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TaxTMI 
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1961 (2) TMI 51
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....entine of maize and wheat offals already purchased by the Government of India in Argentine. This agreement was arrived at on September 27, 1946. In anticipation of this agreement, the Government of India on September 20, 1946, addressed letters to the managing agents of various jute mills in Bengal demanding from them information as to stocks of hessian of certain description held by the mills under their managing agencies and prohibiting them from selling, transferring, removing, consuming or otherwise disposing of any article enumerated in Schedule B to the communication. This demand was made under sub-rule (5) of rule 75A of the Defence of India Rules (hereinafter called the Rules). After the information had been gathered, the Government of India issued an order on September 30, 1946, to the same managing agents requisitioning the hessian specified in the Schedule to the order and directing them and every other person in possession of the said property to deliver it to the Director of Supplies, Calcutta, and in the meantime not to dispose of the property in any manner without the permission of the Central Government. The Schedule to the order in each case indicated the mill from....
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.... the Ordinance provided that the suit should be proceeded with in regard to one question involved in it and decision thereon obtained. Under section 3 it was provided that if in the suit it was finally decided that the said goods were not validly requisitioned or acquired by the Central Government on the 30th day ; of September, 1946, each of the several previous owners of the said goods would be entitled to receive as compensation from the Central Government the market price prevailing on the date of the institution of the aforesaid suit; but if no such decision was made in the suit, the said goods would, be deemed to have been validly requisitioned and acquired by the Central Government on the 30th September, 1946, and the amount of compensation to be paid by the Central Government to the several previous owners of the said goods would-be determined in accordance with the provisions of law in force on September 30, 1946, relating to the requisition and acquisition of movable property under the rules made under the Defence of India Act, 1939. It may be mentioned, that the Defence of India Act, 1939, and the Rules made thereunder came to an end on September 30, 1946. The main quest....
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....Government which was claiming ownership through the mills was also subject to estoppel and as the holders of the delivery' orders being the owners of the property were not served on September 30,1946, under rule 75A(2) of the Rules, the property in the goods therefore did not pass on September 30, 1946. On this view the suit was dismissed. The Union of India then went in appeal. The appeal court reversed the view of Sarkar J. on the question of requisition. It held that the requisition orders did affect and intended to affect individual mills and service on the managing agents of the mills was good service on the mills and therefore the orders of requisition were valid. On the question of acquisition the appeal court posed the question whether the notices of acquisition were served on the owners as required by rule 75A (2). It did not agree with the view of Sarkar J. that the Government was claiming through the mills and were therefore estopped from challenging the title of the holders of delivery orders. It also held that property in the goods could not pass by estoppel in the face of the provisions of the Sale of Goods Act (III of 1930). Accordingly it held that it was not neces....
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.... that no property used for the purpose of religious worship and no such property as is referred to in rule 66 or in rule 72 shall be requisitioned under this rule. (2)Where the Central Government or the Provincial Government has requisitioned any property under sub-rule (1), that Government may use or deal with the property in such manner as may appear to it to be expedient, and may acquire it by serving on the owner thereof, or where the owner is not readily traceable or the ownership is in dispute, by publishing in the official gazette, a notice stating that the Central or Provincial Government, as the case may be, has decided to acquire it in pursuance of this rule. (3) Where a notice of acquisition is served on the owner of the property or published in the official gazette under sub-rule (2), then at the beginning of the day on which the notice is so served or published the property shall vest in Government free from any mortgage, pledge, lien or other similar encumbrance, and the period of the requisition thereof shall end." "119. (1) Save as otherwise expressly provided in these Rules, every authority, officer or person who makes any order in writing in pursuance of any of....
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.... that the orders of requisition were invalid as they did not comply with the first condition indicated above, namely, the necessity or expediency of passing the order. It is enough to say that there is nothing in this contention. The bitter of September 30, 1946, states in so many words that "in the opinion of the Central Government it is expedient for maintaining supplies and services essential to the life of the community" to make a requisition. It has never been the case of the defendants that the orders of requisition were passed mala fide. In these circumstances, in the absence of mala fides, the opinion of the Government is final and the purpose indicated by it in the orders for making requisitions is one of the purposes for which an order of requisition can be made under rule 75A. The main contention of the defendants in their appeals is that rule 75A contemplates that the order of requisition must be brought to the knowledge of the person whose interests are being affected by it and that this was not done in this case, for neither the holders of delivery orders nor the mills were apprised of the orders of requisition on September 30. Therefore, it is urged that the orders ....
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....er is in our opinion to be found in rule 119 of the Rules. Rule 119(1) provides that save as otherwise expressly provided in these Rules, every order in writing in pursuance of any of these Rules shall be served in the manner provided therein. Now there is no express provision as to the manner in which an order of requisition in writing issued under rule 75A has to be served; therefore it has to be served as provided in rule 119(1). Further, as orders in this case concerned an individual corporation they had to be served in the manner provided for service of summons in rule 2 of Order XXIX of the Code of Civil Procedure. Rule 2 of Order XXIX provides that where the suit is against a corporation, the summons may be served on the secretary, or on any director, or other principal officer of the corporation, or by leaving it or sending it by post addressed to the corporation at the registered office or if there is no registered office then at the place where the corporation carries on business. We have, therefore, to see whether the mills were served with the orders of requisition in the manner provided by rule 2 of Order XXIX of the Code of Civil Procedure. Further in case there is an....
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.... with rule 2 of Order XXIX of the Code of Civil Procedure. In the matter of service, we are concerned with clause (a ) of Order XXIX, rule 2, which provides that summons may be served on the secretary, or on any director or other principal officer of the corporation ; and what we have to see is whether service on the managing agents was service on "other principal officer" of the corporation. Section 2(11) of the Indian Companies Act (VII of 1913), which was in force at the relevant time, defines an "officer" to include any director, managing agent, manager or secretary. So a managing agent of a corporation is an officer of the corporation. The question then is whether he is a principal officer, and the answer to our mind is obvious, considering the nature of the duties of a managing agent of a corporation. It is not seriously disputed either that if a managing agent is an officer of the corporation, he would, considering the nature of his duties, be a principal officer. What is, however, contended is that the definition of an officer given in the Companies Act is an artificial definition and is only for the purposes of the Companies Act and not for the Code of Civil Procedure. Th....
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....ce to be effective it is not necessary that summons must be served on some human being connected with the corporation. Nor do we see anything in Order XXIX which would militate against our holding that the service on one corporation may be made by serving another corporation which may be the principal officer of the first corporation. Once it is clear in view of the definition of an "officer" in section 2(11) of the Companies Act that a managing agent is an officer and when it is obvious considering the nature of the duties of a managing agent of the corporation that it must be held to be a principal officer, service on the managing agent of a corporation would be effective service for the purpose of Order XXIX, rule 2. We therefore agree with the appeal court that the orders of requisition in this case having been undoubtedly served on the managing agents of the mills as such there has been proper service of the said orders on the mills as required by rule 119 of the Rules. Therefore as the service on the mills through the managing agents was good service within the meaning of rule 119 read with Order XXIX, rule 2, it is unnecessary to consider the further question whether it is ....
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....notice on the owner, and (2) that this service should be in accordance with rule 75A (2). If both these conditions are satisfied, rule 75A (3) conies into play and the property vests in the Government as provided therein. The first question therefore that arises is whether the notice in this case was served on the owner of the requisitioned goods. The argument on behalf of the defendants Is that the requisitioned goods did not belong to the mills and that the real owners were the holders of the pucca delivery orders, and as there was no service of notice on them, there could be no acquisition under rule 75A(3). Reliance in this connection is placed on An glo- India Jute Mills Co.'s case [1960] ILR 38 Cal. 127. In that case it was held that "by the usage of the jute trade in Calcutta, pucca delivery orders are issued only on cash payment, are passed from hand to hand by endorsement and are sold and dealt with in the market as absolutely representing the goods to which they relate." Therefore, it is urged that the owners of the goods were the holders of the pucca delivery orders and not the mills even though the goods were in the possession of the mills at the time when notices of a....
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....elivery. The appeal court in our opinion was, therefore, right in holding that the property in the goods included in the pucca delivery orders did not pass to the holders thereof in view of section 18 of the Sale of Goods Act in spite of the decision in the case of Anglo-India Jute Mills Co.'s case (supra). What that case decided was that in a suit between a holder of a pucca delivery order- be he the first holder or a subsequent holder who has purchased the pucca delivery order in the market-and the mills, there will be an estoppel and the mill will be estopped from denying that cash had been paid for the goods to which the delivery order related and that they held the goods for the holder of the pucca delivery order. That case, therefore, merely lays down the rule of estoppel as between the mill and the holder of the pucca delivery order and in a suit between them the mill will be estopped from denying the title of the holder of pucca delivery orders; but that does not mean that in law the title passed to the holder of the pucca delivery order as soon as it was issued even though it is not disputed that there was no ascertainment of goods at that time and that the ascertainment o....
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....then at the beginning of the day on which the notice is so served, the property shall vest in Government free from any mortgage, pledge, lien or other similar encumbrance." This shows clearly that what the Government is acquiring under the statute is a kind of paramount title and not any title derived from any owner, for title derived from the owner would not be (for example) free from mortgage, etc. Therefore when Government takes action to acquire the requisitioned property under sub-rule (2) of rule 75A by serving a notice of its decision to do so, it is acquiring the whole property under the statute and is not making any claim to the property through the mills. Thus it is not merely the rights of the owners that the Government acquires; it acquires the whole property free from all kinds of encumbrances. What is thus acquired under the Defence of India Rules is no particular person's right but the totality of the rights in the property. It cannot, therefore, be said that the Government of India when it takes action under rule 75A (2) is claiming through anybody ; it acquires the totality of the rights in the property by virtue of the power vested in it by the statute, eliminatin....
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.... notice. On the other hand, it has been contended on behalf of the defendants that rule 119 refers to service of orders in writing and rule 75A(2) does not speak of an order in writing as is the case in rule 75A(1). We do not think it necessary for purposes of this case to decide whether a notice stating that the Government has decided to acquire the requisitioned property is an order in writing as contemplated under rule 119. Assuming that it is not so, it still remains to be seen how a notice of the kind envisaged in rule 75A(2) has to be served on a corporation. The appeal court was of the view that as rule 75A (2) did not provide for the manner of service and as in its opinion rule 119 did not apply, the service of a notice under rule 75A (2) must be in a reasonable manner. Proceeding on the assumption that rule 119 does not apply, it seems to us that the view of the appeal court that a notice under rule 75A(2) must be served in a reasonable manner is correct. What then is this reasonable manner of service of notice under rule 75A(2)?. In this connection reference may be made to two provisions in two other Acts. The first is a provision in section 148 of the Indian Companies Ac....
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.... the service of notices under rule 75(2) is that provided in Order XXIX, rule 2(a), namely, by effecting service on the principal officer of the mills, namely, the managing agents. We have already considered whether the orders of requisition on the various managing agents were duly served and have held that it was so. We fail to see why what was good service under Order XXIX, rule 2, in the case of orders of requisition would not be good service or a reasonable way of service in the case of notices of acquisition, for it is not in dispute that the two were served on the same day one after the other and were substantially the same. There was the same defect in the two communications, namely, the heading where the name of the managing agent was mentioned did not contain in so many words that it was being addressed as the managing agent of such and such mill, but the schedule attached made it clear that it was addressed as managing agent of those mills both for the purpose of requisition as well as for the purpose of acquisition. The appeal court seems to think that though this kind of service was good for the purpose of requisition it was not good for the purpose of acquisition, beca....