MOHANLAL ISHVARDAS PANCHAL versus UNION OF INDIA & ORS.

Citation: [1975] 1 S.C.R. 950 · Decided: 28-08-1974 · Supreme Court of India · Bench: A.N. RAY · Disposal: Remitted to Lower Court

Judgment (excerpt)

950 
MOHANLALISHVARDAS PANCHAL 
v .. 
UNION OF INDIA & ORS. 
August 28, 1974 
[A. N. RAY, C.J. AND K. K. MATHEW, J.] 
Adn1i11istration of E~·acuee Property Act, 1950 S. 2(1)(1A)-S. 10(2) 
One of the shareholders of K company, of which the appellant was the 
Chairman, was B company holding 12,100 shares in K Company, The capital 
of B company was made up of J0,000 shares, of which 9998 shares were held 
by three shareholders and the other two by two shareholders of one share each. 
The Custodian of Evacuee Property claimed that since all the shareholders of 
B company had become evacuees the shares held by that company in K com~ 
pany had become evacuee property. He further claimed that the shares already 
held by him in K company together with the 12,100 shares of B company con~ 
stituted more than 51 % of the share capital of K company and that therefore, 
he was entitled to take charge of the management Of the whole of the affair~ 
of K company_ under s. 10(2) ( 11) of the Administration of Evacuee Property 
Act 1950. The appellant challenged this claim. 
The High Court held that assuming that all the shareholders of B company 
bad become evacuees that fact could not make B company, which had a different 
corporate personality of its own, an evacuee, and that the shares held by B 
company in K company could not be evacuee property, 
On appeal the Supreme Court remitted the case to the High Court to con-
liiider the question if all or a substantial number of shareholders of B company 
became evacuees. 
Without acing into this question the Hi&h Court dismissed the writ petition. 
In April, 1951 the definition of -"evacuee property" was amended by s. 2(i) 
(IA) of the Administration of Evacuee Property (Amendment) Act, 1951 with 
rest'rospective effect from April, 1950. 
By this definition evacuee property was 
made to include property belongin1 to a company of which not less than 
51 
per cent tif the shares were held by evacuees. 
By Act 11 of 1953 that defini-
tion was deleted and s. 10(2)(11) was inserted. 
On nppea1 to this Court it was contended that the three shareholders owning 
9998 shares were declared evacuees only in 1955 and that since these aharehol· 
dcrs became evacuees subsequent to the date of the Amendment Act of 1953 
when the definition clause inserted by the Amendment Ac~ of 1951 was deleted, 
the shares held by B company in K company would not become evacuee 
property. 
Remitting the case to the High Court 
HELD : The point of time at which the shareholders should have been eva-
cuees is when the Amendment Act of 1951 came into force or any time while 
that Act was in operation. In the absence of a finding on the queation when 
they becam• evacuees it would bo difficult to hold that tho shares held by B com· 
pany in K company would be evacuee property. It is, therefore, necessary that 
A 
B 
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D 
E 
F 
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D 
E 
F 
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MOllANLAL l'. UNION (l'dathew, J.) 
95 I 
the High Court should enter a finding on the question whether these three aha:rc-
holder-5 were evacuee at any point of time before or during the period when the 
definition clause 2(1) (IA) was in operation [954 H-9550] 
C1v1L APPELi.ATE JURISD:CTiON : Civil Appeal No. 1991 of 1972. 
Appeal from the Judgment & Order dated the 12th/13th April, 
1972 of the Guj?.rat High Court in Special Civil Appln. No. 1055/ 
1965. 
I. N. Shroff, for the appellant. 
L. N. Sinha, Solicitor General for India, P. P. Rao and S. P. Nayar 
for the respondent Nos 1-3. 
K. T. Hat/ii, A. R. Chaphekar and P. C. Kap•r, for respondent No. 
5. 
The Judgment of the Court was delivered by 
MATHEW, J. The appellant was the chairman of the Board of 
Directors. of Kathiawar Industries Limited. The Custodian of Eva-
cuee Property sought to proceed against the company under s. 10(2)(11) 
of the Administration of Evacuee Property Act, 1950 (hereinafter 
referred to as 'the· Act'). The appellant challenged the validity of 
proceedings before the High Court of Gujarat by a petition under 
Article 226 of the Constitution. The High Court allowed the petition 
and quashed the proceedings. An appeal against the ordtr was 
preferred to this Court. The Court set aside the order and remitted 
the case to the High Court for a fresh decision. The Court thereafter 
dismissed the writ petition and, this appeal, by certificate, is against 
that order. 
The issued share capital of Kathiawar Industries is Rs. 50 lakhs. 
The total number of shares subscribed, preferential as well a

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