Chief Justice of India continues ....

Before I had become Chief Justice of India, Dwarkadas Sreenivasan vs. The Directors of the Sholapur Spinning and Weaving mill
Company reached the Court. In 1950, the Supreme Court, while rejecting the application for appropriate remedies by a shareholder, Charanjit Lal, of this company had implied that the Sholapur Spinning and Weaving Company (Emergency Powers) Act, 1950 was constitutional. ‘The legislation’, it was said, ‘related to a company which was engaged in the production of a commodity essential to the community’, and in short supply at that time.

The Government of Bombay advanced considerable sums of money to the Company to keep it in production. The directors made a call on the preference shareholders of the company to pay a further instalment of the unpaid portion of the value of their shares.

The preference shareholders approached the Bombay High Court for protection against this ‘urgent’ demand by directors, who, the preference share-holders claimed had no right to make the call or, for the matter of that, to do anything else in connection with the management of the Company. The Bombay High Court refused to grant them any redress basing its decision on the earlier decision of the Supreme Court in Charanjit Lal’s case. On their approaching the Supreme Court through special leave to appeal, the case came up for decision to the Court.

To be continued...