TaxTMI 
TaxTMI 
1951 (6) TMI 20
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....rests of holders of life insurance policies of those Companies and informing them that he would hear them on the 26th of February, 1951, in his office in New Delhi, and unless satisfactory cause was shown he would make a report to respondent No. 2 for the appointment of an Administrator to manage the affairs of the companies. Grounds for action under Section 52A of the Act were stated in the notices issued to the companies. 3. On the 17th of February, 1951, the Controller informed the companies that the hearing On the 26th of February, 1951, would be at Bombay instead at New Delhi. 4. On the 19th of February, 1951, the companies applied to the Controller for the postponement of the date of hearing to March, 1951. On the 20th of February, 1951 the Controller refused postponement of the date of hearing. On the 21st of February, 1951, the companies again asked the Controller to postpone the date of hearing and furnish them with particulars of the charge that they were acting in a manner likely to be prejudicial to the interests of holders of life insurances policies, but the Controller refused. 5. On the 26th of February, 1951, the companies appeared before the Controller in ....
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....il Miscellaneous (Writs) Nos. 17 to 19 of 1951. 10. Counsel for the respondents urge that in Civil Miscellaneous (Writs) Nos. 17 and 18 of 1951 this Court has no jurisdiction to make an order under Article 226 of the Constitution of India for the order passed by the Controller has to take effect outside the territories in relation to which this Court exercises jurisdiction and the acts sought to be restrained under Article 226 of the Constitution of India are to be done by the Controller outside the territorial jurisdiction of this Court. In support of the argument raised counsel cite 'Ryots of Garabandho v. Zamindar of Parlakimedi 70 IA 129 'Hamid Hasan v. Banwari Lal' ILR (1948) Cal 230 and 'Shree Menakshi Mills v. Provincial Textile Commissioner. 11. For the reasons given by me in 'Ebrahim. Aboobakar v. Achhru Ram', Civil Misc. (Writ) No. 15 of 1951, I have no doubt that the argument raised has no substance, but considering the importance of the point, I would like to add a few observations to supplement what I have said in that case. 12. Article 226(1) provides: "226(1) Notwithstanding anything in Article 32, every High Court shall have....
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....n the High Court by virtue of the Indian High Courts Act, 1861, and the statutes ' repeating this provision'." In ILR (1948) Cal 230', Sir John Beaumount observed: "Their Lordships feel no doubt on the construction of Section 9 of the High Courts Act, 1861, and the Letters Patent of 1865, that the Original Civil Jurisdiction which the Supreme Court of Calcutta possessed over certain classes of persons outside the territorial limits of that jurisdiction has not been inherited by the High Court, that the power to grant an information in the nature of 'quo warranto' arises in the exercise of the Ordinary Original Civil Jurisdiction of the High Court, that such jurisdiction is confined to the town of Calcutta and that, as the appellant does not reside, and the office which he is alleged to have usurped is not situate, within those limits, the Court had no power to grant the information in this case." Clearly the judgment in I L R (1948) Cal 230', proceeds upon Section 9 of the High Courts Act, 1861, and the Letters Patent of 1865. 15. In, Sir Madhavan Nair said: " 'The scope of the provisions of Section 45 restricts the jurisdiction o....
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.... the Constitution of India the 'sole' condition upon! which the jurisdiction of the Court depends is that the person or authority to whom orders, directions and writs are issued is within the territories in relation to which the High Court exercises jurisdiction and I am not prepared to read in Article 226 the conditions mentioned in Section 45 of the Specific Relief Act, 1877, or the charters establishing the Supreme Courts at Madras and Calcutta. 18. Mr. Chaudhri then argues that having regard to the provisions of Section 52A of the Act no writ is available in law in these proceedings. In argument it is said that the order complained of is a ministerial or administrative order which does not involve the exercise of any judicial or 'quasi'-judicial function and to a purely administrative order no writ of 'certiorari' lies. 19. Mr. P.R. Das on the other hand maintains that the provisions of the Act dealing with the management of the business of an insurer by an Administrator take away or abridge the rights conferred by Articles 19 and 31 of the Constitution of India and are void. 20. Before discussing the issues involved, it is necessary to examine ....
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....transfer of the business of the insurer to some other insurer; (b) the carrying on of its business by the insurer (whether with the policies of the business continued for the original sum insured with the addition of bonuses that attach to the policies or for reduced amounts); (c) the winding up of the insurer; or (d) such other course as he deems advisable. 2. On the filing of the report with the Controller, the Controller may take such action as he thinks fit for promoting the interests of the holders of life insurance policies in general. 3. Any order passed by the Controller under Sub-section (2) shall be binding, on all persons concerned, and shall have effect notwithstanding anything in the memorandum or articles of association of the insurer if a company. (52C) Cancellation of contracts and agreements.- The Administrator may, at any time during the continuance of his appointment with respect to an insurer and after giving an opportunity to the persons concerned to be heard, cancel Or vary (either unconditionally or subject to such conditions as he thinks fit to impose) any contract or agreement (other than a poli....
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....petent to enact the impugned legislation; and (ii) that the impugned legislation takes away or abridges the rights conferred by Part III of the Constitution of India. 22. In these proceedings there is no dispute as to the legislative competency in enacting the impugned provisions of the Act. Indeed, entries Nos. 43, 44 and 47 of the Union List set out in the Seventh Schedule to the Constitution of India clearly support the impugned legislation so far as the question of legislative competency is concerned. The question is whether the impugned legislation takes away or abridges the rights conferred by Articles 19 and 31 of the Constitution of India. The relevant clauses of Articles 19 and 31 are: "19(1) All citizens shall have the right: (f) to acquire, hold and dispose of property; and (g) to practise any profession, or to carry on any occupation, trade or business. * * * 31 (1) No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquire....
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....whom it was vested immediately prior to the date of the appointment of the Administrator. 28. Sections 52E and 52G are not material for the decision of the point before us. Section 52F provides penalty for withholding documents or property from the Administrator. 29. Counsel for the Companies maintain that the effect of the impugned legislation is to make the Administrator, the sole arbiter of the destinies of the insurer to the total exclusion of managers, directors and the shareholders. The Administrator is put in full control and management of the Company and the Board of Directors and other persons in charge become 'functus officio'. The Administrator is not governed or controlled by the Articles of Association of the insurer, if a Company. He can revise or cancel contracts entered into by the insurer without providing for compensation. On the appointment of the Administrator, the share-holders have absolutely no control over the conduct of the insurer and the Administrator is even entitled to apply for the winding-up of the insurer without consulting the share-holders. That being the position under the impugned legislation, it is said that the impugned legislatio....
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....he taking possession of property but provides for the change of management for such period of time as may be necessary to fulfil the purpose. 34. No doubt the affairs of the insurer are to be managed by the Administrator and not by the insurer but this, it is argued, would not mean the taking possession of any property within the meaning of Article 31(2), Constitution of India. 35. Now, the term "property" possesses a singular variety of different applications having different degrees of generality. In its widest sense "property" includes all a person's legal rights, of whatever description. A man's property is all that is his in law. This usage, however, is obsolete at the present day, though it is common enough in the older books. In a second or narrower sense, "property" includes not all a person's rights, but only his proprietary as opposed to his personal rights. The former constitute his estate or property, while the latter constitute his status or personal condition. In this sense a man's land, chattels , shares, and the debts due to him are his property; but not his life or liberty or reputation . In a third application, the term includes not even all ....
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....ortgage or pledge. The holding of the share in his name gives him the right to vote at the election of Directors and thereby take a part though indirectly, in the management of the Company's affairs. If the majority of shareholders sides with him, he can have a resolution passed which would be binding on the Company and lastly, he can institute proceedings for winding-up of the Company which may result in a distribution of the net assets among the share-holders." 39. Under the impugned legislation, the share-holder continues to hold the shares and his legal and beneficial interest in the shares he holds is left intact. In case the Administrator declares dividend, he would be entitled to the same. He can sell or otherwise dispose of the shares at any time at his option. The impugned legislation has affected him in this way that his right of voting at the election of Directors has been kept in abeyance so long as the management by the Administrator continues; and as a result of that, his right to participate in the management of the Company has been abridged to that extent. Notwithstanding all that it cannot be said that the impugned legislation seeks to dispossess the share-h....
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.... 45. To similar effect are the observations made by Das J. in at p. 63. Clearly, their Lordships of the Supreme Court have expressed no opinion on the point before us. In the test applicable to such cases was, however, stated to be whether the rights taken away by the statute are such as would render the rights left untouched illusory and practically valueless. That being so, without noticing herein other authorities which were cited at the hearing, I proceed to apply that test to the cases before us. 46. Applying then the test laid down in AIR (38) 1951 SC 41 to these cases, we have to see whether the Companies have been dispossessed substantially from the rights held by them or the loss is with regard to some minor ingredients of the proprietary right. Undoubtedly, under the impugned legislation the rights of the Companies have been restricted and may not be capable of being exercised to the fullest extent as long as the management of the Administrator continues, but I apprehend, that the restrictions imposed by the impugned legislation do not amount to the taking possession of the property of the Companies. Indeed, the right of management of the business of the insurer, be....
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.... Before I address myself to the merits of the contentions raised under Article 19(1) (f) and (g), it is necessary to examine whether the Companies can claim protection under Article 19 of the Constitution. As stated above, Article 19 enumerates the different forms of individual liberty the protection of which is guaranteed by the Constitution. The question that arises for decision is whether a 'corporation' is a 'citizen' within Article 19. 50. Mr. P.R. Das points out that in order to sustain the proposition that a corporation is a citizen within Article 5 of the Constitution, of India, three conditions have to be satisfied: (i) that the corporation is a person; (ii) that the corporation had its domicile in the territory of India at the commencement of the Constitution; and (iii) that the corporation had been ordinarily resident in the territory of India for not less than five years immediately preceding such commencement. 51. Article 367 of the Constitution of India provides that the General Clauses Act, 1897, shall apply for the interpretation of the Constitution unless the context otherwise requires. Section 3(39) of the General C....
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....he equal protection of the laws." 55. As stated above, the answer to the question whether a corporation is a citizen within the particular statute depends upon the intent to be gathered from the context and general purpose of that statute. Clauses (a) and (b) of Article 5 do not apply to corporations. Articles 6 and 8 of the Constitution which deal with the rights of citizenship of persons who have migrated to India from Pakistan and the rights of citizenship of persons of Indian origin residing outside India, have likewise no application to corporations. Article 19(1) (a) to (e) cannot possibly apply to corporations. In Article 39(a) the expression "citizen" means "men and women". 56. For the foregoing reasons, I think that a corporation is not a citizen within Article 19, Constitution of India. That being so, the Companies cannot raise the question that the impugned legislation takes away or abridges the rights conferred by Article 19(1) (f) and (g), Constitution of India. 57. But an insurer may be a natural person and I may be wrong in the opinion expressed in the preceding paragraph. That an insurer may be a natural person is plain from Section 2(9) of the Act. The que....
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.... that the legislation is not void within Article 13(2), Constitution of India. 61. On the merits these cases present no difficulty. As stated above, the reliefs claimed in the petitions are that a writ of 'certiorari' should issue to the Controller to bring up, in order to be quashed, the proceedings under Section 52A of the Act and that a writ of 'mandamus' be issued directing the Controller to give opportunity to the Companies to be heard on the charge that the Companies are acting in a manner likely to be prejudicial to the interests of the holders of life insurance policies. Now, the distinction between "mandamus" and "certiorari" is that "mandamus" issues to compel the performance of an unperformed official duty while "certiorari" reviews a performed judicial or 'quasi'-judicial duty. In other words, the writ of 'certiorari' is intended to bring into the High Court the decision of an inferior Court or Tribunal, in order that the High Court may be satisfied whether the decision is within the jurisdiction of the inferior Court or. Tribunal. 62. In these proceedings the respondents object that the Court has no jurisdiction to issue writs of &....
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....nferred on the Controller the power to initiate proceedings against an insurer carrying on life insurance business if at any time he has reason to believe that that insurer is acting in a manner likely to be prejudicial to the interests of holders of life insurance policies. That being so, the Courts cannot exercise any control over the discretion confided by the Legislature in the Controller within the first part of Section 52A(1) of the Act. In other words this Court has no authority to issue a writ of 'certiorari' to the Controller to bring up. in order to be quashed, the proceedings initiated by him within the first part of Section 52A(1) of the Act. On this point the dictum of Lord Halsbury in 'Mayor of Westminster v. L. & N. W. Rly. Co.', (1905) AC 426, may be seen. In that case Lord Halsbury said: "Where the Legislature has confided the power to a particular body with a discretion how it is to be used, it is beyond the power Of any Court to contest that discretion. Of course this assumes that the thing done is the thing which the Legislature has authorized." 66. Indeed, in arguing the point Mr. P.R. Das conceded that if the impugned legislation is....
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....ient. Clearly, on these facts writ of prohibition is not the appropriate remedy, Prohibition is the converse of 'mandamus' in that prohibition is used to prevent a Court or Tribunal from doing something which it has not the power to do while 'mandamus' is used to require it to do something which it is required to do. Finding as I do, that the legislation is valid and not void, the Controller possesses the power to make an enquiry under Section 52A(1) of the Act. In my judgment, there is no justification for the issuance of writs of prohibition in these proceedings. 70. Having regard to my conclusion that on the facts and circumstances of these cases a writ of prohibition is not the appropriate remedy, it is not necessary to discuss whether the Controller exercises 'quasi'-judicial' functions within the second part of Section 52A(2) of the Act. The 'sole' question that calls for decision is whether the conditions for the issuance of a writ of 'mandamus' are satisfied. 71. In order to appreciate the objection raised, it is necessary to set out at this stage the grounds for action given in the notices. In the case of Jupiter General In....
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.... to the Central Government. Notices directing the Companies to show cause on the 26th of February, 1951, were received by the Companies on the 19th of February, 1951. Under Section 52A(1) the Controller is the 'sole' Judge of the nature and the extent of the opportunity to be given to the insurer. In any case, each of the Companies has had by now ample time to prepare its defence. In these circumstances, there is no warrant for the issuance of the writs of 'mandamus' on the ground that the Controller did not give sufficient time to the Companies to show cause on the point arising under Section 52A(1) of the Act. 76. I now pass" on to examine the objection that the Companies should have been informed with certainty and accuracy the exact nature of the charge brought against them. 77. Section 52A(1) of the Act provides that the Controller may, after giving such opportunity to the insurer to be heard as he thinks fit, make a report to the Central Government. Under Section 52A(1) of the Act, if the Controller thinks that the insurer carrying on life Insurance business is acting in a 'manner' likely to be prejudicial to the interests of the holders of life ....
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....opical Insurance Company, Limited, New Delhi, no criminal proceedings are pending. In drafting the petition in Civil Miscellaneous (Writ) No. 19 of 1951, the pendency of criminal proceedings was mentioned in paragraphs Nos. 9, 11 and 13 of the petition, but as there were no such proceedings pending, references to the criminal proceedings in the petition were deleted. 81. That being the petition (sic., position), it cannot be maintained that the Controller has failed to give opportunity to the Companies to be heard on the points arising under Section 52A(1) of the Act. Notices given to the Companies indicate the manner carrying on life insurance business which the Controller has reason to believe to be prejudicial to the interests of holders of life insurance policies. In response to the notice the Company concerned may place before the Controller information rebutting the objections as to the 'manner' of carrying on life insurance business and I have no doubt that if at any stage of the proceedings it becomes necessary to examine specific items of misapplication of funds or abuse of investments the Controller will give particulars of such items to the Company concerned b....
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....rohibition is not the appropriate remedy and it is not necessary to discuss whether the Controller exercises 'quasi' judicial functions within the second part of Section 52A(1) of the Act; (g) that the Controller is the sole judge of the nature and the extent of the opportunity to be given to the insurer within the second part of Section 52A(1) of the Act; and (h) that on the facts and circumstances of these cases it cannot be maintained that the Controller has failed to give opportunity to the Companies to be heard on the points arising under Section 52A(1) of the Act. 84. On the findings summarised in the preceding paragraph, Civil Miscellaneous (Writs) Nos. 17, 18 and 19 of 1951 fail and are dismissed with costs. S.S. Sodhi, J. 85. There are three applications made by (1) the Jupiter General Insurance Co., Ltd., Bombay, (2) the Empire of India Life Assurance Co., Ltd., Bombay, and (3) the Tropical Insurance Co., Ltd., New Delhi, against Mr. Raja Gopalan, Controller of Insurance, and the Union of India, in which the prayer is that certain orders and directions should be issued to the respondents. These applications came up for a preliminary hear....
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....r written submission that the grounds given to them were vague. They had done this on the 19th also. It is alleged in the applications that the petitioners were asked to answer the grounds then and there. They refused to do so on the ground that unless further particulars were furnished to them they could not reply to the allegations the charge of which was made against them. It is alleged in the applications that Mr. Raja Gopalan said that unless the petitioners answered the charges on the spot he would proceed further and make a report to the Government of India as stated in his notice. The petitioners beyond making their written sub-mission through counsel on 26-2-1951, did not do anything or partake further in the proceedings on that day. They put in the present applications three days later in this Court on the 1st of March and, as already stated, an 'ad interim' order of prohibition was obtained from Mr. Jusitice Kapur on 2-3-1951. 88. In these applications preliminary objections have been taken both by the petitioners and by the respondents. On behalf of the Controller and the Union it is stated as a preliminary objection that this Court has no jurisdiction to pro....
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....ouncil were ryots of three villages included in the Parlakimedi estate in the district of Ganjam in the Northern Circars. The respondents were (1) the Zamindar of Parlakimedi and (2) the Board of Revenue at Madras. In October, 1925, the Zamindar applied, under Chap. 11, Madras Estates Land Act, for the settlement of rent in respect of these villages, and, by a supplemental application in March, 1926, he applied for settlement of a 'fair and equitable rent' under Section 168 (1) of the Act. The Government of Madras in November 1927, directed the Special Revenue Officer of the district to settle a fair and equitable rent in respect of lands in the said villages. After memoranda had been submitted by the contesting parties and after elaborate investigation on the spot, the Special Revenue Officer in 1925 made an order doubling the previous rents. On the ryots' appeal to the Board of Revenue, a member of that Board sitting alone reversed this decision and allowed an increase of rent of only 12 1/2 per cent. The Zamindar appealed by way of revision to the Collective Board of Revenue from the decision of the single member. The Collective Board on 9-10-1936. increased the rent....
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....ubt true that what the Controller proposes to do is to be done in Bombay, but the Controller can by the issue of proper writs be directed to do things and if he is within the jurisdiction of this Court, this Court can take action against him if he disobeys the orders of this Court. The argument is based on the exercise by the Court of King's Bench in England to issue high prerogative writs against persons within its Jurisdiction. I admit that the argument has great force behind it. But their Lordships of the Privy Council have given repeated rulings on this subject. One of them was given in the case of an application for a writ of quo warranto to be issued to a person resident within the original jurisdiction of the Calcutta High Court regarding the usurpation of an office by him without that jurisdiction. That is 'Nomani's case' reported in ILR (1948) Cal 230 : 74 IA 120'. Another is a case under Section 45 of the Special Relief Act regarding a 'mandamus' to be issued to the Textile Commissioner whose office was at Madras within the limits of the original jurisdiction of the Madras High Court regarding an act with reference to which the relief asked for....
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....es of the Constitution. Section 52A reads as follows: " (1) If at any time the Controller has reason to believe that an insurer carrying on life insurance business is acting in a manner likely to be prejudicial to the interests of holders of life insurance policies, he may, after giving such opportunity to the insurer to be heard as he thinks fit, make a report thereon to the Central Government. (2) The Central Government, if it is of opinion after considering the report that it is necessary or proper to do so, may appoint an Administrator to manage the affairs of the insurer under the direction and control of the Controller. (3) The Administrator shall receive such remuneration as the Central Government may direct and the Central Government) may at any time cancel the appointment and appoint some other person as Administrator. (4) The management of the business of the insurer shall as on and after the date of appointment of the Administrator vest in such Administrator, but except with the leave of the Controller the Administrator shall not issue any further policies. (5) As on and after the date of appointment of the Administrator any p....
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....akes orders or decisions of the Central Government under Section 52A or Section 52D final and not to be called in question in any Court. 99. Section 52F relates to penalties for withstanding documents or properties from the Administrator. 100. Section 52G relates to protection of action taken under Sections 52A to 52D. 101. The submission on behalf of the petitioners was based on Article 19 and 31 of the Constitution. It was submitted that Section 52A of the Insurance Act infringes Articles 19(1) Sub-clause (f) and (g), and also infringes Clause (2) of Article 31. Sub-clause (f) and (g) of Article 19(1) read as follows: "All citizens shall have the right...... (f) to acquire, hold and dispose of property; and (g) to practise any profession, or to carry on any occupation, trade or business." Sub-clause (f) and (g) are, however, subject to Clauses (5) and (6) of this Article. 102. Clause (5) of this Article reads as follows : "(5) Nothing in Sub-clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing reasonable restrictions on the exe....
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....ce Act relates to insurer and as it is not necessary that an insurer should be a Company, I would hold that Section 52A enacts reasonable restrictions and even if Article 191 were to apply, the provisions of the section are saved by Clauses (5) and (6) of Article 19. I there-fore hold that Section 52A of the Insurance Act is not hit by Article 19 of the Constitution. 106. Section 52A of the Insurance Act was then challenged under Clause (2) of Article 31. That Article has six clauses. The first clause reads as follows: "No person shall be deprived of his property save by authority of law." 107. It is not urged that this clause applies. What is urged is that it is the second clause which makes Section 52A 'ultra vires'. That clause reads as follows: "(2) No property, movable or immovable, including any interest in, or in any Company owning, any commercial or industrial undertaking shall be taken possession of or acquired for public purposes under any law authorizing the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation....
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....is taken over by Government. The property still remains the property of the Company. The share-holders are still the share-holders of the Company and entitled to get what they can out of the Company. Though the powers of Directors and share-holders qua management are taken away, they still retain the powers, for instance, of selling or transferring their rights in the Company to another Company. It is the management and management alone that is taken over by Government. The property taken over is managed under Section 52B in the interests of the owner, which is the Company, and as if the Administrator was a trustee. When it appears to the Government that the purpose for the appointment of the Administrator has been fulfilled or that for any reason it is undesirable that the order of appointment should remain in force the Central Government cancels the order of the appointment of the Administrator. On this cancellation what happens? Section 52D provides that the Administration shall be divested of the management of the insurance business and, unless otherwise directed by the Central Government, the management again vests in the person in whom it was vested immediately prior to the d....
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....vested." 110. The learned Chief Justice further at p. 227 is reported to have said as follows: "But in the first instance, the right of management is not such property as is contemplated by Article 31. This is not property which can be acquired or taken possession of............" 111. I hold that the temporary deprivation of management that is apprehended to take place in the present case is by virtue of the police powers of the State. I think that the introduction of Sections 52A to 52G can be supported with reference to Clause (5) of Article 31 which. states that nothing in Clause (2) of Article 31 shall affect the provisions of any law which the State may hereafter make for the prevention of danger to property. This clause is not confined to cases, where, for instance, a building may have to be sacrificed in order to prevent a conflagration destroying a row of buildings. The clause is couched in general terms. Under Section 52A of the Insurance Act, steps are taken to prevent the insurer from acting in a manner prejudicial to the interests of holders of life insurance policies, that is to say to prevent danger to the property of the policy-holders. 112. Entry 4....
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....ower vested in the legislature by the Constitution to make, ordain, and establish all manner of wholesome and reasonable laws statutes and ordinances either with penalties or without, not repugnant to the Constitution, as they shall judge to be for the good and welfare of the Commonwealth, and of the subjects of the same. It is much easier to perceive and realize the existence and the sources of this power than to mark its boundaries, and prescribe the limits to its exercise." (113) Willoughby also quotes here, in his American Constitutional Law, Volume II, 766 saying : "The police power may be justly said to be more general and pervading than any other. It embraces all the operations of society and government; all the constitutional provisions presuppose its existence, and none of them preclude its legitimate exercise. It is impliedly reserved in every public grant. Chartered rights and privileges are therefore like other property, held in subordination to the authority of the government, which may be so exercised as to preclude the use of doing of the very thing which the company was constituted or authorized to manufacture or perform. The legislature cannot be presum....
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....das'. The purpose and possible result of the police law being shown, the fact that, indirectly, private interests or property values are affected, becomes immaterial, and the persons detrimentally affected have no claim upon the State for compensation. Theirs is a case of 'damnum absque injuria." 117. Under our Constitution police powers are exercised by the State in making laws under, amongst other, the provisions of Clauses (5) and (6) of Article 19 and Clause (5) of Article 31. What is known as 'eminent domain' in American Law is given in our Constitution under Clause (2) of Article 31. Regarding this Willis quotes 'Commonwealth v. Alger1851 7 Cust 53 : 61 Mass 53the case already mentioned, and other cases at page 225, and states : "Eminent domain differs from the police power in that the police power is not a taking of any rights, whether of property or a person, from people, but a limitation on the exercise of such rights by people, although the police power may also result in making people lose their property." 118. Willoughby at page 1781 quotes the case of 'Mugler v. State of Kansas (1887) 123 US 623. In that case the Court said : ....
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.... for reasons so clear and satisfactory as to leave no doubt as to its coming in conflict with rights guaranteed by the Constitution. 121. I come now to the next question which was argued at great length before us, viz., whether the Controller when acting under Section 52A acts judicially. The argument that was advanced on behalf of the petitioning Companies was that his action decides matters; if his report is accepted the previous management becomes suspended and the Administrator becomes the sovereign authority who can do what he thinks fit without let or hindrance; that the Companies can be deprived not only of their management but also of their property and that the Controller owes a duty to the insurer and his proceedings must, therefore, be judicial. On behalf of the Controller it is urged that he is merely a reporting officer of Government, that he himself decides nothing, that it is his report which is put up before the Central Government and the authority which issues the orders against the Company is the Central Government, and not the Controller, that functions of the Controller are purely ministerial and executive and no judicial element enters into his proceedings. ....
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....te. In a recent case which came up before their Lordships of the Privy Council from Ceylon, 'Nakkuda Ali v. M.F. De S. Jayaratne', 1951 AC 66, their Lordships had to determine whether the Controller of Textiles in that case was acting judicially. The regulation which their Lordships had to construe was regulation 62 of Defence (Control of Textiles) Regulations, 1945, which ran as follows: "Where the Controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer, the Controller may cancel the textile licence or textile licenses issued to that dealer." At page 77 of the report, Lord Radcliffe, who delivered - the judgment of their Lordships of the Privy Council, said: "Their Lordships therefore treat the words in regulation 62, 'where the Controller has reasonable grounds to believe that any dealer is unfit to be allowed to continue as a dealer' as imposing a condition that there must in fact exist such reasonable grounds, known to the Controller, before he can validly exercise the power of cancellation. But it does not seem to follow necessarily from this that the Controller must be acting jud....
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....................the operation of the writs has extended to control the proceedings of bodies who do not claim to be, and would not be recognised as Courts of Justice. Wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs.' As was said by Lord Hewart C. J., in 'Rex v. Legislative Committee of the Church Assembly', (1928) 1 KB 411 at p. 415, when quoting this passage, 'In order that a body may satisfy the required test it is not enough that it should have legal authority to determine questions affecting the rights of subjects; there must be super-added to that characteristic the further characteristic that the body has the duty to act judicially." Lord Redcliffe then goes on to say : "It is that characteristic that the Controller lacks in acting under regulation 62. In truth, when he cancels a license he is not determining a question: he is taking executive action to withdraw a privilege because he believes, and has reas....
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....ing those functions he is under no obligation to the Insurance Company; his obligation is really speaking to the holders of life insurance policies. He does not determine questions. He may and can only 'recommend' executive action to withdraw the privilege of management from the insurer. In a case from West Africa reported as 'Patterson v. District Commissioner of Accra', 1948 AC 341, their Lordships of the Privy Council had to construe Section 9 of the Peace Preservation Ordinance there, which ran thus: "Where additional constabulary or police have been sent up to or stationed in a proclaimed District the Governor in Council may order that the inhabitants of such proclaimed district be charged with the cost of such additional constabulary or police. A District Commissioner within whose District any portion of a proclaimed District is shall, after inquiry, if necessary, assess the proportion in which such cost is to be paid by the said inhabitants according to his judgment of their respective means..............." 123. Regarding this section, their Lordships said at pages 348 and 349 of the report: "Apart from the difficulty of ascertaining exac....
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....ng and ministerial officer of the Government side the Government in the discharge of its police functions. In my opinion, the Controller's proceedings while acting under Section 52A are purely ministerial and involve no judicial element. In my opinion, even if it may be held that he determines questions affecting the rights of an insurer, there is not, in the words of Lord Hewart C. J., "super-added to that characteristic the further characteristic that the body has the duty to act judicially." 125. We were referred by Mr. P.R. Das and other learned counsel for the petitioning Companies to various rulings of various Courts in which the question had to be determined whether a person was acting judicially. The main case that was relied on was the case which is referred to by Lord Radcliffe in the case already cited, the case of 'Rex v. Electricity Commissioners', (1924) 1 KB 171and to the observations of Atkin L. J. therein. It would serve no useful purpose to examine those various cases as each case had to be decided on what had happened in that case and what was the provision of law that had to be construed. In this connection I would refer to Advani's case repor....
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....r as a preliminary step to the exercise of a certain power conferred on it, the determination of the objective fact and the exercise of the power based thereon are alike matters of an administrative character and are not amenable to the writ of 'certiorari'. Observations from different decisions of the English Courts were relied upon to find out whether a particular determination, was 'quasi'-judicial or ministerial. In some cases it was stated that you require a proposition and an opposition, or that a 'lis' was necessary, or that it was necessary to have a right to examine, cross-examine and re-examine witnesses. As has often been stated, the observations in a case have to be read along with the facts thereof and the emphasis in the cases on these different "aspects is not necessarily the complete or exhaustive statements of the requirements to make a decision 'quasi'-judicial' or otherwise. It seems to me that the true position is that when the law under which the authority is making a decision itself requires a judicial approach, the decision will be 'quasi'-judicial'. Prescribed forms of procedure are not necessary to make an inq....
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....n my opinion, lays down good conditions to be fulfilled before a writ can be issued even under the Constitution. One of the conditions that must be fulfilled in the present case is that the doing of the Act is clearly incumbent on the Controller. The words "clearly incumbent" are strong words. They imply an absence of doubt regarding the obligation on the Controller. The words used in Section 52A are, "The Controller may, after giving such opportunity to the insurer to be heard 'as he thinks fit'.................." The phrase "as he thinks fit" in my mind is clearly destructive of an obligation. I cannot hold that it becomes incumbent on the Controller to do the various things which the petitioning Companies want him to do. In this connection we must examine what are the facts, what notices the Controller has issued and what attitude the Companies have adopted regarding them and him. The issue of a writ is discretionary. It will be issued only if the facts clearly justify it. It must be consonant to right and justice to issue it in the circumstances. 129. In the case of the Jupiter Insurance Company, Ltd., Bombay, the notice which the Controller of Insurance gave to the ....
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....stated that the grounds given in the notice were vague, indefinite and too general and that unless particulars were given regarding dates, months, etc., and specific accusations were properly formulated, it would be unreasonable to proceed with the investigation under Section 52A. They further mentioned in para. 7 of the representation as follows: "7. Your notice is, we submit, untimed as the Bombay Police have taken proceedings against the Directors and Secretary of the Company under Sections 409 and 109 of the Indian Penal Code. They have made charges and accusations against us which are more or less Identical with the general charges that you have made. In view of this fact your investigation may be, we fear, a kind of interference with the course of justice on a matter which is 'sub judice'." 132. In paras. 9 and 10 of the representation they stated that the Controller had the power of an autocrat but expected his autocracy to be benevolent in fact. They also went into questions of law in that representation. In the eleventh (the last) para, of that representation they requested the Controller not to proceed with the inquiry on that date but give them suffic....
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....r so and how they had been managing their affairs. I dare say that the Controller would have told them if they had co-operated with him what sort of information was in his possession regarding which he wanted an explanation. It is not necessary in law, in my opinion, for the Controller to draw up a charge-sheet with full particulars as the Company was asking him to do. The scope and method of his inquiry is left to the discretion of the Controller and if the Company non-co-operated with him, they did so at their own risk. 135. On 14th March, 1951, the hearing in this case in this Court was adjourned to the 3rd April 1951 on certain undertakings being given by the petitioning Company. When the hearing was resumed on the 3rd April, it was pointed out to this Court that the Jupiter General Insurance Company had not carried out its undertakings and had committed contempt of Court and therefore could not be heard. We, however, allowed arguments to proceed as they were common to the cases of the other two Companies, giving the Jupiter General Insurance Company time to reply to the allegation regarding contempt of Court. Arguments were concluded on the 6th of April, 1951 and the case w....
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....o right and justice to issue any mandate or order against the Controller. 138. In the case of the Tropical Insurance Co., Ltd., New Delhi, the grounds as given by the Controller did not include ground No. (iii) of the grounds given to the Jupiter Insurance Company, but otherwise the first two grounds were the same. The reply of this Company to the Controller was identical with the reply of the Jupiter General Insurance Company. They also stated that the Bombay Police had taken action against the Directors and Secretary of the Company under Sections 409 and 109 of the Penal Code. In fact even the written representation made by them to the Controller on the 26th February, 1951, was identical in terms with the one put in by the Jupiter General Insurance Company on that day, In this case also the Tropical Insurance Company has no grievance. 139. In the case of the Empire of India Life Assurance Co., Ltd., Bombay, the grounds given by the Controller for his action were: "(i) The above-named insurer misapplied or is misapplying his funds; (ii) The above-named insurer has invested or is investing his funds in a manner likely to be prejudicial to the interests of th....
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....ranch on or about the 17th February, 1951. Thereupon Mr. Damodar Swarup Seth rushed to the said Branch immediately and found that the balance was only about Rupees nine lacs. He further states in his affidavit that there is a grave apprehension of the funds of Company being misapplied inasmuch as there is no properly constituted Board of Directors and some of the Directors and Mr. Bhagwan Swarup were acting against the interests of the Company. The affidavit also states that the confidence of the public in the management of the Company has been completely shaken and all its business is practically at a standstill. 142. After the meeting of the 3rd March, 1951, Mr. Damodar Swarup Seth received a notice informing him that another meeting of the Board of Directors had been called by some Director for the 8th of March, 1951. It appears from counter-affidavits that a further meeting of the Directors in which four Directors were present was held on the 12th of March, 1951. In that meeting it was resolved that all the resolutions passed in the Board meeting held on 3rd March be rescinded. It was also resolved that the Court proceedings in this Court be pursued, and Mr. V.V. Subhedar be....
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....ration he would, after questioning them have given them more time if he found that further time should be given. The Company states that it is an old Company and that it was impossible to find out what was in the Controller's mind regarding what he had alleged in his notice of the 17th February. But as practical men of the world, it should be apparent to them that it would be only the recent working of the Company regarding their investments, their dealings with the insurance fund, their expenses and their management generally that was to be enquired into by the Controller. If they had given him information which was within their special knowledge as to how they had been managing and conducting themselves during the last couple of years or so, they may have been able to satisfy the Controller that there was no cause for any apprehension on his part. It is a grave thing for a Managing Director of a Company to state that the funds of the Company are being taken away and the confidence of the public in the management of the Company has been shaken. In his letter of 21st February 1951 to Mr. V.V. Subhedar, Mr. Damodar Swarup Seth told him that he had informed the Delhi police ab....