KAMLA PRASAD KHETAN Vs. UNION OF INDIA

JUDGEMENT

(1.) On 8.11.1955, the Ministry of Commerce and Industry, Government of India published a notified order, in exercise of the powers conferred on that Government by section 18A of the Industries (Development and Regulation) Act, 1951, hereinafter referred to as the Act, authorising one Shri Kedar Nath Khetan of Padrauna, called the authorised Controller, to take over the management of Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, Dedoria, subject to certain conditions. The order as originally passed and published was to have effect for a period of one year only, commencing on the date of its publication in the official gazette. On 7-11-1956, there was an amendment of that order. The amendment was published in notification No. 338-A of even date and stated in effect that in stead and place of the words 'one year' occurring in the order, the word 'two years' shall be substituted.

(2.) Petitioner No. 1 before us is one Kamalaprasad Khetan, who states that he is Director and shareholder of the second petitioner, which is the Ishwari khetan Sugar Mills Ltd. The Union of India was and is the only respondent. By an order dated 1-10- 1956, this Court permitted the said authorised Controller to intervene, with the result that both the Union of India and the authorised Controller have been heard in opposition to the petition. The substantial case of the petitioners is that the order referred to above dated 8-11-1955, and the amending order dated 7-11-1956, are invalid in law and bad on certain other grounds to be stated presently, and it is not open to the Central Government to interfere with the fundamental right of the petitioners to hold and manage their property on the strength of the said invalid orders; the petitioners therefore pray for the issue of appropriate writs or directions to quash those orders.

(3.) Short and simple as the case of the petitioners appears to be at first sight, it is necessary to refer to a background of certain antecedent facts for a proper understanding and appreciation of the issues involved in the present dispute between the parties. The Ishwari Khetan Sugar Mills Ltd., is a public limited Company, in which four branches of a family known as the Khetan family held a large number of shares and only about one-fourth of the shares were held by outsiders. The Company was managed by a firm of Managing Agents, subject to supervision by the Directors. Four members of the Khetan family constituted the Managing Agency firm, of which Kedar Nath (later appointed as the authorised Controller) was one and Onkarmal Khetan (now deceased), father of petitioner Kamla Prasad Khetan, another. The Managing Agents managed two Mills, known as the Ishwari Khetan Sugar Mills Ltd., Lakshmiganj, and the Maheshwari Khetan Sugar Mills Ltd., Ramkola, District Deoria. We are concerned in the present case with the Ishwari Khetan Sugar Mills Ltd. The Managing Agents were also partners in the firm of managing agents of certain other companies, namely, Morarji Gokul Das Spinning and Weaving Mills, Bombay, and Laxmidevi Sugar Mills Ltd., Deoria. In the affidavit in opposition filed on behalf of the authorised Controller, it is stated that the Khetan family was in the beginning a mere trading family, but "due to the initiative, business acumen and imagination of Rai Bahadur Kedar Nath Khetan, various manufacturing concerns including several sugar factories grew up"; and it was under his direction that the other members of the family, including Onkarmal Khetan, were put in charge of the day-to- day routine administration of one business or the other. There was a Provision in the Managing Agency agreement under which every member of the firm of Managing Agents was authorised to exercise all the powers of the Managing Agents. According to the case of the authorised Controller, trouble arose between the members of the different branches of the family of Managing Agents sometime in 1950-51 when it came to light that Onkarmal Khetan had surreptitiously withdrawn large sums of money from the accounts of the various businesses in which the members of the Khetan family were interested as Managing Agents, and this led to certain suits being instituted against Onkarmal Khetan. The latter, in his turn, retaliated by bringing suits, for the appointment of a Receiver, or for restraining the holding of a general meeting of one of the mills, and instituting certain other proceedings stated to be of an obstructive nature and calculated to create an impasse in the working of the mills.