DHAVAN, J. - (1.) THIS is an application by Seth Sheo Prasad under clauses (a), (b) and (c) of Art. 133(1) of the Constitution for a certificate enabling him to appeal to the Supreme Court from a decision of this Court rejecting his appeal from an order of Oak, J. dismissing his petition under Art. 226 and refusing to restrain the State of Uttar Pradesh, the Sales Tax Officer, Hathras and the Collector of Aligarh from recovering from him a certain amount of sales tax assessed on the firm of which the petitioner was a partner. The facts are these : Messrs. Lallamal Harden Das Cotton Spinning Mills Company was a partnership firm consisting of the partners including the petitioner Seth Sheo Prasad. It owned a cotton spinning mill in Hathras and carried on the business of producing and selling cotton yarn. In 1944 differences arose between the partners and one of them Raghunath Prasad, filed a suit for the dissolution of the partnership. This suit was dismissed on a preliminary ground and an appeal from it is decision was filed in this Court. During the pendency of this appeal, receivers were appointed for working the mills under the directions of the Court. In 1949 the receiver reported to the Court that the mill could be run only at a loss and thereupon the Court directed that the mill be closed. At this stage the State Government intervened and in 21st July 1949 passed an order under S. 3(f) of the U.P. Industrial Disputes Act, 1947 appointing an authorised controller of the mill. The petitioner was selected for this post. The order of appointment directed him to take possession of the mill to the exclusion of the partners and run it subject to the general supervision of the District Magistrate of Aligarh. He was allowed a salary of Rs. 1000 per month and commission at the rate of 12 annas per cent on sales. This order was challenged by one of the partners, Seth Shanti Swarup by a petition under Art. 226 which was rejected on 19-7-1953. During the pendency of the petition, on 31st October, 1952, the Union of India intervened and passed an order under S. 3(4) of the Essential Supplies (Temporary Powers) Act, 1946 appointing the applicant as authorised controller and directed him to run the mill on the same terms and remunerations as under the previous order of the State Government.
(2.) THE terms of the two orders, which are identical, are important. The authorised controller was to act under the general supervision of the District Magistrate of Aligarh. He was further required to dispose of the funds of the undertaking for (a) payment of all arrears of wages and other dues to the employees, (b) payment of the expenses of the undertaking, and (c) the distribution of profits after meeting all the expenses. He was also required to undertake such essential repairs and renewals of machinery as he might consider necessary for securing the efficient working of the undertaking. The order also restrained all persons having control over the affairs of the undertaking from selling, gifting, transferring, disbursing or disposing of in any manner whatsoever the assets of the undertaking. In effect the order placed the control of the Mill with the authorised Controller and deprived all the partners of their powers of management. The terms of the order must he read with S. 4 of the Central Act which enjoined the authorised Controller appointed under S. 3 to exercise his junctions in accordance with any instructions given to him by the Central Government and also directed any person having any functions of management to comply with the directions of the authorised Controller. As subsequently observed by the Supreme Court, the authorised Controller was, under the U.P. Industrial Disputes Act, "practically exempted from all obligations and responsibilities normally attaching to an agent" and the effect of the order of the Central Government was to have deprived the partners of their right of property within the meaning of Art. 31 of the Constitution. The applicant Seth Sheo Prasad has alleged in his petition that though the Mill was running at a loss between July 1949 and February 1953, the authorities did not permit him, in spite of repeated requests, to close the Mill and it was only in 1953 that he was permitted to do so on condition that all the arrears of wages due to labour had been paid in full. The Mill was closed by him on 10th February 1953.
(3.) IN 1954, one Seth Shanti Swamp one of the partners, owning the undertaking, moved the Supreme Court under Art. 32 of the Constitution for the quashing of the two orders of the U.P. and Central Government appointing the applicant Seth Sheo Prasad as authorised Controller. This petition was allowed and the orders set aside as illegal. In the concluding paragraph of its judgment the court observed "the petitioner will have the liberty to take such steps as he may be advised to do for cover damages by way of compensation for the loss of such properties or assets in an appropriate civil court". The Supreme Court had no occasion to express an opinion on the question on whose behalf and under whose authority the Controller should be deemed to have made transactions such as the sale of cotton yarn and who was liable to pay the sales tax on them.;