DWARKADAS SHRINIVAS OF BOMBAY versus THE SHOLAPUR SPINNING & WEAVING CO. LTD., AND OTHERS.

Citation: [1954] 1 S.C.R. 674 · Decided: 18-12-1953 · Supreme Court of India · Bench: M. PATANJALI SASTRI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

1953 
T!11 Sta11 of 
W1Jt B1ngal 
Y, 
Subodh Gopal 
BoJt a11d Otlitrr. 
JazannU!11u/as J. 
195~ 
Dec. 18. 
674 
SUPREME COURT REPORTS 
[1954} 
of Eminent Domain. It is on a par with article 21. 
It seems to me to serve a distinct purpose over and 
above that relating to the law of Eminent Domain, 
viz., that it relates also to deprivation of property 
other than that which may fall within the scope of 
article 31 (2). It enjoins that such deprivation shall 
not be brought about save by authority of law. 
In view of what I have said above, it follows that 
the 
assumption 
with which I have 
started, vit:., that 
this is a case falling under article 19 (1) (f) :md (5) is, in 
my opinion, correct. 
In the result I agree that the appeal should be 
allowed with costs here and in the High Court. 
Appeal allowed. 
Agent for the appellant : P. K. Bose. 
Agent for respondent No. 1 : R. R. Biswas. 
DWARKADAS SHRINIVAS OF BOMBAY 
v. 
THE SHOLAPUR SPINNING & WEAVING CO. 
LTD., AND OTHERS. 
rPATANJALI 
sAsTRI c.J., MEHR 
CHAND 
MAHAJAN, 
S. R. DAs, VIVIAN BosE 
and GHIJLAM HASAN JJ.] 
Sholapur Spinning and Weaving Co1npany 
(Emergency Proui-
sions) 
Ordinance II of 1950, replaced by Act XXVl!l 
of !950-
H1 hether ultra vircs art. 31 of the Constitution-Arts. 19 and 31-
Scope of-Whether different. 
The Sholapur 
Spinning and Weaving Co., Ltd., was incorpo
4 
rated 
under the Indian Companies Act, 1913, with an authorised 
capilal of Rs. 48 lakhs 
divided into 1590 fully 
paid up ordinary 
• shares of Rs. 1,000 each, 20 fully paid up ordinary shares of Rs. 500 
each and 32,000 partly 
paid up cumulative 
prcferenc<": 
shares of 
Rs. 100 each, the paid up capital of the Company being- Rs. 32 lakhs 
comprised 
of Rs. 16 
lakhs fully 
paid up 
ordinary shares and 
Rs. 16 lakhs partly paid up preference shares, Rs. 50 being unpaid 
on each of the 32,000 cumulative preference shares. The Company 
did goo<l business and declared high dividends for son1c time ; but 
in the year 1949 
there \Vas accumulation of stocks 
and financia1 
difficulties. On the 
27th July, 1949, the Directors gave notice Gf 
• 
S.C.R. 
SUPREME COURT REPORTS 
675 
their decision to close the Mills to the workers, and pursuant 
to 
this notice the Mills were closed. 
Thi• created a labour problem 
and to solve it the Governn1cnt on he 5th October, 1949, appointed 
a Controller 
to supervise 
the affairs of the· Mills 
under the 
Essential 
Supplies Emergency 
Powers 
Act, 
1946. 
On the 9th 
Novcrnher, 1949, 
the Controller in order to resolve 
the deadlock 
decided to call in 1nore capital 
and asked 
the Directors of the 
Company to n1ake a call of Rs. 50 per share, on the preference 
shareholders, 
the amount remaining unpaid on each of the prefer~ 
ence shares. 
The 
Directors 
refused- to comply with this rcquisi~ 
tion, as in their judgment, this was not in the interests of the 
Company. 
'[hereupon the Govcrnor~Gcncral on the 9th 
January, 
1950, pro1nulgated the itnpugne<l Ordinance, under which the Mills 
could be 
1nanaged 
an<l run 
by 
the Directors appointed by the 
Central 
Government. 
On the 
9th 
January, 
1950, 
the Central 
Govern1nent acting under s. 15 of the Ordinance delegated all iu 
powers 
to 
the 
c;overn1nent 
of Bombay. 
The Government 
of 
Bombay 
then 
appointed 
certain 
Directors 
\Vho took over 
the 
assets 
and inanagemcnt of the Mills. 
On the 7th February, 1950, 
they passed a resolution 
1nakinp,: a call of Rs. 50 on each of the 
preferc-nce shares 
payable 
at 
the 
titnc 
stated in the resolution. 
Pursuant 
t~ this resolution a notice was addressed on the 22nd 
February, 1950, 
to the plaintiff 
in the suit 
\vho held preference 
shares, to pay Rs. 1 ,62,000 the amount of the said call on or ~fore 
the 3r<l April, 
1910. Tht': plaintiff instead of meeting the demand, 
filed the present suit on the 28th March, 1950, in a represt":ntativc 
capacity on behalf of hi1nself 
and other 
preference 
shareholders 
against the Coinpany and the Directors 
appointed by the Govern-
ment of Ro111bay challenging the validity of the Ordinance and 
qucstiof1ing the right of the 
Directors 
to make the call. 
It was 
alleged in the suit that the Ordinance \Vas 
illegal and ultra vire.r 
and invalid as it contravened the provisions of Section 299(2) of the 
(;overntnent of India Act, 1935, 
and the provisions of Part III of 
the Constitution 
an<l that the resolution 
of 
the 
Directors dated 
7th February, 1950, inaking a call ,Vas illegal a

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