PETITIONER: MOTIPUR ZAMINDARI CO. LTD. Vs. RESPONDENT: THE STATE OF BIHAR AND ANOTHER.RAJA JANKINATH ROY AND NAREND DATE OF JUDGMENT: 17/04/1953 BENCH: DAS, SUDHI RANJAN BENCH: DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ) MUKHERJEA, B.K. HASAN, GHULAM BHAGWATI, NATWARLAL H. CITATION: 1953 AIR 320 1953 SCR 720 ACT: Bihar Land Reforms Act, 1950, ss. 2 (o) and (r), 3- Applicability of Act to companies-"Person" "Proprietor" "tenure-holder",meanings of. HEADNOTE: The word " person " in the definitions of " proprietor "" and tenure-holder " contained in a. 2 (o) and s. 2 (r) respectively of the Bihar Land Reforms Act, 1950, includes companies incorporated under the Indian Companies Act, 1913. There is nothing repugnant in the subject or context of the Act to prevent the inclusion of a company within the terms proprietor " and " tenure-holder ". On the contrary such inclusion is necessary in order to give full effect to the object of the Act. Pharmaceutical Society v. The London and Provincial Supply Association, Limited (1880) 5 App. Cas. 857 distinguished. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 62 and
63 of 1953. Appeals under Article 132 (1) of the
Constitution of India from the Judgment and Order dated 22nd
December, 1952, of the High Court of Judicature at Patna
(Ramaswami and Sarjoo Prosad JJ.) in Miscellaneous Judicial
Cases Nos. 238 and 242 of 1952.
P. R. Das (J. C. Sinha and L. K. Chaudhry, with him) for
the appellant in both the appeals.
M. C. Setalvad, Attorney-General for India (L. N.Sinha
and Bajrang Sahai, with him) for the respondents in both the
appeals.
1953. April 17. The Judgment of the Court was delivered by
S. R. DAB J.
721
DAS J.-This judgment disposes of Civil Appeals No. 62 of
1953 and No. 63 of 1953 which have been heard together.
The Motipur Zamindari Company Ltd., the appellant in Civil
Appeal No. 6.) of 1953, was incorporated in 1932 under the
Indian Companies Act and has its registered office in
Bengal. It supplies sugar-cane to a sister concern named
Motipur Sugar Factory Ltd. Raja Jankinath Roy and Narendra
Nath Roy and Co., Ltd., the appellant in C. A. No. 63 of
1953, was incorporated in 1933 under the Indian Companies
Act and also has its registered office in Bengal. This
company owns Zamindari Properties in Purnea in the State of
Bihar as well as in Malda in the State of West Bengal. It
carries on business, amongst others, as banker and
financier.
On the 30th December, 1949, a bill entitled the Bihar Land
-Reforms Bill was passed by the Bihar Legislature and having
been reserved for the consideration of the President
received his assent on the 11th September, 1950. The Act so
passed and assented to was published in the Bihar Gazette on
the 25th September, 1950, and was brought into force on the
same day by a notification made by the State Government in
exercise of powers conferred on it by section 1(3) of the
Act. Many of the proprietors and tenure holders of
Zamindari estates took proceedings against the State of
Bihar for appropriate orders restraining the State
Government from taking over the estates under the provisions
of the Act which they claimed to be beyond the legislative
competency of the Bihar Legislature and otherwise void. On
the 12th March, 1951, a Special Bench of the Patna High
Court held that the Act was unconstitutional on account of
its contravention of article 14 of the Constitution. The
State of Bihar appealed to this Court. Pending that appeal,
the provisional Parliament passed the Constitution (First
Amendment) Act, 1951. The respondents in the main appeal
took proceedings in this Court, contending that the Act
amending the Constitution was invalid. This
722
Court however, on 5th October, 1951, upheld the validity of
the amending Act. On 6th November,’ 1951, notifications
were issued under section3 of the Bihar Act declaring that
certain Touzies belonging to the appellants specified in the
notification had passed to and become vested in the State.
Both the appellants made separate applications to the Patna
High Court under article 226 of the Constitution praying for
mandamus or suitable direction or order restraining the
respondent from taking possession of their respective
estates or tenures by virtue of the said notifications and
for other ancillary reliefs. The appeals filed by the State
of Bihar against the order of the Special Bench declaring
the Act to be void came up for hearing before this Court and
this Court upheld the validity of the Act, except as to a
few provisions mentioned in the majority judgment which were
hold to be severable. Thereafter, the two applications made
by the two appellants under article 226 before the Patna
High Court came up for hearing and were dismissed by a Bench
of that Court on the 22nd December, 1952. The present
appeals have been filed with leave of the Patna High Court
against the said dismissal.
The question raised before the High Court was whether the
Act was, on its true construction, intended to apply to
Zamindari estates of companies incorporated under the Indian
Companies Act. In support of the appellants’ contention
that it was not, it was urged -that the Bihar Legislature
had no authority to legislate with respect to trading
corporations or non-trading corporations whose objects were
not confined, to one State. Reference was made to entries
43, 44 and 45 of List I to show that it was Parliament alone
which was authorized to make law with respect to matters set
forth in those entries. The contention was that the Bihar
Legislature in enacting the Act invaded the Union field and
so the Act was invalid. This argument was sought to be
reinforced by reference to the provisions of the Act and the
winding up provisions of the Companies Act. The Patna High
723
Court overruled this contention and Mr.P.R.Das appearing in
support of these appeals has not challenged this part of the
decision of the Patna High Court.
The main point urged by Mr. P. R. Das is that even if the
Bihar Legislature could make a law for acquiring Zamindari
estates of incorporated companies it did not, by the Act, in
fact do so. Section 3 authorises the State Government to
declare by notification that the estates or tenures of a
proprietor or tenure-holder have passed to and become vested
in the State. It will be recalled that it was under this
section that the State Government on the 6th November, 1951,
issued the notifications with respect to the estates of the
appellants situate within the State. Mr. P. R. Das’s
principal contention is that the appellant companies do not
come within the terms, ” proprietor” or ” tenure holder” as
defined by the Act and consequently no part of their estates
were intended ‘to be vested or did in fact vest in the
State. ” Proprietor” is defined by section 2(o) as meaning
a person holding in trust or owning for his own benefit an
estate or a part of an state and includes the heirs and
successors-in-interest of a proprietor and, where a
proprietor is a minor or of unsound mind or an idiot, his
guardian, committee or other legal curator. Tenure-holder
is defined by section 2 (r) as meaning a person who has
acquired from a proprietor or from any tenure-holder a right
to hold land etc. The argument is that the word “person” in
the two definitions referred to above does not, in the
context of the Act, include a company. It is conceded that
under section 4(40) of the Bihar General Clauses Act the
word “person” would ordinarily include a company, but it is
urged by Mr. P.R. Das that the definitions given in that
section apply only where there is nothing repugnant in the
subject or context. His contention is that the definition
of “proprietor” and “tenureholder” indicates that a company
which owns Zamindaries is not covered by that definition.
We are unable to accept this contention. It is not disputed
94
724
that a company can own an estate or a part of an estate and,
indeed, the appellant companies are fighting these appeals
only to protect the estates they own. Therefore, they come
within the first part of the definition. The definition
after stating what the word means proceeds to state what
else the definition would include under certain specified
circumstances, namely, the heirs and successor-in-interest
etc. The word “heir” certainly is inappropriate with regard
to a company, but there is nothing inappropriate in the
company having a successor in interest. It is pointed out
that there is no provision in the definition of proprietor
to include the directors, managing agents and, in case of
winding up, the liquidator of the company. This
circumstance does not appear to us to be a cogent reason for
holding that the word “proprietor” as defined does not cover
a company. It is to be noted that the agent or, in case of
insolvency, the official assignee or receiver of an
individual proprietor are also not included in the
definition. Reference to proprietor who is a minor or of
unsound mind or an idiot and his guardian etc., was
obviously necessary because those proprietors suffer from
legal disabilities.
Mr. P. R. Das refers us to various sections and rules
framed under section 43 of the Act to show that’ only
natural persons were intended to be affected by the Act,
because, ha urges, the company is not competent to do the
acts therein referred to. It is not ,disputed by Mr. P. R.
Das that there is no difficulty on the part of an
incorporated company to do all these acts by its directors
or managing agents or other officers empowered in that
behalf by its articles of association, but his contention is
that the provisions of the Indian Companies Act should not
be imported into the consideration of the provisions of his
Act. He relies primarily on the case of Pharmaceutical
Society v. The London and Provincial Supply Association,
Limited(1) whore it was held,that a corporation
(1) (1880) L.R. 5 App. Cas. 857.
725
did not come within the word “person” used in the Pharmacy
Act, 1868 (31 & 32 Vic., Chapter 121). Reliance was placed
upon the observations of Lord Selborne L.C. at page 863.
The preamble to that Act recited, amongst other things, that
it was “expedient for the safety of the public that persons
keeping open shop for the retailing, dispensing or compound-
ing of poisons, and persons known as chemists and druggists
should possess a competent practical knowledge of their
business.” This clearly comtemplated persons skilled in
matters pharmaceutical and not impersonal corporate bodies
which would know nothing about that particular business.
Indeed, Lord Blackburn in his speech in the House of Lords
in the Pharmaceutical Society’s case(1) referred to this
preamble and observed at page 870:-
“Stopping there, it is quite plain. that those who used
that language were not thinking of corporations. A
corporation may in one’ sense, for all substantial purposes
of protecting the public, possess a competent knowledge of
its business,, if it employs competent directors, managers,
and so forth. But it cannot possibly have a competent
knowledge in itself. The metaphysical entity, the legal
‘person’, the corporation, cannot possibly have a competent
knowledge. Nor I think, can a corporation be supposed to be
a ‘person known as a chemist and druggist’.”
His Lordship then referred to the provisions of sections
1 and 15 of that Act and came to the conclusion that the
word “person” in that Act. meant a natural person. The
effect of ‘that case is that whether the word “Person” in a
statute can be treated as including a corporation must
depend on a consideraiion of the object of the statute and
of the enactments passed with a view to carry that object
into effect. In view of the object of that Act as recited
in the preamble there could be no manner of doubt that the
word “person” in that Act could not possibly, include a
corporation. Lord Selborne towards the end of page 863
indicated, by reference to the 18th
(1) (188o) L.R. 5 App. Cas. 857
726
section, that the legislature by the word “person” referred
only to individual persons as it was clearly repugnant to
the subject of that Act to include a corporation within the
word “person” as used in ‘that Act. Mr. P. R. Das urges
that the judgment of Lord Selborne was founded on the fact
that the corporation could not come within the term “person”
on the ground that it could not make an application in
writing signed by it. From this Mr. P. R. Das urges that
the necessary implication of this part of the judgment of
Lord Selborne is that it was not permissible to take the
provisions of the Companies Act into consideration for
construing another Act. If that were the implication of the
speech of Lord Selborne, with respect, we are unable to
accept the same. Indeed, one cannot think of a company
unless one has in view the provisions of the Companies Act,
for a company is the creature of the Companies Act. Its
existence, powers and rights are all regulated by that Act.
The trend of the, speeches of the noble Lords in the case
relied on by Mr. P. R. Das is that the object of the
particular Act under consideration was entirely repugnant to
the word “corporation” being included within the term
“Person” as used in that Act, and as we apprehend it, that
decision lays down nothing beyond that.
In support of his contention that a company owning an
estate was never intended to be affected by the Act, Mr.P.
R. Das draws our attention to the winding up sections of the
Indian Companies Act and urges that it is not possible to
fit in the scheme of winding up into the scheme of the Bihar
Act. If the Zamindari assets of the company are taken over
and compensation is paid by non-transferable bonds it will,
he contends, be impossible, to apply the law of winding up
in case the company goes into liquidation. There will,
according to him, be conflict of jurisdiction between the
Court where the winding up is proceeding, which may
conceivably be in another State, land the Bihar Government
and its officers. ‘We see no force in this contention.
Upon a
727
notification being issued under section 3, the Zamindari
estate will vest in the State and the company will cease to
have any interest in it. Its only right will be to receive
compensation. In case of winding up the liquidator will
have to pursue the remedy provided by this Act. He or the
company will be in no worse position than the official
assignee or official receiver of an individual proprietor
who may happen to become insolvent in another State.
Finally, Mr. P. R. Das strongly relies on section 41 of
the Act and contends that that section would be wholly
inapplicable to a company and that circumstance by itself
would indicate that the Bihar Legislature did not intend
that a company owning an estate should be governed by this
Act. A corporation, it is true, cannot be made liable for
treason, felony or any misdemeanour involving personal
violence or for any offence for which the only penalty is.
imprisonment or corporal punishment. (Halsbury, 2nd Edition,
Volume IX, article 5, p. 14). Section 41 does not prescribe
punishment by imprisonment only. Mr. P. R. Das suggests
that the infliction of imprisonment or fine would depend
upon the gravity of the offence and not on the character of
the offender. This argument, however, would seem to run
counter to the opinion of Lord Blackburn set forth at pages
869-870 of the report of the very case relied on by Mr. P.
R. Das. The recent cases of Director of Public Prosecutions
v. Kent and Sussex Contractors Limited(1) and Rex v. I.C.B.
Haulage, Limited and Another(2) seem to indicate that a
corporation may be convicted even of an offence requiring an
act of will or a state of mind. Apart, however, from the
consideration whether a company may be held guilty of wilful
failure or neglect, as to which we need not express any
definite opinion on this occasion, there can be no
difficulty in applying the provisions of section 41 to the
officers or agents of the company. On a notification under
section 3(1) being published the estate vests in the State.
Section 4 sets out the
(1) [1944] I.K.B. 14 6. (2) [1944] I.K.B. 551.
728
consequences of such vesting. Clause (g) of that section
empowers the Collector by written order served in the
prescribed manner to require any person in possession of.
such an estate or tenure or any part thereof to give up
possession of the same by a date specified in the order and
to take such steps or use such force as may be necessary for
securing compliance with the said order. If any officer or
agent of the company in the possession of the estate
wilfully fails or ignores to comply with such lawful order,
then surely he can be proceeded against under section 41.
Likewise, under section 40, the. officers therein mentioned
are authorized at any time before or after the date of
vesting by a written order served in the prescribed manner
to require a proprietor or tenureholder or any other person
in possession of such an estate or tenure or any agents or
employees of such proprietor, tenure-holder or other person
to produce at a time and place specified in the order such
documents, papers or registers or to furnish such informa-
tion relating to such estate or tenure as such officer may
from time to time require for any of the purposes of this
Act. A wilful failure or neglect to comply with such order
would clearly bring the recalcitrant officer or agent of the
company within the penalty provided under section 41.
Section 41 therefore, does not necessarily preclude the
application of the Act to incorporated companies.
It cannot be denied that a company is competent to own and
hold property. The whole. object of the impugned Act is
thus stated by Mahajan J. in the State of Bihar v. Kameshwar
Singh(1):
” Now it is obvious that concentration of big blocks of
land in the hands of a few individuals is contrary to the
principle on which the Constitution of India is based. The
purpose of the acquisition contemplated by the impugned Act
therefore is to do away with the concentration of big blocks
of land and means of production in the hands of a few
individuals and to so distribute the ownership and control
of the
(1) [1952] S.C. R. 889 at p. 941.
729
material resources which come in the hands of the State as
to subserve the common good as best as possible. In other
words, shortly put, the purpose behind the Act is to bring
about a reform in the land distribution system of Bihar for
the general benefit of the community as advised.”
In view of this, purpose there is no reason to
differentiate between an individual proprietor and a company
which owns estates or tenures. Indeed, there is not only
nothing repugnant in the subject or context of the Act which
should prevent the inclusion of a company owning estate
within the definition of “proprietor”, such inclusion is
necessary in order to give full effect to the very object of
the Act.
In Appeal No. 63 of 1953 Mr. P. R. Das raises an
additional point, namely, that the appellant company in that
appeal owns estates which are situate in Purnea in the
district of Bihar and in Malda in the district of West
Bengal but it has to pay a single Government revenue at
Purnea. It is further alleged that the appellant company
has let out portions of the estates on Patni leases, each of
the Patnis comprising land situate both within and outside
Bihar. The acquisition of that part of the estate, which is
situate in Bihar has made it difficult, if not impossible,
for the appellant company to pay its revenue or recover its
rent. That part of the estate which is in Bihar cannot be
severed from the rest and therefore the notification
covering only the portion of the estate situate in Bihar is
invalid. We do not think there is any substance in this
argument. As stated by the High Court it is a simple case
of apportionment of the revenue and also apportionment of
the rent. The necessity for such apportionment cannot
possibly affect the validity of the notification.
For reasons stated above these appeals fail and must be
dismissed with costs.
Appeals dismissed.
Agent for the appellants: B. B. Biswas.
Agent for the respondents: G. H. Rajadhyaksha.
730