MAHESH KUMAR SAHARIA Vs. STATE OF NAGALAND

JUDGEMENT

(1.) The appellant, formerly a shareholder and Managing Director of the Nagaland Forest Products Limited (hereinafter called the "Company"), challenged the vires of Nagaland Forest Products Ltd. (Acquisition of Shares) Ordinance, 1981 and Nagaland Forest Products Ltd. (Acquisition of Shares) Act, 1982, which replaced the Ordinance (hereinafter called the "State Act"), contending inter alia that the said legislations were ultra vires the powers of Nagaland State Legislature in view of Section 20 of the Industries (Development and Regulation) Act, 1951 (hereinafter called the "Central Act").

(2.) Pursuant to a contract entered into between late Shri Ram Gopal Saharia, father of the appellant and the Government of Nagaland dated 24-4-1972 to establish a plywood factory in the territory of Nagaland on the terms and conditions stipulated therein, the Company was incorporated. The authorised share capital of the Company was Rs. 50,00,000/- divided into (i) 20,000/- (6% cumulative redeemable) preference shares of Rs. 100/- each (ii) 15,000/- 'G' class equity shares of Rs. 100/- each and (iii) 15,000/- 'S' class equity shares of Rs. 100/- each. 'G' and 'S' class equity shares carried the same rights. It appears that the appellant's group, on the one hand and the Government of Nagaland on the other hand, subscribed 50% each of the equity shares. The Company after obtaining necessary certificate of commencement of business on 22-7-1972, as required under the Central Act, commenced its business thereafter. The father of the appellant was the first Managing Director of the Company. After the death of his father, the appellant became the Managing Director some time in 1975. A Cabinet ranking Minister of the Government of Nagaland was the Chairman of the Company since its inception except during Governor's Rule.

(3.) While so, on December 14, 1981, the Deputy Commissioner, Mon District, directed the manager, Nagaland Forest Product Limited to close down the plywood factory on 14-12-1981 till further orders. It was followed by Ordinance 1 of 1981 which enabled the State Government to take over the assets, books of accounts, registers etc. of the Company. The Ordinance came into force on 17-12-1981. As noticed earlier, the Ordinance was replaced by the Act. The appellant challenged the Ordinance initially and subsequently by amending the petition appropriately, the Act was also challenged.