Case Laws Companies Act Jute and Gunny Brokers Ltd Vs The Union of India and Others

PETITIONER:
JUTE AND GUNNY BROKERS LTD.AND ANOTHER

Vs.

RESPONDENT:
THE UNION OF INDIA AND OTHERS.(and connected appeals)

DATE OF JUDGMENT:
17/02/1961

BENCH:
WANCHOO, K.N.
BENCH:
WANCHOO, K.N.
GAJENDRAGADKAR, P.B.
GUPTA, K.C. DAS

CITATION:
1961 AIR 1214 1961 SCR (3) 820
CITATOR INFO :
D 1973 SC2061 (12)
F 1978 SC 389 (9,19,21,45)
E 1980 SC1163 (6)
ACT:
Requisition and Acquisition of Property-Orders by Government
of India-Notice on managing agents Validity-Holders of
Pacca delivery order, if owners of goods-Estoppel-Defence of
India Act, 1939 (35 of 1939)-Defence of India Rules, 1939,
rr. 75A, 119 Code of Civil Procedure, 1908 (Act V of 1908),
0. XXIX, r. 2 Indian Companies Act, 1913 (7 Of 1913), ss.
2(11),148-Indian Sale of Goods Act, 1930 (3 Of 1930), S. 18.

 

HEADNOTE:
The Government of India entered into an agreement with the
President of Argentine Institute for Promotion of Trade to
supply Hessian in return for licences for. shipment to India
of food-stuff purchased there and with a view to implement
that agreement issued orders under r. 75A(i) of the Defence
of India Rules, 1939, on the managing agents of certain jute
mills on September 30, 1946, requisitioning hessian and
directing them and any other person in possession of the
said goods to deliver them to the Director of Supplies,
Calcutta. Although in the heading of the notices after the
names of the managing agents it was not stated that they
were being addressed as managing agents of such and such
mills, the schedules attached to them made it clear that
they were addressed ‘as managing agents of such and such
mills. On the same day notices of acquisition under r.
75A(2) were served on the said managing agents and they were
further informed that under r. 75A(3) the goods would vest
in the Government at the beginning of the same day free from
any mortgage, pledge, lien and other similar encumbrance.
The notices of acquisition were also accompanied by
schedules similar to those accompanying the requisition
orders. The
821
Government of India tried to take possession of the hessian
but was resisted by the mills and the holders of pucca
delivery orders and brought the suit, out of which the
present appeals arose, for enforcing the said orders of
requisition and acquisition. The Defence of India Act,
1939, and the Rules made thereunder, had in the meantime
come to an end and the question before the courts below was
whether the orders of requisition and acquisition as served
were effective in law. The trial judge held that as there
were no valid orders of requisition as the mills had not
been properly served and since the goods were subject to
pucca delivery orders, the mills as well as the Government
were estopped from challenging the ownership of the holders
of the said delivery orders. The appeal court held that the
orders of requisition were valid and binding, that the
mills, and not the holders of the delivery orders, were the
owners of the goods but that the notices of acquisition had
not been served as required by r. 75A(2) Of the Rules and,
therefore, there was no valid acquisition under r. 75A(3) Of
the Rules.
Held, that the requisition of the goods could be effected
either by taking possession of them or by requiring them to
be placed at the disposal of the requisitioning authority.
Since in the present case, the mills and not the holders of
the delivery orders were admittedly in possession of the
goods on the date of the requisition, the proper persons to
be served with the orders were the mills.
Since the Rules did not expressly provide as to the manner
in which orders of requisition in writing under r. 75A had
to be served, r. 119(i) must apply and as the orders in the
present case concerned an individual corporation, they had
to be served in the, manner prescribed by 0. XXIX, r. 2 of
the Code of Civil Procedure.
The word “officer” as defined by S. 2(ii) Of the Indian
Companies Act, 1913, includes a managing agent and such
definition can be utilised for the purpose of the Code and
regard being ha to the nature of his duties there can be no
doubt that a managing agent would be within the expression ”
other principal officer” in O. XXIX, r. 2(1) of the Code.
There was no basis for the contention that service under r.2
must be on some human being or that there could be no
effective service on a corporation by serving another
corporation which might be its principal officer.
The service of the orders of requisition on the managing
agents obviously meant for the mills in the instant case,
was, therefore, good service under 0. XXIX, r. 3 Of the
Code.
Since r. 75A(2) itself did not provide for any mode of
service of notice under it, either the one or the other of
the modes specified in s. I48 of the Indian Companies Act,
1913, or 0. XXIX, r. 2 Of the Code would be a reasonable
mode of effecting service thereunder. In the instant case
the notices of
822
acquisition having been served under 0. XXIX, r. 2(a), as
the orders of requisition had also been, such service was
good service and the acquisition was effective in law.
It was not correct to say that the property in the goods
represented by the pucca delivery orders had passed to their
holders. The contract involved in such delivery orders is a
contract of sale of unascertained goods and in view of s. 18
of the Indian Sale of Goods Act, 1930, title cannot pass to
the buyer till the goods are ascertained by appropriation.
Anglo-India jute Mills Co. v. Omademull (1910) I.L.R. 38
Cal. 127, explained.
It was not correct to say that the Government of India in
acquiring the requisitioned goods was claiming title through
the mills and would be, like them, estopped qua the holders
of pucca delivery orders. The power to acquire the property
flowed from the Defence of India Act and the Rules made
thereunder and covered not merely the rights of the owners
but the entire goods. Rule 75A(3) of the said Rules made it
quite clear the acquisition thereunder was of a title
paramount and of the whole of the property freed from all
kinds of encumbrances.
No question of serving any notice on the holders of pucca
delivery orders, therefore, arose in the present case as the
property in the goods had not in law passed to them.

 

JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 314-316 &
778 of 1957.
Appeals from the Judgment and Decree dated September 8,
1954, of the Calcutta High Court in appeal from Original
Decree No. 159 of 1951.
S. Chowdhury, B. Das and P. K. Ray Chaudhury, for the
appellants in Civil Appeal No. 314 of 1957.
M. C. Setalvad, Attorney-General for India, R. Ganapathy
Iyer and D. Gupta, for respondent No. 1.
S. N. Mukherjee, for respondent No. 2.
S. M. Bose, B. Sen and B. N. Ghosh, for respondents Nos.
3-18, 20-40, 42 and 44-47.
B. N. Ghosh, for respondent No.48.
N. C. Chatterjee and P. K. Chatterjee, for respondent No.
51.
S. M. Bose, S. Chowdhury, B. Sen and B. N. Ghosh, for the
appellants in Civil Appeal No. 315 of 1957.
M. C. Setlvad, Attorney-General for India, R. Ganapathy
Iyer and D. Gupta, for respondent No. 1.
S. N. Mukherjee, for respondent No. 2.
823
P. K. Ray Chaudhury, for respondent No. 6.
B. Das and P. K. Ray Chaudhury, for respondents Nos. 8-28.
P. K. Chatterjee, for respondent No. 30.
S. Chowdhury and P. K. R. Chaudhury, for the appellant in
Civil Appeal No. 316 of 1957.
M. C. Setalvad, Attorney-General for India, R. Ganapathy
Iyer and D. Gupta, for respondent No. 1.
S. N. Mukherjee, for respondent No. 2.
B. Das and B. N. Ghosh, for respondents Nos. 3-18, 20-40,
42, 44, 47 and 49-69.
N. C. Chatterjee and P. K. Chatterjee, for respondent No.
71.
M. C. Stealvad, Attorney-General for India, R. Ganapathy
Iyer and D. Gupta, for the appellant in Civil Appeal No. 778
of 1957.
S. M. Bose, S. Chowdhary, B. Sen and B. N. Ghosh, for
respondents Nos. 2-17, 19-39, 41 and 43-46.
Sukumar Ghose, for respondent No. 40.
S. Chowdhury and P. K. Ray Chaudhury, for respondent No.
47.
S. Chowdhury, B. Das and P. K. Ray Chaudhury, for
respondents Nos. 49-69.
N. C. Chatterjee and P. K. Chatterjee, for respondent No.
71.
1961. February 17. The Judgment of the Court was delivered
by
WANCHOO, J.-These four appeals on certificates granted by
the High Court at Calcutta arise out of one judgment and
will be dealt with together. The brief facts necessary for
present purposes are these: In September 1946 there was food
shortage in the country. In order to relieve this shortage,
the Government of India entered into an agreement with the
President of Argentine Institute for Promotion of Trade by
which it undertook to freeze, requisition and take over and
sell to the Argentine Institute and ship to Argentine 30,000
tons of hessian and, in return the Institute guaranteed to
obtain licences for shipment
824
from Argentine 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 Sch. B to the communication.
This demand was made under Sub-rule (5) of r. 75-A 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 which the
requisition was made, the quantity, the description of the
hessian and the name of the registered stock-holders. These
requisition orders were served upon the managing agents of
the mills under sub-r. (1) of r. 75-A of the Rules on that
very day. Thereafter on the same day, that is, September
30, 1946, the Government of India issued a notice under sub-
r. (2) of r. 75-A to the managing agents communicating that
it had been decided to acquire the property under that sub-
rule. The managing agents were further informed that by
virtue of sub-r. (3) of r. 75-A the said property would vest
in the Central Government at the beginning of the day on
which the notice was, served upon them free from any
mortgage, pledge, lien or other similar encumbrance. The
notices of acquisition were accompanied by schedules similar
to the schedules accompanying the requisition orders. This
notice of acquisition was also served on the same day on all
the
825
managing agents. Further on the same day the Deputy
Director of Supplies, Government of India, wrote to the
Secretary, Indian Jute Mills Association that shipping
instructions would be issued in due course by the Director
of Supplies, Calcutta, with respect to hessian requisitioned
and acquired under the orders and notices already referred
to. The Government then tried to take possession of the
hessian requisitioned and acquired but the mills and the
holders of delivery orders resisted the Government’s attempt
on the ground that the orders of requisition and acquisition
were invalid. The Government of India then filed the suit,
out of which the present appeals have arisen, on December
11, 1946, for enforcing the orders of requisition and
acquisition and also applied for a receiver to be appointed.
This application was resisted and it became apparent that it
would take some time before it could be disposed of. As
ships which were to carry the hessian to Argentine were
ready and shipment could not be delayed, the Government on
January 7, 1947, promulgated an Ordinance, being Ordinance
No. I of 1947, whereby notwithstanding the pendency of the
suit the title and possession of the goods requisitioned and
acquired were made to vest in the Government. The
Government then took possession of the hessian and shipped
the same to Argentine. The suit however did not become
infructuous or unnecessary after this because s. 3 of the
Ordinance provided that the suit should be proceeded with in
regard to one question involved in it and decision thereon
obtained. Under s. 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
826
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
question therefore which remained to be decided in the suit
was whether the orders of requisition and acquisition were
valid and binding on the respective defendants; and the suit
was confined to obtaining a declaration to that effect. If
a declaration was granted to the Government of India as
prayed, the compensation would be determined as on September
30, 1946, in accordance with the provisions of law in force
on that day relating to the requisition and acquisition of
movable property under the rules made under the Defence of
India Act, 1939. On the other hand, if no such declaration
was granted, compensation would have to be arrived at in
accordance with the market price of hessian prevailing on
the date on which the suit was filed, i.e., December 11,
1946.
The main questions which arose for determination in the
trial court were four, namely-(1) Were the alleged orders of
requisition dated September 30, 1946, -mentioned in the
plaint properly and/or validly and/or duly served? (2) Did
such alleged orders effect any valid requisition of the
goods mentioned in the Schedules to such orders? (3), Were
the orders and notices of acquisition mentioned in the
plaint properly made or given and/or duly served ? (4) Is
there any custom of trade, practice or usage that upon
delivery orders being made over to the buyers against
payment the property in the goods represented by such
delivery orders passed to such buyers ?
Sarkar, J., who tried the suit on the original side of the
High Court held that the orders of requisition were properly
and validly made. He further held that there was no service
of the orders on the mills which were in possession of the
hessian and which
827
had to be served in order to effect a valid requisition. He
therefore held that as there was no proper or due service of
the orders there was no -valid or binding requisition.
Further on the question of acquisition he held that as the
goods requisitioned and acquired were subject to pucca
delivery orders and in view of the usage that pucca delivery
orders were only issued against payment, were passed from
hand to hand by endorsement and were sold and dealt with in
the market as absolutely representing the goods to which
they relate and as the mills were estopped from challenging
that the property in the goods had passed (see Anglo-India
Jute Mills Co. v. Omademall (1)), the 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 r. 75-A (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 r. 75-A (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 necessary to serve the
holders of the delivery orders with notices of acquisition ;
but it further held that the mills which were the owners of
the goods requisitioned were not served with the notices of
(1) (1910) I.L.R. 38 Cal. 127,
828
acquisition, as in its opinion strict compliance with, the
provisions of the rules in 0. XXIX of the-Code of Civil
Procedure were necessary in order that transfer of ownership
contemplated under r. 75-A of the Rules, may be effected.
Further as there was failure to comply strictly with the
provisions of 0. XXIX of the Code of Civil Procedure and as
in the view of the appeal court r. 119 (I-B) of the Rules
did not apply,,, to the case, there was no service of
notices of acquisition on the owners as required by r. 75-A
(2) of the Rules therefore it held that the acquisition was
not valid. In the result the appeal was partly allowed as
to the effect of the requisition orders but the view of
Sarkar J. was upheld as to the effect of notices of
acquisition.
This has been followed by four appeals on certificates
granted by the High Court. Appeals Nos. 314 to 316 are by
the defendants in the suit challenging the view of the
appeal court that the orders of requisition were valid and
binding. The appellants in these appeals will hereinafter
be referred to as the defendants. Appeal No. 778 is by the
Union of India challenging the view of the appeal court that
the, notices acquisition were not properly served and,
therefore there was no acquisition of property: on September
30, 1946, as provided by r. 75-A (3).
We shall first deal with the three appeals by the defendants
relating to the requisition-orders. It is necessary to set
out rr. 75.A and 119 of the Rules in this connection, for
the validity of the requisition orders depends upon whether
the, two rules have been complied-‘, with. The two rules
are as follows:-
” 75A. (1) If in the opinion of the Central
Government or the Provincial Government it is
necessary or expedient so to do for securing
the defence British India, public safety, the
maintenance of public order or the efficient
prosecution of the war, or for maintaining
supplies and services essential to the life of
the community, that Government may by order in
writing requisition any property, movable or
immovable, and may make-such further orders as
829
appear to that Government to be necessary or
expedient in connection with the
requisitioning :
Provided 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 i
n
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 encum-
brance and the period of the requisition
thereof shall end.
(4)……………………………………”
“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 these Rules shall, in the
case of an order of a general nature or
affecting a class of persons, publish notice
of such order in such manner as may, in the
opinion of such authority, officer or person,
be best adapted for informing persons whom the
order concerns, in the case of an order
affecting an individual corporation or firm
serve or cause the order to be served in the
manner provided for the service of a summons
in rule 2 of Order XXIX or rule 3 of Order XXX
as the case may be in the First Schedule to
the Code of Civil Procedure, 1908 (V of 1908),
and in the case of an
830
order affecting an individual person (not
being a corporation or firm) serve or cause
the order to be served on that person–
(i) personally, by delivering or tendering
to him the order, or
(ii) by post, or
(iii)where the person cannot be found, by
leaving an authentic copy of the order with
some adult male member of his family or by
affixing such copy to some conspicuous, part
of the premises in which he is known to have,
last resided or carried on business or
personally worked for gain.
(1-A). Where any of these Rules empowers an
authority, officer or person to take action by
notified order, the provisions of sub-rule (1)
shall not apply in relation to such order.
(1-B). If in the course of any judicial
proceeding, a question arises whether a person
was duly informed of an order made in
pursuance of these Rules, compliance with sub-
rule (1), or, in a case to which sub-rule (1-
A) applies, the notification of the order,’
shall be conclusive proof that he was so
informed; but a failure, to comply with sub-
rule (1)-
(i) shall not preclude proof by other means
that he had information of the order; and
(ii) shall not affect the validity of the
order.”
The scheme of r. 75-A(1) which provides for requisitioning
is that the Government has to form an opinion whether it is
necessary or expedient to make a requisition for securing
the defence of British India, public safety, the maintenance
of public order or the efficient prosecution of the war or
for maintaining supplies and services essential to the life
of the community. After such opinion has been formed, the
Government may by order in writing requisition any property,
movable or immovable, and make such further orders as appear
to it to be necessary ;or expedient in that connection. It
has been faintly urged on behalf of the defendants that the
orders of requisition were invalid as they did not comply
with
831
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 order 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 defend. ants that the orders of requisition
were passed mala fide In these circumstances, in the absence
of mala fide, 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 r. 75-A.
The main contention of the defendants in their appeals is
that r. 75-A 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 of
requisition were not valid and binding. Now sub-rule (1) of
r. 75-A does not specifically provide for the manner in
which an order of requisition is to be served, nor does it
provide specifically on whom such an order should be served.
So far as the person on whom an order of requisition should
be served is concerned, we agree with the appeal court that
service of such an order is necessary on the. person who can
place the goods in question at the disposal of the
requisitioning authority and until that is done there cannot
be any valid and effective requisition. This is also clear
from the definition of the word ” requisition ” in r. 2(11)
of the Rules, for ” requisition ” means in relation to any
property, to take possession of the property or to require
the property to be placed at the disposal of the
requisitioning authority. Therefore a requisition of
property can be effected either by taking possession of the
property or by requiring the property to be placed at the
disposal of the requisitioning authority. In the present
case we are concerned with
832
the second mode of requisition. In such a case it is
necessary that the party which is required to place the
goods in question at the disposal of the requisitioning
authority should be informed of the order of requisition, so
that it may place the property at the disposal of the
requisitioning authority as required by the order. Three
questions therefore immediately &rise in this connection,
namely, (i) who were the proper persons on whom orders of
requisition should have been served, (ii) what is the manner
in which the orders should have been served, and (iii)
whether proper persons have been served in the proper manner
in this case.
So far as an order of requisition is concerned, we are of
opinion that there is no question of any service of the
order on the holders of delivery orders, for whatever may be
their position as to the ownership of the goods (a matter
with which we shall deal later when considering the matter
of, acquisition), they were admittedly not in possession of
the goods on September 30. Further the goods were
admittedly in the possession of the mills and therefore the
proper persons to be served with the orders of requisition
in this case were the mills.
The next question is as to the manner in which the mills
which were in possession of the goods had to be served. To
that the answer is in our opinion to be found in r. 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 r. 75-A has to be served ; therefore it has to
be served as provided in r. 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 r.
2 of 0. XXIX of the Code of Civil Procedure. Rule 2 of 0.
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
833.
it or sending it by post addressed to the corporation as
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 r. 2 of
0. XXIX of the Code of Civil Procedure. Further in case
there is any irregularity in service it will have to be seen
whether the matter comes under sub-r. (1-B) of r. 119.
Let us therefore first examine the question whether the
mills were served as provided in 0. XXIX, r. 2. Now the
orders of requisition were sent to the managing agents of
the various jute mills. It is true that in the heading of
the order, though the name of the managing agency
corporation was mentioned, it was not specifically stated
there that the order was being addressed to it as the
managing agents for such and such mills. But when one reads
the schedule attached to each order sent to the managing
agents, it becomes immediately clear that the order was
intended for the mills mentioned in the schedule and was
being served on the managing agents of the mills. As an
instance, we may refer to one requisition order addressed to
Messrs. Thomas Duff and Co. Ltd. In the, schedule it was
clearly stated that the order was with respect to jute bales
held by the jute mills under the managing agency of the
addressee and the names of the jute mills with respect to;
which the order was passed and was being communicated to the
managing agents were also mentioned, that is, Titaghur,
Victoria, Samnaggur (South) and Samnaggur (North) Jute,
Mills. Any one. receiving this order should be therefore
able immediately to understand that the order was -served on
Messrs. Thomas Duff and Co. Ltd., as the managing agents of
the four jute mills mentioned above. The defect therefore,
in the form of address was in our opinion of no consequence.
The order read as a whole along with the schedule leaves no
doubt that the order was meant for the jute mills mentioned
in the schedule and was addressed to Messrs. Thomas Duff
and Co. Ltd. as the managing agents of, those jute mills, It
is not in dispute, that
834
orders of requisition with respect to other mills addressed
to other managing agents were in the same form and
contained- similar schedules. There can therefore in our
opinion be no doubt that the orders of requisition were
meant for the mills and were addressed to them through the
managing agents. It is not in dispute that those orders
were served on the managing agents on September 30, 1946,
and the only question therefore that remains to be
considered is whether the service on the managing agents on
behalf of the mills is proper service as provided in r. 119
(1) of the Rules read with r. 2 of 0. XXIX of the Code of
Civil Procedure.
In the matter of service, we are concerned with cl. (a) of
O. XXIX, r. 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 (II) of
the Indian Companies Act, No. 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,& 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. The appeal court
did not accept this contention and was of the opinion that,
the definition of an officer given in the Companies Act can
also be utilised for the purpose of the Code of Civil
Procedure and we think,that that view is correct.
Therefore, when the service in this case was effected on the
managing agents of the mills it was effected on one of the
principal officers of the corporation and
835
would be a good service under O. XXIX, r. 2 But it is
contended that the intention behind O. XXIX, r. 2 is that
the service must be on a human being and that O. XXIX, r. 2
does not contemplate service on one corporation for the
purpose of securing service on another corporation. In this
connection reliance is placed on rr. I and 3 of 0. XXIX
where it is urged that the same words occur and it is clear
that these rules contemplate that the other principal
officer mentioned therein must be a human being. This
contention was urged before the appeal court and was
rejected by it-and in our opinion, rightly. It is true that
under rr. I and 3, the principal officer envisaged must be
a human being, but that conclusion follows from the setting
in which these words appear in these two rules. Rule I
relates to the signature and verification of a pleading by
the secretary, director or other principal officer of the
corporation while r. 3 provides that a court may require the
personal appearance of the secretary or of any director or
other principal officer of the corporation. It is obvious
therefore from the setting in which the words “other
principal officer” appear in these two rules that he must be
a human being, for signature and verification in one case
and personal appearance in another can only be by a human
being. But rr. I and 3 do not define who a principal
officer is. Therefore, even though in these two rules a
principal officer must be a human being, it does not follow
that in r. 2 also he must be a human being. Rule 2 relates
to service and cl. (b) thereof clearly shows that the
service to be effected need not necessarily be on a human
being connected with the corporation, for under el. (b) the
service will be effective if the summons is left or sent 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. Therefore, for service
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 0. XXIX which would militate
against our holding that the service on one corporation may
be made by serving
836
another corporation which may be the principal officer of
the first corporation. Once it is clear in view of the
definition of an ” officer” ins. 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 0. XXIX, r. 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 r. 119 of the Rules. Therefore as the service on the
mills through the managing agents was good service within
the meaning of r. 119 read with 0. XXIX, r. 2, it is
unnecessary to consider the further question whether it is
good service within the meaning of r. 119 (1-B). We are
therefore in agreement with the appeal court that the orders
of requisition were properly and validly and duly served on
the mills through the managing agents and therefore these
orders effected a valid requisition of the goods mentioned
in the schedules attached thereto. In this view Appeals
Nos. 314 to 316 fail and are hereby dismissed.
Now we turn to the appeal of the Union of India with respect
to acquisition. It is not disputed that on the same day
(namely, September 30, 1946) notice of the decision to
acquire the requisitioned goods was served on the same
managing agents. Here again in the heading of the notice
only the name of the managing agent was mentioned without
specifying in so many words that the communication was being
addressed to the managing agents corporation concerned as
managing agents of such and such mills. But it is not in
dispute that as in the case of orders of requisition so in
the case of notices of acquisition there was a schedule
attached and that schedule mentioned that acquisition was of
goods held by the jute mills under the managing agency of
the corporation to which the notice was addressed and the
names
837
of the mills whose managing agents the addressed corporation
was, were also mentioned in the schedule. It is clear
therefore that the notice of the decision to acquire was
given to the various managing agents of the various mills in
their capacity as managing agents of the mills specified in
the schedule and the question is whether the notice was in
accordance with r. 75-A (2). Rule 75-A(2) provides that
after the property has been requisitioned the Government may
acquire it by serving on the owner thereof a notice stating
that the Government has decided to acquire it. Further sub-
r. (3) of r. 75-A lays down that where a notice of
acquisition has been served on the owner, 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 and the period of
the requisition thereof shall end. Sub-rule (2) therefore
requires that there should be a service of the notice of
acquisition on the owner of the property requisitioned. Two
questions therefore immediately arise in view of the
provisions of r. 75-A (2), namely, (1) that there should be
a service of the notice on the owner, and (2) that this
service should be in accordance with r. 75-A (2). If both
these conditions are satisfied, r. 75-A (3) comes 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 r. 75-A (3).
Reliance in this connection is placed on Anglo-India Jute
Mills Co.’s case (1). 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
(1) (1910) I.L.R. 38 Cal. I27.
838
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 acquisition were
issued. Now it is not in dispute so far as these pucca
delivery orders with which we are concerned in these appeals
are concerned that though holders thereof pay for the goods
specified therein, at no time till actual delivery is given
is there any appropriation of the goods either to the
contract or the delivery orders. In spite however of the
absence of such appropriation, the holders of pucca delivery
orders are regarded by the trade as the owners of the goods
specified therein and as held in The Anglo-India Jute, Mills
Co.’s case (1) these pucca delivery orders 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. The question therefore that arises is whether
the property in the goods represented by the pucca delivery
orders can be said to have passed to the holders thereof,
when they receive them.
The contention on behalf of the Union of India is that
property in the goods cannot pass in law to the holders of
the pucca delivery orders till the goods are actually
appropriated to the particular order; therefore, as in this
case it is not in dispute that no goods were actually
appropriated towards the pucca delivery orders concerned,
the property in the goods did not pass to the holders
thereof but was still in the mills. Reliance in this
connection is placed on s. 18 of the Indian Sale of Goods
Act, go. III of 1930. That section lays down that ” where
there is a contract for the sale of unascertained goods, no
property in the goods is transferred to the buyer unless and
until the goods are ascertained.” In the present case, as we
have already said it is not in dispute that the goods
covered by the pucca delivery orders are not ascertained at
the time such orders are issued and, ascertainment takes
place in the shape of appropriation when the goods are
actually delivered in compliance
(1) (1910) I.L.R. 38 Cal. 177.
839
therewith. Therefore, till appropriation takes place and
goods are actually delivered, they are not ascertained. The
contract therefore represented by the pucca delivery orders
is a contract for the sale of unascertained goods and no
property in the goods is transferred to the buyer in view of
s. 18 of the Indian Sale of Goods Act till the goods are
ascertained by appropriation, which in this case takes place
at the time only of actual delivery. 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 s. IS of the Sale of
Goods Act in spite of the decision in the case of the Anglo-
India Jute Mills Co. (1). 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 only takes place when
the goods are appropriated to the pucca delivery orders at
the time of actual delivery. The appeal court was in our
opinion right in holding that the effect of the decision in
the case of Anglo-India Jute.Mills Co. (1) was not that the
property in the goods passed by estoppel and that that case
only decided that as between the seller and the holder of
the pucca delivery order, the seller will not be heard to
say that there was no title in the holder of the delivery
order. That case was not dealing with the question of title
(1) (1910) I.L.R. 38 Cal. 127.
840
at all as was made clear by Jenkins C.J. but was merely
concerned with estoppel. In the present case the question
whether the Government of India will be estopped is a matter
which we shall consider later; but so far as the question of
title is concerned there can be no doubt in view of s. 18 of
the Sale of Goods Act that title in these cases had not
passed to the holders of the pucca delivery orders on
September 30, 1946, for the goods were not ascertained till
then, whatever may be the position of the holders of the
pucca delivery orders in a suit between them and the mills
to enforce them.
The next question then is whether the Government of India is
also estopped from challenging that the title passed to the
holders of the pucca delivery orders as soon as they got the
delivery orders. Sarkar J. seems to have taken the view
that as the Government of India was claiming under the mills
and had stepped into the place of the mills by acquisition
and was claiming ownership through the mills, it would also
be estopped from denying the title of the holders of pucca
delivery orders in the same way as the mills through whom it
was claiming. The appeal court on the other hand held that
the Government of India was not claiming through the mills
and therefore would not be estopped like the mills from
disputing the title of the holders of the pucca delivery
orders. We are of opinion that the view of the appeal court
is correct. The Government was not acquiring the property
through the owners but under the power given to it by the
statute, namely, the Defence of India Act and the Rules made
thereunder. It did not acquire merely the rights of the
owners of the property but the whole property. This is
clear from r. 75-A (3) which lays down that “where a notice
of acquisition is served on the owner of the property 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
841
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-r. (2) of r.
75-A 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 r.
75-A (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, eliminating all
subsisting private rights. There can in such a case be no
estoppel against the Government of India qua the holders of
the pucca delivery orders, for the Government of India is
not stepping into the shoes of the mills but is acquiring
title which is paramount in nature. Therefore even though
there may be an estoppel against the mills in view of the
decision of The Anglo-India Jute Mills Co. (1), there can be
no estoppel against the Government of India. Further as in
law the property had not passed to the holders of the pucca
delivery orders in the circumstances of this case, it was
not necessary to serve them with notices under r. 75-A (2),
for in law the owners were the mills and it was sufficient
if notices were served on them. We may incidentally make it
clear that the decision in the case of Anglo-India Jute
Mills Co. (1) would still be good law in an appropriate case
where the question of estoppel can rightly arise.
” In view of the foregoing discussion, the conclusion at
which we arrive is that on September 30, 1946, the mills
were in law the owners of the property which had been
requisitioned and with respect to which notices of
acquisition were given on the same day. Therefore the
notice required under r. 75-A (2) had to be given only to
the mills.
(1) (1910) 38 Cal. 127.
842
The question then which arises is whether due notice was
given to the mills under r. 75-A (2). The appeal court held
that strict compliance with the provisions of the rule by
which such transfer of ownership can be effected was
necessary. It further held that as notices were not
addressed in so many words to the managing agents as
managing agents of the various mills, there was no due
service as required by r. 75-A (2) and therefore there was
no acquisition following on the service of the notices in
this case. The first question that arises in this
connection is the manner in which notice has to be served
under r. 75-A (2). Now all that r. 75-A (2) says’ is that
notice of the decision to acquire the property has to be
served on the owner thereof (except in certain circumstances
with which we are not concerned). The contention of the
learned Attorney-General on -behalf of the Union of India is
that. a notice under r. 75-A (2) has also to be served in
the manner provided in r. 119 and that therefore the
provisions of r. 119 (1-B) would also apply to service of
such a notice. On the other hand it has been contended on
behalf of the defendants that r. 119 refers to service of
orders in writing and r. 75-A(2) does not speak of an order
in writing as is the case in r. 75-A(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 r. 119. Assuming that it is not so, it
still remains to be seen how a notice of the kind envisaged
in r. 75-A (2) has to be served on a corporation. The
appeal court was of the view that as r. 75-A (2) did not
provide for the manner of service and as in its opinion r.
119 did not apply, the service of a notice under r. 75-A (2)
must be in a reasonable manner. Proceeding on the
assumption that r. 119 does not apply, it seems to us that
the view of the appeal court that a notice under r. 75-A (2)
must be served in a reasonable manner is correct. What then
is this reasonable manner of service of notice under r. 75-
A(2)? In this connection reference may be made to two
provisions in two other Acts. The first
843
is a provision in s. 148 of the Indian Companies Act, 1913,
which was then in force. That section provides that-
” a document ‘may be served on a company by
leaving it at, or sending it by post to, the
registered office of the company. ”
The other provision is 0. XXIX, r. 2 of the
Code of Civil Procedure, which we have already
considered. We may however read the opening
words of this rule for this purpose. They are
as follows:-
” Subject to any statutory provision
regulating service of process, where the suit
is against a corporation the summons may be
served… ”
It will be seen that r. 2 of 0. XXIX of the Code of Civil
Procedure is subject to any statutory provision regulating
service of process and where there is any specific statutory
provision r. 2 would not be applicable. The only other
statutory provision is in s. 148 ibid. But that provision,
as the words themselves show, is merely an enabling
provision and it nowhere lays down that the method mentioned
in s. 148 is the only method of serving all documents on a
company. The section lays down that a document may be
served on a company by leaving it or sending it by post at
the registered office of the company. But the language
shows that that is not the only provision nor is it
imperative that service can be effected in the way mentioned
in that section, and in no other way. If that were the
intention this section of the Companies Act would have been
very differently worded. We therefore find that there is
one enabling,.provision in s. 148 of the Companies Act as to
the manner in which documents may be served on a company or
a corporation. Order XXIX, r. 2 lays down another method
also in addition which courts may employ in effecting
service on a corporation. To our mind either of the modes
specified in s. 148 of the, Indian Companies Act or 0. XXIX,
r. 2 of the Code of Civil Procedure is a reasonable mode of
effecting service on a company. It is said that 0. XXIX, r.
2 applies to a case of a suit by or against a corporation.
That is undoubtedly so. But what is good service in suits
would in our opinion
844
be reasonable service for the purpose of r. 75-A (2).
Therefore, notices under r. 75-A (2) could be served on the
mills either in the manner provided in a. 148 of the
Companies Act or in the manner provided in 0. XXIX, r.2 of
the Code of Civil Procedure. In this case the manner
employed for the service of notices under r. 75-A (2) is
that provided in 0. XXIX, r. 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 0. XXIX, r. 2 in the case of
orders of requisition would not be good service or &
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 ” the managing agent of
such and such mill, but the schedule attached made it clear
that 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, because
where acquisition was concerned it was necessary that there
must be strict compliance with the manner of service, that
is, the heading should have also contained that the managing
agents were being addressed &a managing agents of particular
mills. We are of opinion that this view of the appeal court
is not correct and that what was good service in the case of
orders of requisition was also good service in the matter of
notices of acquisition, for in substance the two services
were effected exactly in the same manner on the principal
officer of the mills, which’in one case were in possession
of the goods and in other were owners of the goods. – We are
therefore of opinion that service of the notices of
acquisition in this case
845
on the managing agents of the mills was effective service on
the mills as owners for the purpose of r. 75-A (2). In
consequence r. 75-A (3) would apply and the property in the
goods passed to the Government of india on September 30,
1946. The appeal of the Union of India therefore is allowed
and a declaration is granted that the goods were validly
requisitioned and acquired and that the orders of
requisition and notices of acquisition were valid and
binding on the respective defendants, and the goods
specified therein vested in the Government of India on
September 30, 1946.
As to costs, it appears that this litigation was due
entirely to the defect in the form of address of the
requisition orders and the notices of acquisition. In the
circumstances we order parties to bear their own costs
throughout.
Civil Appeals Nos. 314 to 316 of 1957 dismissed.
Civil Appeal No. 778 of 1957 allowed.

 

 

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