other.

There was a provision in . the Managing Agency agreement under which every member of the firm of Managing Agents was authorised to exercise all the powers of the Managing Agents.

According to the case of the authorised Controller, trouble arose between the members of the different branches of the family of Managing Agents sometime in 1950-51 when it came to light that Onkarmal Khetan had surreptitiously withdrawn large sums of money from the accounts of the various businesses in . which the members of the Khetan family were interested as Managing Agents, and this led to certain ·· suits being instituted against Onkarmal Khetan.

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.

Kamla Prasad

K!rtlan

v •.

S. K. Das].

Kam/a Pra.wlli

Khttan

1"he Union of India

S. tr. DaJ J.

The petitioners on the contrary alleged that when the balance sheet of the lshwari Khetan Sugar Mills Ltd., for the financial year 1950-51 was published in June 1952, it \Vas discovered that some of the Directors including the. authorised Controller had utilised the funds of the Company for their personal gain and had committed breaches of certain provisions of the Indian Companies Act.

This led to Suit No. 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. 2 and also for a. declaration that a notice calling the . twenty-fourth ordiriary general meeting of the Company to be held on July 9, 1952, was illegal and invalid.

In that suit, an ex parte order of injunction was made against the Directors concerned on July 8,

1952. That order was, however, subsequently vacated as being without jurisdiction and a fresh order was made on June 3, 1953. 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, ws 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. The fresh temporary order of injunction which was passed by the Civil Judge, Deoria, on June 3, 1953, was confirmed by the High Court of Allahabad by its order dated September 14, 1953.

Feeling that the order of stay would completely 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 condition that if the Court decided in Suit No. 4 of 1952 that the said Directors had not ceased to be Directors, the resolution would be ineffectual to that extent. There

were several proceedings in the High Court of Allahabad in connection with Suit 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.

Unfortunately, however, for reasons which need not be stated here, Suit No. 4 of 1952 is still awaiting trial and on July 31, 1956, petitioner No. 1 obtained an ex parte order from the said High Court adjourning the hearing of the suit. The case of the authorised Controller is that petitioner No. 1 having realised that he is not supported by the majority of shareholders and cannot, therefore, legally represent the Company, is delaying the hearing of Suit No. 4 of 1952 on one ground or another.

While all this legal tussle, with allegations and counter 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 now be made. The petitioners allege that the authorised Controller, finding that the majority of the shareholders and Directors were not in favour of his managing the Ishwari Khetan Sugar Mills Ltd. moved the Ministry of Food, through his grandson Durga Prasad Khetan and another gentleman related to him, for passing orders under ss. 15 and 17 of the Act. On November 8, 1952, a communication was received from the Ministry of Food and Agriculture, Government of India, wherein was stated :-

"The Government of India consider that if on account of the failure of the parties concerned to compose their differences and inability to take timely and proper steps to arrange for normal working of the mills, the mills are not able to start work in time during the 1952-53 season, or are unable to work at all, it will result in a substantial fall in the production of sugar without due justification.

Such a result will lead to the conclusion that the mills are being managed in a manner likely to damage the interests of a substantial body of consumers besides cane growers and mill workers." The communication contluded with the statement that, in the circumstances stated above, the Government of India would be constrained to order an investigation

Kamla PrOJDl/

Khr:a.

The U11io11 of India

S. K. Das].

Kamlo Prasad

KMon

v. . The Union of India

S. K. Das J.

into the matter and, if necessary, to undertake the management of the said mills.

It may be stated here that the communication was in respect of both the Ishwari Khetan Sugar Mills Ltd. and the Maheshwari Khetan Sugar Mills Ltd ..

On December 18, 1952, the Central Government did actually pass an order under sub-s. ( 4) of s. 3 of the Essential Supplies (Temporary Powers) Act, 1946, under which the authorised Controller was empowered to exercise certain functions of control in respect of the Ishwari Khetan Sugar Mills Ltd., the functions of control being stated in detail in notification No. S.R.O. 2073 of even date.

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.

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.

The writ petition itself could not, however, be heard in time and was late-r dismissed on May 14, 1954, as having become infructuous in . the meantime.

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 complete investigation into the circumstances of each of the industrial undertakings referred to therein. 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. By that amendment, s. 17 was omitted and a new chapter, viz., Chapter IIIA, was inserted.

This new chapter contained s. 18A under which the Central Government passed its. order dated November 14, 1953. The order stated that it shall have effect for a period of one year.

In December 1953 came the decision of this Court in . Dwarkadas Shrinit1as of .

Bombay v. The Sholapur Spinning & Weaving Co. Ltd. (1).

That decision pronounced on Art. 31 (2) of the Constitution . with . reference to the validity of the Sholapur Spinnifi)fS':tnd.; Weaving .· Company (Emergency Provisions) Ordinance II of 1950 and ActXXVIII of 1950. 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.

The case of the petitioners is that in spite of the cancellation the authorised Controller continued to remain in possession of the undertaking in question.

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 control 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.

On January 31, 1955, the present pedtioners filed a writ petition iii this Court in respect of the order passed by the Central Government on July 16, 1954. This is the writ petition which, after necessary amendments, is now under consideration before us, the amendments having been necessitated by reason of certain subsequent notifications made by the Central Government. These Nubsequent notifications are-( 1) the notifications 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. By reason of these subsequent notifications, the order dated July 16, 1954, no longer exists, and the writ petition which was originally directed against that order stands in need of amendment.

(1)[1954] S.C.R. 674.

Komla PrtJJati

Khetan

Tll4 U11ion of India

S. K. DtJJ J.

K amla Prasad

Khttan v.

Tire Union of India

S. K. Da, ].

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 notified orders, one dated November 8, 1955, and the other dated November 7, 1956.

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. 32. But before that date, i.e., on November 5, 1956, when the stay application of the petitioners was heard, the following direction was given by this Court-

"The hearing of the main petition under Art. 32 to be expedited ....................... .It will be open to the petitioners to challenge that the appointment of R, B. Kedar Nath Khetan, if again made, is also bad." In view of the aforesaid directions, we have treated the main petition under Art. 32 as a petition against the latest order passed by the Central Government appointing the authorised Controller to take over the management of the undertaking, and we have also permitted the petitioners to urge fresh grounds in support of their petition.

Having indicated in the preceding paragraphs the necessary background against which the dispute between the parties has to be considered, we proceed now to a consideration of the grounds on which the petitioners challenge the validity of the orders dated November 8, 1955, and November 7, 1956.

It is necessary to clear the ground by stating at the very outset that learned counsel for the petitioners has not challenged the validity of s. 18A of the Act under which the impugned orders were made.

We have already stated that Chapter !!IA of the Act was inserted by the Amending Act 26 of 1953.

Article 31B of the Constitution was enacted by the Constitution (First Amendment Act, 1951, which states, inter alia, that none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is

inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part

(meaning Part III) of the Constitution. The Ninth Schedule was added to by the Constitution (Fourth Amendment) Act, 1955.

Item No. 19 of the Ninth Schedule is now Chapter IIIA of the Act as inserted by the Industries (Development and Regulation) Amendment Act, 1953. Learned Counsel for the petitioners has frankly conceded that in view of these amending provisions, he is not now in a position to challenge the validity of s. 18A of the Act.

Therefore, the principal question for our consideration is the validity of the impugned orders made under that section.

Learned counsel for the petitioners has attacked the two orders on the following grounds :

(1) the order of November 8, 1955, is not a lawful order, as it does not fulfil one of the essential requirements of s. 18A of the Act under which it purports to have been made ;

(2) even assuming that the order was a good order when it was made, s. 18A of the Act does not authorise an extension of the peri0d during which the . order is to remain in force, in the manner in which the extension was made on November 7, 1956, and such extension did not compiy with one of the essential requirements of s. 21 of the General Clauses Act, (No. X of 1897) ; and ·

(3) in any event, the order is not a bona fide order in that the Central Government appointed the very person who was mismanaging the undertaking, who was one of the parties to a pending dispute, and against whom .an order of injunction had been passed by a Court of competent jurisdiction.

These three grounds we now propose to examine in the order in which we have set them out.

(1) We must first read s. 18A of the Act so far as it is relevant for our purpose. The section states-

"If the Central Government is of opinion that- ( a) ............. .

(b) an industrial undertaking in respect of which an investigation has been made under section 15 (whether or not any directions have been issued to the

K amla Prasad

Khetan

The Union of India

S. K. Das].

19~7

Kamla Prmad

Kht14n

T/r• Union of lrulia

S. K. Dos:f.

undertaking in pursuance of section 16, is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest, the Central Government may, by notified order, authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of conrtol as may be specified in the order.

(2) Any notified order issued under sub-section (1) shall have effect for such period not exceeding five years as may be specified in the order : Provided that the Central Government, if it is of opinion that it is expedient in public interest so to do, may direct that any such notified order shall continue to have effect after the expiry of the period of five years aforesaid for such further period as may be specified in the direction and where any such direction is issued; a copy thereof shall be laid, as soon as may be, before both Houses of Parliament." The argument before us is that for the application of

cl. (b) of sub-s. (I) of s. IBA, the two esential requirements are-(i) an investigation under s. 15 of the Act and (ii) the opinion of the Central Government that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. Learned counsel for the petitioners has conceded that before the order dated November 8, 1955, was made, there was an investigation under s. 15 of the Act in respect of the industrial undertaking in question, and the first requirement was thus fulfilled.

Learned counsel has, however, very strongly submitted that the second requirement was not fulfilled in the present case, because the authorised Controller himself was in charge of the undertaking from December 18, 1952, till November 8, 1955 (when the impugned order was made) with a small break of less than two months only between the two dates, May 21, 1954, when all appointments under the Act were cancelled and July 16, 1954, when a fresh order under the Essential Supplies (Temporary Powers) Act, 1946 was made, and

even during this short period the case of the petitioners is that the authorised Controller continued in posses~ sion.

Founding himself on these circumstances, learned counsel for the petitioners contends that it was rationally and logically impossible for the Central Government to be of opinion that the industrial undertaking was being managed in a manner highly detrimental to the public interest, before the impugned order was made.

We are unable to accept this argument as correct.

We have already referred to the legal tussle which was going on between the parties with regard to the management of the industrial undertaking in question.

The Central Go\'l:rnment very rightly pointed out in their kttcr dated November 8, 1952, that the result of tk differences b::tween the partie:; wa~ Ekc!y to be a stoppage of the mill and a fall in the production of sugar with consequential detriment to the interests of the industry concerned and the interests of a substantial body of consumers, cane growers and mill workers.

In view of the litigatio!l which was pending between the partie,:, the likelihooLl of the dangers at which the Centra I Govermcnt hinted in 1952 must have continued to exist~ as long as the management was not fully and completely taken over by the authorised Controller.

In Dt'.cember 1952, the order passed under the Essential Supplies (Temporary Powers) Act, 1946 merely gave some functions. of control to the authorised Controller ; it did not vest the management in him.

This distinction between exercising certain functions of control, however, drastic the functions may be, on an order made under sub-s. ( 4) of s. 3 of the Essential Supplies (Temporary Powers) Act and the taking over of the management of the whole of an undertaking. on an order under s. ISA of the Act is a real distinction which must be bOrne in mind, as it has a bearing on the argument advanced before us.

Sub-section ( 4) of s. 3 of the Essential Supplies (Temporary Powers) Act,

1946; authorises the Controller to exercise, with respect to the whole or any part of the undertaking, such functions of control as may be provided by the order ; s. ISA of the Act is in wider terms and empowers the 8-61 S. C. India.'59

Kam/a Prasad

Khetan

The Union of India

S.K.Das J.

Kam/a Prasad

Khetan .. 7 he !Jn ion of India

S. K. Da>].

Central Government to authorise any person or body of persons to take over the management of the whole or any part of the undertaking or to exercise in respect of the whole or any part of the undertaking such functions of control as may be specified in the order.

Section !SB of the Act states the effect of a notified order under s. ISA; in sub-s. (!), els. (a) to (e), is stated the effect of taking over the management, and in subs. (3) is stated the effect of merely giving functions of control-a distinction which is clear! y drawn in the section itself.

It Is not difficult to conceive that in a particular industrial undertaking the mere giving of some functions of control may not be enough to meet the situation which has arisen and it may be necessary for the Central Government to pass an order taking over the management of the whole of the undertaking.

In the case under our consideration, in December, 1952, certain functions of control were vested in the authorised Gmtroller, but the management of the whole undertaking was not taken over.

This continued till an investigation was ordered under s. 15 of the Act on July 30, 1953. Then, on November 14, !953, the authorised Controller was directed to take over the management of the whole of the industrial undertaking. This order was however cancelled on May 21, 1954, and under s. !SF of the Act, the effect of the cancellation was to vest the management of the undertaking again in its owner the expression 'owner' meaning,. under s. 3 (f) elf the Act, the person who, or the authority which, has the ultimate contrd over the affairs of the undertaking and, where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent.

Therefore, the legal effect of the cancellation on May 21, 1954, was to vest the management of the Ishwari Khetan Sugar Mills Ltd., in the Directors and Managing Agents who were quarrelling amongst themselves.

On behalf of the petitioners, it has been pointed ou't that Kedar Nath Khetan, the erstwhile authorised Controller, continued to remain in possession in spite of the cancellation order. In an affidavit filed on behalf of the Central Government, it

is stated that after the cancellation order, Kedar Nath Khetan, the erstwhile authorised Controller, informed the Government of India that he was continuing in management in a capacity other than that of autho- . rised Controller. The affidavit filed on behalf of the authorised Controller states, however, that between the time the Central Government directed him to hand over possession to the Directors and the time when he was again appointed on July 16, 1954, the management of the Company remained in the hands of the Directors who were in possession of the undertaking.

It is not necessary for us to pronounce on these disputed facts.

It is abundantly clear from the affidavits filed that peace amongst the Directors or in the family of the Managing Agents had not been restored bv the time the cancellation order was made on May Zl, 1954.

Suit No. 4 of 1952 was still pending, and the tussle between the parties was going on.

This was the position when another order was made um\er the Essential Supplies (Temporary Powers) Act, 1946, on July 16, 1954.

This was followed by a second in\'estigation under s. 15 of the Act in September, 1954.

Petitioner No. 1 was still pursuing what he conceived to be his legal remedy by filing a writ application in respect of the order elated July 16, 1954, in this Court and also in other proceedings arising out of Suit No. 4 of 1952, in the High Court of Allahabad. In these circumstances, the Central Government made the impugned order dated November 8, 1955. Having regard to the circumstances just stated, it is, we think, idle to contend that the Central Government had no materials before it for . arriving at the opinion that the industrial undertaking was being managed in a manner highly detrimental to public interest.

The Central Government might reasonably have felt that the order elated July 16, 1954, which vested certain functions of control only, was not enough to meet the situation and a more drastic step was necessary. It is worthy of note that in the affidavit filed on behalf of the Centr'll Government it is stated that the affairs of the industrial • undertaking were investigated a second

Kam/a Prasad Khetan v • The Union of Idia

S. K. Dns J.

Kamla PraJad

Khetan

The Union of India

S. K. Das J.

time under s. 15 of the Act in September I954, and the panel of officers who held that investigation recommended that Government should take over the management of the industrial undertaking for a period of three years.

It is on that recommendation that the Central Government passed the impugned order on November B, 1955.

We are unable to accept the argument of learned counsel for. the. petitioners that one of the essential requirements of cl. (b) of sub-s. ( 1) of s. IBA of the Act was not fulfilled before the order dated November B, 1955, was made.

Learned counsel for the petitioners has drawn our attention to those statements in the affidavit filed on behalf of the Central Government which referred to the improvement in management, after the undertaking was taken over by the authorised Controller.

In that affidavit, it is stated :

 "I say that by virtue of the order issued by the Government of India under s. 3( 4) of the Essential Supplies (Temporary Powers) Act, 1946, the Government of India had taken over only the supervisory control and the said Kedar Nath Khetan had only powers to issue directions to the management.

The management was with the old management and the Government of India or the authorised Controller had no effective functioning in the management as the authorised Controller could not manage the undertaking. I say that in view of the continued litigation referred to in detail in the affidavit of the intervener dated 25th October, 1956, it was apparent that the mill was. being managed in a manner highly detri-. mental ro the interests of the undertaking and that it was necessary to pass the order under s. IBA of the Industries (Development and Regulation) Act, 1951.

I say that after the management was taken over by Shri Kedar Nath Khetan, the Government has reason to believe that the management has improved and has saved further deterioration."

In another parr of the same affidavit, it is stated that the mill earned a profit during 1953-54 and in 1954-55 also the mill was likely to make a net profit of

Rs. 84,321.

We see nothing in these statements from which it can be inferred that the recorded opinion of the Central Government in the order dated November 8, 1955, that the industrial undertaking . was being managed in a manner highly detrimental to public interest contained a palpably false statement.

The crux of the matter was the dispute inter se amongst the Directors and the Managing Agents, leading to protracted and harassing litigation', some of which was. still pending ; that was the real cause of the trouble, and we think that the Central Government had enough materials for its opinion that the industrial undertaking in question was being managed in a manner highly .detrimental to public interest .

. (2) w c now turn to the amending order of November 7, 1956.

The amending order is in these terms:

"In the said order in sub-clause (ii) of clause 1 and clause 2 for the words 'one year', the words 'two years' shall be substituted." Section 21 of the General Clauses Act states :

"Where, by any Central Act or Regulation, a power to issue notifications, orders, rules, or bye-laws is conferred, then that power includes a pov.:er, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any . notific_ations, orders, rules or bye-laws so issued."

The argument of learned counsel for the petitioners is that neither s. 18A of the Act nor s. 21 of the General Clauses Act save the ·. amending order of November 7, ··· 1956.

There has been some argument before us with regard to the proviso .to sub-s. (2) of . s. 1'8/\ of the Act, which we have quoted in extenso in an . earlier part of this . judgment.

That proviso, it is contended by learned counsel for the petitioners, refers only to an . order which is initially made for a period of five years, or, alternatively, which comes to an end on the expiry of a perioo of five years.

According to him, the proviso empowers the Central Government to continue the order after the expiry of a period of

Kam/a Prasad

Khelan

The Union of lndia

S. K. Das].

Kanda Pra; ad

Khdan

Tke Union of India

ii. K. Das].

five years for such further period as may be specified in the direction given by the Central Government, and the only safeguard is that a copy of the direction is to be laid before both Houses of Parliament. The argument of learned counsel for the petitioners proceeds to state that the proviso has no application in the present case where the original order was made for a period of one year only and the amending order merely continued it for another year.

In the view which we. have . taken of the substantive provisions of sub-s. (I) of s. 18A of the Act and s. 21 of the General Clauses Act, we do not think it necessary to make any pronouncement with regard to the true scope and effect of the aforesaid proviso. In our opinion, the amending order is protected under s. 21 of the General Clauses Act read with sub-sec. (I) of s. ISA of the Act.

Section 21 of the General Clauses Act says, inter alia, that the power to issue an order under any Central . Act includes a power to amend the order ; but this power is subject to a very important qualification and the qualification is contained in the words 'exercisable in the like manner and subject to the like sanction and conditions (-if any)'.

There is no dispute before us that the amending order was made in the same manner as the original order, that is, by means of a notified order.

As no sanction is necessary for an order under s. 18A, the only question before us is whether the amending order complied with the like conditions under which the original order was made.

We have already stated what are the two essential requirements of an order under cl. (b) of sub-s. ( 1) of s. !SA of the Act. The argument of learned counsel for the petitioners is that those two essential conditions must be fulfilled again before any amendment of the order can be made ; this, he urges, is the true scope and effect of the expression 'subject to the like condiiions (if any)' occurring in s. 21 of the General Clauses Act.

We agree with learned counsel for the petitioners that the power to amend, which is included in the power

to. make the order, is exercisable in the like manner and suh:cer to the like sanction and conditions (if any) as govern the lnaking of the original order ; this is stated by the section itself. It becomes necessary, however, to understand clearly . the true nature of the conditions

which have to be fulfifled before an order under cl. (b) of ;, ub-!;. (1) of s. 18A of the Act can be made. Once

the true nature of those conditions is appreciated, there is in our opinion little difficutl:y left in the application of s. 21 of the General Clausl'.s Act. Now, the first condition in cl. (b) of sub-s. ( 1) of s. 18A of the Act is that the industrial undertaking must he one in respect of which an investigation has been ma<le under s. 15 of the Act. Section 15 is in these terms : . . . "Where the Central Government is of the opinion that- ·

(a) ii1 respect of any sche<lulc<l industry or indus- . trial undertaking or undertakings-

(i) there has been, or is likely to be, a substantial fall in the value of production in respect of any article or class of articles relatable to .that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which, having regard to the economic cooditions prevailing, there is

!10 justification ; or .

(ii) there has been, or is likely to be, a marked deterioration in the quality of any article or class of articles relatable to that industry or manufactured or pro<luced in the industrial undertaking or undertakings, as the case may be, which could have been or can be avoided ; or

(iii) there has been or is likely to be a rise in the price of any article or class of articles relatable to that industry or manufactured or produced in the industrial undertaking or undertakings, as the case may be, for which there is no justification ; or

(iv) it is necess'.lry to take any such action as is provided in this Chapter for the purpose of conserving any resources of national importance which are utilised in the industry or the industrial undertaking or undertakings, as the case may be ; or

Kam/a Prarad

Khetan v, The Union of India

S. K. Das].

Kam/a PrtJJad

KNtan

v •.

The Union of India

S. K. DtJJ ].

(b) any industrial undertaking is being managed m a manner highly detrimental to the scheduled industry concerned or to public interest ; the Central Government may make or cause to be made a full and complete investigation into the circumstances of the case by such person or body of persons as it may appoint for the purpose."

The order for investtgation" in this case was made under cl.

(b) of s. 15, and that clause again uses the expression that the 'industrial undertaking is being managed in a manner highly detrimental to the industry concerned or to public int.erest'-the same expression which occurs in cl. (b) of sub-s. ( 1) of s. 18A of the Act.

Section 16 of the Act states, inter alia, that if, after making or causing to be made any investigation under s. 15, the Central Government is satisfied that action under the section is desirable, it may then issue certain directions which are stated in the section.

It may, however, be that in a given case the management is so <letrimental to the industry concerned or to public interest that mere directions under s. 16 are not enough; in that event, the Central Government may take over the management by an order passed under cl. (b) of sub-s. ( 1) of s. 18A of the Act.

There may even be a case where in spite of the directions, no sufficient improvement has taken place and an order under sub-s. (1) of s. 18A of the Act becomes necessary. That is why in cl. (b) of sub-s. ( 1) occurs the expression 'whether or not any directions have been issued to the undertaking in pursuance of section 16.' The reason why the same expression 'is being managed in a manner highly detrimental etc.' occurs both in cl. (b) of s. 15 and cl. (b) of sub-s. ( 1) of s. 18A of the Act is this : an investigation is ordered when the conditions mentioned in s. 15 are fulfilled, one of the conditions being that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest.

On such an investigation being made, the Central Government may issue directions under s. 16 ; those directions may or may not improve the situation. If they do not improve the

situation, or if the mere giving of directions under s. 16 is not considered sufficient to meet the situation, the Central Government may pass an order under s. 18A; but one of the requisite conditions is that the Central Government roust be of opinion that the industrial undertaking is still being managed in a manner highly detrimental to the scheduled industry concerned or to public interest.

If these ss. 15; 16 and 18A, a; e read together, as they must be read, then it becomes at once clear that the condition as to the management of the industrial undertaking in a manner highly detrimental to the scheduled industry concerned or to public interest relates in its true scope and effect to a period when the management of the industrial undertaking is in the hands of its owner ; that is, to a period before the management of the whole or any part of the undertaking is taken over. Similarly, with regard to the exercise of functions of control, which also is contemplated by s. 18A of the Act, the condition again relates to a period before the functions of control are taken over. It would, in our opinion, be illogical and against the terms of ss. 15, 16 and 18A of the Act . to hold that the condition as to mismanagement (using the word 'mismanagement' for the purpose of brevity and convenience, for the correct expression; namely, 'management in a manner highly detrimental to the scheduled industry concerned or to public interest') can apply after the management has been taken over and during the period of its management by the authorised Controller. The contention of learned counsel for the petitioners is that whenever an amendment is made, the test of mismanagement must again be fulfilled. Let us examine the full implications of this argument.

If, after the management is taken over, the authorised Controller becomes seriously ill or dies in a few days when the period of the order has not expired, the Central Government may find it necessary to appoint another person and for that purpose make an amendment.

If the argument of learned counsel for the petitioners is correct, then no amendment can be made unless the test of mismanagement is again ·

Kam/a Prasad

K!rttan

. v •.

Tll' Union of India

S. K. Da, ]. ·

Kam/a Prasad

Khetan

The Union of India

S. K. Das].

fulfilled ; but how can such a test be fulfilled when the management was in the hands of the authorised Controller till he died, the authorised Controller being more or less in the position of an agent of the Central Government ? The argument of learned counsel for the petitioners, pushed to its logical extreme, will thus

result in an absurdity and no amendment will ever be possible.

Learned counsel for the authorised Controller has on the contrary contended that the two conditions laid down in cl. (b) of sub-s. ( 1) of s. 18A of the Act are not static in nature and once they are fulfilled, they continue to have effect thereafter whatever may have happened in the meantime. The argument proceeds to state that if an investigation under s. 15 of the Act had once been made and if at some previous stage the industrial undertaking was mismanaged, the two conditions continue to operate irrespective of whether the undertaking vests in the owner again for a time, and an amendment may be made at any time and even a fresh order can be made without the necessity ci a fresh investigation and a fresh mismanagement.

We consider that both these are extreme views. On a proper construction of ss. 15, 16 and IBA of the Act, the correct view appears to be what we have stated earlier, namely the two conditions, one as to an investigation under s. 15 and the other as to mismanagement, relate to a period when the management of the industrial undertaking is legally vested in its owner, and s. IBA must be read, with reference to the two conditions stated in cl. (b) of sub-s. (I), as though the words 'while the undertaking is vested in its owner' are present in the clause. If, as in this case, the management is once taken over by an order under s. IBA but the order is later cancelled and the inanagment again vests in the owner, the two conditions must be fulfilled again before an order under cl. (b) of sub-s. (I) of s. IBA of the Act can be made. That is what happened in the present case.

The management was taken over on November 14, I953, but the order was cancelled on May 21, I954, and the management vested in the owner.

investigation under s. 15 of the Act was again made in September, 1954, and the Central Government, being satisfied that the industrial undertaking was being mismanaged in spite of the order under the Essential Supplies (Temporary Powers) Act made on July 16, 1954, passed the impugned order on November 8, 1955.

So far as the amending order of November 7, 1956, was concerned, the like conditions still continued to exist and there was no necessity for a fresh investiga- . tion etc., because the management had not since November 8, 1955, vested in the owner, and by their very nature the conditions continued to exist till the management went into the hands of the owner again.

Having regard to the true nature of the conditions laid down in s. 18A of the Act, there was no violation of s. 21 of the General Clauses Act when the amendment was made on November 7, 1956, and, in our opinion, the requirements . of s. 21 had been substantially complied with. The power to amend which is included in the power to make the order was exercised subject to like conditions . within the meaning of s. 21 of the General Clauses Act, the conditions being an investigation under s. 15 of the Act and management in a manner highly detrimental to public interest, both of which necessarily related to the period when the management of the industrial undertaking was legally vested in its owner; . and both had been fulfilled and continued to be so fulfilled when the amendment was made. It is to be remem\>ered that s. 21 of the General Clauses Act embodies a rule of construction, and that rule must have reference to the context and subjectmatter of the particular statute to which it is being applied ; for example, s. 18A of the Act does not prescribe any conditions for the cancellation of an order made under that section, but s. 18F does and the power of cancellation referred to in s. 21 of the General Clauses Act must have reference to s. 18F.

Similarly, an order of amendment made becomes an order under s. 18A and is subject to all the conditions mentioned therein, including the condition mentioned in sub-s. (2).

A refernece wls made in this connection to a decision of this Court in jtrawboard Manufacturing Co. v. Gutta 138

Kam/a Prasad

Khetan

Tht Union of lndiw

S. K.Das].

Kamla Prasad

KMtan

Thi Union of India

S. K. DasJ.

Mill Workers' Union('). In that case, the State Government of Uttar Pradesh had referred an industrial dispute to the Labour Commissioner on February 18, 1950, and directed that the award should be submitted not later than April 5, 1950.

The award, however, was . made on April 13, and on April 26 the Governor issued a notification extending the time for making the award up to April 30, 1950. It was held by this Court that the State Government had no authority whatever to extend the time and the adjudicator became functus officio on the expiry of the time fixed in the original order of reference and the award was, therefore, one made without jurisdiction and a nullity.

It was further held that s. 14 of the U. P. General Clauses Act did not in terms or by necessary implication give any such power of extension of time to the State Government.

It was argued on behalf of the State Government in that case that. the order of April 26, 1950, could be supported with reference to s. 21 of the U. P. General Clauses Act.

But this Court rejected the argument and held that the power of amendment and modification conferred by s. 21 of the U. P. General Clauses Act could not be exercised so as to have retrospective operation. We do not think that the principle of that decision has any application in the

p~sent ase. But as already stated by us, the prov1s1on m s. 21 of the General Clauses Act embodies a rule of construction, and the implied power of amendment therein embodied must be determined with reference to the context and subject-matter of the provisions of the principal statute. In the present case, that rule of construction applies, but it does so with reference to the context and subject-matter of ss. 15, 16 and 18A of the Act.

(3) We now turn to the third and last question which has been agitated before us.

Learned counsel for the petitioners has contended that the impugned orders are not bona fide orders.

He has submitted that the authorised Controller was one of the parties to the dispute which led to so much protracted litigation.

(1) [1953] S.C.R. 439.

He has pointed out that there was an order of injunction against him. He has also referred to certain other circumstances arising out of other activities of the authorised Controller and relating to income-tax demarn; ls against him. He has submitted that the authorised Controller ceased to be a Director by reason of breaches of certain provisions of the Indian Companies Act committed by him. These submissions have been very seriously contested in the affidavit filed on behalf of the authorised Controller. On the materials before us, it is neither possible nor desirable that Wt should make any pronouncement with regard to these disputed questions of fact.

It is sufficient to state that the selection of a suitable person to be the authorised Controller rests with the Central Government and it may be presumed that the Central Government knows best the needs of the particular industry and of its own subjects and the suitability of the person to be appointed as authorised Controller. Having regard to the facts and circumstances to which we have already made a reference, it cannot be said that the appointment of Kedar Nath Khetan as the authorised Controller in this particular case was made for some ulterior purpose, that is, a purpose other than the purpose of achieving the objects for which the impugned order was. passed.

The primary concern of the Central Government was to see that the mills were managed in a manner which was not detrimental to public interest, and having regard to the experience of Kedar Nath Khetan in the industry in question, it was open to the Central Government to select him as the most suitable person to be appointed as the .authorised Controller, notwithstanding that he was a party to the dispute. The test to be applied in cases of this nature, where lack of good faith in the Central Government is pleaded, is not whether a better or more independent man was or might be available ; nor is it the duty of the Court to subject the selection made by the Central Government to another and independent test of propriety and suitability, for the Court has really no materials for such a test.

The test to be applied is whether the

Kam/a Prasad

Khttan

Tll4 Union of lnditl"

S. K. DasJ.

Kam/a Prasad

Khetan

v. 7'ht flnion of India

S. K. DruJ.

Sarkar],

appointment was made for some ulterior purpose, some purpose other than the object for which the law, under which the impugned order is made, was enacted. In our view, the petitioners have completely failed to satisfy that test in the present case.

For the reasons given above, we hold that the order made on November 8. 1955. and the amending order dated November 7, 1956, are both valid in law, and the petitioners have not made out any case of a violation of their fundamental right.

In conclusion, it may be stated that on behalf of the authoris.ed Controller a preliminary objection was also taken that petitioner No. l was not legally competent to represent petitioner No. 2.

Having regard to our decision on merits, it is unnecessary to say anything more about this preliminary objection. It was stated at the Bar that this preliminary objection has also been taken in Suit No. 4 of 1952. As that suit is still pending, we have thought it fit to refrain from. expressing any opinion on the preliminary objection.

The result is that there is no merit in the petition which is dismissed with costs in favour of the respondent, the Union of India. The authorised Controller, who iptervened at his own risk, must bear his own costs.

SARKAR J.-I have had the privilege of reading the judgment just delivered by my brother S. K. Das.

I regret that on one of the questions that arise in this matter I have come to entertain a different opinion.

In this judgment I will say a few words on that question only. With the rest of the judgment of S. K. Das J.

I am in entire agreement. He has dealt with the facts very fully and therefore I do not propose to state them myself.

The Central Government had by an order published in the Official Gazette of November 8, 1955, and made in exercise of the power conferred by s. 18A of the Industries (Development & Regulation) Act, 1951 (LXV of 1951), authorised Kedar Nath Khetan who has been allowed to intervene in these proceedings to take

over the management of Ishwari Khetan Sugar Mills Limited, an industrial concern then in the management of its directors. The order provided that it was to have effect for a period of one year commencing on the date of its publication in the Official Gazette. By another order made on November 7, 1956, the Central Government directed that in the order of November 8, 1955, for the words "one year" the words 'two years' should be substituted.

The effect of this latter order was that Kedar Nath Khetan was to be in management of the Mills up to November 7, 1957. The question is whether the order of November 7, 1956 was a valid order. The latter order is onlv an amendment of the earlier order. Had the Centrai Government then any power so to amend ?

Section 18A does not expressly confer any power to amend an order once it is made under it. Section 21 of the General Clauses Act, however, provides that a power of amendment shall exist in certain circumstances. The only question therefore is whether s. 21 of the General Clauses Act justifies the amendment made in this case. Section 21 is in these terms :

"Where, by any (Central Act) or Regulation, a power to (issue notifications), orders, rules or bye-laws is conferred then that power includeS' a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to , amend, vary or resci1nd any (notifications), orders, rules or bye-laws so

(issued)." Under this section a Notification or an Order once issued can be amended only "in the like manner and subject to the like sanction and conditions (if any)".

This means that the power of amendment can be exercised only in the same manner and subject to the same sanction and conditions, if any were imposed, in which the power to make the order could be exercised under the main Act. Was the order of NQvember 7, 1956, then made in the same manner and subject to the same sanction and conditions under which an order under s. 18A of th~ main Act could be made?

Under s. 18A the power to authorfae a person to take over the management of an undertaking can be

Kam/a Prasad

Khetan

The Union of India

Sarkar].

K amla Prasad

Khetan

The Union qf Indio

Sarkar J.

exercised only by a notified order, that is to say an order notified in the Official Gazette. This is the manner of the exercise of the power. The amending Order had been made in the same manner.

This requirement of s. 21 of the General. Clauses Act, therefore, was fulfilled in this case.

Section 18A does not provide for any sanction being obtained before the exercise of the power conferred by it. The amending Order, therefore, did not need any sanction, and no question of satisfying any requirement as to any sanction arises.

The difficulty has arisen as to the last requirement specified in s. 21, namely, that indicated by the words 'subject to like conditions'.

Section ISA of the main Act so far as relev3nt for the present purpose is in these terms :

"If the Central Government 1s of opinion that ................... .

(a) ................................ ..

(b) an industrial undertaking in respect of which an invtstigation has been made under s. 15 .......... is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest, the Central Government may, by a notified order, authorise any person or .............. to take over the management of .......... the undertaking .............. "

Learned counsel for the petitioner formulated his argument in this way.

He said that the right to exercise the power conferred by s. IBA arises only on two conditions being fulfilled, namely, (a) the existence of an industrial undertaking in respect of which an investigation had been made under s. 15, and (b) the Central Government being of opinion that such an undertaking is being managed in a manner highly detrimental to the industry or to public interest.

It was said that in this case the second condition was not present when the order for amendment of the earlier order was made and thc; refore it is invalid. I agree that the second condition was not present when the amending order was made.

The reason is this.

Section 18A contemplates the taking over of manage' ment of an undertaking by a person authorised by the Government.

It, therefore, contemplates a state of

affairs in which the management is not in such a person.

It follows that it contemplates management in a manner highly detrimental to the industry or public interest by a person other than that appointed by the Government under the Act.

In this case at the date of the amendment the management was in the person appointed by the Government by its earlier order of November 7, 1955, and, therefore, the Government could not at the date of the amending order have been of opinion that the management was by a person other than that appointed by it and such management was in a mann.er highly detrimental to the industry or to public. interest.

In my view, howevtr, when s. 21 of the General Clauses Act makes the power to amend exercisable subject to the like conditions as in the main Act, it does not contemplate those conditions upon the fulfilment of which the right to issue the order arises under the main Act. If this were so, the power of amendment conferred by s. 21 would have been wholly redundant and unnecessary. If the conditions upon the fulfilment of which the right to exercise the power arose under the main Act existed, then the Government could have instead of amending the order made a fresh order under s. 14 of the General Clauses Act, if necessary, rescinding the earlier order. Therefore, it seems to me that the provision in s. 21 of the General Clauses Act that the power of amendment shall be exercisable subject to like conditions does not refer to conditions upon the existence of which the right to exercise the power arises under the main Act.

In my view the conditions referred to in s. 21 are the conditions to which the order issued under the main Act must be made subject.

Thus, in this case sub-s. 2 of s. 18A provides that "any notified order issued under sub-section (1) shall have effect for such period not exceeding five years as may be specified in the order". The effect of this sub-section is that the order made under s. 18A must be subject to the condition that it cannot ha,•e effect for a longer period than 5 years.

When, therefore, an order once made under s. 18A is sought to be amended with the

Kam!a Prasad

Khetan

The Union of India

Sarhlr j.

Jramla Prasad

Tibetan

.v.

Thi Union qf lwdia

&.rluJr ].

aid derived from s. 21 of the General Clauses Act, the amendment must observe the condition laid down in sub-s. (2) of s. 18A. Such amendment is subject to the conditions in the main Act. The amendment cannot, therefore, extend the operation of the order beyond the period of five years mentioned in the main Act.

In the present case the amending order of November 7, 1956, complied with this condition and, therefore, it was properly made in compliance with the provisions of s. 2.1 of the General Clauses Act.

For this reason, in my view the argument of the learned Counsel for the petitioner that the amending order was invalid must fail.

I, therefore, agree with the orJer proposed by S. K. Das J.

Petition dismissed.

GIPN-54-61 S. C. India/59-9-12-59 1,000.

KAMLA PRASAD KHET

May I,

KAMLA PRASAD KHET AN

THE UNION OF INDIA

(and connected petitions)

(S. R. DAS c. J., JAFER IMAM, s. K. DAS,

GoVINDA MENON and A. K. SARKAR J J.)

[1957)

Industrial undertaking, control of-Central Government taking over management by notified order-Atnendment of such order by another-Validity-'Like conditions', Meaning of-Appointment of Controller-Bona fides-The Industries (Development and Regulation) Act (LXV of 1951), as amenqed by Amrnding Act, 26 of 1953, ss.

AN

THE UNION OF INDIA

S. R. DAS

JAFER IMAM

GoVINDA MENON

A. K. SARKAR J

Industries (Development and Regulation) Act

ss. 18A, 15, 16

Gcneral Clauses Act

s. 21

November 8, 1955

Government of India

s. 18A(l)

Industries (Development and Regulation) Act, 1951

s. 15

Central Government

November 7, 1956

s. 18A(l)(b)

Govinda Menon

s. 18A

ss. 15 and 16

s. 18A

s. 21

General Clauses Act

s. 18A(I} (b)

s. 21

General Clauses Act

s. 18A

Article 32

Constitution of India

Purshottam Tricumdas

S. N. Andley

Rameshwar Nath

f. B. Dadachanji

P. L. Vohra

C. K. Daphtary

Porus A. Mehta

R.H. Dhebar

M. L. Misra

C. P. Lal

J. Jafar Imam

S. K. Das

S. K. Das J. Sarkar

Kamla PrtJJad

Khetan

S. K. DAs

Kedar Nath Khetan

Deoria

Kamlaprasad Khetan

Ishwari Khetan Sugar Mills Ltd.

Union of India

October 1, 1956

Union of India

Khetan

Onkarmal Khetan

Karola Prasad Khetan

Ishwari Kheian Sugar Mills Ltd.

Lakshmiganj

Maheshwari Khetan Sugar Mills

Ramkola

Morarji Gokul Das Spinning and Weaving Mills, Bombay

Laxmidevi Sugar Mills Ltd.

Rai Bahadur Kedar Nath Khetan

Kamla Prasad

Kamla Prasad

K!rtlan

v •.

S. K. Das].

K!rtlan

S. K. Das

Companies Act

July 9, 1952

July 8,

1952

June 3, 1953

July 8, 1952

October 9, 1951

High Court of Allahabad

September 14, 1953

November 9, 1953

July 31, 1956

Ministry of Food

Durga Prasad Khetan

ss. 15 and 17

November 8, 1952

Ministry of Food and Agriculture, Government of India

U11io11 of India

S. K. Das

Maheshwari Khetan Sugar Mills Ltd

s. 3

December 23, 1952

Onkarmal

May 14, 1954

July 30, 1953

s. 15

November 14, 1953

s. 18A

s. 17

s. 18A

Dwarkadas Shrinit1as

Art. 31

May 21, 1954

July 16, 1954

s. 3

Ishwari Khetan Sugar Mills -Ltd

September 19, 1954

s. 15

January 31, 1955

s. 18A

Komla PrtJJati

S. K. DtJJ

amla Prasad

Khttan

S. K. Da

Art. 32

November 5, 1956

Art. 32

B. Kedar Nath Khetan

Art. 32

s. 18A

IA of the Act was inserted by the Amending Act

Article 31B

IA of the Act was inserted by the Amending Act

IA of the Act was inserted by the Amending Act

First Amendment Act, 1951

Ninth Schedule

Ninth Schedule

Ninth Schedule

Amendment Act, 1953

s. 18A

s. 18A

s. 18A

s. 21

General Clauses Act

s. 18A

section 15

Union of lrulia

S. K. Dos

section 16

Parliament

s. 15

s. 15

December 18, 1952

s. 3

s. 3

S.K.Das

S. K. Da

s. 15

November 14, !

s. 3

May Zl, 1954

s. 15

s. 15

November B, 1955

s. 3( 4)

25th October, 1956

clause 1

clause 2

Section 21

General Clauses Act

s. 18A

s. 21

General Clauses Act

November 7, ···

s. 1

s. 18A

s. 21

General Clauses Act

s. 21

General Clauses Act

Section 21

General Clauses Act

s. 18A

s. 21

General Clauses Act

s. 18A

s. 21

s. 18A

s. 15

Section 15

s. 15

s. 18A

Section 16

s. 15

s. 16

s. 18A

s. 18A

section 16

s. 15

s. 18A

s. 15

s. 16

s. 16

s. 18A

ss. 15

s. 18A

ss. 15, 16 and 18A

S. K. Da

v •.

Tll' Union of India

S. K. Da, ]. ·

s. 18A

s. 15

ss. 15, 16

s. 15

November 14, I953

May 21, I954

s. 15

s. 18A

s. 21

General Clauses Act

s. 21

s. 21

General Clauses Act

s. 15

s. 21

General Clauses Act

s. 18A

s. 18F

s. 21

General Clauses Act

s. 18F

s. 18A

S. K.Das

S. K. DasJ.

State Government of Uttar Pradesh

April 30, 1950

s. 14

General Clauses Act

April 26, 1950

s. 21

General Clauses Act

s. 21

General Clauses Act

s. 21

General Clauses Act

ss. 15, 16 and 18A

Companies Act

S. K. DruJ.

November 8. 1955

SARKAR

s. 18A

Ishwari Khetan Sugar Mills Limited

November 7, 1957

Centrai Government

Section 18A

Section 21

General Clauses Act

s. 21

General Clauses Act

Section 21

s. 18A

s. 18A

Sarkar

s. 21

Section 18A

s. 21

Section ISA of the main Act

s. 15

s. 15

Section 18A

November 7, 1955

s. 21

General Clauses Act

s. 21

s. 14

General Clauses Act

s. 21

General Clauses Act

s. 21

s. 2

s. 18A

s. 18A

s. 18A

Kam!a Prasad

Khetan

Union of India

Jramla Prasad

s. 21

General Clauses Act

s. 18A

s. 2

General Clauses Act