QUALITY CUR PIECES Vs. M LAXMI AND CO

JUDGEMENT

(1.) Summer of 42. The city of Bombay was slowly recovering from the erosion of war economy. Serpentine queues for essential commodities were seen every where The mighty arch of yellow basalt hautily thrusting its frame above the promontory lapped by the waters of Bay of Bombay had witnessed the entry of many an Englishman-administrators, Governors-General, dashing blades or humble quill drivers-coming to India to keep Pax Britannica. That very arch was soon to serve as their exist. DSS Incorporated

(2.) A group of seven businessmen drawn from various fields like pharmaceuticals, textiles, tea, banking and insurance got together and surveyed the Indian economic scene. They had a vision of a possible co-operation of Indian and foreign entrepreneurs in the field of supply of essential commodities for civilian consumption-something which was very much relegated to the background by the more pressing need to keep the sinews of war flowing. They envisaged a free-flow of goods and merchandise once the sea routes became open; took note of the fact that manufacturers in western countries had at their disposal large departmental chain stores to handle goods direct from the factory to the consumer and managed country-wide distribution system. This group regretted the absence of a similar large-scale departmental store in India and decided to remedy the defect and build up a co-ordinated contract between the producer and consumer. With this object in view, the group incorporated a company "Departmental Service Stores Limited." ("DSS").

(3.) The Company could not function in view of the prohibition regarding the issue of shares under Rule 94-A of the Defence of Indian Rules, without the sanction of the Examiner of Capital issues. This sanction was granted on 15th November, 1983 authorising the company to raise capital of the value of Rs. 1,62,000/- under certain conditions. The hurdle of the Defence of India Rule was crossed and capital was raised. Having realised the capital by allotting shares to those who had applied before 17th May, 1943, the company had money but no premises wherein to start the contemplated departmental stores. The Company was all dressed up but had nowhere to go. On 8th September, 1944 the company, acquired the house of Messrs. Dinshaw and Company. Colaba, Causeway, Bombay, from one Behram Rustom Irano, after paying Rs. 47,000/- out of which Rs. 4,000/- were towards the goodwill and the remainder towards the price of goods, electrical installations type writers etc. A store was started in the premises of Dinshaw and Co. for the 10 months ending 30th June, 1945, DSS made a modest profit of Rs. 6,405-2-11 Ps.