Jute And Gunny Brokers Ltd. And Another vs The Union Of India And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 314-316 and 778 of 1957

Decision Date: 17 February 1961

Coram: K.N. Wanchoo, P.B. Gajendragadkar, K.C. Das Gupta

In this matter, the case was styled Jute and Gunny Brokers Ltd. and Another versus The Union of India and Others. The judgment was delivered on 17 February 1961 by the Supreme Court of India. The opinion was authored by Justice K. N. Wanchoo and the bench was composed of Justice K. N. Wanchoo, Justice P. B. Gajendragadkar and Justice K. C. Das Gupta. The petitioners were Jute and Gunny Brokers Ltd. and another entity, while the respondents were the Union of India together with additional parties. The appeal was a connected appeal arising from earlier proceedings. The formal citation of the decision is 1961 AIR 1214 and 1961 SCR (3) 820. Subsequent citation references to the case include D 1973 SC2061 (12), F 1978 SC 389 (9, 19, 21, 45) and E 1980 SC 1163 (6). The legal issues examined involved the Requisition and Acquisition of Property Orders issued by the Government of India, the validity of notices served on managing agents, the rights of holders of pucca delivery orders, the doctrine of estoppel, the Defence of India Act 1939 (Act 35 of 1939), the Defence of India Rules 1939 (particularly rules 75A and 119), provisions of the Code of Civil Procedure 1908 (Act V of 1908, Order XXIX rule 2), sections 2(11) and 148 of the Indian Companies Act 1913, and section 18 of the Indian Sale of Goods Act 1930.

The factual background recorded that the Government of India entered into an agreement with the President of the Argentine Institute for Promotion of Trade. Under that agreement the Government agreed to supply hessian in exchange for licences permitting the shipment to India of food‑stuff purchased in Argentina. To give effect to the agreement, on 30 September 1946 the Government issued orders under rule 75A(i) of the Defence of India Rules 1939 to the managing agents of certain jute mills. Those orders requisitioned hessian and directed the managing agents and any other persons in possession of the goods to deliver the hessian to the Director of Supplies in Calcutta. Although the headings of the notices did not explicitly state that they were addressed to the managing agents of particular mills, the schedules annexed to the notices made it clear that the intended recipients were the managing agents of those specific mills. On the same day, notices of acquisition under rule 75A(2) were also served on the managing agents, informing them that, pursuant to rule 75A(3), the hessian would vest in the Government at the start of the same day, free of any mortgage, pledge, lien or similar encumbrance. The acquisition notices were accompanied by schedules similar to those that accompanied the requisition orders. When the Government attempted to take possession of the hessian, the jute mills and the holders of pucca delivery orders resisted the effort. Consequently, the Government instituted suit, which gave rise to the present appeals, seeking enforcement of the requisition and acquisition orders. By the time the lower courts heard the matter, the Defence of India Act 1939 and the Rules made thereunder had ceased to be in force. The principal question before the trial judge was whether the requisition and acquisition orders that had been served remained legally effective. The trial judge held that the requisition orders were not valid because the mills had not been properly served, and, since the goods were subject to pucca delivery orders, both the mills and the Government were estopped from challenging the ownership of the holders of those delivery orders.

The trial judge held that, because the goods were subject to pucca delivery orders, both the mills and the Government were estopped from challenging the ownership of the holders of those delivery orders. The appellate court subsequently held that the orders of requisition were valid and binding, that the mills—not the holders of the delivery orders—were the owners of the goods, but that the notices of acquisition had not been served in the manner required by rule 75A(2) of the Rules, and therefore there was no valid acquisition under rule 75A(3) of the Rules. The court further explained that requisition of the goods could be effected either by taking possession of them or by requiring that they be placed at the disposal of the requisitioning authority. 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; consequently, the proper persons to be served with the requisition orders were the mills. Because the Rules did not expressly prescribe the manner in which written requisition orders under rule 75A had to be served, rule 119(i) had to be applied, and where the orders concerned an individual corporation, service had to follow the procedure laid down in Order XXIX, rule 2 of the Code of Civil Procedure. The word “officer” as defined by section 2(ii) of the Indian Companies Act, 1913, includes a managing agent, and that definition may be used for the purposes of the Code; given the nature of his duties, there can be no doubt that a managing agent falls within the expression “other principal officer” in Order XXIX, rule 2(1) of the Code. There was therefore no basis for the contention that service under rule 2 must be effected on a natural person or that a corporation could not be served by serving its principal officer. Service of the requisition orders on the managing agents of the mills, therefore, constituted proper service under Order XXIX, rule 3 of the Code. Since rule 75A(2) itself did not provide a mode of service for the notice, either the mode specified in section 148 of the Indian Companies Act, 1913, or the procedure in Order XXIX, rule 2 of the Code would be a reasonable way to effect service. In the instant case, the notices of acquisition had been served under Order XXIX, rule 2(a), the same manner as the requisition orders, and consequently such service was valid 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 embodied in those delivery orders was a contract for the sale of unascertained goods, and, in view of section 18 of the Indian Sale of Goods Act, 1930, title could not pass to the buyer until the goods were ascertained by appropriation.

In this case the Court explained that under section 18 of the Indian Sale of Goods Act, 1930, title could not pass to the buyer until the goods were identified by appropriation, and it cited the decision in Anglo‑India Jute Mills Co. v. Omademull (1910) I.L.R. 38 Cal. 127 to illustrate that principle. The Court further held that it was inaccurate to assert that the Government of India, when acquiring requisitioned goods, claimed title through the mills and would consequently be estopped in relation to the holders of pucca delivery orders. The authority to acquire the property derived from the Defence of India Act and the accompanying Rules, which extended not merely to the owners’ rights but to the entire goods themselves. Rule 75A(3) of those Rules expressly stated that the acquisition conferred a paramount title over the whole property, free from all encumbrances. Consequently, there was no requirement to serve any notice on the holders of pucca delivery orders because, in law, the property in the goods had never passed to them.

The judgment recorded that the appeals originated in the Civil Appellate Jurisdiction as Civil Appeals Nos. 314‑316 and 778 of 1957. These appeals were filed against the judgment and decree dated 8 September 1954 of the Calcutta High Court, which had arisen from Original Decree No. 159 of 1951. Counsel for the appellants in Civil Appeal No. 314 of 1957 were S. Chowdhury, B. Das and P. K. Ray Chaudhury. The respondent No. 1 was represented by M. C. Setalvad, Attorney‑General for India, together with R. Ganapathy Iyer and D. Gupta, while respondent No. 2 was instructed by S. N. Mukherjee. Respondents Nos. 3‑18, 20‑40, 42 and 44‑47 were defended by S. M. Bose, B. Sen and B. N. Ghosh, and respondent No. 48 by B. N. Ghosh. Respondent No. 51 was represented by N. C. Chatterjee and P. K. Chatterjee. In Civil Appeal No. 315 of 1957 the appellants were again represented by S. M. Bose, S. Chowdhury, B. Sen and B. N. Ghosh, with the same counsel for respondent No. 1, respondent No. 2, respondent No. 6, respondents Nos. 8‑28, respondent No. 30, and the appellant in Civil Appeal No. 316 of 1957 by S. Chowdhury and P. K. R. Chaudhury, accompanied again by M. C. Setalvad, R. Ganapathy Iyer and D. Gupta for respondent No. 1, S. N. Mukherjee for respondent No. 2, and B. Das and B. N. Ghosh for respondents Nos. 3‑18, 20‑40, 42, 44, 47 and 49‑69, with N. C. Chatterjee and P. K. Chatterjee for respondent No. 71. Finally, Civil Appeal No. 778 of 1957 was filed by the appellant represented by M. C. Setalvad, Attorney‑General for India, R. Ganapathy Iyer and D. Gupta, with respondents Nos. 2‑17, 19‑39, 41 and 43‑46 represented by S. M. Bose, S. Chowdhary, B. Sen and B. N. Ghosh, respondent No. 40 by Sukumar Ghose, respondent No. 47 by S. Chowdhury and P. K. Ray Chaudhury, respondents Nos. 49‑69 by S. Chowdhury, B. Das and P. K. Ray Chaudhury, and respondent No. 71 by N. C. Chatterjee and P. K. Chatterjee. The judgment was delivered on 17 February 1961 by Justice Wanchoo.

These four appeals before the High Court at Calcutta arose from a single judgment and were therefore considered together. The factual background relevant to the present case was as follows: In September 1946 a shortage of food occurred throughout the country. To alleviate this shortage, the Government of India concluded an agreement on 27 September 1946 with the President of the Argentine Institute for Promotion of Trade. Under the agreement the Government agreed to freeze, requisition, take over and sell to the Institute thirty thousand tons of hessian and, in return, the Institute guaranteed that licences would be obtained for the shipment from Argentina of maize and wheat offals that had already been purchased by the Government of India in Argentina. Anticipating the agreement, the Government on 20 September 1946 sent letters to the managing agents of various jute mills in Bengal. The letters demanded information about stocks of hessian of a particular description held by the mills under their agencies and prohibited the agents from selling, transferring, removing, consuming or otherwise disposing of any article listed in Schedule B to the communication. The demand was made pursuant to sub‑rule (5) of rule 75‑A of the Defence of India Rules (the Rules). After the information was collected, the Government issued on 30 September 1946 an order to the same managing agents requisitioning the hessian specified in the Schedule annexed to the order. The order directed the agents and every other person in possession of the property to deliver it to the Director of Supplies in Calcutta and, in the meantime, not to dispose of the property without the permission of the Central Government. Each schedule identified the mill from which the requisition was made, the quantity, the description of the hessian and the name of the registered stock‑holders. The requisition orders were served on the managing agents under sub‑rule (1) of rule 75‑A of the Rules on the very same day. On that same day, 30 September 1946, the Government also issued a notice under sub‑rule (2) of rule 75‑A to the managing agents, informing them that it had been decided to acquire the property in accordance with that sub‑rule. The agents were further advised that, by virtue of sub‑rule (3) of rule 75‑A, the property would vest in the Central Government at the beginning of the day on which the notice was served, free from any mortgage, pledge, lien or similar encumbrance. The acquisition notices were accompanied by schedules identical in form to those annexed to the requisition orders, and they were likewise served on all managing agents on the same day. Later on the same day, the Deputy Director of Supplies wrote to the Secretary of the Indian Jute Mills Association, stating that shipping instructions concerning the requisitioned and acquired hessian would be issued in due course by the Director of Supplies in Calcutta.

After issuing the requisition and acquisition orders, the Government attempted to take possession of the hessian that had been requisitioned and acquired. The jute mills and the holders of delivery orders opposed this attempt, arguing that the requisition and acquisition orders were not valid. In response, the Government of India instituted a suit on 11 December 1946 to enforce those orders and also applied for the appointment of a receiver. The application for a receiver was contested, and it became clear that the matter would not be resolved quickly. Because ships prepared to transport the hessian to Argentina were already ready and any delay would jeopardise the shipment, the Government issued Ordinance No. I of 1947 on 7 January 1947. This Ordinance declared that, notwithstanding the pending suit, title and possession of the requisitioned and acquired goods vested in the Government. Consequently, the Government took physical possession of the hessian and shipped it to Argentina. The suit, however, did not become moot after the Ordinance was promulgated because section 3 of the Ordinance required that the suit continue to address a specific question and that a decision be rendered on that question. Section 3 stipulated that if the suit finally determined that the goods had not been validly requisitioned or acquired by the Central Government on 30 September 1946, each former owner would be entitled to compensation calculated at the market price prevailing on the date the suit was instituted. Conversely, if the suit refrained from making such a determination, the goods would be deemed to have been validly requisitioned and acquired on 30 September 1946, and compensation would be fixed in accordance with the law that was in force on that date, namely the provisions governing the requisition and acquisition of movable property under the Rules made under the Defence of India Act, 1939. It is noteworthy that the Defence of India Act, 1939, together with the Rules made thereunder, ceased to operate on 30 September 1946.

The essential issue that remained for resolution in the suit was whether the requisition and acquisition orders were valid and binding upon the defendants. The suit was therefore confined to obtaining a declaration affirming the validity of those orders. Should the court grant the declaration sought by the Government of India, compensation would be determined according to the legal provisions that were applicable on 30 September 1946, the date on which the requisition and acquisition were purported to have occurred. If, however, the court declined to grant such a declaration, compensation would have to be assessed based on the market price of hessian prevailing on the date the suit was filed, that is, 11 December 1946. Thus, the determination of the validity of the requisition and acquisition orders was pivotal, as it dictated the legal basis and timing for any compensation payable to the former owners of the hessian.

Had the Court declined to grant the declaration sought by the Government of India, the compensation for the hessian would have been calculated on the basis of the market price of the commodity prevailing on the date the suit was instituted, which was 11 December 1946. The trial court was required to resolve four distinct issues. First, it had to examine whether the requisition orders dated 30 September 1946, as mentioned in the plaint, had been properly issued, were legally valid, and had been duly served upon the parties concerned. Second, the Court needed to determine whether those alleged orders had effected a valid requisition of the goods listed in the schedules annexed to the orders. Third, it was necessary to consider whether the orders and notices of acquisition referred to in the plaint had been properly made, duly given, and duly served in accordance with the relevant regulations. Fourth, the Court was asked to decide whether, under the customs of trade, prevailing practice, or established usage, the transfer of delivery orders to buyers upon receipt of payment resulted in the passage of ownership of the goods represented by those delivery orders to the buyers.

Justice Sarkar, who heard the suit at the original side of the High Court, held that the requisition orders had indeed been properly and validly made. However, he found that the orders had not been served upon the mills that were then in possession of the hessian, and that such service was a necessary condition for a requisition to be valid. Because the service of the orders on the mills was lacking, Justice Sarkar concluded that there was no valid or binding requisition. On the question of acquisition, he observed that the requisitioned goods were subject to “pucca” delivery orders, and that, according to the commercial usage, such delivery orders were issued only after payment, passed from hand to hand by endorsement, and were treated in the market as absolute representations of the goods to which they related. Citing the precedent set in Anglo‑India Jute Mills Co. v. Omademall, he noted that the mills were estopped from challenging the passage of title under those delivery orders. Consequently, the Government, which was asserting ownership through the mills, was likewise subject to the same estoppel. As the holders of the delivery orders had not been served with notices of acquisition on 30 September 1946 pursuant to rule 75‑A (2) of the Rules, Justice Sarkar held that ownership of the goods did not pass on that date. On this basis, he dismissed the suit.

The Union of India appealed the decision. The appellate court reversed Justice Sarkar’s finding on the requisition issue. It held that the requisition orders were intended to affect individual mills and that service of those orders on the managing agents of the mills constituted sufficient service on the mills themselves, thereby rendering the requisition orders valid. Regarding acquisition, the appellate court framed the issue of whether the notices of acquisition had been served upon the owners in compliance with rule 75‑A (2). It rejected Justice Sarkar’s conclusion that the Government, by asserting its claim through the mills, was estopped from challenging the title of the delivery‑order holders. The appellate court further held that ownership of the goods could not be transferred by estoppel in conflict with the provisions of the Sale of Goods Act, 1930. Consequently, it concluded that proper service of the acquisition notices was required, and that without such service, the acquisition could not be deemed valid.

The Court observed that the provisions of the Sale of Goods Act, 1930 were not applicable to the present dispute, and consequently it was not necessary to serve the holders of the delivery orders with notices of acquisition. However, the Court found that the mills, which were the owners of the requisitioned goods, had not been served with notices of acquisition. In the Court’s opinion, strict compliance with the provisions of Order XXIX of the Code of Civil Procedure was essential for the transfer of ownership contemplated under rule 75‑A of the Rules to be effected. Because there was a failure to comply strictly with Order XXIX, and because the Court held that rule 119(1‑B) of the Rules did not apply to the case, the notices of acquisition were not served on the owners as required by rule 75‑A(2). Accordingly, the Court concluded that the acquisition was not valid. As a result, the appeal was partly allowed with respect to the effect of the requisition orders, but the view of Sarkar J. was upheld concerning the effect of the notices of acquisition.

The judgment noted that four appeals on certificates granted by the High Court followed. Appeals numbered 314 to 316 were filed by the defendants in the original suit, who challenged the appellate court’s view that the requisition orders were valid and binding; these appellants will be referred to as the defendants. Appeal 778 was filed by the Union of India, which contested the appellate court’s finding that the notices of acquisition had not been properly served, and therefore that no acquisition of property had occurred on 30 September 1946 as required by rule 75‑A(3). The Court first addressed the three appeals filed by the defendants concerning the requisition orders. For this purpose, it was necessary to set out rules 75‑A and 119 of the Rules, because the validity of the requisition orders depended upon compliance with both rules. Rule 75‑A provided that, if in the opinion of the Central Government or a Provincial Government it was necessary or expedient for securing the defence of British India, public safety, maintenance of public order, efficient prosecution of the war, or for maintaining supplies and services essential to community life, the Government could by written order requisition any movable or immovable property, subject to certain exclusions, and could issue further orders deemed necessary. Rule 119 stipulated that, except as expressly provided otherwise in the Rules, any authority, officer or person making a written order pursuant to the Rules must, when the order is of a general nature or affects a class of persons, publish the order accordingly.

The Government was authorised to acquire the property in whatever manner it deemed expedient. It could acquire the property by serving a notice directly on the owner, or, if the owner could not be readily traced or the ownership of the property was in dispute, the Government could publish a notice in the Official Gazette. The Gazette notice had to state that the Central Government or the Provincial Government, as the case might be, had decided to acquire the property in accordance with the rule. Once such a notice of acquisition was either served on the owner or published in the Official Gazette, the property was deemed to vest in the Government at the beginning of the day on which the notice was served or published. At that moment, the property passed to the Government free of any mortgage, pledge, lien or any other similar encumbrance, and the period of requisition of the property was considered to have ended.

Rule 119 set out the procedure for publishing and serving orders made under the Rules. Sub‑rule (1) required that, except where the Rules expressly provided otherwise, any authority, officer or person who issued an order in writing in pursuance of the Rules must publish notice of a general order or an order affecting a class of persons in a manner that the authority considered best suited to inform the persons concerned. Where an order affected an individual corporation or firm, the order had to be served in the manner prescribed for the service of a summons under Rule 2 of Order XXIX or Rule 3 of Order XXX, as set out in the First Schedule to the Code of Civil Procedure, 1908. Where an order affected an individual person who was not a corporation or firm, the order could be served in any of three ways: (i) personally, by delivering or tendering the order to the person; (ii) by post; or (iii), if the person could not be found, by leaving an authentic copy of the order with an adult male member of the person’s family or by affixing the copy to a conspicuous part of the premises where the person was known to have last resided, carried on business, or worked for gain. Sub‑rule (1‑A) clarified that where any of the Rules empowered an authority, officer or person to act by a notified order, the publication and service requirements of sub‑rule (1) did not apply to such notified order. Sub‑rule (1‑B) provided that, in any judicial proceeding, if a question arose as to whether a person had been duly informed of an order made under the Rules, compliance with sub‑rule (1), or the notification provision of sub‑rule (1‑A), would be conclusive proof of such notice. However, failure to comply with sub‑rule (1) would not preclude proof by other means that the person had knowledge of the order, nor would it affect the validity of the order.

In this case the Court explained that the purpose of forming an opinion under rule 75‑A was to determine whether it was necessary or expedient to make a requisition for the defence of British India, for public safety, for the maintenance of public order, for the efficient prosecution of the war, or for maintaining supplies and services essential to the life of the community. Once such an opinion had been formed, the Government was authorised to issue a written order requisitioning any movable or immovable property and to issue any further orders that it considered necessary or expedient in that connection. The defendants had faintly argued that the requisition orders were invalid because they did not satisfy the first condition of necessity or expediency. The Court found that this contention had no substance. The order dated 30 September 1946 expressly stated 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. The defendants had never alleged that the requisition orders were passed mala fide. In the absence of any mala‑fide allegation, the Court held that the Government’s opinion was final and that the purpose set out in the order was one of the purposes expressly authorised by rule 75‑A. The principal ground of appeal advanced by the defendants was that rule 75‑A required that a requisition order be brought to the knowledge of the person whose interests were affected, and that this had not been done with respect to the holders of delivery orders or the mills. Consequently, they claimed that the requisition orders were not valid or binding. The Court noted that sub‑rule (1) of rule 75‑A did not prescribe the specific manner of service of a requisition order, nor did it specify on whom such an order must be served. The Court agreed with the appellate court that service of the order is required on the person who is capable of placing the goods in question at the disposal of the requisitioning authority; until such service is effected, no valid and effective requisition can exist. This principle was corroborated by the definition of “requisition” in rule 2(11) of the Rules, which describes a requisition as the taking possession of property or requiring the property to be placed at the disposal of the requisitioning authority. Accordingly, a requisition may be accomplished either by physical possession or by obliging the owner to place the property at the authority’s disposal. In the present matter the Court identified that the case concerned the second mode of requisition, namely, requiring the property to be placed at the disposal of the authority.

In the second mode of requisition the law requires that the party who must place the disputed goods at the disposal of the requisitioning authority be duly informed of the requisition order, so that it can comply with the direction contained in the order. This requirement immediately raises three questions: (i) which individuals or entities were the proper persons on whom the requisition orders should have been served, (ii) what method of service was prescribed for such orders, and (iii) whether, in the present case, the proper persons were served in the manner prescribed by law.

The Court held that there was no need to serve a requisition order on the holders of delivery orders, regardless of their claim to ownership of the goods, because those holders were not in possession of the goods on 30 September. The goods were, on that date, in the possession of the jute mills, and consequently the mills themselves were the proper persons to be served with the requisition orders. The next issue for determination was the manner in which the mills, as possessors of the goods, should have been served. The Court found the answer in Rule 119 of the Rules, which provides in clause (1) that, unless the rules expressly state otherwise, every written order issued under the rules must be served in the manner prescribed therein. Because there is no specific provision directing how a written requisition order issued under Rule 75‑A must be served, the order must be served according to Rule 119 (1). Moreover, since the orders in this matter concerned an individual corporation, they had to be served in the same way that a summons to a corporation is served under Rule 2 of Order XXIX of the Code of Civil Procedure. Rule 2 of Order XXIX stipulates that when a suit is against a corporation, the summons may be served on the secretary, any director, or another principal officer, or it may be left at, or sent by post to, the corporation’s registered office, or if no registered office exists, to the place where the corporation conducts its business. Accordingly, the Court needed to ascertain whether the mills were served in compliance with Rule 2 of Order XXIX. If any irregularity in service were found, it would be necessary to examine whether the situation fell within sub‑rule (1‑B) of Rule 119. The Court therefore began its analysis by first examining whether the service to the mills conformed to the requirements of Order XXIX, Rule 2.

The requisition orders were dispatched to the managing agents of the various jute mills. While the heading of each order did mention the name of the managing‑agency corporation, the heading did not expressly state that the order was addressed to that corporation in its capacity as managing agent for particular mills. Nevertheless, examination of the schedule annexed to each order made it immediately apparent that the order was intended for the mills listed in the schedule and that service was effected upon the managing agents of those mills. For illustration, one requisition order was addressed to Messrs Thomas Duff and Co. Ltd. The accompanying schedule expressly recorded that the order concerned jute bales held by the jute mills under the addressee’s management, and it identified the specific mills involved, namely Titaghur, Victoria, Samnaggur (South) and Samnaggur (North) Jute Mills. Any person receiving that order could therefore instantly understand that it was served on Messrs Thomas Duff and Co. Ltd. in their role as managing agents of the four named jute mills. The imperfection in the address format, therefore, was held to be of no material consequence. Reading the order in its entirety together with the schedule left no doubt that the order was meant for the jute mills named in the schedule and that it was addressed to Messrs Thomas Duff and Co. Ltd. as the managing agents of those mills. It was not contested that requisition orders concerning other mills, which were addressed to other managing agents, were issued in the same format and contained comparable schedules. Consequently, it was concluded that there was no doubt that the requisition orders were intended for the mills and were conveyed to them through their managing agents. It was also undisputed that those orders were served on the managing agents on 30 September 1946. The remaining issue, therefore, was whether service upon the managing agents on behalf of the mills satisfied the requirements of proper service prescribed by Rule 119(1) read with Rule 2 of Order XXIX of the Code of Civil Procedure. Regarding service, the Court examined clause (a) of Order XXIX, Rule 2, which authorises service of summons on the secretary, any director, or any other principal officer of a corporation. The point to be determined was whether service on the managing agents constituted service on an “other principal officer” of the corporation. Section 2(II) of the Indian Companies Act, No VII of 1913, which was operative at the relevant time, defined “officer” to include any director, managing agent, manager or secretary. Accordingly, a managing agent of a corporation was an officer within the meaning of the Companies Act.

In the present case the Court examined whether a managing agent of a corporation qualified as a principal officer under the definition of “officer” contained in Section 2(II) of the Companies Act, No VII of 1913. That provision defined an officer to include any director, managing agent, manager or secretary, and therefore the Court held that a managing agent was indeed an officer of the corporation. The next question was whether such an officer also satisfied the description of a “principal officer” required by Order XXIX, Rule 2 of the Code of Civil Procedure. Considering the nature of the duties customarily performed by a managing agent, the Court found it obvious that a managing agent must be treated as a principal officer. The parties did not seriously dispute that if a managing agent is an officer, the character of his duties makes him a principal officer. One contention advanced by the respondents was that the definition of officer in the Companies Act was an artificial classification intended solely for the purposes of that Act and could not be imported into the Code of Civil Procedure. The appellate court had rejected that contention and had held that the Companies Act definition could be employed for the purposes of the Code of Civil Procedure. The Court agreed with that view, and consequently held that service of the summons on the managing agents of the mills amounted to service on a principal officer of the corporation and therefore satisfied the requirements of Order XXIX, Rule 2.

The respondents further argued that the intention behind Order XXIX, Rule 2 was that service must be effected upon a natural person and that the rule did not contemplate serving one corporation in order to secure service on another corporation. To support this argument they relied upon Rules I and 3 of Order XXIX, contending that the repetition of the words “other principal officer” in those rules demonstrated that the term was meant to refer only to a human being. The Court noted that this argument had also been raised before the appellate court and had been rejected. While it is true that Rules I and 3 require a human being—Rule I deals with the signature and verification of pleadings by a secretary, director or other principal officer, and Rule 3 permits a court to order the personal appearance of a secretary, director or other principal officer—those rules do not define the term “principal officer.” Accordingly, the Court concluded that the requirement that a principal officer be a human being in Rules I and 3 does not automatically extend to Rule 2, which concerns service of process. Finally, the Court examined Clause (b) of Rule 2, which provides that service is deemed effective if the summons is left at, or sent by post to, the corporation at its registered office, or if no registered office exists, at the place where the corporation conducts its business. This provision clearly shows that service under Rule 2 need not be made to a specific individual connected with the corporation. Therefore, the Court held that service on the managing agent, even though the agent is a corporation’s officer, satisfied the statutory requirements for proper service under Order XXIX, Rule 2.

In this case, the Court observed that the rules allow service of a summons by leaving it at, or sending it by post to, the corporation’s registered office, or, where no registered office exists, to the place where the corporation carries on business. Consequently, the Court held that effective service does not require that the summons be delivered to a human being connected with the corporation. The Court also found no provision in paragraph XXIX that would oppose the proposition that service on one corporation may be effected by serving another corporation that acts as the principal officer of the first corporation. Referring to the definition of “officer” in section 2(11) of the Companies Act, the Court noted that a managing agent qualifies as an officer and, given the nature of a managing agent’s duties, must be regarded as a principal officer. Therefore, service upon the managing agent of a corporation satisfied the requirement of paragraph XXIX, rule 2. Accordingly, the Court agreed with the decision of the appellate court that the requisition orders in the present proceedings had been unquestionably served on the managing agents of the mills, and that such service fulfilled the requirements of rule 119 of the Rules. Because the service on the mills through their managing agents constituted valid service under rule 119 read with paragraph XXIX, rule 2, the Court found it unnecessary to examine whether the service also satisfied the criteria of rule 119(1‑B). The Court therefore affirmed the appellate court’s view that the requisition orders were properly and validly served on the mills, and that the orders effected a lawful requisition of the goods listed in the accompanying schedules. In this view, Appeals Nos. 314 to 316 were dismissed. Turning to the Union of India’s appeal concerning acquisition, the Court noted that it was not contested that on 30 September 1946 a notice of the decision to acquire the requisitioned goods was served on the same managing agents. The heading of that notice identified only the managing agent, without expressly stating that the communication was addressed to the managing agent corporation of the specified mills. Nevertheless, the notice was accompanied by a schedule indicating that the acquisition concerned goods held by the jute mills under the managing agency of the corporation to which the notice was directed, and the schedule named the mills whose managing agents were the addressed corporation. From this, the Court concluded that the notice of acquisition was communicated to the managing agents of the various mills in their capacity as managing agents of the mills identified in the schedule.

In this matter, the notice of acquisition had been addressed to the agents of the various jute mills, each acting in the capacity of managing agent for the mills specifically identified in the accompanying schedule; the Court therefore examined whether such service complied with Rule 75‑A(2). Rule 75‑A(2) stipulated that after requisition of property, the Government could acquire that property by serving a notice upon the owner, indicating the Government’s decision to acquire it. Furthermore, Rule 75‑A(3) provided that once a notice of acquisition was served on the owner, the property would vest in the Government at the start of the day on which the notice was served, free of any mortgage, pledge, lien or similar encumbrance, and the requisition period would consequently cease. Accordingly, sub‑rule (2) required that the notice of acquisition be served upon the owner of the requisitioned property. From these provisions, the Court identified two immediate questions: first, whether the notice had indeed been served on the owner, and second, whether that service had been made in accordance with Rule 75‑A(2). The Court held that if both conditions were satisfied, Rule 75‑A(3) would become operative and the property would vest in the Government as prescribed. The initial inquiry therefore turned on the question of whether, in the present case, the notice had been served upon the owner of the requisitioned goods. The defendants contended that the requisitioned goods did not belong to the mills; rather, they argued that the true owners were the holders of the pucca delivery orders, and because no notice had been served upon those holders, acquisition under Rule 75‑A(3) could not occur. The defendants relied upon the decision in Anglo‑India Jute Mills Co. (1910) I.L.R. 38 Cal. I‑27, wherein it was held that, according to the customary practice of the Calcutta jute trade, pucca delivery orders were issued only upon cash payment, transferred by endorsement from hand to hand, and dealt with in the market as absolute representations of the goods to which they related. On that basis, the defendants urged that ownership of the goods rested with the pucca delivery order holders, not with the mills, even though the goods remained in the mills’ possession at the time the acquisition notices were issued. The Court noted that, for the pucca delivery orders under consideration in these appeals, it was undisputed that although the holders paid for the specified goods, no appropriation of the goods to either the contract or the delivery order had taken place until actual delivery occurred. Nevertheless, despite the lack of such appropriation, the trade regarded the holders of the pucca delivery orders as the owners of the goods specified therein, and, as affirmed in the Anglo‑India Jute Mills Co. case, those pucca delivery orders were transferred from hand to hand by endorsement.

In this matter, the pucca delivery orders were transferred by endorsement and subsequently bought and sold in the market as absolute evidence of the goods to which they referred. The Court therefore examined whether ownership of the goods described by the pucca delivery orders transferred to the persons who possessed those orders at the moment of receipt. The Government of India argued that, according to law, ownership could not pass to the holders of the pucca delivery orders until the goods were specifically appropriated to the particular order. Consequently, because it was undisputed that no goods had been appropriated to the pucca delivery orders in question, ownership remained with the mills. The Union placed reliance on section eighteen of the Indian Sale of Goods Act, 1930, which provides that where a contract involves unascertained goods, no ownership passes to the buyer until the goods become ascertained. The Court noted that, as already established, the goods covered by the pucca delivery orders were unascertained at the time the orders were issued. It further observed that ascertainment occurs only when the goods are appropriated and actually delivered in compliance with the order, as referenced in the 1910 Calcutta case. Accordingly, until such appropriation and delivery occurred, the goods could not be said to be ascertained. The Court therefore concluded that the contract embodied in the pucca delivery orders was a contract for the sale of unascertained goods. It further held that, by operation of section eighteen, ownership of the goods could not transfer to the buyer before they were ascertained through appropriation at the time of delivery.

The appeal court, in the view of the present Court, was correct in holding that the property in the goods covered by the pucca delivery orders had not passed to the holders. It relied on section eighteen of the Sale of Goods Act and rejected the view that the Anglo‑India Jute Mills Co. decision transferred ownership by estoppel. The earlier case decided that, in a suit between a holder of a pucca delivery order—whether the original holder or a subsequent purchaser in the market—and the mills, the mill would be estopped from denying that cash had been paid for the goods to which the delivery order related. It also held that the mill could not deny that it held the goods for the holder of the delivery order. Thus, the Anglo‑India Jute Mills decision merely established the rule that, between the mill and the holder of a pucca delivery order, the mill is prevented by estoppel from contesting the holder’s claim to the goods. However, that rule of estoppel does not mean that ownership in law automatically transferred to the holder at the moment the pucca delivery order was issued, especially when the goods remained unascertained. Consequently, the question before this Court was whether the Government of India could be estopped from asserting its title to the goods under the same principle.

In this matter the Court observed that, according to law, the title to the goods passed to the holder of a pucca delivery order at the moment the order was issued, even though it was not contested that the goods had not been ascertained at that time and that such ascertainment only occurred when the goods were actually appropriated to the delivery order at delivery. The Court agreed with the appellate court that the effect of the decision in Anglo‑India Jute Mills Co. (1) was not to transfer property in the goods by estoppel; rather, that earlier case merely held that, in a dispute between the seller and the holder of a pucca delivery order, the seller could not deny that the holder possessed title to the goods. The earlier judgment, as clarified by Jenkins C.J., did not address the question of ownership at all, but was confined to the principle of estoppel. The present case therefore required an examination of whether the Government of India could be estopped from asserting that title passed to the holders of the pucca delivery orders immediately upon issuance of those orders. The Court noted that, for the issue of title, Section 18 of the Sale of Goods Act made it clear that title had not passed to the holders on 30 September 1946 because the goods remained unascertained until that date, irrespective of any rights the holders might claim in a suit against the mills. The subsequent issue was whether the Government of India was also estopped from challenging the notion that title passed to the holders upon receipt of the delivery orders. Sarkar J. had taken the view that, since the Government was claiming under the mills and had stepped into their position by acquisition, it would be estopped in the same way as the mills. The appellate court, however, held that the Government was not asserting rights through the mills and therefore would not be estopped. The Court concurred with the appellate court, emphasizing that the Government’s acquisition was made under the authority granted by the Defence of India Act and the corresponding Rules, not through any private owner. Rule 75‑A(3) specifies that when a notice of acquisition is served on the owner, the property vests in the Government from the start of that day, free of any mortgage, pledge, lien or similar encumbrance. This provision demonstrates that the Government acquires a paramount title independent of any proprietor’s interest, and not merely the owners’ rights. Consequently, when the Government acts under sub‑rule (2) of Rule 75‑A by serving a notice of its decision to acquire, it obtains the entire property under the statute and does not claim through any other party.

The Court observed that rule 75‑A (3) provides that when a notice of acquisition is served on the owner, the property vests in the Government free from any mortgage, pledge, lien or similar encumbrance. This wording indicates that the Government acquires a paramount title under the statute, not merely a title derived from an individual owner, because a title taken from an owner would not be free of such encumbrances. Consequently, when the Government, under sub‑rule (2) of rule 75‑A, serves a notice of its intention to acquire requisitioned property, it acquires the entire property pursuant to the statutory power and does not claim the property through the mills. In other words, the Government does not acquire only the owners’ rights; it acquires the whole property, free from all encumbrances. What the Defence of India Rules confer upon the Government is not a particular person’s right but the total bundle of rights in the property. Therefore the Government of India, in exercising rule 75‑A (2), does not act as a successor to any private party; it obtains a title that is superior to any private interest and eliminates all existing private rights. As a result, no estoppel can arise against the Government of India in respect of the holders of the pucca delivery orders, because the Government is not stepping into the shoes of the mills but is acquiring a paramount title. While an estoppel may attach to the mills, as indicated by the decision in The Anglo‑India Jute Mills Co. (1), that estoppel does not extend to the Government. Moreover, because the property had not legally passed to the holders of the pucca delivery orders in the present circumstances, it was unnecessary to serve them with notices under rule 75‑A (2); serving notices upon the mills, who were the legal owners, sufficed. The Court further clarified that the Anglo‑India Jute Mills Co. (1) decision remains good law for cases where an issue of estoppel properly arises. Accordingly, the Court concluded that on 30 September 1946 the mills were, in law, the owners of the requisitioned property for which acquisition notices were issued on the same day, and thus the notice required by rule 75‑A (2) needed to be addressed only to the mills. The appeal court had held that strict compliance with the rule’s provisions was essential for effecting ownership transfer and that the notices, not being expressly addressed to the managing agents as managing agents, failed to meet the due‑service requirement of rule 75‑A (2).

In the present case the Court observed that the owners of the various mills had not been served the notice required by rule 75‑A (2) in the proper manner, and consequently the acquisition could not be said to have taken place on the basis of the notices that had been issued. The first issue that the Court addressed was the manner in which a notice must be served under rule 75‑A (2). Rule 75‑A (2) merely provides that a notice of the decision to acquire the property must be served on the owner of that property, except in certain situations that were not relevant to the present dispute. The Attorney‑General, representing the Union of India, argued that a notice issued under rule 75‑A (2) must also be served in the way prescribed by rule 119, and therefore the provisions of rule 119 (1‑B) should govern the service of such a notice. Conversely, counsel for the respondents contended that rule 119 deals with the service of written orders, whereas rule 75‑A (2) does not refer to an order in writing as rule 75‑A (1) does. The Court found it unnecessary to decide whether a notice declaring that the Government had decided to acquire the requisitioned property qualified as a “order in writing” within the meaning of rule 119. Assuming that it was not such an order, the Court still needed to determine the proper method for serving a notice of the kind contemplated by rule 75‑A (2) on a corporate entity.

The Court noted that the appellate court had held that, because rule 75‑A (2) is silent on the mode of service and, in its opinion, rule 119 was inapplicable, the notice had to be served in a “reasonable manner.” Accepting the assumption that rule 119 does not apply, the Court agreed with the appellate court that the service of a notice under rule 75‑A (2) must indeed be carried out reasonably. The Court then examined what would constitute a reasonable manner of service under rule 75‑A (2). For this purpose it referred to two other statutory provisions. The first was section 148 of the Indian Companies Act, 1913, which was then in force. Section 148 states 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 second reference was to Order XXIX, rule 2 of the Code of Civil Procedure, which the Court had already considered. The introductory words of that rule read: “Subject to any statutory provision regulating service of process, where the suit is against a corporation the summons may be served ….” The Court observed that rule 2 of Order XXIX is expressly subject to any specific statutory provision that governs service of process, and therefore any such specific provision must be taken into account when determining the appropriate method of serving a notice under rule 75‑A (2).

The Court observed that Rule 2 of Order XXIX would not be applicable in the present circumstances because the statutory framework provided an alternative method of service. The only other statutory provision that could govern service of documents on a company was Section 148 of the Indian Companies Act of 1913. The Court noted that the language of Section 148 indicated that it was an enabling provision rather than an exclusive rule prescribing a single method of service. Section 148 merely stated that a document could be served on a company by leaving it at, or sending it by post to, the company’s registered office. However, the Court emphasized that the wording did not declare that this was the sole permissible mode nor that service could not be effected in any other manner. The Court reasoned that if Parliament had intended exclusivity, the provision would have been drafted in a markedly different and restrictive way. Consequently, the Court concluded that Section 148 supplied only one enabling option for serving documents on a corporation, leaving room for additional methods. Order XXIX, Rule 2 of the Code of Civil Procedure provided a further method that courts could employ to effect service on a corporation. The Court held that either the mode described in Section 148 of the Companies Act or the mode described in Order XXIX, Rule 2 constituted a reasonable way to serve a company. While Rule 2 applied to suits involving a corporation, the Court observed that proper service in a suit also satisfied reasonable service under Rule 75‑A(2). Accordingly, the Court concluded that notices issued under Rule 75‑A(2) could be served on the mills in the manner authorized by Section 148 of the Companies Act. The Court also held that service could be effected in the manner authorized by Order XXIX, Rule 2 of the Code of Civil Procedure. In this case, the notices under Rule 75‑A(2) were served in accordance with Order XXIX, Rule 2(a) by delivering them to the mills’ principal officer, the managing agents. The Court had previously examined whether the requisition orders addressed to the managing agents had been properly served and had found proper service. The Court could not understand why service that satisfied Rule 2 for the requisition orders would not also be considered good or reasonable service for the acquisition notices. It noted that both sets of documents were served on the same day, one after the other, and were substantially identical. The Court observed that the same defect existed in both communications: the heading naming the managing agent did not explicitly state that it was addressed to “the managing agent of such‑and‑such mill.” Nevertheless, the Court held that the attached schedule made clear that the communication was intended for the managing agents of those mills, both for the purpose of requisition and for the purpose of acquisition.

The appeal court appeared to hold that, although the method of service used was satisfactory for the purpose of requisition, it was not satisfactory for the purpose of acquisition. The court reasoned that, in acquisition matters, strict compliance with the prescribed mode of service was required, and that the heading of the notice should have expressly stated that the managing agents were being addressed as the managing agents of particular mills. The present judgment disagrees with that view of the appeal court. It is held that the service which was deemed adequate for the orders of requisition was equally adequate for the notices of acquisition, because in substance both sets of documents were served in exactly the same way on the principal officer of the mills. In one instance the officer possessed the goods; in the other instance the officer owned the goods. Consequently, the service of the acquisition notices on the managing agents of the mills is deemed effective service on the mills as owners for the purposes of rule 75‑A (2). By reason of that finding, rule 75‑A (3) becomes applicable, and the ownership of the goods transferred to the Government of india on 30 September 1946. Accordingly, the appeal filed by the Union of India is allowed, and a declaration is made that the goods were validly requisitioned and acquired. The orders of requisition and the notices of acquisition are held to be valid and binding on the respective defendants, and the goods identified in those orders vested in the Government of India on 30 September 1946. Regarding costs, the judgment observes that the entire litigation arose from the defect in the form of address of the requisition orders and the acquisition notices. In view of that, each party is ordered to bear its own costs throughout. Civil Appeals Nos. 314 to 316 of 1957 are dismissed, and Civil Appeal No. 778 of 1957 is allowed.