Motipur Zamindari Co. Ltd. Vs. The
State of Bihar & ANR  INSC 37 (17 April 1953)
DAS, SUDHI RANJAN SASTRI, M. PATANJALI (CJ)
HASAN, GHULAM BHAGWATI, NATWARLAL H.
CITATION: 1953 AIR 320 1953 SCR 720
Bihar Land Reforms Act, 1950, ss. 2 (o) and
(r), 3Applicability of Act to companies-"Person"
"Proprietor" "tenure-holder" meanings of.
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.
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
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
"tenure holder" 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.
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
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 compounding of
poisons, and persons known as chemists and druggists should possess a competent
practical knowledge of their business." This clearly contemplated 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 considertion 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)  I.K.B. 14
6. (2)  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 information relating to such estate or
tenure as such officer may from time to time require for any of the purposes of
this Act. A willful 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)
 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.
Agent for the appellants: B. B. Biswas.
Agent for the respondents: G. H.