P L D 1965 Supreme Court 236 (PLP)

HAMOODUR RAHMAN, J.‑‑This appeal, by special leave, arises out of the judgment and order of a Division Bench of the High Court of East Pakistan dismissing with costs a writ petition, filed by the appellant herein, under Article 98 of the Constitution. The appellant claiming to be the holder of 100 ordinary shares of the value of Rs.1,000 of the Chittaranjan Cotton Mills Limited, a public limited Company, sought the issuance of a writ in the nature of quo warranto for calling upon the first five respondents herein to show by what authority they were claiming to act as Directors of the said Mills. He also challenged the validity of certain actions taken by the Administrator appointed by the Provincial Government in the exercise of powers given to it under Martial Law Order No. 104 promulgated by the Zonal Martial Law Administrator of East .Pakistan (Zone `C'). The Chittaranjan Cotton Mills was incorporated in the year 1929 with its registered office at premises No. 74, Farash Ganj, Dacca. The main business of the Company was to run a Cotton Mill set up at Narayanganj. The vast majority of its share‑holders belonged to the minority community, i.e., Hindu community and at the time of the Partition of the Province of Bengal the said Mill was being managed by a firm of Managing Agents which carried on business under the name and style of Keshav Lal Industrial Syndicate. The Managing Director of the Chittaranjan Cotton Mills Limited was then one D. N. Bose. After Partition both the Managing Agents and the said Managing Director claimed that the Company was an Indian Company, as its registered office had been transferred to Calcutta prior to Partition and after protracted correspondence succeeded in getting the name of the Company removed from the register of Pakistani Companies and included in that of foreign Companies operating in Pakistan. The validity of such removal was challenged by some share holders and this led to protracted litigations. Ultimately the High Court of East Pakistan was moved by way of a writ petition which resulted in the High Court ordering the Registrar of Joint Stock Companies, East Pakistan, to restore the Company's name to the register of indigenous Companies. This order of the High Court was on appeal upheld by this Court on the 23rd of November 1960. During the pendency of the litigations regarding the status of the Company the said Managing Director and others in charge of the conduct of the affairs of the Company were suspected to be committing breaches of the Foreign Exchange Regulations in various ways so as to cause loss of foreign exchange to Pakistan. The affairs of the Company were also being seriously mismanaged and its assets wasted. The said Managing Director and another Director of the Company, named N. M. Ghosh, were ultimately, after the promulgation of the Martial Law, tried and convicted by a Military Court on the 19th of August 1959, for smuggling currency out of Pakistan and were sentenced to various terms of imprisonment. All their properties and assets in Pakistan, including their shares of the said Company, were forfeited to the Government. The convicted Directors, however, escaped punishment by absconding to India before they could be taken into custody. In this state of affairs for the protection of the assets of the Company, which ran one of the largest Textile Mills in East Pakistan, and for the proper running of the said Mill the Zonal Martial Law Administrator on the 3rd of December 1960, promulgated Martial Law Order No. 104 (hereinafter referred to as the Order). The Order declared that all the Directors of the Company shall be deemed to have vacated their offices as from the date of the promulgation of the Order and gave power to the Provincial Government to appoint by Notification in the official Gazette any person it thought fit as the Administrator of the Company for taking over its management and administration. The Administrator so to be appointed was vested with all the powers of the Board of Directors as also with all other powers necessary to carry on the management and administration of the Company effectively, including powers to cancel or vary the contracts or agreements entered into by the Company with any other person, if such contract or agreement was detrimental to the interests of the Company. Certain provisions of the Memorandum and Articles of Association of the Company were also modified for preventing the appointment of any other person as a Director of the Company and for debarring anyone from taking any step for the winding up of the Company or for the appointment of a Receiver in respect of its assets. Resolutions passed by share holders were also to have effect only if approved by the Provincial Government. The Provincial Government was also given power, when the purpose of the appointment of the Administrator had been fulfilled, to direct the Administrator to call a meeting of the share‑holders of the Company for the purpose of electing new Directors and for re‑constituting the Board of Directors in accordance with the provisions of the Companies Act. Upon such re‑constitution of the Board of Directors the management of the Company was to be made over to the new Board of Directors and the Administrator's appointment was to be cancelled. The Provincial Government was also given, by the Order, power to make rules to carry out the purposes of the Order and subject to such rules or other exceptions and restrictions imposed by the Provincial Government the management of the Company was to be carried on as far as practicable in accordance with the provisions of the Companies Act. In pursuance of the Order the Provincial Government appointed an Administrator on the 3rd of December 1960, to take over the management of the affairs of the Company, and from time to time made rules, inter alia, for limiting and/or restricting and/or suspending the operation of certain sections of the Companies Act in respect of the said Company, amending the Memorandum and Articles of Association of the Company, increasing or reducing the share capital of the Company, re constructing its registers etc. Ultimately, the Provincial Government by a Notification issued on the 12th of May 1962, published a new Memorandum and Articles of Association of the Company superseding the old memorandum and Articles of Association as also directed the Administrator to convene a general meeting of the share‑holders by giving at least 7 days' notice in writing for the purpose of electing new Directors of the Company in pursuance of paragraph 7 of the Order. The Administrator of the Company issued such notices and convened a general meeting of the share‑holders at the registered office of the Company for election of new Directors. Notices were issued between the 20th and 23rd of May 1962, and served by post to all registered share‑holders and were also published in the local newspapers. Thereafter, a meeting was held on the 3rd of June 1962, at which the respondents Nos. 1 to 5 herein were duly elected as Directors of the Company. After such election the Provincial Government by a Notification published on the 4th of June 1962, cancelled the appointment of the Administrator and vested the affairs of the Company in the new Board of Directors with immediate effect. The newly elected Directors assumed office but on the 24th of October 1962, the respondent No. 5 resigned and two other persons were co‑opted as Directors in accordance with the new Articles of Association of the Company. Since then they continued to act as such Directors till the 2nd of September 1963, when another general meeting of the share holders of the Company was duly held at which the respondent No. 3 and a co‑opted Director, named K. N. Chakraborty, who were to retire, were re‑elected, as they were eligible for re-election. The appellant filed the present writ petition on the 11th of June 1962, challenging the legality of the election of the new Board of Directors as also the validity of the notice given by the Administrator on the 18th of May 1962, for allotment of certain forfeited shares of the Company and of the notice of the 23rd of May 1962, calling the meeting of the share‑holders to elect the Board of Directors. He also alleged that although he was a registered share‑holder, he had been given no notice of the proposed allotment of the forfeited shares or any option to take those shares in accordance with the Articles of Association. It appears that these forfeited shares were alloted to various Co‑operative Societies, who were, according to the appellant, not even entitled to become share‑holders of the Company either under the provisions of the Companies Act or the Articles of Association of the Company. Hence they were also not qualified to take part in the meeting of the share‑holders convened to elect the Board of Directors. The validity of the meeting for the election of the Board of Directors was also challenged on the ground of other violations of the Articles of Association and as having not been duly constituted. It is significant, however, that the appellant himself does not anywhere alleged that no notice of this meeting convened for the 3rd of June 1962, was received by him. Apart from these, the appellant also questioned the validity of the Martial Law Order itself and of ail acts done there under since its promulgation. The High Court has mainly dealt with the last ground of attack mentioned above and has, upon an examination relevant provision of law including the Martial Law Regulations under which the country functioned between October 19th and June 1962, when the present Constitution came into force, come to the conclusion that the Zonal Martial Law Administrators possessed the same powers of issuing Regulations, additional Regulations and Orders as the Chief Martial Law Administrator himself. It repelled the contention that the Zonal Martial Law Administrators were delegates of the Chief Martial .Law Administrator. According to the High Court a Zonal Martial Law Administrator was himself a competent Legislature in the same fashion as the Indian Legislature before Independence and, therefore, the doctrine of delegation of powers was not at all attracted. The contention that the powers delegated by the Order No. 104 itself to the Provincial Government amounted to an abdication by the Zonal Martial Law Administrator of his own legislative powers did not also find favour, but it was held that the delegation of powers that had been made by the Zonal Martial Law Administrator in favour of the Provincial Government was not a delegation of the legislative power itself but merely "a bestowal of such power which is ancillary to the effective operation of the said legislation". Having held that the Martial Law Order No. 104 was a valid Order and that the powers given thereunder to the Provincial Government were lawful the High Court took up the examination of the other contentions raised as to the validity of the allotment of forfeited shares and of the general meeting for the election of the Board of Directors, and came to the conclusion that none of these contentions was tenable. The Provincial Government was held to have been vested with abundant authority to alter the Memorandum and Articles of Association of the Company and to re‑issue the un-issued preferential shares after converting them into ordinary shares. The contention of the appellant that this amounted to increasing the share capital was also rejected as it was not beyond the limit of the authorised share capital of the Company, but it gave no decision on the question as to whether the converted shares had, in fact, been offered to existing share‑holders or not, as, in its view, all the facts necessary for deciding this question were not before it. The question as to whether the re‑issue of the forfeited shares constituted an increase of share capital was also not decided, for, the High Court itself has made it clear that it did not wish it to be understood that this point had been finally decided. The forfeitures, it appears, had taken place before the Administrator took over charge and the only question raised was as to whether the forfeited shares could be re‑issued to nevi share‑holders or Co‑operative Societies before giving the existing share‑holders the option to refuse to take them up. The tentative view of the High Court appears to be that it was not necessary for the Board of Directors to offer the forfeited shares first to existing share‑holders, for, the Directors of the Company had full discretion to dispose of them in any manner they thought fit The complaint as regards the non‑service of the notice for the transfer of the shares was accordingly decided against the appellant. The High Court also took the view that the Administrator was entitled not to issue any notice to the appellant, as earlier notices sent to him for the re‑construction of the share register at the address registered in the Company's books had come back undelivered. It was further held that since the appellant was not qualified to be elected a Director and had in fact never offered himself for election as such Director, the writ petition filed by him was, in any event, not filed bona fide and was "a pointless, purposeless and futile" application, which had been filed merely to create a "complete chaos and confusion in the administration and management of the present Company". On these grounds the writ was refused and the petition was dismissed. Hence this appeal. Learned counsel appearing in support of this appeal has re‑agitated the same points that were raised on behalf of the appellant in the High Court. So far as the vires of the Martial Law Order No. 104 is concerned, he has placed strong reliance on the decision of this Court in the case of Muhammad Afzal v. Commissioner, Lahore Division and another (P L D 1963 S C 401), and has contended that since the said Order purported to amend the Companies Act, it was clearly in excess of the powers of the Zonal Martial Law Administrator. It is conceded by the learned counsel appearing for the Directors‑respondents that the Martial Law Order No. 104 is a piece of legislation, which did in fact entrench upon the field covered by the Companies Act and amended its provisions so far as its applicability to the Company in question was concerned. But it is urged that the principles laid down in the above mentioned decision are not applicable in the present case, for, all the acts complained of by the appellant were done, consummated and completed before the present Constitution came into force and, as such, if they could not be challenged at the time the Martial Law was in force, the same protection continues to be enjoyed by them even after the coming into force of the present Constitution by reason of the provisions of the Martial Law Regulations Nos. 88 and 93 read with Article 250 of the present Constitution. The High Court, on an examination of the Proclamation of Martial Law issued on the 7th of October 1958, by the then President of Pakistan, the Martial Law Regulation No. l promulgated on the same date by the Chief Martial Law Administrator appointed by the President and the Laws (Continuance in Force) Order promulgated on the 10th of October 1958, has come to the conclusion that these were all supra Constitutional instruments which gave even to a Zonal Administrator the power to issue Martial Law Regulations and Orders "in the same way as the Chief Martial Law Administrator could issue them" and, therefore, the impugned Order issued by the Martial Law Administrator of Zone `C' was a valid piece of legislation which could over‑ride even the provisions of the Companies Act. This view of the High Court is not in accordance with the view taken by this Court in the case of Muhammad Afzal v. The Commissioner, Lahore Division and another which was decided, after the decision of the High Court, on the 7th of May 1963. 1n that case the view taken by this Court was that the Laws (Continuance in Force) Order was an interim Constitution given to the country by the victorious revolution and that it was a Constitution for all including the law‑giver. A more careful and detailed examination of the Proclamation of Martial Law, the Martial Law Regulation No. 1 and the Laws (Continuance in Force) Order, 1958, confirm us in this view. The Proclamation of the 7th of October 1958, made by the then President of Pakistan whilst abrogating the late Constitution, dismissing th e Central and Provincial Governments, dissolving the Parliament and the Provincial Assemblies and abolishing all political parties itself provided that "until alternative arrangements are made Pakistan will come under Martial Law" and then went on to appoint to the then Commander‑in‑Chief of the Pakistan Army as the Chief Martial Law Administrator. It was in pursuance of this authority that the Chief Martial Law Administrator so appointed issued his first Proclamation and the Martial Law Regulation No. 1 on the same date, namely, the 7th of October 1958. These were thus in the nature of initial steps, until the "alternative arrangements" contemplated by the Proclamation of the President came into being. They were, it is true, in the nature of supra‑Constitutional instruments and the Martial Law Regulation No. 1, which appointed Zonal Martial Law Administrators, also vested them with powers to issue Additional Regulations and Orders "under the Regulations issued by the Chief Martial Law Administrator" but whatever might have been their effect they were only interim provisions applicable only till the "alternative arrangements" contemplated had been made. If it is accepted that the Laws (Continuance in Force) Order, which was subsequently enacted for the governance of the country on the 10th of October 1958, was intended to be one of the said "alternative arrangements" and the interim Constitution for the country given to it by the same law creating agency, namely, the Revolution, then from after its proclamation it became the source of all powers and its provisions must prevail over all other instruments made earlier. If it was intended that even after its promulgation any Martial Law Regulation issued by any Martial Law Authority would over‑ride its provisions, then the meticulous care taken in this Order itself to specify that the country would be governed in accordance with its terms subject only to the Orders of the President or Regulations made by the Chief Administrator of Martial Law was meaningless. It would have been sufficient to say that it would prevail subject to an Order of the President or any Martial Law Regulation. Since this was not done and a distinction was made in this Post Proclamation Order between Regulations made by the Chie Martial Law Administrator and Martial Law Regulations mad by other Authorities, it is only legitimate to conclude that whatever might have been the power possessed by. Martial Lay Authorities other than the Chief Martial Law Administrator their powers were, after the promulgation of the Laws (Continuance in Force) Order, to be curtailed to the therein. As has been pointed out in the case of Muhammad Afzal v The Commissioner, Lahore Division arid others Article 4 of the Laws (Continuance in Force) Order whilst validating all existing laws went on to expressly provide that they should prevail "subject to any Order of the President or Regulation made by the Chief Administrator of Martial Law. The result of this, in our view, could only be that the Zonal Martial Law Administrators would, after the promulgation of this Post‑Proclamation Order of the 10th of October 1958, have the power of making only such Martial Law Orders or Martial Law Regulations as did not entrench upon any existing law. If the Post‑Proclamation Order No. 1 of 1958 became as from the 10th of October 1958, the source of all power and it gave co‑equal, powers only to the President and the Chief Martial Law Administrator to amend existing laws, then it must necessarily follow that as from that date no other authority could claim to exercise that power. Thus even assuming that Martial Law Regulation No. 1 was a supra‑Constitutional document the Laws (Continuance in Force) Order, 1958, being a subsequent document of the same efficacy will have the effect of prevailing over it as well as all other earlier instruments of alike nature emanating from the same law creating agency. Learned counsel appearing for the respondents have also argued that the observations in the case of Muhammad Afzal v. Commissioner, Lahore Division and others as to the validity of the Zonal Martial Law Orders under consideration in that case were merely obiter and hence were not binding. It is true that in that case it was observed that it was not necessary to pronounce upon the validity of the Martial Law Orders under consideration there since they had been repealed by the Constitution of 1962, never theless, what was decided in that case was as to whether the actions purported to be initiated and enforced in pursuance of those Orders were valid or proper and in that connection it was held that since a Zonal Martial Law Order could not competently amend or alter an existing law whilst the Laws (Continuance in Force) Order was in operation, the validity of the action taken thereunder could be examined after the Martial Law had been lifted and those actions were no longer protected by the Constitution. To that extent, therefore, it cannot be said that the observations of this Court with regard to the competence of the Zonal Martial Law Authorities to make Orders and Regulations entrenching upon the fields occupied by existing laws was not a matter which fell to be decided there. This does not, however, dispose of the question as to whether what was done in the case under examination in exercise of the powers given by Zonal Martial Law Order No. 104 by the Provincial Government and the Administrator appointed by it to manage the affairs of the Chittaranjan Cotton Mills Limited can now be questioned, notwithstanding that the said Martial Law Order is no longer in force. Learned counsel appearing for the respondents has argued that anything done under such Martial Law Orders and Regulations, which had not been saved by Article 225 of the Constitution, would still be immune from attack before any Court by reason of the provisions of Martial Law Regulations Nos. 88 and 93 promulgated by the Chief Martial Law Administrator read along with Article 250 of the present Constitution. Martial Law Regulations Nos. 88 and 93, although repealed by the Constitution, it is contended, would be "existing laws" within the meaning of sub‑Article (7) of Article 225 and anything duly done or suffered thereunder or any right, privilege, obligation or liability acquired, accrued or incurred thereunder would, notwithstanding their repeal, be still protected under Article 250 of the Constitution, particularly, since in the present case all those acts which are now sought to be challenged had been done, consummated and completed long before the promulgation of the present Constitution and the repeal thereby of the Martial Law Orders and Regulations, other than those expressly saved by sub‑Article (3) of Article

225. There can be no doubt that all the acts challenged by the writ petition in the High Court by the present appellant were done long before the Constitution came into force. The forfeited and/or converted shares had been allotted to various Co‑operative Societies, a general meeting duly convened and a new Board of Directors elected to whom the management of the Company was made over. The parties who purchased the said shares and the Directors who were elected, acquired vested rights and actually by the time the writ petition came to be heard a fresh election of Directors had also been held, one Director had retired, other Directors, who were to go out of office but were eligible for re election, were re‑elected and the Company is now being managed smoothly. Rights, privileges, obligations and liabilities were thus acquired and accrued before the Constitution came into force. No Court would, in the circumstances, lightly interfere, particularly when such interference would only have the effect o creating further chaos in the management of the Company and a reversal to the status quo ante has become impossible. Indeed the appellant himself does not ask for such a reversal but merely challenges the authority of the present Directors of the Company and complains that the forfeited and/or converted shares should first have been offered to the existing share‑holders before offering them to outsiders. In this view of the matter, it must be conceded that the facts of this case are certainly distinguishable from the facts in the case of Muhammad Afzal v. The Commissioner, Lahore Division and others. No rights, privileges, obligations or liabilities had been acquired, accrued or incurred under the Martial Law Orders under consideration in that case and it was on that basis that this Court interfered therein. The provisions of Martial Law Regulations Nos. 88 and 93 did not also come up for examination in that case for the reason that what was there sought to be challenged was the legality of actions which‑ were sought to be taken after the Constitution of 1962 had come into force and the Martial Law Regulations had been repealed. In the present case the acts sought to be challenged were all done and completed before such repeal. There is, therefore; force in the contention that by reason of tic.; provisions of Martial Law Regulations Nos. 88 and 93 read with Article 250 of the pr; sent Constitution those acts are now immune from challenge, even though the above‑mentioned Regulations now stand repealed. We accordingly accept this contention and hold that the appellant is not entitled to challenge those acts now. In doing so, however, we would like to clarify that, in our view, what the Martial Law Regulations Nos. 88 and 93 rendered immune was "any order made or anything done or to be done" in pursuance of "any Martial Law Regulation or Martial Law Order" (the underlining, is ours). It ` will be observed that even these Regulations preserve the distinction between an `order' spelt with a small 'o' and an `Order' spelt with a capital `O'. This distinction is not without significance and confirms the tow expressed by this Court in the case of Muhammad Ayub Khuro v. Pakistan (P L D 1960 S C 237), that the word `order' when spelt with a small `o' in these instruments made after the Laws (Continuance in Force) Order does not refer to any legislative measure but to orders of other kinds. Therefore, what Martial Law Regulations Nos. 88 and 93 protected were orders of the litter kind made and acts done under Martial Law Regulations and orders of a legislative nature. The protection thus extends in the present case to any order made or anything' done or expressed or purported to be done in pursuance of the Martial Law order No.104 and not the said order itself. It is not necessary to declare the said Order ultra vires, for, it is no longer in force, but even though we are inclined to the view that it was not competently made we hold that orders made and acts done thereunder are protected, because those are now completed acts under which rights, privileges, obligations have been acquired and accrued long before the repeal of the said Order. So far as the amended Memorandum and Article of Association are concerned the question may, however, a rise as to whether these can also be treated as a past and closed transactions for, they still continue to be operative anti further action was and may still be taken under it even now, The appellant has not challenged the validity of these subsequent acts but if he does so the company may find it difficult to meet this challenge on the plea that that too is a past and closed transaction unless, of course, the company at a duly convened extraordinary general meeting has already adopted or now adopts the amended Article of Association. It has next to be considered whether, even though the validity of the said orders and acts cannot be challenged, the action purported to be taken thereunder case be questioned, on tile ground that they were not in accordance with the Martial Law Order. If these were completed acts and tile protection given by Martial Law Regulations Nos. 88 and 93 was available for such acts, then the language of clause 2 of Martial Law, Regulation No. 88 as amended by Martial Law Regulation No. 93, renders them immune from attack. The latter Regulation has expressly widened the immunity so as to include any "order made or any thing done whether the order or the thing is within the scope of the Regulation or Order or not, or whether the Authority making the order or doing a thing had jurisdiction in the matter or not." A Furthermore, under this even persons authorised by or under a Martial Law Regulation or Order to perform any function o exercise any power would be Martial Law Authorities within tile v' meaning of the said Regulations. Thus the Provincial Government n and the Administrator would have also become Martial Law ‑Authorities pro tanto for the purposes of the said Martial Law Order No. 104 and their acts would not have been open to question whilst those Regulations Nos. 88 and 93 were in force. If those acts were consummated acts, then on the principle o past and closed transactions those acts will still enjoy the same immunity given to them by those Regulations by reason of the provisions of Article 250 of the Constitution. In this view of the matter it will be futile to enter into the consideration of the other questions raised, namely, as to whether the issuance of the forfeited shares and the calling of the meeting for the election of the Directors were in accordance with Martial Law Order No. 104 or not. We are also in agreement with the High Court that the circumstance that the appellant was neither qualified to be elected a Director nor had at any stage offered himself for election a such Director nor was even present at the meeting summoned for the election of the Board of Directors, disentitled him to seek the writ of quo warranto which was not a writ of course. The Court from which the writ was sought was entitled to enquire into the conduct and motives of the appellant for such a writ and if the information was considered to be merely of a vexatious nature the Court was entitled to refuse to exercise its discretion in favour of the appellant. Thus where the issuance of the writ would disturb the peaceful and orderly functioning of a corporation the Court is entitled to refuse the writ on the ground that to do so would be merely vexatious, particularly, where its consequence would be, its ill the, present case, to place the Company back, in the hands of those who were miss‑managing its affairs and illegally removing its assets to another country. We are constrained to observe that, in the present case, the circumstances in which the Martial Law Authorities took action for taking over the affair's of the Company were sue as would have legitimately entitled any Government even in normal times to take appropriate emergency measures for the protection of the assets of an indigenous Company engaged in running a vital industry and for the orderly conduct of its affair in the exercise of its sovereign powers. Under the late Constitution also a law could have been enacted for the taking over of a commercial or industrial undertaking for the benefit of its owner without affecting the fundamental right of property assured thereby, as this power is inherent in the sovereign power of a State which has a right to protect the properties of its citizen. For these reasons we are of the opinion that the High Court leas rightly refused to issue the writ in the present case, although eve are clot in full agreement with all the reasons given by it. This appeal is, accordingly, dismissed with costs. A. H. Appeal dismissed. P L D 1965 Supreme Court 248