Rustom Cavasjee Cooper (RC COOPER) ……. Petitioner
Senior Counsel Nani Phalkhivala represented RC Cooper.
Union of India …….. Respondent
Attorney General Niren De and Solicitor General Jagdish Swarup represented Union of India.
EQUIVALENT CITATION:- 1970 AIR 564, 1970 SCR (3) 530.
BENCH:- Shah, J.C. & Sikri, S.M., Shelat, J.M. & Bhargava, Vishishtha, Mitter, G.K., & Vaidiyialingam, C.A., Hegde, K.S. & Grover, A.N., Ray, A.N. & Redd, P.J . & Dua, I.D.
YEAR OF JUDGEMENT:- 1970.
In the year 1969 when the government of India nationalized 14 banks of India, RC Cooper at that time had a major share in some of the banks and it affected him and he felt that as an individual his fundamentals rights have been violated, he then filed a writ petition. The government of India decided to nationalize banks in order to make banking available to most parts of India.
In his writ Petition RC Cooper has stated that his fundamental rights were violated, he filed this case not as a shareholder of the bank but as an individual citizen of the country. He said that his fundamental rights under Article 14, Article 13, Article 19 and Article 31 were violated.
This case was filed in the same year when the Government of India introduced an ordinance and nationalized 14 banks of India. This ordinance was brought just before 2 days of the opening of parliament. Many of the persons including the opposition and RC Cooper criticized that why was the government in such a hurry that they could not wait for 2 days. In the year 1969 Indira Gandhi Government bought up an ordinance to nationalize 14 banks of India, their motive was to nationalize banks and to make sure that banking facilities reach every part of India.
In these 14 banks, there were many banks in which RC Cooper was a shareholder, such as Central Bank of India and Bank of Baroda. The government decided to nationalize those banks of which deposit was more than ₹50 Crores. India was still a developing nation at that time India had a very low GDP at that time, it had a good GDP compared to GDP at the time of independence. R.C Cooper said that this ordinance violated his fundamental rights.
Supreme Court said that shareholder and companies does not enjoy the fundamental right, RC Cooper said that his fundamental rights as an individual has been violated. Respondent on their behalf said that Company does not get fundamental rights according to Article 19 which talks about Freedom of trade and commerce. RC Cooper in this case is claiming fundamental rights of the company which is invalid.
RC Cooper again said that I am not claiming my company fundamental rights I am claiming my own fundamental rights. Courts said that any shareholder of the company or the director of the company cannot claim fundamental rights on behalf of the company and cannot file a petition under Article 32 or Article 226 that company fundament rights have been violated. Petitioner also challenged the ordinance, they said that the ordinance made was not a proper one and timing was also not proper.
Supreme Court on this said that Government has the right to make an ordinance, Government has been given this power and they can use it whenever they feel so, surely timing, in this case, was a matter of question but if the power lies with them they can use them whenever they feel so. In Schedule Ⅱ of this ordinance there was a rule regarding the compensation, it will be decided by the government through an agreement and if that agreement fails then that matter will be referred to a tribunal and when the Judgement arrives the compensation will be given after 10 years, 10 years shall be counted from the date of the agreement failed.
This point was the most controversial point in the ordinance and was criticized by most of the people. RC Cooper also challenged this point in his petition. Regarding this point, Supreme Court said that this method of compensation used by the government, in this case, is illogical and has no logic to it and is totally invalid. Petitioner also raised question that this act violated Article 14, Article 19, Article 13 and Article 31. Respondent on their behalf said that this act does not violate any fundamental rights in any way.
Supreme Court said that the government has violated Article 31 because of the compensation decided by the government. Supreme Court also said that the government has also violated Article 14 in this case because the government only nationalized 14 banks and gave their permission to the rest of the banks to work normally. Supreme Court also said that any shareholder or director cannot file a petition that the company fundamental rights have been violated but they can file a petition if the fundamental rights of the shareholder or director is been violated as an individual. These judgements were passed with a majority of 10:1.
PRINCIPLE LAID DOWN
Supreme Court of India said that a person as a shareholder or a director of the company cannot file a petition that his fundamental rights have been violated. Supreme Court laid down the Effect test and overruled the object test.
- Argument source- https://indiankanoon.org/doc/513801/
- Judgement source- https://www.youtube.com/watch?v=1cnnbLAjbgM
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RC COOPER v UNION OF INDIA RC COOPER v UNION OF INDIA RC COOPER v UNION OF INDIA