MOHANLAL ISHVARDAS PANCHAL Vs. UNION OF INDIA

JUDGEMENT

(1.) The appellant was the Chairman of the Board of Directors of Kathiawar Industries Limited. The Custodian of Evacuee Property sought to proceed against the company under Section 10 (2) (II) of the Administration of Evacuee Property Act, 1950 (hereinafter referred to as 'the Act'). The appellant challenged the validity of the 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 order 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.

(2.) The issued share capital of Kathiawar Industries is Rs.50 lakhs. The total number of shares subscribed, preferential as well as ordinary, of the company is 1,21,961. One of the shareholders of that company is a company by name Bhawani Investment Company Ltd. That company held 12,100 shares in Kathiawar Industries. The case of the respondents was that all the shareholders of Bhawani Investment Company had become evacuees and, therefore, the shares held by Bhawani Investment Company in Kathiawar Industries had become evacuee property and as 51 per cent, of the shares in Kathiawar Industries had become vested in the Custodian of Evacuee Property, the Custodian was entitled to take charge of the management of the whole affairs of the company under Section 10(2)(11) of the Act. The appellant denied the fact that all the shareholders of Bhawani Investment Company had become evacuees. The High Court did not go into that question, it assumed for the purpose of the case, that all the shareholders of Bhawani Investment Company had become evacuees and then it said that that fact cannot make Bhawani Investment Company an evacuee. It observed that an incorporated company has a personality of its own, different from the personalities of the shareholders and that shares held by the Bhawani Investment Company in Kathiawar Industries cannot be evacuee property as Bhawani Investment Company cannot be an evacuee, and allowed the writ petition. It was against this decision that the respondents had appealed to this Court. The Court held that (See Union of India v. Mohanlal Ishvardas Panchal, AIR 1971 SC 139) if all or a substantial number of shareholders in Bhawani Investment Company become evacuees the shares held by that Company in Kathiawar Industries would be evacuee property. It was in these circumstances that this Court set aside the order of the High Court directed the Court to consider the question afresh and dispose of the case.

(3.) Section 2(f) of the Act, as originally enacted, defined 'evacuee property' as follows: