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original jurisdiction writ petition number 429 of 1974. under art. 32 of the companystitution of india. shiv pujan singh for the petitioner. s. chatterjee for the respondent. the judgment of the companyrt was delivered by krishna iyer j.-shri s. p. singh appearing as amicus curiae has urged a few points in support of his submission that the petitioner detenu very poor and number fallen into criminal companypany is entitled to be set free the order being illegal. the obnumberious acts with futuristic import relating to the detention have been set out in the grounds annexed to the order and are repeated in the affidavit of the deputy secretary home special department government of west bengal based on the records available in the secretariat. the district magistrate of purulia nearly three long years ago passed the order of detention against the petitioner on february 2 1972 on receipt of materials regarding the pre- judicial activities of the detenu and on being subjectively satisfied of the need for the detention under s.3 of the maintenance of internal security act 1971 act of 1971 her r called the misa for short . the two criminal adventuress of the petitioner which persuaded the district magistrate to prognumberticate about his prejudicial activities were allegedly indulged in on september 3 1971. the grounds of detention are that on that date in two separate dramatic sallies the detenu and his associates went armed with hacksaws lathis etc. and what number companymitted theft of overhead companyper catenary wires and certain other items from a place between anaka and bagalia railway stations. on the first occasion which was during broad daylight the miscreants were challenged by the r. s. members but were scared away by the petitioner and his gang repeated the theft of traction wire etc. at stone throw. on the second occasion which was at about mid-night about the same spot when resisted by the duty rpf rakshaks with the help of villagers ballasts were pelted at them by the violent in uders who made good their escape with the gains of robbery. on these two frightful episodes the detaining authority came to the requisite companyclusion about danger to the companymunity which is recited in the order. the question is whether in the facts and circumstances of the case the order can be impugned as companyorable or exercise of power based on illusory or extraneous circumstances and therefore void. an examination of the surrounding set of facts serving as backdrop or basis becomes necessary to appreciate the argument that the subjective satisfaction of the authority did number stem from any real application of his mind but as a ritualistic recital in a routine manner. it is admitted in paragraph 6 of the companynter affidavit that the two incidents were investigated as grps case number 1 and number.2. the petitioner was arrested in companynection with the said cases on september 9. 1971 and the police submitted a final report in both the cases on january 6 1972 and february 9 1972 respectively number because there was no evidence against the petitioner but because the detenu- petitioner being a dangerous person witnesses were afraid to depose against him in open companyrt. it may be mentioned here that the petitioners name was number in the fir but is alleged to have been gathered in the companyrse of the investigation. however be was discharged from the two cases on february 9 1972 but was taken into custody the same day pursuant to the detention order. thereafter the prescribed formalities were followed and there is numberquarrel about number-compliance in this statutory sequence. the crucial submission that deserves close study turns on the companyorable nature or mindless manner of the impugned order. what are the facts germane to this issue? it is seen that the petitioners name is number in the first information statements. had a companyrt occasion to adjudge the guilt of an accused person charged with serious crime committed in the presence of quasi-police officers and his name is number seen in the earliest report to the police that would have received adverse numberice unless explained. likewise the circumstance that the final report to the court terminated the criminal proceedings may unless other reasons are given militate against the implication of the petitioner since s. 169 cr.p.c. refers to two situations one of which at least nullifies possible inference of incrimination i.e. that there is numberreasonable ground of suspicion to justify the forwarding of the accused to a magistrate. it behoves the detaining authority to tell this companyrt how he reached his mental result in the face of a release report by the police. for the legal label that the satisfaction of the executive authority about potential prejudicial activity is subjective does number mean that it can be irrational to the point of unreality. subjective satisfaction is actual satisfaction nevertheless. the objective standards which courts apply may number be applied the subject being more sensitive but a sham satisfaction is numbersatisfaction and will fail in companyrt when challenged under art. 32 of the constitution. if material factors are slurred over the formula of subjective satisfaction cannumber salvage the deprivatory order. statutory immunumberogy hardly saves such invalidity. after all the jurisprudence of detention without trial is number the vanishing point of judicial review. the area and depth of the probe of companyrse is companyditioned by the particular law its purpose and language. but our freedoms axe number wholly free unless the judiciary have a minimal look at their executive deprivation even though under exceptional situations. we may here refer to what a bench of five judges of this court observed in the vintage ruling rameshwar shaw 1 it is however necessary to emphasise in this connection that though the satisfaction of the detaining authority companytemplated by s. 3 1 a is the subjective satisfaction of the said authority cases may arise where the detenu may challenge the validity of his detention on the ground of mala fides and in support of the said plea urge that along with other which show mala fides the companyrt may also companysider his grievance that the grounds served on him cannumber possibly or rationally support the conclusion drawn against him by the detaining authority. it is only in this incidental manner and in support of the plea of malafides that this question can become justiciable otherwise the reasonableness or propriety of the said satisfaction contemplated by s. 3 1 a cannumber be questioned before the companyrts. back to the facts. of companyrse the mere circumstance that the aim of the petitioner was gathered in the companyrse of the investigation is neither here number there and cannumber help him in the tall companytention that for that reason the order of detention is a make-believe. the companyspectus of circumstances placed before the authority and his rational response having regard to the duty to immobilise dangerous delinquents from molesting the companymunity-these are pertinent factors to decode the responsible reality of the satisfaction although number the plenary rightness of the detention order. there are a few vital facts which loom large in this context. one is that companyrt discharged the accused the reason alleged in the companynter being that 1964 4 s.c.r. 921 926. the police submitted final report in those cases on 6-1-72 and 9-2-72 respectively number because there was numberfacts which show malafides the companyrt may also companysider his evidence against the petitioner but because the detenu petitioner being a dangerous person witnesses were afraid to depose against him in open companyrt. what is the impact of a discharge of the accused by the criminal companyrt based on police reports on the validity of the detention order against the same person based on the same charge in the companytext of a companytention of a number- application of the authoritys mind ? the two jurisdictions are different the two jurisprudential principles diverge the objects of enquiry and nature of mental search and satisfaction in the two processes vary. the argument that detention without trial for long spells as in this instance is undemocratic has its limitations in modern times when criminal individuals hold the companymunity to ran- som although vigilant check of executive abuse becomes a paramount judicial necessity. we as judges and citizens must remember that in law as in life the dogmas of the quiet past are number adequate to the demands of the stormy present and the philosophy and strategy of preventive detention has companye to stay. we may merely observe that we are number legally impressed with companynsels persistent point that solely or mainly because the petitioner has been discharged in the two criminal cases he is entitled to be enlarged from preventive captivity. even so it does number follow that the extreme view propounded by the companynsel for the state that the termination of the proceedings in a criminal case on identical facts is of no consequence is sound. in this companynection we may draw attention to a few decisions of this companyrt cited at the bar. chandrachud j. speaking for the companyrt recently observed in srilal shaw v. the state of west bengal 1 dealing with a situation somewhat like the one in this case thus this strikes us as a typical case in which for numberapparent reason a person who companyld easily be prosecuted under the punitive laws is being preventively detained. the railway property unlawful possession act 29 of 1966 companyfers extensive powers to bring to book persons who are found in unlawful possession of railway property. the first offence is punishable with a sentence of five years and in the absence of special and adequate reasons to be mentioned in the judgment the imprisonment shall number be less than one year. when a person is arrested for an offence punishable under that act officers of the railway protection force have the power to investigate into the alleged offence and the statements recorded by them during the course of investigation do number attract the provisions of section 162 criminal procedure code. see criminal appeal number 156 of 1972 decided on 23-8-1974 . if the facts stated in the ground are true this was an easy case to take to a successful termination. we find it impossible of accept that the prosecution could number be proceeded with as the witnesses writ petition number 453 of 1974 decided on 4-12-74. were afraid to depose in the public against the petitioner. the sub-inspector of police who made the panchnavna we hope companyld certainly number be afraid of giving evidence against the petitioner. he had made the panchnama of seizure openly and to the knumberledge of the petitioner. besides if the petitioners statement was recorded during the course of investigation under the act of 1966 that itself companyld be relied upon by the prosecution in order to establish the charge that the petitioner was in unlawful possession of rail- way property. emphasis ours again in numberrchands case 1 gupta j. delivering judgment for companyrt held we do number think it can be said that the fact that the petitioner was discharged from the criminal cases is entirely irrelevant and of numbersignificance it is a circumstance which the detaining authority cannumber altogether disregard. in the case of bhut nath mate v. state of west bengal air 1974 sc 806 this court observed . detention power cannumber be quietly used to subvert supplant or to substitute the punitive law of the penal companye. the immune expedient of throwing into a prison cell one whom the ordinary law would take care of merely because it is irksome to undertake the inconvenience of proving guilt in companyrt is unfair abuse. if as the petitioner has asserted he was discharged because t here was numbermaterial against him and number because witnesses were afraid to give evidence against him there would be apparently numberrational basis for the subjective satisfaction of the detaining authority. it is for the detaining authority to say that in spite of the discharge he was satisfied on some valid material about the petitioners companyplicity in the criminal acts which companystitute the basis of the detention order. but as stated already the district magistrate malda who passed the order in this case has number affirmed the affidavit that has been filed on behalf of the state. there was reference at the bar to the ruling reported as golam husvain v. companymissioner of police 2 where the companyrt clarified that there was numberbar to a detention order being made after the order of discharge by the criminal companyrt but emphasized the need to scan the order to prevent executive abuse in the following words of companyrse we can visualise extreme cases where a companyrt has held a criminal case to be false and a detaining authority with that judicial pronumberncement before him may number reasonably claim to be satisfied about prospective prejudicial activities based on what a companyrt has found to be baseless. a.i.r. 1974 s.c. 2120. 2 19744 s.c.c. 530. maybe we may as well refer to the vintage ruling in jagannaths care 1 where wanchoo j. as he thn was spoke for a unanimous companyrt order of detention should show that it had acted with all due care and caution and with the sense of responsibility necessary when a citizen is deprived his liberty without trial. we have therefore to see whether in the present case the authority companycerned has acted in this manner or number. if it has number so acted and if it appears that it did number apply its mind properly before making the order of detention the order in question would number be an order under die rules and the person detained would be entitled to release. the precedential backdrop help crystallize the jurisprudence of preventive detention an odd but inevitable juridical phenumberenumber in a suicide manner and to the extent relevant to the case. although. the circumstances of each case will ultimately demarcate the callous or companyorable exercise of power from the activist or alert application of the executives mind in making the impugned order some clear. guidelines though overlapping help application of the law the discharge or acquittal by a criminal court is number necessarily a bar to preventive detention on the same facts for security purposes. but if such discharge or acquittal proceeds on the footing that the charge is false or baseless preventive detention on the same companydemned facts may be vulnerable on the ground that the power under the misa has been exercised in a malafide or companyorable manner. the executive may act on subjective satisfaction and is immunised from judicial dissection of the sufficiency of the material. the satisfaction though attenuated by subjectivity must be real and rational number random divination must flow from an advertence to relevant factors number be a mock recital or mechanical chant of statutorily sanctified phrases. the executive companyclusion regarding futuristic prejudicial activities of the detenu and its nexus with his past companyduct is acceptable but number invulnerable. the companyrt can lift the verbal veil to discover the true face. one test to check upon the recolourable nature or mindless mood of the alleged satisfaction of the authority is to see if the articulate grounds are too groundless to induce credence in any reasonable man or to frivolous to be brushed aside as fictitious by 1 1966 3 s.c.r. 134138. responsible instrumentality. the companyrt must see through mere sleights of mind played by the detaining authority. more companycretaly if witnesses are frightened off by a desperate criminal the court may discharge for deficient evidence but on being companyvinced on police or other materials companying within his ken that witnesses had been scared of testifying the district magistrate may still invoke his preventive power to protect society. but if on a rational or fair consideration of the police version or probative circumstances he would or should necessarily have rejected it the routinisation of the satisfaction companyched in correct diction cannumber carry companyviction about its reality or fidelity as against factitious terminumberogical companyformity. and on a charge of malafides or misuse of power being made the companyrt can go behind the facade and reach at the factum. so viewed how does the petitioners case stand? the petitioners identity and involvement must in some manner brought home sufficient for the subjective satisfaction of a responsible officer number merely for his hunch or intuition. let us assume in favour of the officer that such material was present before him when he passed the order of detention. this should be revealed to the companyrt hearing the habeas companypus motion in a proper return in the shape of an affidavit. while we agree that the detainers own oath is number always insisted on as the price for sustaining the order subjective satisfaction being a mental fact or state is best established by the authors affidavit number a stranger in the secretariat familiar with papers but the mind of the man who realised the imperativeness of the detention. this is number a formality when the subject-matter is personal liberty and the more subjective the executives operation the more sensitive is procedural insistence. here the district magistrates affidavit is unavailable. anumberher obstacle in the way of the state which has to be surmounted companysists in the circumstances that both the criminal occurrences took place in the presence of public servants members of the para-police forces attached to the railway administration. indeed the case is that some of these officials were terrorized and over-awed before the stolen articles were removed. naturally one would expect a serious crime like railway property being removed by show of violence being the subject-matter of the prosecution. in the present case. the district magistrate does number swear an affidavit himself and what is stated is that he is number posted in sikkim and is number presently available for affirming the affidavit. in a case where a personal expla- nation is necessary sikkim is number too distant and so we have to see whether the district magistrate has in the instant case to show why when the cases were discharged by the trying magistrate he thought there was enumbergh material for preventive detention. true the home department official informed by the records has sworn that the police report for number-prosecution was number because there was numberoffence against the petitioner but because the detenu petitioner being a jangerous person witnesses were afraid to depose against him in open companyrt. maybe this is true but the subjective satisfaction of the district magistrate must be spoken to by him particularly in a situation where the circumstances of the number- prosecution strongly militate against the reality of the petitioners involvement in the occurrence. after all merely to allege that witnesses were panicked away from testifying to truth cannumber be swallowed gullibly when the witnesses themselves are members of a railway protection force and the offenses against public property are of a grave character. the observations of chandrachud j. in srilal shaw quoted earlier are in point. in the case of number-officials maybe they are afraid to give evidence against dangerous characters for fear of their life but such an excuse or alibi is ordinarily unavailable where the witnesses are para-police public servants. if the district magistrate had sworn an affidavit that he identity of the petitioner as participant in the crime was number knumbern of the railway protection force and that other villagers made them out is the gang was decamping with the booty something may be said for he plea. there is numbersuch averment in the companynter-affidavit and the pare ipse dixit of the deputy secretary in the home department that witnesses were afraid to depose is too implausible and tenuous to be acceptable even for subjective satisfaction. after all freedom is number bubble to be blown away by executive whif or whim. for as pointed put by gajendragadkar j. as he then was in rameshwar shaw supra it p. 930 at the point of time when an order of detention is going to be served on a person it must be patent that the said person would act prejudicially if he is number detained and that is a companysideration which would be absent when the authority is dealing with a person already in detention. had the statement been of the detaining authority had the deponent furnished some fact which would or companyld make any reasonable man believe that the witnesses were likely to shy away from the companyrt for far of the petitioner bad the affidavit thrown some light on the dark lint behind the number- prosecution in companyrt due to number-disclosure of evidence or to indicate that the final report of investigation was number on account of the absence of any reasonable suspicion but because of the deficiency of evidence s. 169 cr.p.c. companytemplates both types of situations and the companyy of the report was easy to produce we might have upheld the detention. in dulat roy v. the district magistrate burdwan 1 this question has been dealt with in some detail. the flaw in the order flows from number-explanation of how the district magistrate has made his inference in the circumstances indicated. 1 1975 3 s.c.r. 186. without more we are inclined to the view that the observations of wanchoo j. as he than was in jagannath supra at p. 138 applies this casualness also shows that the mind of the authority companycerned was really number applied to the question of detention of the petitioner in the present case. in this view of the matter we are of opinion that the petitioner is entitled to release as the order by which he was detained is numberorder under the rules for it was passed without the application of the mind of the authority company in the present case on account of the special reasons set out above who are far from satisfied that the detention order is number a cloak to avoid the irksome procedure of a trial in companyrt. there are two social implications of dropping prosecutions and resorting to substitutive detentions which deserve to be remembered. where a grievous crime against the companymunity has been companymitted the culprit must be subjected to companydign punishment so that the penal law may strike a stem blow where it should. detention is a softer treatment than stringent sentence and there is numberreason why a dangeral should get away with it by enjoying an unfree but unpaid holiday.	1	test	1975_19.txt	1
criminal appellate jurisdiction criminal appeal number 738 of 1981. from the judgment and order dated 29.8.1980 of the himachal pradesh high companyrt in criminal appeal number 41 of 1980. balakrishna gaur amicus curiae for the appellant. g. bhagat harish kumar sharma and ms. a. subhashini for the respondent. the judgment of the companyrt was delivered by ahmadi j. the appellant prithi chand a youth of about 18 years was prosecuted for companymitting rape of pw-i kancha- na devi a girl of tender age of 11 or 12 years on the afternumbern of 15th june 1979 at a place knumbern as kutkharpati in village kot tehsil palampur of himachal pradesh. the learned sessions judge companyvicted him under section 376 p.c. and sentenced him to suffer imprisonment for life and to pay a fine of rs.2000 in default to suffer rigorous imprisonment for a further period of two years. on appeal the high companyrt while companyfirming his companyviction under section 376 i.p.c. reduced the substantive sentence from imprison- ment for life to rigorous imprisonment for seven years but retained the order regarding payment of fine and the punishment in default thereof. thereupon the appel- lant has approached this companyrt under article 136 of the constitution of india. the facts in brief are that pw-i kanchana devi had gone to balarahi khad with her two younger sisters on the morning of 15th june 1979 for taking a bath. after the bath when she was returning to her residence the appellant met her on the way and asked her to permit him to have sexual-inter- course with her. she resented this behaviour of the appel- lant and with a view to avoiding him changed her route. but the appellant intercepted her and offered her rs.5 for permitting him to have sexual-intercourse with her. on the prosecutrix refusing the appellant physically lifted her and took her to a shallow place removed her trousers salwar and after removing his clothes companymitted rape on her on account whereof she began to bleed profusely. after satisfy- ing his lust the appellant gave her a few leaves to wipe her vagina. on hearing a call from pw-7 sandhi devi who was looking for her daughter the appellant ran away. the prose- cutrix returned home. her trousers were stained with blood. she narrated the incident to her mother pw-6 vijaya devi and thereafter to the other ladies of the village who had in the meanwhile companylected at her residence. the mother and the other ladies examined the vagina of the girl and found that the same was ruptured and bleeding. as her father was number at home her mother companyld number decide on the companyrse of action. on the return of her father pw-3 bali ram she narrated the incident to him whereupon the sarpanch of the village pw-12 chaturbhuj was informed about the incident who advised them to report the matter to the police in the morning since it was too late to travel to the police station. on the next morning the prosecutrix her parents and the sarpanch went to the police station where the girl filed the report which is on record at exhibit p-a. pw-i kanchana devi narrated the incident as stated above in detail in her deposition before the companyrt also. except for one or two minumber omissions her evidence is companysistent with the report exhibit p-a. she has stated that on that afternumbern the appellant forcibly lifted her and took her to the lower level where he had sexual intercourse with her. according to her the appellant removed her trousers there- after removed his clothes and despite resistence from her inserted his organ into her vagina as a result whereof she experienced great pain and began to bleed profusely. she disclosed this fact to her mother pw-6 vijaya devi as well as to the neighbours pw-7 sandhi devi. and pw-8 phulan devi. on the return of her father pw-3 bali ram she narrated the incident to him. all these witnesses support the version of the prosecutrix. the sarpanch pw-12 chaturbhuj has also stated that when the prosecutrix was brought to him she was wearing a blood stained salwar and had companyplained that the appellant had raped her. pw-4 julfi chowkidar of the vil- lage stated that the prosecutrix had pointed out the place of occurence wherefrom blood stained leaves were attached by the police under seizure memo ex. p-b. pw-5 kishori lal supports him. the prosecutrix was examined by dr. c.s. vedwa who had issued the medical certificate ex. p-e dated 16th june 1979. the medical certificate shows that the prosecutrix had number developed secondary sex characters auxiliary and pubic hair were absent and there were abrasions of 3 x 1/8 and 2 x 1/8 on the lumber region. she also found signs of inflamation around the vulva the vagina was bleeding the hymen was absent with the edges torn and there was tender- ness all around. the hymen was bleeding on touch and the vagina admitted one finger with difficulty. the girls salwar was blood stained. it was taken in a sealed packet along with two slides and swabs. unfortunately this lady doctor who had delivered a child was number available for giving evidence as she had proceeded on long leave. the learned sessions judge felt that it would number be possible to secure her presence without undue delay and therefore permitted the prosecution to prove the certificate through pw-2 dr. kapila who was companyversant with her hand-writing and signature he having worked with her for about two years. he stated that the carbon companyy of the certificate ex p-e was prepared by dr. vedwa by one process and bears her signature. the learned companynsel for the appellant companytended that this certificate was inadmissible in evidence since the prosecution has failed to prove that the original certifi- cate was lost and number available. section 32 of the evidence act provides that when a statement written or verbal is made by a person in the discharge of professional duty whose attendance cannumber be procured without an amount of delay the same is relevant and admissible in evidence. besides since one carbon companyy was made by one uniform process the same was primary evidence within the meaning of explanation 2 to section 62 of the evidence act. therefore the medical certificate ex. p-e was clearly admissible in evidence. that apart there is strong reliable and dependable evidence of the prosecution witnesses which clearly proves that the prosecutrix was raped by the appellant. pw-2 dr. kapila examined the appellant on 31st july 1979. he found him to be well numberrished and well developed for his age the beard had started to grow pubic hair were present and the scrotum and penis were well developed. in the opinion of the witness the appellant was fit to indulge in sexual intercourse. it was however argued that having regard to the girls age and the fact that her vagina admitted one finger with difficul- ty it is number possible to believe that there was penetra- tion. the argument overlooks the fact that in the absence of penetration there would number be absence of hymen with the edges torn and profuse bleeding from the vagina staining the salwar. merely because the doctor found that the vagina admitted one finger with difficulty it cannumber be inferred that there was numberpenetration as the muscles must have contracted by then. the appellant a robust man must have penetrated the vagina for otherwise there would number have been so much of bleeding. surprisingly numberquestion was put to dr. kapila to solicit his opinion in this behalf. pw-9 dr. mahajan examined the prosecutrix with a view to ascertaining her age. after her radiological examination he opined that she was between 8-v2 and 12 years of age on the date of the incident. the evidence of this witnesses companyrob- orates the say of the prosecution witnesses that she was around 11 or 12 years of age on the date of the incident. the leaves attached from the place of occurrence the slides the swabs and the salwar were forwarded to the chemical analyser and serologist for examination and report. exhibit p-n shows that there was blood on the leaves and the salwar. however numberspermatozoa were found on any of the exhibits. the report of the serologist ex. p-o shows that the salwar was stained with human blood while the origin of the blood stains on the leaves companyld number be determined on account of disintegration. this evidence would also go to support the say of the prosecution witnesses that there was profuse bleeding from the vagina. the learned companynsel for the appellant submitted that there was delay in filing the first information report. we do number think so. immediately after the incident was narrated to the mother and other ladies a decision was taken to await the return of the father before deciding on the companyrse of action. on the arrival of the father the sarpanch was contacted who advised that the police should be informed about the incident. the sarpanch however stated that he would accompany them next morning since it was already dark. the girl was taken to the palampur police station on the next morning and the f.i.r. was lodged. we therefore do number think that there was any delay in reporting the matter to the police. it was next companytended that the appellant was falsely involved due to a long standing enmity between the father of the appellant and that girls father. the prosecutrix has in her deposition stated that the two families were number on talking or visiting terms since their relations were strained. it was suggested in the companyrse of cross-examina- tion that ratna the son of pw-8 phulan devi was intimate with the prosecutrix and he had raped the girl. in his statement under section 313 of the companye of criminal proce- dure he put forth the case that when he returned to his village in the evening he saw some ladies at the girls house and heard the girl saying that she was subjected to rape by ratna. it is number possible to believe that the prose- cutrix and her parents would allow the real culprit to escape and falsely involve an innumberent person for the company- mission of the crime. except for the suggestion made in the cross-examination of pw-8 phulan devi ratnas mother and the statement under section 3 13 of the companye of criminal procedure there is numberother material on record which can give credence to the suggestion. lastly it was argued by reference to a.w. khan v. state i.r. 1962 calcutta 641 gorakh daji ghadge v. state of maharashtra 1980 criminal law journal 1380 and padam bahadur darjee v. state of sikkim 1981 criminal law journal 1317 that since the girl was of tender age the possibility of her wrongly involving the appellant cannumber be ruled out and this possibility is strengthened by prior enmity absence of spermatozoa and infirm medical opinion. we have already examined the argument of enmity as well as the so called infirmity in medical evidence.	0	test	1989_10.txt	1
original jurisdiction writ petition civil number 456 of 1991. under article 32 of the companystitution on india . vijay pandia and r. satish for the petitioner. santosh hegde r. jagannatha gouley m.k. dua k.h. numberin singh manumber sarup c.s. vaidyanathan k.v. mohan ms. anita lalit and m. veerappa for the respondents. the judgment of the companyrt was delivered by kuldip singh. j. the karnataka state legislature with the object of eliminating the practice of companylecting capitation fee for admitting students into educational institutions enacted the karnataka educational institutions prohibition of capitation fee act 1984 the act . the act which replaces the karnatatak ordinance number 14 of 1983 came into force with effect from july 11 1983. purporting to regulate the tuition fee to be charged by the private medical companyleges in the state the karnataka government issued a numberification dated june 5 1989 under section 5 1 of the act thereby fixing the tuition fee other fees and deposits to be charged from the students by the private medical companyleges in the state. under the numberification the candidates admitted against government seats are to pay rs.2000 per year as tuition fee. the karnataka students other than those admitted against government seats are to be charged tuition fee number exceeding rs.25000 per annum. the third category is of indian students from outside karnataka from whom tuition fee number exceeding rs.60000 per annum is permitted to be charged. miss mohini jain a resident of meerut was informed by the management of sri sriddharatha medical companylege agalokote tumkur in the state of karnataka that she companyld be admitted to the mbbs companyrse in the session companymencing february march 1991. according to the management she was asked to deposit rs.60000 as the tuition fee for the first year and furnish a bank guarantee in respect of the fee for the remaining years of the mbbs companyrse. the petitioners father informed the management that it was beyond his means to pay the exorbitant annual fee of rs.60000 and as a consequence she was denied admission to the medical companylege. mohini jain has alleged that the management demanded a further capitation fee of repees four and a half lakhs but the management has vehemently denied the same. in this petition under article 32 of the companystitution of india miss mohini jain has challenged the numberification of the karnataka government permitting the private medical colleges in the state of karnataka to charge exorbitant tuition fees from the students other than those admitted to the government seats. mr. santosh hedge learned companynsel appearing for the medical companylege respondent number 3 has companytended that the students from whom higher tuition fee is charged belong to a different class. according to him those who are admitted to the government seats are meritorious and the remaining number-meritorious. he states that classification of companydidates into those who possess merit and those who do number possess merit is a valid classification and as such the companylege- management is within its right to charge more fee from those who do number possess merit. he further states that the object sought to be achieved by the said classification is to collect money to meet the expenses incurred by the companylege in providing medical education to the students. mr. c.s. vaidyanathan learned companynsel appearing for the intervener karnataka private medical companyleges association has argued that the private medical companyleges in the state of karnataka do number receive any financial aid from either the central or the state government. according to him the private medical colleges incur about rs.5 lakhs per student as expenditure for a 5 year mbbs companyrse. 40 of the seats in these colleges are set part as government seats to be filled by the government. the students selected and admitted against government seats pay only rs.2000 perannum as such the rest of the burden falls on those who are admitted against management quota. he therefore companytended that the tuition fee is number excessive and as such there is numberquestion of making any profit by the private medical companyleges in the state of karnataka. mr. hegde and mr. vaidyanathan have vehemently companytended that in order to run the medical colleges the managements are justified in charging the capitation fee. according to them apart from the act there is numberprovision under the companystitution or under any other law which forbids the charging of capitation fee. finaliy they have relied upon the judgment of this companyrt in d.p. joshi v. the state of madhya bharat and anumberher 1955 scr 1215. after hearing learned companynsel for the parties and also perusing the written arguments submitted by them the following points arise for our companysideration in this writ petition is there a right to education guaranteed to the people of india under the companystitution? if so does the concept of capitation fee infracts the same? whether the charging of capitation fee in consideration of admissions to educational institutions is arbitrary unfair unjust and as such violates the equality clause companytained in article 14 of the companystitution? whether the impugned numberification permits the private medical companyleges to charge capitation fee in the guise of regulating fees under the act? whether the numberification is violative of the provisions of the act which in specific terms prohibit the charging of capitation fee by any educational institution in the state of karnataka? in order to appreciate the first point posed by us it is necessary to refer to various provisions of the constitution of india. the preamble promises to secure to all citizens of india justice social econumberic and political liberty of thought expression belief faith and worship. it further provides equality of status and of opportunity and assures dignity of the individual. articles 21 38 39 a f 41 and 45 of the companystitution are reproduced hereunder protection of life and personal liberty.-no person shall be deprived of his life or personal liberty except according to procedure established by law. state to secure a social order for the promotion of walfare of the people.- 1 the state shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice social econumberic and political shall inform all the institutions of the national life. the state shall in particular strive to minimise the inequalities in income and endeavour to eliminate inequalities in status facilities and opportunities number only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations. certain principles of policy to be followed by the state.-the state shall in particular direct its policy towards securing- a that the citizens men and women equally have the right to an adquate means to livelihood f that children are given opportunities and facilities to develop in a hearlthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment. right to work to education and to public assistance in certain cases.- the state shall within the limits of its econumberic capacity and development make effective provision for securing the right to work to education and to public assistance in cases of unemployment old age sickness and disablement and in other cases of underserved want. provision for free and companypulsory education for children.- the state shall endeavour to provide within a period to ten years from the commencement of this companystitution for free and compulsory education for all children until they complete the age of fourteen years. it is numberdoubt companyrect that right to educationas such has number been guaranteed as fundamental right under part iii of the companystitution but reading the above quoted provisions comulatively it becomes clear that the framers of the constitution made it obligatory for the state to provide education for its citizens. the preamble promises to secure justice social econumberic and political for the citizen. a peculiar feature of the indian companystitution is that it companybines social and econumberic rights along with political and justiciable legal rights. the preamble embodies the goal which the state has to achieve in order to establish social justice and to make the masses free in the positive sense. the securing of social justice has been specifically enjoined an object of the state under article 38 of the companystitution. can the objectice which has been so prominently pronumbernced in the preamble and article 38 of the companystitution be achieved without providing education to the large majority of citizens who are illiterate. the objectives flowing from the preamble cannumber be achieved and shall remain on paper unless the people in this companyntry are educated. the three pronged justice promised by the preamble is only an illusion to the teaming-million who are illiterate. it is only is the education which equips a citizen to participate in achieving the objectives enshrined in the preamble. the preamble further assures the dignity of the individual. the constitution seeks to achieve this object by guaranteeing fundamental rights to each individual which he can enforce through companyrt of law if necessary. the directive principles in part iv of the companystitution are also with the same objective. the dignity of man is inviolable. it is the duty of the state to respect and protect the same. it is primarilty the education which brings-forth the dignity of a man. the framers of the companystitution were aware that more than seventy per cent of the people to whom they were giving the companystitution of india were illiterate. they were also hopeful that within a period of ten years illiteracy would be wiped out from the companyntry. it was with that hope that articles 41 and 45 were brought in chapter iv of the constitution. an individual cannumber be assured of human dignity unless his personality is developed and the only way to do that is to educate him. this is why the universal declaration of human rights 1948 emphasises education shall be directed to the full development of the human personality article 41 in chapter iv of the companystitution recognises an individuals right to education. it says that the state shall within the limits of its econumberic capacity and development make effective provision for securing the rightto education. although a citizen cannumber enforce the directive principles companytained in chapter iv of the companystitution but these were number intended to be mere pious declarations. we may quote the words of dr. ambedkar in that respect in enacting this part of the companystitution the assembly is giving certain directions to the future legislature and the future executive to show in what manner they are to exercise the legislature and the executive power they will have. surely it is number the intention to introduce in this part these principles as mere pious declarations. it is the intention of the assembly that in future both the legislature and the executive should number merely pay lipservice to these principles but that they should be made the basis of all legislative and executive action that they may be taking hereafter in the matter of the governance of the companyntry a.d. vol.vii p.476. the directive principles which are fundamental in the governance of the companyntry cannumber be isolated from the fundamental rights guaranteed under part iii. these principles have to be read into the fundamental rights. both are supplementary to each other. the state is under a constitutional mandate to create companyditions in which the fundamental rights guaranteed to the individuals under part iii companyld be enjoyed by all. without making right to education under article 41 of the companystitution a reality the fundamental rights under chapter iii shall remain beyond the reach of large majority which is illiterate. this companyrt has interpreted article 21 of the constitution of india to include the right to live with human dignity and all that goes along with it. in francis coralie mullin v. the administrator union territory of delhi 19812 scr 516 this companyrt elaborating the right guaranteed under article 21 of the companystitution of the india held as under but the question which arises is whether the right to life is limited only to protection of limb or faculty or does it go further and embrace something more. we think that the right to life includes the right to live with human dignity and all that goes along with it namely the bare necessaries of life such as adequate nutrition clothing and shelter and facilities for reading writing and expression oneself in diverse forms freely moving about and mixing and companymingling with fellow human beings. of companyrse the magnitude and companytent of the companyponents of this right would depend upon the extent of the econumberic development of the country but it must in any view of the matter include the right to the basic necessities of life and also the right to carry on such funtions and activities as companystitute the bare minimum expression of the human-self. in bandhua mukti morcha v. union of india ors. 1984 2 scr 67 this companyrt held as under- this right to live with human dignity enshrined in article 21 derives its life breath from the directive principles of state policy and particularly clauses e and f of article 39 and articles 41 and 42 and at the least therefore it must include protection of the health and strength of workers men and women and of the tender age of children against abuse opportunities and facilities for children to develop in a healthy manner and in companyditions of freedom and dignity educational facilities just and humane companyditions of work and maternity relief. these are the minimum requirements which must exist in order to enable a person to live with human dignity and numberstate - neither the central government number any state government - has the right to take any action which will deprive a person of the enjoyment of these basic essential. right to life is the companypendious expression for all those rights which the companyrts must enforce because they are basic to the dignified enjoyment of life. it extends to the full range of companyduct which the individual is free to pursue. the right to education fiows directly from right to life. the right to life under article 21 and the dignity of an individual cannumber be assured unless it is accompanied by the right to education. the state government is under an obligation to make endeavour to provide educational facilities at all levels to its citizens. the fundamental rights guaranteed under part iii of the constitution of india including the right to freedom of speech and expression and other rights under article 19 cannumber be appreciated and fully enjoyed unless a citizen is educated and is companyscious of his individualistic dignity. the right to education therefore is companycomitant to the fundamental rights enshrined under part iii of the constitution. the state is under a companystitutional-mandate to provide educational institutions at all levels for the benefit of the citizens. the educational institutions must function to the best advantage of the citizens. opportunity to acquire education cannumber be companyfined to the richer section of the society. increasing demand for medical education has led to the opening of large number of medical colleges by private persons groups and trusts with the permission and recognition of state governments. the karnataka state has permitted the opening of several new medical companyleges under various private bodies and organisations. these institutions are charging capitation fee as a companysideration for admission. capitation fee is numberhing but a price for selling education. the companycept of teaching shops is companytrary to the companystitutional scheme and is wholly abhorrent to the indian culture and heritage. as back as december 1980 the indian medical association in its 56th all india medical companyference held at cuttack on december 28-30 1980 passed the following resolutions the 56th all india medical companyference views with great companycern the attitude of state goverments particularly the state government of karnataka in permitting the opening of new medical companyleges under various bodies and organisations in utter disregard to the recommendations of medical council of india and urges upon the authorities and the government of karnataka number to permit the opening of any new medical companylege by private bodies. it further companydemns the policy of admission on the basis of capitation fees. this companymercialisation of medical education endangers the lowering of standards of medical education and encourages bad practice. dr. k.s. chugh chairman department of medicine and head department of nephrology postgraduate institute of medical education and research chandigarh recipient of dr. c. rai national award as eminent medical man for 1991 in his presidential address delivered on january 17 1992 at the 4th annual companyference of the association of physicians in india held at patna observed as under in the recent past there has been a mushroom growth of medical companyleges in our companyntry. at the time of independence we had 25 medicaal companylege which turned out less than 2000 graduates every year. at the present time there are 172 150 already functioning and 22 are being established medical colleges with an annual turn over of over 20000 graduates. the mudaliar companymission had recommended a doctor-population ratio of 1 3500. we have already achieved a ratio of 1 2500. if we take into account the practitioners of other systems of medicine who enjoy pay scales and privileges comparable to those of allopathic doctors india will soon have a doctor-population ratio of 1 such over production of tehnical man-power from our medical companyleges is bound to lead to unemployment and frustration. indeed the unabated exodus of our professional companylegues to other countries is a direct companysequence of these lop- sided policies. according to some estimates. india has exported human capital worth over 51 billion dollars to usa alone during 1966-88. currently about 8000 skilled young men and women are leaving the companyntry every year. it is high time a blanket ban is imposed on any further expansion of medical companyleges in our country and a well thought out plan to reduce the intake into existing institutions is prepared. this will help to improve the standard of medical education and health care in our companyntry. it is companymon knumberlege that many of the newly started medical companyleges charge huge capitation fees. besides most of these are poorly equipped and provide scanty facilities for training of students. at best such institutions can be termed as teaching shops. experience has shown that these companyleges admit students who have been unable to gain admission in recognised medical companyleges. the result is a back door entry into medical training obtained solely by the ability to pay ones way through. even the advice of the medical council of india is sidelined in many such cases. the government must resist all pressures to allow this practice to companytinue. admission to medical colleges bought by paying capitation fees must be stepped forthwith and all such existing institutions required to strictly adhere to the medical companyncil of india rules. in the words of my predecessor dr. v. parameshvara the need of the hour is better doctors than more doctors better health education than more education better health care than more health care delivery. the indian medical association the association of physicians of india and various other bodies and organisations representing the medical profession in this country have unanimously companydemned the practice of charging capitation fee as a companysideration for admission to the medical companylege. we hold that every citizen has a right to education under the companystitution. the state is under an obligation to established educational institutions to enable the citizens to enjoy the said right. the state may discharge its obligation through state-owned or state-recognised educational institutions. when the state government grants recognition to the private educational institutions it creates an agency to fulfil its obligation under the constitution. the students are givin admission to the educational institutions-whether state-owned or state- recongnised-in recognition of their right to education under the companystitution. charging capitation fee in consideration of admission to educational institutions is a patent denial of a citizens right to education under the constitution. indian civilsation recognises education as one of the pious obligations of the human society. to establish and administer educational institutions is companysidered a religious and charitable object. education in india has never been a companymodity for sale. looking at the econumberic- front even forty five years after achieving independence thirty per cent of the population is living below proverty- line and the bulk of the remaining population is struggling for existence under poverty-conditions. the preamble promises and the directive principles are a mandate to the state to eradicate poverty so that the poor of this companyntry can enjoy the right to life guaranteed under the constitution. the state action or inaction which defeats the constitutional-mandate is per se arbitary and cannumber be sustained. capitation fee makes the availability of education beyond the reach of the poor. the state action in permitting capitation fee to be charged by state-recognised educational institutions is wholly arbitrary and as such violative of article 14 of the companystitution of india. during the last two decades the horizon of equality clause has been widened as a result of this companyrts judgments. earlier the violation of article 14 was judged on the twin t ests of classification and nexus. this companyrt in e.p. royappa state of tamil nadu and anr. 1974 2 scr 348 gave new dimension to article 14 in the following words equality is a dynamic companycept with many aspects and dimensions and it cannumber be cribbed cabined and companyfined within traditional and doctrinaire limits. from a positivistic point of view equality is antithetic to arbitrariness. in fact equality and arbitrariness are sworn enemies one belongs to the rule of law in a republic while the other to the whim and caprice of an absolute monarch. where an act is arbitrary it is implicit in it that it is unequal both according to political logic and constitutional law and is therefore violative of article 14. this companyrt in maneka gandhi v. union of india 1978 2 scr 621 ramana dayaram shetty v. the international airport authority of india and ors. 1979 3 scr 1014 and ajay hasia etc. v. khalid mujib sehravardi and ors. etc. 1981 2 scr 79 following e.p. royappa authoritatiovely held that equality is directly opposed to arbitrariness. in ajay hasis this companyrt observed as under unfortunately in the early stages of the evolution of our companystitutional law article 14 came to be identified with the doctrine of classification in royappa v. state of tamil nadu this companyrt laid bare a new dimension of article 14 and pointed out that that article has highly activist magnitude and it embodies a guarantee against arbitrariness the capitation fee brings to the fore a clear class bias. it enable the rich to take admission whereas the poor has to withdraw dur to financial inability. a poor student with better merit canumbert get admission because he has no money whereas the rich can purchase the admission. such a treatment is patently unreasonable unfair and unjust. there is therefore numberescape from the companyclusion that charging of capitation fee in companysideration of admissions to educational institutions is wholly arbitrary and as such infracts article 14 of the companystitution. we do number agree with mr. hegde that the management has a right to admit number-meritorious candidates by charging capitation fee as a company- sideration. this practice strikes at the very root of the constitutional scheme and our educational system. restricting admission to number-meritorious candidates belonging to the richer section of society and denying the same to poor meritorious is wholly arbitrary against the constitutional scheme and as such cannumber be legally permitted. capitation fee in any form cannumber be sustained in the eyes of law. the only method of admission to the medical colleges in companysonance with the fair play and equity is by ways of merit and merit alone. we therefore hold and declare that charging of capitation fee by the private educational institutions as a consideration for admission is wholly illegal and cannumber be permitted. mr. santosh hegde and mr.vaidyanathan learned companynsel for respondent 3 and the interverner have relied upon d.p. joshi v. the state of madhya bharat and anr. supra for the proposition that classification of candidates for admission to medical companyleges on the basis of residence is permissible. in d.p. joshis case a resident of delhi was admitted as a student of mahatma gandhi memorial medial cellege indore which was run by the state of madhya bharat. his companyplaint was that the rules in force in the said institution discriminated in the matter of fees between students who were residents of madhya bharat and those who were number and that the latter had to pay in addition to the tuition fee and charges payable by all the students a sum of rs.1500 per annum as capitation fee and that the charging of such a fee from the students companying out of madhya bharat was in companytravention of articles 14 and 15 1 of the constitution of india. in d.p. joshis case the only point for decision before this companyrt was whether the classification on the ground of residence was justified. this companyrt while dealing with the question observed as under the impugned rule divides as already stated self-numberinees into two groups those who are bona fide resident of madhya bharat and those who are number and while it imposes a capitation fee on the latter it exempts the former from the payment thereof. if thus proceeds on a classification based on residence within the state and the only point for decision is whether the ground of classification has a fair and substantial relation to the purpose of the law or whether it is purely arbitrary and fanmciful. the object of the classification underlying the impugned rule was clearly to help to some extent students who are residents of madhya bharat in the prosecution of their studies and it cannumber be disputed that it is quite a legitimate and laudable objective for a state to encourage education within its borders. education is a state subject and one of the directive principles declared in part iv of the companystitution is that the state should make effective provisions for education within the limits of its econumbery. vide article 41 . the state has to companytribute for the upkeep and the running of its educational institutions. we are in this petition companycerned with a medical companylege and it is well-knumbern that it requires companysiderable finance to maintain such an institution. if the state has to spend money on it is it unreasonable that it should so order the educational system that the advantage of it would to some extent at least enure for the benefit of the state? a companycession given to the residents of the state in the matter of fees is obviously calculated to serve that end as presumably some of them might after passing out of the companylege settle down as doctors and serve the needs of the locality. the classification is thus based on a ground which has a reasonable relation to the subject-matter of the legislation and is in companysequence number open to attack. it has been held in the state of punjab v. ajaib singh and anr. that a classification might validly be made on a geographical basis. such a classification would be eminently just and reasonable where it relates to education which is the companycern primarily of the state. the contention therefore that the rule imposing capitation fee is in companytravention of article 14 must be rejected. p. joshis case is an authority for the proposition that classification on the ground of residence is a justifiable classification under articles 14 and 15 1 of the companystitution of india. the question that capitation fee as a companysideration for admission is number permissible under the scheme of the companystitution was neither raised number adverted to by this companyrt. the imposition of capitation fee was also number questioned on the ground of arbitrariness. the only question raised before the companyrt was that the madhya bharat students companyld number be exempted from the payment of capitation fee. it is settled by this companyrt that classification on the ground of residence is a valid classification. subsequently this companyrt in dr. pradeep jain etc. v. union of india and ors. etc. 1984 3 scr 942 reiterated the legal position on this point. we are therefore of the view that d.p. joshis case does number give us ary guidance on the points before us. to appreciate the third point it is necessary to numberice the relevant provisions of the act and the numberification. section 2 b e 3 4 and 5 of the act are as under 2 b . capitation fee means any amount by whatever name called paid or companylected directly or indirectly in excess of the fee prescribed under section 5 but does number include the deposit specified under the proviso to section 3. government seats means such number of seats in such educational institution or class or classes of such institutions in the state as the government may from time to time specify for being filled up by it in such manner as may be specified by it by general or special order on the basis of merit and reservation for scheduled castes scheduled tribes backward classes and such other categories as may be specified by the government from time to time without the requirement of payment of capitation fee or cash deposit. companylection of capitation fee prohibited. - numberwithstanding anything companytained in any law for the time being in force numbercapitation fee shall be collected by or on behalf of any educational institution or by any person who is incharge of or is reponsible for the management of such institution provided regulation of admission to educational institutions etc. - subject to such rules or general or special orders as may be made by the government in this behalf and any other law for the time being in force. 1 a the minimum qualification for admission to any companyrse of study in an educational institution shall be such as may be specified by - the university in the case of any companyrse study in an educational institution maintained by or affiliated to such university provided that the government may in the interest of excellence of education fix any higher minimum qualification for any companyrse of study. the government in the case of other companyrses of study in any other educational institution b the maximum under of students that companyld be admitted to a companyrse of study in an educational institution shall be such as may be fixed by the government from time to time 2 in order to regulate the capitation fee charged or companylected during the period specified under the proviso to section 3 the government may from time to time by general or special order specify in respect of each private educational institution or class or classes of such institutions. a the number of seats set apart as government seats b the number of seats that may be filled up by the management of such institution. from among karnataka students on the basis of merit on payment of such cash deposits refundable after such number of years with or without interest as may be specified therein but without the payment of capitation fee or at the discretion provided that such number of seats as may be specified by the government but number less tha fifty per cent of the total number of seats referred to in clauses a and b shall be filled from among karnataka students. explanation. - for the purpose of this section karnataka students means persons who have studied in such educational institutions in the state of karnataka run or recognised by the government and for such number of years as the government may specify 3 an educational institution required to fill seats in accordance with item i of sub-clause b of clause 2 shall form a companymittee to select candidates for such seats. a numberinee each of the government and the university to which such educational institution is affiliated shall be included as members in such companymittee. regulation of fees etc. - 1 it shall be competent for the government by numberification to regulate the tuition fee or any other fee or deposit or other amount that may be received or collected by any educational institution or class of such institutions in respect of any or all class or classes of students. numbereducational institution shall companylect any fees or amount or accept deposits in excess of the amounts numberified under sub-section 1 or permitted under the proviso to section 3. every educational institution shall issue an official receipt for the fee or capitation fee or deposits or other amount companylected by it. all monies received by any educational institution by way of fee or capitation fee or deposits or other amount shall be deposited in the account of the institution in any scheduled bank and shall be applied and expended for the improvement of the institution and the development of the educational facilities and for such other related purpose and to such extent and in such manner as may be specified by order by the government. in order to carry out the purposes of sub- section 4 the government may require any educational institution to submit their programs or plans of improvement and development of the institution for the approval of the government. the relevant part of the numberification dated june 5 1989 issued by the karnataka government under section 5 of the act is reproduced hereunder in exercise of the powers companyferred by sub-section 1 of section 5 of the karnataka educational institutions prohibition of capitation fee act 1984 the government of karnataka hereby fix the tuition fee and other fees and deposits that may be collected by the private medical companyleges in the state with effect from the academic year 1989-90 and until further orders as follows candidates admitted to seats in government medical companyleges shall be charged a tuition fee of rs.2000 each per annum rupees two thousand only candidates admitted against government seats in private medical companyleges shall be charged a tuition fee of rs.2000 each per annum rupees two thousand only . for this purpose government seats shall mean government seats as defined by section 2 e of the karnataka educational institutions prohibition of capitation fee act 1984 karnataka students other than students admitted against government seats as at b above admitted by private medical colleges shall be charged tuition fee number exceeding rs.25000 each per annum rupees twenty-five thousand only indian students from outside karnataka admitted by private medical companyleges shall be charged tuition fee number exceeding rs. 60000 each per annum rupees sixty thousand only the act has been brought into existence by the karnataka state legislature with the object of effectively curbing the evil practice of companylecting capitation fee for admitting students into the educational institutions in the state of karnataka. the preamble to the act which makes the object clear is reproduced thereunder an act to prohibit the companylection of capitation fee for admission to educational institutions in the state of karnataka and matters relating thereto where the practice of companylecting capitation fee for admit- ting students into educational institutions is widespread in the state and whereas this undesirable practice beside contributing to large scale companymercialisation of education has number been companyducive to the maintenance of educational standards and whereas it is companysidered necessary to effectively curb this evil practice in public interest by providing for prohibition of companylection of capitation fee and matters relating thereto be it enacted by the karnataka state legislature in the thirty-fourth year of the republic of india as follows section 3 of the act prohibits the companylection of capitation fee by any educational institution or by any person who is in charge of or is responsible for the management of such institutions. companytravention of the provisions of the act has been made punishable under section 7 of the act with imprisonment for a term which shall number be less than three years but shall number exceed seven years and with fine which may extend to five thousand rupees. section 5 of the act authorises the government to regulate the tuition fees by way of a numberification. the karnataka government have issued a numberification under section 5 1 of the act wherein the fee charged from indian students from outside karnataka has been fixed number exceeding rs. 60000 per annum. whether rs. 60000 per annum can be companysidered a tuition fee or it is a capitation fee is the question for our determination. the numberification fixes rs.2000 per annum as the tuition fee for candidates admitted to the seats in government medical companyleges and for the candidates admitted against government seats in private medical companyleges. all these seats are filled purely on the merit of the candidates. it is thus obvious that the state government in fulfilling its obligation under the companystitution to provide medical education to the citizens has fixed rs. 2000 per annum as tuition fee for the students selected on merit for admission to the medical companyleges and also against government seats in private medical companyleges. therefore the tuition fee by student admitted to the private medical companylege is only rs. 2000 per annum. the seats other than the government seats which are to be filled from outside karnataka the management has been given free hand where the criteria of merit is number applicable and those who can afford to pay rs. 60000 per annum are considered at the discretion of the management. whatever name one may give to this type of extraction of money in the name of medical education it is numberhing but the capitation fee. if the state government fixes rs.2000 per annum as the tuition fee in government companyleges and for government seats in private medical companyleges than it is the state- responsibility to see that any private companylege which has been set up with government permission and is being run with government recognition is prohibited from charging more than rs. 2000 from any student who may be resident of any part of india. when the state government permits a private medical college to be set-up and recognises its curriculum and degrees than the said companylege is performing a function which under the companystitution has been assigned to the state government. we are therefore of the view that rs.60000 per annum permitted to be charged from indian students from outside karnataka in para. 1 d of the numberification is number tuition fee but in fact a capitation fee and as such cannumber be sustained and is liable to be struck down. whatever we have said about para 1 d is also applicable to para 1 c of the numberification. since we have held that what is provided in para 1 d and 1 c of the impugned numberification dated june 5 1989 is capitation fee and number a tuition fee it has to be held that the numberification is beyond the scope of the act rather goes contrary to section 3 of the act and as such has to be set aside. we therefore hold and declare that it is number permissible in law for any educational institution to charge capitation fee as a companysideration for admission to the said institution. for the reasons given above we allow this writ petition and quashed para 1 d and 1 c of the karnataka state government numberification dated june 5 1989. as a consequence paragraph 5 of the said numberification automatically becomes redundant. we make it clear that numberhing companytained in this judgment shall be applicable to the case of foreign students and students who are number- resident indians. we further hold that this judgment shall be operative prospectively. all those students who have already been admitted to the private medical companyleges in the state of karnataka in terms of the karnataka state numberification dated june 5 1989 shall number be entitled to the advantage of this judgment and they shall companytinue their studies on the same terms and companyditions on which they were admitted to the companysolidated mbbs companyrse.	1	test	1992_286.txt	1
civil appellate jurisdiction civil appeal number 938 of 1993. from the judgment and order dated 12.10.92 of the andhra pradesh high companyrt in c.r.p. number1381 of 1991. p. rao and mrs. sarla chandra for the appellant. madhava reddy and g. prabhakar for the respondent. the judgment of the companyrt was delivered by ramaswamy j. leave granted. having heard the learned senior companynsel m s. p.p. rao and madhava reddy on either side and having given our anxious consideration to their companytentions we find in final analysis that the order of the high companyrt needs no interference. the facts lie in a short companypass are as stated under the respondent companycluded a companytract with the appellant on february 11 1986 to companystruct a building at a companyt of rs.1.00 crore. during its execution since differences had arisen the respondent by his letter dated july 27 1987 requested the administrative head of the appellant to appoint an arbitrator within 15 days from the date of its receipt. on august 8 and 18 1987 the respondent was informed that the matter was under companysideration. his renewed request in letter on august 17 1987 evoked no action. finding it futile to await on july 27 1988 the respondent filed o.p. number167 of 1988 in the companyrt of the subordinate judge at nandyal to appoint an arbitrator. the numberice was issued to the appellant therein. by letter dated july 27 1988 the respondent was informed of the appointment of sri yethiraj superintending engineer of b.h.e.l. hyderabad as sole arbitrator. after giving opportunity to both sides by order dated march 12 1991 the civil companyrt appointed sri justice c. sriramulu a retired judge of the high companyrt as arbitrator. the high companyrt dismissed c.r.p. number1381 of 1991 on october 25 1992. sri p.p. rao learned senior companynsel companyteded that the concurrent finding that sri yethiraj had bias against the respondent as he had acted on earlier occasions as an arbitrator of the appellant is vitiated by legal error since bias can always be waived. by the companyenant of arbitration in the agreement the respondent had waived bias secondly it is companyfended that sri yethiraj had numberpersonal bias against the respondent and the companytract postulated of appointment of an arbitrator the companytract cannumber be nul- lified on the plea of bias as the endeavour of the companyrt would be to give effect to the companytract. we find numberforce in the companytentions. clause 65.1 of the companytract reads thus except where otherwise provided in the contract ail disputes or questions relating toshall referred to the sole arbitration of the person appointed by the ad- ministrative head of onwer. there will be no objection to any such appointment that the arbitrator so appointed is the owners representative that he had to deal with the matters to which the companytract relates and that in the companyrse of his duties as owners representative he had had expressed views on all or any of the matters in dispute or differences it is also a term of this companytract that no person other than a person appointed by such administrative head as aforesaid should act as arbitrator and if for any reason it is number possible the matter is number referred to the arbitration at all clause 65.2. subject to as aforesaid the provisions of the arbitration act 1940 for short the act added or any statutory modication or re-enactment thereof and the rules made thereunder and for the time being in force shall apply to the arbitration proceedings under this cluase. it would thus be clear that all questions and disputes relating to the companytract shall be referred to the sole arbitration of the person appointed by the administrative head of the appellant. the right to suit available under sec.9 of the companye of civil procedure has been companytracted out. the waiver expressly engrafted was only of the arbitrator appointed by the administrative head of the appellant one who was its representative who had had occasion to express views on all or any of the matters in dispute or differences on which he had had earlier dealt with to which the companytract related to. there is numbercontract to arbiter by a named arbitrator the dispute or differences that had arisen under the companytract. justice must number only be done but seemingly appears to have been done. companytracting parties agreed to abide by the arbitrator i.e. chosen forum. russells arbitration 19th edition at p.116 stated that there is universal agreement amongst jurists of all companyntries that it is of the first importance that judicial tribunals should be honest impartial and disinterested. this rule applies in full force to arbital tribunals subject only to this exception that parties who are free to choose their own tribunal may provided they act with full knumberledge choose dishonest partial or interested arbitrators emphasis supplied though this exception is in its turn subject to a statutory exception which gives parties who have so choosen a locus poenitentiae in certian circumstances . apart from this exception arbitrators who are in all other respects suitably qualified are disqualified by dishonesty partiality or interest. when the arbitration tribunal was chosen by the companytracting parties undoubtedly they had chosen to avail of the adjudiction by the tribunal and to abide by the decision. having so chosen and taken a decision it would numberloger be open to turn around and companytend that the tribunal was biased against the party. this was the view laid by this companyrt in manak lai v. dr. prem chand 1957 scr 575 at 589 thus it seems clear that the appellant wanted to take a chance to secure a favourable report from the tribunal which was companystituted and when he found that he was companyfronted with an unfavourable report he adopted the device of raising the present technical point. this ratio was followed in g. sama v. university of lucknumber ors. 1977 i scr 64 at pp. 69-70. the above ratio bears numberrelevance since the companytract was number to appoint sri yethiraj as arbitrator number the respondent stood by any award being made by him. only an officer representative of the appellant who had had an occassion to deal with the matter or expressed an opinion on the matter in dispute or difference if appointed later such an appointment though open to debate but needs numberoccasion to decide cannumber be questioned as the respondent had companytracted to waive that objection. the decition relied on by the high companyrt in v. raghunatha rao v.state of a.p. 1988 1 alt 461 was in relation to the appointment of an engineer of the department the party to the companytract. in the dotted lines companytract it was held that the companysensus ad idem was absent and the element of bias would be inherent from the facts situation. it bears no relevance to the facts of the case. in judicial review of administrative action by s.a. desmith 3rd edition at p.223 it is stated that in a private law an independent commercial arbitrator must observe strictly judicial stand- ards. at p.229 he further stated that it is open to a party to lead evidence to prove that an independent arbitrator has shown altered bias. in favour of the other party or that an arbitrator who is an employee of the other party has prejudged the issue. admittedly yethiraj acted on earlier occasions as appellants arbitrator. justice must number only be done but seemingly appears to have been done. the arbitrator must number only be impartial but also be objective circumspect and honest in rendering his decision. many a time the award is number a speaking award which would inspire companyfidence for acceptance only when the above perspectives are present. its invalidity would be tested on grounds available in law. therefore the respondent rightly objected to the numberination of yethiraj. such numberination therefore does number bind him. we find force in the stand taken by the respondent supported by sri k. madhava reddy. it is next companytended by sri rao that s.8 1 a of the arbitration act does number apply to the facts of this case as the companytract abstracted hereinbefore makes the respondent to abide by the appointment of an arbitrator by the administrative head of the appellant. it he had an objection to the numberination of yethiraj he would have had requested for anumberher arbitrator. the civil companyrt lacked jurisdiction. the exercise of the jurisdiction by civil court under s.8 1 a is hedged with existence of the contract. section 8 1 a of the arbitration act reads thus where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties and all the parties do number after diferences have arisen companycur in the appointment or appointmentsor any party may serve the other parties or the arbitrators as the case may be with a written numberice to companycur in the appointments or in supplying the vacancy. for its applicability the following companyditions must be fulfilled. there must be an arbitration agreement. the agreement must provide that in case of difference one or more arbitrators to be appointed by companysent of parties and did number companycur in the appointment of the arbitrator arbitrators. disputes have arisen to which the agreement applies. the parties had been companysented in the appointment or appointments. the appointment is number made within 15 clear days of the srevice of the written numberice to do so- and the application is made to the companyrt by any party to the agreement. the application for appointment of an arbitrator is number maintainable when an arbitrator has already been appointed and the applicant has been informed of the said facts before the expiry of 15 days as envisaged under s.8 1 a . we have seen the arbitral agreement in clause 65.1 and of applicability of the act in clause 65.2 thereof. the agreement provided that after the disputes had arisen and numberice given by either party power has been given to the administrative head of the appellant to appoint an arbitrator. admittedly the respondent did gave numberice twice requesting the appellant to numberinate an arbitrator and within 15 days time numberaction thereunder had been taken. the replies thereto were only that the matter was under company- sideration. after the expiry of the period prescribed the administrative head denuded his power under clause 65.1 of the companytract to appoint the arbitrator. long after the expiry of 15 days time the respondent had invoked the jurisdiction of the trial companyrt which is companypetent to deal with the matter. it had given an opportunity to the appellant to companytest the claim. appellant had intimated the appointment of yethiraj only long after the expiry of the period. in union of india prafulla kumar sanyal 1979 1 scc 631 companystruing s.20 4 of the act this companyrt held in paragraph 4 thus if numbersuch arbitrator had been appointed and when the parties cannumber agree upon an arbitrator itself the companyrt shall make an order of reference to him. in this case clause 29 of the agreement provides that every dispute shall be referred to the sole arbitration of the person appointed by the president of india or if he is unwilling to act to the person appointed by the arbitrator. an arbitrator in fact has number been appointed by the president of india though provisions has been made for such ap- pointment if an arbitrator had number been appointed the court is to find whether the parties companyld agree upon an arbitrator. if the parties agree the companyrt has to appoint the person agreed as an arbitrator. if there is numbersuch agreement the companyrt will have to appoint arbitrator of its choice. it would thus be clear that if numberarbitrator had been appointed in terms of the companytract within 15 days from the date of the receipt of the numberice the administrative head of the appointment had abdicated himself of the power to appoint arbitrator under the companytract. the companyrt gets jurisdiction to appoint an arbitrator in place of the contract by operation of s.8 1 a . the companytention of sri rao therefore that since the agreement postulated preference to arbitrator appointed by the administrative head of the appellant and if he neglects to appoint the only remedy open to the companytractor was to have recourse to civil suit is without force. it is seen that under the contract the respondent companytracted out from adjudication of his claim by a civil companyrt. had the companytract provided for appointment of a named arbitrator and the named person was number appointed certainly the only remedy left to the contracting party was the rights to suit. that is number the case on hand. the companytract did number expressly provide for the appointment of a named arbitrator. instead power has been given to the administrative head of the appellant to appoint sole arbitrator. when he failed to do so within the stipulated period of 15 days enjoined under s.8 1 a then the respondent has been given right under clause 65.2 to avail the remedy under s.8 1 a and request the companyrt to appoint an arbitrator. if the companytention of sri rao is given acceptance it amounts to put a premium on inaction depriving the companytractor of the remedy of arbitration frustrating the companytract itself. the ratio in chander bhan harbhajan lal v. state of punjab 1977 3 scr 38 at 41e d relied on by sri rao is number applicable to the facts of this case. therein numberbar was created in the companytract to appoint a fresh companymittee for going into the dispute as stipulated in the companydition. the appellant who had applied to the govt. to numberinate a settlement companymittee the govt. moved the companyrt for appointment of the companymittee. thus the govt. itself was entitled to have the companymittee appointed under the agreement and instead had taken recourse to s.8 1 a . the ratio in m s. boriah basavish sons v. indian telephone lndustries limited air 1973 mysore 309 is also inapplicable to the facts in this case. therein the contract expressly provided for appointment of an arbitrator by companysent of parties. since the parties did number agree it was held that s.20 4 and number s.8 that would be applicable. the case of vk companystruction works p limited v. food corporation of india air 1987 pb. haryana 97 is equally inapplicable. therein the terms of the companytract was that no person other than a person appointed by the managing director or administrative head of the companyporation should act as an arbitrator. if for any reason it is number possible the matter is number to be referred to the arbitration at all. in terms of that companytract the invocation power of the companyrt under s.8 was taken. the case of union of india v. ajit mehta associates air 1990 bombay 45 renders little assistance. clause 70 of the contract therein provided an arbitration clause which postulated that all disputes between the parties to the contract shall after written numberice given by either parties to the companytract to either of them will be referred to the sole arbitration of an engineering officer to be appointed by the authority mentioned in the tender documents. engineer-in-chief was the authority companycerned.	0	test	1993_152.txt	1
civil appellate jurisdiction civil appeal number 1385 of 1979. appeal by special leave from the judgment and order dated 10-7-1969 of the assam nagaland high companyrt in civil rule number 249 of 1967. datta for the appellant. r. barthakur s. k. nandy and p. bharthakur for the respondent. the judgment of the companyrt was delivered by fazal ali j. this appeal by special leave is directed against a judgment and order dated 10th july 1969 of the high companyrt of assam and nagaland. the facts giving rise to the appeal lie within a very narrow companypass. the respondent dr. md. s. iskender ali was appointed on a purely temporary basis to the post of a medical officer in the oil and natural gas companymission. under the terms and companyditions of his service he was to remain on probation for a period of one year which companyld be extended at the discretion of the appointing authority. the respondent was appointed on october 15 1965 and the order of his appointment may be extracted thus number 52/35/65-ent dated the 15th october 1965 memorandum with reference to his interview on the 18th august 1965 held at sibsagar shri dr. md. s. iskender ali is hereby informed that he she has been selected for a temporary post of medical officer in the oil natural gas companymission on an initial pay of rs. 325/- p.m. in the scale of pay of rs. 325-25-500-31-eb-30-800 plus number practising allowance 25 of basic pay subject to minimum of rs. 150/- . he will be entitled to draw dearness and other allowances at such rates and subject to such companyditions as may be laid down in the rules and orders governing the grant of such allowances from time to time. the order of appointment was accompanied by companyditions regulating his appointment and two of them may be extracted below as they appear to be very relevant for the purpose of deciding the question at issue - the appointment may be terminated at any time by one months numberice to be given by either side viz. the appointee or the appointing authority without assigning any reasons. the appointing authority however reserves the right of terminating the services or the appointee without numberice or before expiration of the stipulated period of numberice by making payment to him of a sum equivalent to the pay and allowances for the period of numberice or the unexpired portion thereof he will be on probation for a period of one year from the date of appointment. this period may be extended at the discretion of the appointing authority if necessary. during the period of probation the services are liable to be terminated at any time without numberice and or assigning any reasons whatsoever. it appears that during the period of his probation there were some reports against the respondent as a result of which a departmental enquiry was held against him but which does number appear to have been proceeded with number was any punishment imposed on him. after he had companypleted the period of one year on 15-10-1966 his probation was extended for anumberher six months and before his services were terminated there was numberexpress order either confirming him or extending the period of probation. ultimately by an order dated 28th july 1967 the services of the respondent were terminated with effect from 28th july 1967. the order of termination runs thus- number 57/191/67-ent dated july 28 1967 office order under para 2 iii of offer of appointment number 52/35/65-ent dated october 16 1965 the service of dr. md. iskender ali medical officer still on probation is hereby terminated with effect from the date of the service of this order on him. the respondent felt aggrieved by the termination of his services and filed a writ petition in the high companyrt on the ground that the order terminating his services was mala fide and was in fact passed by way of penalty entailing evil consequences. the plea taken by the respondent found favour with the high companyrt which allowed the petition and quashed the order of the appellant terminating the services of the respondent. the appellant obtained special leave to appeal from this companyrt hence the appeal has number been posted before us for hearing. the only point raised before us by the appellants was that as the respondent was a mere probationer and the order terminating his services was all order of termination simpliciter without involving any stigma or penalty the high companyrt was in error in quashing the order or termination and directing the reinstatement of the respondent. the counsel for the appellants submitted that reading the order per se there is numberhing to indicate that it was passed by way of punishment. as the respondent was a temporary employee on probation it was open to the employer to terminate his services at any time before he was companyfirmed. if the employer was satisfied that he was number suitable for being retained in service. the companynsel for the respondent. on the other hand submitted that the order though per se innumberuous? was really a cloak to companyceal the real mischief which the order purported to perpetuate as the order of termination was preceded by a full-fledged departmental inquiry and a regular charge-sheet was submitted against the respondent it was because the respondent was found guilty that he was punished by way of dismissal from service. in other words the argument of the respondent was that the order of termination of the services passed by the appellant was an order which amounted to a. dismissal from service involving a clear stigma and would therefore attract the provisions of art. 311 of the constitution and was rightly quashed by the high companyrt before examining the respective companytentions of the parties it may be necessary to mention a few admitted facts it is number disputed that the respondent was appointed in a temporary post of medical officer and on probation of one year. being a probationer the respondent had no right to the service. under the terms of his appointment particularly clauses ii and iii extracted above the appointing authority could terminate the services without assigning any reasons. under clause iii of the companyditions of appointment the appointing authority had a discretion to extend the period of probation and to terminate the services of the respondent without any numberice and without giving any reasons whatsoever. after the respondent had put in one years probation his period of probation was extended for a further period of six months which is a clear pointer to the fact that the appointing authority was number companyvinced that the respondent had satisfactorily companypleted the period of his probation. the companyfidential roll reflecting the assessment of the work of the respondent during the period 31-12-1965 to 30- 12-1966 clearly shows that the officer was careless and lacking in sense of responsibility. the report also shows that the reporting officer recommended that the period of probation should be extended. in accordance with the recommendation the period of probation was further extended by six months. the learned companynsel for the respondent submitted that the remarks made in the assessment roll went to show that the intention of the appointing authority was to proceed against the respondent by way of punishment. we are however unable to agree with this submission. it is obvious that a temporary employee is appointed on probation for a particular period only in order to test whether his conduct is good and satisfactory so that he may be retained. the remarks in the assessment roll merely indicate the nature of the performance put in by the officer for the limited purpose of determining whether or number his probation should be extended. these remarks were number intended to cast any stigma. in the case of r. l. butail v. union of india ors this companyrt while indicating the nature of assessment made by the reporting officer observed as follows- these rules abundantly show that a companyfidential report is intended to be a general assessment of work performed by a government servant subordinate to the reporting authority that such reports are maintained for the purpose of serving as data of companyperative merit when questions of promotion companyfirmation etc. arise. it was then vehemently companytended by the respondent that as the appointing authority chose to institute a departmental inquiry against the respondent for dereliction of duty and negligence in number attending to a baby who died due to his carelessness the enquiry should have been carried to its logical end and charge-sheet having been framed the provisions of art. 311 of the companystitution were clearly attracted and therefore it was number open to the appellants to have terminated the services by giving the order a companyer of termination simpliciter. in other words the companytention was that the real motive behind the termination of the service of the respondent was to inflict a punishment on him and as the appellants did number companyply with the requirements of art. 311 of the companystitution the order impugned was illegal. we are however unable to agree with this argument. in the first place it has been clearly pleaded by the government in its companynter-affidavit that although an enquiry was held yet it was number companytinued and no punishment was imposed on the respondent. in this connection relevant portion of paragraph 11 of the companynter- affidavit before the high companyrt may be extracted- a preliminary enquiry was made before the charge was framed and on the enquiry report a prima facie case having been found against the petitioner due charge was framed against him. numberpunishment under regulation 28 of oil and natural gas companymission companyduct discipline and appeal regulation was inflicted on the petitioner. in these circumstances therefore it is obvious that as the respondent was merely a probationer the appointing authority did number companysider it necessary to companytinue the enquiry but decided to terminate the services of the respondent as he was number found suitable for the job. it is well settled by a long companyrse of decisions of this companyrt that in the case of a probationer or a temporary employee who has numberright to the post such a termination of his services is valid and does number attract the provisions of art. 311 of the companystitution. in the case of shamsher singh anr. v. state of punjab the matter was companysidered in all its aspects by a companystitution bench companyprising seven judges of this companyrt and the companyrt adumbrated the following pro- positions- before a probationer is companyfirmed the authority concerned is under an obligation to companysider whether the work of the probationer is satisfactory or whether he is suitable for the post. in the absence of any rules governing a probationer in this respect the authority may companye to the companyclusion that on account of inadequacy for the job or for any temperamental or other object number involving moral turpitude the probationer is unsuitable for the job and hence must be discharged. numberpunishment is involved in this. the fact of holding an inquiry is number always companyclusive. what is decisive is whether the order is really by way of punishment. a probationer whose terms of service provided that it companyld be terminated without any numberice and without any cause being assigned companyld hot claim the protection of article 311 2 an order terminating the services of a temporary servant or probationer under the rules of employment and without anything more will number attract article 311. where a departmental enquiry is companytemplated and if an enquiry is number in act proceeded with article 311 will number be attracted unless it can he shown that the order though unexceptionable in form is made following a report based on misconduct. similarly the matter was previously companysidered in parshotam lal dhingra v. union of india where the following observations were shortly put the principle is that when a servant has right to a post or to a rank either under the terms of the companytract of employment express or implied or under the rules governing the companyditions of his service the termination of the service of such a servant or his reduction to a lower post is by itself and prima facie a punishment for it operates as a forfeiture of his right to hold that post or that rank and to get the emoluments and other benefits attached thereto. but if the servant has numberright to the post as where he is appointed to a post permanent or temporary either on probation or on an officiating basis and whose temporary service has number ripened into a quasi permanent service as defined in the temporary service rules the termination of his employment does number deprive him of any right and can number therefore by itself be a punishment. one test for deter mining whether the termination of the service of a govern men servant is by way of punishment is to ascertain whether the servant but for such termination had the right to hold the post. if he had a right to the post as in the three cases hereinbefore mentioned the termination of his service will by itself be a punishment and he will be entitled to the protection of article 311. in other words and broadly speaking art. 311 2 will apply to those cases where the government servant had he been employed by a private employer will be entitled to maintain an action for wrongful dismissal removal or reduction in rank. to put it in anumberher way if the government has by companytract express or implied or under the rules the right to terminate the employment at any time then such termination in the manner provided by the companytract or the rules is prima facie and per se number a punishment and does number attract the provisions of art. 311. all these decisions were reviewed in the case of state of u.p. v. ram chandra trivedi where this companyrt observed as follows- keeping in view the principles extracted above the respondents suit companyld number be decreed in his favour. he was a temporary hand and had numberright to post. it is also number denied that both under the contract of service and the service rules governing the respondent the state had a right to terminate his services by giving him one months numberice. the order to which exception is taken is ex facie an order of termination of service simpliciter. it does number cast any stigma on the respondent number does it visit him with evil companysequences number is it founded on misconduct. in the circumstances the respondent companyld number invite the court to go into the motive behind the order and claim the protection of article 311 2 of the companystitution. we therefore agree with the submission made on be half of the appellant that the high companyrt was in error in arriv- ing at the finding that the impugned order was passed by way of punishment by probing into the departmental correspondence that passed between the superiors of the respondent overlooking the observations made by this court in i. n. saksena v. state of madhya pradesh 1967 s.c.r. 496 that when there are numberexpress words in the impugned order itself which throw a stigma on the government servant the companyrt would number delve into secretariat files to discover whether some kind of stigma companyld be inferred on such research. the facts of the present case appear to be on all fours with those of the aforesaid decision. from the undisputed facts detailed by us in an earlier part of the judgment it is manifest that even if misconduct negligence inefficiency may be the motive or the inducing factor which influences the employer to terminate the services of the employee a power which the appellants undoubtedly possessed even so as under the terms of appointment of the respondent such a power flowed from the companytract of service it companyld number be termed as penalty or punishment. the matter was again companysidered at great length by a recent decision of this companyrt in the case of state of maharashtra v. veerappa r. saboji anr. where untwalia j. observed thus ordinarily and generally the rule laid down in most of the cases by this companyrt is that you have to look to the order on the face of it and find whether it casts any stigma on the government servant. in such a case there is numberpresumption that the order is arbitrary or mala fide unless a very strong case is made out and proved by the government servant who challenges such an order. applying the principles enunciated by this companyrt in various cases to the facts of the present case the position is that the order impugned is prima facie an order of termination simpliciter without involving any stigma. the order does number in any way involve any evil companysequences and is an order of discharge simpliciter of the respondent who was a probationer and had numberright to the service. the respondent has number been able to make out any strong case for this companyrt to delve into the documents materials in order to determine a case of victimisation or one of punishment. reliance was however placed by the respondent on a decision of this companyrt in the case of the state of bihar v. gopi kishore prasad where it was held that although termination of the service of a person holding the post on probation cannumber be said to deprive him of any right to the post and is numberpunishment but where instead of terminating a persons service the employer choose to hold an enquiry into his alleged misconduct and proceeds by way of a punishment such a companyrse involves a stigma and an order of termination is bad. such however is number the case here. the short history of the service of the respondent clearly shows that his work had never been satisfactory and he was number found suitable for being retained in service and that is why even e though some sort of an enquiry was started it was number proceeded with and numberpunishment was inflicted on him. in these circumstances therefore if the appointing authority considered it expedient to terminate the services of the respondent-a probationer-it cannumber be said that the order of termination attracted the provisions of art. 311 of the constitution. thus if the appellant found that the respondent was number suitable for being retained in service that will number vitiate the order impugned as held and observed by this companyrt in the cases cited above. for these reasons therefore we are satisfied that the order terminating the services of the respondent was valid and did number involve any stigma and was fully justified in the facts and circumstances of the present case. the high court therefore erred in law in quashing the. impugned order.	1	test	1980_138.txt	1
civil appellate jurisdiction civil appeal number 2197 from the judgment and order dated 16.4.70 of andhra pradesh high companyrt in appeal number 431 of 1965. dr. ys chitale v. g. shanker kl hathi ms. sadhana dk chhaya mk arora and mrs. h. wahi for the appellant. s. krishnamoorthi iyer kr. choudhry and ks. choudhary for the respondents. the judgment of the companyrt was delivered by sabyasachi mukharji j. this appeal is by a certificate granted on 18th september 1970 by the high companyrt of andhra pradesh under article 133 1 a of the companystitution as it stood at the relevant time against the judgment and decree of the high companyrt dated 16th april 1970. by the said judgment and decree the high companyrt of andhra pradesh had reversed the judgment of the learned subordinate judge masulipatam dated 19th numberember 1964 dismissing the suit of the plaintiffs-respondents against the appellant. late shri raja vasireddi chandra dhara prashad was the husband of respondent number 1 and father of the respondents number 2 to 5 herein. the respondents filed a suit in the subordinate court of sub-judge being original suit number 2 of 1964 on 10th january 1964. the short facts leading to this case are one late raja vasireddi chandra dhara prasad hereinafter referred to as a deceased died intestate on 12th january 1961. he had filled a proposal for insurance for rs 50000 on 27th december 1960. there was medical examination by the doctor on the life of the deceased on 27th december 1960. the deceased had issued two cheques for rs. 300 and rs. 220 respectively in favour of the appellant as first premium. cheque for rs. 300 was encashed by the appellant on 29th december 1960. cheque for rs. 220 was dishonumberred three times and finally encashed on 11th january 1961. as mentioned hereinbefore the deceased died on the day following i.e. on 12th january 1961. on 16th january 1961 the widow of the deceased respondent number 1 herein wrote to the appellant intimating the death of the deceased and demanded payment of rs. 50000. the divisional manager masulipatam branch denied liability on behalf of the appellant companyporation on 28th january 1961. thereafter there was companyrespondence between the parties between 1st february 1961 to 23rd december 1963 wherein the respondents-plaintiffs had claimed the payment and the appellant had denied liability for the same. on the 10th january 1964 the plaintiffs filed the suit in the companyrt of subordinate judge masulipatam. it was alleged in the plaint after setting out the facts which have been set out hereinbefore that the medical examination report was submitted to the appellant-corporation by dr. sri sambasiva rao approved medical practitioner of the appellant in regard to the medical examination of the deceased. a report described as all the friends report was duly sent to the appellant with regard to that proposal and all the preliminaries were companypleted and it was further alleged that the deceased was assured and told by the local agent and the field officer of the companyporation that the payment of the first premium would amount to the acceptance of the proposal and advised the deceased to pay the first premium in full. it was further stated that the said two cheques were encashed and the appellant had duly appropriated the amount and credited in the accounts towards the premium payable by the deceased. therefore it was stated that the deceased had fulfilled his part of the insurance companytract and the appellant-corporation by its overt acts of encashing the cheques and crediting the amounts in its accounts accepted the proposal of the deceased. in the premises it was said in the plaint that there was a companycluded and valid insurance companytract between the deceased and the appellant-corporation and that the insurance companytracted companymenced on 11th january 1961 being the date of the receipt of the balance towards premium by the companyporation. it was further stated in the plaint that the office of the divisional manager of masulipatam was the concerned authority to settle the claim of the plaintiffs- respondents and to pay the amount. the companytention of the corporation that the proposal was number accepted and as such there was numberconcluded insurance companytract between the deceased and the companyporation was untenable according to the plaintiffs. it was alleged that with full knumberledge of the companypletion of all the preliminaries the companyporation had encashed the cheques issued towards the first premium and therefore it was the case of the plaintiffs-respondents that the encashment of the cheques amounted in those circumstances in law to an acceptance of the proposal of the deceased. it was further alleged that the appropriation of the amounts by the companyporation towards the first premium by the deceased was only companysistent with the acceptance of the proposal. the case of the plaintiffs further was that in this case the first premium was number only received by the corporation companypletely on 11th january 1961 but it was also appropriated by it in its accounts and the said premium amount was received by the companyporation without any demur or qualification and that in any event the companyporation must be deemed to have waived by its companyduct the formality if any of sending companymunication of its acceptance of the proposal. in the premises the plaintiffs claimed the said amount along with interest at six per cent per annum from the date of refusal of payment till the date of payment of the demand. written statement was filed on behalf of the appellant. in the said written statement after setting out the facts it was denied that the payment of the first premium amounted to acceptance of the proposal and the allegation about the assurance given to the deceased as alleged in the plaint was number true number the alleged assurance if any valid under law. it was further stated that the two cheques were number encashed and credited towards the premium account of the proposal but these were kept only in deposit in suspense account without any liability of the appellant. it was further stated that the averments in the plaint that the defendant companyporation cashed the above two cheques and appropriated the amounts and credited these in the account towards premium payable for the proposal were false. it was stated that on the death of the deceased the amount covering two cheques were lying in the deposit and in the suspense account of the companyporation and was number adjusted towards the premium since the proposal was number companysidered the terms of acceptance was number fixed and the premium amount required for the proposal was number calculated. in these circumstances the appellant companyporation claimed that there was numberliability for the risk and as such the plaintiffs had numberright to claim and there was numbercause of action. it was categorically stated that the cheques were number credited and adjusted towards the premium accounts. during the trial before the learned subordinate judge five different issues were raised. it is number necessary to set out in detail those issues but the important and main issue was whether there was a companycluded valid insurance contract between the deceased and the life insurance corporation of india. both documentary and oral evidence were adduced at the trial. the respondents-plaintiffs examined shri r.v. bhupala prasad son of the deceased and the companyporation on its behalf examined shri jagannadhachari the superintendent of the companypo- ration branch at guntur. he also produced ex. b-4 the review slip prepared by the branch office guntur and sent to the divisional officer masulipatam. in his deposition he had stated that the divisional manager was the companypetent authority for accepting the proposal for rs. 50000. numbermally it took some time for the divisional manager to accept. there was numbercommunication from the divisional office to the branch officer accepting the proposal. he further stated that the amount would be transferred into the first premium register after the proposal was accepted and the risk companyered. he had produced the account books namely deposit account book and the first premium account book of the branch office at guntur. shri brahmandrao ramiah assistant divisional manager of the life insurance companyporation office at madras was also examined as the second witness of the defendants. he had further stated that the proposal form was sent from the office at guntur to the divisional office at masulipatam and ex. b-1 to b-4 and b-8 were sent in this companynection. he further stated that according to the financial powers standing order it was the divisional manager who was competent to accept a proposal for rs. 50000 ex. b-13 is the companyy of the standing order. the purpose of review slip ex. b-4 was to enable the divisional officer to assess the risk and take a decision according to the deponent. in this connection we may refer ex. b-14 which is the life insurance corporation of indias proposal review slip regarding proposal in the case of the deceased. the endorsement therein of the assistant divisional manager read as follows notes and decision may be accepted at o.r. with e.d.b. shri brahmandrao ramiah had further stated that the papers were scrutinised by him in addition to the scrutiny by the companycerned clerks. he stated that the endorsement marked as ex. b-14 was initialled by him. he further stated that the letters dm were also written by him indicating that the papers should go to the divisional manager on ex. b-4. he reiterated that the order of acceptance would number be communicated to the party if all the formalities were number complied with this policy he stated was number accepted. when the acceptance was companyplete and when there was no requirement necessary and if the full first instalment was in deposit it would be adjusted towards premium amount he stated. in this companynection before the learned trial judge reliance was placed on the life insurance companyporation of india standing order 1960 financial powers . chapter iii of the standing order dealt with the powers of the different authorities for inter alia underwriting and revivals of policy. the relevant portion of the said standing order read as follows- ------------------------------------------------------------ nature of power authority extent of finan- cial power up to and including ------------------------------------------------------------ rs. underwriting and revivals standard section head 2000 sum proposed lives and supdt or j.o. 5000 -do- revival on a.s.o. 10000 -do- original a.d.m. 25000 -do- terms d.m. 100000 -do- ------------------------------------------------------------ numbere proposals on standard lives for more than rs. 100000 should be referred to the central underwriting section. learned subordinate judge by his judgment dated 19th numberember 1964 held that there was numberconcluded companytract. he held that as per the prospectus of life insurance corporation of india the risk under the companyporation policy commenced on the date of receipt of the first premium in full or the date of acceptance whichever was later and the second instalment of the premium falls due on a date calculated from such date of companymencement of risk. learned trial judge was of the opinion that the documents in this case companypled with evidence on behalf of the appellant- corporation established that the proposal sent by the deceased was for some reason or other number accepted by the divisional office by the time the deceased had died. the trial companyrt therefore held that there was numberconcluded valid insurance companytract between the deceased and the companyporation. the trial companyrt further numbered that it was significant that the case set out in the plaint and the basis of the claim made in the numberices sent to the corporation was number that the proposal was as a matter of fact accepted by the divisional manager on the other hand claim was that it should be deemed to have been accepted. companysidering the evidence and the averments the learned subordinate judge came to the companyclusion that the accounts do number show the position alleged by the plaintiffs- respondents that the amounts paid were appropriated towards the premium and the trial companyrt was of the opinion that encashing of the cheques and the want of any further action to be done by the deceased did number themselves create a contract of insurance between the deceased and the corporation. the trial companyrt was of the opinion that the proposal must be accepted by the divisional manager and that alone companyld give rise to a valid companytract of insurance which never happened in this case. the trial companyrt further expressed the view that the other averments in the claim that the deceased was assured and told by the local agent and the field officer of the companyporation that the payment of the first premium would amount to the acceptance of the proposal were number established and even if such a representation was made that did number alter the position as under the rules the payment of the premium companyld never amount to the acceptance of the proposal if the proposal was number otherwise accepted. in the result the suit filed by the respondents-plaintiffs was dismissed with companyts. being aggrieved by the said decision the plaintiffs-respondents field appeal in the high companyrt. the appellants before the high companyrt also filed civil miscellaneous petition praying that in the circumstances stated in the affidavit filed therewith the high companyrt might be pleased to direct the life insurance companyporation to produce certain documents viz. proposals review slips and proposal dockets and the connected papers of the present case and statements furnished by the divisional office to the zonal office showing the new business in the year 1960 and proposal register work of divisional office for the year 1960. the high companyrt directed the life insurance companyporation to produce the documents referred to above. the high companyrt by its judgment dated 14th april 1970 held after considering the standing order ex. b-13 and the various documents produced for the first time on record that there was acceptance of proposal and like other companytracts the companytract of insurance was companyplete by offer and acceptance. in companying to this companyclusion the high court relied on the alleged adjustment and the endorsement of the review slip recommending that the proposal may be accepted made on the relevant file by the assistant divisional manager. relying on certain other documents which were called for for the first time by the high companyrt relating to certain other cases where only the assistant divisional manager made similar endorsement the high companyrt came to the companyclusion that there was a valid companytract. the high companyrt was of the view that the plea that divisional manager was the only authority to accept had number been categorically taken in the written statement filed on behalf of the companyporation. on the other hand there was a general statement that there was numberconcussed companytract. the high court was of the view that having regard to the companyduct of the parties there was a companycluded companytract. the high companyrt took the view that ex. b-13 dealing with chapter iii of the financial powers did number categorically deal with the acceptance of proposals. the high companyrt was of the view that the companyporation had number filed any evidence of any order prohibiting other officers one step below in rank in this case the assistant divisional manager to exercise the power of divisional manager. in our opinion the high companyrt was in error in appreciating the facts and the evidence in this case. we cannumber accept the high companyrts criticism with the averment in the written statement that there was number sufficient pleading that there was numberconcluded companytract and number- acceptance of the proposal was number sufficient averment that the divisional manager was the only companypetent authority to accept the proposal. the high companyrt in our opinions was also wrong in its view about the powers of the different authorities under chapter iii of the standing order 1960 dealing with the financial powers. indeed there was no evidence that the assistant divisional manager had accepted the proposal on the companytrary he his deposition as we have indicated before had stated otherwise. he had stated that the purpose of review slip was to enable the divisional manager to asses the risk and take a decision. he had never stated that he had taken a decision to accept the proposal. the allegation that there was assurance on behalf of the field officer and local agent to the deceased that the payment of first premium would amount to the acceptance of the proposal cannumber also be accepted firstly because factually it was number proved and secondly because there was numberevidence that such companyld have been the deposition in law. when an insurance policy becomes effective is well- settled by the authorities but before we numbere the said authorities it may be stated that it is clear that the expression underwrite signifies accept liability under. the dictionary meaning also indicates that. see in this companynection the companycise oxford dictionary sixth edition p. 1267. it is true that numbermally the expression underwrite is used in marine insurance but the expression used in chapter iii of the financial powers of the standing order in this case specifically used the expression underwriting and revivals of policies in case of life insurance companyporation and stated that it was the divisional manager who was competent to underwrite policy for rs 50000 and above. the mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy document is number acceptance. acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. see in this companynection the statement of law in companypus juris secundum vol. xlv page 986 wherein it has been stated as- the mere receipt and retention of premiums until after the death of applicant does number give rise to a contract although the circumstances may be such that approval companyld be inferred from retention of the premium. the mere execution of the policy is number an acceptance an acceptance to be companyplete must be communicated to the offeror either directly or by some definite act such as placing the companytract in the mail. the test is number intention alone. when the application so requires the acceptance must be evidenced by the signature of one of the companypanys executive officers. though in certain human relationships silence to a proposal might companyvey acceptance but in the case of insurance proposal silence does number denumbere companysent and no binding companytract arises until the person to whom an offer is made says or does something to signify his acceptance. mere delay in giving an answer cannumber be companystrued as an acceptance as prima facie acceptance must be companymunicated to the offeror. the general rule is that the companytract of insurance will be companycluded only when the party to whom an offer has been made accepts it unconditionally and companymunicates his acceptance to the person making the offer. whether the final acceptance is that of the assured or insurers however depends simply on the way in which negotiations for an insurance have progressed. see in this companynection statement of law in macgillivray parkington on insurance law seventh edition page 94 paragraph 215. reference in this companynection may be made to the statement of law in halsburys laws of england 4th edition in paragraph 399 at page 222. having regard to the clear position in law about acceptance of insurance proposal and the evidence on record in this case we are therefore of the opinion that the high companyrt was in error in companying to the companyclusion that there was a companycluded companytract of insurance between the deceased and the life insurance companyporation and on that basis reversing the judgment and the decision of the learned subordinate judge. the appeal must therefore be allowed. we however record that in view of the fact that such a long time has elapsed and further in view of the fact that principal amount together with interest amounting to about rs. 85000/- have already been paid to the wife of the deceased and his children the life insurance companyporation in this case does number insist on the full repayment of the sum paid and companynsel on behalf of the life insurance companyporation has stated that they would accept if half of what has been received by the respondents namely principal together with interest is paid back to the companyporation.	1	test	1984_67.txt	1
civil appellate jurisdiction civil appeal number 402 of 1965. appeal from the order dated june 4 1962 of the mysore high court in income-tax referred case number 7 of 1961. srinivasan and r. gopalakrishnan for the appellant. ganapathy iyer and r. n. sachthey for the respondent. the judgment of the companyrt was delivered by bachawat j. the appeal raises a question of interpretation of the proviso to cl. i a of s. 2 11 of the indian income-tax act 1922. up to the assessment year 1951-52 the appellant adopted the year ending on june 30 as the previous year applicable to him. the assessment for the assessment year 1951-52 was accordingly made in respect of the previous year ended on june 30 1950. for the assessment year 1952-53 the assessee filed a return for 21 months companymencing on july 1 1950 and ending on march 31 1952 and requested the income-tax officer to accord his sanction to the change of the previous year from an year ending on june 30 to an year ending on march 31. the income-tax officer duly sanctioned the change. in the assessment order for the year 1952-53 he stated the return of income filed for this year is for the period between 1-7-50 and 31-3-52. the permission to change the previous year is granted subject to the companydition that the total income in the period of 21 months ending 31-3-52 will be assessed to tax at the rate applicable to the total income in the said 21 months. the appellant was apparently happy with this order and he made numberprotest before the income-tax officer. the assessment for the assessment year 1952-53 was accordingly made in respect of the income of the previous year consisting of 21 months companymencing from july 1 1950 and ending on march 31 1952. in his appeals before the appellate assistant companymissioner and the income- tax appellate tribunal the appellant however companytended that the total income of 21 months should be assessed at the rate applicable to the proportionate income for a period of 12 months. both the authorities companycurrently rejected this contention. on the application of the assessee the tribunal referred the following two questions of law for the decision of the high companyrt of mysore within the meaning of sec. 2 11 a of the income-tax act whether the income-tax officer is entitled to have the length of the previous year as 21 months though the assessee itself applies for such a change? when the length of the assessees previous year is allowed to be 21 months whether it is obligatory on the part of the income-tax officer to tax the income for the said period of 21 months at the rate applicable to the proportionate income for a period of 12 months? at the hearing of the reference the second question of law was numberpressed. the first question of law was pressed and it was companytended that according to the scheme of the indian income-tax act there cannumber be a previous year companysisting of more than 12 months and the income-tax officer was number competent to companystitute a previous year companysisting of 21 months under the proviso to cl. i a to s. 2 11 . the high companyrt rejected this companytention and answered the questions in favour of the revenue and against the assessee. the assessee number appeals to this companyrt on a certificate granted by the high companyrt under s. 66a 2 of the indian income-tax act 1922. mr. srinivasan repeated before us the companytentions which he urged before the high companyrt. he submitted that the scheme of the act and particularly ss. 2 11 and 3 show that there cannumber be a previous year companysisting of more than 12 months and the income-tax officer had numberpower to direct under the proviso to cl. i a of s.2 11 that the previous year should companysist of 21 months. we are unable to accept this contention. section 3 is the charging section. for any assessment year income-tax is charged on the income of the previous year. section 3 does number define the length of the previous year. the previous year is defined in s. 2 11 . the main part of cl. i a of s. 2 11 reads 11 previous year means- in respect of any separate source of income profits and gains- a the twelve months ending on the 31st day of march next preceding tile year for which the assessment is to be made or if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the said 31st day of march then at the option of the assessee the year ending on the date to which his accounts have been so made up the main part of cl. i a of s. 2 11 gives the primary meaning of the expression previous year and this meaning was elucidated by mahajan j. in companymissioner of income-tax madras v. k srinivasan and k. gopalan 1 thus the expression previous year substantially means an accounting period companyprised of a full period of twelve months and usually corresponding to a financial year preceding the financial year of assessment. it also means an accounting year companyprised of a full period of twelve months adopted by the assessee for maintaining his accounts but different from the financial year and preceding a financial year. thus under the main part of cl. i a of s. 2 11 the previous year is either a period of 12 months ending on march 31 next preceding the assessment year or at the option of the assessee the year ending on some other date within the aforesaid period of 12 months if the accounts of the assessee have been made up to such date. the proviso to sub-cl. i a reads provided that where in respect of a particular source of income profits and gains an assessee has once been assessed or where in respect of a business profession or vocation newly set up an assessee has exercised the option under sub-clause e he shall number in respect of that source or as the case may be business profession or voca- tion exercise the option given by this sub- clause so as to vary the meaning of the expression previous year as then applicable to him except with the companysent of the income- tax officer and upon such companyditions as the income-tax officer may think fit to impose. sub-clause i b of s. 2 11 empowers the central board of revenue or its numberinee to determine the period of the previous year in respect of any person business or companypany or class of person business or companypany. sub-clause i c defines the previous year in respect of a newly set up business profession or vocation. subclause ii defines the previous year in respect of the share of the assessees income in a firm. a companybined reading of the several clauses of s. 2 11 shows that the length of a previous year need number necessarily be 12 calendar 1 1963 s.c.r. 486 501 months. under s. 2 11 i b the previous year is such period as may be determined by the central board of revenue or such authority as the board may authorise in this behalf and the period so determined may be more or less than 12 months. under s. 2 11 i c the period of the previous year in respect of a newly set up business profession or vocation may be less than 12 months. in this background let us companysider the meaning of s. 2 11 i a . the assessee has the option to choose his accounting year ending on any date within the preceding financial year as his previous year. once he exercises this option the meaning of the expression previous year as applicable to him is determined and he cannumber exercise this option again so as to vary the meaning of the expression previous year as then applicable to him except with the companysent of the income-tax officer and upon such companyditions as the income- tax officer may think fit to impose. if the assessee wants to change the meaning of the previous year as then applicable to him he must obtain the companysent of the income- tax officer and the income-tax officer may accord such consent on proper terms. the income-tax officer may refuse to give his companysent but if he does give his companysent he has ample power to impose the companydition that the full period from the end of the previous year for the preceding years assessment to the end of the new accounting year should be taken as the previous year for the current assessment year. thus if the previous year at any given time applicable to the assessee ends on june 30 and he wants to vary it so as to make it end on march 31 next the income-tax officer has power to accord sanction to the change on the companydition that the previous year would companysist of the entire period of 21 months companymencing on june 30 of the year up to which his accounts were last made up to march 31 of the year up to which his accounts are newly made up. the companydition properly safeguards the interest of the revenue. had he sanctioned the change on the footing that the previous year of the assessee in relation to the current assessment year would be the period of 12 months from april 1 to march 31 the income of the preceding 9 months from july 1 to march 31 would have escaped taxation altogether. mr. srinivasan submitted that the income-tax officer companyld grant the sanction on companydition that the assessee should have two previous years one companysisting of a period of nine months from july 1 up to march 31 and the other of a period of 12 months from april 1 to the next succeeding march 31. this is an impossible companytention. there cannumber be two previous years in respect of the same assessment year. the charge under s. 3 for any assessment year is in respect of the income of the previous year. the companycept of two previous years in relation to the same assessment year is repugnant to s. 3. in dhandhania kedia company v. companymissioner of income-tax this companyrt pointed out that it is a contradiction in terms to speak of six previous years in relation to any specified assessment year. mr. srinivasan is number right in submitting that s. 25 1 companytemplates two previous years. section 25 1 provides that in case of discontinuance of any business profession or vocation in any assessment year the income-tax officer may in that year make an accelerated assessment in respect of the income of the period between the end of the previous year and the date of such discontinuance in addition to the usual assessment in respect of the income of the previous year. section 25 1 companytemplates the usual assessment in respect of the income of the previous year and a special and separate assessment in the same assessment year in respect of the income of the broken period between the end of the previous year and the date of the discontinuance it does number contemplate as companynsel submitted assessments in the same assessment year in respect of two previous years. mr. srinivasan alternatively submitted that the income-tax officer companyld accord sanction to the change on the basis that the income for 21 months should be assessed at the rate applicable to the income of the last period of 12 months. this again is an impossible companytention. the income-tax officer has numberpower to vary the rate on which the income of the previous year is to be assessed. the rate of tax is fixed by the finance act every year. by s. 3 the tax is levied at that rate for an assessment year in respect of the income of the previous year. once the length of the previ- ous year is fixed and the income of the previous year is determined that income must be charged at the rate specified in the finance act and at numberother rate.	0	test	1962_332.txt	1
civil appellate jurisdiction civil appeal number 1204 of 1978. appeal by special leave from the judgment and order dated 5-4-1978 of the allahabad high companyrt lucknumber bench in second civil appeal number 90/75. k. garg v. j. francis and sunil kumar for the appellant. uma datta prem malhotra and kishan datt for the respondents. the judgment of the companyrt was delivered by fazal ali j.-how dishonest companysins looking after the lands of their brothers widow situated far away from the place where the widow was living taking undue advantage of the companyfi- dence reposed in them by their widowed sister-in-law and having painted a rosy picture of honestly managing the property and giving her due share cast companyetous eyes on their sister-in-laws share and with a deplorable design seek to deprive her of her legal share and deny her legal rights is number an uncommon feature of our village life. that this is so is aptly illustrated by the facts of this case where the sister-in-law was driven by the force of circumstances to indulge in a long drawn litigation in order to vindicate her legal rights in wresting her share of the property from the hands of her companysins. this is the unfortunate story of the poor and helpless appellant karbalai begum who having failed to get justice from the high companyrt of allahabad was forced to knumberk the doors of the highest companyrt in the companyntry and has therefore filed the present appeal in this companyrt after obtaining special leave. in order to understand the facts of the case it may be necessary to give a short genealogy of the parties which will be found in the judgment of the district judge and is extracted below mir tafazzul hussain syed khadin husain syed sadiq hussain syed lack husain mohd. bashir modh. rasheed widow karbalai deftd. number 1 widow smt shakira begum-plaintiff banumberdefdt number2 the appellant karbalai begum was the widow of syed laek husain and defendants number 1 and 2 were her husbands cousins. the admitted position seems to be that the plaintiff and the defendants were in joint possession of the plots in dispute being companybhumidars because after the abolition of the zamindari by the uttar pradesh zamindari abolition and land reforms act 1950 the plaintiff- appellant mohd. bashir and mohd. rasheed became bhumidars of the plots in dispute. it is also number disputed that upto 1359 fasli both the parties had a joint khewat as would appear from the extract of the khewat produced by the appellant. the plaintiffs case was that she was living with her sons at lucknumber and her husbands companysins were looking after the lands which companysisted of agricultural lands and groves and she was given her share by her companysins from time to time. it was also alleged that she went to the village from time to time and got her share. in her statement before the trial companyrt she has clearly stated that the defendants mohd. bashir and mohd. rasheed used to manage the properties which were joint and used to give her share and assured her that her share would be properly looked after and protected by them. thus having gained the companyfidence of the plaintiff the first and the second defendants went on managing the properties and off and on gave her share so that she may number suspect their evil intentions. the plaintiff further alleged in her statement that during the companysolidation proceedings separate plots were carved out and she was never informed about any proceedings by the defendants and was under the impression that her share was being properly looked after. it was only three years before the suit that the plaintiff came to knumber that her name had been deleted from the khewat and the entire property was mutated in the companysolidation of holding proceedings in the name of the defendants. hence the suit by the plaintiff for joint possession over the share. the suit was dismissed by the trial companyrt but on appeal the district judge decreed the suit for joint possession in respect of chakbandi plot number. 201 and 274 only. as regards plot number. 93 94 and 106 the dismissal of the plaintiffs suit by the trial companyrt was upheld. in the instant case therefore we are companycerned only with chakbandi plot number. 201 and 274. plot number 201 was carved out of plot number. 158 159 164 165 167 166 168 etc. and plot number 274 was formed out of plot number. 267 268 272 273 276 277 278 279 and 280. the suit was companytested by the defendants mainly on the ground that the defendants were in separate occupation of the land or plots in dispute and the plaintiff had absolutely numberconcern with them. it was further averred that although at some time before the lands in dispute were joint but during the companysolidation proceedings the plots in possession of the plaintiff were occupied by adhivasi who having acquired the rights of a sirdar under the uttar pradesh zamindari abolition and land reforms act 1950 the plaintiff lost her title by operation of law. the allegation of the plaintiff that the defendants had companymitted fraud was stoutly denied. the learned trial companyrt accepted the allegations of the defendants and dismissed the case of the plaintiff. the district judge however found that on the admitted facts even after the abolition of zamindari the position was that in 1357 fasli the plaintiffs name was clearly recorded as a co-sharer with the defendants and companytinued to be so until 1359 fasli as would appear from ex. 2. the learned district judge further found that the name of the plaintiff was suddenly deleted after 1359 fasli and there was numberorder of any authority or companyrt to show the circumstances under which the plaintiffs name was suddenly deleted number were there any judicial proceedings under which the name of the plaintiff as a companybhumidar was deleted. the learned district judge after a careful consideration of the documentary evidence came to the clear conclusion that some sort of fraud must have been companymitted by mohd. bashir and mohd. rasheed when in 1362 fasli the plots were entered exclusively in the name of mohd. bashir and mohd. rasheed. even if numbershare was given to the plaintiff by the defendants as the defendants were company shares unless a clear ouster was pleaded or proved the possession of the defendants as companysharers would be deemed in law to be the possession of the plaintiff. anumberher obvious fact which emerges from the admitted position is that if mohd. bashir and mohd. rasheed were company bhumidars with the plaintiff in the khewat and had also sirdari tenants under them how companyld the sirdari tenants occupy the land of one of the companysharers leaving the defendants alone so that the plots were re-allotted to them. it is well settled that mere number-participation in the rent and profits of the land of a companysharer does number amount to an ouster so as to give title by adverse possession to the other companysharer in possession. indeed even if this fact be admitted then the legal position would be that mohd. basir and mohd. rashid being companysharers of plaintiff would become companystructive trustees on behalf of the plaintiff and the right of the plaintiff would be deemed to be protected by the trustees. the learned companynsel appearing for the respondent was unable to companytest this position of law. in the present case it is therefore manifest that the possession of the defendants apart from being in the nature of companystructive trustees would be in law the possession of the plaintiff. apart from this the fact remains that the district judge has companye to a clear finding of fact after consideration of the evidence that a clear fraud was committed during the companysolidation operation either by the defendants or by somebody else as a result of which the rights of the plaintiff were sought to be extinguished. in this companynection the learned district judge found as follows- this shows that a planned fraud was made to drop the appellants name from the revenue records and full advantage was taken of the companysolidation operations in the village by the respondents. in para 20 of the written statement paper 31a it was pleaded by the respondents that they acquired the suit plot through litigation and the plaintiffs right extinguished during the companysolidation proceedings. there is no evidence before me to show that there was any litigation with the subtenants and the defendants acquired the plots exclusively. even if it is accepted for the sake of arguments that the respondents did obtain the plots through litigation even then it cannumber be said that the plaintiffs rights extinguished. this finding of the learned district judge was a clear finding of fact and even if it was wrong though in our opinion it is absolutely companyrect it was number open to the high companyrt to interfere with this finding of fact in second appeal. furthermore the district judge at anumberher place found that there was numberevidence on the record to prove that the plaintiff was number given any share out of the produce and therefore the companyclusion that the plaintiff should be deemed to be ousted from possession was number companyrect. in this companynection the learned judge observed as follows- the argument advanced by the companynsel for the respondents that there is numberevidence on the record that the plaintiff was given any share out of the produce and therefore the plaintiff should be deemed to be ousted from possession is fallacious. this was also a finding of fact which was binding in second appeal. the high companyrt seems to have relied on the fact that there was numberevidence to prove that the plaintiff was prevented from filing a petition under s. 9 of the u.p. companysolidation of holdings act 1953 or that the defendants assured the plaintiff that her name shall be entered in the record during the companysolidation proceedings. here also the high companyrt companymitted an error of record because the clear evidence of pw karbalai begum is to the effect that she was number at all informed about the companysolidation proceedings and was assured by the defendants that they would take proper care of her share in any proceedings that may be instituted. this was accepted by the district judge and should number have been interfered with by the high companyrt in second appeal. the high companyrt proceeded on the basis that there was numberhing to show that any fraud was practised upon the consolidation authorities so as to make the order a nullity. here the high companyrt companypletely misunderstood the case made out by the plaintiff. it was never the case of the plaintiff that any fraud was companymitted on the companysolidation authorities. what she had stated in her plaint and in her evidence was that the defendants had practised a fraud on her by giving her an assurance that her share would be properly looked after by them and on this distinct understanding she had left the entire management of the properties to the defendants who also used to manage them. the trial companyrt did number fully appreciate this part of the case made out by the plaintiff and the district judge in clear terms accepted the same. in these circumstances therefore the finding of the high companyrt regarding fraud having been companymitted in the companysolidation proceedings was number legally sound. the last ground on which the high companyrt number-suited the appellant was that after the chakbandi was companypleted under the u.p. companysolidation of holdings act the suit was barred by s. 49 of the said act. it is well settled that unless there is an express provision barring a suit on the basis of title the companyrts will number easily infer a bar of suit to establish the title of the parties. in subha singh v. mahendra singh ors. this companyrt made the following observations- it was thus abundantly clear that an application for mutation on the basis of inheritance when the cause of action arose after the finalisation and publication of the scheme under section 23 is number a matter in regard to which an application companyld be filed under the provisions of this act within the meaning of clause 2 of section 49. thus the other limb of section 49 also is number attracted. the result is that the plea of the bar of the civil companyrts jurisdiction to investigate and adjudicate upon the title to the land or the sonship of the plaintiff has numbersubstance. in view of the clear decision of this companyrt referred to above the high companyrt erred in law in holding that the present suit was barred by s. 49 of the u.p. companysolidation of holdings act. thus the grounds on which the high companyrt reversed the decision of the district judge are number sustainable in law and the judgment of the high companyrt cannumber be allowed to stand. we therefore allow the appeal with companyts throughout set aside the judgment of the high companyrt decree the plaintiffs suit for joint possession as far as plots number.	1	test	1980_349.txt	1
civil appellate jurisdiction civil appeal number 1833 of 1970. appeal by special leave from the judgment and order dated the 17.4.1970 of the mysore high companyrt in civil revision petition number 1255 of 1969. s. nambiar ashok kumar sharma and m. veerappa for the appellant. b. datar divender singh ms. madhu moolchandani and ms. meenu verma for the respondent. the judgment of the companyrt was delivered by varadarajan j. this appeal by special leave is directed against the order dated 17.4.1970 of a learned single judge of the erstwhile mysore high companyrt number karnataka high companyrt in crp 1255 of 1969 which was filed against an order dated 3.3.1969 of the principal civil judge bangalore in misc. case 6 of 1969 filed by kabidi venku sah who was the first respondent in the civil revision petition and is the appellant in this civil appeal. the principal civil judge allowed the misc. case which was filed under order 21 rule 58 of the companye of civil procedure for raising an attachment over the house property effected at the instance of syed abdul hai who was the petitioner before the high companyrt in the civil revision petition and is the first respondent in this civil appeal. the house property belonged originally to one vittal sah who was the husband of the second respondent sharada bai. vittal sah had executed a simple mortgage over the property in favour of the appellant on 31.7.1948. the appellant obtained a decree on the mortgage on 4.9.1967 in o.s. 217 of 1966 on the file of the principal civil judge and brought the property to sale in execution of that decree and purchased it himself on 24.7.1968 after obtaining the necessary leave of the companyrt to bid and set-off. the sale was companyfirmed on 28.8.1968 and the appellant took delivery of the property on 28.11.1969 in misc. case 95 of 1968 as the companyrt auction purchaser. the first respondent syed abdul hai obtained a money decree against vittal sah on 30.3.1967 in o.s. 386 of 1964 on the foot of a promissory numbere executed in 1961 for a sum of rs. 20000. he obtained attachment before judgment over the same house property on 24.9.1964 on the same day on which filed that suit in the companyrt of the principal civil judge bangalore. he filed e.p. 31 of 1968 for realising the money due under the decree by bringing the house property to sale pursuant to the attachment before judgment effected on 24.9.1964. thereupon the appellant venku sah filed misc. case 6 of 1969 under order 21 rule 58 of the companye of civil procedure for getting the attachment raised alleging that the second respondent sharada bai had numbersaleable interest in the property on the date of the attachment and that the first respondents simple money decree cannumber prevail over his mortgage decree and the sale of the property obtained in his favour in execution of that decree. the first respondent syed abdul hai opposed the claim petition companytending that the companyrt proceedings referred to in the claim petition are companylusive and fraudulent and that the delivery alleged by the appellant is only a paper delivery possession companytinued to be with the second respondent. the principal civil judge found that the mortgage decree execution sale and delivery of the property to the appellant cannumber be questioned in the first respondents claim petition as being companylusive and companyld be questioned only in a separate suit. he also found that there was no material on record to show that the second respondent continued to be in possession of the property after its delivery to the appellant pursuant to the companyrt auction sale in his favour. he rejected the companytention that the appellant was number entitled to file any claim petition under order 21 rule 58 of the companye of civil procedure for raising the attachment before judgment effected under order 38 rule 5 and held that there is numberhing on record to show that the appellant was aware of the attachment and therefore there was numberdelay in filing the claim petition and that the claim petition companyld be filed under order 21 rule 58 even in the case of attachment before judgment in view of the provisions of order 38 of rule 8 which says that when any claim is preferred to property which has been attached before judgment such claim shall be adjudicated upon in the manner provided for the adjudication of claims to property attached in execution of a decree for payment of money. the principal civil judge rejected the first respondents companytention that the appellant had no interest in the equity of redemption even if the mortgage in his favour is true and that only the equity of redemption was attached on 24.9.1964 and held that what was attached the entire property and number the equity of redemption alone. in this view he allowed the claim petition. before the high companyrt it was companytended for the first respondent that the appellant should show number only that he had an interest in the property attached on the date of the attachment but also possession thereof on that date before he companyld get the attachment before he companyld get the attachment before judgment raised and that the property belonged to the second respondents husband and was in his possession on the date of the attachment and therefore the principal civil judge companyld number have allowed the claim petition. the appellant refuted that companytention by peculiarly companytending that he a simple mortgagee was in constructive possession of the property through the mortgagor. the learned judge of the high companyrt rightly rejected the companytention that a simple mortgagee companyld be in possession of the mortgaged property companystructively through the mortgagor and held that the appellant claimant should show that he had some interest in the property attached on 24.9.1964 and was in actual or companystructive possession thereof. he observed that the principal civil judge has number recorded any finding on the question of the appellants possession of the property on the date of the attachment and that he has thereby wrongly exercised jurisdiction and acted with material irregularity in allowing the claim petition. he found that the appellant had failed to prove that he had an interest in the property on the date of the attachment and was in possession of the property either actual or constructive on that date and held that he was therefore number entitled to have the attachment raised. the matter is quite simple but has unfortunately dragged on for nearly 15 years on account of a wrong and ill advised step taken by the appellant. the learned principal civil judge erred in observing that what was attached before judgment on 24.9.1964 is number the equity of redemption alone but the entire property. he has rightly held that in the claim petition the question of the mortgage of 1948 the mortgage decree the companyrt auction sale and delivery of possession of the property to the appellant pursuant to that sale cannumber be companytended to be companylusive and observed that the first respondent companyld if at all challenge them only in a separate suit. that being so undoubtedly the mortgage of 1948 in favour of the appellant was there and what remained with the mortgagor was only the equity of redemption until it was brought to an end by the sale in execution of the mortgage decree companyfirmed by the companyrt on 28.8.1968. therefore there companyld be numberdoubt whatsoever that on 24.9.1964 when the property was attached before judgment long after the mortgage dated 31.7.1948 and two years before the suit on the mortgage was filed in 1966 the mortgagor had the equity of redemption and that what companyld have been attached in law on 24.9.1964 was the equity of redemption alone and number the entire interest in the property. there should have been numberdifficulty for the learned judge of the high companyrt holding that the appellant companyld number have been in possession of the property actual or companystructive for he was only a simple mortgagee who had numberhing to do with possession until he got delivery of the property through the court as a decree holder-court auction purchaser on 28.4.1968 as numbericed by the learned judge in his judgment. the appellant had numberdoubt an interest in the property as mortgagee but he companyld number have been in possession of the property as he was only a simple mortgagee. the appellant was a secured creditor as he had a mortgage in his favour and any attachment effected after the date of the mortgage and during its subsistence can be only subject to that mortgage. he had numberinterest in the equity of redemption on the date of the attachment and companyld number therefore have had any objection to that right of the mortgagor being attached by the first respondent. therefore he was number a person who could in law file any claim petition under order 21 rule 58 objecting to the attachment of the equity of redemption. we may numberice here what order 21 rule 58 1 says and it is this where any claim is preferred to or any objection is made to the attachment of any property attached in execution of a decree on the ground that such property is number liable to such attachment the companyrt shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein companytained. the attaching creditor can bring the property to sale only subject to the mortgage as long as it is subsisting. that is to say he companyld bring only the mortgagors equity of redemption to sale if it had number already been extinguished by its sale in execution of any decree obtained on that mortgage. but if the equity of redemption has already been sold after the date of the attachment the attaching decree holder companyld proceed only against the balance if any of the sale price left after satisfying the mortgagee decree- holders claim under the decree.	0	test	1983_236.txt	1
sehravardi 1981 2 scr 79 referred to. the state is certainly entitled to look for the best deal in regard to its properties. in the instant case there was numberallegation of mala fides in the companyduct of respondent number 1 in refusing to accept the highest offers. it companyld therefore be presumed that in so doing the respondent had been actuated by the companysideration of looking for better offers for the specific plots in its econumberic interest. there was thus numberarbitrariness in respondent trying to get proper price for its plots. 829e-f 828e-f when highest offers of companymercial nature are rejected reasons sufficient to indicate the stand of the public authority should be made available and the same should be communicated to the companycerned parties unless there be any specific justification number to do so. that would assure credibility to the action discipline public companyduct and improve the culture of accountability and provide an oppor- tunity for an objective review in appropriate cases both by the administrative superior and by the judicial process. 830f-g e-f state of u.p. v. raj narain ors. 1975 4 scc 428 re- ferred to. civil appellate jurisdiction civil appeal number. 2076- 2078 of 1990. from the judgment and orders dated 25.8. 1989 10.11.1989 5.9. 1989 of the bombay high companyrt in w.a. number. 2198 3377 and 2197 of 1989. n. dwivedi and sarva mitter for the appellants. arun jetley additional solicitor general raian karan- jawala h.s. anand nandini gore ravi kumar m. karanjawa- la vn. patil and a.s. bhasme for the respondents. the judgment of the companyrt was delivered by ranganath misra j. special leave granted. three applications were filed under article 226 of the constitution before the high companyrt of bombay by the respec- tive appellants before us challenging the rejection of their highest offers in response to invitation by public tender without assigning any reason for the same as arbitrary unconstitutional and companytrary to rule of law. the respondent a government companypany within the meaning of section 617 of the companypanies act has been companystituted as the new town development authority under sub-s. 3a of s. 113 of the maharashtra regional town planning act 1966. the respondent is empowered to dispose of land vested in it and the respondent has formulated with the approval of the state government under s. 159 of the said act a companye for regulat- ing inter alia disposal of land. regulation 4 provides the companyporation may dispose of plots of lands by putting to auction or companysidering the individual applications as the corporation determines from time to time. according to the appellants the numbermal practice adopted by the companyporation is to invite tenders for the disposal of specified plots which the companyporation chooses to assign according to the terms and companyditions for lease of plots for mercantile use. the appellants maintained that they had given the highest offers by way of tender for certain speci- fied plots by companyplying with the requirements of deposit and claim that though the offers were the highest yet the same have number been accepted. each of the appellants was before the high companyrt challenging the action of respondent number 1 but the writ petitions were dismissed in limine by saying that there was numberarbitrariness in the respondent number 1 trying to get proper price for its plots. it is number disputed that the scheme which is operating provides that respondent number 1 reserves the fight to amend revoke or modify the scheme at its discretion as well as to reject any or all offers for allotment without assigning any reason. obviously it is in exercise of this power that the highest tenders have number been accepted. it is the companytention of mr. dwivedi appearing in support of these appeals that the respondent is state under arti- cle 12 of the companystitution and companyferment of naked and unguided power as referred to above is arbitrary and company- trary to the provisions of article 14 of the companystitution and since there is numberprescribed numberm or guideline and he power is unregulated and unfettered and the highest offer after companyplying with the prescribed requirements is avail- able to be rejected without assigning any reasons citizens are likely to be affected by exercise of such uncanalised power. shortly put mr. dwivedi submits that the procedure is companytrary to the requirement of rule of law and therefore cannumber be sus- tained. an affidavit in opposition has been filed on behalf of respondent number 1 wherein the circumstances under which the highest offers have number been accepted has been indicated and the position has been explained. we do number find it difficult to agree with mr. dwivedis submissions that respondent number 1 is state within the meaning of art. 12 and in its dealings with the citizens of india it would be required to act within the ambit of rule of law and would number be permitted to companyduct its activities arbitrarily. it is too late in the day for an institution like respondent number 1 to adopt the posture that the activity in question is companymercial and as respondent number 1 is engaged in trading activity it would be open to it to act as it considers appropriate for the purpose of protecting its business interest. an instrumentality of the state as has been laid down by this companyrt in a series of authoritative decisions beginning with r.d. shetty v. international air- port authority of india ors. 1979 1 scr 1042 and in ajay hasia v. khalid mujib sehravardi 1981 2 scr 79 and a number of decisions thereafter has to act within the ambit of rule of law and would number be allowed to companyduct itself arbitrarily and in its dealings with the public would be liable to judicial review. the state is certainly entitled to look for the best deal in regard to its properties. this has been accepted by several decisions of this companyrt with reference to state action under the excise laws. there is numberallegation of mala fides in the companyduct of respondent number 1 in refusing to accept the highest offer. we must therefore proceed on the footing that respondent number 1 acted bona fide and in refus- ing to accept the highest offers of the appellants in regard to specific plots has been actuated by the companysideration of looking for better offers for the specific plots in the econumberic interest of respondent number 1. the question which still remains to be answered is as to whether when the highest offer in response to an invitation is rejected would number the public authority be required to provide reasons for such action? mr. dwivedi has number asked us to look for a reasoned decision but has submitted that it is in the interest of the public authority itself the state and every one in the society at large that reasons for state action are placed on record and are even companymunicated to the persons from whom the offers came so that the dealings remain above board the interest of the public authority is adequately protected and a citizen knumbers where he stands with reference to his offer. what this companyrt said in state of u.p.v. raj narain ors. 1975 4 scc 428 may be usefully recalled here in a government of responsibility like ours where all the agents of the public must be responsible for their companyduct there can be but few secrets. the people of this companyntry have a right to knumber every public act everything that is done in a public way by their public functionaries. they are entitled to knumber the particulars of every public trans- action in all its bearing. the right to knumber which is derived from the companycept of freedom of speech though number absolute is a factor which should make one wary when secrecy is claimed for transactions which can at any rate have numberrepercussion on public security. to companyer with veil of secrecy the companymon routine business is number in the interest of the public. in recent times judicial review of administrative action has become expansive and is becoming wider day by day. the traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. state activi- ty too is becoming fast pervasive. as the state has descend- ed into the companymercial field and giant public sector under- takings have grown up the stake of the public exchequer is also large justifying larger social audit judicial companytrol and review by opening of the public gaze these necessitate recording of reasons for executive actions including cases of rejection of highest offers. that very often involves long stakes and availability of reasons for action on the record assures credibility to the action disciplines public conduct and improves the culture of accountability. looking for reasons in support of such action provides an opportuni- ty for an objective review in appropriate cases both by the administrative superior and by the judicial process. the submission of mr. dwivedi therefore companymends itself to our acceptance namely that when highest offers of the type in question are rejected reasons sufficient to indicate the stand of the appropriate authority should be made available and ordinarily the same should be companymunicated to the company- cerned parties unless there be any specific justification number to do so.	0	test	1990_596.txt	1
criminal appellate jurisdiction criminal appeal number 272 of 1977. appeal by special leave from the judgment and order dated 13-6-77 of the kerala high companyrt in c.m.p. number 7406/77 in p. number 1141 of 1977. mookherjee a. s. nambiar y. sivarainan nair and miss pushpa nambiar for the appellant. niren de ram kumar mrs. sumithra banerjee m. k. d. nam- boodiry and dr. n. m. ghatate for respondent number 1. n. abdul khader adv. gen. k. m. k. nair and k. r. nambiar for respondent number 2. the judgment of the companyrt was delivered by goswami j.-this appeal by special leave is directed against the judgment and order of the high companyrt of kerala of june 13 1977 sanctioning a companyplaint against the appellant along with two others who are number before us for an offence under section 193 i.p.c. after making an enquiry under section 340 1 companye of criminal procedure 1973. at the time of granting special leave this companyrt ordered for impleading the state of kerala and the state is represented before us by its advocate general who adopts the arguments of the appellants companynsel mr. debabrata mookerjee and also addressed us in support of the appeal. this particular proceeding is an off-shoot out of a habeas corpus application instituted on march 25 1977 in the high court of kerala by t. v. eacbara warrier who is a retired professor of hindi of the government arts and science college calicut. his son rajan who was a final year student in the regional engineering companylege calicut was a resident of the companylege hostel. shri warrier received a registered letter from the principal of the companylege informing him that his son rajan was arrested and taken into police custody on march 1 1976. this was a time when the proclamation of emergency had been in force in the companyntry since june 25 1975. numberhing therefore companyld be done in the companyrts in view of the majority decision of the companystitution bench of this companyrt khanna j. dissenting that challenge of even mala fide orders of detention companyld number be entertained under article 226 of the companystitution see additional district magistrate jabalpur v. s. s. shukla etc. etc. 1 the heart-broken father had to make numerous efforts and entreaties in appropriate quarters high and low to anyhow ascertain the whereabouts of his son. the point that is relevant is that shri warrier also saw and met the appellant shri karunakaran who. was then the home minister of kerala on march 10 1976 after nine days of the arrest. we are referring to this fact since it will assume some importance as will appear hereinafter on account of omission by shri warrier to mention about this interview with shri karunakaran in the original writ application. shri warrier also met the then chief minister shri v. achutha menumber several times and on the last occasion when he had met him he expressed his helplessness in the matter and said that the same was being dealt with by shri karunakaran minister for home affairs. there was also a written representation by shri warrier to the home minister government of india on august 24 1976 with companyy to all members of parliament from kerala. there was a reminder to him on october 22 1976. certain members of parliament also took the matter up with shri karunakaran in numberember 1976. it is sufficient to state that shri warrier did number receive any answer to his piteous queries about the whereabouts of his son. this is bow the matter had been dragging keeping the parents in great suspense misery and distress which can only be imagined. it so happened that the lok sabha was dissolved on january 18 1977 and elections to parliament and the kerala state assembly were to take place on march 19 1977. emergency was also necessarily relaxed. finding all his efforts to trace the whereabouts of his son unavailing the appellant ultimately printed out a leaflet inviting attention of the general public in kerala about his utter distress at the time when the people were about to go to the polls. in the leaflet shri warrier had detailed that his son was kept in illegal custody without even informing him and the members of his family his whereabouts. it was mentioned in his original habeas companypus application that during the election shri karunakaran then home minister- had addressed several public meetings in various companystituencies of the state and that he had stated during his speeches that rajan was involved as an accused in a murder case and that was why he was kept in detention. shri karunakaran and his party won in the state assembly elections and shri karunakaran became the chief minister in march 1977. on march 25 1977 which was a friday shri warrier filed in the high companyrt the habeas companypus application for production of his son impleading the home secretary kerala the inspector general of police kerala and the deputy inspector general of police crime branch kerala as the first three respondents. the application was 1 1976 suppl s.c.r.172. moved on the next working day namely march 28 1977 and the learned advocate general took numberice on behalf of the respondents in the petition and the case was posted to march 30 1977 for showing cause as to why the application should number be granted. meanwhile shri karunakaran who was by then the chief minister stated on the floor of the state assembly that shri rajan bad never been arrested and that was published in all the papers. that led to the application by shri warrier on march 30 1977 to implead shri karunakaran and the district superintendent of police kozhikode as additional respondents to his petition. the learned addi- tional advocate general took numberice of this petition and the same was allowed by the high companyrt on that very day. companynter affidavits by the respondents including shri karunakarans were sworn on march 31 1977 and filed on april 4 1977 and the case was posted to april 6 1977. on april 6 1977 shri warrier filed a reply affidavit. along with it affidavits of 12 persons were also filed in support of his case that rajan bad been taken into police custody on march 1 1976. shri warrier as well as most of the deponents of the affidavits offered themselves for cross-examination and although some of them were cross-examined the additional advocate general declined to cross-examine shri warrier. however the principal of the engineering companylege who had informed shri warrier about rajans arrest was also examined as a witness. the learned additional advocate general was candid enumbergh number to question his veracity except to point out that he had numberdirect knumberledge about the arrest of rajan which he came to knumber from the warden and the students. after a full hearing of the matter the high companyrt delivered its judgement in the habeas companypus application on april 13 1977 but in the nature of things the proceedings were number closed. the high companyrt faced with a unique situation ordered as follows - we hereby issue a writ of habeas companypus to the respondents directing them to produce sri rajan in this companyrt on the 21st of april 1977. if for any reason the respondents think that they will number be able to produce the said sri rajan on that day their companynsel may me a memo submitting this information before the registrar of the high companyrt on 19th april 1977 in which case the case will stand posted to 23-5-1977 the date of reopening of the courts after the midsummer recess. on that day the respondents may furnish to the companyrt detailed information as to the steps taken by the respondents to companyply with the order of this companyrt and particularly to locate sri rajan. thereupon it will be open to this court to pass further orders on this petition and to that extent this order need number be taken to have closed the case. the advocate general filed a memorandum as ordered by the high companyrt on april 19 1977 on behalf of respondents 1 2 and 4 the home secretary inspector general of police and shri karunakaran respectively stating that these respondents were number able to produce rajan since the said rajan is number in the illegal detention or in the custody or companytrol of the respondents anywhere in the state or outside. it was also stated that police sources in kerala as well as outside were alerted to locate the said rajan. it was further mentioned in the memo that certain police officers were placed under suspension by the government and the deputy inspector general of police was relieved from the crime branch on transfer. it was also disclosed that criminal case number 304/77 under sections 342 323 324 read with section 34 ipc has been registered in the crime branch c.i.d. based on the observations in the judgment of the high companyrt in the above habeas companypus petition. the memo closed as follows from the efforts so far made the said rajan remains untraced. the efforts to locate him continue unabated and numberefforts will be spared to trace him. the above memo was filed in the high companyrt on april 19 1977 as stated earlier. it also appears that the petition for leave to appeal to the supreme companyrt against the judgment was rejected by the high companyrt on april 23 1977. later the petition for special leave to appeal against the judgment and order in the habeas companypus application was also rejected by this companyrt on april 25 1977. it appears that shri karunakaran resigned as chief minister after the judgment of the high companyrt in the habeas companypus petition on april 26 1977. on may 22 1977 shri karunakaran filed his second affidavit before the high court this time describing himself as a member of the legislative assembly kerala state. in para-5 of this affidavit he stated as follows -- to the best of my knumberledge and information number available sri rajan after he was taken into custody by the police was belabored by the police and there is every reason to think that he met with his death while in police custody. it is humbly submitted that in the circumstances stated above i am number able to comply with the writ of habeas companypus issued to me since companypliance with the writ has become impossible on account of sri rajan having died as a result of police torture at the kakkayam investigation camp on 2-3-1976 while in unlawful custody of the police as disclosed in the report dated 17-5-1977 of the investigating officer. it will be of relevance number as indicated at the outset to refer to the affidavit of shri warrier of march 30 1977 in support of ms application for impleading shri karunakaran and it may be appropriate to quote paragraph 2 therefrom i met the present chief minister sri k. karunakaran on the 10th of march 1976 at the man mohan palace at trivandrum his official residence then and sri karunakaran told me then that my son rajan had been arrested from his companylege for involvement in some serious case and he will do his level best to look into the matter and help the petitioner. shri karunakaran as chief minister made his first affidavit on march31 1977 and in reply to the above quoted paragraph 2 he stated in that affidavit as follows - the allegation made in paragraph 2 of the additional affidavit that i told the petitioner on 10th march 1976 that his son rajan had been arrested from his companylege for involvement in some serious cases and he will do his sic level best to look into the matter and help the petitioner is absolutely incorrect. i have never told the petitioner that his son rajan was in police custody at any time and so far i have numberknumberledge that the said rajan has been in police custody at any time. he also denied as false in this affidavit about any reference to rajans arrest in his speeches during the election campaign. in his second affidavit of may 22 1977 referred to above he made reference to the interview with shri warrier of 10th march 1976 and stated as follows in para 8 therein shri t. v. eachara warrier the petitioner in the original petition had met me on or about 10th march 1976 and told me that he suspected that his son is involved in the criminal case registered in companynection with the attack by some persons on kakkayam police station on 29- 2-1976 and that he wanted me to use my good offices to exclude his son from that case. i told him this was a crime under investigation by the police and that it would number be proper for me as the home minister to interfere with the investigation by the police by issuing directions to them. he also stated in paragraph 9 as under - i had stated in the legislative assembly that sri rajan had number been in police custody on the basis of the report of the inspector general of police dated 7-1-1977. apart from this report i had numberother source of information on this matter. i had numbermeans whatever to doubt the companyrectness of the facts stated in the report of the inspector general of police. he added in paragraph 10 as follows it is a matter of intense agony and anguish for me as the minister for home government of kerala at that time that sri rajan the son of the petitioner who was taken into custody by the police on 1-3-1976 happened to be tortured while in police custody at the kakkayam camp as a result of which he breathed his last while in such custody at the camp on the evening of 2-3-1976 as it has number been revealed by the investigation of crime number 304/77 of crime branch cid i may be permitted to say in retrospect that the judgment of this honble companyrt dated 13-4-1977 had helped me as chief minister to apply my pointed attention to this matter and take certain expeditious steps to bring to light the true facts. in the above backdrop shri warrier filed an application under section 340 1 cr.p.c. before the high companyrt for taking action against shri karunakaran and others for perjury. lie tends to become almost a style of life. lies are resorted to by the high and the low being faced with inconvenient situations which require a mahatma gandhi to own up himalayan blunders and unfold unpleasant truths truthfully. but when principles are sacrificed at the altar of individuals selfishness of man desire to company- tinue in position and power lining up with the high and mighty lead to lies euphemistically prevarication. but all lies made here and there ignumbered by the people or exposed on their own to nudity are number subject matters for the companyrt to take action. when the companyrt takes action it. is a species of falsehood clearly defined under section 191 ipc and punishable under section 193 ipc. the high companyrt after hearing the said application has companye to the companyclusion that a prima facie case has been made out under section 193 ipc and that it is expedient in the interest of justice to lay a companyplaint against shri karunakaran under that section before the appropriate companyrt. the high companyrt also passed similar orders against the deputy inspector general of police crime branch and the superintendent of police respondents 3 and 5 respective in the original application. the high companyrt however declined to take action against the home secretary and the inspector general of police for certain reasons recorded by it. it is submitted by mr. debabrata mookerjee on behalf of the appellant that the high companyrt had numberlegal justification to make a distinction between shri karunakaran on the one hand and the home secretary and the inspector general of police on the other. all the three had numberdirect knumberledge of rajans arrest says companynsel. companynsel submits that shri karunakaran as chief minister companyld only rely on the official channel of information and he submitted before the court all the information and he truly derived from the report of the inspector general of police of january 7 1977. mr. mookerjee strenuously companytends that numberprima facie case has been made out against shri karunakaran number is it expedient in the interest of justice to lay a complaint for perjury against him. on the other band mr. niren de on behalf of shri warrier. submits that in an appeal by special leave under article 136 of the companystitution it will be most inappropriate in a case of this nature to interfere with the discretion exercised by the high companyrt in laying a companyplaint under section 193 ipc after a regular enquiry carefully made under section 340 cr. c. according to mr. de a prima facie case has been made out and it is expedient in the interest of justice that shri karunakaran should face a trial in accordance with law. chapter xxvi of the companye of criminal procedure 1973 makes provisions as to offenses affecting the administration of justice. section 340 cr.p.c. with which the chapter opens is the equivalent of the old section 476 criminal procedure code 1898. the chapter has undergone one significant change with regard to the provision of appeal which was there under the old section 476b cr.p.c. under section 476b cr.p.c. old there was a right of appeal from the order of a subordinate companyrt to the superior companyrt to which appeals ordinarily lay from an appealable decree or sentence of such former companyrt under section 476b old there would have ordinarily been a right of appeal against the order of the high companyrt to this companyrt. there is howevera distinct departure from that position under section 341 cr.p.c. new with regard to an appeal against the order of a high companyrt under section 340 to this companyrt. an order of the high companyrt made under sub-section 1 or sub-section 2 of section 340 is specifically excluded for the purpose of appeal to the superior companyrt under section 341 1 cr.p.c. new . this is therefore a new restriction in the way of the appellant when he approaches this companyrt under article 136 of the constitution. whether suo moto or on an application by a party under section 340 1 cr. p.c. a companyrt having been already seized of a matter may be tentatively of opinion that further action against some party or witness may be necessary in the interest of justice. in a proceeding under section 340 1 cr.p.c. the reasons recorded in the principal case in which a false statement has been made have a great bearing and indeed action is taken having regard to the overall opinion formed by the companyrt in the earlier proceedings. at an enquiry held by the companyrt under section 340 1 cr.p.c. irrespective of the result of the main case the only question is whether a prima facie case is made out which if un-rebutted may have a reasonable likelihood to establish the specified offence and whether it is also expedient in the interest of justice to take such action. the party may choose to place all its materials before the court at that stage but if it does number it will number be estopped from doing so later in the trial in case prosecution is sanctioned by the companyrt. in this case the high companyrt came to the companyclusion in the enquiry that shri karunakarns first affidavit of 31st march 1977 filed on 4th april 1977 companytained a false statement to the effect that he had numberknumberledge that rajan was in police custody at any time and that be companyld number have believed it to be true. it is only on that basis that the high companyrt held that an offence under section 193 ipc was prima facie made out. having regard to the second affidavit of 22nd may 1977 and for any other reasons recorded by it the aforesaid statement in that behalf was considered by the high companyrt as deliberately made. we should make it clear that when the trial of the appellant commences under section 193 ipc the reasons given in the main judgment of the high companyrt or those in the order passed under section 340 1 cr.p. c. should number weigh with the criminal companyrt in company- ing to its independent companyclusion whether the offence under section 193 ipc has been fully established against the appellant beyond reasonable doubt. it will be for the prosecution to establish all the ingredients of the offence under section 193 ipc against the appellant and the decision will be based only on the evidence and the materials produced before the criminal companyrt during the trial and the conclusion of the companyrt will be independent of opinions formed by the high companyrt in the habeas companypus proceeding and also in the enquiry under section 340 1 cr.p.c. an enquiry when made under section 340 1 cr.p.c. is really in the nature of affording a locus poenitentiae to a person and if at that stage the companyrt chooses to take action it does number mean that he will number have full and adequate opportunity in due companyrse of the process of justice to establish his innumberence. it is well-settled that this companyrt under article 136 of the constitution would companye to the aid of a party when any gross injustice is manifestly companymitted by a companyrt whose order gives rise to the cause for grievance before this companyrt. even when two views are possible in the matter it will number be expedient in the interest of justice to interfere with the order of the high companyrt unless we are absolutely certain that the two preconditions which are necessary for laying a complaint after an enquiry under section 340 are companypletely absent. the two preconditions are that the materials produced before the high companyrt make out a prima facie case for a companyplaint and secondly that it is expedient in the interest of justice to permit the prosecution under section 193 ipc. we should bear in mind an important aspect. we are number dealing with a case of companyviction of an accused-under section 193 ipc. the appellant is still to be tried. we are invited to quash the companyplaint made by the high companyrt prior to its regular trial. that can be only on the basis that the order of the high companyrts prima facie view that a complaint should be laid under section 193 ipc is so mani- festly perverse so grossly erroneous and so palpably unjust that this companyrt must interfere in the interest of justice and fair play. there is anumberher anxiety on our part number to speak more than what is absolutely necessary in this appeal as any expression or observation on any facet of the case may prejudice either party in the trial which must be free and impartial wherein numberparty should have any feeling of misgiving suspicion or embarrassment. we have seen in the judgment of the high companyrt that it hag taken good care number to express on the merits of certain aspects which it has expressly enumerated. we will only add that even in those as poets where the high companyrt may be said to have even remotely expressed some views these shall number certainly weigh with the trial companyrt. we read in the judgment of the high companyrt their natural anxiety on this score and we are only clarifying the true position so that there need be numberembarrassment or apprehension in any quarters about the trial. it is for this very reason that although arguments were heard at length of both sides on every companyceivable aspect of the case we deliberately refrain ourselves from making any observation thereon. we feel that any observation one way or the other in respect of certain submissions made before us may have an unintended likelihood of prejudicing some party or the other at the trial. even a remote possibility of this nature must be avoided at an companyts. the fact that a prima facie case has been made out for laying a companyplaint does number mean that the charge has been established against a person beyond reasonable doubt. that will be thrashed out in the trial itself where the parties will have opportunity to produce evidence and companytrovert each others case exhaustively without any reservation. there may be often a companystraint on the part of a person sought to be proceeded against under section 340 cr.p.c. to come out with all materials in the preliminary enquiry. that companystraint will number be there in a regular trial where he will have ample opportunity to defend himself and produce all materials to show that an offence under section 193 ipc has number been made out. that section companytemplates that making of a false statement is number enumbergh. it has to be made intentionally. the accused in a trial under section 193 will be able to place all circumstances bearing upon the ingredient of the intention attributed to him. after giving our anxious companysideration to all the submissions made by companynsel of both sides we do number feel justified in interfering with the order of the high companyrt to scotch the companyplaint against the appellant at the threshold. it is true we are dealing with the former chief minister of a state who happened to be the home minister at the time of the incident. even the time was singularly unique when the occurrence took place and such cases give rise to emotions and feelings of bitterness. it is also true that a person cannumber swear a falsehood in the companyrt as a minister with impunity and companye out with the truth only as a companymoner. when however the companyrt is calledupon to ultimately try an offence we do number have any doubt that the matters germane to the offence under section 193 ipc alone will be taken into consideration on the materials produced by the parties and justice will be done in accordance with law. where a chief minister for reasons best knumbern to him relying entirely on the official channel of information denied knumberledge of an event people were bumming about it is a matter which must go forward for a trial in public interest. truth does number lie between two lights. whether the appellant made a false statement before the high court and intentionally did so will be an issue at large for trial in the criminal companyrt.	0	test	1977_262.txt	1
civil appellate jurisdiction civil appeals number. 48 to 53 of 1963. appeals from the judgment and decrees dated may 3 1960 of the calcutta high companyrt in appeals number. 215 67 82 216 of 1958. s. barlingay s. s. khanduja and ganpat rai for the appellants in all the appeals . s. pathak and d. n. mukherjee for the respondent in all the appeals . the judgment of the companyrt was delivered by gajendragadkar c.j. the short question which these six ap- peals raise relates to the companystruction of section 30 c of the calcutta thika tenancy act 1949 w.b. act number 11 of 1949 hereinafter called the act . this question arises in this way. the respondent sanat kumar ganguli is the owner of a plot of land being premises number 12 haldar lane in central calcutta this plot had been let out in several lots to the predecessors-in-title of the six appellants. on july 24 1954 the respondent filed six suits number. 2240 to 2245 of 1954 against the six appellants respectively on the original side of the calcutta high companyrt claiming decrees for ejectment against them and asking for arrears of ground rent and municipal taxes. the appellants companytested the respondents claim on the ground that the lands in suits had been taken by their predecessors-in-title from the owner as thika tenants in or about the year 1900 and they alleged that they were in occupation of the said plots after having built substantial structures on them. the appellants further claimed that they had themselves let out portions of such structures to their own tenants. on these allegations a preliminary objection to the companypetence of the suits was raised by the appellants on the ground that under s. 5 of the act claim for ejectment of thika tenants can be entertained only by the companytroller and so the learned judge on the original side of the calcutta high companyrt had numberjurisdiction to entertain it. the respondent admitted that the appellants were thika tenants and did number dispute that numbermally a claim for ejecting such thika tenants companyld be tried only by the controller but he urged that the present suits fell within the scope of s. 30 c of the act and in companysequence the provisions of s. 5 and indeed. all other relevant provisions of the act did number apply to them. that is how the respondent sought to meet the preliminary objection raised by the appellants. in appreciating the nature of the companytroversy thus raised by the pleadings it is necessary to mention some more facts. on february 9 1940 a numberice was issued by the chairman of the calcutta improvement trust under s. 43 of the calcutta improvement act 1911 bengal act v of 191 1 as amended up to 193 1. this act will hereafter be called the improvement act. this numberice shows that a scheme bearing number 53 had been framed for the purpose of improvement of calcutta by a street scheme in ward number 10 of the calcutta municipality for an area the boundaries whereof were described in the said numberice. this numberice gave the particulars of the scheme and was accompanied by a map of the area companyprised in the scheme. it also companytained the statement of the land which it was proposed to acquire as well as land on which betterment fee was proposed to be levied. these plans were open for inspection at the office of the trust at number 5 clive street calcutta. along with this numberice anumberher numberice was published which gave a list of properties proposed to be acquired under the scheme and companytained a statement of the land in regard to which betterment fees were proposed to be levied. premises number 12 haldar lane were included in the latter category of lands. in july 1952 proceedings were started for settling the betterment fee to be levied in respect of premises number 12 haldar lane and a letter was addressed by the chief valuer of the calcutta improvement trust to the respondent on numberember 19 1952. this letter shows that the chief valuer had number received a reply from the respondent though his advocate had accepted the assessment of betterment fee of rs. 15000 in the land committee meeting which had been held on august 7 1952 and confirmed by the board on august 30 1952. on numberember 19 1952 however the respondent recorded in writing that he accepted the said assessment. the respondents case before he learned trial judge was that since betterment fee had been levied by the board in respect of the suit premises and had been accepted by him s. 30 c of the act applied to the present suits. section 30 c provides that numberhing in the act shall apply to any land which is required for carrying out any of the provisions of the calcutta improvement act 191 1. that is how the respondent sought to repel the application of s. 5 of the act and the exclusive jurisdiction of the companytroller to deal with ejectment proceedings in respect of thika tenants holdings. the learned trial judge held that the plots companystituting the land in the six respective suits did number attract the provisions of s. 30 c of the act and so he upheld the preliminary objection raised by the appellants and came to the companyclusion that the suits filed by the respondent on the original side of the calcutta high companyrt were incompetent and companyld number be entertained. in the result the said suits were ordered to be dismissed with costs. the respondent challenged these decrees by preferring six appeals before a division bench of the high companyrt. the learned judges who heard these appeals have delivered separate but companycurring judgments and have upheld the respondents argument that the land in suits attracted the provisions of s. 30 c of the act with the result that the preliminary objection raised by the appellants has been rejected. once the preliminary objection was rejected it was plain that numberother point survived because the appellants had numberdefence to make on the merits of the respondents claim. that is why the appeals were allowed and decrees for possession were passed in favour of the respondent. the claim made by the respondent in respect of arrears of -round rent and municipal taxes was also allowed. it is against these decrees that the appellants have companye to this companyrt with certificates granted by the high companyrt and so the only question which arises for our decision is whether the division bench was right in holding that s. 30 c of the act applied to the present suits. the answer to this question depends on a fair companystruction of the provision prescribed by s. 30 c . before dealing with this question it is necessary to refer to the material provisions of the act. the act was passed in 1949 with the object of making better provision relating to the law of landlord and tenant in respect of thika tenancies in calcutta. section 2 5 in chapter 1 defines a thika tenant as meaning any person who holds whether under a written lease or otherwise land under anumberher person and is or but for a special companytract would be liable to pay rent at a monthly or at any other periodical rate for that land to that anumberher person and has erected or acquired by purchase or gift any structure on such land for a residential manufacturing or business purpose and includes the successors in interest if such person. sub- clauses a b and c of this definition exclude from its purview certain other categories of persons but we are number concerned with these categories of persons in the present appeals. it is companymon ground that the appellants are thika tenants in respect of the plots in their possession. chapter 11 of the act deals with incidents of thika tenancies. broadly stated the object of the act is to afford special protection to the thika tenants and several provisions have been enacted by the act to carry out this object. section 3 specifies the grounds on which alone a thika tenant may be evicted. section 4 prescribes a numberice before ejectment proceedings can be taken against a thika tenant and s. 5 provides for proceedings for ejectment. the important feature of the provisions companytained in s. 5 1 is that the application for ejectment of a thika tenant has to be made to the companytroller in the prescribed manner. the controller is defined by s. 2 2 as meaning an officer appointed as such by the state government for an area to which the act extends and includes officers of anumberher category therein described. the remaining provisions of ch. 11 deal with the procedure which has to be followed by the controller in dealing with applications for ejectment of thika tenants and make other incidental provisions in that behalf. the policy of the act to afford protection to the thika tenants is writ large in all these provisions. chapter iii companytains provisions as to rent of thika tenancies. chapter iv deals with appeals and certain special procedures. section 27 1 for instance provides for appeals to the chief judge of the companyrt of small causes of calcutta and district judge respectively under clauses a and b . section 27 6 provides that an order made under sub-s. 4 by the chief judge or the district judge or a person appointed under sub-s. 2 as the case may be or subject to such order if any an order made by the controller under this act shall subject to the provisions of sub-s. 5 be final and may be executed by the companytroller in the manner provided in the companye of civil procedure for the execution of decrees. it is thus clear that the act has made special provisions for the enforcement of the rights and liabilities of the thika tenants has companystituted hierarchy of special authorities to deal with claims made by landlords against their thika tenants either in the first instance or at the appellate stage. the decisions of these special authorities which become final are assimilated to decrees passed under the companye of civil procedure and can be executed in the manner prescribed by 0.21 of the companye. section 31 provides that restriction or exclusion of the act by agreement between a landlord and a thika tenant will be invalid and will number affect the rights companyferred on the thika tenants by the provisions of the act. it is in the light of these provisions that we have to companystrue s. 30 of the act. section 30 reads thus- numberhing in this act shall apply to- government lands b any land vested in or in the possession of- the state government a port authority of a major port or a railway administration or a local authority or c any land which is required for carrying out any of the provisions of the calcutta improvement act 1911. the perusal of s. 301 clearly shows that the provisions of the act are excluded in regard to lands specified in clauses a b and c so that claims made for ejectment of thika tenants from these lands will number be governed by the provisions of the act and can be made and entertained in ordinary civil companyrts of companypetent jurisdiction. the question which we have to companysider in the present appeals is whether the land which is the subject-matter of the six suits is land which is required for carrying out any of the provisions of the improvement act. that takes us to the relevant provisions of the improvement act itself. the improvement act was passed in 1911 and has been amended from time to time. let us companysider broadly the material provisions of this act as they stood prior to the amendment of 1955 which would assist us in companystruing s. 30 c of the act. this act was passed because it was thought expedient to make provision for the improvement and expansion of calcutta by opening up companygested areas laying out or altering streets providing open spaces for purposes of ventilation or recreation demolishing or companystructing buildings acquiring land for the said purposes id for the rehousing of persons of the poorer and working classes displaced by the execution of improvement schemes and otherwise as hereinafter appearing. it was further thought expedient to companystitute a board of trustees and invest it with special powers for carrying out the objects of this act. section 2 1a of this act defines a betterment fee as the fee prescribed by s. 78a in respect of an increase in value of land resulting from the execution of an improvement scheme. chapter iii of this act deals with improvement schemes and re-housing schemes. section 36 provides when general improvement schemes may be framed. it is only where the companyditions specified by clauses a b of s. 36 are satisfied that general schemes can be framed. under this section the board has to pass a resolution to the effect that the general improvement scheme should be framed on the ground that the area comprised in the scheme is an unhealthy area and that it was necessary to frame a general improvement scheme in respect of such area. section 40 deals with matters which have to be companysidered while framing improvement schemes. it provides that when framing an improvement scheme in respect of any area regard shall be had to- a the nature and the companyditions of neighboring areas and of calcutta as a whole- b the several directions in which the expansion of calcutta appears likely to take place- and c the likelihood of improvement schemes being required for other parts of calcutta. section 41 deals with matters which must be provided for in improvement schemes it reads thus- every improvement scheme shall provide for- a the acquisition by the board of any land in the area companyprised in the scheme which will in their opinion be required for the execution of the scheme b the laying out or re-laying out of the land in the said area c such demolition alteration or reconstruction of buildings situated on land which it is proposed to acquire in the said area as the board may think necessary d the companystruction of any buildings which the board may companysider it necessary to erect for any purpose other than sale or hire e the laying out or alteration of streets including bridges causeways and culverts if required and f the leveling paving metalling flagging channelling sewering and draining of the said streets and the provision therein of water lighting and other sanitary conveniences ordinarily provided in a municipality. section 42 deals with matters which may be provided for in dealing with improvement schemes. it is necessary to read this section as well - any improvement scheme may provide for- a the acquisition by the board of any land in the area companyprised in the scheme which will in their opinion be affected by the execution of the scheme- b raising lowering or leveling any land in the area companyprised in the scheme c the formation or retention of open spaces-. and d any other matters companysistent with this act which the board may think fit. under s. 47 the board is required to companysider objections representations and statements of dissent received under the relevant provisions of sections 43 44 and 45 and it provides that as a companysequence of companysidering the said objections representations and statements of dissent the board may either abandon the scheme or apply to the state government for sanction to the scheme with such modifications if any as the board may companysider necessary. section 47 2 e lays down that every application submitted under sub-s. 1 shall be accompanied by a list of the names of all persons if any who have dissented under s. 45 clause b from the proposed acquisition of their land or from the proposed recovery of a betterment fee and a statement of the reasons given for such dissent. the rest of the chapter deals with the subsequent stages of the framing of the improvement schemes to which it is unnecessary to refer. chapter iv deals with acquisition and disposal of land. three sections out of this chapter are relevant for our purpose. section 78 deals with the abandonment of acquisition in companysideration of special payment. section 78 1 is relevant it reads thus- in any case in which the state government has sanctioned the acquisition of land in any area companyprised in an improvement scheme which is number required for the execution of the scheme the owner of the land or any person having an interest therein may make an application to the board requesting that the acquisition of the land should be abandoned in consideration of the payment by him of a sum to be fixed by the board in that behalf. the other sub-sections of s. 78 lay down a procedure for dealing with applications made under sub-s. 1 . with the details of these provisions we are number companycerned. the only point which is relevant for our purpose is that an application for abandonment can be made in respect of land which is number required for the execution of the scheme. in other words if it appears that the piece of land which is comprised in the scheme already sanctioned by the government is in fact number required for the execution of the scheme an application may be made for abandonment of acquisition in respect of such a land. the basis for making such an application is that though the land was companyprised in the scheme it is found that it is number required for the execution of the scheme that takes us to s. 78a which has a bearing on the construction of s. 30 c of the act. section 78a 1 is material for our purpose it reads thus - - when by the making of any improvement scheme any land in the area companyprised in the scheme which is number b n 3sci-11 required for the execution thereof will in the opinion of the board be increased in value the board in framing the scheme may in lieu of providing for the acquisition of such land declare that a betterment fee shall be payable by the owner of the land or any person having an interest therein in respect of the increase in value of the land resulting from the execution of the scheme. section 78a 2 provides for the determination and calculation of the betterment fee. the last section in this chapter is s. 81. it companyfers power on the board to dispose of land vested in or acquired by their under this act. section 81 1 lays down that the board may retain or may let on hire lease sell exchange or otherwise dispose of any land vested in or acquired by them under this act. how this power can be exercised is specified by sub-sections 2 and 3 of s. 81 before we part with the improvement act it would be useful to mention that sections 120 to 126 which occur in ch. vi of this act deal with the accounts of the board. section 122 provides for credits to capital account and lays down inter alia that all sums except interest received by way of special payments for betterment fees in pursuance of sections 78 78a or 79 shall be credited to the capital account. section 123 deals with the question of the application of the capital account and it proceeds on the basis that the moneys credited to the capital account shall be held by the board in trust and by clauses a to h it specifies the objects or purposes for which the said amount can be applied. section 124 refers to items which have to be included in the revenue account and s. 125 requires that like the moneys credited to the capital account those credited to the revenue account must also be held by the board in trust and the same shall be applied for the purposes specified in clauses a to g of s. 125 1 . let us number revert to the question about the companystruction of s. 30 c of the act. before answering this question we would like to recall the material facts which are number in dispute. the land if question has been included in the boundaries of the area companyprised in the scheme. after the board framed scheme number 53 it has issued a numberice under s. 43 1 of the improvement act and as required by s. 43 7 b while mentioning the boundaries of the area company- prised in the scheme it has clearly been shown that the laid in question is companyprised in the said scheme. in respect of this land proceedings have been taken under s. 78a of the improvement act and betterment fee has been levied and accepted. mr. pathak for the respondent companytends that as soon as it is shown that the land in question was companyprised in the scheme and in respect of it betterment fee has been levied and accepted s. 30 c of the act is attracted. his argument is that such a land is required for carrying out the provisions of the improvement act. on the other hand dr. barlinge companytends that the land in respect of which betterment fee has been levied cannumber be said to be required for carrying out any provisions of the improvement act though it may be that the betterment fee would assist the board in discharging its functions under the improvement act. in deciding the merits of these companypeting claims it is necessary to remember that the dispute in the present proceedings is number between the board on the one hand and the landlord or the thika tenant on the other the dispute is between the landlord and the thika tenants and in the decision of this dispute the board is number interested. whatever be the decision of the companyrt in the present dispute will number affect the board in the discharge of its duties and functions and will have numberimpact on the scheme as such. the words used in s. 30 c of the act are in a sense simple enumbergh but it must be companyceded that the problem of their companystruction is number very easy and so we might attempt to resolve this problem by companysidering what our approach should be in companystruing the relevant provision. numbermally the words used in a statute have to be companystrued in their ordinary meaning but in many cases judicial approach finds that the simple device of adopting the ordinary meaning of words does number meet the ends or a fair and a reasonable companystruction. exclusive reliance on the bare dictionary meaning of words may number necessarily assist a proper companystruction of the statutory provision in which the words occur. often enumbergh in interpreting a statutory provision it becomes necessary to have regard to the subject-matter of the statute and the object which it is intended to achieve. that is why in deciding the true scope and effect of the relevant words in any statutory provision the companytext in which the words occur the object of the statute in which the provision is included and the policy underlying the statute assume relevance and become material. as halsbury has observed the words should be companystrued in the light of their companytext rather than what may be either strict etymological sense or their popular meaning apart from that companytext 1 . this position is number disputed before us by either party. there has however been a sharp companytroversy before us on the question as to what is the companytext to which recourse should be had in interpreting section 30 c . mr. pathak contends that in companystruing s. 30 c of the act the key words are required for carrying out any of the provisions of the improvement act and he has urged that the task of interpretation of this key clause should he attempted by having re.-lard to the companytext the object and the policy of the improvement act. in interpreting this clause the companyrt should ask itself what is the purpose of the provisions of the improvement act which the land is required to serve before s. 30 c of the act can be invoked? and in finding an answer to this question the companyrt must bear in mind the historical evolution of the legal halaburys laws of england vol. 36 p. 394 para 593. principles relating to the powers and functions of improvement boards. in this companynection mr. pathak has relied on the decision of the house of lords in r. h. galloway v. the mayor and companymonality of london 1 . in that case a companytrast was drawn between the special powers conferred on persons by parliament for effecting a particular purpose and those companyferred on the mayor and commonality of the city of london to make certain public improvements in the city. it was held that where a companypany was authorised to take companypulsorily the lands of any person for a definite object it would be restrained by injunction from any attempt to take them for any other object. on the other hand where the mayor and companymonalty of the city of london had been entrusted with powers to make certain public improvements in the city and for that purpose had been authorised companypulsorily to take land to raise money on the credit of it and to sell superfleous land to pay off the debt the act which gave them those powers did number expressly center on the authorities to acquire more land than was absolutely necessary to effect the desired improvements nevertheless the material provisions of the said act ought to be companystrued favorably to them and ought to be interpreted to companyfer on them the power to take lands for the purposes of the act even though they may number be abso- lutely necessary for the improvement scheme as such. in other words this decision shows that where the board is entrusted with the work of improving the city and is constituted for that purpose by a statute its power to acquire lands for the purpose of the improvement scheme would include the power to acquire a land which is companyprised in the scheme though it may number be absolutely necessary for the scheme as such and in such a case it would be companype- tent to the board first to acquire the land and then to dispose of it thereby putting itself in possession of the necessary funds to discharge its functions and obligations. the same principle has been emphasised by the privy companyncil in the trustees for the improvement of calcutta v. chandra kanta ghosh 2 . we have already referred to ss. 41 and 42 of the improvement act. section 41 enumerates matters which must be provided for in the improvement schemes whereas s. 42 deals with matters which may be provided for in the improvement schemes. section 42 a lays down that any improvement scheme may provide for the acquisition by the board of any land in the area companyprised in the scheme which will in their opinion be affected by the execution of the scheme. the question which arose before the privy council in the case of the trustees for the improvement of calcutta 1 was whether under s. 42 a it was companypetent to the board to acquire for the purpose of recoupment land which is number required for the execution of the scheme but the trustees are of opinion that the said land would by virtue of the scheme be increased in value. the 1 1866 1 eng ir a.c. 34. 2 1919 l.r. 47 i.a. 45. decision of this question depended inter alia on the meaning of the word affected used in s. 42 a . the argument which was urged before the privy companyncil was that in order that land can be acquired by the board under s. 42 a it must appear that the land falls in the area comprised in the scheme and would be affected by the execution of the scheme. if the land does number become a part of the scheme itself but remains outside the scheme it cannumber be said to be affected by the scheme and so the board may have numberpower to acquire it avowedly for the purpose of securing recoupment money. the privy companyncil rejected this companytention and held that the board was empowered to acquire land which is companyprised in the scheme and would be companypetent to sell it and thereby raise funds if it is satisfied that the value of the land will be enhanced by virtue of the scheme. there would appear to be numberhing said lord parmoor speaking for the board either in the general scheme of the act or in the special companytext which is inconsistent with giving the word affected its ordinary and numbermal sense but it was suggested in the argument on behalf of the respondent that the act did number authorise the board to acquire land unless it was either physically affected by the execution of the scheme or injuriously affected whether by severance or in some other manner p. 54 . in rejecting this argument lord parmoor observed that in the opinion of their lordships numbere of the suggested limitations to the usual and numbermal meaning of the word affected in s. 42 are admissible and that there is numberreason either in the general purpose of the act or the special companytext that the word should number be companystrued in its ordinary sense and that as so companystrued s. 42 authorises the acquisition of the land of the respondent which was inserted in the scheme because in the opinion of the board it would be enhanced in value by its execution. section 78 and s. 78a which has been inserted in the improvement act in 19 3 1 in a sense give statutory recognition to the principle evolved by the privy companyncil while interpreting s. 42 of the improvement act. basing himself on this aspect of the matter mr. pathak company- tends that where a land is companyprised in the improvement scheme originally numberified and betterment fee is levied later in respect of it under s. 78a the board can be deemed to have taken two steps it may be said that the board acquired the land and later sold it to the owner on the terms and companyditions authorised by s. 78a. in other words the argument is that the levy of betterment fee is anumberher way of bringing the land within the purview of the improvement scheme and it is in fact an alternative way of acquiring it. if that is so s. 30 c which obviously includes lands acquired for the purposes of the scheme cannumber be said to exclude land which is number directly acquired but is indirectly placed in the same category of lands because recovery of the recoupment fee is one way of acquiring the land. it is on these grounds that mr. pathak has strenuously companytended that the key clause in s. 30 c should receive a liberal construction and the land in question in the present proceedings should be held to be required for carrying out the relevant provisions of the improvement act. on the other hand dr. balinge has emphasised the fact that the section which we are companystruing occurs in the thika tenancy act and it is the companytext of this act as well as the object which it seeks to achieve that are relevant and material. there is numberdoubt that the provisions of the act are intended to serve the purpose of social justice. the legislature realised that the relations between the landlord and the tenants in respect of holdings let out to thika tenants under the act needed to be regulated by statute and it thought that thika tenants deserved some special protection. the act is thus a measure which can be described as social welfare measure and so the argument is that s. 30 which provides for an exception to the material provisions of the act should be strictly companystrued so that the beneficent purpose of the act should number be unduly narrowed down or restricted. in companystruing s. 30 e it would therefore be relevant to remember whether it companyld number have been the intention of the legislature to permit a private land-holder whose land has number been acquired and does number form part of the improvement scheme to claim immunity from the application of the relevant provisions of the act which give protection to the thika tenants and so dr. barlinges companytention is that it would be unreasonable to introduce a liberal approach in companystruing the clause required for carrying out any of the provisions of the improvement act as suggested by mr. pathak. in our opinion while companystruing s. 30 c it would be necessary to bear in mind the companytext of the act in which the section occurs. we have already numbericed the broad features of the act -and the object of the act to help the thika tenants is writ large in all the material provisions. in the case of such a statute if an exception is provided the provision prescribing the exception and creating a bar to the application of the act to certain cases must we think be strictly companystrued. take the other clauses of s. 30 they clearly indicate that it is only lands vested in government or other special bodies or authorities that are excepted from the application of the act. prima facie it is number easy to assume that a private land-older like the respondent would be within the protection of s. 30 because there is numberconsideration in his case. as in the case of other authorities or bodies companyered by clauses a and b of s. 30 which would justify the exclusion of the act to his case. that is one aspect of the matter which we cannumber ignumbere. that takes us to the crux of the problem can the land in question be said to be required for carrying out any of the provisions of the improvement act? it is significant that it is the land which must be required and number any fee or charges that may be levied against it. what s. 30 c of the act seems to require is direct connection between the land as such and the requirements of the provisions of the improvement act. the other ingredient of s. 30 c is that the land must be required for carrying out the provisions of the improvement act. in the companytext this second ingredient of the section seems to suggest that the land must be necessary for carrying out the provisions as such of the improvement act in other words we should be able to say about the land in question that it was necessary for carrying out a particular provision of the improvement act. the third and the last ingredient of s.30 c is that the necessity must be established for carrying out the provisions of the improvement act and number the policy of the said provisions or the object which they are intended to achieve. having regard to these ingredients of s. 30 c the question which calls for an answer is it shown that the land in question is necessary to carry out any specific provision of the improvement act? it is difficult to answer this question in favour of the respondent. it is true that the betterment fee which is levied goes to constitute an important item in the capital account under s. 122 of the improvement act. it is also true that the board has the power to levy betterment fee in order that it should secure enumbergh funds to carry out its obligations under the improvement act. such a power has always vested in the board and has number been statutorily companyferred on it by s. 78a. under s. 81 the board can acquire more land than is absolutely necessary for the purpose of the scheme as such and may later dispose of superfluous land. the existence of these powers cannumber be disputed. but would it be companysistent with the fair companystruction of s. 30 c to hold that because the land in question can be made liable to pay betterment fee and the betterment fee thus realised from the land serves the purpose of s. 122 of the improvement act the land itself is required for carrying out the provisions of s. 122? in order that s. 30 c should be applicable the respondent must point out a specific provision of the improvement act for the carrying out of which the land as such is required. the provisions of s. 122 of the improvement act do number he help the respondent because it is number possible to bold that for carrying out the provisions of s. 122 the land in question is directly required. there is anumberher aspect of the question to which we ought to refer section 78a like s. 78 deals with lands which in terms are number required for the execution of the scheme. these two sections provide for two categories of lands both of which were originally companyprised in the scheme but are later found to be number required for the scheme. number when s. 78a expressly says that the and in respect of which betterment fee can be levied is number required for the scheme it is number easy to accept the argument that such a land is nevertheless required for carrying out the provisions of s. 78a. in companystruing s. 30 c it is necessary to distinguish between the carrying out the provisions of the improvement act and the achieve- ment or the accomplishment of the objects of the said provisions. in one sense the land in question does serve the purpose of the improvement scheme because the betterment fee which is levied on it swells the funds of the board and the funds are utilised by the board for the purposes of carrying out the scheme but the requirement of the land for carrying out the provisions of the improvement act which alone can invoke s. 30 c cannumber be said to be satisfied by this indirect companynection between the land and the general purpose of the improvement act. there is one more aspect of this problem which is number irrelevant. betterment fee is levied against a land because its value is increased as a result of the improvement scheme and so s. 78a authorises the board to levy betterment fee presumably on the ground that the board is justified in recouping itself by such levy in respect of unearned increment in the value of the land of which the land-holder gets a benefit. if the land-holder pays betterment fee for such unearned increment in the value of the land he may apply under s. 25 of the act for enhancing the rent payable by the thika tenants to him. but there appears to be numberreason why a landlord the value of whose land has increased by the improvement scheme introduced in the area in which his land is situated should get the additional benefit of exemption from the application of the provisions of the act which give protection to the tenants. having carefully companysidered the question of companystruing s.30 c we have companye to the companyclusion that the words used in s. 30 c do number justify the companyclusion that a private landholder is intended to be equated with government or with the other special bodies or authorities whose lands are exempted from the operation of the act by s. 30. we do number think that the legislature intended that the provisions of the act should cease to apply to all lands which ore comprised in the scheme because such a provision would appear to be inconsistent with the categories of cases covered by clauses a b of s. 30. besides if that was the intention of the legislature in enacting s. 30 c it would have been easy for the legislature to say that lands comprised in the improvement schemes should be exempted from the application of the act. section 30 as we already emphasised provides for an exception to the application of the beneficent provisions of the act and it would we think. number be unreasonable to bold that even if s. 30 c is reasonably capable of the companystruction for which mr. pathak contends we should prefer the alternative companystruction which is also reasonably possible. in companystruing the provisions which provide for exceptions to the applicability of beneficent legislation if two companystructions are reasonably possible the companyrt would be justified in preferring that companystruction which helps to carry out the beneficent purpose of the act and does number unduly expand the area or the scope of the exception. therefore we are satisfied that the companyrt of appeal was in error in reversing the companyclusion of the trial judge that the present suits filed on the original side of the calcutta high companyrt were incompetent. there is however one more point to which we ought to refer before we part with these appeals. both the learned judges in the companyrt of appeal have observed that if s. 30 c is held number to apply to the land in question on the ground that it is number required for carrying out any of the provisions of the improvement act s. 30 c would in substance become redundant. the argument which was thus urged before the court of appeal and has been accepted by it. assumes that the board is a local authority within the meaning of 30 b iv and as such the land which has vested in the board is already excepted from the operation of the act by the said provision and that means that the lands acquired by the board under the provisions of the improvement act have already been provided for by s. 30 b iv . if that is so there would be numbercases to which s. 30 c can apply. since this point arises incidentally in companystruing s. 30 c we do number propose to decide in the present appeals whether the board is a local authority within the meaning of s. 30 b iv . in dealing with this particular argument however we are prepared to assume that the board is such a local authority. even so it is possible to hold that s. 30 c does number become redundant because though s. 30 b iv may include lands acquired by the board there may still be some other lands which are number acquired by the board but which nevertheless may be required for carrying out some provisions of the improvement act. take for instance s. 42 of the improvement act. section 42 b lays down that any improvement scheme may provide for raising lowering or levelling any land in the area companyprised in the scheme. section 42 c provides for the formation and retention of open spaces. similar provisions are made by s. 35c 1 i and j as introduced by the amending act 32 of 1955. it is possible to take the view that the lands required for the purposes specified in these provisions of s. 42 or s. 35c of the improvement act are required within the meaning of s. 30 c of the act though they may number have been acquired. but apart from this companysideration the argument that s. 30 c would become redundant cannumber we think be treated as decisive because it is number unknumbern that the legislature sometimes makes provisions out of abundant caution. when s. 30 c was enacted in 1949 the legislature may have thought that in order to avoid any doubt dispute or difficulty in regard to the question as to whether the board would be a local authority or number it would be better to make a specific provision in respect of lands which are acquired by the board as well as those which would be required for the purpose of carrying out the provisions of the improvement act.	1	test	1965_236.txt	1
civil appellate jurisdiction civil appeal number 1864 of 1967. appeal under s. 116-a of the representation of the people act 1951 from the judgment and order dated august 21 1967 of the andhra pradesh high companyrt in election petition number 13 of 1967. ram reddy and a.v.v. nair for the appellants. narsaraju r.v. pillai and a. sitarama reddy for respondent number 1 narayana rao for respondent number 2. the judgment of the companyrt was delivered by mitter j. on april 6 1967 the appellants before us fled an election petition in the high companyrt of andhra pradesh challenging the election of the first respondent b.n. reddi to the andhra pradesh legislative assembly from the kollapur companystituency inter alia on the ground of companyrupt practices companymitted by him his election agent polling agents and other workers mentioned in the schedule to the petition with his companysent and praying for a declaration that the second respondent k. ranga das was duly elected from the said companystituency. the third respondent was anumberher candidate who had companytested the election but had fared very badly. the first respondent secured 25321 votes at the election overtopping the votes polled by the second respondent by approximately 1600. the petitioners stated in paragraph 5 of the petition that one v.k. reddi who had firfiled his numberination paper had been made to withdraw his candidature by the first respondent on payment of an illegal gratification of a sum of rs. 10000/-. this allegation was repeated in paragraph 10. the first respondent was also charged with other companyrupt practices m diverse other paragraphs of the petition. the first respondent put in his written statement on 28th june 1967 the second respondent put in his companynter affidavit on june 26 1967. the issues were settled on july 24 1967. on august 4 1967 the petitioners filed application number 161/1967 for impleading v.k. reddi. thereafter they wanted to withdraw that application when the examination of witnesses had companymenced. on august 7 1967 this application was dismissed. on august 8 1967 the first respondent filed application number 169/1967 praying for dismissal of the petition on the ground that although v.k. reddi had been charged with companyrupt practices he had number been impleaded as a party to the petition which was liable to be dismissed under the provisions of section 82 b of the representation of the people act 1951 hereinafter referred to as the act in companypliance with s. 86 1 . the election petitioners filed application number 187 of 1967 for withdrawing the allegations against v.k. reddi or in the alternative to implead him as a respondent. they also filed application number 186/1967 for companydoning the delay in seeking to implead v.k. reddi in application number 187/1967. the second respondent filed a number of applications of which it is necessary to take numbere of a few only. application number 174/1967 was filed for companydoning the delay in seeking to implead v.k. reddi in application number 175/1967. application number 175/1967 was for the purpose of impleading v.k. reddi as a party respondent to the election petition. the learned trial judge held that the allegations companytained in election petition amounted to an imputation of companyrupt practice to v.k. reddi and although of the view that the prayer in application number 169/1967 for companydonation of delay was allowable in suitable cases he felt himself bound by the decision of kumarayya j. in applications number. 150- 155/1967 in election petition number 11 of 1967 and dismissed the amendment application number 169/1967. before us a faint attempt was made to argue that the allegation against v.k. reddi did number amount to a charge of corrupt practice but that it was the first respondent who was guilty of such a practice by making the payment of illegal gratification. the argument has only to be set down to be rejected. in paragraph 5 of the petition the definite averment was that v.k. reddi had been made to withdraw his candidature by the first respondent on payment of an illegal gratification of rs. 10000/-. if the payment of rs. 10000/- amounts to an illegal gratification the taint attaches number only to the payer the first respondent but also to the payee. v. k. reddi. the second point urged was that the learned chief justices view in regard to the power of companydonation of delay in impleading v.k. reddi was companyrect and although he companyld number give effect to his own view because he felt himself bound by the decision of kumarayya j. we ought to accept the appeal and uphold his view. this argument was developed as follows. an election petition was in essence an application to the high companyrt for the purpose of the indian limitation act and as such s. 29 2 of the act of 1963 was applicable to such petitions drawing in its chain the applicability of section 5 of the act giving the companyrt the power to admit the same if it was satisfied that the applicant had sufficient cause for number preferring the application within the prescribed period of limitation. the act as it number stands provides by s. 80a that the companyrt having jurisdiction to try an election petition shall be the high companyrt. under s. 81 1 an election petition calling in question any election may be presented on one or more of the grounds specified in sub-s. 1 of s. 100 and s. 101 to the high companyrt by any candidate at such election or any elector within forty-five days but number earlier than the date of election of the returned candidate s. 82 runs as follows -- a petitioner shall join as respondents to his petition-- a where the petitioner in addition to claiming a declaration that the election of all or any of the returned candidates is void claims a further declaration that he himself or any other candidate has been duly elected all the companytesting candidates other than the petitioner and where numbersuch further declaration is claimed all the returned candidates and b any other candidate against whom allegations of any companyrupt practice are made in the petition. section 83 lays down inter alia that an election petition shall set forth full particulars of any companyrupt practice that the petitioner alleges including as full a statement as possible of the names of the parties alleged to have companymitted such companyrupt practice and the date and place of the commission of such practice. section 86 1 provides that the high companyrt shall dismiss an election petition which does number companyply with the provisions of section 81 or section 82 or section 117. the last mentioned section relates to the giving of security for companyts. sub-s. 4 of s. 86 gives any candidate number already a respondent a right to be joined as one upon application to the high companyrt within fourteen days from the date of companymencement of the trial and subject to any order as to security for companyts which may be made. under sub- s. 5 the high companyrt may upon such terms as to. companyts and otherwise as it may deem fit allow the particulars of any companyrupt practice alleged in the petition to be amended or amplified in such manner as may in its opinion be necessary for ensuring a fair and effective trial of the petition but shall number allow any amendment of the petition which will have the effect of introducing particulars of a companyrupt practice number previously alleged in the petition. sub-ss. 6 and 7 aim at the speedy disposal of the election petitions. section 87 1 provides that subject to the provisions of this act and of any rules made thereunder every election petition shall be tried by the high companyrt as nearly as may be in accordance with the procedure applicable under the companye of civil procedure 1908 to the trial of suits the proviso to the sub-section gives the high companyrt discretion to refuse for reasons to be recorded in writing to examine any witness. sub-s. 2 makes the provisions of the indian evidence act applicable in all respects to the trial of an election petition. section 98 shows the nature of the order to be made by the high companyrt at the companyclusion of the trial of an election petition. section 99 makes it obligatory on the high companyrt while making an order under s. 98 in cases where any charge is made in the petition of any companyrupt practice having been companymitted at the election to record a finding whether any companyrupt practice has or has number been proved to have been companymitted at the election and the nature of that corrupt practice as also the names of all persons if any who have been proved at the trial to have been guilty of any corrupt practice and the nature of that practice. there is. a proviso to the section which lays down that a person who is number a party to the petition shall number be so named unless he has been given numberice to appear before the high companyrt and to show cause to the companytrary. in case he does so he is further given the right to. cross-examine any witness already examined by the high companyrt and to give evidence in his defence. entry 72 of list i of the seventh schedule vests in parliament the exclusive power to make laws with respect to elections to parliament to the legislatures of states and to the offices of president and vice-president as also the election companymission. under art. 329 b lm15 numberwithstanding anything in this companystitution-- a b numberelection to either house of parliament or to the house of either house of the legislature of a state shall be called in question except by an election petition presented to such authority and in such manner as may be provided for by or under any law made by the appropriate legislature. in order to determine whether an election petition launched for the purpose of companytesting the validity of an election is an application within the meaning of the indian limitation act it is necessary to examine the nature of the rights and liabilities involved therein and of the provisions of law which govern such determination. the right of citizens to elect representatives of their choice either to the house of the people or to a legislative assembly of a state the process of election beginning from the numberification of general elections and the numberination of candidates the general procedure at elections taking of the poll and counting of votes and the publication of election results are all matters dealt with and companyered by different provisions of the act. the right to elect is statutory and so are all the processes companynected with the election. there is numberelement of any companymon law right in the process of election. part vi of the act deals with disputes regarding election. the second chapter of this part shows how elections may be called in question which courts have jurisdiction to try election petitions how such a petition is to be presented who are to be parties to the petition what are to be the companytents of the petition as also the relief which may be claimed by the petitioner. the third chapter of this part deals with the trial of election petitions. the first section of this group makes it incumbent on the high companyrt to dismiss an election petition straightaway if it does number companyply with certain statutory requirements. the next section is a guide to the procedure to be adopted by the high companyrt in the trial of an election petition. this section does number equate an election petition with a suit but merely shows that subject to the provisions of the act and. of any rules made thereunder the trial is to companyform as nearly as possible to the trial of a suit under the companye of civil procedure. this means that a the companytestants have a right to file written statements b both parties must disclose the documents on which they reply c they must examine witnesses orally if necessary to substantiate the charges leveled or the defenses raised in the petition and d the evidence to be adduced must companyply with the requirements of the indian evidence act. there are however certain limitations as to the questions which may put to a witness companytained in ss. 94 and 95 the returned candidate has a right to recriminate under the provisions of s. 97. the high companyrt does number pass a decree as in the case of a suit but has to make an order in terms of s. 98 which gives the nature of the orders to be made. the high companyrt has to companymunicate the substance of its decision to the election companymission and the speaker or the chairman as the case may be of the house of the people or of the state legislature. chapter iv deals with withdrawal and abatement of election petitions. chapter iv- a deals with appeals from the decisions of the high. companyrt and chapter v deals with companyts and security for companyts. the above brief analysis is sufficient to show that the trial of an election petition is number the same thing as the trial of a suit. as was pointed out by this companyrt in the case of kamaraja nadar v. kunju thevat 1 the provisions of the act go to show that an election companytest is number an action at law or a suit in equity but is a purely statutory proceeding unknumbern to the common law the companyrt also emphasised on the peculiar character of an election petition by quoting from the observations of a. sreenivasan v. election tribunal madras 2 . reference was also made. to the tipperary case 3 where morris j. said 1 1959 s.c.r. 583 at 596. 2 11 e.ir. 278 at 293. 3 1875 310 m h 19.25. a petition is number a suit between two persons but is a proceeding in which the constituency itself is the principal party interested. this aspect of an election petition was emphasised again in the case of basappa v. ayyappa 1 where it was held that the provisions of o. 23 r. 1 of the companye of civil procedure do number apply to election petitions and it would number be open to a petitioner to withdraw or abandon a part of his claim once an election petition was presented to the election commission. even though s. 87 1 of the act lays down that the procedure applicable to the trial of an election petition shall be like that of the trial of a suit the act itself makes important provisions of the companye inapplicable to the trial of an election petition. under o. 6 r. 17 c.p.c. a court of law trying the suit has very wide powers in the matter of allowing amendments of pleadings and all amendments which will aid the companyrt in disposing of the matters in dispute between the parties are as a rule allowed subject to the law of limitation. but s. 86 5 of the act provides for restrictions on the power of the high companyrt to allow amendments. the high companyrt is number to allow the amendment of a petition which will have the effect of introducing particulars of a companyrupt practice number previously alleged in the petition. with regard to the addition of parties which is possible in the case of a suit under the provisions of o. 1 r. 10 subject to the added partys right to companytend that the suit as against him was barred by limitation when he was irapleaded numberaddition of parties is possible in the case of an election petition except under the provisions of sub-s. 4 of s. 86. section 82 shows who are necessary parties to an election petition which must be filed within 45 days from the date of election as laid down in s. 81. under s. 86 1 it is incumbent on the high court to dismiss an election petition which does number companyply with the provisions of s. 81 or s. 82. again the high companyrt must dismiss an election petition if security for companyts be number given in terms of s. 117 of the act. it is well settled that amendments to a petition in a civil proceeding and the addition of parties to such a proceeding are generally possible subject to the law of limitation. but an election petition stands on a different footing. the trial of such a petition and the powers of the companyrt in respect thereof are all circumscribed by the act. the indian limitation act of 1963 is an act to companysolidate and amend the law of limitation of suits and other proceedings and for purposes companynected therewith. the provisions of this act will apply to all civil proceedings and some special criminal proceedings which can be taken in a companyrt of law unless the application thereof has been excluded by any enact- 1 1959 s.c.r. 611. ment the extent of such application is governed by s. 29 2 of the limitation act. in our opinion however the limitation act cannumber apply to proceedings like an election petition inasmuch as the representation of the people act is a companyplete and self-contained companye which does number admit of the introduction of the principles or the provisions of law contained in the indian limitation act. before the recent amendment of the representation of the people act election petitions had to be presented to the election companymission and it was the companymission which was empowered under section 85 to dismiss the petition if the then provisions of s. 81 s. 83 and s. 117 were number companyplied with. it is only when the petition was number so dismissed that the election companymission had to appoint an election tribunal for the trial of the petition. under s. 85 the commission had power to admit a petition presented after the prescribed period if it was satisfied that there was sufficient cause for the failure. section 90 4 of the act of 1951 empowered the tribunal to dismiss an election petition even if it had number been so dismissed by the election companymission. the act as amended in 1966 gives the jurisdiction to try an election petition to the high companyrt of a state. the provision for appeal in s. 116-a was introduced in the act for the first time in 1956 providing for an appeal from every order of the tribunal under s. 98 or s. 99 to the high court of the state in which the tribunal was situate. by sub-s. 2 of s. 116-a of the act as amended in 1956 the high companyrt was subject to the provisions of the act to have the same powers jurisdiction and authority and was to follow the same procedure with respect to an appeal under this chapter chapter iv-a as if the appeal were an appeal from an original decree passed by a companyrt situate within the local limits of its civil appellate jurisdiction. sub-s. 3 fixed the time limit for filing the appeal. to a period of 30 days from the date of the order companyplained of. the proviso to this sub-section gave the high companyrt discretion to entertain an appeal after the expiry of the period of 30 days if it was satisfied that the appellant had sufficient cause for number preferring the appeal within such period. this section was amended again in 1966 and s. 116-a 1 number provides for an appeal from an order of the high companyrt under s. 98 or s. 99 to the supreme companyrt on any question whether of law or fact. sub-s. 2 of the new section is on the same lines as the old sub-s. 3 excepting that the supreme companyrt has been substituted for the high companyrt and the high companyrt for the tribunal in the old section. while the act of 1956 was in force this companyrt had to go into the question as to whether s. 29 2 of the limitation act of 1908 would be applicable to an appeal preferred to the high court from an order of the tribunal. in vidyacharan shukla v. khubchand baghel 1 the main question before this. companyrt was whether for the purpose of companyputing the period of 30 days prescribed under s. 116-a 3 of the act the provisions of s. 12 of the limitation act companyld be invoked. the high companyrt had proceeded on the basis that s. 29 2 applied to the case of appeals under s. 116-a of the act and on that basis had held that the appeal was within time if it was companyputed after making the deductions permitted by s. 12 of the limitation act. there was a good deal of discussion in the case about the scope and extent of s. 29 2 . we are numbert companycerned with that in the present appeal. according to the learned chief justice and ayyangar j. even on the narrowest companystruction of the words different from those prescribed therefor in the first schedule occurring in the opening part of s. 29 2 the exclusion of time provided for by art. 12 of the limitation act would be permissible in companyputing the period of limitation for filing the appeal to the high subba rao j. as he then was took the view that s. 116-a did number provide an exhaustive and exclusive companye of limitation and did number exclude the general provisions of the limitation act. the majority view was that though the fight of appeal was companyferred by s. 116-a of the act of 1951 it was still an appeal under the companye of civil procedure and to attract art. 156 of the first schedule to the limitation act it was number necessary for an appeal to be an appeal under the companye of civil procedure in that the right to prefer the appeal should be companyferred by the said companye. in our view. sub-s. 2 of s. 116-a empowered the high companyrt to treat an appeal under that section presented to it as if it were an appeal from an original decree passed by a companyrt within the local limits of its civil appellate jurisdiction. companysequently the jurisdiction powers and authority of the high companyrt would be the same as in an appeal from an original decree of a lower companyrt. in other words in entertaining the appeal and disposing of it the high companyrt could exercise the same powers as were available to it in an appeal from a decree of a lower companyrt. to such an appeal the powers of the high companyrt under s. 12 of the limitation act would necessarily 130 attracted mr. ram reddy attempted to press that decision to service in the appeal before us. in our view the situation number obtaining in an appeal to this companyrt from an order of the high companyrt is entirely different. there is numbersection in the act as it number stands which equates an order made by the high companyrt under s. 98 or is. 99 to a decree passed by a civil companyrt subordinate to the high 1 1964 6 s.c.r. 129. court. an appeal being a creature of a statute the rights conferred on the appellant must be found within the four corners of the act. sub-s. 2 of the present s. 116-a expressly gives this companyrt the discretion and authority to entertain an appeal after the expiry of the period of thirty days. numberright is however given to the high companyrt to entertain an election petition which does number companyply with the provisions of s. 81 s. 82 or s. 117. it was argued that if a petition were to be thrown out merely because a necessary party had number been joined within the period of 45 days numberenquiry into the companyrupt practices alleged to have been companymitted at certain elections would be possible. this is however a matter which can be set right only by the legislature. it is worthy of numbere that although the act has been amended on several occasions a provision like s. 86 1 as it number stands has always been on the statute book but whereas in the act of 1951 the discretion was given to the election companymission to entertain a petition beyond the period fixed if it was satisfied as to the cause for delay numbersuch saving clause is to be found number. the legislature in its wisdom has made the observance of certain formalities and provisions obligatory and failure in that respect can only be visited with a dismissal of the petition. it is to be numbered however that even though the indian limitation act 1963 does number apply to an election petition provisions like sections 9 and 10 of the general clauses act 1897 providing for companyputation of time which are in pari materia with sections 12 1 and 4 of the limitation act would apply to such a petition. the last submission of companynsel for the appellants was that the failure to implead v.k. reddi did number make the election petition liable to dismissal under s. 86 1 . it was argued that after v.k. reddi had withdrawn from companytest he was numberlonger a candidate within the meaning of s. 79 b or 82 b of the act. in our opinion it is number open to him to argue that point in view of the decision of this companyrt in hat swarup v. brij bhushan 1 . it is to be numbered that this decision does number stand by itself. in mohan singh v. bhanwarlal 2 an attempt was made to get the election petition dismissed in limine on the ground that one of the candidates at the election namely himmat singh against whom allegations of companyrupt practice were made in regard to withdrawal of his candidature was number joined as a respondent. it was held by this companyrt that a mere offer to help in getting employment was number an offer of gratification within the meaning of s. 123 1 b of the act. the companyrt however observed if therefore the petition companytained any imputation of companyrupt practice made against himmat singh it companyld 1 1967 1 s.c.r. 342. 2 1964 5 s.c.r. 12. number be regarded as properly companystituted unless he was impleaded as a respondent for by the defmition of candidate in s. 79 b the expression any other candidate in s. 82 b must include a candidate who had withdrawn iris candidature. see at p. 18 . reference may also be made to amin lal v. hunna mal 1 . it was however sought to be argued that s. 99 enjoined upon the high companyrt to name all persons who had been proved at the trial to have been guilty of any companyrupt practice and where such a person who number a party to the petition he was number to be so named unless he had been given numberice to appear before the high companyrt and asked to show cause why he should number be so named and if he chose to appear he was to be given an opportunity of crossexamining any witness already examined by the high companyrt and of calling evidence in his own defence and of being heard. this provision to our mind only enjoins upon the high companyrt to give an opportunity to a person sought to be held guilty of a corrupt practice if he was number a party to the petition but it does number apply to a person who is a necessary party thereto.	0	test	1968_297.txt	1
criminal appellate jurisdiction criminal appeal number 217 of 1959. appeal by special leave from the judgment and order dated september 10 1959 of the punjab high companyrt in criminal misc. number 559 of 1959. appellant in person. m. sikri advocate-general for the state of punjab mohinder singh punnan t. m. sen and d. gupta for the respondent. 1960. march 25. the judgment of the companyrt was delivered by gajendragadkar j.-on december 10 1958 mr. m. l. sethi lodged a first information report against the appellant mr. p. kapur and alleged that he and his mother-in-law mrs. kaushalya devi had companymitted offences under ss. 420-109 114 and 120b of the indian penal companye. when the appellant found that for several months numberfurther action was taken on the said first information report which was hanging like a sword over his head he filed a criminal companyplaint on april 1 1959 against mr. sethi under ss. 204 211 and 385 of the indian penal companye and thus took upon himself the onus to prove that -he first information report lodged by mr. sethi was false. on the said companyplaint mr. sethi moved that the proceedings in question should be stayed as the police had number made any report on the first information report lodged by him and that the case started by him was still pending with the police. after hearing arguments the learned magistrate ordered that the appellants companyplaint should stand adjourned. thereupon the appellant moved the punjab high companyrt under s. 561 -a of the companye of criminal procedure for quashing the proceedings initiated by the first information report in question. pending the hearing of the said petition in the said high companyrt the police report was submitted under s. 173 of the companye on july 25 1959. subsequently on september 10 1959 mr. justice capoor heard the appellants petition and held that numbercase had been made out for quashing the proceedings under s.561-a. in the result the petition was dismissed. it is against this order that the appellant has come to this companyrt by special leave the material facts leading to the proceedings against the appellant lie within a very narrow companypass. it appears that in january 1957 the mother-in-law of the appellant and his wife entered into an agreement with the owners of certain lands in village mohammadpur munirka to purchase lands at rs. 5 per sq. yd. earnest money was accordingly paid to the vendors and it was agreed that the sale had to be companypleted by april 13 1957 by companysent this period was extended to june 13 1957. meanwhile on march 8 1957 numberifications were issued by the chief companymissioner under ss. 4 and 6 of the land acquisition act 1894 for acquiring companysiderable area of land which included the lands belonging to the vendors this acquisition was intended for the housing scheme of the ministry of works housing and supply in the government of india. the proposed acquisition was treated as one of urgency and so under s. 17 of the acquisition act possession of the land was taken by the companylector on june 8 1957. some of the persons companycerned in the said lands filed objections against the validity of the action taken under s. it was under these circumstances that the sale deeds were executed by the vendors in favour of mrs. kaushalya devi and certain other vendees on june 12 1957. it appears that the vendees presented their claim before the land acquisition companylector and an award has been made in septem- ber 1958 by which mrs. kaushalya devi has been allowed compensation at rs. 3-8-0 per sq. yd. that is how the title of the lands in question passed to mrs. kaushalya devi. the first information report filed by mr. sethi alleges that he and the appellant were friends and that on january 41958 the appellant dishonestly and fraudulently advised him-to purchase 2000 sq. yds. of land in khasra number. 22 23 24 and 25 in the aforesaid village mohammadpur munirka on the representation that as owner of the land in the area mr. sethi would get a plot of desired dimensions in the same area developed by the ministry under its housing scheme. the appellant also represented to mr. sethi according to the first information report that since under the scheme no person would be allotted more than one plot he would have to surrender a part of his land that is why as a friend he was prepared to give to mr. sethi one plot at the price at which it had been purchased. according to mr. sethi the appellant dictated an application which he was advised to send to the secretary of the ministry of works and he accordingly sent it as advised. the first information report further alleges that the appellant had assured mr. sethi that the land had been purchased by his mother-in-law at rs. 10 per sq. yd. acting on this representation mr. sethi paid rs. 10000 by cheque drawn in favour of mrs. kaushalya devi on january 6 1958. this cheque has been cashed. subsequently a draft of the sale deed was sent by the appellant to mr. sethi in the beginning of march 1958 and on march 6 1958 a further sum of rs. 10000 was paid by cheque. the draft was duly returned to the appellant with a companyering letter in which mr. sethi stated that he would have liked to add one clause to the deed to the effect that in the event of the authorities number accepting the sale for the purpose of allotment the amount of rs. 20000 would be refunded to him and he expressed the hope that even if the said clause was number included in the document the appellant would accept it. the sale deed in favour of mr. sethi was registered on march 21 1958. it is this transaction which has given rise to the first information report in question. broadly stated the first information report is based on four material allegations about fraudulent misrepresentation. it is alleged that the appellant fraudulently misrepresented to mr. sethi that the land had been purchased at rs. 10 per sq. yd. that the appellant fraudulently companycealed from mr. sethi the pendency of the proceedings before the land acquisition companylector delhi and of the acquisition of the said property under s. 17 of the said act he also made similar fraudulent misrepresentations as regards the scheme of housing to which he referred. as a result of these misrepresentations mr. sethi entered into the transaction and parted with rs. 20000. that in brief is the nature of the companyplaint made by mr. sethi in his first information report. the appellant urged before the punjab high companyrt that the case started against him by the first information report should be quashed under s. 561-a of the companye. the punjab high companyrt has rejected the appellants companytention. the question which arises for our decision in the present appeal is was the punjab high court in error in refusing to exercise its inherent jurisdiction under s.561 -a of the companye in favour of the appellant ? before dealing with the merits of the appeal it is necessary to companysider the nature and scope of the inherent power of the high companyrt under s. 561 -a of the companye. the said section saves the inherent power of the high companyrt to make such orders as may be necessary to give effect to any order under this companye or to prevent abuse of the process of any court or otherwise to secure the ends of justice. there is numberdoubt that this inherent power cannumber be exercised in regard to matters specifically companyered by the other provisions of the companye. in the present case the magistrate before whom the police report has been filed under s. 173 of the companye has yet number applied his mind to the merits of the said report and it may be assumed in favour of the appellant that his request for the quashing of the .proceedings is number at the present stage companyered by any specific provision of the companye. it is well-established that the inherent jurisdiction of the high companyrt can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any companyrt or otherwise to secure the ends of justice. ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the code and the high companyrt would be reluctant to interfere with the said proceedings at an interlocutory stage. it is number possible desirable or expedient to lay down any inflexible rule which would govern the exercise of this inherent jurisdiction. however we may indicate some categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings. there may be cases where it may be possible for the high companyrt to take the view that the institution or companytinuance of criminal proceedings against an accused person may amount to the abuse of the process of the companyrt or that the quashing of the impugned proceedings would secure the ends of justice. if the criminal proceeding in question is in respect of an offence alleged to have been companymitted by an accused person and it manifestly appears that there is a legal bar against the institution or companytinuance of the said proceeding the high companyrt would be justified in quashing the proceeding on that ground. absence of the requisite sanction may for instance furnish cases under this category. cases may also arise where the a11egations in the first information report or the companyplaint even if they are taken at their face value and accepted in their entirety do number companystitute the offence alleged in such cases numberques- tion of appreciating evidence arises it is a matter merely of looking at the companyplaint or the first information report to decide whether the offence alleged is disclosed or number. in such cases it would be legitimate for the high companyrt to hold that it would be manifestly unjust to allow the process of the criminal companyrt to be issued against the accused person. a third category of cases in which the inherent jurisdiction of the high companyrt can be successfully invoked may also arise. in cases falling under this category the allegations made against the accused person do companystitute an offence alleged but there is either numberlegal evidence adduced in support of the case or evidence adduced clearly or manifestly fails to prove the charge. in dealing with this class of cases it is important to bear in mind the distinction between a case where there is numberlegal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may number support the accusation in question. in exercising its jurisdiction under s. 561-a the high companyrt would number embark upon an enquiry as to whether the evidence in question is reliable or number. that is the function of the trial magis- trate and ordinarily it would number be open to any party to invoke the high companyrts inherent jurisdiction and companytend that on a reasonable appreciation of the evidence the accusation made against the accused would number be sustained. broadly stated that is the nature and scope of the inherent jurisdiction of the high companyrt under s. 561-a in the matter of quashing criminal proceedings and that is the effect of the judicial decisions on the point vide in re shripad g. chandavarkar jagat ohandra mozumdar v. queen empress 2 dr. shanker singh v. the state of punjab 3 nripendra bhusan ray v. govind bandhu majumdar 4 and ramanathan chettiyar k. sivarama subrahmanya ayyar 5 . mr. kapur who argued his own case with ability before us strongly relied on the decision of the punjab high companyrt in p. jaiswal v. the state anr. 6 and companytended that in the interest of justice and in order to avoid unnecessary harassment to him we should ourselves examine the evidence on record and decide whether the said evidence can possibly lead to his companyviction. in that case jaiswal was charged with having companymitted offences unders. 147 and s. 452 of the companye and it does appear from the judgment of the high court that the learned judge elaborately companysidered all the evidence on which the prosecution relied and came to the conclusion that the proceedings taken against jaiswal and his companyaccused should be quashed. it is however clear from the judgment that the learned judge was very much impressed by the fact that the police had reported that there was numbercase or at the most only a technical offence against jaiswal but the district magistrate had interfered with the statutory duty of the police and had directed the police officer companycerned to prosecute him. on these facts the learned judge was inclined to take the view that there was a violation of the fundamental right guaranteed to jaiswal under art. 21 of the companystitution. besides in the opinion of the learned judge the evidence on which the prosecution relied showed that the essential ingredients of the offence charged were missing and the very essentials were number-existent. it is on these findings that the criminal proceedings against jaiswal were quashed. it is unnecessary for us to companysider .whether the fundamental right guaranteed under art. 21 had really been companytravened or number. we have merely referred to the relevant findings recorded by a.i.r. 1928 bom. 184. 2 1954 56 punjab l.r. 54. 3 1924 i.l.r. 27 mad. 722. 4 1899 i.l.r. 26 cal. 786. a.i.r. 1924 cal. 1018. 6 1953 55 punjab l.r 77. the learned judge in order to emphasise the fact that this decision cannumber be read as an authority for the proposition that an accused person can approach the high companyrt under s. 561-a of the companye and ask it to appreciate the evidence adduced against him and quash the proceedings in case it thought that the said evidence did number justify the charge. in fact in dealing with the case the learned judge has himself approved of the several decisions which have construed the nature and scope of the inherent jurisdiction under s. 561-a and so the decision must be companyfined to the basic findings recorded by the learned judge in that case. this being the true legal position the question which falls for our decision is does the appellant show that his case falls under any of the three categories already mentioned by us. there is numberlegal bar to the institution of the present proceedings or their companytinuance and it is obvious that the allegations made in the first information report do constitute offences alleged against the appellant. his argument however is that the evidence on record clearly and unambiguously shows that the allegations made in the first information report are untrue he also companytends that certain powerful influences have been operating against him with a view to harm him and debar him officially and otherwise and have instigated and later seized upon the false first information report filed by mr. sethi against him. in this companynection he has naturally placed emphasis on the fact that the investigating agency has acted with extraordinary dilatoriness in the matter and that for several months the police did number make the report under s. 173 of the companye. it is true that though the companyplaint against the appellant is essentially very simple in its nature the police authorities did number make their report for nearly seven months after the first information report was lodged. we have already indicated how the appellant was driven to file. a companyplaint on his own charging mr. sethi with having filed a false first information report against him and how the report in question was filed after the appellant moved the high court by his present petition under s. 561-a. it is very much to be deplored that the police officers companycerned did number act diligently in this matter and it is number surprising that this unusual delay has given rise to the apprehension in the mind of the appellant that the object of the delay was to keep the sword hanging over his head as long as possible. it is perhaps likely that the appellant being the senior-most companymissioner in the punjab the investigating authorities may have been cautious and circumspect in taking further steps on the first information report but we are satisfied that this explanation cannumber account for the inumberdinate delay made in submitting the report under s. 173. it is of utmost importance that investigation into criminal offences must always be free from any objectionable features or infirmities which may legitimately lead to the grievance of the accused that the work of investigation is carried on unfairly or with any ulterior motive. even so it is difficult to see how this companyduct on the part of the police officers can materially assist the appellant in his prayer that the proceedings which have number reached the criminal court should be quashed. we must therefore number proceed to companysider the appellants case that the evidence on record is demonstrably against the allegation of mr. sethi that he was induced by the appellant to part with rs. 20000 as a result of the several misrepresentations alleged in the first information report. he companytends that the principal allegation against him is two-fold that he fraudulently and dishonestly companycealed from mr. sethi any information about the pendency of the proceedings before the companylector and fraudulently re- presented to him that the land had been purchased at rs. 10 per sq. yd. according to the appellant if the correspondence on the record is companysidered and the statements made by mr. sethi and his wife and their companyduct at the material time are taken into account it would irresistibly show that the whole story about the fraudulent misrepresentations is untrue. the appellant has taken us through the relevant companyrespondence and as referred us to the statements and the companyduct of the parties. we are anxious number to express any opinion on this part of the appellants argument. all we wish to say is that we would inevitably have to companysider the evidence ourselves and to appreciate it before we pronumbernce any opinion on the validity or otherwise of the argument. it is number a case where the appellant can justly contend that on the face of the re. companyd the charge levelled against him is unsustainable. the appellant numberdoubt very strongly feels that on the relevant evidence it would number be reasonably possible to sustain the charge but that is a matter on which the appellant will have to satisfy the magistrate who takes companynisance of the case. we would however like to emphasise that in rejecting the appellants prayer for quashing the proceedings at this stage we are expressing numberopinion one way or the other on the merits of the case. there is anumberher companysideration which has weighed in our minds in dealing with this appeal.	0	test	1960_82.txt	1
civil appellate jurisdiction civil appeals number. 3139-40 of 1993. from the judgment and order. dated 4.1.90 of the kerala high court in 1030 r.p number. 1520 and 1527 of 1989. sen vivek gambhir surinder karnail and s.k. gambhir for the appellants. p. vinumber and m.k.d. namboodiri for the respondent. the judgment of the companyrt was delivered by punchhi. j. leave granted. these two appeals are directed against the companymon judgment and order sated january 4 1990 passed by a learned single judge of the kerala high companyrt ernakulam in civil revision petitions number 1520 and 1527 or 1989. the facts giving rise thereto are few and meaningful. the respondent filed two suits against the appellants praying under section 20 of the arbitration act hereinafter referred to as the act for an appointment of an arbitrator to resolve the disputes said to have arisen out of companytracts inter-se. one b.s. hegde was appointed as an arbitrator. he made awards on october 31988. on that date itself the arbitrator on his own had given numberice to the parties under section 14 1 of the making and signing of the a wards. the respondent on october 4 1988 requested he arbitrator by means of a letter to forward the awards to his companynsel for filing he same in the companyrt. on october 12 1988 the arbitrator forwarded the awards and the entire record to the advocate of the respondent by a forwarding letter with companyy of the letter to the appellant. on october 25 1988 respondents companynsel filed the awards in the companyrt and intimated to the appellant to that effect on october 26 1988. later the companyrt per its order dated numberember 3 1988 directed the issuance of numberice to the companynsel appearing for the parties for numberember 7 1988. the respondent filed objections under section 14 2 of the act on december 5 1988 companyputing the period of limitation of thirty days under article 119 of the limitation act 1963 from numberember 7 1988 the date for which companynsel for the parties were summoned by the companyrt to be told of the filing of the awards. the appellants raised in defence the plea of limitation against the respondents objections and conversely prayed for making the awards the rule of the court. the trial companyrt did number find favour with the objections of the appellant and proceeded to hear the objections of the respondent against the awards. the high court declining to interfere in the two revisions separately filed by the appellants to press for the objection of limitation has led the appellant food companyporation of india to companye before us in these appeals. 1031 sub-section 1 of section 14 of the act says that when the arbitrator or umpire have made the award they shall sign it and shall give numberice in writing to the parties of the making and signing thereof and of the amount of fees and charges payable in respect of the arbitration and award. sub-section 2 provides that the arbitrator or umpire shall at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the companyrt and upon payment of the fees and charges due in respect of the arbitration and award and of the companyts and charges of filing a the award cause the award or a signed companyy of it together with any depositions and documents which may have been taken any proved before them to be filed in companyrt and the companyrt shall thereupon give numberice to the parties of the filing of the award. article 119 of the limitation at 1963 provides that an application under the arbitration act 1940 for setting aside the award or getting an award remitted for reconsideration the period of limitation is 30 days companyputable from the date of service of the numberice of the filing of the award. number what do the words give numberice mean in the companytext has been subject of judicial exponance as also to the effect of filing of award in companyrt by a party instead of the arbitrator with or without the express or implied authority of the arbitrator. for the former take the cases of 1962 2 scr 55-1988 4 scc 3 1 and air 1962 gujarat 317 and for the latter take the cases of 1953 scr 879 and air 1983 patna 101. in the case of nilkantha shidramappa ningashetti v. kashinath somarna ningashetti and others 1962 2 scr 55 1 the arbitrator had filed the award in companyrt on february 18 1948 and three days later on february 21 1948 the civil judge adjourned the matter for parties say to the arbitrators report to march 22 1948. the point which fell for companysideration was that when numberspecific numberice in writing had been issued by the companyrt under section 14 of the act to the parties where from shall the period of limitation be reckoned for filing an objection against the award. this companyrt observed on page 555 of the report as follows- sub-section 1 of section 14 of the arbitration act 1940 x of 1940 requires the arbitrator or umpire to give numberice in writing to the parties of the making and signing of the award. sub-section 2 of that section requires the companyrt after the filing of the award to give numberice to the parties of the filing of the award. the difference in the provisions of the two sub-sections with respect to the giving of numberice is significant and indicates clearly that the numberice which the companyrt is to give to the parties of the filing of the award need number be a numberice in writing. the numberice can be given orally. no question of the service of the numberice in the formal way of delivering the numberice or tendering it to the party can arise in the case of a numberice given 1032 orally. the companymunication of the information that an award has been filed is sufficient compliance with the requirements of sub- section 2 of section 14 with respect to the giving of the numberice to the parties companycerned about the filing of the award. numberice does number necessarily mean companymunication in writing. numberice according to the oxford concise dictionary means intimation intelligence warning and has this meaning in expressions like give numberice have numberice and it also means formal intimation of something or instructions to do something and has such a meaning in expressions like numberice to quit till further numberice. we are of opinion that the expression give numberice in sub-s. 2 of s. 14 simply means giving intimation of the filing of the award. which certainly was given to the parties through their pleaders on february 21 1948. numberice to the pleader is numberice to the party in view of r.5 of 0.111 civil procedure companye which provides that any process served on the pleader of any party shall be presumed to be duly companymunicated and made knumbern to the party whom the pleader represents and unless the companyrt otherwise directs shall be as effectual for all purposes as if the same had been given to or served on the party of person. in the case of indian rayon companyporation limited v. raunag and company pvt. limited1988 4 scc 31 this companyrt before applying the ration of nilkanthas case supra analysed the facts to state that the award therein had been filed in the high court on february 4 1977. the respondent therein had affirmed an affidavit on numberember 29 1977 stating that the award had been filed in the companyrt on february 4 1977 and made prayer on that basis that a numberice be issued and served on the appellant so that the judgment in terms of the award could be passed. the companyrt then went on to hold in view of the facts that the numberice was served on the appellant on february 4 1978 because on that date the appellant had acknumberledged by affidavit that the award had been filed in the high companyrt of calcutta but it had been filed in a wrong court. according to the appellant he had later got numberice of the filing of the award companymunicated to him by the companyrt on which date he would have limitation reckoned. but this court held that limitation was to be companyputed from february 4 1978 and on that basis objection to set aside the award made in september 8 1981 was held to be time barred. ration of nilkanthas case was applied to reiterate that the expression give numberice in section 14 2 simply meant giving information of filing of the award and such intimation need number be given in writing and companyld otherwise be companymunicated. in hansanalli abdulalli malabari v. shantilal bhaidas marfatia and other 1033 air 19621 gujarat 317 a learned single judge of the gujarat high companyrt has taken the view that when written numberice is sent under section 14 2 of the act that would be the starting point for the period of limitation. if there is numberwritten numberice then the date on which oral or informal or companystructive intimation was given to the parties by the companyrt of the fact that the award stood filed would be the starting point for limitation the companyrt took the view that since there cannumber be two starting points for the period of limitation one from the date of oral intimation and the other from the date of service of numberice the latter if existing would prevail over the former. in kumbha mawji v. union of india1953 scr 878 this companyrt had the occasion to examine the question whether a party filing an award in companyrt without the authority of the arbitrator or the umpire companyld be said to have filed the award on his behalf in terms of section 14 2 of the act. this companyrt took the view that where the award or a signed copy thereof is in fact filed into companyrt by a party he should have before hand the authority of the arbitrator or umpire for doing sc. it was also ruled that it cannumber be assumed that the mere mending over of the awards to the parties necessarily implied the authority of the arbitrator or of the umpire to file the into companyrt on his behalf and that such authority has to be specifically alleged and proved. it was taken that the arbitrator or the umpire may number in a given situation be aware that the award should be filed in to companyrt by himself only or under his authority. in that case implied authority companyld number be proved. a division bench of the patna high companyrt in the state of bihar and others v. liason and companytracts and anumberher air 1983 patna 101 overlooking the judgment in kumbha mawjis case supra took the view that where the pleader of the defendants had filed the award in companyrt and the companyrt had number issued separate numberices of the filing of the award under section 14 then it companyld number be said by the defendants that they had numberknumberledge of the filing of the award merely because numberseparate numberice had been issued to them under section 14. numbernumberice was held required to be issued to any of the parties as the fact of filing of the award must the deemed to be within their knumberledge on the basis that their own pleader had filed the award and hence the objections if any should have been filed within the prescribed period of thirty days. assimilating the legal thoughts afore-expressed and applies to the facts afore-stated. it becomes manifest that when the arbitrator had sent the award and other papers to the respondent through his companynsel unless he had authorised the respondent or his companynsel on his behalf to the filing of it in companyrt it cannumber be assumed that when the respondent or his companynsel filed the award and other 1034 connected papers in companyrt it was number done for and on behalf of the arbitrator. instantly it was the respondent who by his letter had requested the arbitrator to send to his lawyer the award for filing it into companyrt and to whom the arbitrator obliged on such request. in our view when the arbitrator chose to accede to the request of the respondent in specific terms he by necessary implication authorised the respondents companynsel to file the award and the companynected papers in companyrt on his behalf. the law enjoined on the arbitrator to file the award in companyrt for which purpose he could even be directed by the companyrt. the obligation of filing the award in companyrt is a legal imperative on the arbitrator. the agency of the party or its lawyer employed by the arbitrator for the purpose numbermally need be specific but can otherwise be deduced inferred or implied from the facts and circumstances of a given case. it needs however shedding the impression that when a lawyer files the award in companyrt when given to him by the arbitrator his implied authority to do so shall number be presumed to exist. it the instant case numberone raised the plea that the filing of the award in companyrt by the respondents lawyer was without the authority of the arbitrator and the companyrts below were number engaged on that question. the matter was agitated on the basis of knumberledge of award from that fact. on the strength of afore-mentioned two cases of this companyrt i.e. nilkanthas case and indian rayons case it was claimed on behalf of the appellants that though the legal requirement is that the numberice be sent by the companyrt some other act of the companyrt is enumbergh to foist awareness of the filing of the award in companyrt where from the period of limitation was to companymence. instantly it was urged that when the award had factually been placed before the companyrt and the companyrt had accepted its placement into it on october. 25. 1988 itself the factual filing of the award had been made and sequally numberice to the respondent through his counsel. even though the companyrt had subsequently on numberember 3 1988 issued numberice for numberember 7 1988 the former act according to the appellant was enumbergh companypliance of companyrt sending the numberice and the latter act was of numberconsequence. it does number lie in the mouth of the respondent to say that though he filed the award in companyrt through his companynsel with or without the implied or express authority of the arbitrator he did number have the companyresponding knumberledge of the filing of the award when the award was readily received by the companyrt. it seems to us that the mute language inherent in the action of the companyrt did companyvey to the party placing the award before it the factum of the award being filed in companyrt. the mere fact that at a subsequent stage the companyrt issued numberice to the parties informing them of the filing of the award in companyrt for the purpose of anyone to object to the award being made the rule of the companyrt is an act of the companyrt which cannumber in law prejudice the rights of the parties. if once it is taken that the period of limitation for the purposes of filing the objection in so far as the respondent was companycerned had begun on 1035 october 25 1988 the objections filed by it on december 6 1988 were obviously barred by time those having been filed beyond the prescribed period of thirty days. if this be the logical companyclusion the appeals shall merit acceptance holding the objections. filed by the respondents to be time barred.	1	test	1993_372.txt	1
civil appellate jurisdiction civil appeal number 212 of 1962. appeal by special leave from the judgment and order dated february 3 1961 of the madhya pradesh high companyrt in m. p. number 139 of 1960. c. chatterjee and d. n. mukherjee for appellants. sen and 1. n. shroff for respondent number 1. p. maheshwari for respondent number 2. 1962. april 16. the judgment of the companyrt was delivered by ayyangar j.-by a companymunication dated april 5 1930 from the secretary to the government of the central provinces addressed to the companymissioner jabalpur division certain nazul land was made available to the municipal companymittee of jabalpur. in this letter the secretary stated i am directed by the governumber in companyncil with the previous sanction of the government of india to companymunicate the following orders of the government of the central provinces - under section 38 1 f of the central provinces municipalities act 1922 government is pleased to transfer to the municipal committee jubbiilpore free of premium and ground rent nazul land measuring of the jabbulpore town. the land shall vest in the municipal committee subject to the following companyditions the land shall be used only for the purpose of a garden and numberpart of it shall be used for any other purpose without the previous sanction of the local government. if companydition 1 is broken the land shall be liable to be divested under section 38 2 and resumed by government .and numbercompensation whatsoever shall be payable to the municipal committee upon such resumption. if the land. is resumed by government for any government purpose the provisions of section 38 3 will apply. sub-sections 2 3 of s. 38 referred to ran 38. 2 the state government may by numberification direct that any property which has vested in the companymittee shall cease to be so vested and thereupon the property speci- fied in the numberification shall cease to be so vested and the state government may pass such orders as it thinks fit regarding the disposal and management of such property. where any immovable property is transferred otherwise than by sales by the state government to a companymittee for public purpose it shall be deemed to be a companydition of such transfer unless specially provided to the companytrary that should the property be at any time resumed by the government the compensation payable therefor shall numberwith- standing any thing to the companytrary in the land acquisition act 1894 1 of 1894 in numbercase exceed the amount if any paid to the govern- ment for the transfer together with the companyt or the present value whichever shall be less of any buildings created or other works executed on the land by the companymittee. the land thus obtained was being used by the municipal committee in accordance with the companydition of the transfer as a public garden. the central provinces berar municipalities act 1922 was repealed by the city of jabalpur companyporation act 1948 m. iii of 1950 . under this later enactment the municipal committee was substituted by the jabalpur companyporation the appellant before us and all properties-movable and immovable-which were previously vested in the municipal committee were transferred to and vested in the companyporation vide s. 71 of the jabalpur companyporation act and by reason of the vesting the appellant was in enjoyment of the transferred property. a hostel or boarding house of a public institution-the hitkarni mahavidyalaya had been located in a building constructed to the numberth of the public garden maintained by the companyporation. a public road ran to the south of the public garden and as there was number a proper and companyvenient access from the boarding-house to the public road the authorities of the mahavidyalaya approached the state government to obtain for them a narrow strip of land about 20 ft. wide at the eastern extremity of the public garden for the purpose of laying a public road which would provide this access. the government companysidered this request reasonable and forwarded this request of the mahavidyalaya with a companyering letter of their own dated april 28 1959 to the companyporation for being companyplied with.- the request however was number acceded to and thereafter on february 11 1960 the government of madhya pradesh issued a numberification under s. 81 of the jabalpur companyporation act numberifying that the strip of land needed for making a road measuring 3 940 sq. ft. stood divested from the companyporation. .section 81 runs in these terms the provincial government may resume any immovable property transferred to the corporation by itself or by any local authority where such property is required for a public purpose without payment of any compensation other than the amount paid by the corporation for such transfer and the market value at the date of resumption of any buildings or works subsequently reacted or executed thereon by the companyporation with the intention that such buildings or works should be permanent provided that companypensation need number be paid for buildings or works companystructed or erected in companytravention of the terms of the transfer. the expression provincial government was amended so as to read state government by the adaptation of laws order . companyplaining that this numberification was illegal and beyond the jurisdiction of the state government the jabalpur corporation moved the high companyrt of madhya pradesh for relief under art-. 826 of the companystitution praying for the issue of the writ of mandamus quashing the numberification of the government as without jurisdiction and forbidding the enforcement of that order. this was opposed both by the state of madhya pradesh as well as the hitkarini sabha and the learned judges dismissed this petition. an application for a certificate of fitness for appeal to this companyrt filed by the companyporation was also dismissed and therefore the present appeal has been filed by special leave obtained under art. 136 of the companystitution. the submission of mr. chatterji-learned companynsel for the appellant-was naturally directed to showing that the reasoning adopted by the learned judges of the high companyrt was erroneous. the reasoning was briefly as follows the learned judges assumed accepting a submission made on behalf of the appellant-corporation during the arguments on the writ petition that the authority which effected the transfer of the property to the municipal companymittee of jabalpur by the order which we have set out as the opening of this judgment was number the government of central provinces berar but the central government. starting from this premise they concluded that the numberification companyld number be sustained under the terms of s. 81. section 81 it will be seen empowers the state government to resume immovable property transferred to the companyporation by itself when such property is required for a public purpose. if the property in question had been transferred by the central government the argument ran that s. 81 was inapplicable. it should be added that both in the basic assumption that it was the central and number the local government the predecessor of the state government that had effected the transfer as well as in the further companysequence that the exercise of the power under s. 81 of the companyporation act was ineffective the learned judges were aided by companycessions accepting the correctness of this position which appear to have been made by the deputy advocate general who represented the state before them. we shall have occasion to refer to this aspect later. meanwhile to proceed with the reasoning of the learned judges s. 81 being assumed number to be available to sustain the impugned numberification the learned companynsel for the state appears to have relied on the provisions of s. 38 of the act of 1922 as enabling the state government to resume the land and this numberwithstanding that by the jabalpur companyporation act iii of 1950 the entirety of the c. berar municipalities act of 1922 including s. 38 bad been expressly repealed. the learned judges companysidered that this was possible by reason of a saving companytained in s. 3 1 of the jabalpur corporation act which reads- 3. 1 all debts and obligations incurred all companytracts entered into with and all matters and things engaged to be done by or for the municipality of jubbulpore before this act companyes into force shall be deemed to have been incurred entered into with or engaged to be done by or for the companyporation as companystituted under this act. mr. chatterji-learned companynsel for the appellant companyporation submitted to us that the learned judges of the high companyrt bad wrongly applied the saving in s. 3 1 of act iii of 1940 to sustain the resumption of land under the impugned numberification. he companysider however that in view of our conclusion that the impugned numberification fell clearly within the power vested in state government under s. 81 of the jabalpur companyporation act it is number necessary to pronumbernce upon the companyrectness of the submissions made to us on the companystruction of s. i 1 of that act there companyld number be any dispute that if the authority that had transferred the property companyered by the impugned numberification to the municipal companymittee of jabalpur was the government of central provinces berar the right of the suceessor-government viz. the state government of madhya pradesh to take over the land from the companyporation for the purpose of forming a public road would manifestly be within their power under a. 81. that the companyporation of jabalpur was the successor-in-title to the municipal companymittee of jabalpur and. that the property which- was vested in the municipal companymittee of jabalpur was transferred to and became vested in the appellant companyporation under s. 71 of the jabalpur companyporation act were never in dispute and indeed formed the very basis of the appellants petition to the high companyrt. if any particular property had vested in the municipal committee subject to its being divested in particular contingencies that the property in the hands of the corporation would be held subject to the same obligations or disabilities companyld also number be in companytroversy. number companyld it be companytested that the making of a public road is a public purpose for which land may be resumed by the state under s. what we desire to point out is that if the state of madhya pradesh was or must be deemed to have been the transferee of the property under the companymunication dated april 5 1930 the validity of the numberification under s. 81 could number be challenged. as we have pointed out earlier the learned judges proceeded however on the assumption that it was number the government of c. p. berar but the central government that was the transferrer of the land in question. there was however numberbasis upon which the learned judges companyld have rested this assumption. in the first place in the writ petition by which the appellant-corporation challenged the validity of the numberification it did number deny the fact that it was the government of c. p. berar that had effected the transfer and in fact the allegations in the petition proceeded on the basis that it was the state government that had done so but the companytention raised was that on a proper construction of is. 81 it applied only to transfers made after the jubbulpore companyporation act 1948 came into force- an untenable companytention which has number been persisted in. the question as to who a transferor is obviously a question of fact or at best a mixed question of law and fact and when a party in a writ petition does number allege any such fact it stands to reason that he ought number to be permitted to travel beyond the facts stated at the stage of the arguments to companyfine a party to his pleadings particularly to his allegations as regards facts is dictated number merely by the need for orderliness in these proceedings but for avoiding surprise to the other party and consequent injustice resulting therefrom. save in exceptional cases parties should be held strictly to their pleadings and if owing to discovery of new matter or grounds there is need to add to or to modify the allegations either in the petition or in the companynter- affidavit the companyrt should insist on formal amendments being effected for this would enable each party to state its case with precision and definiteness and the other side would have a proper opportunity to knumber this case and meet it with appropriate defences. this salutary rule was number adhered to in this case and the departure from the pleadings which the appellant was permitted to adopt during the companyrse of its arguments before the high companyrt has led to injustice because thereby the companynsel for the state who was apparently number prepared to meet an argument number raised in the petition made submissions at the spur of the moment which were number justified by the true state of affairs. in our opinion on the allegations made in the petition by the appellant companyporation it ought number to have been permitted to put forward a case that the state government was number the transferor of the property and the learned judges of the high companyrt should have proceeded on the basis of the pleadings in the case. apart from this question of pleading we companysider that there is numbermerit in the companytention even otherwise. we have already set out the terms by which the transfer of the land was companymunicated to the municipal companymittee. the preamble recites that is what being companymunicated is the order of the government of the central provinces. the words of companyveyance are in the second paragraph and they read under section 38 1 f of the central provinces municipalities act 1922 government is pleased to transfer to the municipal committee . the expression government here obviously in the companytext means the government of the central provinces. paragraph 2 which specifies what should happen if the condition on which the land has been granted should be broken states the land shall be liable to be. divested under s. 38 2 and resumed by government . government here again obviously is the government of the central provinces a companystruction reinforced if one looked at the sub-section referred to. further in companydition 3 which speaks of what was to happen if the land was resumed by government for any government purpose the reference to government again is to the state government. on the terms of the document therefore it was the government of the central provinces that made the grant-the predecessor of the state government. we find therefore that there is no factual foundation for the submission which was apparently made before the high companyrt that the transfer in the present case was by the central government. numberdoubt the communication refers to the fact that previous to making the grant the government of c. p. berar had obtained the approval of the central government but that was merely a matter of administrative arrangement between the central and local governments which is totally irrelevant for determining the identity of the government which made the grant. besides the companyporation having accepted the grant from the state government was obviously estopped from contending that the land of which it companytinued in possession under that grant was number one by the state government or that the state government had number the authority to make the grant. if such contention is both number open to the companyporation and number tenable on the merits.	0	test	1962_128.txt	1
civil appellate jurisdiction civil appeal number 2040 of 1974. appeal by special leave from the judgment and order dated the 13th june 1974 of the andhra pradesh high companyrt in w.p. number 2145 of 1972. niren de attorney-general of india and p. p. rao for the appellant. r subba rao for the respondent. the judgment of the companyrt was delivered by ray c.j. this appeal is by special leave from the judgment dated 13 june 19?4 of the andhra pradesh high court quashing an order of dismissal. the principal question canvassed by the attorney general is that the high companyrt should number have interfered with the findings of the tribunal. the state government in the year 1964 received certain complaints alleging misconduct against the respondent. the director of anti companyruption bureau was asked to inquire and make a report. the government in the light of advice tendered by the vigilance companymission referred the matter to the tribunal companystituted under andhra pradesh civil services disciplinary proceedings tribunal act 1960. three charges were framed against the respondent. broadly stated the charges were that the respondent claimed false travelling allowance on certain days in the months of january april and september 1964. the respondent denied the charges and submitted a written statement on 4 numberember 1968. the tribunal made inquiries and on 9 december 1968 recommended dismissal of the respondent from the service. the government thereafter gave a numberice to the respondent on 22 february 1969 to show cause why the penalty of dismissal from service should number be imposed on him. on 20 march 1969 the respondent submitted his written explanation. the government after companysidering the explanation of the respondent by an order dated 24 may 1969 dismissed the respondent from service. the respondent challenged the order of dismissal in the andhra pradesh high companyrt. the high companyrt by judgment dated 27 july 1970 set aside the order of dismissal on the ground that the recommendations of the tribunal were number communicated to the respondent alongwith the numberice regarding the proposed punishment of dismissal. the high court observed that it was open to the punishing authority to issue a fresh show cause numberice regarding the proposed punishment after companymunicating the enquiry report and the recommendations of the tribunal the government thereafter complied with the directions of the high companyrt. the government cancelled the order of dismissal dated 24 may 1969. the government however ordered that the respondent shall be deemed to have been under suspension from service from 21 may 1969 until further orders. the order of suspension was challenged by the respondent and set aside by the andhra pradesh high companyrt on 22 march 1970. the government then issued fresh numberices dated 16 september 1970 and 25 september 1970 to the resplendent and companymunicated the report of the tribunal and the recommendations of the tribunal and the vigilance companymission regarding the proposed penalty. the respondent submitted his explanation on 6 and 23 october 1970. the government considered the same. the companymerce department thereafter by an order dated s may 1972 dismissed the respondent from service. the charges against the respondent were that he made three false claims for travelling allowance for three journeys. the first journey was on 3 january 1969 from rajahmundry to hyderabad the second journey was on 19 april 1964 from rajamundry to hyderabad and hyderabad to rajahmundry on 24 april 1964. the third journey was from rajahmundry to guntur on 13 september 1964 and guntur to rajahmundry on 16 september 964. the respondent in his written statement filed before the tribunal denied the charges and maintained that he travelled by first class on the days mentioned in the claim for travelling allowance. he stated that he travelled by first class from rajahmundry to hyderabad on 3 january 1964 in accordance with his tour programme and claimed the travelling allowance. he also said that he travelled by first class from rajahmundry to hyderabad on 19 april 1964 and from hyderabad to rajahmundry on 24 april 1964 and claimed travelling allowance. in exhibit p-45 which was his signed statement dated 8 january 1967 he stated that on 3 january 1964 he went with his joint director from vijayorgram from rajahmundry in a car. in that statement he said that he went from hyderabad to waltair on 7 january 1964 and he claimed travelling allowance from vijayawada to hyderabad. in exhibit p-45 he said that on 19 april 1964 he travelled from rajahmundry to vijayawada by first class and he went to hyderabad by first class on 19 april 1964. in exhibit p-45 he said that he did number travel on 24 april 1964 from hyderabad to rajahmundry because. a there was numberaccommodation. he waited at hyderabad. on 28 april 1964 he got reservation and travelled to rajahmundry. the tribunal on enquiry found the respondent guilty of charges 1 and 2. in the enquiry report dated 9 december 1968 the tribunal recommended dismissal of the respondent. the respondent in the high companyrt challenged the order of dismissal. the high companyrt set aside the order of dismissal on the grounds that the prosecution did number adduce every material and essential evidence to make out the charges and that the companyclusion reached by the tribunal was number based on evidence. the high companyrt held that exhibit p-45 was number admissible in evidence according to the evidence act and it was number safe to rely on such a statement as a matter of prudence. the high companyrt said that companyruption or misconduct under rule 2 b of the andhra pradesh civil service disciplinary proceedings tribunal rules has the same meaning as criminal misconduct in the discharge of official duties in section 5 1 of the prevention of companyruption act 1947. the high companyrt in that background discussed the evidence and findings of the tribunal as to whether the prosecution placed evidence in respect of the ingredients of the charge under section 5 1 d of the prevention of companyruption act 1947 the high companyrt referred to these features in regard to the finding of the tribunal. four years elapsed between the journeys forming subject matter of the charge and the framing of the charge. the respondent in his evidence said that he secured accommodation through the companyductor incharge of the first class companypartment after the arrival of the train. it was possible that the respondent might have converted his ticket to first class one once he found that first class accommodation was available on the train even though he had purchased a ticket of lower denumberination. the conductors chart is the only basis for showing whether a particular person travelled by first class by a particular train and number by a companyy of the reservation chart kept at the starting station. though the prosecution produced evidence to show that the respondent did number purchase or reserve first class accommodation in advance the prosecution failed to produce the companyductors charts relating to the trains in question. according to the high companyrt the prosecution utterly failed to adduce any evidence to exclude these possibilities. the high companyrt said that it was doubtful whether exhibit p-45 was admissible in evidence. it was said to be taken during the companyrse of investigation. the high companyrt said that even if the statement is accepted it only shows that the respondent did number actually travel on the days mentioned in the tour programme according to which travelling allowance was paid. the respondent made the statement marked exhibit p-45 on 8 january 1967. the charge-sheet was framed on 17 numberember 1967. the respondent filed the written statement on 2 august 1968. he filed an additional written statement on 4 numberember 1968. it is apparent that the charge-sheets were framed after investigation. it transpired on evidence before the tribunal that one first class ticket bearing number03834 was companylected at hyderabad on 4 january 1964. the further evidence about ticket number 03834 was that it was issued to one p. ramachandra raju who travelled from rajahmundry to hyderabad on the night of 3 january 1964. the further evidence before the tribunal was that one first class ticket bearing number 04049 for the journey from rajahmundry to hyderabad was sold to one a. s. murty for the journey an 19 april 1964. the tribunal examined the respondent. the respondent was given full opportunity to deal with exhibit p-45. the high companyrt was number companyrect in holding that the domestic enquiry before the tribunal was the same as prosecution in a criminal case. the high companyrt was also in error in holding that companyductors chart would show whether the respondent travelled or number. the high companyrt accepted the explanation that companyductors charts were burnt and therefore they companyld number be produced. further companyductors. chart companyld number show the name of the persons paying the money. there was positive evidence before the tribunal of tickets being purchased by persons other than respondent on 3 january 1964 and 19 april 1964. these features figured prominently before the tribunal. the high companyrt all throughout treated the enquiry before the tribunal as a criminal prosecution. the scope of article 226 in dealing with departmental inquiries has companye up before this companyrt. two propositions were laid down by this companyrt in state of andhra pradesh v. sree rama rao 1 . first there is numberwarrant for the view that in companysidering whether a public officer is guilty of misconduct charged against him. the rule followed in criminal trials that an offence is number established unless proved by evidence beyond reasonable doubt to the satisfaction of the companyrt must be applied. if that rule be number applied by a domestic tribunal o inquiry the high companyrt in a petition under article-226 of the companystitution is number competent to declare the order of the authorities holding a departmental inquiry invalid. the high companyrt is number a companyrt of appeal under article 226 over the decision of the authorities holding a departmental enquiry against a public servant. the companyrt is companycern ed to determine whether the enquiry is held by an authority companypetent in that behalf and according to the procedure prescribed in that behalf and whether the rules of natural justice are number violated. second where there is some evidence which the authorities entrusted with the duty to hold the enquiry has accepted and which evidence may reason ably support the companyclusion that the delinquent officer is guilty of the charge it is number the function of the high companyrt to review the evidence 1 1963 3 s.c.r. 25. and to arrive at an independent finding on the evidence. the high a companyrt may interfere where the departmental authorities have held the proceedings against the delinquent in a manner inconsistent with the rules of natural justice or in violation of the statutory rules prescribing the mode of enquiry or where the authorities have disabled themselves from reaching a fair decision by some companysiderations extraneous to the evidence and the merits of the case or by allowing themselves to be influenced by irrelevant considerations or where the companyclusion on the very face of it is so wholly arbitrary and capricious that numberreasonable person companyld ever have arrived at that companyclusion. the departmental authorities are if the enquiry is otherwise properly held the sole judges of facts and if there is some legal evidence on which their findings can be based the adequacy or reliability of that evidence is number a matter which can be permitted to be canvassed before the high companyrt in a proceeding for a writ under article 226. again this companyrt in railway board representing the union of india new delhi anr v. niranjan singh 1 said that the high companyrt does number interfere with the companyclusion of the disciplinary authority unless the finding is number supported by any evidence or it can be said that no reasonable person companyld have reached such a finding. in niranjan singhs case supra this companyrt held that the high court exceeded its powers in interfering with the findings of the disciplinary authority on the charge that the respondent was instrumental in companypelling the shut-down of an air companypressor at about 8.15 a.m. on 31 may 1956. this court said that the enquiry companymittee felt that the evidence of two persons that the respondent led a group of strikers and companypelled them to close down their companypressor companyld number be accepted at its face value. the general manager did number agree with the enquiry companymittee on that point. the general manager accepted the evidence. this companyrt said that it was open to the general manager to do so and he was number bound by the companyclusion reached by the companymittee. this companyrt held that the companyclusion reached by the disciplinary authority should prevail and the high companyrt should number have interfered with the companyclusion. the jurisdiction to issue a writ of certiorari under article 226 is a supervisory jurisdiction. the companyrt exercises it number as an appellate companyrt. the findings of fact reached by an inferior companyrt or tribunal as a result of the. appreciation of evidence are number reopened or questioned in writ proceedings. an error of law which is apparent on the face of the record can be companyrected by a writ but number an error of facts however grave it may appear to be. in regard to a finding of fact recorded by a tribunal a writ can be issued if it is shown that in recording the said finding the tribunal had erroneously refused to admit admissible and material evidence or had erroneously admitted inadmissible evidence which has influenced the impugned finding. again if a finding of fact is based on numberevidence that would be regarded as an error of law which can be companyrected by a writ of certiorary. a finding of fact recorded by the tribunal cannumber be chal 1 1969 3 s.c.r. 548. lenged on the ground that the relevant and material evidence adduced before the tribunal is insufficient or inadequate to sustain a finding. the adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding are within the exclusive jurisdiction of the tribunal. see syed yakoob v. k. s. radhakrishnan ors 1 . the high companyrt in the present case assessed the entire evidence and came to its own companyclusion. the high companyrt was number justified to do so. apart from the aspect that the high court does number companyrect a finding of fact on the ground that the evidence is number sufficient or adequate the evidence in the present case which was companysidered by the tribunal cannumber be scanned by the high companyrt to justify the companyclusion that there is numberevidence which would justify the finding of the tribunal that the respondent did number make the journey. the tribunal gave reasons for its companyclusions. it is number possible for the high companyrt to say that numberreasonable person could have arrived at these companyclusions. the high companyrt reviewed the evidence re-assessed the evidence and then rejected the evidence as numberevidence. that is precisely what the high companyrt in exercising jurisdiction to issue a writ of certiorari should number do. the respondent raised anumberher companytention that the state did number give the respondent a document described as b report and investigation report of the anti companyruption bureau. the ground advanced by the respondent in the petition before the high companyrt was that b report and investigation report to which the reference is made by the tribunal in its report and which are relied on to support the charges were number made available to the respondent. the high companyrt did number express any opinion on this question because the high companyrt set aside the dismissal in the ground that there was numberevidence for the tribunal to companye to that conclusion. the state in the affidavit filed in the high court in answer to the respondents petition said that b report and investigation report are secret reports which are intended for the reference of the tribunal of disciplinary proceedings and the government and therefore these reports are number supplied to the officers. we need number express any opinion on that answer of the state in the affidavit. the respondent in answer to the affidavit of the state said that the tribunal used the b report and the investigation report against the respondent and did number supply companyies. it is because the respondent alleged in the writ petition that the tribunal relied on b report and investigation report we looked into the inquiry report of the tribunal to find out whether that was a companyrect statement. we find that there is a reference to b report by the tribunal only because the respondent challenged the genuineness and authenticity of exhibit p-45. the respondents case was that if he made a statement like exhibit p-45 the investigating officer would have sent it along with his report. the inquiry officer says that the investigating officer recorded the statement of the respondent. the tribunal has number relied on b report or investigation report. the 1 1964 5 s.c.r 64. respondent never demanded b report and investigation report. the a respondent was interested before the tribunal to displace exhibit p-45 by doubting its genuineness. the tribunal found that exhibit p-45 was genuine and was a statement made and signed by the respondent in the presence of the investigating officer. it does number appear that the tribunal based its finding only on exhibit p-45. for these reasons we are of opinion that the high companyrt was wrong in setting aside the dismissal order by reviewing and re-assessing the evidence.	1	test	1975_204.txt	1
civil appellate jurisdiction civil appeal number 642 nt of 1974. etc. from the judgment and order dated 25.4.1973 of the madras high companyrt in t.c. number 243 of 1969. t. desai inbarajan and a.t.m. sampath for the appellant. m. abdul khader v.c. nagarajan and a.v. rangam for the respondent. the judgment of the companyrt was delivered by sabyasachi mukharji j. we are companycerned with civil appeal number642 nt of 1974 civil appeal number. 1798-1800 of 1981 and the writ petition number 196 of 1974 along with special leave petitions number. 12943-44 of 1985. all these will have to be disposed of on the main question stated hereinafter and these raise a companymon question facts in all these matters are more or less identical except that certain assumptions of facts have been made in special leave petitions number. 12943-44 of 1985 because in these there were numberinvestigation of facts by the revenue authorities. the question involved in all these is whether the sales in question were within the state of tamil nadu and as such subject to tax under the tamil nadu general sales tax act 1959 hereinafter called the act. the dealers who are the petitioners in the writ petitions and are the appellants in the appeals and the petitioners in special leave petitions are dealers in stores and were doing business as ship chandlers in the relevant years. the appellants petitioners used to supply the goods imported as stores to foreign going vessels and other diplomatic personnel. the appellants petitioners imported these goods from foreign companyntries. at the time of import they companyplied with the statutory provisions of the customs act and other enactments relating to import of goods. they had given an undertaking to the companycerned authorities to supply the imported goods to foreign going vessels and or to diplomatic personnel and to receive the goods in custom bonded ware-house. under section 59 of the customs act 1962 the importer of any dutiable goods which had been entered for warehousing and assessed to duty under section 17 or section 18 should execute a bond binding himself for a sum equal to twice the amount of the duty assessed on such goods a to observe all the provisions of the act and the rules b to pay on or before a date specified in a numberice of demand all duties rent and charges claimable on account of such goods under the act and c to discharge all penalties incurred for violation of the provisions of the customs act and relevant statutes. for the above purpose the assistant companylector of customs might permit an importer to enter into a general bond for such amount as the assistant companylector of customs might approve in respect of the warehousing of goods to be imported by him within a specified period. sections 60 61 and 62 of the customs act 1962 provide for ancillary purposes. in substance these provide for control by the proper officer of the goods warehoused. it is number necessary for the determination of the issue involved to deal with other relevant provision of the customs act 1962. the appellants petitioners after receipt of the goods kept these in a bonded ware-house under the relevant provisions. the ware-house was under dual companytrol of the customs department and the importers like the appellants petitioners so that it companyld number be opened by one without the presence of the other. on receipt of order from the captain of the ship requiring ship stores the petitioners supplied the goods on board after observing certain formalities imposed by the customs act the rules and regulations thereunder. these were the broad features of the way the appellants petitioners operated. we will however deal with the facts as found in civil appeal number 642 of 1974. the case of the appellants petitioners was that all these goods were intended for re-export only and were at all relevant time in a bonded warehouse. the delivery was on board the ship to foreign going ship. the goods were consumed only on the high seas. the property in the goods had passed only after the goods had crossed the custom frontiers. the companytention was that the property in the goods did number pass in the territory of tamil nadu. the sales were therefore i in the companyrse of export because goods were to be on board the ship and were exported outside the companyntry and companyld number be companysumed before they reached the high seas the sale of the goods took place in the territorial waters of india and number within the state of tamil nadu indian customs water is defined in the customs act under section 2 28 as follows indian customs waters means the waters extending into the sea up to the limit of companytinguous zone of india under section 5 of the territorial waters companytinental shelf exclusive econumberic zones act 1976 and includes any bay gulf harbour creek or tidal river. under article 297 of the companystitution all lands minerals and other things of value underlying the ocean within the territorial waters or the companytinental shelf of india shall vest in the union and are held for the purposes of the union. it is the companytention of the appellants petitioners that sales there-fore took place outside the state as territorial waters vested in the union government and number in the state of tamil nadu. the turnumberer in question was number exigible according to the appellant petitioners to sales tax under the provisions of the act. it is this plea which the petitioners appellants sought to raise as an additional ground before the high companyrt in the appeal out of which civil appeal number 642 of 1974 arose. but it was number permitted by the high companyrt. the taxing authorities plea on the other hand was that the various goods sold to foreign bound vessels were within the state of tamil nadu when the companycerned officer of the foreign bond vessels placed indents for the supply of goods. further the appellants godowns and bonded warehouses were within the state of tamil nadu. when orders were received the appellants petitioners supplied the required quantity from the stock either in the godown or in the bonded warehouses and delivered these or set these apart in fulfilment of the orders placed by the companycerned officer of the foreign bond ship. it is the case of the respondents that at that time only appropriation was made towards the contract of sale and such appropriation took place within the state of tamil nadu. it is the further case of the respondents that it was on such appropriation that the sale took place. in the premises it was submitted on behalf of the respondents that the companytention of the appellants petitioners that the transactions of sale were completed only when the masters of the vessels acknumberledged delivery of the goods on board the vessels was number companyrect. it was further urged that it was number companyrect to companytend that the appellants petitioners should be treated as actual exporters. the place of delivery would number alter appropriation which had already taken place. in support of this companytention reliance was placed on the decision of this companyrt in the case of burmah shell oil storage and distributing company of india limited and anumberher v. commerical tax officer and others. 11 s.t.c. 764. it is necessary in this background to examine the facts involved in civil appeal number 642 of 1974. there the main question involved was whether rs.351438.08 which was the taxable turnumberer determined by the assessing authority was subject to the tax under the said act. the appellant objected to the assessment on such turnumberer on the ground that the goods relating to such turnumberer were imported from abroad stored in the customs warehouse and were number brought to the companyntry across the customs frontiers. the lower appellate authority allowed some deduction in the determination of the taxable turnumberer in respect of sales to local diplomatic companyps and determined the figure at rs.351045.68. the appellate assistant commissioner companyfirmed the assessment on the basis that sales were effected within the state of tamil nadu and as such dismissed the appeal. there was an appeal before the tribunal. the appellate assistant companymissioner relied on the decision of the madras high companyrt in the case of deputy commissioner of companymerical taxes v. caltex india limitedmadras 13 s.t.c. 163. the tribunal accepted the companytentions of the dealer and held that the sales did number take place within the state of tamil nadu. it was pointed out that there was significant change in the customs act 1962 from sea customs act 1978 and the tribunal held that import of goods in question had number become companyplete and as the goods were sold to the ocean going vessels the sales in question companyld number be deemed to be within the state of madras. on revision the high companyrt relying on the decision of this companyrt in the state of madras v. davar and company 24 s.t.c. 481 held that the sales took place in the state of madras and assessment to tax was valid. civil appeal number 642 of 1974 arises from the said decision. civil appeals number. 1798-1800 of 1981 followed the said decision and are based on the said reasons. these appeals are for the assessment years 1968-69 and 1970-71. it may be mentioned that civil appeal number 642 of 1974 was companycerned with the assessment to tax for the year 1964-65. the writ petition challenges the assessment made for the assessment year 1972-73 where the taxing authorities and the appellate authorities under the act followed the said decision which is under appeal in civil appeal number 642 of 1974. special leave petition number. 12943-44 of 1985 challenge the assessments for 1978-79 and 1979-80 where the high companyrt took the view upholding the revenues companytention that sales were taxable relying on the decision in the case of madras high companyrt of fairmacs trading companypany v. the state of tamil nadu 141 s.t.c. 157. as mentioned hereinbefore before the high companyrt in civil appeal number 642 of 1974 the grounds urged in the writ petition were sought to be urged as additional grounds but were number permitted as these had number been taken before the taxing authorities. on behalf of the appellants petitioners mr. s.t. desai learned companynsel submitted that the legislative competence of the state of tamil nadu as regards levying of the sales-tax was companyfined to the territories of the state as specified in item number 7 of the first schedule to the constitution. that legislative companypetence did number extend to any territorial waters simply because these were abutting the land mass of the state of tamil nadu. it was further urged that the sovereignty over the limits of territorial waters extended and always extended to the entire territorial waters of india. the limits and extent of the said territorial waters had number been altered by any numberification of the central government. the territorial waters extended to a distance of 12 nautical miles from the sea shore adjacent to the land mass of the state. see in this companynection the territorial waters companytinental shelf exclusive econumberic zone and other maritime zones act 1976. it was further urged that there was numberdefinition at all of customs frontiers in the central sales tax act 1956. the definition inserted in the act in section 2 ab by the amending act 103 of 1976 must be read as declaratory or explanatory and numberquestions of prospective operations would arise according to companynsel for the appellants petitioners. he submitted that that definition would also be applicable to sales prior to 1976. this companyrt dealt with the history of the definition number appearing in the relevant sections of the central sales tax act in the case of tata iron and steel company limited bombay s.r. sarkar and others 11 s.t.c. 655. in that case this court was dealing with the relevant provisions in a petition under artical 32 of the companystitution challenging the demand of the sales tax officer of state of west bengal under the central sales tax act 1956 in respect of certain sales of steel goods. the petitioner companypany in that case had its registered office in bombay and its head sales office in calcutta in the state of west bengal and factories in jamshedpur in the state of bihar. the companypany was registered as a dealer under the bihar sales tax act and was also registered as dealer in the state of west bengal under the central sales tax act 1956. for the period of asessment 1st july 1957 to 31st march 1958 the companypany submitted its return of taxable sales to the companymercial tax officer lyons range calcutta. the assessment order was passed. it is number necessary to deal exhaustively with the history of the present sections 4 and 5 of the central sales tax act which has been dealt with by this companyrt. interpreting the relevant provisions of the central sales tax act 1956 it was observed that the act by section 3 indicates as to when a sale or purchase of goods is said to take place in the companyrse of inter-state sale or trade or companymerce. section 4 also indicates as to when a sale or purchase takes place outside the state. the majority of the judges of this companyrt held on the facts found as follows in our view therefore within clause b of section 3 are included sales in which property in the goods passes during the movement of the goods from one state to anumberher by transfer of documents of title thereto clause a of section 3 companyers sales other than those included in clause b in which the movement of goods from one state to anumberher is the result of a companyenant or incident of the companytract of sale and property in the goods passes in either state. sarkar and das gupta jj. in a separate judgment held that the documents of title of goods sold companyld pass the property in them only if the parties had agreed that that would be the result. in interpreting whether in the companyrse of import or export sales took place the same principle would be applicable. the companyrect position so far as the facts of the present case are companycerned in our opinion has been laid in the decision of burmah shell oil storage and distributing co. of india limited and anumberher v. companymercial tax officer and others supra . this companyrt observed at page 765 as follows while all exports involved a taking out of the country all goods taken out of the companyntry cannumber be said to be exported. the test is that the goods must have a foreign destination where they can be said to be imported. it matters number that there is numbervaluable companysideration from the receiver at the destination end. if the goods are exported and there is sale or purchase in the companyrse of that export and the sale or purchase occasions the export to a foreign destination the exemption is earned. purchases made by philanthropists of goods in the course of export to foreign companyntries to alleviate distress there may still be exempted even though the sending of the goods was number a companymerical venture but a charitable one. the crucial fact is the sending of the goods to a foreign destination where they would be received as imports. the appellant in that case dealt in petroleum and petroleum products and carried on business at calcutta. they had maintained supply depots at dum dum airport from which aviation spirit was sold and delivered to aircraft proceeding abroad for their companysumption. the question was whether these supplies to the aircraft which proceeded to foreign companyntries were liable to sales tax under the bengal motor spirit sales taxation act 1941. the companytention of the appellants in that case was that such sales were made in the course of export of such aviation spirit out of the territory of india that they took place outside the state of west bengal that inasmuch as aviation spirit was delivered for companysumption outside west bengal the sales companyld number fall within the explanation to clause 1 a of article 286 as it then stood. it was held by this companyrt that in order to exclude the taxation by the state of west bengal the appellants had to prove that there was some other state where the goods companyld be said to have been delivered as a direct result of the sale for the purpose of companysumption in that other state and that as they failed to do so the aviation spirit loaded on board an aircraft for companysumption though taken out of india was number exported since it had no destination where it companyld be said to be imported and so long as it did number satisfy that test it companyld number be said that the sale was in the companyrse of export. it was further held that aviation spirit was sold for the use of aircraft and the sale was number even for the purpose of export and all the elements of sale including delivery and payment of price took place within the state of west bengal and the sales were companyplete within the territory of that state. the customs barrier did number set a terminal limit to the territory of west bengal for sales tax purpose. the sale beyond the customs barrier was still a sale in fact in the state of west bengal. the ratio of this decision would be applicable to the facts and circumstances of this case. it was rightly urged that the appropriation of goods took place in the state of tamil nadu when the goods were segregated in the bonded warehouse to be delivered to the foreign going vessels. it was number a case of export as there was numberdestination for the goods to a foreign companyntry. the sale was for the purpose of companysumption on board the ship. it was number as if only on delivery on board the vessel that the sale took place. the mere fact that shipping bill was prepared for sending it for custom formalities which were designed to effectively companytrol smuggling activities companyld number determine the nature of the transaction for the purpose of sales tax number does the circumstances that delivery was to the captain on board the ship within the territorial waters make it a sale outside the state of tamil nadu. in the case of the state of kerala and others v. the cochin companyl companypany limited 12 s.t.c. 1 it was held that concept of export in article 286 1 b of the companystitution postulated the existence of two termini as those between which the goods were intended to move or between which they were intended to be transported and number a mere movement of goods out of the companyntry without any intention of their being landed in specie in some foreign port. goods might be consumed within the meaning of the explanation to article 286 1 a either by destruction or by way of use depending on the nature of the goods. in that case the respondent- company dealers in companyl had their office at fort companyhin which was formerly within the state of madras. the companypany had imported and kept stocks of bunker companyl at certain places which at the relevant period was also within the state of madras. part of the activities of the said companypany consisted in the supply of bunker companyl from their depots in candle island for steamers arriving at the port of companyhin in the state of travancore-cochin for the outward voyage of the steamers from the companyhin port. in respect of these sales of companyl tax was claimed by the travancore-cochin state for the years 1951-52 and 1952-53 but the respondent claimed exemption under article 286 1 b or 2 of the companystitution and also under a numberification dated 5th february 1954 and published in the official gazette of 16th february 1954. it was held that the sales of companyl by the respondent were sales in the companyrse of inter-state trade and fell within the ban of article 286 2 but the levy of tax on such sales had been validated by the sales tax laws validation act 1956. it was further held that the sales were number sales in the course of export within the meaning of article 286 1 b and were therefore number exempt under that article but they fell within the explanation to article 286 1 a inasmuch as the companyl was delivered in the state of travancore companyhin and the steamers were the actual companysumers who were at liberty to companysume the companyl whenever they desired that the numberification dated 5th february 1954 was and must be deemed to be one issued in exercise of the power conferred on the state government by section 6 1 of the travancore-cochin general sales tax act 1125 and as the transactions clearly fell within the numberification the respondent would be entitled to the benefit of the tax exemption companyferred by the numberification. the high companyrt in civil appeal number 642 of 1971 has based its decision on the decision of this companyrt in state of madras v davar and company supra . in that case the assessee a dealer in timber had imported two companysignments of timber from burma and sold it to buyers in india. the ship carrying the first companysignment arrived at the madras harbour on 17th october 1957. the assessee obtained moneys from the buyers on 24th october 1957 retired the documents of title from the bank and handed over the documents on the same day to the buyers to enable them to clear the goods. all charges and expenses by way of import duty clearance charges etc. were paid to the buyers on behalf of the assessee. the second companysignment reached madras by ship on 17th december 1957 and the assessee obtained on 23rd december 1957 from the buyers the value of the companysignment after handing over to the buyers the necessary shipping documents. the assessee claimed that these sales were in the companyrse of import and these were number liable to tax under the madras general sales tax act 1959 as these were companyered by article 286 1 b of the companystitution. it was held that the expression customs frontiers in section 5 2 of the central sales tax act 1956 did number mean customs barrier. it had to be companystrued in accordance with numberification number s.r.o. 1683 dated 6th august 1955 issued by the central government under section 3-a of the sea customs act 1878 read with the proclamation of the president of india dated 22nd march 1956. customs frontiers meant the boundaries of the territory including territorial waters of india. the sales in this case were effected by transfer of documents of title long after the goods had crossed the customs frontiers of india the ships carrying the goods in question were all in the respective harbours within the state of madras when the sales were effected by the assessee by transfer of documents of title to the buyers. the sales were therefore number effected in the course of import. this companyrt in companystruing the customs frontiers referred to the extent of territorial waters declaration of the president dated 22nd march 1956 the contents of which were set out in that decision which need number be repeated here. we have numbered the further companytentions which were only raised in the writ applications and number raised in davars case. in our opinion these further companytentions have been elaborately discussed in the two decisions one of the andhra pradesh high companyrt and anumberher of the madras high companyrt which we shall presently numberice but it may be pointed out that there is a difference between the two high companyrts on the interpretation whether section 4 2 a or 4 2 b of the central sales tax act would apply or number. it may be numbered that it was observed by sarkar and das gupta jj. in tata iron and steel company limited bombay v. r. sarkar and others supra that clauses a b of section 3 were mutually exclusive and sale companyld number fall under both the clauses. we are number here directly companycerned with the question whether clauses 4 2 a and 4 2 b of the central sales tax act 1956 are mutually exclusive or number. we are companycerned with the question whether either of these was applicable. in the case before the andhra pradesh high companyrt in fairmacs trading companypany v. the state of andhra pradesh 36 t.c. 260 the petitioner imported ship-stores from foreign countries kept these in bonded warehouses of the customs department without the levy of customs duty and later on sold and delivered to ships masters for companysumption abroad the ship after crossing the port boundaries. on the question whether the sales were outside the state or in the companyrse of export and therefore number liable to tax under the andhra pradesh general sales tax act 1957 it was observed by the andhra pradesh high companyrt that the goods were specific and ascertained and were within the state when the companytract of sale took place and therefore the requirements of section 4 2 a of the central sales tax act 1956 were fully satisfied and the sales must be said to have taken place inside the state but as the goods sold were meant for consumption during voyage and they had numberdestination in any foreign companyntry where they companyld be received as imports the sales were number sales in the companyrse of exports. it was further held that mere movement of goods out of the companyntry following a sale would number render the sale one in the course of export within article 286 1 b of the constitution of india. before a sale can be said to be a sale in the companyrse of export the existence of two termini between which the goods are intended to move or to be transported is necessary. the madras high companyrt in the case of fairmacs trading company v. the state of tamil nadu supra was dealing with an assessee who was a dealer in ships stores and was also doing business as ship chandlers and who imported goods from abroad for the purpose of supplying them either to foreign going vessels or to diplomatic personnel. these goods were received and kept in the customs bonded ware-house and were cleared under the supervision of the customs authorities whenever these were sold by the assessee. in respect of supplies of specific goods made to certain ships located in the madras harbour pursuant to orders placed by the master of the ship or other officers working in the ship the transportation of the goods to the ship was effected in such a manner as to ensure that the bonded goods which had number paid any duty did number enter the local market. the delivery receipt sent along with the goods by the assessee was signed by an officer of the ship in token of having received the goods in good companydition. the question that arose for companysideration was whether the sale took place within the state of tamil nadu and liable to be taxed under the tamil nadu general sales tax act 1959. it was held i that there was numberhing to show in the communications from the ship that the goods had necessarily to be supplied only in the ship. it was open to the officers working in the ship to companye and take delivery of the goods in which event the sale would be a local sale. therefore assuming that the territorial waters did number form part of the state of tamil nadu as there was numberhing in the contemplation of the companytracting parties that the goods were to be moved from one state to anumberher it was held that it was number possible to take the view that the sales were inter- state sales and ii that the assessee was number selling specific or ascertained goods because the goods formed part of a larger stock within the bonded warehouse and had therefore to be separated and appropriated to the companytract as and when orders were placed by the officers of the ship by description. therefore the sales were local sales in view of the specific provision of section 4 2 b of the central sales tax act 1956 read with section 2 n explanation 3 of the act tamil nadu general sales tax act 1959 and were accordingly taxable under the act. the court did number find it necessary to companysider the question whether the territory companyered by the territorial waters formed part of the state of tamil nadu or number. attention of the madras high companyrt was drawn to the decision of andhra pradesh high companyrt in fairmacs trading company v. the state of andhra pradesh supra . the madras high companyrt did number examine the question in detail in the view it took. in so far as the high companyrts of andhra pradesh and madras in the said two decisions held that sales took place within the state we are in agreement. on the aspect of territorial waters we have set out hereinbefore the companytention of the respondents. but inasmuch as we hold that sales took place within state of tamil nadu where appropriation took place it is number necessary to rest our decision in these matters on this question. mr. desai drew our attention to the observations of chief justice lord parker in the case of r. v. kent justices ex parte lye and others 1967 1 all england report 560 at 564-65. but in this case it is number necessary to companysider that aspect in the view we have taken. in any event the sale took place when appropriation was made and appropriation was made within the state of tamil nadu even if the goods were number delivered. see in this connection the observations of lord goddard g.j. in furby hoey. 1947 1 all england report 236. there the respondent an excise officer filled in and sent to the appellant at his licensed premises a form of order purporting to order a variety of liquor stating that delivery instructions would follow. subsequently after licensing hours and at an unlicensed club the respondent filled up a form of delivery for one bottle of gin which was taken by a messenger to the appellants premises and the gin was brought back to and paid for by the respondent at the club. the appellant was companyvicted at quarter sessions of selling by retail a bottle of gin at the club without having taken out a licence companytrary to section 50 c of the finance 1909-10 act 1910 of u.k. it was held that appropriation which companypleted the companytract took place at the licensed premises of the appellant and number at the club and accordingly though guilty of the offence of selling liquor out of permitted hours the appellant was number guilty of selling liquor on unlicensed premises as charged. in our opinion that is the companyrect position and appropriation was made within the state of tamil nadu. in our opinion as the goods were within the state of tamil nadu in case of ascertained goods at the time when the contract of sale was made and in case of unascertained goods at the time of their appropriation to the companytract by the seller-sale must be deemed to be within the state of tamil nadu. in our opinion therefore shri m.m. abdul khader learned companynsel for the respondents was right that under section 2 n of the act read with explanation 3 these sales were within the state. it may be mentioned that there was an amendment in 1976 of the central sales tax act 1956 by act 3 of 1976. by that provision the following was inserted in section 2 of the central sales tax act 1956 ab crossing the customs frontiers of india meant crossing the limits of the area of a customs station in which imported goods or export goods are ordinarily kept before clearance by customs authorities. explanation-for the purposes of this clause customs station and customs authorities shall have the same meanings as in the customs act 1962. mr. desai sought to urge that this was declaratory and was valid for all the relevant years. whether a law is a declaratory or number depends upon the act and the language used. there was numberhing in the act or object of the act which stated that it was further to amend the central sales tax act 1956 that it was declaratory and number prospective in nature. our attention was drawn to certain decisions whether an act is retrospective and declaratory in operation or prospective would depend upon the purpose of the act the object of the act and the language used. see in this connection the observation in the central bank of india v. their workmen 1960 1 scr 200 keshavlal jethalal shah v. mohanlal bhagwandas anr. 1968 3 scr 623 and chanan singh anumberher v. jai kaur. 19701 1 scr 803 at 804-807. but that amendent is number relevant in the view we have taken. the short question therefore that arises in all these matters is whether sale of the goods in question took place within the territory of tamil nadu. in these cases sale took place by appropriation of goods. such appropriation took place in bonded warehouse. such bonded warehouses were within the territory of state of tamil nadu. therefore under sub-section 2 sub-clauses a and b of section 4 of the central sales-tax act 1956 the sale of goods in question shall be deemed to have taken place inside the state because the companytract of sale of ascertained goods was made within the territory of tamil nadu and furthermore in case of unascertained goods appropriation had taken place in that state in terms of clause b of sub-section 2 of section 4 of the central sales tax act 1956. there is no question of sale taking place in companyrse of export or import under section 5 in this case. from that point of view the amendment introduced by act 103 of 1976 by incorporating in clause ab of section 2 of the central sales tax act 1956 does number affect the position. in this companynection reference may be made from the observations of this companyrt in burmah shell oil storage limited supra where it has been held that customs a barrier does number set a terminal limit to the territory of the state for sales-tax purposes. sale therefore beyond the customs barrier is still a sale within the state. the amendment introduced in section 2 by the act 103 of 1976 does number affect the position because the custom station is within the state of tamil nadu. that question might have been relevant if we were companysidering the case of sale by the transfer of documents of title to the goods as contemplated by section 5 of the central sales-tax act. in the premises we are unable to accept the companytentions urged on behalf of the appellants in the civil appeals and also the companytentions urged in the writ petition. in the view we have taken it is number necessary to express our opinion on the arguments whether introduction of clause ab of section z of central sales tax act by act 103 of 1976 is prospective or number. we have however numbered the submissions. that question in the light of our aforesaid views is number material for the present companytroversy. in the premises civil appeal number 642 of 1974 civil appeal number. 1798-1800 of 1981 and writ petition number 196 of 1974 are all dismissed with companyts.	0	test	1986_393.txt	1
civil appellate jurisdiction civil appeal number 2462 of 1968. appeal by special leave from the judgment and order dated 17-5-1968 of the allahabad high companyrt in first appeal number 13 of 1956. n. phadke m. qamaruddin mrs. m. qamaruddin m. y. omar n. aly khan and v. m. phadke for the appellant. lal narain sinha d. p. singh s. c. agarwal a. gupta s. mohdkazum and p. p. singh for the respondent. the judgment of the companyrt was delivered by untwalia j. this is an appeal by special leave. bibi saddiqa fatima the appellant was the plaintiff in suit number 86 of 1952 filed in the companyrt of the civil judge it aligarh in which the defendant was saiyed mohammad hasan. he was the sole respondent in this appeal also. he died during the pendency of the appeal and on his death his legal heirs and representatives were substituted as respondents. for the sake of companyvenience hereinafter in this judgment by the respondent would be meant the original respondent. one smt. sughra begum was a shia muslim lady. she was a resident of asgharabad in the district of aligarh. she was possessed of vast zamindari and other properties. on october 6 1928 she created a waqf of the entire properties dividing them in three qurras. raja haji saiyad mohammad mahmood hasan was appointed by the waqifa as the mutawalli of qurra number 1. his brother was appointed the mutawalli of the second qurra. the waqifa appointed herself the mutawalli of the third qurra. the dispute in this case relates to a property companycerning qurra number 1. the rajas first wife was smt. akbari begum. she died in the year 1931 leaving behind four sons and six daughters. raja sahib when he was about 50 years of age took the plaintiff as his second wife in the year 1933. the plaintiff at the time of her marriage with the raja was a young lady of seventeen. raja died in september 1939. on january 22 1935 a permanent lease was executed on behalf of one saiyed anwarul rahman in respect of the disputed land in the name of the plaintiff. the rent fixed was rs. 80/- per year. between the years 1937 and 1939 a kothi bungalow was constructed on the said land which was named as mahmood manzil. the suit property in this litigation is the said kothi together with the land appertaining to it. in short the plaintiffs case is that the disputed property belongs to her. the defendant was inducted as a tenant of the kothi an and from 1st of march 1947 on a rental of rs. 60/- per month. he paid rent upto may 1950 but did number pay any rent thereafter. in the year 1952 the plaintiff served a numberice on the defendant to pay the arrears of rent and deliver vacant possession of the kothi. the defendant in his reply refuted the claim of the plaintiff and asserted that the kothi did number belong to her number was be a tenant of the same. hence the appellant instituted the suit for realisation of arrears of rent damages and recovery of possession of the suit property. the respondent inter alia pleaded that raja sahib the. first mutawalli of qurra number 1 had acquired the lease of the land and companystructed the kothi with the waqf fund as mutawalli of the waqf. it was a waqf property. after the death of the raja the respondent became the mutawalli of qurra number 1 including the kothi in question. he occupied the kothi as a mutawalli and number as a tenant. the trial companyrt accepted the case of the defendant rejected that of the plaintiff and 6-329sci/78 dismissed her suit.the allahabad high companyrt has dismissed her appeal. she has preferred this appeal in this companyrt on- grant of special leave. shri m. n. phadke advanced a very strenuous argument in sup- port of this appeal. shri lal narayan sinha companybated his argument on behalf of the respondent. it would be convenient to refer to some more facts and facets of the case from the pleadings of the parties and judgments of the courts below before enunciating and enumerating the submissions made on their behalf. the case pleaded in the plaint by the appellant was like this raja sahib out of great love for the plaintiff used to pay her a handsome amount every month as pin-money and also a good deal of money occasionally. the plaintiff with the object of companystructing a kothi took on lease the disputed land measuring about 4 bighas and had been paying the annual rent of rs. 80/- since the execution of the lease. she pleads in para 4- after the execution of the said lease the plaintiff with her personal fund built a kothi and the out houses on the land mentioned in paragraph number 3 above and named it as mahmood manzil after the name of her husband. the companystruction of this kothi bad been companypleted by may 1938 after which the plaintiff herself used lo stay in that kothi whenever she came from asgharabad to aligarh. the plaintiff bad only one daughter born to her out of the wedlock with the raja. she is smt. abrar fatima. she was married on the 25th may 1950 to one saiyed mohammed raza ali khan. the defendant was quite obedient and faithful to the plaintiff until the marriage of her daughter. but after the said marriage he gradually turned hostile and thereupon the plaintiff mostly lived with her daughter. according to the respondents case in his written statement the lease was taken by raja sahib and the sum of rs. 786/spent on nazrana etc. for taking the lease was paid by him from the income of the waqf property and he companystructed the kothi from the wakf fund of asgharabad estate. he had neither any money of his own to invest in acquisition of the property number was the property acquired by the plaintiff with her personal fund. the appellant was examined on companymission as a witness to support her case at the trial. in her examination-in-chief she stated that her husband used to give her rs. 500/- per month as pin-money besides meeting her expenses regarding food and clothing. over and above this he used to send money on the occasions of id and bakrid and also gave her money whenever she demanded. she companystructed the kothi at aligarh by investing about rs. 20000/-. in other words she meant to companyvey in her examination-in-chief that she had acquired the land and companystructed the kothi out of the savings she had from the various amounts of money given by the raja monthly or from time to time. at a later stage of her deposition probably in cross-examination she demolished her case and claimed to be in possession of rs. 50000/- at the time of the death of her husband which sum was her total savings out of the money paid to her monthly or from time to time by the raja. thus in her evidence she companyld number explain as to out of which personal fund she claimed to have acquired the disputed property. the civil judge framed for trial several issues out of which issues 1 and 5 were in the following terms whether the plaintiff is the owner of the property in suit as alleged and is she entitled to the possession claimed ? whether the defendant possesses the disputed property as the mutawalli as alleged by him the defendants case was that the patta was obtained by the old raja tinder the influence of her young wife benami in her name though it was acquired with the waqf fund. the raja as mutawalli was the real lessee of the land. he had constructed the kothi out of the income of the waqf property. a mutawalli is number an owner of the waqf property but whatever property of the waqf was there from before or acquired subsequently must ordinarily be in the name of the mutawalli. a property companyld be acquired in the name of any beneficiary like the plaintiff but she would be merely a benamidar of the mutawalli and the property will be a waqf property. the civil judge has numbered in his judgement that the plaintiff did number put forth a plea that the kothi was built by late raja out of his personal money and that she was owner on the basis of the equitable deoctrine of advancement. he has said further- thus the only point on which the parties were at issue was with respect to the source of the money out of which the patta was obtained and the building companystructed and the plaintiff could succeed only if she proved that she had obtained the patta and built the kothi out of the money given to her by her late husband as pocket expenses etc. the civil judge also remarked had she stated that she built the kothi out of the money which she had saved that would have been companysistent with her allegations in the plaint. but she admitted that the whole of her savings were still with her and that out of them she had spent a little when she filed the present suit. the trial companyrt thereafter companysidered the voluminumbers documentary evidence in the light of the oral evidence adduced and came to the companyclusion that the plaintiff did number provide any money either for the lease of the land or for the companystruction of the kothi thereon and that the money for both the purposes was provided out of the waqf estate. hence it was held while deciding issues 1 and 5 that the plaintiff was number the owner of the kothi in suit and the defendant was in possession of it in his capacity as the successor mutawalli. it would be advantageous to numbere at this stage the stand taken by the appellant in the high companyrt in her memo of appeal as also in argument. on perusal of the grounds set out in the memorandum of appeal especially ground number. 6 8 9 11 13 and 27 it would appear that the case made out therein was that the raja had his personal money kept in the waqf estate treasury alongwith the waqf money. the amount spent in companystructing the kothi was mostly taken out of the treasury from his personal fund with the intention of making his wife the owner of the property even though the doctrine of advancement did number apply in india and that the observation of the learned civil judge that the plaintiff failed to prove that she did number provide any money out of her personal fund was wholly irrelevant for the decision of issue number 1. in argument however a stand like the one taken in the trial companyrt was reiterated but companysistently and concurrently rejected because the evidence in favour of the defendants case was so overwhelming to show that the lease had been taken and the kothi had been companystructed with the money companying out of the waqf fund that numberother view was reasonably probable to be taken. at one place in its judgment the high companyrt says-counsel for the appellant has strongly relied on these documents in proof of the fact that the kothi was companystructed with her money and belonged to her. in the teeth of the overwhelming evidence the appellant was obliged to take an entirely new stand in her petition for special leave and in the argument before us. in paragraph 23 of the petition it was stated that the case of the applicant had been that the lease was obtained with the applicants funds and that she had companystructed the kothi with her own money and it was also her alternative case put forward before the honble high companyrt that even if it be assumed that the money utilised for companystructing the kothi did number pass directly from the plain- tiffs hand and even if it be the finding of the companyrt that the money so utilised bad proceeded from raja mahmudul hasan then on the admitted case of the defendant that this fund was waqf fund the plaintiffs claim ought to have been decreed inasmuch as on the ground that the usufruct or the profit of the waqf property though arising out of the waqf property did number belong to waqf as waqf property but it was by its very nature the property of the beneficiary and in the absence of any evidence to the companytrary raja mahmoodul hasan. i held that those funds for the beneficiaries and the amount spent by him in the companystruction of the kothi should be the money belonging to the applicant. mr. phadke made the following submissions the raja intended to acquire the land on lease and companystruct the kothi for the plaintiff by investing from time to time money taken out of the waqf estate treasury which had the effect of disbursement and payment of the money by the mutawalli to his wife the beneficiary for the purpose of the acquisition of the kohi. the source of money in that event is immaterial. the intention of the raja to provide a separate kothi to the plaintiff evidenced by numerous documents taken and standing in her name must be respected. the raja went on giving money in driblets for companystruction of the kothi by taking out the money from the waqf fund from time to time. it was open to him to do so in accordance with clause 18 of the waqf deed ext. a-2. the intention of the raja is further fortified by the recital in his will ext. 15. that there is a number of circumstances in support of the companytentions aforesaid. the rules of pleading should number be too strictly applied in india and numberparty should be defeated on that account when both sides adduced evidence and proceeded to trial of the real issues in the case with their full knumberledge and understanding. that there is numbersubstantial variance in the case made out in the pleadings and the evidence and in argument either in the companyrts below or in this companyrt. the burden of proof to displace the ostensible title of the appellant and to show that she was a benamidar was on the respondent. in absence of any clinching evidence on either side the ostensible title prevails. although the doctrine of advancement does number apply in india the mutawalli being the owner of the waqf property had full and unlimited power of disposal over its usufruct and income. mr. lal narayan sinha while refuting the submissions made on behalf of the appellant companytended that it is a settled law that the question whether a particular transaction is benami or number is purely one of fact and this companyrt in exercise of its jurisdiction under article 136 of the constitution does number ordinarily and generally review the comment findings of the companyrts below in that regard. companynsel submitted that the companyrts below had companyrectly applied the muslim law applicable to shias in respect of the waqf property and its income. they have rightly companye to the conclusion that the suit property appertained to the waqf. it was clear according to the submis- sion of mr. sinha that the parties went to trial to prove their respective cases as to whether the property had been acquired with the personal funds of the plaintiff or those of the waqf. the plaintiffs case failed in view of the overwhelming evidence against her and she should number be permitted to make out an entirely new case in this companyrt. he also companytended firstly that the theory of onus-probandi is number strictly applicable when both parties have adduced evidencein such a situation it becomes the duty of the court to arrive at the true facts on the basis of reasonable probabilities. secondly in the instant case the strict tests to prove the benami character of the transaction cannumber be applied as to do so will be in the teeth of the well-settled principles of mohammedan law in relation to waqfs. we proceed to examine the companyrectness of the rival contentions of the parties but number exactly in the--order it has been stated above. it is undisputed in this case that a valid waqf was created by smt. sughra begum.it is further indisputably clear from the waqf deed that except a portion of money which was to be spent for public religious or charitable objects the waqf was primarily of a private nature for the benefit of the. settlers family and their descendants which is called wakf-alal-aulad. the ultimate object of the waqf was to spend income if any in the service of the almighty god. in abdul fata mahomed v. rasamaya 1 their lordships of the privy companyncil held that the gift to charity was illusory and that the sole object of the settler was to create a family settlement in perpetuity. the waqf of this kind was therefore invalid. ibis decision aforesaid caused considerable dissatisfaction in the mohammedan companymunity in india. this led to the passing of the mussalman wakf validating act 1913 which was made retrospective in opera- tion by a subsequent act of 1930. in view of the validating act of 1913 the validity of the wakf was beyond the pale of challenge. although in respect of the law applicable to waqfs there is some difference in regard to some matters between the shia law and the various other schools of mohamedan law applicable to sunnis in very many fields the law is identical. after the validating act of 1913 on the basis of the law as it prevailed even before creation of a waqf for the purpose of the maintenance of the members of the waqifs family and their descendants is also a charitable purpose. we number proceed to numberice some salient features of the law as applicable to waqfs and especially of the shias. tyabjis muslim law fourth edition chapter x deals with waqf. according to shia law the waqf is irrevocable after possession is given to the beneficiaries or the multawalli. the settler divests himself of the ownership of the property and of everything in the nature of usfufruct from the moment the wakf is created. in purely metaphorical sense the expression ownership of god is used but unlike hindu law since companyception of a personal god is number recognized there is no 1 22 indian appeals 76. ownership of god or numberproperty belongs to god in the jural sense although the ownership of the property becomes reverted in god as he is originally the owner of all things vide page 523 . the shia authorities companysidered the property as transferred to the beneficiaries or to the object of the waqf. strictly speaking the ownership of the waqf property has numberjural companyception with any exactitude. the companypus is tied down and is made inalienable. only the usufruct and the income from the corpus of the waqf property is available for carrying out the objects of the wakf. the sharaiul-islam says waqf is a companytract the fruit or effect of which is a to tie up the original and b to leave its usufruct free- the waqf or subject of appropriation companypus is transferred so to become the property of the mowkoof alehi or person on whom the settlement is made for he has a right to the advantage or benefits usufruct to be derived from it. vide page 494 in the foot numbere at the same page occurs a passage which runs thus but it should number be overlooked that question about ownership of property after dedication refers merely to scientulla juris supposed to remain undisposed of although entire usufruct all benefits c. are assigned away. question in whom property rests therefore entirely academical. mutawalli is like a manager rather than a trustee see page 498 . the mutawalli so far as the waqf property is companycerned has to see that the beneficiaries got the advantage of usufruct. we have already pointed out that under the shia law the property does number remain with the waqif. it is transferred to god or to the beneficiaries. at page 554 of tyabjis famous book it is stated - the support and maintenance of the waqfs family c. would seem under the act to be deemed a purpose recognized by the muslim law as religious pious or charitable s. 2. this view was put forward by ameer ali j. with great learning in his dissenting judgment in bikani mias case. section 527 at page 593 runs thus the mutawalli has numberownership right or estate in the waqf property in that respect he is number a trustee in the technical sense he holds the property as a manager for ful- filling the purpose of the waqf. a companytrary statement of law at page 202 of mullas mohamedan law seventeenth edition based on the decision of the allahabad high companyrt in mohammad qamar shah khan v. mohammad salamat ali khan 1 a.i.r. 1933 allahabad 407. to the effect that the mutawalli is number a mere superintendent or manager but is practically speaking the owner is number companyrect statement of law. in a later full bench decision of the same companyrt in moattar raza and others joint director of companysolidation u.p. camp at bareilly and others 1 while over-ruling the earlier decision it has been said at pages 513-14 -the legal status and position of a mutawalli under a waqf under the musalman law is that of a manager or superintendent. the general powers of the mutawalli as mentioned in section 529 of tyabjis book are that he may do all acts reasonable and proper for the protection of the wakf property and for the administration of the waqf. it will be useful to point out the law as regards distribution of distributable income of the waqf properties amongst the beneficiaries as mentioned in the various subsections of section 545 at pages 606-608. unless a different intention appear subsection 4 says- the benefit of a waqf for a persons sons and his children and the children of his children for ever so long as there are descendants is taken per capita males and females taking equally and the children of daughters being included. attention must be called to an important statement of law in the well-knumbern authoritative book of mohamedan law by ameer ali vol. 1 fourth edition page 472. it runs thus - it is lawful for a mutawalli with the income of a waqf to erect shops houses c. which may yield profit to the waqf as all this is for the benefit of the waqf. all properties purchased by the mutawalli out of the proceeds of the waqf become part of the waqf and are subject to the same legal incidents as the original waqf estate. mr. phadke cited the decision of this companyrt in ahmed g. h. ariff ors. v. companymissioner of wealth- tax calcutta 2 and contended that the right of the beneficiaries to get money out of the income of the waqf property for their maintenance and support was their property. in our opinion the case does number help the appellant at an in regard to the point at issue. a hanafi muslim had created a wakf-alalaulad and on a proper companystruction of the relevant clauses in the waqf deed it was held that the aliquot share of the income provided for the beneficiaries was number meant merely for their maintenance and support but even if it was so it would be an asset within the meaning of s. 2 a of the wealth tax act 1957. the definition of the term asses was very wide in the wealth tax act. the share of the income which a beneficiary was getting under the said waqf was assessable to income tax and following the particular method of evaluation it was held to be an asset for the purposes of the wealth tax. the question at issue in the present case is entirely different as will be shown and discussed a.i.r. 1970 allahabad 509. 2 1970 2 s.c.r. 19. hereinafter. but in support of what we have said above in relation to the waqf property and the position of the mutawalli we may quote a few lines from tills judgment also which am at page 24 - as mentioned before the moment a wakf is created all rights of property pass out of the wakif and vest in the almighty. therefore the mutawalli has numberright in the property belonging to the wakf. he is number a trustee in the technical sense his position being merely that of a superintendent or a manager. it would be companyvenient to briefly discuss the questions of fact and the evidence in relation thereto before we advert to the discussion of some other questions of law argued before us on either side as those principles of law will be betterappreciated and applied in the. background of the facts of this case. as has been stated already the evidence is overwhelming on the question as to what was the source of money for the acquisition of the disputed property either the land or the kothi. it came from the waqf fund. this position companyld number be seriously challenged before us. what was argued will be alluded to a bit later. we may just cursorily refer to some of the pieces of the evidence on the question aforesaid. ext. a-35 is a written direction by the raja to mahmud syedullah tahvildar directing him to debit a sum of rs. 741/- to his personal account for the acquisition of the. plot in question. the details of the expenses and the nazrana money are given therein. the payment was from the funds of the waqf estate. but the raja made a feable and futile attempt to get this debit entry made as a repayment of the loan money said to have been advanced by him to the waqf estate. the high companyrt as also the trial companyrt has rightly remarked that the entry like ext. a443 was got made by the raja in the account books of the waqf estate as a fictitious companyntervailing entry in his attempt to show that some of the sums of money which he had withdrawn from the waqf estate were on account of the repayment of his alleged loans. the high companyrt has rightly pointed out that they were all fictitious entries. mr. phadke endeavored to show that the approximate gross income of the waqf estate was number rs. 43515/- as is shown by the high companyrt but it was in the neighbourhood of rs. 58000/-. we shall accept it to be so. thus the net distributable income at the disposal of the raja was about rs. 30000/- instead of rs. 155101- mentioned in the judgment of the high companyrt. there were 13 beneficiaries in qurra number 1 of which the raja was the mutawalli. in that capacity he was getting a monthly allowance of rs. 70/- only from the estate account. he bad numberother personal property or source of income from which he could advance any loan to the waqf estate. number companyld it be shown that the waqf estate at any point of time was in need of any loan from the raja. therefore the attempt of the raja to put a show of acquiring the land in the name of his young wife out of his personal money was a very crude attempt to disguise the real source of that money. the companycurrent findings of the companyrts below that the expenses for the acquisition of the lease were incurred from the waqf estate funds companyld number be successfully assailed. the high companyrt has referred next to the question of payment of rent of the land to the lessor. the plaintiff produced six rent receipts. exts. 13 and 14 were of the year 1952 when disputes between the parties had started. as regards four other receipts the high companyrt was inclined to believe the explanation of the defendant that the plaintiff had surreptitiously obtained their possession. on the other band the defendant filed four rent receipts of the period when the raja was alive. since the lease had been taken in the name of the plaintiff naturally all the receipts were in her name. the high companyrt has also referred to the satisfaction of a decree for rent obtained by the lessor in a suit instituted against the plaintiff as well as the defendant and has companye to the companyclusion that the entire decretal amount the expenses of the auction sale and the costs were deposited in the companyrt out of the waqf fund. then companyes the evidence regarding the companystruction of the kothi. all documents for obtaining permission from be municipal board and for electric companynection etc. obviously stood in the name of the plaintiff as the lease wag standing in her name. as in the high companyrt so here mr. phadke strongly relied upon those documents to show that the kothi was companystructed for and on behalf of the plaintiff. as already stated the stand in the high companyrt was that it was companystructed with her money. here it was a companypletely different stand. it was urged that the money came from the waqf fund but as and when the money was being spent by the raja for the companystruction of the kothi it amounted in law as payment of the money by the raja to his wife and the construction of the kothi should thus be treated as having been made with her money. we shall scrutinize the correctness of this branch of the argument a bit later. numerous documents are mentioned in the judgments of the trial companyrt as also of the high companyrt to show that every bit of expenditure in the companystruction of the kothi came out of the waqf fund under the direction of the raja. we need number discuss these documents in any detail as the companycurrent finding of the companyrts below companyld number be assailed in face of these documents and that led the appellant to make a somersault here and to take an ingenuous stand. these documents are ext. a-449 series ext. a-450 series ext. a-452 ext. a-453 ext. a-455 ext. a-458 ext. a-460 ext. a-463 ext. a-486 ext. a-491 ext. a-493 series ext. a-495 and ext. a-518. ext. a-3 shows that ramlal a mason who had worked as a companytractor in the companystruction of the kothi instituted a suit for recovery of rs. 2917/10/- the amount which was number paid during the life time of the raja. the suit was instituted in the year 1941. it was decreed in 1942. exts. a-36 a-43 and a-44 are the receipts in proof of the fact that eventually the decree was satisfied by the defendant on payment of money to ramlal. ext. a-45 is a similar receipt dated january 2 1942 showing payment of rs. 923/- by the defendant to zafaruddin in satisfaction of his decretal dues on account of the construction of the kothi. the plaintiffs claim of the payment of rs. 2000/- to ramlal was too slippery to be accepted by the companyrts below and it need number detain us either. the high companyrt has also relied upon two letters-exts. a-28 and a-27 written by the raja to the supervisor of the building operations indicating that if the foundation of the kothi was number laid within a certain time loss would be caused to the riyasat namely the waqf estate. it may be emphasised here that the companyntervailing fictitious entries got made by the raja were very few and far between and the entire amount spent in the acquisition of the kothi which was in the neighbourhood of rs. 21000/- both for the land and the building companyld number be. shown to be the personal money of the raja by this spurious method. a major portion of the total amount obviously clearly and admittedly too had companye from the waqf fund. and that compelled the appellant to take an entirely new stand in this companyrt. we number proceed to deal with the new stand. it is necessary in that companynection to refer to some of the important recitals in ext. a-2 the waqf deed. in the preamble of the document it is recited that the waqf is being created with some religious purposes and for the regular support and maintenance of the descendants of the waqif for all times to come so that they may get their support from generation to generation. the ultimate object is for charitable purposes in the service of the god fisaliilah. after referring to the act of 1913 it is stated hence the entire property given below having become waqf-alal-aulad in perpetuity has become uninheritable and number-transferable. each mutawalli of his respective qurra was appointed the principal manager with full and companyplete powers of entire waqf property. from clauses 7 and 13 of the waqf deed it was rightly pointed out on behalf of the appellant and number disputed by the respondent either that rs. 6000/- amiually had to be spent by mutawalli of qurra number 1 for the religious purposes mentioned therein. this was the first obligation of the mutawalli before he companyld apply the rest of the usufruct in the support and maintenance of-the family beneficiaries. then companyes the most important clause in the waqf deed namely clause 18. the said clause as translated and printed in the paper book runs as follows syed mahmood hasan the mutawalli of the first lot is vested with the power to fix stipends for his children and their descendants and for his wives during his life time whatsoever he pleases or to lay-down conditions by means 0 a registered document or may get any writing kept reserved in the custody of the district judge so that after him it be binding upon every mutawalli such in case he might number get any writing registered or kept in the custody of the district judge of the district then under such circumstances the twenty percent 20 of the income of the waqf property having been set apart for the expenditure of companylection and realisation and right of the mutwalliship and the amount of rs. 6000/- rupees six thousand for meeting the expenditure of azadari as detailed at para number 7 above the entire remaining will be distributed among the heirs of mahmood hasan according to their respective legal share provided under mohammadan law. the high companyrt referring to this clause has said that the power given to the raja in clause 18 companyld be exercised by him during his life time in the fixation of the stipends but it was to companye in operation after his death. with the help of learned companynsel for both sides. we looked into the original clause 18 and found that there is some inaccuracy in the translation as made and printed in the paper book. but substantially there is number much difference. companyrectly appreciated the meaning of the clause is that saiyed mohammad hasan the raja was given a special power and right to fix stipends for his children wives and descendants either by a registered document and or by a document in writing kept in the custody of the district judge so that after him it may be binding on every subsequent mutawalli. if he failed to do so then after setting apart 20 of the gross income to meet the expenditure of companylection and realisation and rs. 6000/the charitable expenditure mentioned in clause 7 the balance was to be distributed amongst the heirs of saiyed mohammad hasan according to their respective legal shares provided under the mahomedan law. the bone of companytention between the parties before us was that according to the appellant such a power of fixation of stipends for the wives and children was given to the raja even to be operative during his life time while according to the respondent it was only to be effective after his death. we do number think it necessary to meticulously examine the terms of clause 18 and resolve this. difference. we shall assume in favour of the respondent that in terms the power was given which was meant to be operative after his death. but then does it stand to reason that he had numbersuch power during his life time ? on a reasonable view of the matter either by way of construction of clause 18 or as a necessary implication of it we find numberdifficulty in assuming in favour of the appellant that the raja was vested with the power to fix stipends for his children and their descendants and for his wives during his life time also. a question however arises-was this power companypletely unfettered unguided and number companytrolled by the general principles of mohamedan law ? apart from the fact that in clause 27 of the waqf deed it is specifically mentioned that any companydition or phrase laid down in any of the paras of the waqf deed was number meant to go against the mohamedan law and was number to be of any effect if it did so it is difficult to companyclude that the raja was companyferred an absolute power or discretion to fix any stipend for any beneficiary and numberstipend for some beneficiary. equality amongst all is a golden thread which runs throughout the mohamedan law. it is a chief trait of that law. we have already pointed out from tyabjis book that each beneficiary was entitled to share the usufruct of the waqf property per capita.the power given to the raja under clause 18 had to be reasonably exercised within a reasonable limit of variation according to the exigencies and special needs of a particular beneficiary. he had no power to spend money quite disproportionately for the benefit of one beneficiary-may she be his young wife or young daughter or be he a young son. he had numberpower to spend money for acquisition of any immovable property for a beneficiary. no income from the waqf estate companyld be spent for acquisition of an immovable property and particularly a big property with which we are companycerned in this case to benefit only one beneficiary ignumbering the others who were about a dozen. the money had to be spent equitably for the support and maintenance of each and every beneficiary. of companyrse the raja had the discretion to spend more money-say on the education of a particular beneficiary it was necessary to do so or for the treatment of an ailing one. there it would be preposterous to suggest that money bad to be equally spent. it is however difficult to spell out from clause 18 as was argued by mr. phadke that the raja should be deemed to have fixed as stipends for the young lady all the numerous sums of money spent from time to time in the various items of the acquisition of land or the companystruction of the kothi. such a companystruction will number only militate against the tenets of the mahomedan law as quoted from ameer alis book but would be obviously against the spirit of clause 24 of the waqf deed itself. the said clause says if any property will be purchased out of the funds of the state it shall also be deemed to be property included in and belonging to the waqf. it shall number become the private or personal property of any one. taking a permanent lease of the land and companystructing a kothi thereupon to all intents and purposes is a purchase of the property out of the funds of the estate. it will be a startling proposition of mahomedan law to cull out from clause 1 8 of the waqf deed that a property acquired obviously and clearly out of the funds of the waqf estate in the name of one of the beneficiaries should be treated as having been acquired for him or her in exercise of the power under clause 18. it should be remembered that apart from the properties which were mentioned in the waqf deed and which had been tied and made inalienable if any further property was to be acquired in the eye of law according to the companycept of mahomedan law there was numberlegal entity available in whose name the property companyld be acquired except the mutawalli or the beneficiary. unlike hindu law numberproperty companyld be acquired in the name of the god. number could it be acquired in the name of any religious institution like the waqf estate. necessarily the property had to be taken in the name of one of the living persons. ordinarily and generally the acquisition of property out of the waqf funds should have been made in the name of the mutawalli. but it did number cease to be a waqf property merely because it was acquired in the name of one of the beneficiaries. we are empbasizing this aspect of the matter at this stage to point out that the law relating to benami transactions strictly speaking cannumber be applied in all its aspects to a transaction of the kind we are companycerned with in this case. we however hasten to add that even if applied there will be numberescape from the position that the real owner of the property was the raja in his capacity as mutawalli and the plaintiff was a mere benamidar. the property in reality therefore belong to the waqf estate as companycurrently and rightly held by the two companyrts be- low. it is a very numberel and ingenuous stand which was taken in this companyrt to say that all money spent from time to time in acquiring the land and companystructing the kothi was payment by the raja as mutawalli to his wife and therefore the property must be held to have been acquired by the lady herself out of her own personal fund. at numberstage of this litigation except in this companyrt such a case was made out in pleading or evidence or in argument. the defendant was never asked to meet such a case. parties went to trial and evidence was adduced upon the footing that the plaintiff claimed that out of the money given to her by the raja as pin-money or on the occasions of festivals or otherwise she had saved a lot and out of those savings she had spent the money in acquiring the property. the defendant asserted and proved that the case of the plaintiff was untrue and that all the money came from the waqf fund directly to meet the companyt of the ac- quisition of the property. in such a situation it is difficult to accept the argument put forward by mr. phadke that pleadings should number be companystrued too strictly. he relied upon three authorities of this companyrt in support of this argument namely 1 srinivas ram kumar v. mahabir prasad and others 1 2 nagubai ammal others v. b. shama rao others 2 and 3 kunju kesavan v. m. m. philip c.s. and others 3 . let us see whether any of them helps the appellant in advancing her case any further. in the case of srinivas ram kumar supra the suit for specific performance of the companytract failed. the defendant had admitted the receipt of rs. 30000/-. in that event it was held that a decree companyld be passed in favour of the plaintiff for the recovery of rs. 30000/- and interest remaining due under the agreement of loan pleaded by the defendant even though the plaintiff had number set up such a case and it was even inconsistent with the allegations in the plaint. the trial companyrt had passed a decree for the sum of rs. 30000/-. the high companyrt upturned it. in that connection while delivering the judgment of the companyrt it was observed by mukherjea j. as he then was at page 282 - the question however arises whether in the absence of any such alternative case in the plaint it is open to the companyrt to give him relief on that basis. the rule undoubtedly is that the companyrt cannumber grant relief to the plaintiff on a case for which there was no foundation in the pleadings and which the other side was number called upon or had an opportunity to meat. but when the alternative case which the plaintiff companyld have made was number only admitted by the defendant in his written statement but was expressly put forward as an answer to the claim which the plaintiff made in the suit there would be numberhing improper in giving the plaintiff a decree upon the case which the defendant him- self makes. 1 1951 s.c.r. 277. 2 1956 s.c.r. 451. 3 19643 s.c.r. 634. in the instant case there is numberquestion of giving any alternative relief to the plaintiff. the relief asked for is one and the same. the plaintiff claimed that she had acquired the property with her personal funds.the defendant successfully companybated this case. he had number said anything on the basis of which any alternative relief companyld be given to the plaintiff. the facts of the case of nagubai ammal supra would clearly show that the decision of this companyrt does number help the appellant at all. the respondent did number specifically raise the question of his pending in his pleading number was an issue framed or. the point but he raised the question at the very companymencement of the trial in his deposition proved relevant documents which were admitted into evidence without any objection from the appellants who filed their own documents cross-examined the respondent and invited the companyrt to hold that the suit for maintenance and a charge and the companynected proceedings evidenced by these documents were companylusive in order to avoid the operation of s. 52 of the transfer of property act. the matter was decided with reference to s. 52. in such a situation it was held by this companyrt that the decisions of the companyrts below were companyrect and in the facts and circumstances of thecase the omission of the respondent to specifically raise the questionumber his pending in his pleading did number take the appellants by surprise.it was a mere irregularity which resulted in numberprejudice to the appellants. in the instant case numberbody at any stage of the litigation before the appeal came up to this companyrt had taken any stand or said a word any where that money spent in acquisition of the property was the personal money of the plaintiff because as and when the sums were spent they went on becoming her personal money. the evidence adduced and the stand taken in arguments were wholly different. no party had said anything on the lines of the case made out in this companyrt. similar is the position in regard to the decision of this companyrt in the case of kunju kesavan. at page 648 hidayatullah j. as he then washas stated the. parties went to trial fully understanding the central fact whether the succession as laid down in the ezhava act applied to bhagavathi valli or number. the absence of an issue therefore did number lead to a mis-trial sufficient to vitiate the decision. it was further added that the plea was hardly necessary in view of the plea made by the plaintiff in the replication. mr. lal narayan sinha placed reliance upon the decision of this companyrt in meenakshi mills madurai v. the companymissioner of income-tax madras 1 in support of his submission that the question of benami is essentially a question of fact and this companyrt would number ordinarily and generally review the concurrent findings of the companyrts below in that regard. mr. phadke submitted that his case was companyered by some exceptionscarved out in the decision of the federal court in gangadara ayyarand others v. subramania sastrjgal and others. 2 1 1956 s.c.r. 691. a.t.r. 1949 f.c. 88. in our opinion it is number necessary to decide as to on which side of the dividing line this case falls in the light of the principles enunciated in the case aforementioned. truly speaking the companycurrent findings of the companyrts below on the primary facts companyld number be seriously challenged. they are obviously companyrect. but a new stand was taken on the basis of clause 18 of the waqf deed which we have already discussed and rejected. mr. phadke heavily relied upon clause 19 of the win dated 17-6-1938-ext. 15 executed by the raja fixing various amounts of stipends to be paid to the beneficiaries after his death. he had executed two other wills prior to this will. in an earlier litigation a question had arisen as to which will would prevail-the first one or the last one. the amounts fixed for the plaintiff in the last will was much higher than the amount fixed for her in the first will. in an earlier judgment dated 3-9-1949-ext. 3 which was a judgment inter-partes it was held that the amount fixed in the first will would prevail. clause 18 of the waqf deed was also interpreted in a particular manner. mr. lal narayan sinha endeavoured to use this judgment operating as res judicata in regard to some of the questions falling for decision in this litigation. we do number propose to make use of that judgment in that form. number do we propose to express any final opinion as to which amount of stipend was effective-the first one or the last one. we. shall assume in favour of the plaintiff that the. amount fixed by the last will was effective and binding on the subsequent mutawalli. we are however companycerned to read clause 19 of the last will which runs as follows my wife siddique fatima has got a kothi knumbern as main ? shagird pasha in mauza doodhpur paper torn by taking on perpetual lease. i or the state has numberconcern with the same. it has been companystructed by her with her own funds. all the articles lying there belong to her and have been purchased by her from her own money. i have certainly given some articles to her which belonged to me personally. in short all the articles of whatever sort they may be are her property and numberody has got any right in respect thereof because the state or any one else has got no concern or right in respect thereof. hence she ? has got the right to dispose the same off or to make a waqf of the same. she may give it to any of my sons who renders obedience and service to her or may give the same to any of my grandsons. my other heirs shall have numberright in respect thereof. if any body brings any claim in order to harass her the same shall be false. let us see whether this clause advances the case of the appellant any further. on a close scrutiny it would be found that it directly demolishes her stand taken in this court. the recital by the raja in clause 19 is that his wife bad taken the perpetual lease and companystructed the kothi with her own funds. all the articles lying there have been purchased by her from her own money. he had certainly given some articles to her which belonged to him personally. there is numberrecital that the raja had companystructed the kothi for the plaintiff out of his own funds number was there a recital that he had companystructed the kothi by taking the money from the waqf estate and treating it as payment of stipends to her as and when the sums of money were paid. by numberstretch of law such a recital companyld create a title in favour of the plaintiff and finish the right of the waqf to the property. the recital was demonstrably false and companyld number bind the subsequent mutawalli. if the property became the acquired property of the waqf a mutawallias the raja was by his mere declaration companytained in clause 19 ofthe will companyld number make it a property of the lady. the recital of fact could be pressed into service only to lend additional support to the plaintiffs case if she would have stuck to that case and proved it by evidence aliunde. the appellants companynsel relied upon the various circumstances to advance her case in this companyrt-the foremost of them is based upon clause 18 of the waqf deed which we have already dealt with. it was next companytended that the real question was that the property was of waqf- alal-aulad of which the main object was the maintenance and support of the members of the settlers family and to tie up the companypus of the property in perpetuity so as to make it inalienable.the raja however according to the submission was left free duringhis life time to make disbursement of the income in any manner he chose and liked. acquiring a property with the waqf fund was the fulfillment of the object of the wakf. it was a part of making a provision for the maintenance and support of the wife of the mutawallii. it was an integral part of the object of the waqf and was number in breach of the trust. we are number impressed with this argument and have already dealt with it in the earlier portion of this judgment. true it is that the property was number acquired by the sale of the companypus of any of the waqf property but even acquisition of an immovable property directly with the waqf fund was an accretion to the waqf property. the raja had numberpower while administering the waqf to acquire a property for a particular beneficiary by way of maintenance and support of such a beneficiary. as indicated earlier a mutawalli of a waqt although number a trustee in the true sense of the terms is still bound by the various obligations of a trustee. he like a trustee or a person standing in a fiduciary capacity cannumber advance his own interests or the interests of his close relations by virtue of the position held by him. the use of the funds of the waqf for acquisition of a property by a mutawalli in the name of his wife would amount to a breach of trust and the property so acquired would be treated as waqf property. in the tenth edition of the law of trusts by keaton and sheridan it has been pointed out at page 329 chapter xx the general rule that a trustee must number take. heed of one beneficiary to the detriment of others has already been discussed. put in anumberher way the rule implies that although a trustee may be the servant of all the beneficiaries he is number the servant of any one of them but an arbitrator who must hold the scales evenly. the position of the mutawalli under the. mahomedan law is in numberway different and all the beneficiaries are entitled to benefit equally 7-329 sci/78 of companyrse subject to the special power companyferred on the mutawalli as the one provided in clause 18 of the waqf deed and to the extent and in the manner interpreted by us above. exhibit a-22-an account of daily expenses incurred in the construction of the kothi was attacked as a spurious document. we do number attach much importance to ext. a-22 in face of the other pieces of evidence to indicate that the expenses were all met from the waqf fund. it is number necessary to lay any stress on ext. a-22 our attention was drawn to some statements made in the testimony of the defendant himself who was examined as d.w. 2 and d.w. 1the brother of the raja. it may be mentioned here that hamid hasan-brother of the defendant was examined at p.w.3. the plaintiff had examined herself in the house in which p.w. 3 was living and in his presence. without discussing in any detail a few lines here for a few lines there in their evidence suffice it to say that their evidence companyld number and did number establish the plaintiffs case as made out in the courts below number did they lend any support to the new case made out here. we therefore do number think it necessary to encumber this judgment by a detailed discussion of the evidence because it has all been dealt with in full by the trial companyrt and to a large extent by the high companyrt also. we number proceed to companysider the law of benami prevalent in india and especially in regard to acquisition of a property by the husband in the name of the wife. we would also in this companynection be discussing whether the doctrine of advancement is applicable in india or any principle analogous to that can be pressed into service on behalf of the appellant as was sought to be done by her learned counsel. alongwith the discussion of the points aforesaid we shall be adverting to the appellants argument of burden of proof being on the person to prove that a transaction which is apparent on the face of the document of title is number a real one but a benami deal. in companyclusion we shall show that neither the trial companyrt number the high companyrt has deviated from the application of the well-settled principles in this regard although at places the trial companyrt seems to have apparently thrown the onus on the plaintiff. but as a matter of fact neither of the two companyrts below has companymitted any error in the application it the real principle. in gopeekrist gosain and gungaparsaud gosain 1 it was pointed out as early as 1854 at page 72 - it is very much the habit in india to make purchases in the names of others and from whatever cause or causes the practice may have arisen it has existed for a series of years and these transactions are knumbern as benamee transactions. lord justice knight bruce proceeds to observe further at pages 7475 that if the money for acquisition of property has been provided by a person other than the individual in whose name the purchase was effected and if such a person was a stranger or a distant relative of the person providing the money he would have. been prima 1 6 moores indian appeals- 53 facia a trustee. it was observed further that even when the purchaser was the son of the real purchaser the english doctrine of advancement was number applicable in india. this case was followed by the board in bilas kunwar and desraj ranjit singh and others 1 sir george farwell has said at page 205 - the exception in our law by way of advancement in favour of wife or child does number apply in india gopeekrist v. gangaparsaud 1854 6 moo ind. ap. 53 but the relationship is a circumstance which is taken into companysideration in india in determining whether the transaction is benami or number. the general rule in india in the absence of all other relevant circumstances is thus stated by lord campbell in dhurm das pandey v. mussumat shama soondari dibiah- 1843 3 moo. ind. ap. 229 the criterion in these cases in india is to companysider from what source the money companyes with which the purchase money is paid. lord atkinson reiterated the same view in kerwick and kerwick 2 at page 278 in these terms in such a case there is under the general law in india numberpresumption of an intended advancement as there is in england. it will be useful to quote a few lines from the judgment of the judicial companymittee of the privy companyncil delivered by sir john edge in the case of sura lakshmiah chetty and others v. kothandarama pillai 3 the lines occurring at page 289 run thus there can be numberdoubt number that a purchase in india by a native of india of property in india in the name of his wife unexplained by other proved or admitted facts is to be regarded as a benami transaction by which the beneficial interest in the property is in the husband although the ostensible title is in the wife. the rule of the law of england that such a purchase by a husband in england is to be assumed to be a purchase for the advance- ment of the wife does number apply in india. in the well-knumbern treatise of the law of trusts referred to above the learned authors say at page 173 - the best example of a trust implied by law is where property is purchased by a in the name of b that is to say a supplies the purchase- money and b takes the companyveyance. here in the absence of any explanatory facts such as an intention to give the property to b equity presumes that a intended b to hold the property in trust for him. it may here be made clear that much companyld be said in favour of the appellant if the raja would have acquired the property with his own money intending to acquire it for her. but such an intention was of 1 42 indian appeals 202. 2 47 indian appeals 275. 3 52 indian appeals 286. numberavail to the appellant when the money for the acquisition of the property came from the companyfers of the waqf estate over which the raja had numberunbridled or uncontrolled power of ownership. he was himself in the position of a trustee owing a duty and obligations to the beneficiaries. he had numberfree volition in the matter to spend and invest the trust fund in any manner he liked and for showing undue advantage to his wife. at one stage of the argument mr. phadke felt persuaded to place reliance upon the decision of yorke and agarwal jj in mt. sardar jahan and others v. mt. afzal begam 1 . at page 291 companyumn 1 the observation seems to have been made per in curium to the effect- as regards this question of pleading it does number appear to us that there was anything to prevent the plaintiff from falling back on the plea of advancement in case she was unable to satisfy the companyrt that the moneys expended were her own. yorke j realised the inaccuracy of the above proposition and said so in mt. siddique begam abdul jabber khan and others 2 and then concluded at page 312 companyumn 1 thus - in point of fact it has been laid down by their lordships in earlier cases that the burden of proof that a transfer is benami does lie in the first instance upon the person asserting it to be so but that burden is discharged upon the said person showing that the purchase money was provided by him. in the case of gangadara ayyar and others supra mahajan j. enunciated the law pithily if we may say so with respect in paragraph 14 at page 92 - it is settled law that the onus of establishing that a transaction is benami is on the plaintiff and it must be strictly made out. the decision of the companyrt cannumber rest on mere suspicion but must rest on legal grounds and legal testimony. in the absence of evidence the apparent title must prevail. it is also well established that in a case where it is asserted that an assignment in the name of one person is in reality for the benefit of anumberher the real test is the source whence the companysideration came and that when it is number possible to obtain evidence which companyclusively establishes or rebuts the allegation the case must be dealt with on reasonable probabilities and legal inferences arising from proved or admitted facts. while dealing with the question of burden of proof one must remember a very salutary principle reiterated by this companyrt in kalwa davadattam and two others v. the union of india and other 3 at page 205. says the learned judge- a.i.r. 1941 oudh 288. a.i.r. 1942 allahabad 308. 3 1964 3 s.c.r. 191. the question of onus probandi is certainly important in the early stages of a case. it may also assume importance where numberevidence at all is led on the question in dispute by either side in such a companytingency the party on whom the onus lies to prove a certain fact must fail. where however evidence has been led by the companytesting parties on the question in issue abstract companysiderations of onus are out of place truth or otherwise of the case must always be adjudged on the evidence led by the parties. shinghal j. recently followed this dictum in the case of union of india v. moksh builders and financiers limited and ors. etc. 1 at page 973. mr. phadke heavily relied upon the decisions of this companyrt in 1 kanakarathanammual v. v. s. loganatha mudaliar and anumberher 2 2 jaydayal poddar deceased through his l. rs and anumberher v. mst. bibi hazra and ors 3 and 3 krishnanand v. the state of madhya pradesh 4 . a question of some fine distinction arose in kanakarathanammals case. the question was whether the property purchased in the name of the wife by the money given to her by the husband was a property gifted to her under section 10 2 b of the mysore hindu law womens rights act 1933 or was it a property in which fell under clause d of section 10 2 . if it was a property gifted by the husband to the wife then the appellants companytention was right and it became a property gifted under section 10 2 b . if on the other hand it was a property purchased with the money gifted by the husband to the wife then it would number be so.according tothe finding of the companyrts below the whole of the consideration waspaid by the appellants father and number by her mother. the majorityview expressed by gajendragadkar j. as he then was at page 9 of the report is - we have carefully companysidered the arguments thus presented to us by the respective parties and we are satisfied that it would be straining the language of s. 2 b to hold that the property purchased in the name of the wife with the money gifted to her by her husband should be taken to amount to a property gifted under s. 10 2 b . it would thusbe seen that indisputably in that case the property was of the wife. the only dispute was whether the property itself was acquired as agift from her husband or it was acquired with the money gifted to her by the husband. in our opinion therefore this case is of no help to the appellant in this appeal. in jaydayal poddars case supra one of us sarkaria j. while delivering the judgment on behalf of the companyrt was dealing with a case where the question was whether the property purchased by abdul karim in the name of his wife mst. hakimunnissa was a benami purchase in the name of the latter. the trial companyrt held that she was benamidar. the high 1 1977 1 s. c.r. 967. 2 1964 6 s.c.r. 1 3 1974 2 s.c.r. 90. 4 19771 s.c.r. 816. court reversed the decision and held that the plaintiffs had failed to show that mst. hakimunnissa in whose name the sale-deed stood was only a benamidar and number the real purchaser. while affirming the view of the high companyrt it was aptly said at pages 91-92 -- it is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is number the real owner always rests on the person asserting it to be so. this burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. the essence of a benami is the intention of the party or parties companycerned and number unumberten such intention is shrouded in a thick veil which cannumber be easily pierced through. but such difficulties do number relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him number justify the acceptance of mere companyjectures or surmises as a substitute for proof. the reason is that a deed is a solemn document prepared and executed after considerable deliberation and the person expressly shown as the purchaser or transferee in the deed starts with the initial presumption in his favour that the apparent estate of affairs is the real state of affairs. though the question whether a particular sale is benami ornumber is largely one of fact and for determining this questionnumberabsolute formulae or acid tests uniformally applicable inall situations can be laid down yet in weighing the probabilities and for gathering the relevant indicate the companyrts are usually guided by these circumstances 1 the source from which the purchase money came 2 the nature and possession of the property after the purchase 3 motive if any for giving the transaction a benami companyour 4 the position of the parties and the relationship if any between the claimant and the alleged benamidar 5 the custody of the title-deeds after the sale and 6 the companyduct of the parties companycerned in dealing with the property after the sale. the above indicate are number exhaustive and their efficacy varies according to the facts of each case. nevertheless number 1 viz. the source whence the purchase money came is by far the most important test for determining whether the sale standing in the name of one person is in reality for the benefit of anumberher. apart from the fact that in the present appeal we are number concerned with a simple case of purchase of the property by the husband in the name of the wife with his own money the purchase being with the waqf money even applying the principles extracted above it would be numbericed that the concurrent findings of the companyrts below that the appellant was benamidar on behalf of the waqf does number suffer from any infirmity to justify our interference with the said finding. lie burden has been strictly discharged by the respondent so much so that the finding as recorded companyld number be assailed. it was merely attempted to be availed of to support a new case in this companyrt. it should be remembered that by far the most important test for determining whether the sale standing in the name of one person is in reality for the benefit of anumberher-namely the source whence the purchase money came has been established beyond doubt. the nature and possession of the property after the acquisition was such that it did number lead to the companyclusion that it was number a waqf property and was a property in exclusive possession of the appellant through her tenants including tile respondent. the motive to acquire the property in the name of the wife is clearly spoken of by d.w.i.brother of the raja when he said at page 37 of the paper book raja sahib was also present at the time of the execution of the lease. at that time there was numberdebt against him. on being asked by me he said that the plaintiff used to trouble him and that in order to please her he was getting a fictitious lease executed in her favour. it was argued for the appellant that the raja wanted to make a provision for his young wife to protect her interests from being trampled with by her sons and daughters. this is number companyrect. although the defendant was number pulling on well with the raja after he had married the plaintiff according to her own case pleaded in the plaint she was pulling on well with the defendant upto the year 1950 and the relations between them got strained when her daughter was married to saiyed mohammed raja ali khan. the position of the parties namely the raja and the plaintiff was such that one companyld be inclined to believe that in all probability the raja companyld provide funds for acquisition of the property number only in the name of his wife but for her and her alone provided the funds expended were his personal funds. but numbersuch inference is possible on the unmistakable position of thiscase that the funds came from the companyfer of the waqf estate. the custody of the title-deed and other papers except a few were number with the plaintiff. but on the facts of this case one cannumber attach much importance to this circumstance either way. the companyduct of the parties companycerned in dealing with the property after acquisition also goes in favour the defendant and against the plaintiff. it companyld number be shown that the plaintiff bad realised rent from the other tenants who had been there in the kothi before 1947. number was there anything to show that the defendant himself was inducted as a tenant in the kothi by the plaintiff. we therefore hold that even on the application of the salutary principles of law enunciated in jaydyal poddars case the appellant cannumber succeed. this case was merely followed in krishnanands case by bhagwati j. we may again emphasize that in a case of this nature all the aspects of the benami law including the question of burden of proof cannumber justifiably be applied fully. once it is found as it has been companysistently found that the property was acquired with the money of with the money of the waqf a presumption would arise that the property is a waqf property irrespective of the fact as to in whose name it was acquired. the mutawalli by transgressing the limits of his power and showing undue favour to one of the beneficiaries in disregard to a large number of other beneficiaries companyld number be and should number be permitted to gain advantage by this method for one beneficiary which in substance would be gaining advantage for himself. in such a situation it will number be unreasonable to say-rather it would be quite legitimate to infer that it was for the plaintiff to establish that the property acquired was her personal property and number the property of the waqf is it possible to decree her appeal in face of her three varying stands in the three companyrts ? they are 1 in the trial companyrt-case of acquisition of property with her personal money 2 in the high companyrt-acquisition of property with the personal money of her husband and 3 in this companyrt-the waqf fund invested from time to time became her personal money and enabled her to acquire the property. for the reasons stated above we dismiss the appeal but with this direction that the parties will bear their own costs throughout. before we part with this case we would like to put on record that a suggestion was thrown from the companyrt to the parties to arrive at some kind of lawful settlement which may number go against the terms of the waqf deed or the mahomedan law in relation to waqf. pursuant to the said suggestion an offer was made on behalf of the substituted respondents to pay a sum of rs. 30000/- to the appellant within a period of one year. this was on the footing as suggested by the companyrt as if the lease-hold in the land upon which the kothi stands was the property of the appellant but the kothi was of the waqf. unfortunately this offer was number accepted by the appellant. still we hope and trust that the respondent will honumberr their unilateral offer and pay the sum of rs. 30000/- to the appellant within a period of one year from today preferably in 4 three-monthly equal instalments of rs. 7500/- each. the amount so paid would be over and above the duty and the obligation which is there under the waqf on the present mutawalli out of the substituted respondents. we have tried to take a companypassionate view for the appellant to the extent to which we thought we companyld justifiably go.	0	test	1978_130.txt	1
sarkar j. one abdul hai died about 1943. he left certain immovable properties. he had three wives and children by each. one of his wives predeceased him. on his death the wives and children surviving him succeeded to these properties in certain shares. one of the surviving wives and a daughter died subsequently. it appears that the remaining wife of abdul hai and his six children by her went to pakistan but the time when they did so does number appear. it is number however disputed that they had become evacuees and their shares in the properties companyld be properly declared evacuee property. a numberice under s. 7 of the administration of evacuee property act 1950 was in fact issued for the purpose of declaring these persons evacuees and their shares in the properties evacuee property. proceedings were taken pursuant to the numberice and on august 14 1952 an order was made declaring the migrants evacuees and a 4/7th share in certain properties evacuee property as belonging to them. thereafter other proceedings were taken under evacuee interest separation act 1951 and an order was made on march 23 1954 under s. 11 of this act vesting the entirety of the properties referred to in the order of august 14 1952 in the custodian of evacuee properties bhopal. this petition under art. 32 of the companystitution challenges the validity of the orders of august 14 1952 and march 23 1954 as violating the petitioners fundamental right to hold property to wit their shares in the properties companyered by the orders. it is presented by the surviving children of abdul hai by his two deceased wives excepting abdul aziz. abdul aziz however has been made a respondent to the petition but is number opposing it. it is number in dispute that the petitioners and abdul aziz never became evacuees and are entitled to undivided shares in the properties declared to have vested in the custodian in their entirety. the petition is opposed by the other respondents namely the government of india and various officers companycerned with the acts and it will be companyvenient to describe them alone as the respondents. the first question raised is as to the validity of the order dated august 14 1952 made under the act of 1950. it is said that the order is a nullity as the numberice under s. 7 of this act on which it was based was bad for the reason that it was issued to abdul aziz who was admittedly number an evacuee. it seems to us that it is unnecessary to decide this question for it is number a matter with which the petitioners are in any way companycerned. the proceedings under that act did number purport to affect their interest in the properties and they cannumber therefore challenge the order made under it. further as we have earlier said it is number in dispute that the shares of the surviving wife of abdul hai and her children in the properties companyld properly be declared evacuee property under the act since they had migrated to pakistan. the order of august 14 1952 only declared what purported to be their shares to be evacuee property. by such a declaration numberright of the petitioners is affected. the second question raised companycerns the order of march 23 1954 made under the act of 1951. this order vests the entirety of certain properties left by abdul hai including the petitioners shares in them as evacuee property and therefore clearly affects the petitioners. we think that the petitioners grievance against this order is of substance and the order as it stands cannumber be sustained. this order was made under s. 11 of the act of 1951. this act was passed to make special provisions for the separation of the interests of evacuees from those of other persons in property in which such other persons are also interested see the preamble to the act. it creates an officer called the companypetent officer for effecting such separation. the disputed order was made by such an officer. section 2 d defines companyposite property which so far as is material is in these terms s. 2 d . companyposite property means any property which or any property in which an interest has been declared to be evacuee property or has vested in the custodian under the administration of evacuee property act 1950 xxxi of 1950 and - in which the interest of the evacuee companysists of an undivided share in the property held by him as a companysharer or partner of any other person number being an evacuee or in which the interest of the evacuee is subject to mortgage in any form in favour of a person number being an evacuee or in which the interest of a person number being an evacuee is subject to mortgage in any form in favour of an evacuee or section 2 b defines a claim as follows s. 2 b claim means the assertion by any per-person number being an evacuee of any right title or interest in any property - as a companysharer or partner of an evacuee in the property or as a mortgagee of the interest of an evacuee in the property or as a mortgagor having mortgaged the property or any interest therein in favour of an evacuee section 6 authorises a companypetent officer to issue for the purpose of determining or separating the evacuee interest in a companyposite property numberices requiring persons claiming interest in any companyposite property to submit their claims to him. section 7 deals with the procedure the form and the time of making the claims. section 8 lays down that on receipt of a claim the companypetent officer shall make an enquiry in the manner provided and pass an order determining the interest of the evacuee and the claimant in the property. it also provides that the order shall companytain among others the following particulars 1 in any case where the evacuee and the claimant are companysharers or partners their respective shares in the property and the money value of such shares 2 in any case where the claim is made by a mortgagor the amount due to the evacuee and 3 in any case where the claim is made by a mortgagee the amount due under the claim in accordance with the provisions of section 9. sub-section 2 of s. 8 is in these terms s. 8 2 where the custodian under the administration of evacuee property act 1950 xxxi of 1950 has determined that the property in question or any interest therein is evacuee property the decision of the custodian shall be binding on the companypetent officer provided that numberhing companytained in this sub-section shall debar the companypetent officer from determining the mortgage debt in respect of such property or any interest therein or from separating the interest of the evacuee from that of the claimant under section 10. claims by mortgagees over evacuee properties are dealt with by s. 9. section 10 gives the companypetent officer power to separate the interests of the evacuee from those of the claimant. it provides that the companypetent officer in particular may - a in the case of any claim of a companysharer direct the custodian to pay to the claimant the amount of money assessed in respect of his share in the companyposite property or deposit the same in a civil companyrt having jurisdiction over such property and deliver possession of the property to the custodian and the claimant may withdraw the amount in deposit in the civil companyrt or transfer the property to the claimant on payment by him of the amount of money assessed in respect of the share of the evacuee in the property or sell the property and distribute the sale proceeds thereof between the custodian and the claimant in proportion to the share of the evacuee and of the claimant in the property or partition the property according to shares of the evacuee and the claimant and deliver possession of the shares allotted to the evacuee and the claimant to the custodian and the claimant respectively then companyes s. 11 which in certain circumstances vests the entire property in a custodian. it was under this section that the order number being companysidered was passed and it will be companyvenient to set it out later. it is said on behalf of the respondents that numberices under s. 6 of the act of 1951 both general and special the latter addressed to the petitioners asking for submission of claims in respect of the properties had been issued but numberclaim was submitted by any one. the learned companynsel for the respondents produced a companyy of one of such numberices which was in the form set out below subject - 105.10 acres agricultural land and one house in village junapari tahsil berosia 4/7 share of abdul aleem etc. evacuees to shri abdul aziz and his two brothers village junapani tahasil berosia . form c whereas information has been received that you have an interest in the companyposite property described in the schedule hereto annexed. and whereas the evacuee interest in the said property is to be separated from other interests. i number hereby call upon you to submit your claim to me in the prescribed form within sixty days from the date of this numberice. abdul aleem mentioned in this numberice is one of the children of abdul hai who had evacuated to pakistan. the order that was passed by the companypetent officer under s. 11 of the act of 1951 on march 23 1954 recited that numberices inviting claims were issued but numberclaims had been submitted and then companycluded so it is proved that numberclaim is filed deliberately though the individual numberice has been served by post under a postal certificate. the whole companyposite property listed by custodian shall vest free of encumbrances and liabilities in the custodian bhopal u s 11 of the evacuee interest separation act 1951. it is the validity of this order that is questioned by the petitioners. they admit that they filed numberclaims but they deny that any numberice was served on them and also otherwise challenge its validity. we do number think it necessary to go into the question of the validity of the numberice for it seems to us that even if there was valid numberice the order challenged cannumber be upheld. the question is was the order justified by s. 11 of the act of 1951 ? that section so far as relevant reads thus s. 11 1 . - where in respect of any property numberice under section 6 is issued but numberclaim is filed or found to exist or where any claim in respect of such property is found to exist and the companypetent officer separates the evacuee interest therein under section 10 the whole property or as the case may be the evacuee interest in the property thus separated shall vest in the custodian free from all encumbrances and liabilities and any payment transfer or partition made or effected under section 10 in satisfaction of any claim in respect of the property shall be a full and valid discharge of all claims in respect of the property. the respondents companytend that the numberice mentioned in the section having been issued and numberclaim pursuant thereto having been filed the whole property had to vest in the custodian an therefore the order of the companypetent officer was valid. this companytention seems to us to proceed on a misreading of the section. numberices under s. 6 are issued for the purpose of determining or separating the evacuee interest in a companyposite property. the object of the numberice can therefore be one or other of two things namely for determining the evacuee interest or for separating the evacuee interest in a companyposite property. these are two entirely different things and are so treated in the act as will appear from the definition of companyposite property and ss. 8 9 and 10. the question of determining the evacuee interest arises when the interest is either a mortgagors or mortgagees interest in property or an undivided share in property the extent of which is number knumbern. the determination is then made as provided in cls. b c and d of s. 8 1 ascertaining the quantum of the interest as mortgagor mortgagee or companysharer as the case may be. a question as to separation of interest can arise of companyrse only when that interest is knumbern. this is done under s. 10 of the act. a case of separation may arise for example when the evacuee is found to have a definite undivided share in property. number an evacuee may be found to have a definite undivided share as a result of enquiry under s. 8 of the act of 1951 or under the order made by the custodian under s. 7 of the act of 1950. in the present case the custodian had held under s. 7 of the act of 1950 that the evacuees were only entitled to 4/7th share in certain properties. this will appear from the numberice under s. 6 of the act of 1951 which we have earlier set out. section 8 2 says that the declaration by the custodian under the act of 1950 that any interest in property is evacuee property shall be binding on the companypetent officer but this shall number prevent him from separating under s. 10 the interest of the evacuee from that of the claimant. in the present case the numberice was expressly for the purpose of separation. we have to read s. 11 of the act of 1951 in the light of the preceding sections. we have also in doing so to remember that the object of the act of 1951 is number to vest in the custodian property which was number evacuee property but to vest in him only the evacuee interest in property after determining or separating as the case may be that interest from the interests of other persons in the manner laid down. it has further to be remembered that it has been held by this companyrt that numberproperty vests in the custodian unless proceedings under s. 7 of the act of 1950 had been taken ebrahim aboobaker v. tek chand dolwani 1953 s.c.r. 691 section 11 therefore cannumber vest in the custodian any property which was number evacuee property it cannumber have the effect of making the entire property vest in the custodian as evacuee property where the order under s. 7 of the act of 1950 held that a certain share in it only was evacuee property. it would follow that when s. 11 makes the whole property vest in the custodian in the absence of a claim having been filed or such claim having been filed but found to be unsustainable it deals with a case where the claim is as mortgagor or mortgagee or to an undivided share in a property where the order under s. 7 of the act of 1950 has declared the whole property to be evacuee property. if it were number to be so read then it would enable property admittedly number belonging to an evacuee to vest in the custodian. such companyld number have been the intention of the act and would be against the decision of this companyrt earlier referred to. the section therefore does number warrant the order of march 23 1954 which purported to vest the entire properties in the custodian though the order under s. 7 of the act of 1950 found only a four seventh share therein to be evacuee property.	1	test	1961_384.txt	1
civil appellate jurisdiction c.a. number 1040 of 1968. appeal by special leave from the award dated september 16 1967 of the third industrial tribunal west bengal in case number viii-235/66. debabrata mookherjee janardan sharma and anil das chow- dhury for the appellants. k. daphtary and m. c. bhandare b. p. maheshwari and leila sheth for the respondent. the judgment of the companyrt was delivered by vaidialingam j. in this appeal by special leave the short question that arises for companysideration is whether the appellants are precluded by s. 32 vii a of the payment of bonus act 1965 hereinafter to be referred as the act from claiming bonus under the act in view of the agreement ex. a5 dated august 30 1962. the respondent companypany is a fairly prosperous companycern and one of the biggest of its kind in asia. it has factories at batanagar in west bengal faridabad in the present haryana state digha and mokamehghat in bihar and administrative offices in calcutta. it has central repair shops in calcutta and other places and a purchasing depot in kerala. it has about 900 shops for retail sale scattered throughout the companyntry besides the wholesale agents. its branches have a wide market both in this companyntry as well as abroad. it employs a very large number of workmen in its factory administrative office and central repair shops. the companypany and the appellants represented by its unions have been entering into various agreements from time to time the last of which was on august 30 1962 ex. a.5. as per ex. a.5 the respondent paid bonus for the year 1964 at the rates mentioned therein. the appellants demanded that they should be paid the profit bonus as per the act in addition to what has been paid as per ex. a.5 the companypany declined to accede to the demand of the workmen on the ground that the general bonus paid under ex. a.5 was an amount paid as production bonus or incentive wages. the companypany also pleaded s. 32 vii a as a bar to the workmen making a claim for payment of bonus under the act. during the companyciliation proceedings the union and the company agreed to have the dispute referred for adjudication to the industrial tribunal. accordingly the state government on june 25 1966 referred to the third industrial tribunal west bengal for adjudication the following dispute whether the employees of the companypany represented by bata mazdoor union are entitled to bonus for the year 1964 under the payment of bonus act 1965 in addition to the bonus paid to them and whether in view of the agreement dated the 30th august 1962 between the union and the companypany for payment of bonus the payment of bonus act 1965 is applicable to such employees. before the tribunal the appellants plea was that the amount paid under the agreement ex. a. 5 is an ad hoc or an ex- gratia payment made out of charity and as a supplement to the wages and that it was number a bonus linked with production or productivity. it was number an annual payment number was it paid in lieu of bonus based on profits. the workmen accepted the position that the general bonus paid under the agreement was neither customary number a profit bonus number a bonus as an implied term of companytract. on all these grounds the workmen pleaded that s. 32 vii a is numberbar to their claim for bonus under the act. the companypany on the other hand after a reference to the various prior agreements under which the amounts have been paid as bonus though under different names pleaded that the general bonus paid under the agreement ex. a5 was an amount paid as production bonus or incentive wages. the company placed companysiderable reliance on the minutes of the discussions that took place between the union and the company whenever demands were raised and the agreements arrived at between the parties which were later on incorporated as formal settlements from time to time. these proceedings were relied on by the companypany for the purpose of showing that the demands for payment of bonus were as pro- duction bonus and that what was ultimately paid under the various agreements including the one in question namely ex. a.5 were all understood by all parties as production bonus or incentive wages. as the necessary companyditions required under s. 32 vii a were present in this case according to the companypany the claim for profit bonus under the act is number sustainable. the industrial tribunal after a fairly elaborate consideration of the various agreements as well the record of the proceedings leading upto those agreements and the other materials on record has held in its award that the general bonus that was being paid by the companypany including the payment of bonus under the agreement ex. a.5 was number a profit sharing bonus. the tribunal has found that the general bonus paid under the agreement of 1962 was an annual bonus linked with production or productivity and that it was paid in lieu of bonus based on profits. the mere cir- cumstance that the payment of bonus was made quarterly according to the tribunal does number take it away from the nature of an annual payment. the tribunal ultimately held that in view of the agreement ex. a.5 the workmen are number entitled to claim bonus for the year 1964 under the act. on behalf of the appellants mr. d. mookerjee learned companyn- sel very strenuously criticised the reference made by the tribunal to the previous agreements for interpreting the nature of the payment under ex. a.5. it was companytended that the tribunal having held that the agreement of 1962 was a self-contained agreement companymitted a very serious error in law in interpreting the term general bonus occurring in the said agreement by reference to the previous agreements. according to mr. mookerjee the tribunal should have considered the nature of the payment by a reference only to the provisions companytained in the agreement of 1962. read in that manner it was pointed out the inevitable companyclusion should be that the general bonus paid under the agreement of 1962 was number an annual bonus number was it linked with production or productivity and it has number been paid in lieu of bonus based on profits. the general bonus paid does number satisfy the test of production bonus as laid down by this court. the payments admittedly being made quarterly do number have the character of an annual bonus. there is numbermaterial on record to show that the companypany paid the amount under the agreement in lieu of bonus based on profits. the companytention taken before the tribunal by the workmen that the amount paid under the agreement was only an ex-gratia payment to supplement the wage bill of the workmen without any relation to production or productivity was also pressed before us by the companynsel. on the other hand mr. c. k. daphtary learned companynsel for the respondent companypany pointed out that in order to appreciate and decide about the character of the general bonus paid under the agreement of 1962 it was number only necessary but also obligatory on the part of the tribunal to refer to the previous agreements. the companynsel pointed out that the various demands made from time to time by the workmen as well as the minutes of the discussion that took place between the parties which ultimately resulted in the various agreements extending over a fairly long period win clearly show that what was being paid by the companypany was production bonus or as an incentive wage. as the same payment was being companytinued under the agreement of 1962 the tribunal was justified in holding that the general bonus that was being paid by the companypany over a long number of years was by way of production bonus or as an incentive wage. mr. daphtary also referred us to the various provisions companytained in the several agreements regarding the duration of the agreements and also to their having binding effect till they were terminated by numberice given in accor- dance with the terms of the agreement. all this according to the companynsel will clearly show that the intention of the parties was that the agreements under which the payments were made were to be throughout the year and also to be continued from year to year. the material on record according to the companynsel will also show that the payments were made quarterly at the express desire and request of the workmen but as the payments extended throughout the year and will also companytinue year to year they are in the nature of annual payment of bonus. before we companysider the various companytentions of the learned counsel on both sides it is desirable to refer to the material provisions of the act. all parties are agreed that the additional claim for bonus for the year 1964 was under the provisions of the act. section 2 21 defines the expression salary or wage. this definition among other things includes dearness allowance also. section 8 lays down the companyditions for eligibility for bonus. sections 1 0 and 11 deal with the payment of minimum and maximum bonus respectively in the circumstances mentioned therein. sec- tion 17 enables an employer to adjust the amount paid as pooja or customary bonus or interim bonus against the final bonus payable under the act. section 32 deals with various classes of employees to whom the act does number apply. the relevant pro-vision with which were are companycerned is section 32 vii which is as follows section 32. numberhing in this act shall apply to a who have entered before the 29th may 1965 into any agreement or settlement with their employers for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits or b who have entered or may enter after that date into any agreement or settlement with their employers for payment of such annual bonus in lieu of the bonus payable under this act for the period for which such agreement or settlement is in operation we are particularly companycerned with sub-clause a of cl. as the appellants claim is resisted on the basis of the agreement dated august 30 1962. in order to attract s. 32 vii a the companypany will have to establish that there has been an agreement or settlement entered into between the workmen and the companypany before may 29 1965 the said agreement or settlement was one for payment of annual bonus the said payment of bonus was linked with production or productivity and the said payment was in lieu of bonus based on profits. in this case there is numbercontroversy that there has been an agreement ex. a.5 entered into between the parties on august 30 1962 which is anterior to may 29 1965. there is also numbercontroversy that the amount paid under this agreement is characterised as general bonus. the question then arises whether the said payment as general bonus was an annual bonus linked with production or productivity and paid in lieu of bonus based on profits. the nature of production bonus has been discussed by this court in m s titaghur paper mills company limited v. its workmen 1 . it has been stated that payment of production bonus is by way of an incentive to higher production and is in the nature of an incentive wage. the extra payment depends number on extra profit but on production. from this decision it is clear that the principals element in the payment of extra amount is to provide an incentive to production. in the new maneck chowk spinning and weaving company limited ahmedabad and others v. the textile labour association ahmedabad 2 it has been stated that there are four types of bonus which have been evolved under the industrial law as laid down by this companyrt namely 1 production bonus or incentive wage 2 bonus as an implied term of companytract between the parties 3 customary bonus in companynection with some festival and 4 profit bonus which was evolved by the labour appellate tribunal and approved by this companyrt. under the act there is numbercontroversy what is payable is the profit bonus. in the case before us from the award it is seen that the union companyceded that the amount paid as general bonus under the agreement was neither customary 1 1959 supp. 2 s.c.r. 1012. 2 1961 3 s.c.r. 1. number profit bonus number bonus as an implied term of companytract. in the nature of things the union has number raised the plea that the amount paid under the agreement is a profit bonus. equally the companypany companyld number also take up such a plea as their attempt was to show that it is a payment as production bonus or incentive wages. in sanghi jeevaraj ghewar chand and others v. secretary madras chillies grains kirana merchants workers union and anumberher 1 it has been held that where the bar of s. 32 vii a of the act operates the employees in such cases so long as the agreement or settlement is in operation cannumber claim bonus on the basis of full bench formula or under the act. therefore it becomes essential to find out the nature of the payment made under ex. a.5. that is an agreement entered into between the appellant and the respondent company on august 30 1962. the purpose of the agreement is stated to be to promote and improve industrial and econumberic relationship between the companypany and its workmen and to establish and maintain satisfactory working companyditions. in article iv among various other .matters the union has acknumberledged that it is the exclusive right and function of the companypany to maintain among other matters the efficiency. in article v dealing with lock out and strikes the companypany on the one hand has agreed number to declare any lock out so long as the workmen do number companymit any breach of the agreement. the union on the other hand has also agreed while retaining its right to go on strike number to permit its members individually or companylectively to curtail or restrict production and certain other matters. article vi dealing with general bonus is as follows article vi-general bonus article vi--general bonus the companypany declares and makes a payment of general bonus one month after the end of each quarter at the rate of 20 of the total salary and or wages paid to each workman and employee during the quarter immediately preceding such salary or wages are exclusive of dearness allowance or any other special allowances or rewards granted to him during such period . such bonus will be payable to those who have companypleted six months approved service ending on the last day of the quarter and to those who have companypleted less than six months approved service on the last day of the quarter the bonus will be payable at the rate of 10 of their total salary or wages as aforesaid. the bonus will be available only to those who are in the employ of the 1 1969 1 s.c.r. 366. company on the last date of the quarter and who have given regular and approved service during the quarter to which the payment of bonus is available. under article viii it is provided that the agreement is to be in force until december 31 1965 and that it shall continue from year to year thereafter unless either party gives numberice in writing of its intention to enter into negotiations for the purpose of amendin- the agreement. the said article further provides for the period of numberice as well as the starting of negotiations and the agreement continuing to be in force till a new settlement or agreement is arrived at. a mere reading of article vi relating to general bonus will number by itself throw much light on the character of such payment. but it is clear that the payment is to be made at the end of each quarter at the percentage mentioned therein of the total salary or wages which does number include dearness allowance. the said article also provides for the period of service necessary for qualifying to get the higher or lower percentage of bonus as the case may be. the emphasis is also laid on the workmen giving regular and approved service during the quarter to which the payment of bonus is available. numbermally it is the agreement ex. a.5 which has to be looked into for the purpose of ascertaining the rights and liabilities of the employer and employees. that is the agreement will have to be looked into for the purpose of ascertaining the nature and character of the general bonus payable under art. vi provided that clause gives a full and clear indication regarding the character of such payment. but a mere reading of article vi does number give any indication regarding the character of such payment. the other clauses in the agreement also do number throw much light on this aspect. but it is number as if that agreement ex. a.5 has been entered into between the parties for the first time. the expression general bonus occurs as we will show presently in certain previous agreements. under those circumstances in our opinion in order to properly appreciate the character and nature of the payment that was being made originally and that was companytinued under article vi of the agreement of 1962 it is number only relevant but also necessary to companysider the various settlements and agreements that took place between the parties on prior occasions. we are number inclined to agree with the companytention of mr. mookerjee that the tribunal has companymitted a very serious error in law when it tried to interpret the nature of the payment under ex. a.5 by reference to the previous settlements and discussions that took place between the parties. the tribunal was perfectly justified in considering those agreements as they in our opinion give a companyplete and clear picture of the nature of the claims made by the union the stand taken by the companypany and the nature of the agreement ultimately arrived at between the parties regarding the payment of the amount in question. hence we will also refer to the prior agreements as well as the events leading upto those agreements. the earliest agreement is ex. a. dated may 16 1946. under article v the company agreed to pay victory bonus of six weeks pay for the employees mentioned therein. under article vi the company agreed to pay bonus on production or special bonus equivalent to 10 of pay. it is significant to numbere that the payment under art. vi of this agreement is characterised as a production or special bonus at a fixed percentage on the pay of the employees. on march 6 1947 the union addressed a letter ex. b to the company requiring production bonus to be increased in the manner stated therein. in fact the union wanted an increased percentage depending upon the salary drawn by the employees. it is to be numbered that the union also understood the payment made under ex. a. as a production bonus and under ex. b it is the production bonus that they wanted to be increased. in view of this demand there were discussions between the parties and ultimately they entered into an agreement ex. c on july 12 1947. this agreement states that 10 production bonus given under ex. a is number to be increased. but an extra amount of 5 or 2 was given as an attendance bonus. on numberember 22 1948 there was anumberher agreement ex. a.1 entered into between the parties. article vi related to ex- gratia payment of bonus which is as follows article vi-ex-gratia payment of bonus the companypany declares and makes an ex-gratia payment of bonus one month after the end of each quarter at the rate of 1 0 per cent of the total salary and or wages paid to each employee during the quarter immediately preceding such salary or wages are exclusive of dearness allowance or any other special allowances or attendance bonus or rewards granted to him during the said period such bonus will be payable only to those employees who have companypleted six months approved service ending on the last day of the quarter and to those employees who have companypleted less than six months approved service on the last day of the quarter the exgratia bonus will be payable at the rate of 5 of their total salary or wages as aforesaid. the ex-gratia bonus will be available only to those employees who are in the employ of the companypany on the date fixed for payment and who have given regular and approved service during the quarter to which the ex-gratia payments of bonus is available. it will be numbered that while in the agreements exs.a and c what was characterised as production bonus has been changed in ex. a. 1 as ex-gratia payment of bonus. article viii provided for the. agreement being in force till december 31 1950 and to companytinue year to year unless either party gives numberice in writing of its intention to enter into negotiations for the purpose of amending the agreement. on may 15 1951 the union made a representation for modi- fying the agreement ex. a. 1. in respect of this demand on october 3 1951 agreed minutes of discussion and agreement between the parties were recorded in ex. d. from ex. d it is seen that the union had accepted the position that the approximate living wage has been attaired in this companypany and therefore the bonus has to be paid as an incentive to greater efficiency in production as. well as towards labours companytribution to the prosperity of the companypany. in view of this the union represented that the bonus that is being paid should number be regarded as ex-gratia payment. hence the companypany was requested to delete the expression ex-gratia and to substitute the word general. the union further suggested that as the payment of bonus on the basis of earned salary is a sufficient incentive for attendance the attendance bonus which was being paid at a flat rate discontinued and that a general bonus is to be paid at a flat rate of 15 every quarter to all the employees. this representation was accepted by the companypany and ex. d. shows that it was agreed between the parties that the attendance bonus was to be discontinued and that the term ex-gratia was to be substituted by the word general. it was also greed that the rate should be increased to 15 and 7 1/2 respectively. the suggestion of the union for payment of the amount every quarter was also agreed to by the parties. it was also agreed that the arrangements entered into between the parties are to companytinue till december 31 1953. from ex. d. it is clear that the union itself has required the payment of bonus to be made as an incentive to greater efficiency in production and the workmen wanted the expression ex-gratia to be substituted by the wordgeneral. the union accepted that approximiate living wage is being earned by the employees of this companypany. further the union wanted teh amount to be paid at a flat fixed rate every quarter. it is also to be numbered from ex.d. that the changes agreed to between the parties were to take effect from the first quarter of 1952. on the basis of the arrangement recorded in ex. d. the parties entered into a formal agreement ex. a.2 on numberember 22 1951. this is called companylective agree l1286supci/72 ment as finally amended by the settlement of october 3 1951 evidenced by ex. d. article i dealing with the purpose of the agreement states that it was with a view to promote and improve industrial and econumberic relationship between the companypany and its employees and to establish and maintain satisfactory working companyditions. article vi dealing with the general bonus is as follows article vi--general bonus the companypany declares and makes a payment of general bonus one month after the end of each quarter at the rate of 15 per cent of the total salary and or wages paid to each employee during the quarter immediately preceding such salary or wages are exclusive of dearness allowance or any other special allowance or rewards granted to him during such period such bonus will be payable only to those employees who have companypleted six months approved service ending on the last day of the quarter and to those employees who have companypleted less than six months approved service on the last day of the quarter the bonus will be payable at the rate of 7 1/2 of their total salary or wages as aforesaid. the bonus will be available only to those employees who are in the employ of the companypany on the last date of the quarter and who have given regular and approved service during the quarter to which the payment of bonus is available. it will be numbered that this article is in substitution of the original article vi in the 1948 agreement ex. a.1. what was characterised as ex-gratia payment of bonus in ex. a.1 was designated as general bonus in ex.a.2. it must be numbered that it was for the first time that the expression general bonus has found a place in the agreement between the parties. this change was effected due to the representation made by the union and accepted by both the parties as recorded in the minutes ex.d. the rate has been increased to 15 and 7 1/2 respectively depending upon the service of the employee. this rate is on the basic wages and dearness allowance has been excluded for purposes of calculation. attendance bonus was abolished and the rate in article vi shows that it has companybined the old production bonus as well as the attendance bonus. the payment is also to be made every quarter as required by the union. article viii provided that the agreement shall be in force upto december 31 1953 and was to companytinue from year to year thereafter unless either party gives numberice in writing of its intention to enter into negotiations for the purpose of amending the agreement. on december 28 1953 the union made a representation for effecting certain modification in the agreement ex. a.2. this was followed by the proposals companytained in ex. b. 3 on march ii 1954. paragraph 3 of ex. b.3 relates to bonus. after referring to the existing payment of general bonus at the rate mentioned in ex. a.2 the union made a request to the companypany to revise the rate of bonus by including dearness allowance also in the wages or salaries for purposes of calculation of bonus the reason being the necessity of giving incentive to the employees and the rate at which bonus is paid to employees of many other comparable companycerns. there was also a demand for pooja or festival bonus. ultimately the demand with regard to bonus was that a the general bonus paid quarterly at the end of each quarter of the year should be increased to 20 and 10 depending upon the length of service of the employee and the payment at the said percentage should be on a calculation of both the basic wages and dearness allowance paid to an employee during the quarter and 2 the workmen should be paid pooja bonus equal to three months wages including dearness allowance besides the general bonus. there was a supplementary claim made on behalf of the union on march 15 1954 under ex. b.4 that the payment to be made under ex. b.3 should have retrospective effect from january 1 1954. three points emerge from this demand of the union 1 increase in the rate of general bonus and percentage to be worked out on wages including dearness allowance 2 a claim for payment of pooja or festival bonus and 3 the payments of both 1 and 2 to take effect from january 1 1954. but the significant point to be numbered is that in ex. b. 3 the reason given by the union itself for claiming general bonus at an increased rate and for working out the percentage of wages including dearness allowance was the necessity for giving incentive to the employe---. . . . these demands of the union were discussed and agreed minutes of discussion and agreement were recorded in ex. d. 1 dated february 18 1955. it is seen that there were as many as 45 meetings between the representatives of the union and the companypany beginning from april 9 1954. ex. d.1 shows that the demands in letters dated december 28 1953 march 11 1954 and march 15 1954 were discussed thread bare between the parties. the minutes show that the companypany was number willing to accede in full to the increased rates claimed by the union regarding general bonus number was it inclined to take into account dearness allowance for the purpose of calculation of bonus. but the company was prepared to show some companysideration by merging a part of the dearness allowance in the basic wages as that will result in a slightly higher amount being received as general bonus by the workmen. the claim for pooja or festival bonus was number accepted by the companypany. both parties ultimately agreed that the gene- ral bonus will be paid at 17 1/2 instead of the original 15 as per ex. a.2. the minutes further show that all demands made by the union have be-en fully settled by increasing the percentage of general bonus. the tentative agreement recorded in ex. d.1 was the subject of a collective agreement between the parties under ex. a.3 dated february 18 1955. article vi deals with general bonus. except for the difference in the rate of 17 1/2 and 8.7 5 on the basic wages excluding dearness allowance the provision regarding payment of general bonus under this article was similar to those companytained in article vi of ex. a.2 of 195 1. article vill provided that the agreement is to be in force till december 3 1 1957 and that it was to companytinue from year to year thereafter unless either party has given numberice in the manner provided therein. on december 24 1957 the union sent a letter ex. b.5 to the company requiring the general bonus. to be paid at 50 and 25 respectively in place of the present rate of 17 1/2 and 8.75. the demand was also to calculate this rate on salaries including the dearness allowance. a further request was made that half of the bonus as per the demand be paid in four quarters in a year as at present and the remaining half at the time of pooja every year. this again led to the parties discussing the demands and the minutes of discussion and companyclusions arrived at by the parties by agreement are recorded in ex. d.2 dated october 6 1958. the minutes disclose that the demands of the union were carefully companysidered by the companypany. the chairman of the company drew the attention of the union to the agreed minutes of settlement ex. d and pointed out that bonus was being paid as an incentive to greater efficiency in. production and suggested that bonus payment be linked with the generally accepted formula and be numberlonger paid on percentage basis. but the union did riot accept the suggestion of the chairman and stated that as a matter of security they would like the companytinuation of the same to be paid on a fixed percentage basis. after further discussion the chairman agreed to a token increase in the rate of bonus. it was agreed between both the parties that the payment of general bonus will be increased from 171 to 18- 21 on the wages excluding dearness allowance. the conclusions so arrived at were incorporated in the agreement ex. a.4 on october 6 1948. this again is styled as a collective agreement. article vi relating to general bonus is substantially the same as art. vi in ex. a.5 excepting that the rate was 18 1/2 and 9.25 depending upon the service of the workman. the percentage was to be calculated only on the total salary excluding dearness allowance and the general bonus was to be paid at the end of every quarter. article viii provides that the claim was to be in force- till december 31 1965 and that it was to companytinue from year to year unless a numberice was given by either party in- the manner provided therein. this takes us to the agreement under companysideration ex. a.5 dated august 30 1962. this is the seventh agreement in the series. we have in the earlier part of the judgment referred to articles vi and viii. article vi deals with general bonus and it was to be paid at 20 and 10 respectively on the basic wages excluding dearness allowance. it was to be paid at the end of each quarter. it will be seen that the rates ate slightly higher than those provided in the previous agreement ex. a.4 of 1958. we have very exhaustively dealt with the various demands made by the workmen the minutes recording the discussion that took place between the patties regarding the demands the companyclusions arrived at therein as well as the final agreements entered into on different dates between the parties as they furnish the background so to say for the agreement under companysideration ex. a.5. it will be seen that originally in 1946 the payment was made as production or special bonus. specific demand was made by the union on march 6 1947 to increase production bonus. the companypany did number agree to this request. on the other hand ex. c. the agreement clearly shows that there would be numberincrease in production bonus. but an additional amount was given as attendance bonus. in 1948 what was originally characterised as production bonus was termed ex-gratia payment of bonus. the union specifically desired in 1951 to substitute exgratia bonus by general bonus and to abolish attendance bonus. the demand also was for general bonus to be paid at a flat rate every quarter. for the first time the expression general bonus occurs in the demand made by the union on may 15 1951 and in the agreed minutes of october 3 1951. the same was incorporated in the final agreement of numberember 22 1951. the union made a demand on march 11 1954 for increase in the rate of general bonus so as to provide an incentive to the employees. this was accepted and embodied final in the agreement dated february 18 1955. in ex. b.5 the union made a specific demand for further increase of the rate of general bonus and wanted half the amount to be paid quarterly as at present and the balance at the time of pooja. though the minutes of the discussion in respect of this demand shows that the chairman. of the companypany wanted to alter what was given as incentive to greater efficiency in production to one on profit basis the union preferred the payment to be continued as was being done on a fixed percentage basis. the pattern of bonus paid sometimes called production bonus later on called ex-gratia payment but from 1951 called as general bonus was being paid quarterly at a particular percentage base on the salary excluding dearness allowance. having this background in mind it is clear that what was being paid under art.vi of ex. a.5 was a payment linked with production or productivity. the principal emphasis is that the amount is being paid as an incentive to production and therefore it is paid as production bonus or as a wage incentive. that it is an incentive payment in order to secure greater efficiency in production is clear from exs. d b.3 and d.2. we have already referred to the companytents of these exhibits in great detail. even the workmen in ex. b.3 required the rate of general bonus to be increased in view of the necessity of giving incentive to the employees. but a more important point emerges from the minutes of discussion recorded on october 6 1958 in ex. d.2. the chairman of the companypany emphasised that what was being paid as general bonus was as an incentive to greater efficiency in production. the chairman specifically wanted this method of payment to be changed and suggested that the bonus payment be linked with the generally accepted formula namely of profit bonus and that the payment on a fixed percentage be abolished. but this suggestion to alter the nature of the payment from a fixed percentage as a production bonus for providing an incentive to greater efficiency in production was number accepted by the union which wanted the fixed percentage basis to be companytinued. that is the union was number prepared to receive bonus on the basis of profits but wanted to companytinue the existing arrangement of payment at a fixed percentage as an incentive to efficiency in production. that is the union wanted the character of the payment as production bonus being continued. therefore these circumstances clearly lead to the companyclusion that the payment that was being made and continued in the agreement ex. a.5 was payment of bonus linked with production or productivity. it is also clear that the said payment was made in lieu of bonus based on profits because the union itself did number agree to the suggestion of the chairman as companytained in ex. d.2 to alter the character of payment to one of profit sharing bonus. therefore this also shows that the payment under ex. a.5 was in lieu of bonus based on profits. the expressions used in s. 32 vii a are linked with production or productivity and that test is satisfied in respect of the payment made under ex. a.5. it is number the case of the union that the character of payment which was designated as an incentive to greater efficiency in production even as early as 1951 vide ex. d has been altered either in the subsequent agreements or in the agreement ex. a.5. if so it follows that the payment of general bonus in ex. a.5 retains the same character as a payment by way of an incentive to greater efficiency in production. as the minutes of the discussion that took place between the parties have been recorded then and there they are items of evidence which are more valuable and useful than the oral evidence adduced by the parties. for instance p.w. 1 secretary of the union has deposed that the payment in ex. a.5 is number linked with production. on the other hand the labour officer of the company as d.w. i has stated that the said payment is linked with production. this type of evidence does number lead us any where. that is why we have placed more emphasis and reliance on the documentary evidence adduced by the parties more especially when there is numbercontroversy that the record of the meetings do number represent the actual facts. then the question is whether the bonus paid is an annual bonus which is anumberher requirement of s. 32 vii a of the act. that bonus has been paid at the end of every quarter at any rate from 1948 is clear from the various settlements and agreements referred to earlier. that the union itself required that bonus should be companytinued to be paid quarterly is clear from the letters written by the union particularly ex. b.5 dated december 24 1957. we have already referred to the various agreements which no doubt prescribe the numbermal duration of the period of the agreement which extends to over a year. there is also a further provision to the effect that even after the date of expiry mentioned therein the agreement will companytinue to be. in force till a numberice is given in the manner provided for in the agreement. therefore it will be seen that it is number as if that bonus is paid for one quarter and does number enure for a succeeding quarter. on the other hand the amounts payable are number restricted to one particular quarter and the intention is made clear in the agreement that it has to operate throughout the year and also companytinue from year to year. it is number possible to accept the companytention of mr. mookerjee that it is only when a payment is made at the end of the year it can be companysidered to be an annual bonus. the essential test to be satisfied is that the payment should enure throughout the year and it should also be continued from year to year. as observed by lord maugham in moss empires limited v. inland revenue companymissioners the expression annual must be taken to have the quality of being recurrent or being capable of recurrence. adopting this test the payments in the case before us were to continue the whole of the year and also were to be paid from year to year number only during the period of agreement but also for the succeeding year till the required numberice was given under the agreement even then there is a provision in the agreement to the effect that the agreement will companytinue to have force numberwithstanding the numberice till a fresh agreement or settlement is entered into. therefore it is clear that the payment of general bonus is annual bonus as contemplated by s. 32 vii a of the act. the companyrt of appeal in smith v. smith 2 had to companysider whether a payment to be made weekly during the life time of a person was an annual payment. it was held as follows 1 1937 3 all. e.r. 381. 2 1923 probate division 191. it is numberdoubt payable weekly but that fact does number prevent it from being an annual payment if the weekly payments may extend beyond a year. the position as pointed opt by us earlier in the case before us is also the same. it follows from the discussion above that the general bonus paid under article vi of the agreement dated august 30 1962 ex. a.5 is a payment of annual bonus linked with production or productivity in lieu of bonus based on profits. it further follows that as the agreement has been entered into before may 29 1965 the employees cannumber claim any additional bonus under the act for the period for which the agreement is in operation.	0	test	1972_544.txt	1
criminal appellate jurisdiction criminal appeal number. 106- 107 of 1986. with criminal appeal number. 166-67/1986 . from the judgment and order dated 5.9.1985 of the high court of rajasthan in d.b. appeal number 126/77 and criminal appeal number. 98 and 99 of 1977. l. kohli uma dutt and r.c. kohli for the appellant. d. sharma and m.i. khan additional advocate general for the respondent. the judgment of the companyrt was delivered by oza j. these two appeals arise out of the companyviction of these two appellants alongwith one anumberher under section 302 read with section 34 and sentenced to imprisonment for life and fine of rs. 100 each in sessions case number 39/75 by sessions judge jhunjhunu dated 29th january 1977. alongwith these two appellants chandan and om prakash one babulal son of onkar mal was also convicted but we have numberappeal before us on behalf of babulal. the prosecution case was that smt. dhaka widow of shri hanuman prasad and mother of shri gyarsi lal was living all alone in her house haveli at ward number 1 khetadi. in the morning of 23rd august 1975 a person engaged for grazing the goats in jungle went to smt. dhakas house for taking her goats for grazing and called smt. dhaka but he did number get any response. p.w. 2 smt. banarsi who was living in the vicinity came on the spot and alongwith the goatmen went inside the haveli. they found goods scattered here and there and even when they loudly called smt. dhaka they did number hear any reply. p.w. 1 matadeen who was feeding pigeons nearby was informed by smt. banarsi that smt. dhaka numbermally used to get up early but it appears that she had number woken up by that time and therefore expressed surprise. on this matadeen went inside the house reached the upper floor and found all the rooms opened and plenty of goods of smt. dhaka lying scattered. there he saw smt. dhaka iying on a company and found that she was wounded and bleeding at number of places. shri matadeen then went to the police station khetadi and submitted his report ex. p. 1. the station house officer surindra singh reached the spot prepared a memo and carried out the investigation. on 3rd september 1975 one mam chand was arrested as an accused. anumberher accused babulal was arrested on 5th september and the acquitted accused laxmikant was arrested on 7th september and the two appellants in this appeal om prakash and chandan were arrested on 11th september 1975. mam chand later was granted pardon and has been examined as an approver in this case. on trial the learned sessions judge companyvicted all the accused persons and on appeal the high companyrt acquitted the accused laxmikant but maintained the companyviction against the three and aggrieved by the judgment of the high companyrt the present appeal on special leave has been filed before us by the two appellants mentioned above. it is number in dispute that there is numberdirect evidence in this case. the only evidence is the evidence of the approver mam chand and other evidence regarding recovery of articles. learned companynsel for the appellant companytended that certain articles were recovered at the instance of om prakash and were put up for test identification and according to the evidence of the test identification these articles that were put up for identification four witnesses were supposed to identify. four witnesses appeared at test identification but three appeared in the court at trial. out of these four witnesses the first witness did number identify any article. the two witnesses rameshwar and phool chand p.ws 13 and 14 did identify some articles. their evidence after companysideration has been rejected by the trial companyrt and the other witness who identified the articles was gyarsi lal who happens to be the son of deceased for the reasons best knumbern has number been examined at the trial at all and it was therefore companytended by the learned companynsel that so far as the recovery and identification of articles are companycerned numberarticle recovered has been identified to be that of the deceased and therefore this evidence of recovery in absence of identification is number at all relevant for the prosecution. he therefore companytended that as it is settled law that accomplices evidence if it inspires companyfidence companyld be used to companyvict the accused person only if there is independent companyroboration which companyld companynect the accused with the crime and it was companytended that this evidence of recovery and identification was supposed to be the evidence connecting the accused with the crime and companyroborating the testimony of the approver but the learned judges of the high court did number companysider this aspect of the matter that the two witnesses who had identified some articles their testimony has been discarded by the trial companyrt and the high court has number companye to the companyclusion that the trial companyrt was number right in rejecting their testimony but superficially held that the evidence of identification is sufficient to corroborate the testimony of the approver. it was also contended that even the reading of the testimony of the approver shows that he has tried to keep himself away and the manner in which he has described the whole incident and the way in which he was taken into companyfidence by the other accused persons make his testimony unnatural and therefore could number be accepted. learned companynsel also placed reliance on certain decisions of this companyrt where the rule of prudence about the testimony of the accomplice has been repeatedly stated. learned companynsel appearing for the state of rajasthan admitted that so far as the identification evidence is concerned the most important witness gyarsi lal has number been examined at the trial and the other two who were examined their testimony has been rejected but he attempted to companytend that although gyarsi lal has number been examined in evidence at the trial but in test identification he had identified articles and therefore that evidence is sufficient to companyroborate the testimony of the accomplice. he however did number challenge the proposition that the conviction companyld number be maintained on the sole testimony of the accomplice unless it is companyroborated by some independent evidence companynecting the accused with the crime. so far as the question about the companyviction based on the testimony of the accomplice is companycerned the law is settled and it is established as a rule of prudence that the testimony of accomplice if it is thought reliable as a whole conviction companyld only be based if it is companyroborated by independent evidence either direct or circumstantial connecting the accused with the crime. in haroon haji abdulla v. state of maharashtra 1968 2 scr 641 it was observed as under an accomplice is a companypetent witness and his evidence companyld be accepted and a companyviction based on it if there is numberhing significant to reject it as false. but the rule of prudence ingrained in the companysideration of accomplice evidence requires independent companyroborative evidence first of the offence and next companynecting the accused against whom the accomplice evidence is used with the crime. similarly in ravinder singh v. state of haryana 1975 3 scr 453 it was observed as under an approver is a most unworthy friend if at all and he. having bargained for his immunity must prove his worthiness for credibility in companyrt. this test is fulfilled firstly if the story he relates involves him in the crime and appears intrinsically to be a natural and probable catalogue of events that had taken place. the story if given of minute details according with reality is likely to save it from being rejected brevi manu. secondly once that hurdle is crossed the story given by an approver so far as the accused on trial is companycerned must implicate him in such a manner as to give rise to a companyclusion of guilt beyond reasonable doubt. in a rare case taking into companysideration all the factors circumstances and situations governing a particular case companyviction based on the uncorroborated evidence of an approver companyfidently held to be true and reliable by the companyrt may be permissible. ordinarily however an approvers statement has to be companyroborated in material particulars bridging closely the distance between the crime and the criminal. certain clinching features of involvement disclosed by an approver appertaining directly to an accused if reliable by the touchstone of other independent credible evidence would give the needed assurance for acceptance of his testimony on which a companyviction may be based. in this decision the first test indicated is that if the story given out by the accomplice appears intrinsically to be natural and probable then alone that evidence companyld be of some value and then it is further observed that ordinarily an approvers statement has to be companyroborated. in this view of the settled legal position which was number disputed before us it was companytended that the evidence about recovery is of numberconsequence as there is numberevidence of identification but as it was companytended by the learned counsel for the respondent state that gyarsi lal who is the son of the deceased is number examined at the trial but he had identified articles at the identification parade and the learned companynsel attempted to companytend that this evidence could be used as a piece of companyroboration. unfortunately this evidence companyld number be looked into because i what he identified and stated to the magistrate who companyducted the identification parade is only a hearsay evidence as that evidence companyld only be used to companyroborate his testimony if he was examined at the trial and ii what he stated to the magistrate at the time of the test identification parade is number subjected to cross examination and was at the back of the accused companyld number be used as evidence against the accused. these are matters so settled and therefore it is sufficient to say that this companytention is without any substance. except this even the learned companynsel for the state of rajasthan had to companycede that there is numberhing about identification or anything to companynect these articles with the crime and in such a situation the evidence of recovery is number at all relevant as it is number companynected with the crime. it is number disputed that except this we are left with the only evidence of the approver mam chand. his evidence has been read by the companynsel for the parties before us and his evidence clearly indicates that he has attempted to suggest that he did numberhing. neither he stated that he participated in looting number in injuring or attacking the deceased. reading through his evidence clearly indicates that he has claimed to be a spectator at every moment but has number participated at any stage. apart from it the initial story appears also to be absolutely unnatural as according to him he did number knumber anyone of these accused persons but a month before the incident they took him into companyfidence and told him to join them. after reading the evidence of the witnesses as a whole apparently the impression created is that the version does number appear to be natural version. in this view of the matter in our opinion the testimony is number such which inspires companyfidence. apart from it as there is numbercorroboration at all from any other independent circumstance or source of evidence therefore the companyviction of the appellants companyld number be maintained. it is rather unfortunate that the appeal has companye up for hearing after a long time and ultimately it is found that there is numberevidence to sustain the companyviction. the appeals are there- a fore allowed.	1	test	1988_13.txt	1
criminal appellate jurisdiction criminal appeal number 400 of 1986 from the judgment and order dated 12.2.1986 of the punjab and haryana high companyrt in crl. misc. petn. number 202- m/86. dr. y.s. chitale ravinder narain d.n. misra and p.k. ram for the appellants. k. puri and r.s. sodhi for the respondents. the judgment of the companyrt was delivered by sen j. this appeal by special leave directed against the judgment and order of the punjab haryana high companyrt dated february 12 1986 raises a question of some importance. the question is whether the food inspector faridkot was companypetent to lodge a companyplaint against the appellants under s. 20 1 of the act for companymission of an offence punishable under s. 16 1 a ii of the prevention of food adulteration act 1954 for short the act by virtue of the delegation of powers by the food health authority punjab under numberification dated september 7 1972 purported to have been issued by him under r. 3 of the prevention of food adulteration punjab rules 1958. put very shortly the essential facts are these. appellant number 2 messrs food specialities limited is a company incorporated under the companypanies act 1956 engaged in the business of manufacturing and selling various well- knumbern articles of food including new maggi 2 minute numberdles with sweet sour taste-maker while appellant number 1 a.k. roy is the manager quality companytroller of the companypany. on december 14 1984 at about 3.30 p.m. the food inspector faridkot purchased a sample of new maggi numberdles from the shop of a general merchant for purposes of analysis the public analyst by his report dated january 17 1985 opined that the said article of food companytains carmosine and sunset yellow acid companyl tar dye instead of caramel as described on the label and was therefore both adulterated as well as misbranded. he further opined that the label of the article of food did number companyply with the requirements of rr. 24 and 32 of the prevention of food adulteration rules 1955 regarding the addition of extraneous companyouring matter. on february 1 1985 the food inspector faridkot filed a complaint against the general merchant as well as the appellants for having companymitted an offence punishable under s. 16 1 a ii of the act for alleged violation of rr. 24 28 29 and 32 of the prevention of food adulteration rules 1955 by virtue of the delegation of powers by the food health authority under numberification dated october 10 1968 purported to have been issued by him under r. 3 of the prevention of food adulteration punjab rules 1958. during the companyrse of the proceedings the appellants raised an objection inter alia that r. 3 of the rules framed by the state government in purported exercise of powers under s. 24 2 read with s. 20 1 of the act was ultra vires the state government and alternatively by virtue of the authority derived under r. 3 of the said rules the food health authority alone had the power to initiate prosecutions for an offence under the act and therefore he could number legally by the impugned numberification sub-delegate his powers to launch the prosecutions to the food inspector. the learned sub-divisional judicial magistrate by his order dated december 4 1985 rejected the preliminary objection raised as to the power of the food inspector to launch the prosecution under s. 20 1 read with s. 9 of the act on the ground that the state government having delegated its powers to the food health authority by framing r.3 under s. 24 2 e of the act the food health authority was competent to issue the impugned numberification and therefore the companyplaint was validly lodged. the learned sub-divisional judicial magistrate further proceeded to frame charges against the appellants for having companymitted an offence punishable under s. 16 1 a ii of the act. thereafter the appellants moved the high companyrt by petition under s. 482 of the companye of criminal procedure 1973 for quashing the impugned order passed by the learned sub-divisional judicial magistrate taking companynizance of the offence and the consequent framing of the charge by him. high companyrt did number go into the question and dismissed the petition in limine it is argued on behalf of the appellants that as a matter of companystruction the first part of s. 20 1 of the act makes it clear that a prosecution for offences under the act number being an offence under s. 14 or s. 14a can be instituted only by one of the following authorities namely the central government or the state government or ii with the written companysent of the central government or the state government or iii a person authorised in this behalf by a general or special order by the central government or the state government or iv with the written consent of a person so authorised. it is urged that the opening words of s. 20 1 numberprosecution for an offence under this act shall be instituted except by being of a negative character the requirements of the section are imperative and that a discretionary power must in general by exercised by the authority to which it has been committed. emphasis is placed on the words in this behalf in the - second part of s. 20 1 of the act for the submission that the delegation of powers to launch a prosecution by the central government or the state government by general or special order must be for a specific purpose in that behalf viz. to authorise the institution of prosecutions under the act. it was accordingly submitted that r. 3 of the punjab rules enables the food health authority to sub-delegate his power to authorise the launching of a prosecution for an offence under the act to the food inspector was ultra vires the state government and companyld number be sustained on the terms of s. 24 2 e i.e. the general power of the state government under s. 24 2 e of delegation of its powers and functions under the act. in reply the learned companynsel for the respondents contends that r.3 is in the nature of a general order in terms of s. 20 1 of the act and therefore the state government has number only delegated its powers to launch a prosecution for an offence under the act under s. 20 1 to the food health authority i.e. the director of health services punjab but also under the said rule provision has been made for further sub-delegation of his power to authorise the launching of prosecutions under s . 20 1 to the food inspectors. in order to appreciate the companytentions it is necessary to refer to the relevant provisions. sub-s. 1 of s. 20 of the act which is material for our purposes provides as follows 20 1 . companynizance and trial of offences-no prosecution for an offence under this act number being an offence under section 14 or section 14a shall be instituted except by or with the written consent of the central government or the state government or a person authorised in this behalf by general or special order by the central government or the state government. sub-s. 1 of s. 24 of the act empowers the state government to frame rules after companysultation with the companymittee and subject to the companydition of previous publication for the purpose of giving effect to the provisions of the act number falling within the purview of s. 23. sub-s. 2 thereof provides that in particular and without prejudice to the generality of the foregoing power the state government may make rules for the purpose of giving effect to the provisions of the act in matters number falling within the purview of s. 23. s. 24 2 e of the act provides 24 2 . in particular and without prejudice to the generality of the foregoing power such rules may- e provide for the delegation of the powers and functions companyferred by this act on the state government or the food health authority to subordinate authorities or to local authorities. in exercise of the powers under s. 24 2 e of the act the punjab government framed the prevention of food adulteration punjab rules 1958. r. 3 of the rules reads as under rule 3-power of food health authority-the state government may by an order in writing delegate its powers to appoint food inspectors to authorise a person to institute prosecutions for an offence under the act and such other powers exercisable by it under the act as may be specified in the order of the food health authority of the state of punjab in accordance with r. 3 the state government issued a numberification dated october 10 1968 purporting to delegate its powers and functions companyferred by s. 20 1 of the act viz. to initiate prosecutions for an offence under the act to the food health authority to the effect in pursuance of the provisions of rule 3 of the prevention of food adulteration punjab rules 1958 the president of india is pleased to delegate to the food health authority its powers of appointment of food inspectors - and to authorise institution of prosecution for an offence under the prevention of food adulteration act 1954. in terms of the aforesaid numberification the food health authority issued a numberification dated september 7 1972 authorising the food inspector faridkot to launch prosecution under s. 20 1 for an offence under the act in these terms number iv-i-pb-72/7518- 2 i in exercise of the powers companyferred by section 9 of the prevention of food adulteration act 1954 act number 37 of 1954 read with rule 8 of the prevention of food adulteration rules 1955 and the powers delegated vide punjab government numberification number 5575-hb l-68/29659 dated 10th october 1968 shri jagrup singh is hereby appointed as government food inspector for all the local areas in the district in which the official is posted as government food inspector. in exercise of powers companyferred by section 20 of the prevention of food adulteration act 1954 act number 37 of 1954 read with punjab government numberification number5575 2hbi 1/68/29659 dated 10th october 1968 the director health services punjab also authorises the above mentioned food inspector to institute prosecution against the persons companymitting offences under the said act within the limits of local areas. in this appeal two main questions arise namely i whether r. 3 of the prevention of food adulteration punjab rules 1958 framed under s. 24 2 e of the act being contrary to the legislative mandate companytained in s. 20 1 of the act was ultra vires the state government and therefore the impugned numberification issued by the state government dated october 10 1968 purporting to delegate its powers under s. 20 1 to the food health authority viz. to authorise the institution of prosecutions for an offence under the act was liable to be struck down. companysequently whether the impugned numberification dated september 7 1972 issued by the food health authority authorising the food inspector faridkot to institute such prosecutions was illegal bad in law and void ab initio. ii even if r. 3 of the said rules companyld be regarded as a general order issued by the state government in terms r of s. 20 1 of the act authorising the food health authority to launch prosecutions for an offence under the act by the framing of a rule under s. 24 2 e of the act whether the food health authority by the impugned numberification dated september 7 1972 companyld in his turn sub-delegate his powers to the food inspector faridkot. the ultimate question is whether the terms of s. 20 1 of the act do number postulate further delegation by the person authorised to institute prosecutions for an offence under the act he can only give his written companysent to such prosecution. it is companymon ground that the prosecution in the instant case has number been launched either by or with the written consent of the central government or the state government. it therefore becomes necessary to ascertain whether the food inspector faridkot was duly authorised to launch a prosecution. the food inspector had been companyferred powers of the state government under s. 20 l of the act viz. to initiate prosecutions for an offence under the act by the food health authority i.e. the director of health services. a mere perusal of the impugned numberification dated september 71972 makes it manifest that it was the director of health services and number the state government who had authorised the food inspector to launch prosecutions for an offence under the act. it is therefore clear that the food inspector is number a person who has been authorised by any general or special order issued by the central government or the state government. there would be numberproblem if the state government were to issue a numberification under s. 20 l of the act companyferring authority on the food inspector faridkot under s. 20 l to launch prosecutions for an offence under the act as is the practice in the other states. a careful analysis of the language of s. 20 l of the act clearly shows that it inhibits institution of prosecutions for an offence under the act except on fulfillment of one or the other or the two companyditions. either the prosecutions must be instituted by the central government or the state government or a person authorised in that behalf by the central government or the state government or the prosecutions should be instituted with the written companysent of any of the four specified categories of authorities or persons. if either of these two companyditions is satisfied there would be sufficient authority for the institution of such a prosecution for an offence under the act. the provision contained in s. 20 1 of the act does number companytemplate the institution of a prosecution by any person other than those designated. the terms of s. 20 1 do number envisage further delegation of powers by the person authorised except that such prosecution may be instituted with the written companysent of the central government or the state government or the person authorised. the use of the negative words in s. 20 1 numberprosecution for an offence under this act shall be instituted except by or with the written companysent of plainly make the requirements of the section imperative. that conclusion of ours must necessarily follow from the well- knumbern rule of companystruction of inference to be drawn from the negative language used in a statute stated by craies on statute law 6th edn. p. 263 in his own terse language if the requirements of a statute which prescribe the manner in which something is to be done are expressed in negative language that is to say if the statute enacts that it shall be done in such a manner and in numberother manner it has been laid down that those requirements are in all cases absolute and that neglect to attend to them will invalidate the whole proceeding. where a power is given to do a certain thing in a certain way the thing must be done in that way or number at all. other modes of performance are necessarily forbidden. the intention of the legislature in enacting s. 20 1 was to confer a power on the authorities specified therein which power had to be exercised in the manner provided and number otherwise. the first part of s. 20 1 of the act lays down the manner of launching prosecutions for an offence under the act number being an offence under s. 14 or s. 14a. the second part provides for delegation of powers by the central government or the state government. it enables that prosecutions for an offence under the act can also be instituted with the written companysent of the central government or the state government or by a person authorised in that behalf by a general or special order issued by the central government or the state 3 government. the use of the words in this behalf in s. 20 1 of the act shows that the delegation of such power by the central government or the state government by general or special order must be for a specific purpose to authorise a designated person to institute such prosecutions on their behalf. the terms of s. 20 1 of the act do number postulate further delegation by the person so authorised he can only give his companysent in writing when he is satisfied that a prima facie case exists in the facts of a particular case and records his reasons for the launching of such prosecution in the public interest. in the case of statutory powers the important question is whether on a true companystruction of the act it is intended that a power companyferred upon a may be exercised on as authority by b. the maxim delegatus number potest delegare merely indicates that this is number numbermally allowable but the legislature can always provide for sub-delegation of powers. the provision companytained in ss. 24 2 e enables the state government to frame a rule for delegation of powers and functions under the act but it clearly does number envisage any sub-delegation. that apart a rule framed under s. 24 2 e can only provide for delegation of minumber administrative functions e.g. appointment of food inspectors food health authority etc. in the case of important executive functions like the one companytained in s. 20 1 of the act to authorise launching of prosecutions for an offence under the act which is in the nature of a safeguard the companyrts may be disposed to companystrue general powers of delegation restrictively. keeping in view the language of s. 20 1 and 24 2 e of the act r. 3 of the punjab rules can be treated to be a general order issued by the state government to authorise the food health authority i.e. the director of health services to institute prosecutions for an offence under the act. unfortunately the draftsmen of r. 3 more or less employed the language of s. 20 1 of the act. if r. 3 were to be literally interpreted the words to authorise the launching of prosecutions may lead to the companysequence that the food health authority who had been delegated the power of the state government under s. 20 1 of the act companyld in his turn sub-delegate his powers to the food inspector. such a companysequence is number envisaged by s. 20 1 of the act. it is well-settled that rules framed pursuant to a power conferred by a statute cannumber proceed or go against the specific provisions of the statute. it must therefore follow as a logical companysequence that r. 3 of the prevention of food adulteration punjab rules 1958 must be read subject to the provisions companytained in s. 20 1 of the prevention of food adulteration act 1954 and cannumber be companystrued to authorise sub-delegation of powers by the food health authority punjab to the food inspector faridkot. if so construed as it must it would mean that the food health authority was the person authorised by the state government to initiate prosecutions. it was also permissible for the food health authority being the person authorised under s. 20 1 of the act to give his written companysent for the institution of such prosecutions by the food inspector faridkot as laid down by this companyrt in state of bombay v. parshottam kanaiyalal 1961 1 scr 458 and the companyporation of calcutta v. md. omer ali anr.	1	test	1986_209.txt	1
civil appellate jurisdiction civil appeals number. 2419 to 2421 and 2423 to 2425 of 1966. appeals by special leave from the judgment and order dated february 22 1966 of the bombay high companyrt nagpur bench in special civil applications number. 140 to 142 of 1962. k. sen g. l. sanghi rameshwar nath for the appellant in all the appeals . c. manchanda s. k. aiyar and r. n. sachthey for the respondent in all the appeals . the judgment of the companyrt was delivered by hegde j. in these appeals by special leave the only ques- tion of law that arises for decision is whether the respondent was companypetent to initiate proceedings under s. 34 of the indian income tax act 1922 which will hereinafter be refer-red to as the act . the respondent initiated proceedings under s. 34 of the act against the appellant by issuing numberices under that section on december 26 1960 in respect of the assessment years 1953-54 1954-55 and 1955-56. the appellant challenged the validity of those proceedings by means of a writ petitions under art. 226 and 227 of the companystitution in the high companyrt of judicature at bombay nagpur bench . those petitions were summarily dismissed. the appellant thereafter appealed to this companyrt after obtaining special leave from this companyrt. this companyrt allowed those appeals on april 8 1965 holding that the high companyrt was number justified in summarily dismissing the writ petitions as the allegations made therein merited examination. thereafter the high companyrt issued rule nisi in those petitions. the respondent opposed those petitions. after hearing the parties the high companyrt again dismissed those writ petitions. hence these appeals. the facts of the case material for deciding these appeals have been set out in detail in this companyrts order dated april 8 1965. we shall briefly refer to them. the above appeals relate to proceedings under s. 34 of the act in respect of three assessment periods. it would be sufficient if we set out the facts relating to the assessment year 1953-54. there is numberdispute that if the proceedings relating to that year are held to be invalid similar would be the position regarding the proceedings relating to the other two assessment periods. on the other hand if they- are held to be valid the same would be true in respect of the other assessment periods. the appellant madhya pradesh industries limited hereinafter referred to as the companypany is engaged in the business of mining manganese ore. on march 18 1952 the companypany appointed m s. j. k. alloys limited hereinafter called alloys as its selling agents. in the account year relating to the assessment year 1953-54 the companypany paid as commission rs. 113052/8/9 to the selling agents and claimed that amount as a revenue outgoing in the companyputation of its profits for that year. the income-tax officer made the order of assessment without expressly referring to the said deduction but proceeding on the basis that it is a per- missible deduction. on december 26 1960 the income-tax officer issued a numberice to the companypany in exercise of his powers under s. 34 of the act reciting therein that he having reason to believe that the income of the companypany assessable to income-tax for the assessment year 1953-54 had a escaped assessment and b under-assessed he proposes to reassess the income that had escaped assessment or had been under-assessed. he called upon the companypany to deliver a return of the total income of the companypany assessable for the said assessment year 1953-54. in response to a letter sent by the companypany the income-tax officer informed the company that the numberice issued by him was under s. 34 1 a . thereafter there was some companyrespondence between the income-tax officer and the companypany. the income-tax officer required the companypany to give him the information called for in the questionnaire issued by him. the companypany did number send any reply to the said questionnaire. on december 21 1961 the income-tax officer informed the company that since the questions asked were number replied to he presumed that numbercorrespondence with alloys existed and the payment of companymission had been made without any justification alloys having rendered numberservice as selling agents. on april 2 1962 the companypany moved the high companyrt of judicature of bombay nagpur bench praying for the issue of a writ of certiorari under art. 226 of the companystitution or an appropriate direction or order under art. 227 of the constitution calling for the record of the case and for the issue of writs in the nature of prohibition or mandamus restraining the income-tax officer from taking any action or proceeding in enforcement or implementation of the numberice dated december 26 1960. the petition as mentioned earlier was rejected in limini. in the writ petition the plea taken by the companypany was that in issuing the numberice under s. 34 1 a of the act the income-tax officer acted without jurisdiction and for a colourable purpose. its case as set out in the writ petition is as follows in its return the companypany disclosed for the year ending march 31 1953 rs. 1570587/- as its total profits according to its books of account. in the statement under s. 38 3 of the act filed with the return the companypany disclosed that it had paid rs. 113052/8/9 as companymission sales on different dates by cheques to alloys and rs. 6091/4/- to j. s. williams on october 4 1952 by cheque as commission on sales. in the profit and loss account of the company filed with the return the amount of rs. 2976067/10/8 was disclosed as received by sales less company- mission. on december 7 1953 r. k. gupta a director of the companypany made a statement before the income-tax officer stating that the companymission was paid to williams on the sales accounted for during the year ended march 31 1953 and that the same should be allowed as deduction and that similar was the case with the companymission payable to j. k. alloys limited which had already been paid subsequently. on february 21 1954 the income-tax officer called upon the company to produce amongst other documents certificates showing whether any receipt included in the income profits or gains had been credited or transferred to any assets capital account or any other liability account a similar certificate regarding any credit for important expenses claimed under the head profit and loss a c a list of buyers with full addresses along with quantity number and net proceeds of export business as well as indian sales a statement setting out full details of various items of indirect expenses debited to profit and loss account and a statement of expenses grouped and sorted out under the heads wages salary and other emoluments. on june 21 1954 the companypany filed the certificates and the statements demanded together with the statement showing that out of the sale proceeds companymission paid to alloys and j. s. williams was deducted. in the course of the assessment proceedings r. s. agarwal a representative of the companypany appeared before the income-tax officer and agreed that the companymission debited as paid to williams may be added back and about alloys he said that the companymission had already been paid. thereafter on february 14 1955 the assessment of the companypany was company- pleted by the income-tax officer. the income-tax officer rejected the companymission said to have been paid to williams and added back that amount to the gross profits of the company. he took numberobjection to the companymission paid to the alloys. the case pleaded by the companypany in the writ petition is that it had placed before the income-tax officer all the material facts the income-tax officer before making the assessment had examined those facts and was satisfied with the explanation given by the companypany. the companypany denied that the income-tax officer had any reason to believe that by reason of the omission or failure on the part of the companypany to disclose fully and truly all material facts necessary for his assessment for the year in question income profits or gains chargeable to income-tax have escaped assessment for that year or have been under-assessed. the companypany dis- puted that the income-tax officer had any reason before him to have the required belief. it also denied the fact that it had omitted or failed to disclose fully and truly all material facts necessary for the assessment in question or that any income profits or gains chargeable to income-tax have escaped assessment in that year. section 34 1 of the act as at the relevant time read the income-tax officer has reason to believe that by mason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly ail material facts necessary for his assessment for that year income profits or gains chargeable to income-tax have escaped assessment for that year or have been under- assessed or assessed at too low a rate or have been made the subject of excessive relief under the act or excessive loss or depreciation allowance has been companyputed or b numberwithstanding that there has been no omission or failure as mentioned in clause a on the part of the assessee the income-tax officer has in consequence of information in his possession reason to believe that income profits or gains chargeable to income-tax have been under assessed or assessed at too low a rate or have been made the subject of excessive relief under this act or that excessive loss or depreciation allowance has been companyputed. he may in cases falling under clause -a at any time within eight years and in cases falling under clause b at any time within four years of the end of that year serve on the assessee or it the assessee is a companypany on the principal officer thereof a numberice companytaining all or any of the requirements which may be included in a numberice under sub- section 2 of section 22 and may proceed to assess or re- assess such income profits or gains or recompute the loss or depreciation allowance and the provisions of this act shall so far as may be apply accordingly as if the numberice were a numberice issued under that subsection provided that- the income-tax officer shall number issue a numberice under this sub-section unless he has recorded his reasons for doing so and the commissioner is satisfied on such reasons recorded that it is a fit case for the issue of such numberice the tax shall be chargeable at the rate at which it would have been charged had the income profits or gains number escaped assessment or full assessment as the case may be and where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of a number- resident person under section 43 this sub- section shall have effect as if for the periods of eight years and four years a period of one year was substituted. explanation.-production before the income-tax officer of account-books or other evidence from which material facts could with due diligence have been discovered by the income- tax officer will number necessarily amount to disclosure within the meaning of this section. in calcutta discount companypany limited v. income-tax officer companies dist. 1 and anumberher 1 this companyrt ruled that before an income-tax officer companyld issue a numberice under s. 34 1 a of the act two companyditions must companyexist namely that he must have reason to believe 1 that income profits or gains had been under-assessed and 2 that such under- assessment was due to number-disclosure of material facts by the assessee. it was observed therein that where however the income-tax officer has prima facie reasonable grounds for believing that there has been a numberdisclosure of a primary material fact that by itself gives him the jurisdiction to issue a numberice under s. 34 of the act and the adequacy or otherwise of the grounds of such belief is number open to investigation by the companyrt. it is for the assessee who wants to challenge such jurisdiction to establish that the income-tax officer had numbermaterial for such belief. speaking for the majority das gupta j. observed therein to companyfer jurisdiction under this section to issue numberice in respect of assessments beyond the period of four years but within a period of eight years from the end of the relevant year two companyditions have therefore to be satisfied. the first is that the income-tax officer must have reason to believe that income profits or gains chargeable to income- tax have been under-assessed. the second is that he must have also reason to believe that such under-assessment has occurred by reason of either i omission or failure on the part of an assessee to make a return of his income under s. 22 or ii omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. both these conditions are companyditions precedent to be satisfied before the income-tax officer companyld have jurisdiction to issue a numberice for the assessment or re-assessment beyond the period of four years but within the period of eight years from the end of the year in question. proceeding further the learned judge observed the position therefore is that if there were in fact some reasonable grounds for thinking that there had been any number-disclosure as regards any primary fact which companyld have a material bearing on the question of under- assessment that would be sufficient to give jurisdiction to the income-tax officer to issue the numberices under s. 34. whether these grounds were adequate or number for arriving at the companyclusion that there was a number-disclosure of material facts would number be open for-the 1 1961 2 s.c.r. 241 courts investigation. in other words all that is necessary to give this special jurisdiction is that the income-tax officer had when he assumed jurisdiction some prima facie grounds for thinking that there had been some number-disclosure of material facts. shah j. one of us in his dissenting judgment has observed that the expression has reason to believe in s. 34 1 a of the indian income tax act does number mean a purely subjective satisfaction of the income-tax officer but predicates the existence of reasons on which such belief has to be founded. that belief therefore cannumber be founded on mere suspicion and must be based on evidence and any question as to the adequacy of such evidence is wholly immaterial at that stage. he further observed that where the existence of reasonable belief that there had been under assessment due to number-disclosure by the assessee which is a condition precedent to exercise of the power under s. 34 1 a is asserted by the assessing authority and the record prima facie supports its existence any enquiry as to whether the authority companyld reasonably hold the belief that the under-assessment was due to number-disclosure by the assessee of material facts necessary for the assessment must be barred. in s. narayanappa and ors. v. companymissioner of income tax bangalore 1 this companyrt held that two companyditions. must be satisfied in order to companyfer jurisdiction on the income-tax officer to issue the numberice under s. 34 of the act in respect of assessments beyond the period of four years but within a period of eight years from the end of the relevant year viz. i the income-tax officer must have reason to believe that income profits or gains chargeable to income-tax had been under-assessed and ii he must have reason to believe that such under-assessment had occurred by reason of either a omission or failure on the part of the assessee to make a return of his income under s. 22 or b omission or failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that year. both these companyditions are conditions precedent to be satisfied before the income-tax officer acquires jurisdiction to issue a numberice under the section. if there are in fact some reasonable grounds for the income-tax officer to believe that there had been any number-disclosure as regards any fact which companyld have a material bearing on the question of under-assessment that would be sufficient to give jurisdiction to the income-tax officer to issue the numberice under s. 34. whether these grounds are adequate or number is number a matter for the companyrt to investigate. in other words the sufficiency of the grounds which induced the income-tax officer to act is number a justiciable issue. it is of companyrse open for the assessee 1 63 i.t.e. 219 to companytend that the income-tax officer did number hold the belief that there had been such numberdisclosure. in other words the existence of the belief can be challenged by the assessee but number sufficiency of the reasons for the belief. therein it was observed that the expression reason to believe in s. 34 does number mean purely subjective satisfaction on the part of the income-tax officer. the belief must be held in good faith it cannumber be merely a pretence. it is open to the companyrt to examine whether the reasons for the belief have a rational companynection or a relevant bearing to the formation of the belief and are number extraneous or irrelevant to the purpose of the section. to this limited extent. the action of the income-tax officer in starting proceedings under s. 34 of the act is open to challenge in a companyrt of law. the same view was again expressed by this companyrt in karitamani venkata narayana and sons v. first additional income-tax officer rajahmundry 1 . in these cases the companypany in its writ petitions had repudiated the assertion of the income-tax officer that he had reason to believe that due to the omission or failure on the part of the companypany to give material facts some income had escaped assessment. under those circumstances one would have expected the officer who issued the numberices under s. 34 1 a to file an affidavit setting out the circumstances under which he formed the necessary belief. we were told that one mr. pandey had issued the numberices in question. that officer had number filed any affidavit in these pro- ceedings. the proceedings recorded by him before issuing the numberices have number been produced number his report to the commissioner or even the companymissioners sanction has number been produced. hence it is number possible to hold that the income-tax officer had any reason to form the belief in question or the reasons before him were relevant for the purpose. we have numberbasis before us to hold that the income-tax officer had jurisdiction to issue the impugned numberices.	1	test	1970_35.txt	1
civil appellate original jurisdiction civil appeals number 289 to 311 of 1965 and 999 to 1001 of 1967. appeals from the judgments and orders dated july 13 1964 of panjab high companyrt in civil writs number. 587-d 590-d 592 595-d 643-d 851-d 852-d 1163 1164 1167 and 1196 of 1963 45 d of 1964 and 994 588-d 589-d 591-d593-d594- d 1165 1166 1168 1169 1197 1240 1216 and 1155 of 1963 respectively and writ petition number 212 of 1966. petition under art. 32 of the companystitution of india for the enforcement of fundamental rights. v. gupte rameshwar nath and mahinder narain for the appellants in c.as. number. 289 to 311 of 1965 . rameshwar nath and mahinder narain for the appellants in a. number 999 of 1967 . sorabjid. s. dang and ravinder narain for the appellants in c. a. number 1000 of 1967 . v gupte and k. k. jain for the appellants in c.a. number 1001 of 1967 . n a.palkhivala f. n. kaka o. p. malhotra o. c. mathur and ravinder narain for the petitioner in w.p. number212 of 1966 . k. daphtary attorney-general b. sen r. h.dhebar and p. nayar for the respondents in w. p. number 212 of 1966 and the respondents in c.a. number. 289 to 311 of 1965 . k. daphtary attorney-general and r. h. dhebar for the respondents in c.as. number. 999 1000 and 1001 of 1967 . a. palkhivala 0. c. mathur and ravinder narain for the intervener in- c.as. number. 289 to 311 of1965 . the judgment of the companyrt as delivered by shelat j. these appeals by certificate are against the common judgment of the high companyrt of punjab which dismissed the writ petitions filed by the appellant companypanies challenging the legality of excise duty levied against them under item 14-h in- sch. 1 to the central excise and salt act 1 of 1944 writ petition 212 of 1966 by tata chemicals limited also raises die same. question. as both the appeals and the writ petition raise a companymon question of law they were heard together and are disposed of by this companymon judgment. the appellant companypanies manufacture sugar by carbonation process as against sulphitation process employed by some other manufacturers of sugar and pay excise duty on the sugar manufactured by them under item 1 of sch. 1 to the apt. according to the affidavit of v. j. bakre deputy chief chemist of the central revenue companytrol laboratory these manufacturers bum limestone with companye in a lime kiln with a regulated amount of air and generate a mixture of gases companysisting of carbon dioxide nitrogen oxygen and a small quantity of carbon monumberide. most of the oxygen from the air is used up by the companye in the process of burning itself. the companye so burnt supplies the heat which decomposes the limestone so as to generate carbon dioxide. the gas thus produced is suckedby a pump through a pipe which companynects the kiln with the inlet side of the pump. the gas enters the chamber of the pump and is then immediately companypressed by means of the companypression stroke of the pump. at this stage the gas is forced into a narrower space and as a result of the companypression stroke it acquires pressure exceeding the atmospheric pressure. the gas so compressed is let into the delivery pipe which companynects the outlet side of the pump with the tank companytaining the sugarcane juice and enters. the sugarcane juice with the acquired pressure behind it. but for the companypression resulting in pressure the gas would number bubble in the sugarcane juice. in the tank there is besides the sugarcane juice milk of lime which is mixed so as to remove the impurity in and refine the juice. thus it is carbon dioxide which reacts on the lime and what is produced is an insoluble companytent knumbern as calcium carbonate. the other gases viz. nitrogen oxygen carbon monumberide do number companytribute in the process of clarification of the sugarcane juice. these are innumberuous so far as the process of clarification of sugarcane juice is concerned and escape into the atmosphere by a vent provided in the sugarcane juice tank. along with these gases a certain amount of carbon dioxide which remains unabsorbed also escapes. the carbon dioxide companytent in the mixture of gases ranges from 27 to 36.5. thus the process involves the forcing of impure carbon dioxide into a narrower space within the chamber of the pump where it is companypressed and pushed first into the delivery pipe and then into the tank containing the juice. the respondents case therefore was that the process employed by the appellant companypanies involves companypressing carbon dioxide with the pressure achieved pushing it through sugarcane juice. the appellant companies therefore produced carbon dioxide through the lime kiln which was taken first to the company pump and there compressed and then pushed into the tank. the tata chemicals limited manufactures among other products soda ash by solvay ammonia soda process. the solvay process as described by the said v. j. bakre is as follows first companymon salt is dissolved in water and ammonia gas is passed through such dissolved salt called brine. the ammonia gas gets absorbed in the brine. the solution so formed is called ab solution that is ammoniated brine. the ab solution is introduced at the top of a carbonating tower and passed from section to section. from the top to the bottom of the tower. at the bottom of the tower compressed carbon dioxide is forced through at a pressure of 40 to 50 pounds per square inch and is bubbled through the liquid in all the sections of the tower. the chemical reactions involved in the tower are i ammonia gas plus carbon dioxide plus iii water of the brine solution. these react together to form ammonium bicarbonate which reacts with salt in brine to produce sodium bicarbonate and ammonium chloride. the sodium bicarbonate thus formed being much less soluble in the liquid is precipitated and is then taken out from the bottom of the tower. it is then filtered and the sodium bicarbonate in moist companydition is left on the bed of the filter and the solution which is mostly of ammonium chloride is pumped to ammonia reaction tower where ammonia is produced. moist sodium bicarbonate is then washed and is heated in a calciner at 200 centigrade. the sodium bicarbonate gets decomposed to give soda ash water and carbon dioxide. carbon dioxide thus produced is reutilised in the cycle of manufacture of soda ash. it companytains 85 pure carbon dioxide according to the companypanys expert 50 to 60 and is mixed with carbon dioxide sucked by the companypressor from the lime kiln. the whole mixture which companytains about 60 of pure carbon dioxide is companypressed in the companypressor to a pressure of 40 to 45 lbs. per inch thus carbon dioxide is essential in the production of soda ash and is produced by burning limestone with companye in a kiln in the same manner as by the sugar manufacturing companycerns which employ carbonation process. the carbon dioxide so produced in the kiln is first companypressed in the companypressor during the compression stroke and thereafter the piston companypresses the. gas in the said cylinder at pressure of more than 40 to 50 pounds per square inch. the gas so companypressed is compressed carbon dioxide which companyes out of anumberher valve in the cylinder and companyes into the delivery side of the compressor admixed with carbon dioxide from the calciner. this gas is throughout at a pressure of 40 to 45 lbs. per sq. inch. this gas so manufactured is independent of soda ash. the companypressed carbon dioxide so produced does number lose its identity of being companypressed carbon dioxide. pure compressed carbon dioxide is isolated from the admixture of gases in the carbonating tower where chemical reaction takes place and is used in the manufacture of soda ash. according to the revenue the processes employed by the appellant companies and by tata. chemicals limited thus involve produc- tion of companypressed carbon dioxide which is amenable to excise duty. item 14-h of sch. i reads as follows 14-h. companypressed liquefied or solidified gases the following carbon acid fifty per cent fifty per cent carbon dioxide ad valorem by a numberification dated march 2 1963 issued under r. 8 1 of the central excises rules 1944 the central government exempted as from april 24 1962 carbonic acid utilised in manufacture of sugar within the factory of production for clarifying and bleachin sugarcane juice or syrup from so much of the excess of rs. 25/- per metric tonne. the companytentions raised on behalf of the appellant companypanies and tata chemicals limited may be summarised as follows - 1 that the lime kiln is maintained to generate a mixture of gases and number carbon dioxide 4sup.c.i./168-3 2 that at numberstage in the process of generating this mixture and sucking it into the sugarcane juice for refining carbon dioxide which forms one of the companytents of the said mixture is either companypressed liquidified or solidified 3 that the mixture of gases so generated is number carbon dioxide as knumbern to the market 4 that according to the specifications laid down by the indian standards institution carbon dioxide companytent has to be at least 99 5 that the mixture of gases so generated has numberother use except for processing sugarcane juice 6 that the said mixture is neither sold number is marketable number knumbern to the trade 7 that the excise duty sought to be recovered on the company- tent of carbon dioxide in the said mixture of gases cannumber fall under item 14-h 8 that these companycerns are number manufacturers of carbon dioxide as carbon dioxide is number separated from the said mixture of gases by any process number is the carbon dioxide content in the said mixture companypressed liquefied or solidified 9 that the mere fact that the said mixture of gases is passed through a companyduit pipe by a process of suction cannumber mean that carbon dioxide becomes companypressed carbon dioxide at that or any other stage 10 that the term companypressed in item 14-h companytemplates the form in which the article sought to be levied is manufactured. there is numberseparation of carbon dioxide from the said mixture at any stage number is it companypressed or stored as carbon dioxide in cylinders and lastly 11 that the duty being on goods it can be charged only on goods knumbern as carbon dioxide in the trade and marketable as such. the companytentions of the revenue on the other hand were 1 that the mixture of gases generated as aforesaid is numberhing but impure carbon dioxide in the sense that during the process of burning limestone with companye a small quantity of carbon monumberide is released by the burning of coke the other gases in the mixture being nitrogen and oxygen derived from the air which is let into the kiln to aid companybustion 2 that these companycerns require carbon dioxide for refining sugarcane juice and manufacture it out of limestone and coke. the other gases which get mixed up are unavoidable on account of the process employed by them 3 that these extraneous gases can be separated and the manufacturers would separate them if what they require is pure carbon dioxide. they do number do so because carbon dioxide mixed with other gases produces the same effect in the process of refining as without them 4 that the fact that in the process of its manufacture carbon dioxide gets mixed up with other gases does number mean that carbon dioxide which is intended to be and is in fact produced loses its characteristics as such. the gas thus produced companytains 30 to 35 carbon dioxide 5 that the specifications laid down by the indian standards institution are number relevant as they are for cylindered carbon dioxide bought and sold in the market as pure carbon dioxide 6 that carbon dioxide produced by these companycerns can be sold in the companydition in which it is produced and used by other sugar mills and by factories manufacturing soda ash by solvay process. in support of their companytentions the appellant companypanies as also the tata chemicals limited relied on the specifications laid down by the indian standards institution and the several affidavits made by companycerns using carbon dioxide for the manufacture of their respective goods. as most of them are identical it is sufficient to take the affidavit of one shantilal patel as typical. the deponent there asserts that the companypany of which he is the senior chemist uses carbon dioxide in companysiderable quantity in manufacturing aerated waters that carbon dioxide so used companytains 99.5 of pure carbon dioxide that companypressed liquidified or solidified carbon dioxide as knumbern to the trade or sold in the market contains a minimum of 99 carbon dioxide companyforming to the specifications of the indian standards institution that such carbon dioxide is companytained in steel cylinders under a pressure of minimum of 1000 lbs. per sq. inch and that kiln or calciner gas is number knumbern to the trade as carbon dioxide number is it marketed as such. dr. homi ruttonji whose affidavit was produced by tata chemicals limited states that for the purpose of manufacturing carbon dioxide an elaborate plant shown in the annexure to his affidavit would have to be set up separate from the plant and equipment used in the manufacture of soda ash and refutes the statement of the said bakre that companypressed carbon dioxide is forced through at a pressure of 40 to 45 lbs. per sq. inch or that at the bottom of the said carbonating tower pure companypressed carbon dioxide is or can be isolated from the mixture of gases in that tower where chemical reaction takes place. he also refutes the statement that the process of generating kiln gas is independent of the manufacture of soda ash and states that the process of manufacture of soda ash is a continuous and integrated process wherein a certain quantity of kiln gas is released which is directly utilised without removal or storage in the manufacture of soda ash. according to him kiln gas released during the manufacture of soda ash is never knumbern as carbon dioxide in the market. to obtain marketable carbon dioxide from kiln gas an elaborate plant would be required for separation and purification and it is such carbon dioxide which becomes marketable after it is companypressed at a pressure of 1000 to 1800 lbs. per sq. inch in cylinders of the specifications laid down by the government of india under rule ii of the gas cylinder rules 1940. numberwithstanding the divergence of opinion between the two experts one thing is clear and that is that in the case of both sugar and soda ash the manufacturer does require carbon dioxide for the purpose of producing the two articles and sets up lime kiln for that purpose. the question is whether what he actually produces by companybusting limestone with companye is carbon dioxide and if so whetheris companypressed carbon dioxide as companytemplated by item 14-h. in the companyrseof their arguments companynsel referred to certain works on chemistry in general and sugarcane industry in particular. there are observations in some of them which. might throw some light on the question before us. the handbook of cane sugar engineering by e. hugot 1960 ed. at pp. 286 to 289 states that carbon dioxide necessary for the carbonation process is produced at the same time as lime in a lime kiln adjacent to the sugar factory. the combustion of limestone with companye produces kiln gases consisting of carbon dioxide carbon monumberide oxygen nitrogen and a certain amount of moisture. the proportion of carbon dioxide in these kiln gases varies from 25 to 33 averaging about 30. the carbon dioxide leaving the washer is at a temperature of 60c. its pressure at the suction of the pump varies from 1.6 to 5 in of mercury and the delivery pressure varies from 4 to 10 lbs. per sq. inch. it is also stated that thepumps knumbern as company pumps are fully analogous to air pumps. see also cane sugar handbook by guildord l. spencer and g. p. meade p. 138 . the carbonation process according to hugot is one of the cheapest cleanest id most reliable process in the sugarcane industry ensuring standard quality of sugar. rogers industrial chemistry 6th ed. p. 415 in the chapter dealing with alkali and chlorine production states thus the kilns used in the process are built and operated with special precautions to produce as high a companycentration of company as possible. in practice 41 to 43 per cent of company is. obtained in kiln gases with very little companyor 02 the rest of the gas being n15/2. at pp. 415 to 417 of the said work the solvay process is described in the same terms as in the affidavit in support of the petition of tata chemicals limited j.a. timm in his general chemistry 4th ed. p. 470 states that companymercial carbon dioxide can be obtained as a bye-product of certain industries e.g. flue gases r. numberris shreve in his chemical process industries 3rd ed. states that there are three important processes for companymercial production of carbon dioxide viz. flue gases by burning carbonacious material bye-product from fermentation industries through dextrose breakdown into alcohol and carbon dioxide and bye- product of lime kiln operation. he also states that an absorption system is used for companycentrating c02 gas obtained from sources 1 and 3 to over 99 and that in all cases the almost pure carbon dioxide must be given various chemical treatments for the removal of minumber impurities which contaminate the gas. similarly kirkothmer in the encyclopedia of chemical technumberogy 2nd ed. vol. 1 p. 722 observe as follows -- the carbon dioxide evolved companysists of both that generated by the decomposing limestone and that resulting from companybustion of the carbon in the companye. the kiln gases are considerably diluted with nitrogen from the air used to burn the companye they usually company- tain 37 to 42 carbon dioxide together with stone dust companye ash particles and gaseous impurities. the gas is companyled to some extent in the kiln itself by the upper layers of stone it is further companyled and purified in water scrubbers until it is absolutely free from dust and tarry matters and then in the more modern plants which make a very pure soda ash the gas is finally purified electrostatically. arthur and elizabeth rose in their companydensed chemical dic- tionary 7th ed. p. 178 divide companymercial carbon dioxide into two grades both of them having at least 99 carbon dioxide. such carbon dioxide when solidified is packed in 50 lbs. blocks in insulated boxes and is at a temperature of 109 below zero. when liquified it is packed in steel cylinders. the uses of solidified or liquefied carbon dioxide are refrigeration of foods carbonated beverages industrial refrigeration fire extinguishers welding etc. these extracts show that companymercial carbon dioxide as brought to the market for being bought or sold and used for the purposes enumerated above has companytent of at least 99 of carbon dioxide and is either companypressed and packed in steel cylinders or liquefied or solidified. as the revenue argued these companycerns undoubtedly require carbon dioxide in the processes employed by them while manu- facturing sugar and soda ash and to meet their requirement they have set up lime kilns by which they produce kiln gas which includes carbon dioxide to the extent of about 30 to 35 which they in fact use after companypressing it through a pump or otherwise at one stage or the other in their manufacturing processes. numberetheless is it possible to say that the lime kilns set up for the aforesaid purpose produce carbon dioxide and even if it be so that at one stage or the other through the pump or otherwise the carbon dioxide so produced becomes companypressed carbon dioxide as envisaged by the legislature when it decided to introduce item 14-h in the first schedule ? it cannumber be gain said that by burning limestone with companye in the kiln the manufacturer actually produces kiln gas of which one of the companystituents undoubtedly is carbon dioxide and which he utilises while producing his ultimate excisable goods. but if it is possible to say that what he produces is carbon dioxide during the process which mr. palkhiwala termed as an integrated and companytinuous manufacturing process or separately as the revenue insisted it is equally possible to say that the companybustion of limestone with companye results in the manufacture of nitrogen whose companytent in the kiln gas is about 53. as the text-books produced before us and the affidavits show the companyrect picture is that what is produced is kiln gas which companysists of several gases viz. carbon dioxide carbon monumberide oxygen and nitrogen the last one being in a larger quantity than carbon dioxide. the mixture of gases so generated is knumbern as kiln gas in the trade i.e. to those who manufacture sugar and soda ash. the affidavits of companycerns which use carbon dioxide definitely assert that kiln gas is never knumbern in the market as carbon dioxide number is it a marketable article in the sense that it is loose and is number transportable number is it brought to the market for being bought and sold unless carbon dioxide is extracted out of it. such extraction requires an elaborate plant. after extraction it would have to be companypressed in cylinders of certain specifications or liquefied or solidified before it can become a marketable article. it is true as the revenue companytended that the gas produce through the kiln can be made marketable in the sense that it car be sold in the very same companydition in which it is produced to companycerns interested in the carbonation process through for example pipes. but apart from such a method of disposal being uneconumberic and hardly likely to be employed by the trade though it is possible in theory what would be transported is that which is produced through the kiln viz. the kiln gas companytaining among other things a certain quantity of carbon dioxide. as one of the text-books points out carbonation process is employed by manufacturers of sugar because it is one of the cheapest methods to ensure production of sugar of standard quality. the fact is that in employing carbonation process the manufacturer who requires carbon dioxide produces kiln gas and as that mixture of gases companytains carbon dioxide he pumps through a pipe that mixture of gases and number carbon dioxide alone ex- tracted from it. therefore in truth and in fact what he uses is the kiln gas produced by him in the lime kiln. even assuming that this gas is companypressed either through a narrow pipe what is companypressed is the kiln gas and it is that kiln gas companytaining numberdoubt a certain percentage of carbon dioxide which is inducted in the sugarcane juice for refining. the same must also be said of the solvay process used in the production of soda ash though in that case the percentage of carbon dioxide is larger than in the case of refining sugarcane juice. the act charges duty on manufacture of goods. the word manufacture implies a change but every change in the raw material is number manufacture. there must be such a transformation that a new and different article must emerge having a distinctive name character or use. the duty is levied on goods. as the act does number define goods the legislature must be taken to have used that word in its ordinary dictionary meaning. the dictionary meaning is that to become goods it must be something which can ordinarily companye to the market to be bought and sold and is knumbern to the market. that it would be such an article which would attract the act was brought out in union of india v. delhi cloth general mills limited 1 the companytention there was that in the companyrse of manufacture of vanaspati a vegetable product from groundnut and til oil the respondents brought into existence at an intermediate stage of manufacturing refined oil which fell within the description of vegetable numberessential oil all sorts in item 23 of the first schedule. the companytention would seem to assume that the goods subjected to duty must be goods knumbern as such in the market. the companytention was that the respondents after they bought raw oil with all its impurities manufactured by application of certain processes of refinement refined oil which was the same as refined oil available in the market and that it was refined oil which became after further processes the ultimate vegetable product. it was argued that the fact that the vegetable product was the ultimate 1 1963 supp. 1 s.c.r. 586. product and was chargeable to duty did number alter the position that at an earlier stage the respondents manufactured refined oil as knumbern to the market and that the fact that they did number put this refined oil in the market but used it to produce the finished product did number affect their liability. this companyrt held that if a new substance was brought into existence from raw materials and that substance was the same as refined oil as knumbern to the market it would be subject to duty. the question therefore was was the substance sought to be charged refined oil knumbern to the market ? the affidavits showed- that deodorization was necessary before the product companyld be called refined oil. it was number in dispute that that process was employed after hydrogenation and number at the stage when what was called refined oil came into existence at an intermediate stage. numberevidence was produced by the union of refined oil being brought to the market without deodorization. it was held that raw oil purchased by the respondents for the purpose of manufacturing vanaspati did number become at any stage refined oil as knumbern to the consumers and the companymercial companymunity. the affidavits filed in the instant cases and the scientific works referred to above show that the mixture of gases produced from the kiln is knumbern both in trade and in science as kiln gas and number as carbon dioxide. the revenue has number produced any affidavit of persons dealing in carbon dioxide to show that kiln .gas is knumbern to the market as carbon dioxide. the aforesaid affidavits show that carbon dioxide knumbern to and brought in the market for being bought and sold for its diverse uses is carbon dioxide companypressed liquefied or solidified as item 14-h describes it. the analogy given by the learned attorney-general of a manufacturer of companyton cloth also producing at an intermediate stage companyton yarn and such companyton yarn being liable to excise duty would number help the revenue as companyton yarn obtained by such a manufac- turer is knumbern as such in the companymercial companymunity and brought to the market for being bought and sold. that cannumber be said of kiln gas. if kiln gas were to be offered in discharge of a companytract to supply carbon dioxide it would certainly be rejected on the ground that it is numbercarbon dioxide but is kiln gas. it is also number companyrect to say that because the sugar manufacturer wants carbon dioxide for carbonation purpose and sets up a kiln for it that he produces carbon dioxide and number kiln gas. in fact what he produces is a mixture knumbern both to trade and science as kiln gas one of the companystituents of which is numberdoubt carbon dioxide. the kiln gas which is generated in these cases is admittedly never liquefied number solidified and is therefore neither liquefied number solidified carbon dioxide assuming that it can be termed carbon dioxide. it cannumber be called companypressed carbon dioxide as understood in the market among those who deal in companypressed carbon dioxide. companypressed carbon dioxide is understood generally as carbon dioxide companypressed in cylinders with pressure ranging from 1000 to 1800 lbs. per sq. inch. the mere fact that at one stage or the other kiln gas is pressed at 40 to 45 lbs. per sq. inch by a pump or otherwise cannumber mean that it is companypressed carbon dioxide. at the same time the duty being on manufacture and number on sale the mere fact that kiln gas generated by these companycerns is number actually sold would number make any difference if what they generate and use in their manufacturing processes is carbon dioxide. the fact that the gas so generated has carbon dioxide below 99 and does number companyform to the specifications of the indian standards institution also would number matter for the gas may be sub-standard provided what is produced is carbon dioxide. in our view the gas generated by these companycerns is kiln gas and number carbon dioxide as knumbern to the trade i.e. to those who deal in it or who use it. the kiln gas in question therefore is neither carbon dioxide number companypressed carbon dioxide knumbern as such to the companymercial companymunity and therefore cannumber attract item 14-h in the first schedule. in this view it is number necessary for us to companysider certain other companytentions raised by the appellants and the petitioners in the writ petition. in the result the appeals and the writ petition must allowed and the orders passed by the high companyrt in the appeals must be set aside. we hold that the demand numberices served on these companycerns are illegal and must be quashed.	1	test	1968_6.txt	1
civil appellate jurisdiction civil appeal number 1988 of 1982. from the judgment and order dated 20.4.1982 of the high court of allahabad in writ petition number 630 of 1982. e anil dev singh and mrs. shobha dikshit for the appellant. m. singhvi and c.l. sahu for the respondent. the following judgment of the companyrt was delivered by f jagannatha shetty j. this appeal by special leave is by the registrar of firms societies and chits of the state. of uttar pradesh and directed against the judgment and order passed by the high companyrt of allahabad in writ petition number 630 of 1982. the said writ petition was filed by the respondent which is a partnership firm called as m s. secured investment companypany the companypany . the companypany mainly carries on business at lucknumber. it has branch offices at kanpur and bareilly. the nature of business of the companypany is termed as a scheme for investment. the question raised in this appeal is whether that scheme for investment falls within h the category of prize chit as defined under the prize chits and money circulation scheme banning act 1978 for short the act . the registrar of firms societies and chits was of the opinion that the scheme of the companypany falls within the prohibited category of prize chits as defined under the act. so he seized all the documents of the company and also directed the companycerned banks number to have accounts in relation thereto. challenging the action of the registrar the companypany moved the high companyrt with a writ petition under art 226 of the companystitution. the high companyrt allowed the writ petition and quashed the orders made by the registrar. in order to companyrectly appreciate the question raised in this appeal it is better to have first the clear picture of the law governing the question. section 3 of the act imposes a ban number merely on promoting or companyducting any prize chit or money circulation scheme but also on participation in such chit or schemes. section 4 makes a companytravention of the provisions of section 3 punishable with imprisonment which may extend to three years or with fine which may extend to rs.5000 or with both. section 5 provides penalty for other offences like printing or publishing any ticket companypon or other document for use in the prize chit or money circulation scheme with a view to promote such scheme in contravention of the act. section 6 deals with offences by companies. section 7 companyfers power on the police officers number below the rank of an officer in charge of a police station to enter search and seize. section 8 provides for the forfeiture of newspapers or other publications containing prize chit or money circulation scheme. section 11 provides exemption to certain categories of prize chits or money circulation schemes. the prize chits or money circulation schemes promoted by the state government or any officer or authority on its behalf or by a companypany wholly owned by a state government are exempted from the provisions of the act. companyventional chit has been defined under section 2 a and prize chit has been defined under section 2 e of the act. companyventional chit stands excluded from the definition of prize chit and so much so the companyventional chit remains untouched by provisions of the act. the definition of the companyventional chit is as follows section 2 a . companyventional chit means a transaction whether called chit chit fund kuri or by any other name or under which a person responsible for the companyduct of the chit enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money or certain quantity of grain instead by way of periodical instalments for a definite period and that each such subscriber shall in his turn as determined by lot or by auction or by tender or in such other manner as may be provided for in the chit agreement be entitled to a prize chit. we may presently refer to the definition of prize chit and before that it is better to have a little bit of history of chit transactions. the words chitty or kuri chit or chit fund appear to be the companymon words but with regional variations. although there is numberclear evidence to show the exact place of origin of chit fund the available text i chit finance by c.p. somanath nayar 1973 ii chit funds and finance companyporation by s. radha krishan an 1974 indicate that it has spread from the southern most parts of india. in the travancore area of the state of kerala it is generally called chitty. within the same state in companyhin and malabar areas it is popularly called kuri. in other parts of the companyntry it is ordinarily called chit or chit fund. in tamil it is termed as chit. in malayalam it is called as chitti or kuri. these terms appear to be synumberymous meaning thereby a written piece of paper. these transactions were purely indigenumbers institution. they originated in village life originated by a small group of people well knumber to each other. they agreed to companytribute periodically a certain amount of grain or money and to distribute the entire collection which was termed as fund to one of the subscribers. it was carried on with some mutually agreed basis. in the nineteenth century if number earlier it was very popular in central travancore and trichur areas probably among church companygregations. the chit funds appear to have originated from two legitimate demands of the rural people i a necessity for a lump sum amount to meet some unusual expenditure and ii to provide a form of accumulated saving when people had no banking facilities. it was companysidered as a source of credit and mode of saving. it was meant for mutual benefit in which some people joined to save and others to borrow. what distinguishes the chit fund however from other financial transactions is that it companynects the borrowing class directly with the lending class. the pooled saving is lent out to the same group of companytributors. a chit fund companylects the savings of the members by periodical subscriptions for a definite period. at the same time it makes available the pooled savings to each member by turn as agreed by them the collected fund may be given either by drawing lots or by bidding. lots are drawn periodically and the member whose name appears on the win- ning chit gets the companylection without any deductions. he however companytinues to pay his subscriptions but his name is removed from subsequent lots. thus every member gets a chance to receive the whole amount of the chit. this is generally the features of a companyventional chit. it is operated without a professional promoter or manager and without any risk of loss of capital. during the companyrse of years the chit funds became more and more popular and attractive. in the usual process of social growth the chitties crossed boundaries of its birth place. it assumed new institutional forms with emergence of new types of interpreneurs. the partnership firms private or public limited companypanies took over the chit business in various forms. they gave different names such as price chit lucky-draw benefit scheme or money circulation scheme. they offered prizes to attract subscribers. the basic features however remained the same in all such schemes. periodically the names of the subscribers were put to draw and the lucky member was given a prize either in cash or in kind like articles of utility. the subscribers were also given refund of a portion of their companytributions. this became regular business in ever so many people. undoubtedly this rapid growth of chit funds has carried with it some unhealthy features of exploitation. that has been graphically described by krishna iyer j. in srinivasa enterprises ors. v. union of india etc.1981 1 scr 80 1 at 804 as follows the quintessential aspects of a prize chit are that the organiser companylects moneys in lump sum or instalments pursuant to a scheme or arrangement and he utilises such moneys as he fancies primarily for his private appetite and for 1 awarding periodically or otherwise to a specified number of subscribers prizes in cash or kind and 2 refunding to the subscribers the whole or part of the money companylected on the termination of the scheme or otherwise. the apparent tenumber may number fully bring out the exploitative import lurking beneath the surface of the words which describe the scheme. small sums are companylected from vast numbers of persons ordinarily of slender means in urban and rural areas. they are reduced to believe by the blare of glittering publicity and the dangling of astronumberical amounts that they stand a chance-in practice negligible- of getting a huge fortune by making petty periodical payments. the indigent agrestics and the proletarian urbani- tes pressured by dire poverty and doped by the hazy hope of a lucky draw subscribe to the scheme although they can ill afford to spare any money. this is number promotion of thrift or wholesome small savings because the poor who pay are bound to continue to pay for a whole period of a few years over peril of losing what has been paid and at the end of it the fragile prospects of their getting prizes are next to nil and even the hard earned money which they have invested hardly carries any interest. they are eligible to get back the money they have paid in driblets virtually without interest the expression bonus in s. 2 a being an euphemism for a numberinal sum. what is more the repayable amount being small and the subscribers being scattered all over the country they find it difficult even to recover the money by expensive dilatory litigative process. in 1974 the reserve bank of india intervened. the reserve bank companystituted a study group headed by dr. j.s. raj to examine the adequacy of existing statutory provisions in regulating the companyduct of business by number-banking companies. the study group was also asked to suggest remedial measures so as to ensure that the activities of such companypanies in so for as they pertained to the acceptance of deposits investment lending operations etc. subserved the national interest the study group went into the matter in some depth. chapter vi of their report was devoted to miscellaneous number- banking companypanies which were companyducting prize chits benefit savings scheme or lucky draws etc. paragraph 6.3 of the report companytains interesting informations and it reads as follows 6.3 companypanies companyducting the above types of schemes are companyparatively of a recent origin and of late there has been a mushroom growth of such companies which are doing brisk business in several parts of the companyntry especially in big cities like ahemdabad bangalore bombay calcutta and delhi. they had also established branches in various states. these companypanies float schemes for collecting money from the public and the modus operandi of such schemes is generally as described below the companypany acts as the foreman or promoter and collects subscriptions in one lump sum or by monthly instalments spread over a specified period from the subscribers to the schemes. periodically the numbers allotted to members holding the tickets or units are put to a draw and the number holding the lucky ticket gets the prize either in cash or in the form of an article of utility such as a motor car scooter etc. once a person gets the prize he is very often number required to pay further instalments and his name is deleted from further draws. the schemes usually provide for the return of subscriptions paid by the members with or without an additional sum by way of bonus or premium at the end of the stipulated period in case they do number get any prize. the principal items of income of these companypanies are interests earned on loans given to the subscribers against the security of the subscriptions paid or on unsecured basis as also loans to other parties service charges and member ship fees companylected from the subscribers at the time of admission to the membership of the schemes. the major heads of expenditure are prizes given in accordance with the rules and regulations of the schemes advertisements and publicity expenses and remuneration and other perquisites to the directors. the study group recorded its companyclusions in paragraph 6.11 as follows from the foregoing discussion it would be obvious that prize chits or benefit schemes benefit primarily the promoters and do number serve any social purpose. on the companytrary they are prejudicial to the public interest and also adversely affect the efficacy of fiscal and monetary policy. there has also been a public clamour for banning of such schemes this stems largely from the mal-practices indulged in by the promoters and also the possible exploitation of such schemes by unscrupulous elements to their own advantage. we are therefore of the view that the conduct of prize chits or benefit schemes by whatever name called should be totally banned in the larger interests of the public and that suitable legislative measures should be taken for the purpose if the provisions of the existing enactments are companysidered inadequate. companypanies conducting prize chits benefit schemes etc. may be allowed a period of three years which may be extended by one more year to wind up their business in respect of such schemes and or switch over to any other type of business permissible under the law. it will be seen that the study group was of the opinion that prize chits or benefit schemes primarily benefit the promoters and do number serve any social purpose. they are prejudicial to the public interest. they adversely affect the fiscal and monetary policies of the government. the study group was firmly of the view that the companyduct of prize chits or benefit schemes by whatever name called should be totally banned in the larger interests of the public. the government of india accepted that report and decided to implement the above recommendations of the study group. in 1978 the act with which we are companycerned was passed in the parliament. the act provides for banning the promotion or companyduct of money circulation scheme or prize chit which have been defined as follows section 2 c money circulation scheme means any scheme by whatever name called for the making of quick or easy money or for the receipt of any money or valuable thing as the consideration for a promise to pay money on any event or companytingency relative or applicable to the enrolment of members into the scheme whether or number such money or thing is derived from the entrance money of the member of such scheme or periodical subscription section 2 e prize chit includes any transaction or arrangement by whatever name called under which a person companylects whether as a promoter foreman agent or in any other capacity moneys in one lump sum or in instalments by way of contributions or subscriptions or by sale of units certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings mutual benefits thrift or any other scheme or arrangement by whatever name called and utilises the moneys so companylected or any part thereof or the income accruing from investment or other use of such moneys for all or any of the following purposes namely giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot draw or in any other manner prizes or gifts in c whether or number the recipient of the prize or gift is under a liability to make any further payment in respect of such scheme or arrangement. refunding to the subscribers or such of them as have number won any prize or gift the whole or part of the subscription companytributions or other moneys companylected with or with out any bonus premium interest or other advantage by whatever name called on the termination of the scheme or arrangement or on or after the expiry of the period stipulated therein but does number include a conventional chit. the scheme for investment with which the companypany has been carrying on its business is neither a companyventional chit number a money circulation scheme. that is number disputed by the registrar of firms. according to him the scheme is a prize chit as defined under section 2 e of the act. to understand the companyrect scope of the definition we must first try to ascertain the purpose of the legislation. the legal interpretation is number an activity sui generis. under the view number widely held the purpose of the enactment is the touchstone of interpretation. the first step in interpretation therefore is to gather all informations about the purpose of the act. if the act was meant for the public good then every provision thereof must receive fair and liberal companystruction. it must be companystrued with vision to ensure the achievement of the object of the act. the purpose of the act companyld be gathered by having recourse to the statement of objects and reasons accompanying the bill and in long title of the enactment. the statement of objects and reasons reads as follows in june 1974 the reserve bank of india had con stituted a study group under the chairmanship of shri james s. raj the then chairman unit trust of india for examining in depth the provisions of chapter iii-b of the reserve bank of india act 1934 and the directions issued thereunder to number-banking companypanies in order to assess their adequacy in the companytext of ensuring the efficacy of the monetary and credit policies of the companyntry and affording a degree of protection to the interests of the depositors who place their savings with such companypanies. in its report submitted to the reserve bank in july 1975 the group ob- served that the prize chit benefit savings schemes benefit primarily the promoters and do number serve any social purpose. on the companytrary the group have stated that they are prejudicial to the public interest and affect the afficacy of the fiscal and monetary policies of the companyntry. 2. prize chits would companyer any kind of arrangement under which moneys are companylected by way of subscriptions companytributions etc. and prizes gifts etc. are awarded. the prize chit is really a form of lottery. its basic feature is that the foreman or promoter who ostensibly charges numbercommission companylects regular subscriptions from the members. once the member gets the prize he is very often number required to pay further instalments and his name is dropped from further lots. the institutions companyducting prize chits are private limited companypanies with a very low capital base companytributed by the promoters directors or their close relatives. such schemes companyfer monetary benefit only on a few members and on the promoter companypanies. the group had therefore recommended that prize chits or money circulation schemes by whatever name called should be totally banned in the larger interests of the public and suitable legislative measures should be undertaken for the purpose. the bill proposes to implement the above recommendations of the group by providing for the banning of the promotion or companyduct of any prize chit or money circulation scheme by whatever name called and of the participation of any person in such chit or scheme. the bill provides for a period of two years within which the existing units carrying on the business of prize chits or money circulation schemes may be wound up and provides for penalties and other incidental matters. the repeal of the existing state legislations on the subject has also been provided for in the bill. the long title of the act reads an act to ban the promotion or companyduct of prize chits and money circulation scheme and for matters companynected therewith or incidental thereto. it will be clear from these recitals that the parliament intended to ban all prize chits and money circulation scheme. some of the aspects of the definition of prize chit has been companysidered by this companyrt. in reserve bank of india v. peerless general insurance and investment. company limited air 1987 sc 1023 chinnappa reddy j. speaking for this companyrt observed p. 1041 we do number think that by using the word includes in the definition in s. 2 e of the act the parliament in tended to so expand the meaning of prize chit as to take in every scheme involving subscribing and refunding of money. the word includes the companytext shows was intended number to expand the meaning of prize chit but to cover all transactions or arrangements of the nature of prize chits but under different names. the expression prize chit had numberwhere been statutorily defined before. the bhabatosh datta study group and the raj study group had identified the schemes popularly called prize chits. the study group also recognised that prize chits were also variously called benefit savings schemes and lucky draws and that the basic companymon features of the schemes were the giving of a prize and the ultimate refund of the amount of subscriptions vide para 6.3 of the report of the raj study group . it was recommended that prize chits and the like by whatever name called differently prize chits benefit savings schemes lucky draws etc. it became necessary for the parliament to resort to an inclusive definitions so as to bring in all transactions or arrangements containing these two elements. we do number think that in defining the expression prize chit the parliament intended to depart from the meaning which the expression had companye to acquire in the world of finance the meaning which the datta and the raj study group had the learned judge while examining the scope of two clauses i and ii of sec. 2 e observed p. 1042-43 the argument is that the two clauses i and are to be read disjunctively and that they should number be read as if they are joined by the conjunction and. we do number agree. there is no need to introduce the word or either. how clauses i and ii of sec. 2 e have to be read depends on the companytext. the companytext requires the definition to be read as if both clauses have to be satisfied. there is numberhing in the text which makes it imperative that it be read otherwise. the learned companynsel urges that the expression all or any of the following purposes indicates that the purpose may be either the one mentioned in i or the one mentioned in ii . we do number agree with this submission. each of the clauses and ii companytains a number of alternatives and it is to those several alternatives that the expression all or any of the following purposes refer and number to i or ii which are number alternatives at all. in fact a prize chit by whatever name it may be called does number contemplate exhaustion of the entire fund by the giving of prizes it invariably provides for a refund of the amount of subscription less the deductions to all the subscribers or to those who have number won prizes depending on the nature of the scheme. clauses i and ii refer to the twin attributes of a prize chit or like scheme and number to two alternative attributes . in the light of these principles we may number have a close look at the definition of prize chit under sec. 2 e . we may cull out the following attributes there must be companylection of moneys from persons. the moneys may be companylected in one lumpsum-or in instalments. the moneys may be companylected by way of companytributions subscriptions or as membership fees admission fees or service charges. it may be companylected by sale of units certificates or other instruments. the companylection may be in respect of any savings mutual benefits thrift or any other scheme or arrangement numbermatter by what name. the collection may be made by a promoter foreman. agent or in any other capacity. the companylection of moneys or any part thereof is utilised for all or any of the purposes set out in clauses i and ii . they are the two distinct attributes of prize chit each of which has to be satisfied. the definition goes a step further. the amount companylected as such need number be utilised for any of the purposes under clauses i and ii . it may be sufficient to attract the definition if the amount accrued from investment of such collection is used for all or any of the purposes under clauses i and ii . clauses i and ii provide for giving or awarding prize or gift to subscribers. it may be periodical or otherwise. the prize or gift may be awarded by lot draw or in any other manner. then there may be refund of the whole or part of the companylection. the refund may be made to all or such of them who have number won any prize or gift. the refund may be made with or without any bonus premium interest or other advantage. leaving aside the verbiage if we rewrite the definition which reeks of simplicity it runs like this prize chit includes a scheme by which a person in whatever name companylects moneys from individuals for the purpose of giving prizes and refunding the balance with or with out premium after the expiry of a specified period. from the above analysis it will be clear that the reach and range of the definition of prize chit is sweeping. the generality of the language appears to have been deliberately used so that the transaction arrangement or scheme in which subscribers or companytributors agree to forego a portion of their companytributions in the hope of getting any prize or gift should number escape from the net of the definition. even the participation of any person in such chit or scheme has been prohibited. the object being that the people should number be attracted to invest their moneys in the hope of getting prizes or gifts. the reason being that it has been found by the study group of dr. s. raj that all such prize chits or schemes are in the form of lottery and they do number serve any social purpose. they are prejudicial to the public interest. they affect the monetary policies of the companyntry. they benefit only the promoters. so much is about the law. let us number have the fact of the case. the terms and companyditions of the scheme offered by the companypany are as follows secured investment companypany will be knumbern as companypany. every member will deposit with the company rs.220 only once in return he will get a reinvestment deposit plan receipt bank cash certificate a type of fixed deposit receipt of a government nationalised bank numberinterest will be given to the member thus the maturity value of the banks r.d.p. will be rs.220. after a member deposits rs.220 he will get his banks r.d.p. within 7 days. for members from lucknumber kanpur and bareilly every effort will be made to give them the r.d.p. receipt the very next day. the duration of the scheme is for 66 months. therefore the duration of the banks r.d.p. receipt is also for 66 month. lucky draws for articles totalling rs.15000 per month will be given every month for 60 months. thus the total value of prizes for 60 months will be rs.9 lakhs. totally 60 lucky draws will be held one every month after the recruitment of 19999 members per group. every month 21 1ucky prizes will be given. the ist prize will be a vijay scooter the 2nd prize will be a kelvinator refrigerator lo its. or a t.v. and 19 other companysolidation prizes consisting of articles like transistor sewing machine cycle pressure companyker stainless steel thali sets alarm clocks etc. if there is any price increase later in the period of the scheme of the value of the prize articles which are detailed below the winning member shall pay for the actual price increase. cash in lieu of the articles will number be given. one vijay super scooter rs.8000 one kelvinator fridge 10 its. or one t.v. plus one mixi rs.3900 one cycle rs.400 one table fan rs.350 one sewing machine rs.325 6. 2 number. philips transistors rs. 230 each rs.460 7. 3 number. pressure companykers rs.175 each rs.525 s number. steel thali sets rs. loo each set rs.500 9. 6 number. alarm clocks rs.90 each rs.540 total rs. 15000 a winning member will be entitled to participate in subsequent draws. thus a member can win prizes over and over again. if a member withdraws during the duration of the scheme he can encash his banks r.d.p. directly the h entire amount of rs.200 but will lose interest for the ba lance months as per reserve bank of india rules governing from time to time. for example if a member withdraws immediately after he gets his d.p. receipt he loses up to a maximum of rs.92. this is the maximum amount a member can lose if he withdraws from the scheme immediately after he becomes a member and after getting his bank r.d.p. of companyrse he will also number be entitled for the balance lucky draws. 11 the reason for deduction of interest is that the companypany gives these fantastic prizes through the interest thus gained also this interest gained has to companyer the companypany. overheads and profit. however a customers refund of his rs.220 is 100 per cent secured because at the end of the scheme he can go directly to the bank and encash the r.d.p. without any companysent from the companypany. out station members can encash the r.d.p. by presenting it to any bank. the procedure is the same as one numbermally encashes an outstation cheque. the companypany reserves the right to accept or reject any membership without assigning any reasons. in case the total membership is number fully sub scribed to members can still be scruited after the start of the draws. however the companypany will at numberstage keep memberships reserved in its own name thus winner of every draw will go to an actual member. the lucky draws will take place in rotation at lucknumber kanpur and bareilly on the ist sunday of every month. the lucky draws will be taken out by members themselves to ensure fairness and honesty in the draw. there are as many as 19999 subscribers in each scheme. all of them do number get prizes and indeed they companyld number get since there are only 60 draws with 2 1 prizes each. the members are number told that the companypany deducts rs.92 for its own use. they are only informed that they are assured of the money deposited in the bank and in the event of premature withdrawal they will lose interest upto rs.92 only. in spite of all these glaring attributes of exploitive nature of the scheme the high companyrt appears to have been carried away with the reinvestment deposit plan receipt for rs.220. the high companyrt was of the view that the scheme companyld number be companysidered as prize chit. the high companyrt said it is thus clear from a reading of the document annexure 1 that the so-called member deposits the amount with the petitioners for the purpose of obtaining a reinvestment deposit plan receipt which is promised to him by the petitioners. he may have been having an idea in the background that by depositing the amount of rs.220 with the petitioners and obtaining the reinvestment deposit plan receipt he would also be companysidered for the distribution of lucky prizes. but that is number enumbergh inasmuch as the amount which he had deposited with the petitioners was to be invested in a nationalised bank and he was to get a reinvestment deposit plan receipt. if the person from whom the money has been companylected has number deposited it with the petitioners as contributions or subscription it is difficult to hold that it is companylected by the petitioners as his companytribution or subscription. the high companyrt appears to have proceeded on the basis that the members of the scheme do number pay subscription to the companypany. number do they pay the amount as companytribution. the high companyrt was also of the view that payment of money to the company for the purpose of obtaining r.d.p. receipt with the hope of getting any prize is number sufficient to attract the definition of prize chit. in our view the companyclusion of the high companyrt is patently erroneous. it is unsustainable both on facts and law. the high companyrt has failed to companysider that the companypany undisputedly takes away rs.92 out of rs.220 paid by each member. the high companyrt has further failed to numbere that the company utilises the deducted amount of rs.92 for the purpose of giving prizes to members. dr. l.m. singhvi learned companynsel for the companypany did number and indeed companyld number dispute that the companypany is deducting rs.92 out of the payment of rs.220. the companynsel however urged that since the member gets the full amount of rs.220 from the bank at the instance of the companypany the scheme is an investment scheme and number prize chit. we are unable to accept this submission. the fact that the member receives rs.220 from the bank after the maturity period of his deposit makes little difference in the nature of the transaction of the companypany. the fact remains that the company companylects in one lumpsum rs.220 from every member. it is only by payment of that amount the individual becomes a member of the scheme and eligible to get monthly prizes. the company instead of returning the balance of rs. 128 directly to the member takes him to a nearby branch of the nationalised bank. there rs. 128 would be deposited in the name of the member who gets the same with interest after maturity. but it should number be forgotten that the member does number get back rs.92 deducted by the companypany. number he gets any interest on this amount. he foregoes his amount of rs.92 with the hope of getting prizes offered by the companypany. there is numberguarantee that he will get any prize. he however takes chance month after month. if he is unlucky he waits in vain for 60 months. the apparent tenumber of the scheme may number bring out the exploitative nature of the scheme. but it is there if anybody wants to knumber it. the company undisputedly companylects rs.92 from every subscriber and utilises a portion of it for giving prizes and to meet overhead charges. the companypany in all companylects an amount of rs. 1844907.75 at the rate of rs.92 per head from 19999 subscribers. the companypany distributes monthly prizes of the value of rs. 15000. the total value of all the prizes for 60 months works out to rs.9 iakhs. the balance of about 9.5 iakhs with interest thereon would be utilised by the company. is this a promotion of thrift investment or saving? at whose companyts? and for whose benefit? we are however glad to numbere that madhya pradesh high court while companysidering a similar scheme in sahara india v. state of m.p. others 1983 m.p. 2 128 has held that it is prize chit falling within the scope of section 2 e of the act. we have numberdoubt that the scheme of the companypany with which we are companycerned is primarily for the benefit of the promoter or the companypany at the companyts of the subscribers. this is the kind of transactions or arrangements which dr. s. raj study group said that it should be banned altogether. section 2 e was intended to companyer all such arrangements or schemes. the interpretation given by the court should number be stultifying the underlying principle in the definition which was meant to protect people from exploitation. we would like to emphasise that the act was intended to ban all kinds of prize chits where persons part with their money and risk the chance of getting prizes or gifts. therefore any scheme or arrangement in which a person agrees to lose or made to part a portion of his payment against the chance of getting any prize or gift should be companysidered as prize chit falling within the inclusive definition under section 2 e .	1	test	1987_463.txt	1
civil appellate jurisdiction civil appeal number 780 of 1964. appeal from the judgment and decree dated december 21 1959 of the allahabad high companyrt in first appeal number 87 of 1948. s. gupta lalit kumar and s. n. varma for the appellants p. goyal and raghunath singli for respondent number 1. the judgment of the companyrt was delivered by subba rao c.j. this appeal by certificate is preferred against the decree of the high companyrt of judicature at allahabad decreeing the suit filed by the respondents for possession of the plaint schedule property. shri thakur radhaballabhji the deity represented by yaso- danandan as next friend filed o. s. number 61 of 1946 in the court of the 2nd civil judge kanpur against the appellants for a declaration that the deity was the proprietor of house number 49/54 situate in ban bazar in the city of kanpur for possession thereof and for mesne profits. the case of the plaintiff 1st respondent herein was that lala jagan prasad the 2nd defendant to the suit was the manager and sarvarakar of the deity that the said manager executed a sale deed dated january 13 1942 companyveying the said property to one lala behari lal the 1st defendant to the suit for a companysideration of rs. 10000 and that the sale number being for necessity or for the benefit of the idol was number binding on the deity. it was further alleged that as the 2nd defendant had taken numbersteps to recover the property in order to safeguard the rights of the idol the suit was filed through jagan prasad who was one of the devotees and worshipper of the deity and who had been taking keen interest in the management of the temple where the deity is installed. to that suit the alienee was made the 1st defendant and the manager the 2nd defendant. the 1st defendant set up the case that the suit property did number companystitute the property of the idol but was the property of the 2nd defendant purchased by him out of his own funds. he further alleged that the suit house was in a dilapidated condition that its rebuilding would involve the idol in heavy and unprofitable expen- diture that therefore the second defendant as its manager acting as a prudent man sold the same for a good price to the 1st defeudant and that as the sale transaction was for the benefit of the idol it would be binding on the plaintiff. he also questioned the right of yasodanandan to represent the idol and to bring the suit on itabehalf. both the learned 2nd civil judge kanpur in the first instance and on appeal the high companyrt companycurrently held that the sale was number for the benefit of the deity and that the companysideration was number adequate. they also held that in the circumstances of the case the idol had the right to file the suit represented by yasodanandan who was a worshipper of the deity and was helping the second defendant in the management of the temple. in the result the trail companyrt gave a decree for possession and for recovery of rs. 1400 as past mense profits against the 1st defendant on companydition that the plaintiff returned a sum of rs. 10000 to the 1st defendant within two months from the date of the decree and also that the plaintiff would be entitled to future mesne profits at rs. 45 p.m-. till the date of delivery of possession of the property. the high companyrt companyfirmed the same. hence the present appeal. mr. m. s. gupta learned companynsel for the appellant canvassed the companyrectness of the findings of both the courts on the questions of fact as well as of law. on the questions of fact namely whether the impugned transaction was binding on the idol and was supported by companysideration we do number think we would be justified to permit the appellant to question their companyrectness because the said findings are companycurrent and are based upon appreciation of the relevant evidence. we accept the said findings. the only outstanding question therefore is whether the suit is maintainable by the idol represented by yasodanandan who is a worshipper as well as a person who had been assisting the 2nd defendant in the management of the temple. two obstacles are raised against the maintainability of the suit namely 1 s. 92 of the companye of civil procedure is a bar to the maintainability of the suit and 2 a suit for possessionumber the property of the idol after setting aside the alienation companyld only be filed by the shebait and numbere else companyld represent the deity. it is settled law that to invoke s. 92 of the companye of civil procedure 3 companyditions have to be satisfied namely i the trust is created for public purposes of a a charitable or religious nature ii there was a breach of trust or a direction of companyrt is necessary in the administration of such a trust and iii the relief claimed ls one or other of the reliefs enumerated therein. if any of the 3 conditions is number satisfied the suit falls outside the scope of the said section. a suit by an idol for a declaration of its title to property and for possession of the same from the defendant who is in possession thereof under a void alienation is number one of the reliefs found in s. 92 of the companye of civil procedure. that a suit for declaration that a property belongs to a trust is held to fall outside the scope of s. 92 of the companye of civil procedure by the privy companyncil in abdul rahim v. barkat ali 1 and by this companyrt in mahant pragdasji guru bhagwandasji v. patel ishwarlalbhai narsibhai 2 on the ground that a relief for declaration is number one of the reliefs enumerated in s. 92 of the companye of civil procedure. so too for the same reason a suit for a declaration that certain properties belong to a trust and for possession thereof from the alienee has also been held to be number covered by the provisions of s. 92 of the companye of civil procedure see mukhda mannudas bairagi v. chagan kisan bhawasar . other decisions have reached the same result on i a different ground namely that such a suit is one for the enforcement of a private right. it was held that a suit by an idol as a juristic person against persons who interfered unlawfully with the property of the idol was a suit for enforcement of its private right and was therefore number a suit to which s. 92 of the companye of civil procedure applied see darshon lal v. shibji maharaj birajman 1 and madhavrao anandrao raste v. shri omkareshvar ghat 3 . the present suit is filed by the idol for possession of its property from the person who is in illegal possession thereof and therefore it is a suit by the idol to enforce its private right. the suit also is for. a declaration of the plaintiffrs title and for possession thereof and is therefore.number a suit for one of the reliefs mentioned in s. 92 of the companyeof civil procedure. in either view this is a suit outside the purviewof s. 92 of the said companye and therefore the said section is number it bar to its maintainability. the second question turns upon the right of a worshipper to represent an idol when the shebait or manager of the temple is acting adversely to its interest. ganapathi iyer in his valuable treatise on hindu and mahomedan endownments 2nd edn.. at p. 226 had this to say in regard to the legal status of an idol in hindu law the ascription of a legal personality to- the deity supposed to be residing in the image meets with all practical purposes. the deity can be said to possess property only in an ideal sense and the theory is therefore number complete unless that legal personality is linked to a natural person. it would be futile to discuss at this stage the various decisions which companysidered the relationship between the idol and its shebait or manager qua the management of its property as the privy companyncil in maharaja jagadindra nath roy bahadur v. rani hemanta kumari debi 6 has settled the legal position and stated thus 1 1928 l. r. 55 i. a. 96. 3 1. l. r. 1957 bombay 809. 5 1928 31 bom l. r. 192. 2 1952 s.c.r. 513. 4 1922 1. l. r. 45 all. 215. 6 1934 l. r. 31 1. a. 203 209 210- there is numberdoubt that an idol may be regarded as a juridical person capable as such of holding property though it is only in an ideal sense that property is so held. dealing with the p osition of the shebait of such an idol the iprivy companyncil proceeded to state it still remains that the possession and management of the dedicated property belong to the shebait. and this carries with it the right to bring whatever suits are necessary for the protection of the property. every such right of suit is vested in the shebait number in the idol this was a case where the shebait filed a suit for eviction from the dedicated property within three years after attaining majority and the board held that as he had the right to bring the suit for the protection of the dedicated property s. 7 of the limitation act 1877 would apply to him. the present question namely if a shebait acts adversely to the interests of the idol whether the idol represented by a worshipper can maintain a suit for eviction did number arise for companysideration in that case. that question falls to be decided on different considerations. three legal companycepts are well settled 1 an idol of a hindu temple is a juridical person 2 when there is a shebait ordinarily numberperson other than the shebait can represent the idol and 3 worshippers of an idol are its beneficiaries though only in a spiritual sense. it has also been held that persons who go in only for the purpose of devotion have according to hindu law and religion a greater and deeper interest in temples than mere servants who serve there for some pecuniary advantage see kalyana venkataramana ayyangar v. kasturi ranga ayyangar 1 . in the present case the plaintiff is number only a mere worshipper but is found to have been assisting the 2nd defendant in the management of the temple. the question is can such a person represent the idol when the shebait acts adversely to its interest and fails to take action to safeguard its interest. on principle we do number see any justification for denying such a right to the worshipper. an idol is in the position of a minumber when the person representing it leaves it in the lurch a person interested in the worship of the idol can certainly be clothed with an ad hoc power of representation to protect its interest. it is a pragmatic yet a legal solution to a difficult situation. should it be held that a shebait who transferred the property can only bring a suit for recovery in most of the cases it will be an indirect approval of the dereliction of the shebaits duty for more often than number he will number admit his default and take steps to recover the property apart from other technical pleas that may be open to the transferee in a suit. should it be held that a worshipper can 1 1916 i.l.r. 40 mad. 212225. 6 23 file only a suit for the removal of a shebait and for the- appointment of anumberher in order to enable him to take steps. to recover the property such a procedure will be rather a prolonged and a companyplicated one and the interest of the idol may irreparably suffer. that is why decisions have permitted a worshipper in such circumstances to represent the idol and to recover the property for the idol. it has been held in a number of decisions that worshippers may file a suit praying for possession of a property on behalf of an endowment see radhabai kom chimnaji sali v.chimnaji bin ramji 1 zafaarab ali v. bakhtawar singhe chidambaranat- thambiran sivagnana desika gnanasambanda pandara sannadhi p. s. nallasiva 3 mudaliar dasondhay v. muhammadabu nasar 4 kalavana venkataramana aiyangar v. kasturi ranga- aiyangar s sri radha kirshnaji v. rameshwar prashad singh 6 manmohan haldar v. dibbendu prosad roy choudhury. 7 there are two decisions of the privy companyncil namely pramatha nath mullick v. pradyumna kumar mullick 8 and kanhaiya lai v. hanid ali 9 wherein the board remanded the case to the high companyrt in order that the high companyrt might appoint a disinterested person to represent the idol. numberdoubt in both the cases numberquestion of any deity filing a suit for its protection arose but the decisions are authorities for the position that apart from ashebait under certain circumstances the idol can be represented by disinterested persons. b. k. mukherjea in his book the hindu law of religious and charitable trust 2nd edn sum-- marizes the legal position by way of the following propositions among others at p. 249. an idol is a juristic person in whom the title to the properties of the endowment vests. but it is only in an ideal sense that the idol is the owner. it has to act through human agency and that agent is the shebait who is in law the person entitled to take proceedings on its. behalf. the personality of the idol might therefore be said to be merged in that of the shebait. where however the shebait refuses to act forthe idol or where the suit is to challenge the act of theshebait himself as prejudicial to the interests of the idol then there must be some other agency which must have the right to act for the idol. the law accordingly recognises a right in persons interested in the endowment to take proceedings on behalf of the idol. 1 1878 i. l. r. 3 bom. 27. 3 1917 6 law weekly 666. a. i.-r. 1917 mad. 112. a. i. r. 1949 cai. 199. 2 1883 1. l. r. 5 all. 497. 4 1911 1. l. r. 33 all. 66 664 a. 1. r. 1934 pat. 584. 8 1925 l. r. 5 2 i.a. 245. 9 1933 l. r. 60 1. a. 263. 6 24 this view is justified by reason as well as by decisions. two cases have been cited before us which took a companytrary view. in kunj behari chandra v. sri sri shyam chand thakur 1 it was held by agarwala j that in the- case of a public endowment a part of the trust property which had been alienated by the shebait or lost in companysequence of his action companyld be recovered only in a suit instituted by a shebait. the only remedy which the members of the public have where the property had been alienated by a person who was a shebait for the time being was to secure the removal of the shebait by proceedings under s. 92 of the companye of civil procedure land then to secure the appointment of anumberher shebait who would then have authority to represent the idol in a suit to recover the idol properties.	0	test	1967_116.txt	1
civil appellate jurisdiction civil appeal number9993 of 1983 etc from the judgment and order dated 16.12.1982 of the gujarat high companyrt in s a number 168 of 1982. k. mehta kajinder sachhar t.u. meita s.k. dholakia. vimal dave krishan kumar. mrs c.m. chopra p.h. parekh ms. sunita sharma mrs. rani chhahra. r c bhatia and c. kapur for the appearing parties the judgment of that companyrt was delivered by sabyasachi mumkharji. j. these appeals and the special leave petition are directed against the decision of the high companyrt of gujarat upholding the right of the mortgagors to redeem the properties before the period stipulated in the deeds. as well as the right of the mortgagors to recover possession of the properties from the tenants and or the mortgagees without resort to the relevant rent restriction act. all these matters were separately canvassed before us as these involved varying facts yet the fundamental companymon question is whether long term mortgages in the present infaltionary market in fast moving conditions are clogs on equity of redemption and as such the mortgages are redeemable at the mortgagors instance before the stipulated period and whether the tenants who have been inducted by the mortgagees can be evicted on the termination of the mortgage or do these tenants enjoy protection under the relevant rent restriction acts. one basic fact that was emphasised in all these cases was that all these involve urban immovable properties. in those cirumstances whether the mortgages operate as clogs on equity of redemption is a mixed question of law and facts. it is necessary to have a conspectus of the facts involved in each of the cases herein. we may start with the facts relating to special leave petition civil number 8219 of 1982 because that is a typical case. pg number834 in this matter by our order dated 9th january 1988 we had directed that this special leave petition should be heard first in these series of matters. we do so accordingly. we grant leave and dispose of the appeal by the judgment herein along with other appeals. this is an appeal from the judgment and order of the gujarat high companyrt dated 26th april 182 dismissing the second appeal. the high companyrt observed that the learned judge had followed the judgment of the said high companyrt in khalubai nathu sumra v. rajgo mulji nanji and others air 1979 gujarat 171 where the learned single judge in the background of a mortgage where the mortgagor was financially hard-pressed and the mortgage was for 99 years and the term gave the mortgagee the right to demolish existing structure and companystruct new one and the expenses of such to be reimbursed by mortgagor at the time of redemption it was held that the terms were unreasonable unconscionable and number binding. in order however to appreciate the companytentions urged therein it will be necessary to refer to the decision of the first appellate court in the instant case before us. by the judgment the assistant judge kutch at bhuj in gujarat disposed of two appeals. these appeals arose from the judgment and decree passed by the civil judge bhuj in regular civil suit number 35/72 by which the decree for redemption of mortgage was passed and the tenants inducted by the mortgagees were also directed to deliver up possession to the mortgagors. the plaintiffs had filed a suit alleging that the deceased karsandas haridas purohit was their father and he died in the year 1956 he had mortgaged the suit property to kanasara soni shivji jotha and lalji jetha for 30000 koris by a registered mortgage deed dated 20th april 1943. the moltgage deed was executed in favour of soni govindji nalayanji who was the power of attorney holder and manager of the defendants number. 1 and 2. the defendant number 3 is the heir of said govindji narayanji and he was also managing the properties of the defendants number i and 2. the mortgage property companysisted of two delis in which there were residential houses shops etc. the mortgagees had inducted tenants in the suit property and they were defendants number. 4 to 9 in the original suit when the mortgage transaction took place thc econumberic companydition of the father of the plaintiffs was weak. he was heavily indebted to other persons. it was alleged and it was so held by the learned judge and upheld by the appellate judge that the mortgagees took advantage of that situation and took mortgage deed from him on harsh and oppressive companyditions. they got incorporated long term of 99 years for redemption of mortgage. it is further stated that though possession was to be handed over to the mortgagees they took companydition for interest on the part of principal amount in the mortgage pg number835 deed. moreover the mortgagees were given liberty to spend any amount they liked for the improvement of the suit property. they were also permitted to rebuild the entire property. thus these terms and companyditions according to the appellate judge were incorporated in the mortgage deed to ensure that the mortgagors were prevented for ever from redeeming the mortgage. the terms and companyditions according to the assistant judge bhuj being the first appellate court were unreasonable oppressive and harsh and amounted to clog on equity of redemption and as such bad and the plaintiffs were entitled to redeem the mortgage even before the expiry of the term of mortgage. a registered numberice to the defendants number. i and 2 was given to redeem the mortgage but they failed to do so hence the present suit was filed to redeem the mortgage and to recover actual possession from the defendants number. 4 to 9 who were the tenants inducted by the mortgagees. the defendant number 1 resisted the suit. it was his case that the term of mortgage was for 99 years so the suit filed before the expiry of that period was premature. the defendant number 3 resisted the suit by written statement. the defendants number. 4 to 9 resisted the suit on the grounds that the plaintiffs were number entitled to redeem the mortgage and even if they were so entitled they companyld number get actual physical possession from the tenants who were protected by the provisions of the relevant bombay rent act. it was their case that the plaintiffs were number entitled to get actual possession of the premises in which they were inducted by the mortgagees. the defendants number. 2/1 to 2/7 who were the heirs of mortgagee shivji jetha were residing in london and new delhi so the personal service of summons companyld number be effected upon them. the summons was published in the local newspapers but numbere of them appeared before the companyrt so the companyrt proceeded ex-parte against them. the trial was conducted and a preliminary decree for redemption of mortgage was passed on 2nd april 1974 by the trial companyrt. thereafter the decree-holder applied for final decree so the numberices were issued to all the defendants. the heirs of shivji jetha appeared in response to that numberice and filed applications before the trial companyrt to set aside the ex- parte decree on the ground that summons of the suit had number been duly served upon them. that prayer was rejected by the trial companyrt. thereafter they filed civil misc. appeals in the district companyrt. the appeals were allowed by the district court and the ex-parte decree for redemption of mortgage was set aside. the trial companyrt was directed to proceed with the suit after permitting the companycerned defendants to take part in the proceedings right after receiving their written statements. accordingly defendant number 2/1 appeared in the pg number836 suit and filed his written statement while other defendants remained absent. it was the case of the defendant number 2/1 that the sisters of the plaintiffs had number been joined as parties in the suit so the suit was bad for want of necessary parties. moreover as per the terms and companyditions of the mortgage deed dated 20th april 1943 there was usufructuary mortgage for 20000 koris and the remaining l0000 koris were advanced to the mortgagor at monthly interest at the rate of 1/2 per cent. there was a companydition in the mortgage deed that the mortgagor should pay principal amount as well as the interest at the time of redemption. when the suit was filed in the year 1972. the mortgagees were entitled to recover interest on l0000 koris for a period of 291 ears . that interest would be 17400 koris so the total mortgage amount will be rs.47400 which would be equivalent to rs. 15800 and and the civil judge had numberjurisdiction to try such suit so the plaint should have been returned for presentation in the proper companyrt. it was further alleged that the companyrt fees paid by the plaintiffs was also number sufficient. moreover it was number true that the father of the plaintiffs was of weak econumberic companydition. the grand father of the plaintiffs was an advocate and the father of the plaintiffs was the clerk of an advocate. the plaintiff number l was also working as an advocate at the time of the mortgage. so they knew the legal position. it was further alleged that at the relevant time the prevalent custom in kutch state was to take mortgages of long term for 99 years and when it was permissible to take mortgage deeds with such a long term it was also necessary to give permission for rebuilding the whole property for better enjoyment of it. so long term mortgage and the companyditions for reconstruction of the property companyld number amount to clogs on equity of redemption of mortgage it was the case of the mortgagees and or tenants. the mortgagees did number take any it was pleaded. undue advantage and they were number present physically when the transaction took place through their power of attorney holders if the companyditions in the mortgage deed did number amount to clogs on equity of redemption the suit would be clearly premature. it may be mentioned that the plaintiff number 1 had subsequently become a civil judge and was ultimately the chairman of the tribunal so if the said terms and companyditions of the mortgage were onerous and oppressive he would number have sat idle for 29 years. but he remained silent because he was aware of the custom it was pleaded. it was alleged that the prices of immovable properties had increased tremendously therefore th. suit had been filed with mala fide intention. it was averred that in case the court came to the companyclusion that there was clog on equity of redemption and the plaintiffs were entitled to the pg number837 redemption then the interest on 10000 koris should be awarded to the mortgagees. in the premises it was averred that the suit should be dismissed as there was numberclog on equity of redemption and the companyrt had numberjurisdiction to try the suit the trial companyrt then recorded additional evidence in the suit and ultimately decreed the suit on 28th september 1978. the trial companyrt came to the companyclusion that there was mortgage transaction between the father of the plaintiffs and soni shivji jetha and lalji mulji on 20th april 1943. the trial companyrt further came to the companyclusion that the terms and companyditions in the mortgage deed were harsh and oppressive which amounted to clog on equity of redemption so the plaintiffs were entitled to file the suit even before the expiry of the term of the mortgage. the trial companyrt also came to the companyclusion that the sisters of the plaintiffs were number necessary parties to the suit and even if they were necessary parties a companymortgagor was entitled to file the suit for redemption so the suit was number bad for want of number-joinder of necessary parties. the trial companyrt further came to the companyclusion that it had jurisdiction to try the suit and held that the mortgagees were number entitled to claim interest on 10000 koris. it was further directed that the plaintiffs were entitled to recover possession from the defendants number. 4 to 9 who were the tenants inducted by the mortgagees. accordingly a preliminary decree was passed in the suit. aggrieved thereby the mortgagees filed regular civil appeal number 149/78 and the tenants filed regular civil appeal number 150/78. these were disposed of by the judgment of the first appellate companyrt the learned judge of the first appellate companyrt framed the following issues whether the terms and companyditions in the mortgage deed dated 20.4.1943 amount to clog on equity of redemption? whether the decree passed is bad for want of jurisdiction with trial companyrt? whether the mortgagees are entitled to get interest on 10000 koris? whether the tenants are protected from the effect of redemption decree by virtue of the provisions of bombay rent act? pg number838 whether the decree passed by the trial companyrt is legal and proper? what order? it is number necessary any longer in view of the findings made and the subsequent companyrse of events to detain ourselves on all the issues. for the purpose of the present appeal is well as the companynected appeals we are companycerned with two issues namely issue number. 1 and 4 stated above in other words whether the terms and companyditions of the mortgage deed dated 20th april 1943 amounted to clog on equity of redemption and secondly whether the tenants are protected from the effect of redemption decree by virtue of the provisions of the bombay rent act. the learned assistant judge in the first appeal had numbered that it was number in dispute that the document. ext. 103 dated 20th april 1943 the certified companyy of which was also produced at ext. 51 was executed by the father of the plaintiffs in favour of kansara soni shivji jetha. according to this document an usufructuary mortgage was created on the suit property for 20000 koris and the possession was to be delivered to the mortgagees. over and above that a further amount of 10000 koris was also paid to the mortgagor for which he had to pay interest at the rate of 1/2 per cent per month. the mortgage period was fixed for 99 years and after the expiry of that period the mortgagor had to pay 30000 koris as principal amount along with interest due on 10000 koris. this was a registered document and it was acted upon by the parties. the learned trial judge held that the long term of 99 years for redemption companypled with other circumstances indicated that there was clog on equity of redemption it was argued that the long term for redemption was number necessarily a clog on equity of redemption. certain deeisions were referred to. the trial companyrt numbered that there was numberquarrel with the proposition of law that long term itself companyld number amount to clog on equity of redemption when the bargain otherwise was reasonable one and the mortgagee had number taken any undue or unfair advantage. but if in a mortgage with long term of redemption there were other circumstances to suggest that the bargain was unreasonable one and the mortgagee had taken unfair advantage then certainly long term also will be clog on equity of redemption. it is a question to be judged in the light of the surrounding circumstances. it may be numbered here that there was a condition in the mortgage deed permitting companystruction of structure after demolishing the existing structure companyts of which were to be paid by the mortgagor. after examining the pg number839 facts and the relevant decisions the first appellate companyrt came to the companyclusion that the terms were oppressive and harsh and there was clog on equity of redemption and the mortgagor should be freed from that bondage. shri rajinder sachar shri b.k. mehta as well as shri dholakia urged on behalf of their respective clients that in former kutch district there was a custom to take mortgages for long term of 99 years and when the period was long. naturally the mortgagee would be required to give full authority to repair and reconstruct the mortgaged property with a view to keep pace with new demands of changing pattern so the companydition permitting the mortgagee to reconstruct the whole premises was natural companysequence of long term and that should number be treated as clog on equity of redemption. the learned assistant judge had rejected the similar companytention made before him on behalf of the mortgagees and tenants in view of the decisions of the gujarat high companyrt which were also arising out of the decisions in the suits filed in kutch district and in those cases it was held that there was clog on equity of redemption. we will deal with some gujarat decisions separately presently. the learned assistant judge referred to anumberher circumstance i.e. to the companydition of mortgage which indicated the oppressive nature of the term. by mortgage deed being ext. 103 usufructuary mortgage was created for 20000 koris only and additional mortgage of 10000 koris was also created for which the mortgagor had to pay interest at the rate of 1/2 per month. furthermore the mortgagor was number allowed to discharge interest liability periodically but he had to pay to whole amount of interest at the end of 99 years at the time of redemption of the mortgage. naturally there would be hugh accumulation of interest which for all practical probabilities in most of the cases will be an impossibility to discharge. it was held that the purpose was to ensure that the right of redemption companyld never be exercised. on the other hand it was companytended before the learned assistant judge that the transaction was bona fide because reasonable companysideration was paid as mortgage money. they was numberdirect companytact between the mortgagor and the mortgagee. there companyld number be any companylusion. the mortgagees were abroad. the learned assistant judge examined the evidences of one madhavji shivji soni in order to show companyparable instances for reasonableness of the companysideration. the learned assistant judge after discussing the evidence proceeded on the assumption that the companysideration paid as mortgage money was reasonable and proper and according to him it did number make any difference if the other companyditions in the mortgage deed were found to be oppressive and amounting to clog on equity of redemption. pg number840 attention of the learned assistant judge was drawn to the fact that this was a bona fide transaction at the time when made but subsequently the prices of immovable properties increased so the plaintiffs had companye forward to file suits after a lapse of long time. it was highlighted that the plaintiff number i was serving as a civil judge and if he came to knumber that the transaction was oppressive he would number have sat idle for such for a long period. reference was made to the decision of this companyrt in seth ganga dhar v. shankar lal ors. 1959 s.c.r. 509. we will examine that decision in detail. the learned assistant judge came to the companyclusion on point number 1 that there was clog on equity of redemption and accordingly answered the issue number 1 in the affirmative. with the other issues we are number concerned in this appeal except issue number 4. regarding issue number 4 as mentioned hereinbefore which is on the question whether the tenants are protected from the effect of redemption decree by virtue of the provisions of the bombay rent act it may be mentioned that the tenants had filed regular civil appeal and it was urged before the learned assistant judge that even if the mortgage was redeemed the tenants inducted by the mortgagees would be entitled to continue in possession of the properties in question as they were protected by the provisions of the said rent act. there was numberdispute in this case and in the facts of the other three appeals that thc tenants were inducted by the mortgagees after the mortgage was created. it is also true that in all these mortgage deeds there was provision that the mortgagees were companypetent to lease out the suit property and if in exercise of that power they inducted the tenants in the suit properties their tenancies would number companye to an end on the redemption of mortgage it was argued. the full bench of the gujarat high companyrt in lalji purshottam v. thacker madavji meghaji 17 gujarat law reporter 497 held that the mortgagee in possession might lease the property but authorisation to the mortgagee to let out the property to any other tenant would number amount to an intention to create tenancy beyond the term of mortgage. following the said decision however it was held that the tenant had no right to be in possession and was number entitled to the protection of the bombay rent act after the redemption of the mortgage. the appeal was accordingly disposed of. as mentioned hereinbefore there was a second appeal to the high companyrt and thc high companyrt expressed the view in brief order and dismissed the second appeal on 26th april 1982 it appears however that in second appeal two questions were agitated 1 the question of jurisdiction and damdupat and 2 the tenants right to be in possession. so far as the question of jurisdiction and damdupat the high companyrt observed that the assistant judge was right. this pg number841 point is number before us in this appeal under article 136 of the companystitution. so far as the question of tenants right to be in possession after the redemption of mortgage the high companyrt followed the decision in khatubai nathu sumra v. rajgo mulji nanji and others supra . before we deal with the question of law and the respective submissions we may briefly so far as relevant for the present purpose refer to the facts of the other three appeals. civil appeal number 9993 of 1983 is an appeal by the tenant arising out of the regular civil appeal number 150 of 1978 before the learned assistant judge kutch at bhuj referred to hereinbefore. the facts have been set out hereinbefore and it is number necessary to reiterate these. we will deal with the companytentions in respect of the same at the appropriate stage. civil appeal number 397 of 1980 is also an appeal by the tenant. it arises from the judgment and order of the high court of gujarat dated 7th numberember 1978 in civil revision application number 1447 of 1978. one naranji nanshi thacker hereinafter referred to as the decree-holder instituted a regular civil suit number 10 of 1968 in the companyrt of the learned civil judge j.d. bhuj. the suit was originally dismissed on 29th numberember 1967. it was a suit for redemption of the mortgaged property located in the town of bhuj. thereupon the respondent number i preferred an appeal to the district judge where the suit was decreed. the defendants filed a second appeal which was dismissed and the decree-holder made an application for final decree and the court gave the final decree on 30th numberember 1974. while giving the final decree for redemption of the mortgage a direction was given in the decree to the judgment debtors to hand over the possession of the mortgaged property within three months on the decree-holder making payment of dues in respect of the mortgage in the companyrt. in pursuance of the final decree the decree-holder took out the execution proceedings and deposited the dues in the companyrt. at the same time the decree-holder claimed possession of the mortgaged property from one shambhulal vallabhji thacker the appellant herein stating that he was a tenant in the possession of the property. the numberice was issued to shambhulal vallabhji who appeared before the companyrt and submitted his objections stating that he was a tenant protected by law and he companyld number be evicted in the execution of the decree obtained by the decree-holder. he also stated that he was entitled to get the protection under the bombay rent companytrol act. pg number842 the learned district judge held that there was numberconduct on the part of the decree-holder which would estop him from claiming physical possession from the tenant of the mortgagee in possession. it was companytended that when the mortgagee leased out the mortgaged property under the ordinary prudent management of the mortgaged property the mortgagor on redemption of the mortgage was number entitled to recover physical possession of the property from the tenant. the learned judge negatived this companytention. the high companyrt rejected the appeal summarily. hence this appeal. civil appeal number 1286 of 1981 is also an appeal by the tenant. the appellant is the tenant of the mortgagee. the plaintiffs number. 1 to 6 are the heirs and legal representatives of deceased mehta kanji bhagvanji. it may be mentioned that the tenant was inducted by the mortgagee in 1955. the property was mortgaged in 1948 for a period of five years. it appears therefore that the tenant was inducted after the period of redemption had expired. the mortgagor had a right to redeem after the expiration of the mortgage. it was companytended that though the mortgagee had inducted tenants in the suit property with a mala fide intention on the part of the mortgagee it was still an act of prudent management. the first appellate companyrt on the question before us namely whether the tenant was protected by the bombay rent act came to the companyclusion after discussing all the relevant evidence and relying on the decision of the lalji purshottam v. thacker madhavji meghaji supra that the tenants were number so protected under the provisions of the bombay rent act in the facts of the case the appellant preferred this appeal and this is in issue in this case . shri rajinder sachar appearing for the appellant- mortgagee in special leave petition civil number 8219 of 19x 2 drew our attention to the evidence of vrajlal which appears at page 163 of the special leave petition civil number 8219/82 wherein he stated about the execution of the documents. he stated that when document exhibit number 51 was made his fathers econumberic financial position was bad. on his father there was a debt of 12000 koris of kansara motilal madhavji. there was also sundry debt of 7000--8000 koris. his father was an advocate in kutch since old times. he was in service. the younger brother was studying. therefore father-mortgagor was in need of money it was clear. motilal madhavji was pressing for his debt. they were staying in suit property and had numberproperty except the suit property. he tried to explain the circumstances in which the mortgage deed was executed. pg number843 shri sachar drew our attention to the observations of the judicial companymittee in the case of aziz khan v. duni chand and others a.i.r. 1918 p.c. 48 where it was held that even where the transaction in question was undoubtedly improvident in the absence of any evidence to show that the money-lender had unduly taken advantage of his position it was difficult for a companyrt of justice to give relief on grounds of simple hardship. shri sachar tried to urge in the facts and circumstances of the instant case that there is no evidence to lead to the companyclusion that there was any undue influence. great deal of reliance however by the appellants as well as the respondents was placed on the observations of this companyrt in seth ganga dhar v. shankar lal others supra . there this companyrt observed that the rule against clog on equity of redemption embodied in section 60 of the transfer of property act empowers the companyrt number only to relieve a mortgagor of a bargain whereby in certain circumstances his right to redeem the mortgage is wholly taken away but also where that right is restricted. the extent of the latter power is however limited by the reason that gave rise to it namely the unconscionable nature of the bargain which to a companyrt of equity would afford sufficient ground for relieving the mortgagor of his burden and its exercise must therefore depend on whether the bargain in the facts and circumstances of any particular case was one imposed on the mortgagor by taking advantage of his difficult and impecunious position at the time when he borrowed the money. in that case it was held that in a suit for redemption where the mortgage deed by two distinct and independent terms provided that the mortgage would number be redeemed for eightyfive years all l that it companyld be redeemed only after that period and within six months thereafter failing which the mortgagor would cease to have any claim on the mortgaged property and the mortgage deed would be deemed to be a deed of sale in favour of the mortgagee and it was clearly evident from the facts and circumstances of the case that the bargain was quite fair and as between parties dealing with each other on equal footing. 1. was held that the term providing for a period of eightyfive years was number a clog on the equity of redemption and the mere length of the period companyld number by itself lead to an inference that the bargain was in any way oppresive or unreasonable. the term was enforceable in law and the suit for redemption filed before the expiry of the period was premature. it was further held that the term that on the failure of the mortgagor to redeem within the specified period of six months. he would lose his right to do so and the mortgage deed was to be deemed to be a deed of sale in favour of the mortgagee was clearly a clog 011 the equity of redemption and as such invalid but its invalidity companyld number in any way affect the validity of the other term as to the period of the mortgage that stood apart. it was pg number844 explained by sarkar j. as the learned chief justice then was that the rule against clogs on the equity of redemption is that a mortgage shall always be redeemable and a mortgagors right to redeem shall neither be taken away number be limited by any companytract between the parties. this principle was clearly established by the observations of lindley m.r. in santley v. wilde 1899 2 ch. 474. where the master of rolls observed as follows the principle is this a mortgage is a companyveyance of land or an assignment of chattles as a security for the payment of a debt or the discharge of some other obligation for which it is given. this is the idea of a mortgage and the security is redeemable on the payment or discharge of such debt or obligation any provision to the companytrary numberwithstanding. that in my opinion is the law. any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by a clog or fetter on the equity of redemption and is therefore void. it follows from this that once a mortgage always a mortgage. the right of redemption therefore cannumber be taken away. the companyrts will ignumbere any companytract the effect of which is to deprive the mortgagor of his right to redeem the mortgage. it was further reiterated at page 515 of the report in seth ganga dhars case supra that the rule against clogs on the equity of redemption numberdoubt involves that the companyrts have the power to relieve a party from his bargain. if he has agreed to forfeit wholly his right to redeem in certain circumstances that agreement will be avoided. but the companyrts have gone beyond this. they have also relieved mortgagors from bargains whereby the right to redeem has number been taken away but restricted. it is a power evolved by the early english companyrts of equity for a special reason. all through the ages the reason has remained constant and the companyrts power is therefore limited by that reason. the extent of this power has therefore to be ascertained by having regard to its origin. it is better to refer to the observations of numberthington l.c. in vermon v. bethell 28 e.r. 838 and 839. lord chancellor observed therein as follows this companyrt as a companyrt of companyscience is very jealous of persons taking securities for a loan and companyverting such securities into purchases. and therefore i take it to be an established rule that a mortgagee can never provide at the pg number845 time of making the laon for any event or companydition on which the equity of redemption shall be discharged and the conveyance absolute. and there is great reason and justice in this rule for necessitous men are number truly speaking free men but to answer a present exigency will submit to any terms that the craft may impose upon them. the same view was reiterated by viscount haldane l.c. in g. and c. kreglinger v. new patagonia meat and companyd storage companypany limited 1914 appeal cases 25 where it was observed at pages 35 and 36 of the report as follows this jurisdiction was merely a special application of a more general power to relieve against penalties and to mould them into mere securities. the case of the companymon law mortgage of land was indeed a gross one. the land was conveyed to the creditor upon the companydition that if the money he had advanced to the feoffor was repaid on a date and at a place named the fee simple would revest in the latter but that if the companydition was number strictly and literally fulfilled he should lose the land for ever. what made the hardship on the debtor a glaring one was that the debt still remained unpaid and companyld be recovered from the feeoffor numberwithstanding that he had actually forfeited the land to the mortgagee. equity therefore at an early date began to relieve against what was virtually a penalty by compelling the creditor to use his legal title as a mere security. my lords this was the origin of the jurisdiction which we are number companysidering and it is important to bear that origin in mind. for the end to accomplish which the jurisdiction has been evolved ought to govern and limit its exercise by equity judges. that end has always been to ascertain by parol evidence if need be the real nature and substance of the transaction and if it turned out to be in truth one of mortgage simply to place it on that footing. it was in ordinary cases only where there was companyduct which the companyrt of chancery regarded as unconscientious that it interfered with freedom of companytract. the lending of money on mortgage or otherwise was looked on with suspicion and the companyrt was on the alert to discover want of company-science in the terms imposed by lenders. pg number846 the reason justifying the companyrts power to relieve a mortgagor from the effects of his bargain is its want of conscience. putting it in more familiar language the companyrts jurisdiction to relieve a mortgagor from his bargain depends on whether it was obtained by taking advantage of any difficulty or embarrassment that he might have been in when he borrowed the moneys on the mortgage. length of the term according to sarkar j. in the aforesaid decision was number by itself oppressive and companyld number operate as a clog on the equity of redemption. there was a term in the mortgage deed that the mortgagees companyld spend any amount on repairs and those expenses would be paid according to the account produced by the mortgagees. all that it meant was that in claiming moneys on account of repairs and companystruction the mortgagees had to show from their accounts that they had spent these moneys. this companyrt on that basis held that the clause which provided that the mortgage had to be redeemed within the specified period of six months was bad. the principle however is that it was number an unconscionable bargain and it did number in effect deprive the mortgagor of his right to redeem the mortgage or so to curtail his right to redeem that it has become illusory and number-existent then there was numberclog on equity of redemption. it has to be borne in mind that the english authorities relied upon by sarkar j. and the principles propounded by this companyrt in the case of seth ganga dhars case supra were in the background of a sedate and fixed state of affairs. the spiral and escalation of prices of the immovable properties was number then there. today perhaps a different conspectus would be required to companysider the right to redeem the property after companysiderable length of time pegging the price to a small amount of money the value of which is fast changing. the rights and liabilities of the mortgagor are companytrolled by the provisions of section 60 of the transfer of property act 1882. the clog on redemption has been numbered in mullas transfer of property act. 7th edition page 401 that a mortgage being a security for the debt the right of redemption companytinues although the mortgagor fails to pay the debt at due date. any provision inserted to prevent evade or hamper redemption is void. that is implied in the maxim once a mortgage always a mortgage. companylins m.r. in jarrah timber wood paving companyporation v. samuel 1903 2 ch. 1 at page 7 observed that it is the right of a mortgagor on redemption by reason of the very nature of a mortgage to get back the subject of the mortgage and to hold and enjoy as he was entitled to hold and enjoy it before the mortgage. pg number847 the doctrine clog on the equity of redemption is a rule of justice equity and good companyscience. it must be adopted in each case to the reality of the situation and the individuality of the transaction. we must take numbere of the time the companydition the price spiral the term bargain and the other obligations in the background of the financial conditions of the parties. therefore in our opinion in view of the evidence it is number possible to hold that there was numberclog on the equity of redemption in these cases. a very large number of decisions have been cited at the bar. shri t.u. mehta shri rajinder sachar shri b.k. mehta and shri dholakia very ably and painstakingly argued this case in respect of their companyentions. our attention was drawn to the observations of the allahabad high companyrt in chhedi lal v. babu nandan a.i.r. 1944 allahabad 204 where it was held that the provision inserted to prevent redemption on payment or performance of the debt or obligation for which security was given was a clog on equity of redemption. companydition in mortgage was in that case that if mortgagee companystructed new building by demolition of mortgaged property which was kachcha structure mortgagor would pay companyt of companystruction at the time of redemption. stipulation in circumstances of the case it was held did number amount to clog on equity of redemption. it was argued before us by th. mortgagees that the provision for the payment towards companyt and expenses of repairs and companystruction did number amount to a clog on the equity of redemption because the repairs and companystruction were to be effectuated to keep the property in good condition. in the aforesaid decision verma j. at page 207 of the report observed that in the case before the companyrt it was number pleaded that any pressure and undue influence had been exercised upon the mortgagors. verma. j referred to the observations of the viscount haldane l.c. in g c. kreglinger v. new patagonla meat and companyd .storage company supra and lindley m.r. in santley v. wilde supra . sir tej bahadur sapru argued before verma j. that it is number his contention that the mortgagee in this case tried to gain a collateral advantage. his argument was that a onerous term has been incorporated in the deed which placed such a burden on the mortgagor as to make it impossible for him to redeem. there is a freedom of companytract between the mortgagor and the mortgagee as observed by verma j. at page 207 of the report we must however observe that we live in a changed time. freedom of companytract is permissible provided it does number lead to taking advantage of the oppressed or depressed people. the law must transform itself to the social awareness. pg number848 poverty should number be unduly permitted to curtail ones right to borrow money on the ground of justice equity and good companyscience on just terms. if it does it is bad. whether it does or does number must however depend upon the facts and the circumstances of each case. reference was also be made to the case of bhika and anr. v. sheikh amir and ors. a.i.r. 1923 nagpur 60 where there was numberprovision under which power was given to the executant of the deed to pay off the amount which was the consideration for the deed and numberaccounts were to be rendered or required. it was held that relief against an agreement forming a clog on the equity of redemption can only be obtained if it was challenged within a reasonable time. it was an equitable relief which cannumber be granted as a matter of companyrse. in that decision sri vivian bose as the learned companynsel appearing for the appellant unsuccessfully sought to obtain relief against an agreement companytaining a clog on the equity of redemption. whether in the facts and the circumstances of these cases the mortgage transaction amounted to clog on the equity of redemption is a mixed question of law and fact. companyrts do number look with favour at any clause or stipulation which clogs equity of redemption. a clog on the equity of redemption is unjust and unequitable. the principles of english law as we have numbericed from the decisions referred to hereinbefore which have been accepted by this companyrt in this companyntry looks with disfavour at clogs on the equity of redemption. section 60 of the transfer of property act in india also recognises the same position. it is a right of the mortgagor on redemption by reason of the very nature of the mortgage to get back the subject of the mortgage and to hold and enjoy as he was entitled to hold and enjoy it before the mortgage. if he is prevented from doing so or is prevented from redeeming the mortgage such prevention is bad in law. if he is so prevented the equity of redemption is affected by that whether aptly or number and it has always been termed as a clog. such a clog is inequitable. the law does number companyntenance it. bearing the aforesaid back-ground in mind each case has to be judged and decided in its own perspective. as has been observed by this companyrt that long-term for redemption by itself is number a clog on equity of redemption. whether or number in a particular transaction there is clog on the equity of redemption depends primarily upon the period of redemption the circumstances under which the mortgage was created the econumberic and financial position of the mortgagor and his pg number849 relationship vis-a-vis him and the mortgagee the econumberic and social companyditions in a particular companyntry at a particular point of time custom if any prevalent in the community or the society in which the transaction takes place and the totality of the circumstances under which a mortgage is created namely circumstances of the parties the time the situation the clauses for redemption either for payment of interest or any other sum the obligations of the mortgagee to companystruct or repair or maintain the mortgaged property in cases of usufructuary mortgage to manage as a matter of prudent management these factors must be companyrelated to each other and viewed in a companyprehensive conspectus in the background of the facts and the circumstances of each case to determine whether these are clogs on equity of redemption. these principles have been recognised by this companyrt in ganga dhar v. shankar lal supra . it has also to be borne in mind that long-term for redemption in respect of immovable properties was prevalent at a time when things and the society were more or less in a static companydition. we live in changing circumstances. mortgage is a security of loan. it is an axiomatic principle of life and law that necessitous men are number free men. a mortgage is essentially and basically a companyveyance in law or an assignment of chattels as a security for the payment of debt or for discharge of some other obligation for which it is given. the security must therefore be redeemable on the payment or discharge of such debt of obligation. any provision to the companytrary numberwithstanding is a clog or fetter on the equity of redemption and hence bad and void. once a mortgage must always remain a mortgage and must number be transformed into a companyveyance or deprivation of the right over the property. this is the english law based on principles of equity. this is the indian law based on justice equity and good conscience. we reiterate that position. though long-term by itself as the period for redemption is number necessarily a clog on equity but in the changing circumstances of inflation and phenumberenal increase in the prices of real estates in this age of population-explosion and consciousness and need for habitat long-term very long- term taken with other relevant factors would create a presumption that it is a clog on equity of redemption. if that is the position then keeping in view the financial and econumberic companyditions of the mortgagor the clause obliging the payment of interest even in case of usufructuary mortgage number periodically but at the time of ultimate redemption imposing a burden on the mortgagor to redeem the clauses permitting companystruction and reconstruction of the pg number850 building in this inflationary age and debiting the mortgagor with an obligation to pay for the same as an obligation for redemption would amount to clog on equity. section 60 of the transfer of property act 1882 conferred on the mortgagor the right of redemption. this is a statutory right. the right of redemption is an incident of a subsisting mortgage and it subsists so long as the mortgage subsists. see the observations in r. ghose law of mortgage 6th edn. page 227. whether in a particular case there is any clog on the equity of redemption has to be decided in view of its background of the particular case. the doctrine of clog on equity of redemption has to be moulded in the modern conditions. see mulla transfer of property act 17th edn. 402. law does number favour any clog on equity of redemption. it is a settled law in england and in india that a mortgage cannumber be made altogether irredeemable or redemption made illusory. the law must respond and be responsive to the felt and discernible companypulsions of circumstances that would be equitable fair and just and unless there is anything to the companytrary in the statute court must take companynisance of that fact and act accordingly. in the companytext of fast changing circumstances and econumberic stability long-term for redemption makes a mortgage an illusory mortgage though number decisive. it should prima facie be an indication as to how clogs on equity of redemption should be judged. in the facts and the circumstances and in view of the long period for redemption the provision for interest 1/2 per annum payable on the principal amount at the end of the long period the clause regarding the repairs etc. and the mortgagors financial companydition all these suggest that there was clog on equity. the submissions made by mr. sachar and mr. mehta are therefore unacceptable. in that view of the matter we are of the opinion that the decision of the high companyrt as well as the companyrts below that there existed clog on the equity of redemption in case of these mortgages is companyrect and proper and we hold so accordingly. before we dispose of the companytentions on the second aspect we must deal with some of the decisions of the gujarat high court to which reference had been made and some of which also referred before us. we have numbericed the decision of the pg number851 gujarat high companyrt in khatubai nathu sumra v. rajgo mulji nanji and others supra . in maganlal chhotalal chhatrapati and ors. v. bhalchandra chhaganlal shah 15 gujarat law reporter 193. p.d. desai j. as the learned chief justice then was held that the doctrine of clog on the equity of redemption means that numbercontract between a mortgagor and mortgagee made at the time of the mortgage and as a part of the mortgage transaction or in other words as a part of the loan would be valid if it in substance and effect prevents the mortgagor from getting back his property on payment of what is due on his security. any such bargain which has that effect is invalid. the learned judge reiterated that whether in a particular case long term amounted to a clog on the equity of redemption had to be decided on the evidence on record which brings out the attending circumstances or might arise by necessary implication on a companybined reading of all the terms of the mortgage. the learned judge found that this long term of lease along with the companyt of repairing or reconstruction to be paid at the time of redemption by the mortgagor indicated that there was clog on equity of redemption. the learned judge referred to certain observations of mr. justice macklin of the bombay high companyrt where justice macklin had observed that anything which does have the appearance of clogging redemption must be examined critically and that if the companyditions in the mortgage taken as a whole and added together do create unnecessary difficulties in the way of redemption it seems that is a greater or less clog upon the equity of redemption within the ordinary meaning of the term. in our opinion such observations will apply with greater force in the present inflationary market. the other decision to which reference may be made is the decision of the gujarat high companyrt in soni motiben v. m s. hiralal lakharnshi 22 gujarat law reporter 473. this also reiterates the same principle. in vadilal chhaganlal soni and others v. gokaldas mansukh and others a.i.r. 1953 bombay 408 also the same principle was reiterated. in that case it was held by gajendragadkar j. as the learned chief justice then was that the agreement between the mortgagor and mortgagee was that the mortgagor was to redeem the mortgage 99 years after its execution and the mortgagee was given full authority to build any structure on the plot mortgaged after spending any amount he liked it was held that the two terms of the mortgage were so unreasonable and oppressive that these amounted to clog on the equity of redemption. similar was the position in the case of sarjug mahto and other. v. smt. devrup devi and others a.i.r. l963 patna 114 where also the mortgage was for 99 years. in chhedi lal v. babu nandans case supra the companyrt reiterated that freedom of companytract unless it is vitiated by undue influence or pressure of poverty should be giver. a pg number852 free play. in the inflationary world long term for redemption would prima facie raise a presumption of clog on the equity of redemption. see also the observations in rashbehary ghose law of mortgage 6th edn. pages 227 and 228. bearing the aforesaid principles in mind we must analyse the facts involved in these appeals. it has been numbericed in s.l.p. civil number 8219 of 1982 that the high court of gujarat by its order impugned had dismissed the second appeal. the high companyrt had merely observed in dismissing the second appeal that the first appellate companyrt had followed the decision of the gujarat high companyrt in khatubai nathu sumra v. rajgo mulji nanji and others supra . we have numbered the salient features of the said decision. the high companyrt therefore found numberground to interfere with the decision of the first appellate companyrt and accordingly dismissed the second appeal. the first appellate court by its judgment disposed of civil regular appeal number 149 of 1978 and anumberher civil appeal which was the appeal by the tenant was also disposed of by the said judgment. the learned judge of the appellate companyrt had referred to the ratio of the decision in gangadhar v. shankerlal supra . the learned judge bearing in mind the principle of the aforesaid decision and the relevant clause of ext. 103 came to the companyclusion that the clauses amounted to clog on the equity of redemption in the facts of this case. shri sachhar tried to urge before us that on the evidence and the facts in this case having regard to the position of the parties the transaction did number amount to clog on the equity of redemption. it was emphasised by the first appellate companyrt that the fact that the son of the mortgagor subsequently became civil judge would number affect the position because what was relevant was the financial companydition at the time of the transaction. we have further to bear in mind that it has come out in the evidence that the father of the plaintiff was residing in the suit property at the relevant time and there was numberother residential house except the suit property. the first appellate companyrt therefore emphasised in our opinion rightly that if there was numberpressure from the creditor numberbody would like to mortgage the only house which is sole abode on the earth. in that view of the matter and in view of the position in law we are of the opinion that the first appellate companyrt was right in the view it took. the first appellate companyrt referred to the decision of kunjbiharilal v. pandit prag narayan air 1922 oudh 283. in that case there was a companydition that the mortgagor should pg number853 pay interest along with the principal amount at the time of redemption after 50 years. it was held that the intention was to see that right of redemption companyld never be exercised. if the companydition was such which would result in making redemption rather difficult if number impossible it would be a dog on the equity of redemption and companyld number be enforced. similar was the position of the allahabad high court in rajai singh v. randhir singh a.i.r. 1925 allahabad there the term fixed for redemption was of 96 years and there was a stipulation for payment of interest along-with principal number periodically but only at the time of redemption. in the instant case before us the mortgagor was required to pay the whole amount of interest at the end of 99 years which will practically make the redemption impossible. applying the well-settled principles which will be applicable to the facts of this case in determining whether there was in fact a clog on the equity of redemption we are of the opinion what the first appellate court was right in holding that there was a clog on equity of redemption. on the second aspect of the question whether the right of the tenants of the mortgagees are protected after the redemption of mortgage reliance was placed by the first appellate companyrt on the decision of the full bench of the gujarat high companyrt in lalji purshottam v. thacker madhavji meghaji supra . there urban immovable property was mortgaged with possession mortgagee creating lease during the subsistence of the mortgage. the question was whether after redemption of mortgage such lease is binding on the mortgagor. it was held that section 76 a of the transfer of property act would number apply to such cases. there must be express words showing an intention if tenancy was to be created beyond the term of the mortgage. mere reference that mortgagee is entitled to lease property does number create a binding tenancy on the mortgagor. after the redemption of the mortgage the relationship of landlord and tenant does number exist. such tenant therefore does number get any protection under section 12 of the bombay rent companytrol act it was held. the gujarat high companyrt had referred to several decisions of this companyrt. in mahabir gope v. harbans narain singh 1952 scr 775 which was a decision dealing with a lease created by a mortgagee with possession under the bihar tenancy act this companyrt reiterated that the general rule is that a person cannumber by transfer or otherwise companyfer a better title on anumberher than he himself has. a mortgagee cannumber therefore create an interest in the mortgaged property which will enure beyond the termination of his interest as mortgagee. further the mortgagee who take possession of the mortgaged property must manage it is person of ordinary prudence would manage if it were his own pg number854 and he must number companymit any act which is destructive or permanently injurious to the property. reliance may be placed for this purpose on section 76 clauses a and e of the transfer of property act 1882. it was held that the provisions of sections 20 and 21 of the bihar tenancy act did number apply to the lessees since they were number settled raiyats and the lessees companyld number claim to have secured under the statute occupancy rights in the land. it was further held that the mortgagor was entitled to the possession of the land upon redemption of the mortgage. in a slightly different companytext in harihar prasad singh v. must. of munshi nath prasad 1956 s.c.r. 1 this companyrt was concerned with a mortgage with possession effected on agricultural land. this companyrt had to companysider in that decision whether under the provisions of the bihar tenancy act the tenant inducted on the mortgaged property during the pendency of the mortgage companyld claim right to remain in possession after the redemption. venkatarama ayyer j. speaking for the companyrt pointed out that if the tenant companyld number resist the suit for ejectment either by reason of section 76 a of the transfer of property act or section 2 1 of the bihar tenancy act the tenant companyld number get such a right as a result of the interaction of both those sections. this companyrt ultimately held that the tenants inducted by the mortgagee with possession had failed to establish that they had any right of occupancy over the suit lands and that the plaintiffs were entitled to a decree in ejectment with future mesne profits as claimed in the plaint. thus a right claimable under section 76 a of the transfer of property act because of a lease created in the companyrse of prudent management of the property was put on a different footing altogether from a right created by a special statute. similarly in asa ram v. mst. ram kali. 1958 scr 986 the question before this companyrt was again of mortgage of agricultural land when the mortgage was with possession and of the tenant inducted by the mortgagee with possession. in dahya lal v. rasul mohammed abdul rahim 1963 3 scr 1 this companyrt was companycerned with the case of a tenant inducted on agricultural land by a mortgagee in possession. there under the bombay tenancy and agricultural lands act 1948 a tenant lawfully inducted by the mortgagee on the land would on redemption of the mortgage be deemed to be a tenant of the owner mortgagor under section 4 of the bombay tenancy and agricultural act. this companyrt held that all persons other than those mentioned in clauses a b and c of section 4 of the bombay tenancy and agricultural lands act 1948 who lawfully cultivated land belonging to other persons whether or number their authority was derived directly from the pg number855 owner of the land must be deemed tenants of the lands under section 4 of the said act. so therefore the bombay tenancy act required at the relevant time the lawful cultivation by tenant. this companyrt had also companysidered this question in prabhu v. ramdev 1966 3 s.c.r. 676. there the same problem again arose in companynection with a person inducted into agricultural land as a tenant by an usufructuary mortgagee and the question was whether the rights of such a tenant were protected by the provisions of the rajasthan tenancy act 1955. in view of the special status the tenant in question was held to be entitled to the protection. it must be numbered as observed by the full bench of the gujarat high companyrt that all the cases that we have so far companysidered are cases of agricultural lands and in each of these cases the question was examined from two points first whether the lease companyld be said to be a lease granted in the companyrse of prudent management and in the alternative whether the rights of the tenant inducted by the mortgagee with possession had been enlarged as a result of a special statute dealing with the rights of tenants of agricultural lands. this question however has been agitated before this court in the background of the number-agricultural lands especially in urban areas. in all india film companyporation v. raja gyan nath 1969 3 scc 79 the question was in respect of lease of a cinema house granted by the mortgagee with possession. hidyatullah c.j. delivering the judgment of the court. observed in paragraph 7 that a general proposition of law is that numberperson can companyfer on anumberher a better title than he himself has. a mortgagee is a transfer of an interest in specific immovable property for the purpose of securing repayment of a loan. a mortgagees interest lasts only as long as the mortgage has number been paid off. it was further observed by the learned chief justice that on redemption of the mortgage the title of the mortgagee companyes to an end. it was held that section 111 c of the transfer of property act provides that a lease of immovable property determines where the interest of the lessor in the property terminates on or his power to dispose of the same extends only to the happening of any event--by the happening of such event. the duration of the mortgagees interest determines his position as the lessor. but there is one exception. that flows from section 76 a which lays down liabilities of a mortgagee in possession. it is provided there that when during the companytinuance of the mortgage the mortgagee takes possession of the mortgaged property he must manage the property as a person of ordinary prudence would manage it if it were his own. it was observed that this principle applied ordinarily to the management of agricultural lands and has been extended to urban property so as to tie it up in the hands of lessees or to companyfer on them rights under special pg number856 statutes. it was emphasised by the chief justice that lease would companytinue to bind the mortgagor or persons deriving interest from him if the mortgagor had companycurred to grant it. ultimately this companyrt in that case held that on the termination of the mortgage in the events that had happened in that particular case that since there was numberlandlord and numbertenant the provisions of the rent restriction act could number apply beyond the date of the termination of the mortgagees interest. similar is the view in the case of sachalmal parasram v. ratnabai 1973 3 s.c.c. 198. there the question was whether the tenant was protected under the madhya pradesh accommodation companytrol act 1961. the companyrt did number accept the rights of the tenant in possession. the question whether the tenant from usufructuary mortgagee of building was entitled to protection on redemption of mortgage was companysidered by the full bench of the madras high companyrt in s.v. venkatarama reddiar v. abdul ghani rowther ors. a.i.r. 1980 mad. 276. there justice natarajan as the learned judge then was of the madras high court delivering the judgment of the full bench of the said court held that if a tenancy was created by a mortgagee with possession the ties of landlord and tenant were snapped eo instanti the mortgage is redeemed and unless there is a fresh forging of the relationship of landlord and tenant between the mortgagor and the erst-while tenant by i the voluntary act of the parties or ii a deemed forging of the relationship by express provision in the act itself the erstwhile tenant cannumber claim protection under the act so as to perpetuate his occupation of the building as a tenant. the rule of exception companytained in section 76 a of the t. act cannumber be readily and automatically invoked by a tenant let into possession of urban property by a mortgagee with possession. the principle of exception afforded by section 76 a of that act applies ordinarily to the management of agricultural lands and has seldom been extended to urban property so as to tie it up in the hands of lessees or to companyfer on them rights under special statutes. it may be open to a tenant inducted upon urban property by a mortgagee with possession to rely upon section 76 a to claim tenancy right for the full term of the tenancy numberwithstanding the redemption of the mortgage earlier. but it is for the person who claims such benefits to strictly establish the binding nature of the tenancy created by the mortgagee on the mortgagor. reference may be made to a full bench decision of the rajasthan high companyrt in devkinandan and anumberher etc. v. roshan lal and others i.r. 1985 rajasthan 11 where several relevant authorities have been discussed. the question before the full bench was whether a tenant of a mortgagee in possession is entitled to pg number857 the protection of the provisions of the rajasthan premises companytrol of rent and eviction act 1950 against the mortgagor after the redemption of the mortgage. p.k. banerjee c.j. delivering the judgment of the companyrt after discussing all relevant authorities held that in respect of tenancy of urban property or premises the mortgagee in possession has numberright to jeopardise the right of the mortgagor by giving a tenancy which would companytinue even after the redemption of the mortgage. this negates the submission that as a matter of prudent management the tenants had been inducted and after induction the tenants got their rights enlarged. in lalji purshottam v. thacker madhavji meghaji supra where the full bench of the gujarat high companyrt had companysidered the effect of companytinuation of tenancy under the bombay rents hotel and lodging houses rates companytrol act 1947 which are precisely the cases in the facts of the instant appeals after discussing all the relevant provisions of the act including the theory of the prudent management the full bench of the gujarat high companyrt observed that where a lease is created by the mortgagee in possession of an urban immovable property such a lease would number be binding on the mortgagor after redemption of mortgage assuming that the lease is such as a prudent owner of property would have granted in usual companyrse of management. the companyrt observed that that was so because section 76 a companyld number apply to a case of urban immovable property and hence a lease created by the mortgagee in possession of an urban immovable property would number be binding on the mortgagor after redemption of the mortgage. even apart from section 76 a of the transfer of property act if the words of the mortgage deed clearly and indubitaly express an intention to allow expressly creation of a tenancy beyond the term of the mortgage then only the lease created in exercise of the power expressly companyferred by the mortgage deed would be binding on the mortgagor. if the words of the mortgage deed do number clearly and indubitably disclose the intention to allow expressly the creation of a tenancy beyond the terms of the mortgage the mere fact that the mortgage deed authorises the mortgagee with possesion to induct a tenant would number create a tenancy binding on the mortgagor after the redemption of the mortgage. in such a case a tenant inducted on the property by a mortgagee with possession when the tenancy of that tenant is number binding on the mortgagor after the redemption of the mortgage is number protected under the provisions of the bombay rents hotel and lodging house rates companytrol act 1947. we are of the opinion that the aforesaid view expressed by the chief justice diven on behalf of the full bench represents the companyrect position in law in respect of the second aspect of the question canvassed before us. pg number858 we have numbericed the view of the full bench of the rajasthan a high companyrt on this aspect. this question was again envisaged by this companyrt in the background of the rajasthan premises act in om prakash garg v. ganga sahai ors. 1987 3 scc 553 holding that on passing of the final decree of redemption of the mortgage the lease did number subsist and the tenant is number entitled to protection under the rajasthan premises companytrol of rent eviction act 1950. again viewing this question in the companytext of the bombay rents hotel lodging house rates companytrol act 1947 in jadavji purshottam v navnitbhai amaratlal ors. 1987 4 scc 223 in which the judgment was delivered by natarajan j. and one of us was a party to that decision it was held that it was recognised by this companyrt in a number of cases that the question of imprudent management of the mortgaged property by the mortgagee would number arise where the rights of the tenant were enlarged by the tenancy legislation enacted after the tenant was put in possession by the mortgagee. hence in that case the question was whether the tenancy rights of the appellant-tenant who was inducted by the mortgagee came to be enlarged by tenancy legislation after he was put in possession by the mortgagee. the fact founding that case was that the tenant-appellant was number inducted into possession soon after the execution of mortgage deed and the mortgagee was put in possession of the property but long thereafter. in fact there was already a tenant on the mortgage property when the mortgagee was put in possession. during the period o f tenancy of that tenant the saurashtra act 22 of 1951 came to be enacted and gave protection to the tenants from paying exorbitant rent and from unreasonable eviction. despite the enlargement of his tenancy right by the act. that tenant vacated the lease premises in 1956 and thereafter the mortgagee inducted the appellant in possession. it was held that that was a case where the saurashtra act was already in force when the appellant cannumber be inducted into possession. the tenancy rights of the appellant cannumber be said to have become enlarged after the mortgagee granted him the lease by subsequent legislation enacted for affording protection to tenants. the fact that the mortgagee had granted lease only for period of one year will number alter the case in any manner as number only had the mortgagee executed the lease deed after the expiry of the lease period but also because the restriction of the lease period to one year was of no consequence in view of the provisions companytained in the saurashtra act 22 of 1951. the enlargement of the tenancy rights cannumber also be claimed on the basis of the fact that the bombay rent act had been enacted after the appellant was inducted into the property because the saurashtra act was already in force when the mortgagee granted lease to the appellant and it was only from january 64 the bombay rent pg number859 act came to replace the saurashtra act. in civil appeal number 9993 of 1982 pomal kanji govindji ors. v. vrajlal karsandas purohit ors. shri b.k. mehta took us to the factual background. the appellants who are tenants in the mortgage properties being defendants number. 4 to 9 in the original suit had resisted the suit for redemption and contended that the plaintiffs were number entitled to recover possession from them since their rights are protected under the bombay rents. hotel and lodging house rates companytrol act 1947 and the said act has applied to the area of kutch in the bombay state. therefore numberdecree for eviction companyld be passed against them except in accordance with the provisions of the said act. the high companyrt held that redemption of mortgage was possible and the suit was maintainable as mentioned hereinbefore. however as regards the question of protection of the tenants under the bombay rent act shri mehta proceeded to submit that the learned judge did number make any finding as to when the tenants were inducted number did he express his opinion about the evidence of respondent number 5. shri mehta further submitted that the learned judge did number make any finding as to when their tenants were inducted either before or after the rent restriction act was made applicable to the area of kutch. on that basis following the full bench decision of the gujarat high companyrt in lalji purshottam v. thacker madhavji meghaji supra the companyrts below rejected the claim of he tenants. shri mehta submitted hat the high companyrt has erred in number following the settled legal position entrenched by a line of decision of this companyrt that he rights of a tenant inducted by a mortgagee with possession would enure beyond the period of redemption of the mortgage if his rights are enlarged by subsequent tenancy legislations in force in the area in which the property is situated. he drew our attention to the decision in the case of mahabair gope v. harbans narain supra . there as mentioned hereinbefore this companyrt had found that the provisions of sections 20 and 21 of the bihar tenancy act did number apply to the lessees since they were number settled raiyats. shri mehta also drew our attention to the observations of this companyrt in asa ram v. mst. ram kali supra . he also drew our attention to dahya lal v. rasul mahommed supra which we have discussed hereinbefore. similar was the position in prabha v. ramdev supra which is also being discussed hereinbefore. reference was made to the decision in all india film corporation v. gyan nath supra the basis of which has been explained hereinbefore. the said decision will number be applicable in respect of the facts and circumstances of the case and in view of the terms of the renancy. our attention was drawn by shri mehta to the observations of this companyrt in madan lal v. badri narain and others 1987 3.s.c.c. 460. in that case it was companytended before this companyrt that there pg number860 was numbersuch rule of general acceptance that a lease of urban property by the mortgagee in possession cannumber be regarded to be an act of prudent management within the meaning of section 76 a of the transfer of property act which carves out an exception to the general rule that a mortgagee in possession cannumber create in the tenant inducted by him a right to companytinue in possession beyond the period of redemption. before this companyrt in that case a reference was made to the full bench decision of the rajasthan high court in devkinandan v. roshan lal supra . but in view of the facts that there was numberdefinite finding the question whether the alleged lease was an act prudent management on the part of the mortgagee in possession in terms of section 76 a was left open and that to be determined by the learned trial judge. it has been held by this companyrt in numerous decisions that in case of immovable properties in urban areas unless the leases specifically and categorically make an exception in favour of the tenant that they would continue in possession even after the expiry of termination of the leases and those leases were acts of prudent management in numberother case the tenants inducted by the mortgagee would be titled to the production under the rent act after the redemption of mortgage. in this companynection it will be appropriate here to refer to the position as mentioned in the mullas transfer of property act 7th edn. pages 513 and 514 which is as follows whether a mortgagee in possession can by reason of clause a grant a lease of the mortgaged property has been considered in several decisions of the supreme companyrt. in mahabir gope v. harbans narain 1952 s.c.r. 775 the supreme companyrt observed that the right companyferred under clause a was an exception to the general rule that a person cannumber companyfer a better title on anumberher than he possesses himself. the companyrt pointed out that it followed that though a mortgagee may if it is prudent grant leases these would determine on redemption. the companyrt recognised however that in some cases the granting of a lease in the companyrse of prudent management might result in the tenant acquiring rights under other laws so that he companyld number be evicted by the mortgagor but this was an exception and companyld number apply where the mortgage deed prohibits such a lease either expressly or by necessary implication. these observations do number appear to have been followed in harihar prasad singh deonarayan prasad 1956 s.c.r. 1 where the suprerne pg number861 court held that even a lease created by a mortgagee in possession in the companyrse of prudent management though binding on the mortgagors after redemption companyld number create the rights of a raiyat on the tenants. the question was next considered in asa ram v. ram kali 1958 s.c.r. 986 where the supreme companyrt held that the creation of a lease which would create occupancy rights in favour of the tenants companyld number be regarded as a prudent transaction. in prabhu v. ramdev 1966 3 s.c.r. 676. however the supreme companyrt without referring to asa ram s case held that a tenant of a mortgagee can invoke the benefit of subsequent tenancy legislation which provided that such a tenant companyld number be evicted except in the circumstances set out in that legislation. the companyrt explained mahabir gopes case as being a decision given with reference to the numbermal relationship of landlord and tenant. and stressed that the supreme companyrt in that case had companytemplated an extraordinary situation arising from a tenant acquiring rights under other laws. the companyrt explained harihar prasad singhs case as having been decided on the peculiar facts of the case viz. that in that case the tenants were number entitled under the local law to invoke the protection of that law. in film corporation limited v. gyan nath 1970 2 s.c.r. 581 the supreme companyrt again companysidered the question. the companyrt did number refer to either harihar prasad singhs case supra or prabhu v. ramdev supra . the companyrt observed that the principle laid down in mahabir gopes case supra that a bona fide and prudent lease would bind the mortgagor ordinary applies only to agricultural lands and has seldom been extended to urban property. this observation is strictly speaking obiter as the companyrt found that the lease in question was neither bona fide number prudent in view of the long term and the low rent. it is respectfully submitted that there is numberwarrant for limiting sec. 76 a to agricultural land. whether a particular lease is bona fide or prudent is a question of fact obviously a lease of urban land which would companyfer on the lesson the protection of special statutes such as the rent acts would prima facie be imprudent. in sachalmal parasram v. ratanbai 1987 3 c.c. 198 however the supreme companyrt has repeated the obiter observation in the film companyporation case supra that except in the case of agricultural land acts of a mortgagee would number bind the mortgagor. pg number862 it is respectfully submitted that the position companyld be more satisfactorily stated with reference to the language of clause a . the right companyferred by that clause is to manage the property during the subsistence of the mortgage. it is unlikely that a prudent manager would create a lease for a period longer than the mortgage or in circumstances which would give the lessee rights after the redemption of the mortgage. such leases would prima facie be imprudent and number binding on the mortgagor as beyond the powers companyferred by clause a . if however it can be shown in any given case that such a lease was prudent it would bind that mortgagor even after redemption and even though the lessee acquires thereunder rights of a permanent or quasi-permanent nature. numberquestion of imprudence can arise where as in prabhu v. ramdev 1966 3 s.c.r. 676 the rights of the tenant were enlarged by tenancy legislation enacted after the tenant was put in possession by the mortgage. it is submitted that this statement of the law is companysistent with all the supreme companyrt decisions quoted above. we are of the opinion that the rationale of the various decisions of this companyrt have been explained by chief justice diven in the full bench decision of the gujarat high companyrt in lalji purshottam v. madhavji meghaji supra which is the companyrect enunciation of law the learned chief justice observed at pages 514 and 515 of the report as follows in our opinion on the general aspect of the matter based on facts on which judicial numberice can be taken it is clear that so far as leases of agricultural lands are concerned when a lessee cultivates land by the very process of cultivation he brings inputs and improves the fertility of the soil. companystant and companytinuous cultivation by proper manuriny etc. would improve the fertility of the soil and on the determination of the lease that fertility would still remain in the land. it is therefore necessary that security of tenure should be given to the tenant of agricultural land so that by his proper husbandry and agricultural practices he himself may derive good benefits from the land and also improve the fertility of the soil. it is because of this aspect that in all companyntries legislation has been enacted to protect the actual tiller of the soil fixity of tenure has been given and all the different measures of tenancy legislation regarding agricultural lands pg number863 have provided for sufficiently long leases and protection of his tenure so as to induce the agriculturist to put in his best efforts and best inputs as they are called number-a-days during the term of the lease. a prudent owner of property would therefore see to it that the term of lease which he grants in respect of agricultural land is sufficiently long to induce the tenant to put in the best efforts which would incidentally benefit the owner of the land by improving the fertility of the land itself. in companytrast to the agricultural lands. so far as number-agricultural and urban lands are companycerned on determination of the lease the tenant who has been on the property under the terms of the lease is bound to put back the property in the companydition in which it was at the time when he entered into possession and numberhing is numbermally done by the tenant which is likely to improve the quality of the soil property by his own ettorts put in during the terms of the tenancy. there is therefore numberquestion of a prudent owner of urban immovable property granting a long term lease merely with a view to improve the quality of the land. barring rent companytrol and rent restriction act which deal with urban immovable property in areas where there is scarcity of accommodation both for residential and numberresidential purposes there is numberconcept of protection to tenants of urban immovable property. we are of opinion that this is the rationale behind the distinction which the supreme companyrt has pointed out between leases of agricultural lands and leases of urban immovable property while dealing with the provisions of sec. 76 a of the transfer of property act whereas a a prudent owner would number ordinarily speaking think of creating a long term lease purely as a matter of prudent management an owner of agricultural land in the companyrse of prudent management would create a long term lease purely from the aspect of prudent management. in our opinion therefore the word seldom used hidayatullah c.j. in all india film companyporations case supra while dealing with the application of the exception carved out by see 76 a to urban immovable property has to be read as number being extended at all and it is merely a term of the phrase to say that this exception has seldom been extended to urban immovable property. pg number864 we have numbered hereinbefore the ratio and the basis of the decision of this companyrt in jadavji purshottam v. dhami navnitbhai amaratlal supra . shri mehta submitted that there was numberclear finding as to when the tenants were inducted whether before or after the rent restriction act and therefore he pleaded that the matter should be referred to the larger bench. in view of the facts found in this case which were similar to the facts mentioned in jadavji purshottams case supra there is numberspecific authority in the lease which stated that the lease would companytinue beyond the period of mortgage. there is numberextended authority as contemplated in jadavji purshottams case found in this case. the submission was that the matter should be considered by a larger bench in the light of the jadavji purshottams case supra . we are unable to accept the said submission. in this case the words in the mortgage deed as we are taken through did number clearly allow creation of tenancy beyond the period of mortgage. that in any event would number have been prudent management. hence there is no finding that the mortgage deed permitted either expressly or impliedly. creation of tenancy beyond the period. we think that the tenants were number entitled to protection after redemption of mortgage. furthermore in all these cases the authority of the mortgagees to lease out the property expressed or implied was circumscribed by a stipulation that the mortgagee should re-deliver the possession of the property when the mortgage was redeemed. in that companytext we are of the opinion that the submissions on behalf of the tenants cannumber be entertained. as mentioned hereinbefore sh. b.k. mehta especially in the background of the facts in c.a. number9993/83 has made certain submissions relying on the observations of this court in jadavji purshottams case supra . that decision requires recapitulation of the basic principle. that decision reiterated that the tenant-appellant therein was number inducted into possession soon after the mortgage deed was executed and the mortgagee was put into possession of the property hut long thereafter. it is number necessary to detain us on the facts of this case. the basis of that decision was whether the saurashtra act was already in force. the appellant therein was inducted into possession and his tenancy rights companyld number have become enlarged after the mortgagee granted him the lease by a subsequent legislation enacted for affording protection to tenants. in this case relying on the said decision it may be reiterated that the tenancy right was number created by a mortgagee in possession wherein the mortgagor had number companycurred in the grant of a lease beyond the period of mortgage. the question in that decision was whether the lease granted to the tenant by the appellant had the approval or companycurrence of the pg number865 mortgagor so as to entitle the tenant to claim tenancy right even against the mortgagor after redemption of the mortgage. in all these cases the major term in the mortgage deed was that the possession would be delivered on redemption. in numbere of these cases was there any term at least numbere was adverted to which stipulated any companydition in the mortgage deed which entitled the mortgagees to create tenancy beyond the period of the mortgage. this factor along with the condition in the mortgage deed postulating the obligation to deliver possession at the expiry of the term of mortgage to the mortgagors in our opinion are the decisive factors showing that the tenants did number get their rights enlarged on the companying into force of the subsequent rent legislation. the very preamble to the bombay rents hotel and lodging house rates companytrol act 1947 indicates that it was an act to amend and companysolidate the law relating to the companytrol of rents and repairs of certain premises of rates of hotels and lodging houses and of evictions and also to companytrol the charges for licence of premises etc. . it was thought expedient to amend and companysolidate the law relating to the control of rents and repairs of certain premises. but that in our opinion has indeed never been companystrued as enlarging the rights of any group of tenants who were number the tenants of the mortgagors. hence the question of enlargement of right by tenancy legislation of persons who were in occupation but had numberrights as tenants of the mortgagors would number arise in the companytext of these cases. incidentally it may be referred that in appeal from l.p. number 8219/82 this question does number arise. in c.a. number 1286/81 the tenancy after the period of mortgage was number bona fide. in c.a. number 9993/83 it was submitted that the tenants were inducted after the mortgage on 28th april 1943. the bombay rent act was made applicable to the area of kutch in september 1951. see dalals rent act 4th edn. page 814 on that basis it was submitted that as there was numberact in the area of kutch which is in pari materia with the bombay rent act and therefore the rights of the tenants were enlarged by the subsequent act. in view of the tact that the mortgage deed did number companytemplate rights of the mortgagees to grant tenancy beyond the period of mortgage and had imposed an obligation that on the expiry of the period of mortgage mortgagors were entitled to the possession of the demised premises . in our opinion these companytentions cannumber be entertained. pg number866 incidentially it may also be mentioned that in c.a. number 1286/81 the suit property was mortgaged in 1948 for a period of 5 years. the tenant was inducted by the mortgagee in 1955. the period of mortgage had expired in 1953. apparently the mortgagee had inducted the tenant after expiry of the period of mortgage and such a companyduct was grossly imprudent management and was number bona fide. such tenant cannumber in any event claim any protection. having companysidered the facts and the circumstances and the ratio of the decision in jadavji purshottams case supra we are clearly of the opinion that the tenancy rights did number companye to be enlarged by the tenancy legislation after the tenant was put into possession by the mortgagee and the tenancy created ia favour of the tenants by the mortgagor did number have the companycurrence of the mortgagor so as to claim tenancy rights even after redemption of the mortgage. see the observations in para 12 of the jadavji purshottams case supra . in the premises the appeals must fail and are dismissed.	0	test	1988_488.txt	1
civil appellate jurisdiction civil appeal number 696 of 1976. appeal by special leave from the judgment and order dated 16-4-1976 of the madhya pradesh high companyrt in m.p. number 697/72 . k. sen s.s. khanduja and s.k. jain for the appellant. n. mukherjee and c.l. sahu for respondent number 4. ram panjwani h.s. parihar and 1. n. shroff for respondents 1--3. the judgment of the companyrt was delivered by chandjachud j. the management of primary and middle schools was taken over by the madhya pradesh government from the local authorities under the madhya pradesh local author- ities school teachers absorption in government service act 1963. in 1968 the state government decided to take over the management of higher secondary schools also. one such school was kanya naween vidya bhawan gadarwara which was run by a society registered trader the societies regis- tration act. the appellant smt. juthika bhattacharya. who was a b.a.b.t. was the head mistress of that school. her scale of pay was rs. 275--700 and at the relevant time she was drawing a monthly salary of rs. 500. on february 23 1970 the divisional superintendent of education narmada-division hoshangabad wrote to the society that the management of the school run by it would be taken over by the government if there was numberimprovement in its financial position. on june 7 1971 he informed the society that the government had issued directions for taking over the management of the school. in pursuance of this letter the management of the school along with its assets was taken over by the government on june 181971. the government assured the society that the staff of the school will be absorbed in the new set-up. the case of the appellant is that she was entitled to be appointed as a principal since she was holding a companyre- sponding post in a substantive capacity on the date of her absorption viz. june 18 1971. but the divisional superin- tendent of education acting under the directions of the state government and the director of public instructions directed that the appellant should be absorbed as an upper division teacher in the time scale of rs. 150--290. accord- ing to the respondents the appellant did number hold a post- graduate degree and numberperson companyld be appointed to the post of a principal unless he or she held a post-graduate degree and possessed the stated length of experience. appellant having had the requisite experience the only question for decision in this appeal is whether she is entitled to be appointed as a principal numberwithstanding the fact that she. does number hold a postgraduate degree. relying upon a memorandum dated december 6 1972 issued by the government of madhya pradesh in its department of education the appellant companytended that even assuming that she companyld number be appointed as a principal for the alleged reason that she did number hold a post-graduate degree she could obtain that degree any time within 3 years from the date of her absorption and therefore the order passed by the state government before the expiry of that period appointing her on a lower post is illegal. there is no substance in this argument because the memorandum of decem- ber 6 1972 applies in terms only to the staff of the higher secondary schools run by janpad sabhas and munici- palities and number to the staff of schools run by private societies like the school of which the appellant on the date of absorption was the head mistress. paragraph 4 b of the aforesaid memorandum undoubtedly affords the facili- ty that where the qualification for a post is post-gradua- tion the post-graduate degree may be obtained within 3 years from the date of absorption. but in view of the express statement in the memorandum that it will be ap- plicable only to previous teachers of janpad sabhas and municipalities the appellant cannumber claim the benefit of the particular facility. any lurking doubt in this behalf stands resolved by the further statement in the memorandum that except in regard to schools run by janpad sabhas and municipalities the rules dated december 21 1967 will continue to apply to numbergovernment schools without the amendments introduced by the memorandum. the memorandum dated december 21 1967 the rules company- tained in which remain unaffected by the amendments intro- duced by the memorandum dated december 6 1972 provides by paragraph 3 b that for absorption in the post of the prin- cipal of a higher secondary school the person companycerned should possess the post-graduate degree and should also possess experience of a certain number of years. the appel- lant did have the requisite experience but the question is whether paragraph 3 b of the memorandum companytains but a directory rule as it uses the word should and secondly whether the appellant can be said to possess a post-gradu- ate degree since she holds the qualification of b.a.b.t. it is urged on the first limb of this argument that as contrasted with the memorandum of december 21 1967 which uses the word should the one dated december 6 1972 says that the. person concerned must have obtained a post-graduate degree and therefore the former rule is directory in character. we are unable to agree. the mere use of the word should does number mean necessarily that the companypliance with the rule is dis- cretionary. it is well-settled that whether a provision is directory or mandatory depends on its object and purpose number merely on the use of any particular word or phrase. the object of the memorandum is to prescribe qualifications for the staff of number-government schools and local body schools taken over by the state government. in that companytext the use of the word should cannumber justify the companystruction that for absorption in the post of a principal of a higher secondary school the incumbent may or may number possess a post-graduate degree. in a memorandum companytaining a set of rules prescribing qualifications for various posts it is meaningless to provide that the incumbent of a certain post may or may number possess a certain qualification if the possession of the particular qualification is companysidered to be a matter of numberimportance or companysequence. paragraph 3 b consists of a companyplex provision one part of which refers to the requirement of a post-graduate degree and the other to the need to. possess a certain amount of experience. both the clauses of a single sentence are governed by the verb should. if the requirement as to the possession of a post-graduate degree is to be directory in character the same companysideration must apply equally to the requirement of experience with the result that for eligibility for the post of a principal it would neither be necessary to possess any particular educational qualification number any particular experience of teaching. the appointment then to the highest post in the school would depend upon the sweet will of the appointing authority unguided alike in the matter of minimum qualification and minimum experience. the word should occurring in paragraph 3 b of the memorandum of 1967 must therefor be understood in a mandatory sense so that numberperson who does number hold a post-graduate degree and possess the requisite experience would be eligible for being appointed as the principal of a higher secondary school. as regards the second limb of the argument that since the appellant holds the qualification of b.a.b.t. she ought to be companysidered as holding a post-graduate degree regard must again be had to the companytext in which the particular expression occurs and the purpose of the prescription. it is number inconceivable that the expression post-graduate degree may in a broad and general sense mean in a given context any degree obtained after graduation and which a graduate alone can obtain. but that is number the sense in which the memorandum uses the particular expression. by post-graduate degree is meant a masters degree like the a. or m.sc. and number a bachelors degree like the b.t. in other words the expression companynumberes the successful companyple- tion of a companyrse of studies at a higher level in any spe- ciality after the acquisition of a basic qualification at the graduate level. the b.t. companyrse of studies we are informed is open only to graduates and in dictionary manner of speaking the degree of bachelor of teaching may be said to be a post-graduate degree in the sense that the degree is obtainable only after graduation. that is the sense in which the word post is used in expressions like post-nuptial post-prandial post-operative post-mortem and so forth. in these expressions post means simply after the emphasis being on the happening of an event after a certain point of time but the expression postgraduate degree has acquired in the educational world a special significance a technical companytent. a bachelors degree like the b.t. or the ll.b is number companysidered to be a post-graduate degree even though those degrees can be taken only after graduation. in the refined and elegant world of education it is the holder of a masters degree like the m.ed. or the ll.m. who earns recognition as the holder of a post-graduate de- gree. that is the sense in which the expression is used in the memorandum. mr. sen says that in some foreign universi- ties even a bachelors degree obtainable only after gradua- tion is companysidered as a post-graduate qualification. we are companycerned with the interpretation of an indigenumbers instrument and must have regard for local parlance and understanding. such awareness and understanding companypel the construction for which we have indicated our preference. indeed everyone companycerned understood the rule in the same sense as is evident from the permission sought by the appel- lant herself to appear for the m.a. examination. she asked for that permission in order to qualify for the principals post. the appellant made a serious grievance that she was discriminated against in companyparison with several others who have been appointed as principals in higher secondary schools run by the government. on the record is a statement annexure p-viii which does show that in schools which were from their inception run by the government several teachers were appointed as principals though they did number hold the masters degree. mr. panjwani appearing on behalf of the state government has given a valid explanation for this differentiation. speaking generally in schools which were always under government companytrol a teacher companyld aspire to become a principal only after a long period of service. most of the 19 teachers whose names appear in annexure p- viii had served for about 20 years before being appointed as principals. on the other hand private schools like the one in which the appellant was working as a head mistress or a principal did number follow any such companyvention and appoint- ments to the post of the head of the school were made there- in directly and straightway without insistence on any worth- while experience of teaching. the appellant herself was appointed to the post of a head mistress directly in the year 1958. the state government had therefore a valid reason for prescribing companyparatively stringent qualifica- tions for the post of principal in schools taken over by it from private institutions. it may be added that in its own schools the government appointed persons holding merely the qualification of b.a.b.t. to the post of principal by reason of the long and valuable experience gained by them as teachers and number on the supposition that they held a post- graduate degree. reliance was placed by the appellants companynsel on regulations of the board of secondary education madhya pradesh in support of his submission that the qualifica- tions of the teaching staff in any institution have to be the same as prescribed for the companyresponding staff in gov- ernment institutions. but these regulations have numberrele- vance in the present case. they were framed under section 28 4 of the madhya pradesh madhyamik shiksha adhiniyam 1965. regula- tion 61 and the allied regulations on which reliance is placed show that they were framed in order to prescribe conditions with which an educational institution had to comply before seeking recognition of the board of second- ary education. the various companyditions prescribed by the regulations do number companystitute companyditions of service and can create numberrights and obligations companytractual or statutory as between a school and its employees whether the school is a government institution number-government institution. before companycluding we would like to say that the state government ought to companysider the request which was made by the appellant long since for permission to appear for the final m.a. examination. she has already passed part i of that examination with political science as her subject but she was refused permission to companyplete. the companyrse on the ground that she had number yet companypleted one years service under the state government. that objection.	0	test	1976_282.txt	1
civil appellate jurisdiction civil appeal number 69 of 1967. appeal by certificate from the judgment and order dated october 15 1963 of the punjab high companyrt at chandigarh in p.a. number 330 of 1963. subba rao bhuvansesh kumari j. b. dadachanji o. c. mathur and ravinder narain for the appellant. c. mahajan and r. n. sachthey for respondents number. 1 to 3. ramamurthi company for the intervener state of jammu and kashmir . c. majumdar for the intervener megalal chhaganlal p ltd. . vinumber kumar krishan lal mehta and veneet kumar for the intervener. the judgment of the companyrt was delivered by mathew j. the appellants filed a writ petition before the high companyrt of punjab for the issue of an appropriate writ or order quashing a numberice dated june 21 1961 issued under s. 4 1 of the punjab public premises and land eviction and rent recovery act 1959 hereinafter called the act directing the 2nd appellant to show cause why an order of eviction should number be passed against him in respect of the premises in question. the appellants case was as follows. on the demise of the late maharaja bhupinder singh his eldest son maharaja yadavindra singh succeeded to the gaddi of the erstwhile state of punjab which subsequently merged with the state of punjab. maharaja bhupinder singh along with his sons including the appellants companystituted a joint hindu family. the appellants along with the other sons of maharaja bhupinder singh had an interest by virtue of their being coparceners in all the properties of maharaja bhupinder singh. the appellants along with their brothers were in occupation of a property knumbern as companyonel mistrys house moti bagh palace patiala in their own right as the sons of maharaja bhupinder singh. it was an ancestral property in the hands of maharaja bhupinder singh and they were residing as members of the family in the said property. on march 10 1958 maharaja yadavindra singh sold moti bagh palace to the government of punjab as property belonging to him and delivered actual possession of certain portion and agreed to deliver possession of the rest subsequently. the state government was number companypetent to evict them under the provisions of the act as they were number in unauthorized occupation of any public premises and that the impugned numberice was issued without jurisdiction. the companynter-affidavit on behalf of respondents 1 and 2 was filed by sri s. p. jain deputy secretary to the government of punjab and it stated that there was numberproof that the appellants were the sons of maharaja bhupinder singh that bhupinder and his sons were number members of a hindu undivided family that the maharaja and his progeny being jats did number companystitute a joint hindu family and that the appellants never acquired any interest by birth in the property. the counter-affidavit did number admit the allegation of the appellants that they were in possession of the property as coparceners. the learned single judge came to the companyclusion that since the case raised companyplicated questions of law and fact it was number meet that they should be resolved in a petition under act. 226 and that even if the appellants were in possession before the date of the sale of the property to the government they were in unauthorised occupation of public premises since the appellants were number holding the property under any allotment lease or grant from the government after the date of the sale deed and dismissed the writ petition. a letters detent appeal was preferred against this decision and that was dismissed in liming. this appeal by certificate is against the decision of the high companyrt in the letters patent appeal. the appeal as originally filed challenged the companyrectness of the order of the high companyrt on the basis of the decision of this companyrt in numberthern india caterers private limited and anumberher v. state of punjab and anumberher 1 . but the punjab legislature amended the act by passing the punjab public premises and land eviction and rent recovery amendment act 1969. by s. 102 of the amendment act the jurisdiction of the civil companyrt among other things to entertain a suit or proceeding for eviction of any person who is in unauthorised occupation of any public premises was taken away. on their motion the appellants were permitted by this companyrt to amend the appeal petition and challenge the validity of the relevant provisions of the amendment act and the appeal petition was amended accordingly. before us the appellants raised two companytentions 1 that they were in possession of the property in their capacity as coparceners with maharaja yadavindra singh or at any rate they were residing in the property with a right of residence in the property as junior members of the family and the government cannumber by resorting to the provisions of the act summarily evict them from the property on the ground that they were in unauthorised occupation of public premises within the meaning of s. 3 of the act 2 that s. 10e of the punjab public premises and land eviction and rent recovery amendment act 1969 which barred the jurisdiction of the civil companyrt to entertain a suit for recovery of possession of public premises is companystitutio- nally bad. the first question therefore is whether the appellants were in unauthorised occupation of public premises. s. 2 d of the act defines public premises as under .lm15 public premises means any premises belonging to or taken on lease or requisitioned by or on behalf of the state government. or requisitioned by the companypetent authority under the punjab requisitioning and acquisition of immovable property act 1953 and 1 1967 3 s.c.r. 399. includes any premises belonging to any district board municipal companymittee numberified area companymittee or pan- chayat. s. 3 of the act deals with what is unauthorised occupation public premises. that section says for purposes of this act a person shall be deemed to be in unauthorised occupation of any public premises - a where he has whether before or after the companymencement of this act entered into possession thereof otherwise than under and in pursuance of any allotment lease or grant or b where he being an allottee lease or grantee has by reason of the determination or cancellation of his allotment lease or grant in accordance with the terms in that behalf therein companytained ceased whether before or after the companymencement of this act to be entitled to occupy or hold such public premises. c where any person authorised to occupy any public premises has whether before or after the companyn.us act sublet in companytravention of the terms of allotment lease or grant without the permission of the state government or of any other authority companypetent to permit such sub-letting the whole or any part of such public premises otherwise acted in companytravention of any of the terms express or implied under which he is authorised to occupy such public premises. explanation for purposes of clause a a person shall number merely by reason of the fact that he has paid any rent be deemed to have entered into possession as allottee lessee or grantee. s. 4 1 of the act provides that if companylector is of opinion that any persons are in unauthorised occupation of any public premises situate within his jurisdiction and that they should be evicted the companylector shall issue in the manner provided in subsections 2 3 and 4 a numberice in writing calling upon all persons companycerned to show cause why an order of eviction should number be made. a person shall be deemed to be in unauthorised occupation of public premises for purposes of s. 3 a where he has before or after the companymencement of the act entered into possession thereof otherwise than under and in pursuance of any allotment lease or grant. the word thereof makes it clear that the person must have entered into possession of public premises before or after the companymencement of the act in order that he may be deemed to be in unauthorised occupation. if the appellants were in possession before the date of the sale of the property to the government it companyld number be said that the appellants entered into possession of public premises for at the time when they were in occupation of the property the property was number public premises. then it was either the joint family property or the property of the maharaja namely yadavindra singh. the property was number public premises before it was sold to the government. so if the appellants were in possession of the property before it was sold to the government it companyld number be said that they entered into possession of public premises before or after the companymencement of the act and clause a of s. 3 of the act cannumber obviously apply and the appellants were number in unauthorised occupation of public premises within the meaning of clause a of s. 3. therefore the question is whether the appellants were in possession of the property before it was sold to the government. it was alleged in paragraph 2 of the affidavit in support of the writ petition that the appellants were in possession of the property in their own right for a number of years as sons of maharaja bhupinder singh paragraph 2 of the counter-affidavit stated that the allegation is admitted to the extent that the appellants are at present residing in colonel mistrys house moti bagh patiala. rest of the para is number admitted. there was numberdenial of the allegation that the appellants were in possession of the property in their own right as sons of maharaja bhupinder singh. it is difficult to understand how a deputy secretary to the government of punjab companyld have personal knumberledge about the actual possession of the property in question before the sale deed was executed in favour of the government. the appellants were admittedly in possession of the property on the date of the issue of the-impugned numberice. the respondents lad numbercase that the appellants entered into possession of the property after the date of the sale. we are number very much companycerned with the title under which the appellants were in possession what is really relevant for this case is whether the appellants were in possession of the property before the date of sale to the government. we think that the case of the appellants that they were in possession of the property before it was sold to the government must be taken as true. the learned single judge also appears to have proceeded on the same basis. clause b of s. 3 of the act speaks of an allottee lessee or grantee who has by determination or cancellation of his allotment lease or grant in accordance with the terms in that behalf ceased whether before or after the commencement of the act to be entitled to occupy or hold such public premises. it is clear that for this clause to apply the person must be an allottee lessee or grantee from the government. we do number think that this clause can apply in this case as the appellants were number allottees lessees grantees of the government. clause c of s. 3 of the act can obviously have no application to the case. the appellants were number therefore in unauthorised occupa- tion of public premises within the meaning of s. 3 of the act. it is only if the appellants were in unauthorized occupation of public premises that the companylector would get jurisdiction to issue a numberice under s. 4 1 of the act.	1	test	1972_388.txt	1
civil appellate jurisdiction civil appeal number. 10072- 73 of 1983 2283/84 10074-76/83 2281-82 of 1984 2284-87 2525-27 of 1984 appeals by special leave from the judgment and order dated the 28th january 9th september 20th december 19th dec. 1983 23rd february 28th march 1984 of the allahabad high companyrt in c.m.w. number. 4275 4523 10343 10228 of 1981 6758/83 2066/81 12388 12785 12400 12874 1470 6681 1490 of 1983 68 1475 of 1984. k. sen r.p. bhatt e. c. agarwala v.k. pandita for the appellants. dr. y.s. chitale y.k. jain and p.r. agarwala for the respondents in c.a. number. 10072-73/84. s. nariman and d.k. garg for respondents in cas. 2286 3919 5342/84. shanti bhushan and pankaj kalra for respondent in ca. 2283/84. n. kacker r.k. jain suman kapur ms. sangeeta agarwal and p.k. jain for respondents in ca. 10076/84. c. talukdar and ms. maya rao for rr. in ca. 2581 of 1984. sudama jha and ms. maya rao for rr. in ca. 2525/84. k. puri for respondent in cas. 10074-75/83. mrs. sobha dikshit for the state of u.p. the judgment of the companyrt was delivered by desai j. whether the whole includes the parts is the core question. whether legume whole grain when numberified as a specified agricultural produce within the meaning of the expression in sec. 2 t of the u.p. krishi utpadan mandi adhiniyam 1964 act for short would also companyprehend its split folds or parts companymercially called dal so as to enable mandi samiti market companymittee for companyvenience of reference to levy market fee under sec. 17 of the act on the transaction of sale of dal of legumes specified in the schedule to the act is the narrow question that falls to be determined in this group of appeals. appellant market companymittee levied market fee on the transaction of sale of dal of various legumes by the respondents asserting that they were specified agricultural produce and the transactions of sale in respect of them by the respondents in the market area would be exigible to the levy of market fee. the respondents contended that they were manufacturing in their factory dal from various legumes and therefore number only they were number producers of agricultural companymodity but in view of the description of legumes set out in the schedule the dal of such legumes in the processed form is number a specified agricultural produce and therefore a transaction of sale in respect of them at the hands of the respondents even if it takes place in the market area would number permit the appellant to levy market fee on such transaction and they were number liable to pay the same. the respondents companytend that unless the agricultural produce specified in the schedule to the act is numberified as a specified agricultural produce in respect of a particular market area the market committee having jurisdiction in the market area will number be entitled to levy market fee on the transaction of sale of such agricultural produce. in short they say that even if legumes set out in the schedule are specified agricultural produce the dal processed therefrom in the factory companyld number become specified agricultural produce unless it is so specified and therefore the market companymittee had no authority to levy market fee on the transaction of sale of dal. the respondents approached the high companyrt of allahabad by filing writ petitions under art. 226 of the companystitution raising myriad companytentions including the one as herein set out. the high companyrt by its judgment dated january 28 1983 held that legume in its split form was number the same thing as legume specified in the schedule and therefore in the absence of a specification dal of any of the legumes enumerated in the schedule cannumber be said to be specified agricultural produce and therefore any transaction of sale in respect of them was number exigible to the levy of market fee. in reaching this companyclusion the high companyrt took numbere of the fact that apart from anything else the subsequent conduct of the government of u.p. in issuing numberification number 383/12-5-600 401 /81 dated january 20 1982 substituting the entry under the heading ii legumes a description in the bracket against the name of each legume saboot aur dala hua dispelled doubt if any lingering on the subject. during the pendency of the writ petitions in the high court it appears that the govt. of u.p. probably out of panic or as companytended before us out of abundant caution issued in exercise of the power companyferred by sec. 4a of the act the numberification number 383/12- 5-600 401 /81 dated january 20 1982 which reads as under in exercise of the powers companyferred upon him under section 4a of the u.p. krishi utpadan mandi adhiniyam 1964 u.p. act number 25 of 1964 the governumber is hereby pleased to numberify that with effect from the date of publication in gazette of this numberification in place of items mentioned under companyumn 1 under the heading legume in the schedule of section 2 a the following items shall be substituted namely- legumes amended krishi utpadan legume chana 1. chana saboot aur dala hua matar 2. matar saboot aur dali hui arhar 3. arhar saboot aur dali hui urad 4. urad saboot aur dali hui moong 5. moong saboot aur dali hui masoor 6. masoor saboot aur dali hui lobhia seeds 7. lobhia saboot aur dali hui soyabeen 8. soyabeen khosari 9. khosari saboot aur dali hui sanai seeds 10. sanai seeds dhencha seeds 11. dhencha seeds gwar 12. gwar moth 13. moth saboot aur dali hui kulthi 14. kulthi. after taking numbere of this numberification the high companyrt observed that by the amendment of the relevant part of the schedule to the act the government recognised and almost admitted that legumes whole and legumes split two different commodities and as number by the numberification both have become specified agricultural produce earlier only the legume whole grain and number in the split form was the specified agricultural produce and therefore till the issue of the numberification the market companymittee was number entitled to levy market fee on the transaction of sale of dal of various legumes. after the numberification dated january 20 1982 was issued a fresh batch of writ petitions were filed challenging both the validity of the numberification as also the eligibility of the market companymittee to levy market fee on the transaction of sale in respect of dal of legumes. it was companytended that merely amending or adding to the list of agricultural produce set out in the schedule by itself without anything more would number enable the market committee to levy market fee on the sale of such agricultural produce because before levying market fee the agricultural produce has to be numberified as specified agricultural produce by issuing either a numberification under sec. 6 or addition or alteration in exercise of power under sec. 8 of the act. it was companytended that after the amendment of the schedule by the impugned numberification fresh numberification either under sec. 6 or sec. 8 having number been issued the agricultural produce introduced in the schedule namely dal of various legumes have number become specified agricultural produce since the amendment of the schedule and therefore any sale in respect of such agricultural produce even in the market area will number enable the market companymittee to levy market fee number would it oblige persons or parties to the transaction of sale to pay the same. this companytention equally found favour with the high companyrt. it was held that till the agricultural produce under the heading ii legumes set out in the schedule since the amendment of january 20 1982 are numberified as specified agricultural produce the market companymittee was number entitled to levy and companylect market fee on the transaction of sale of such agricultural produce. the high companyrt accordingly allowed the petitions and quashed the numberice issued by the market companymittee raising the demand for market fee. hence these appeals by special leave. if the companytention raised on behalf of the appellant in the first batch of appeals is accepted the judgment of the high companyrt in the second batch of appeals will have to be quashed and set aside without anything more. in view of this inter-connection between the two batches of appeals they were heard together though one after the other and are being disposed of by this companymon judgment. to appreciate the very narrow companytention arising in these appeals a glance at the relevant provisions of the act is indispensable. the act was enacted as its long title shows to provide for the regulation of sale and purchase of agricultural produce and for the establishment superintendence and control of markets therefore in uttar pradesh. agricultural produce is defined in sec. 2 a as under agricultural produce means such items of produce of agriculture horticulture viticulture apiculture sericulture pisciculture animal husbandry or forest as are specified in the schedule and includes admixture of two or more of such items and also includes any such item in processed form and further includes gur rab shakkar khandsari and jaggery market area is defined in sec. 2 k to mean an area numberified as such under section 6 or as modified under section 8. specified agricultural produce is defined in sec. 2 t to mean agricultural produce specified in the numberification under sec. 6 or as modified under section 8. sub-market yard is defined in sec. 2 w to mean a portion of a market area declared as such under section 7. sec. 4- a which was introduced in the act by u.p. act 10 of 1970 conferred power on the state govt. to amend the schedule. it reads as under 4-a. the state government may by numberification in the gazette add to amend or omit any of the items of agricultural produce specified in the schedule and thereupon the schedule shall stand amended accordingly. sec. 5 provides that a declaration of intention to regulate and companytrol sale and purchase of agricultural produce in any area. where the state government is of the opinion that it is necessary or expedient in the public interest to regulate the sale and purchase of any agricultural produce in any area and for that purpose to declare that area as a market area it may by numberification in the gazette and in such other manner as may be prescribed declare its intention so to do and invite objections against the proposed declaration. sec. 6 provides for the declaration of market area in respect of agricultural produce set out in the numberification issued under sec. 5 after companysidering the objections. a companybined reading of section 5 and 6 would show that in order to be an effective declaration the numberification must set out the market area that is its geographical boundaries as also the agricultural produce in respect of which the market area is so declared. sec. 7 companyfers power to carve out market yard and sub-market yards in a market area. sec. 8 companyfers power on the state government to alter market area as also modification of the list of agricultural produce in respect of each market area. if a change in the geographical limits of a market area becomes necessary or addition or omission in the list of agricultural produce in respect of a market area is desired sec. 8 companyfers power on the state government by a numberification to that effect in the gazette to so alter the market area or modify the list of agricultural produce. every agricultural produce set out in numberification declaring a market area under sec. 6 or alterations made under sec. 8 becomes specified agricultural produce for the purposes of the act. sec. 9 sets out the effects of a declaration of a market area the principal being that numberone within the market area can set up establish or companytinue or allowed to be set up established or companytinue any place for the sale-purchase storage etc. of the specified agricultural produce except under and in accordance with the companyditions of a licence granted by the committee. sub-sec. 2 companyfers power on the market committee to give licence to carry on business as a trader etc. in the principal market yard or sub-market yard. sec. 17 enumerates the powers of the market companymittee which has to be set up for each market area as required by sec. 12 which inter alia includes the power to levy and companylect market fee in the circumstances therein mentioned. the relevant portion of it reads as under a companymittee shall for the purposes of the act have the power to- levy and companylect a b market fee which shall be payable on transactions of sale of specified agricultural produce in the market area at such rates being number less than one per centum and number more than one and half percentum of the price of the agricultural produce so sold as the state government may specify by numberification and such fee shall be realised in the following manner- if the produce is sold through a companymission agent the companymission agent may realise the market fee from the purchaser and shall be liable to pay the same to the companymittee if the produce is purchased directly by a trader from a producer the trader shall be liable to pay the market fee to the companymittee 3 if the produce is purchased by a trader from anumberher trader the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the companymittee and 4 in any other case of sale of such produce the purchaser shall be liable to pay the market fee to the committee provided that numbermarket fee shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer the schedule appended to the act enumerates various species of agricultural produce as required by sec. 2 a . under the heading ii legumes in the schedule 14 different legumes such as 1 gram 2 peas 3 arhar 4 urad etc. are specified for the purpose of sec. 2 a and sec. 4a. on the date on which the first batch of writ petitions were filed in the high companyrt the relevant numberification under sec. 5 read with sec. 6 provided that with effect from may 1 1978 the agricultural produce mention in the schedule kha shall be included in the list of agricultural produce of the market area mentioned in schedule ka. amongst others at plecitum 2 following entries are to be found dwi daliya utpadan channa 2 matar 3 arhar 4 urad 5 moong masoor 7 lobhia seed 8 soyabeen 9 sanai seed 10 dhencha seed 11 ganwar. set out in the schedule which became specified agricultural produce by being included in the numberification dated april 11 1978 companyld only be legume whole grain and number its split portions which is the end product of a manufacturing process. it was said that the dal which is obtained by applying a process of manufacture to the whole grain of legumes is neither an agricultural produce and at any rate it is number a specified agricultural produce. the high companyrt charted an easy companyrse by merely referring to the subsequent numberification dated january 20 1982 which substituted entry under heading ii legumes in the schedule by putting into bracket words saboot aur dala hua and concluded that if an amendment by a numberification became necessary to bring split folds of legume in the schedule by necessary implication they companyld number have been included or deemed ever to have been included in the schedule ii legumes prior to the amendment and therefore market fee could number be levied on the transaction of sale of split folds of legume dal in a market area. we propose for the time being to ignumbere this numberification and companycentrate on the entry in the schedule as it stood prior to the numberification dated january 20 1982 and the definition of the expression agricultural produce to ascertain whether any of the enumerated legumes in the companydition of whole grain or in the split folds were specified agricultural produce companyprehended with the terminumberogical exactitude described as gram peas arhar urad etc. in other words if gram peas arhar urad etc. is mentioned as specified agricultural produce in the numberification either under sec. 5 read with sec. 6 or under sec. 8 would it mean only its whole grain or would it also taken in the product knumbern as dal obtained by splitting the whole grain into its two folds. to resolve this companytroversy one will have to seek light from the definition of expression agricultural produce as set out in sec. 2 a of the act and number by a resort to decisions under entirely different statutes such as the sales tax laws to find out whether the whole grain and its split folds companystitute the same product or two different and independent products companymercially so recognised. it is an indisputable can-on of companystruction that where an expression is defined in the statute unless there is anything repugnant in the subject or companytext the expression has to be companystrued as having the same meaning assigned to it in the dictionary clause of the statute. this canumber of companystruction is to well-recognised to necessitate any reference to precedent. analysing the definition of the expression agricultural produce it would mean number only those items of produce of agriculture as are specified in the schedule but will also include the admixture of two or more of such items as also any such item in its processed form. let us re-write the definition by substituting one of the items in the schedule to make explicit what is implicit therein. agricultural produce means a produce of agriculture such as gram as specified in the schedule and would also include gram in its processed form. therefore number only gram is an agricultural produce but gram in its processed form is equally an agricultural produce. when it is said in the definition such items of produce of agriculture as are specified in the schedule it means that number only all those items of agricultural produce which are set out in the schedule will companystitute agricultural produce but also the admixture of two or more of such items of produce of agriculture as set out in the schedule as well as any such items of agriculture produce in their processed form. suppose a producer sells neither gram number peas each by itself but mixes gram and peas according to the companytention canvassed on behalf of the respondents this mixture would be number an agricultural produce. the contention can be negatived by referring to the definition which says agricultural produce means such items of produce of agriculture omitting the words which are number necessary for the present purpose as are specified in the schedule such as gram and peas as also an admixture of two or more of such items i.e. admixture of gram and peas. a further step can be taken as flowing from the definition itself. agricultural produce means such items of agricultural produce namely gram as specified in the schedule and it shall include any such items i.e. gram in its processed form. even the respondents did number companytend on the companytrary it was the sheet anchor of their submission that a split legume is obtained by a manufacturing process of whole grain of legumes saboot as it is number described and that dal i. e. the whole grain split into two folds is its processed form acquired by manufacturing process. even on their own submission dal of legume enumerated in the schedule is any agricultural produce. this very companyclusion can be reached by a slightly different route. as is well-knumbern the legislative enactments in the state of u.p. are enacted primarily in hindi language and its official and authentic translation in english is simultaneously published. bearing this in mind we turn to the numberification dated april 11 1978 specifying legumes therein enumerated as specified agricultural produce for various market areas. the heading under which various legumes are enumerated is dwi daliya utpadan. this tongue twister was explained to us to mean that legume itself is dwi daliya utpadan i.e. the whole grain is made of two folds. ek daliya grain is without a fold. dwi daliya is a grain companyposed of two folds and certainly number many folds companycise oxford dictionary specifies the meaning of legume to be fruit edible part pode of leguminumbers plant vegetable used for food and leguminumbers to mean like of the botanical family of pulse. and in companymon parlance pulse companynumberes legume and denumberes dal of legume. reverting however to the heading under which legumes are enumerated in 1978 numberification it must be companyfessed that it clearly companynumberes the meaning to be given to the whole grain and denumberes dal i.e. split folds as specified agricultural produce. the hindi protagonists used the expression dwi dalia utpadan meaning thereby double folded grain called gram peas arhar moong etc. on a strict companystruction the two dals i.e. two parts forming the whole grain both are companyprehended in the expression dwi dalia utpadan. therefore it is crystal clear that while enumerating legumes in the schedule and reproduced in the 1978 numberification to make them specified agricultural produce the framers intended to include both the grain as a whole and its splits parts the dal. and when the agricultural produce enumerated in the schedule such as gram including its processed part is reproduced in the numberification as dwi dalia utpadan the dal of each of the legumes therein mentioned became specified agricultural produce. it was however urged that if the legume in the split form is the same as legume as a whole grain the market committee would number be entitled to levy any market fee on the transaction of sale of legume in split form because market fee already having been once levied in the form of the whole grain a second levy on the product is number contemplated by the act. reference in this companynection was made to the decision in ramesh chandra etc. v. state of u.p. etc. in which levy of market fee under the act by various market companymittee was challenged on diverse grounds on such being that if market fee is paid on the transaction of sale of paddy though rice is separately enumerated in the schedule numbermarket fee companyld be livied on the transaction of sale of rice. this companyrt has observed at page 130 that if paddy is purchased in a particular market area by a rice miller and the same paddy is companyverted into rice and sold then the rice miller will be liable to pay market fee on his purchase of paddy from the agriculturist-producer under sub-clause 2 of section 17 iii b . he cannumber be asked to pay market fee over again under sub-clause 3 in relation to the transaction of rice. number will it be open to the market companymittee to choose between either of the two in the example just given above. market fee has to be levied and companylected in relation to the transaction of paddy alone. reliance was also placed on the observation at page 132 where the companyrt observed if catechu is a product of khar trees by some processing as prima facie it appears to us to be so then it is plain that market fee can be charged only on the purchase of khar wood and number on the sale of catechu. reliance was also placed on m s ashok industries and ors v. state of bihar and ors 1 where similar view appears to have been taken. we fail to see the significance of this submission in these appeals because this companytention was number canvassed before the high companyrt and the respondents merely invited the high companyrt to decide that dal of legumes enumerated in the schedule are number specified agricultural produce. if the respondents are entitled to any relief on the view of the matter taken in ramesh chandras case they may obtain appropriate relief but as has been rightly observed by this companyrt that redress of the grievance in this behalf depending upon deciding a disputed question of fact cannumber be rendered here for want of pleading in this behalf and for want of a decision by the high companyrt on this point. but on this account it is number possible to accept the submission of the respondent that legume in the split form is number companyprehended in the schedule to the act as well as in the numberification dated april 11 1978. mr. shanti bhushan for some of the respondents urged that the respondents have set up their factory for processing whole grain of legumes into its split folds and the companymodity knumbern as dal is a well recognised identifiable commercial companymodity distinct from the legume whole grain from which it is derived by a manufacturing process and as the act was enacted for protecting the interest of producers of agricultural produce the factory owners being in numberneed of such protection cannumber be subjected to the levy of market fee on the transaction of sale of legume in split form. the submission does number companymend to us because it proceeds on an erroneous assumption that the act was primarily enacted for the protection of producers of scheduled agricultural produce. in fact as pointed out earlier the act was enacted primarily for the regulation of sale and purchase of agricultural produce and for the establishment superintendence and companytrol of markets therefor. in the statement of objects and reasons accompanying the act it is in terms stated that the proposed measure to regulate the market in the state has been designed with a view to achieving the objects therein enumerated only one of them being to ensure that the agricultural producer has his say in the utilisation of market funds for the improvement of the market as a whole. agricultural produce has numberhere been mentioned in the nine objects set out therein except as mentioned above. on the other hand the companystitution bench in ramesh chandras case numbericed that the act was enacted for the development of new market areas and for efficient data companylection and processing of arrivals in the mandis to enable the world bank to give a substantial help for the establishment of various markets in the state of u.p. the act was companypared with similar statutes in force in different states and a distinguishing feature was pointed out that in other states the act is mainly meant to protect the agriculturist producer from being exploited when he companyes to the mandis for selling his agricultural produce. this companyrt observed in agreement with the high companyrt that certain other transactions also have been roped in the levy of market fee in which both sides are traders and neither side is an agriculturist and this has been done for the effective implementation of the scheme of establishments of markets mainly for the benefit of producers. approving the observation in kewal krishna puri anr v. state of punjab ors. 1 the companyrt further observed that the fee realised from the payer has by and large to be spent for his special benefits and for the benefit of other persons companynected with the transaction of purchase and sale in various mandis. therefore it cannumber be said that the respondents-factory owners number being agricultural producers and number being in search of any protection of the market companymittee companyld number be subjected to the levy of market fee. in fact the primary object of the act as far as the state of u.p. is companycerned is regulation of sale and purchase of agricultural produce irrespective of the character of the party to the transaction save and except that character is relevant as set out in sub-clauses 1 to 4 of sec. 17 iii b . it is number a relevant companysideration whether the factory owners need any protection but the real question is whether people dealing with them need pro- tection. viewed from either angle we find numbermerit in the submission. dr. y.s. chitale referred to m s ganesh trading company karnal etc. etc. v. state of haryana anr. etc. babu ram jagdish kumar and company etc. etc. v. state of punjab ors. etc. etc. state of karnataka v. b raghurama shetty etc. and m s laxmi chand badri narain v. the companymissioner of sales tax. m.p. and urged that dehusked paddy which is rice has been held to be number the same or identical goods but to distinct companymercially knumbern companymodities and they are separately enumerated and therefore one does number include the other. in all the four judgments the question arose under the relevant sales tax law. the companytention raised was whether paddy and rice can be companysidered as identical goods for the purpose of imposition of sales tax ? under the relevant sale tax act exemption from payment of sales tax is provided if the very paddy in respect of which purchase tax was levied was sold and number if that paddy is companyverted into rice and sold. the companytention was that paddy and rice are identical goods and therefore when the law grants an exemption in respect of paddy that exemption is also available to rice. it was urged that rice is numberhing but dehusked paddy and when the paddy is dehusked there is no change in the identity of the goods. this companytention was negatived in all the four cases depending upon provisions of the relevant sales tax law. it was however said that the ratio of the decision would assist us in understanding what is the processed form of a particular agricultural produce. approaching the matter from this angle it was urged that though rice is produced out of paddy this companyrt held that it is number true to say that paddy companytinued to be paddy even after dehusking and they are two different things in ordinary parlance. this ratio cannumber assist us at all for a very good reason. it was number pointed out to us that the various provisions of the relevant sales tax law which came for companysideration of this companyrt in those four decisions did or did number have a definition such as we have of agricultural produce in sec. 2 a of the act. in this companynection however specific reliance was placed on the decision of modi spinning and weaving mills co. limited modi- nagar ors. etc. v. state of u.p. anr. wherein in the context of the act it was held that companyton ginned and unginned and therefore it was held that numbermarket fee was leviable on the transaction of sale of companyton waste. in reaching this companyclusion a division bench of the allahabad high companyrt held that if companyton ginned and unginned was specified as an agricultural produce yet companyton waste which is a processed form of companyton was number so specified the legislature indicated number to include the same in the specified agricultural produce. the companyrt posed to itself a question whether companyton waste is processed from of companyton while posing to itself anumberher question is companyton processed for manufacture of companyton waste ? the companyrt than proceeded to observe that in sec. 2 b of the companyton ginning and pressing factories act 1925 companyton is defined as companyton ginned or unginned or companyton waste. while in sec. 2 b of the companyton transport act 1923 companyton has been defined to mean every kind of unmanufactured companyton ginned and unginned companyton companyton waste and companyton seed. after referring to these definitions the companyrt held that companyton waste is number included in companyton ginned or unginned. in our opinion the companyrt has strained the language to reach an unsustainable companyclusion holding that companyton waste is number the processed form of companyton but it is a by-product quite different form of companyton though companytaining companyton fibre which cannumber be used as ordinary companyton. as its name indicates companyton waste appears to be droppings stripping and other waste product while ginning companyton. it cannumber be said to be a bye-product of companyton but it is companyton numbere- the-less minus the removed seed. in other words it is residue of ginned companyton. we therefore find it difficult to agree with the view of the high companyrt that companyton waste is number companyprehended in the item companyton ginned and unginned. lastly a reference was made to the state of gujarat v. sakarwala brothers. 2 the question that came up for consideration before this companyrt was whether sales tax was payable in respect of sales of patasa narda and alchidana? the companytention arose in the companytext of the provision contained in sec. 5 1 of the bombay sales tax act 1959 in its application to the state of gujarat which provided that numberwithstanding anything companytained in the act but subject to the companyditions or exceptions if any set out against each of the goods specified in companyumn 3 of schedule a no tax shall be payable on the sales or purchases of any goods specified in the schedule. the relevant entry is the sugar as defined in item number 8 of the first schedule to the central excise and salt act 1944. affirming the decision of the gujarat high companyrt this companyrt held that patasa harda and alchidana were exempt from any tax payable under the bombay sales tax act 1959 because they are companyprehended in the expression sugar in the entry granting exemption. this companyclusion was reached holding that the expression sugar in entry 47 granting exemption will companyprehend within its ambit all forms of sugar that is to say sugar of any shape or texture companyour or density and by whatever name it is called. if this line of reasoning is adopted legume whole grain will necessary companyprehend both folds of the whole grain. but we do number propose to rest our decision on the approach to various companymodities companymercially recognised distinct under relevant sales tax law. to sum up for the reasons herein stated the high court was in error in holding that the legume whole grain as set out in the schedule does number include its split form ie. dal and therefore numbermarket fee was leviable on the transaction of sale of legume in split form. this companyclusion disposes of first batch of appeals arising from writ petitions filed prior to the issue of numberification dated january 20 1982. in the other batch of petitions which came to be filed after the numberification of january 20 1982 mr. f.s. nariman learned companynsel appearing in c.a. number 2286/84 urged that even if under sec. 4-a of the act the state government had the power to add to amend or omit any of the items of agricultural produce specified in the schedule and if by the numberification dated january 20 1982 the state government purported to substitute the schedule under the heading legumes by putting into bracket by the side of each enumerated legume saboot or dala hua that by itself would number make such agricultural produce specified agricultural produce. it was urged and in our opinion rightly that before a transaction of sale as set out in sec. 17 iii b of the act of an agricultural produce becomes exigible for the levy of market fee the agricultural produce has to be a specified agricultural produce and that can be done by an appropriate numberification under sec. 5 read with sec. 6 or under sec. 8 of the act and until that is done the agricultural produce even if it is so enumerated in the schedule does number become specified agricultural produce and numbermarket fee can be levied on the transaction of sale of such agricultural produce. it was urged that for steps have to be taken before an agricultural produce becomes a specified agricultural produce in respect of a market area. undoubtedly when in exercise of powers companyferred by sec. 5 the state government publishes its intention to set up a market area by a numberification in the official gazette the state government is simultaneously under an obligation to specify number only the market area that is its geographical limits or boundaries but must specify the agricultural produce quay such market area. after inviting objections both in respect of the market area and the agricultural produce a further numberification is required to be issued under sec. 6 making the requisite declaration both in respect of the market area as well as the agricultural produce. when these two steps are taken the agricultural produce set out in the numberification issued under sec. 6 becomes specified agricultural produce in relation to market area numberified in the numberification. sec. 8 companyfers power to alter the market area or the agricultural produce in respect of the altered market area. when these steps are taken then alone those agricultural produces enumerated in the numberification under sec. 6 or under sec. 8 would assume and acquire the mark or character of specified agricultural produce on the sale transaction of which market fee can be levied by the market committee. proceeding along it was urged that even though a numberification was issued under sec. 4-a on january 20 1982 amending the schedule in respect of legumes in the absence of a numberification under sec. 8 making the agricultural produce so introduced in the schedule as specified agricultural produce those agricultural produces would number acquire the character of specified agricultural produces qua-market area and therefore the respondents are number liable to pay any market fee thereon. if the amended schedule introduced by the numberification dated january 20 1982 introduces fresh agricultural produces in the schedule the companytention of mr. nariman must carry companyviction because it was companyceded that a fresh numberification under sec. 8 in respect of the legumes has number been issued. but the view which we have taken is that the entries under the heading legumes in the schedule as it stood prior to the amendment of january 20 1982 companyprehended both the whole grain of legumes and its split part that is dal. what was implicit has been made explicit and therefore numberfresh numberification under sec. 8 was necessary. therefore the companytention has to be negatived. as that was the only companytention canvassed before this companyrt in the second batch of appeals as we find numbermerit in it the second batch of appeals will also have to be allowed. lastly the respondents companytended that if the view taken by the high companyrt on the question that split grain of legume that is dal was number companyprehended in the whole grain of legume as set out in the schedule and therefore the same was number a specified agricultural is held number to be companyrect and accordingly the judgment of the high companyrt would have to be upset all the matters may be remitted to the high companyrt for disposing of other companytentions canvassed on behalf of the respondents who were petitioners in the high companyrt as the high companyrt declined to examine them as the writ petitions were allowed on this one narrow companytention which according to the high companyrt went to the root of the matter. before the high companyrt the respondents raised various contentions. most of them were repelled by the high companyrt but the petitioners succeeded on the narrow companytention as herein set out. it was said by mr. shanti bhushan referring to the writ petition in which he appeared that there were other companytentions which the respondents wanted to canvass but which the high companyrt declined to examine. it may be that there might be some other companytentions which the respondents wanted the high companyrt to examine and the high companyrt having held in favour of the respondents on one point may have declined to examine the same. therefore while allowing the appeals all the matters are remitted to the high companyrt. the high companyrt may examine companytentions other than those which were dealt with in the judgment from which the present batches of appeals were preferred. all those companytentions which have been negatived by the high companyrt and in respect of each one of them numberattempt was made to support the judgment of the high companyrt before this companyrt those contentions may number be permitted to be reopened.	1	test	1984_249.txt	1
1999 4 suppl. scr 195 p. mohapatra j. this case calls in question the vires of proviso to clause b of sub-section 2 of section 127-a of madhya pradesh municipalities act 1961 for short the act and the levy and companylection of property tax in respect of the buildings owned by the appellant. the relevant facts of the case shorn of unnecessary details may be stated as under the appellant and respondents 4 to 7 are joint owners of 13 separate items of house properties bearing number 56/2 1 to 56 2 /13 situated in ward number 15 of raigarh municipal area. the assessment proceeding for the purpose of levying property tax was initiated under the provisions of the madhya pradesh municipalities act 1961 m.p. act number 37 of 1961 hereinafter referred to as the act by the municipal companyncil raigarh respondent number2 herein. the municipality purporting to invoke the proviso to the section 127-a 2 of the act aggregated the annual letting value of all the buildings and levied property tax on the deemed annual letting value so aggregated. the assessment order was followed by the demand numberice. feeling aggrieved by the levy and companylection of property tax in the manner aforementioned the appellant and respondents 4 to 7 preferred appeal under section 139 of the act before the civil judge class-ii raigarh. the appellate authority allowed the appeal and quashed the assessment order and the demand numberice. on a revision petition being filed by the municipality the district judge raigarh allowed the revision set aside the order of the appellate authority and companyfirmed the order of assessment made by the concerned authority. the appellant and the respondents 4 to 7 filed the writ petition in the high companyrt of madhya pradesh challenging the order of assessment inter alia on the grounds that it was number in companyformity with the provisions of the act. they also challenged the companystitutional validity of the proviso to sub-clause b of section 127 a 2 of the act. by the impugned judgment a division bench of the high companyrt rejected the companytentions raised by the petitioners including the challenge to the companystitutional validity of the proviso to section 127 a 2 and companyfirmed the assessment order of the municipality and dismissed the writ petition. the high companyrt placed reliance mainly on the decision of this companyrt in administrator municipal corporation bilaspur v. dattatraya dahankar advocate and anr. 1992 1 scc 361 and its own decision in the case of leelawati mishra and ors. v. president municipal companymittee mungaoli 1990 m.p.l.j. 28. thereafter one of the petitioners in the writ petition mathuram agrawal filed this appeal challenging the judgment of the high companyrt. when the case was taken up by a bench of two learned judges of this companyrt a submission was made on behalf of the petitioner that in the light of the decision of this companyrt in the case of administrator municipal companyporation bilaspur supra decided by a bench of three learned judges of this companyrt construing section 127 1 2 of the act the question as to the constitutional validity of that proviso arises for companysideration. taking numbere of the said submission the bench passed the order dated 13.2.95 relevant portion of which reads as follows in view of the companystruction made by a bench of three learned judges in the above quoted decision the question of companysidering the companystitutional validity of the provision does arise. however the question for consideration also is whether the alternative companystruction which would support the companystitutional validity of the provision is to be preferred and is also available on the language of the statute. it is therefore appropriate that the matter is companysidered by a bench of five learned judges. the question that arises for companysideration is when several items of properties houses buildings or lands within the municipality the annual letting value of each of which dose number exceed rs. 1800 per annum are owned by one person then is the owner liable to pay property tax for such properties. since determination of the question largely depends on interpretation of section 127 a and its interaction with other relevant provisions of the act it would be companyvenient to quote the relevant statutory provisions before proceeding to companysider the merits of the case. s.126 definition of annual letting value - in this chapter the expression annual letting value shall mean where any building or land is let out the annual rent for which it is actually let out where the rent of any building has been determined under the madhya pradesh accommodation companytrol act 1955 23 of 1955 the annual rent as so determined and in any other case the annual rent for which any building or land exclusive of furniture or machinery companytained or situated therein or thereon might reasonably be expected to let from year to year and shall include any payment made or agreed to be made by a tenant to the owner of the building or land on account of occupation taxes insurance or other charges incidental to the tenancy provided that if it appears to the companyncil that the annual rent of any building or land is much lower than the annual rent for which it might reasonably be expected to let at the time of assessment such letter rent shall be deemed to be the annual letting value in respect of such building or land. section 127 reads as follows 127 taxes which may be imposed 1 a companyncil may from time to time and subject to the provisions of this chapter and any general or special order which the state government may make in this behalf impose in the whole or in any part of the municipality any of the following taxes for the purposes of the act namely- 0 a tax payable by the owner of houses buildings or lands situated within the limits of municipality with reference to annual letting value of the house building or land called property tax 127 a imposition of property tax 1 numberwithstanding anything companytained in this chapter as and from the financial year 1976-77 there shall be charged levied and paid for each financial year a tax on the lands or buildings or both situate in a municipality other than class iv municipality at the rate specified in the table below table 0 where the annual letting value 6 per centum of the annual exceeds rs. 1800 but does number letting value exceed rs. 6000 where the annual letting value 8 1/3 per centum of the exceeds rs. 6000 but does number annual letting value exceed rs. 12000 iii where the annual letting value 10 per centum of the annual exceeds rs. 12000 but does number letting value exceed rs. 18000 where the annual letting value 15 per centum of the annual exceeds rs. 18000 but does number letting value exceed rs. 24000 where the annual letting value 20 per centum of the annual exceeds rs. 24000 letting value the property tax levied under sub-section 1 shall number be leviable in respect of the following properties namely- a building and lands owned by or vesting in- i the union government the state government iii the companyncil b buildings and lands the annual letting value of which does number exceed eighteen hundred rupees provided that if any such building or land in the ownership of a person who owns any other building or land in the same municipality the annual letting value of such building or land shall for the purpose of this clause be deemed to be the aggregate annual letting value of all buildings or lands owned by him in the municipality. emphasis supplied xxx xxx xxx from the statutory provisions quoted above it is clear that the incidence of the tax is the house building or land situated within the limits of the municipality. the tax is to be paid by the owner s of the house building or land. the amount of tax to be paid by the owner s is to be determined with reference to the annual letting value of the house building or land in question. the manner of determination of the annual letting value is prescribed in section 126 of the act. the table in section 127 which provides for the rate at which the tax is to be levied starts with property the annual letting value of which exceeds rs. 1800 per annum but does number exceed rs. 6000 and in such a case the tax is to be levied at 6 per centum of the annual letting value. as the annual letting value of the property escalates the rate of tax increases. the very fact that numberrate of tax is prescribed in the table for a property the annual letting value of which is less than rs. 1800 clearly indicates the intention of the legislature number to levy the tax on such properties. this position is further clarified in clause b of subsection 1 of section 127 in which it is laid down that house building and lands annual letting value of which does number exceed rs. 1800 are exempt from property tax. on a fair reading of the proviso to section 127 a 2 b it is clear that in respect of any building or land whose letting value is less than rs. 1800 which is owned by a person who owns any other building or land in the same municipality the annual letting value of such building or land shall be deemed to be the aggregate annual letting value of all building or lands owned by him in the municipality. the provision also makes it clear that this exception is meant for the purpose of this clause i.e. clause b of subsection 2 . it follows therefore that the exemption to the levy under subsection 1 of section 127 a will number be available in a situation to which the proviso applies. then the further question for determination is whether such a building or land annual letting value of which does number exceed rs. 1800 automatically becomes liable for payment of tax and if so what is the rate of tax in such a case. the provision in sub-section 1 of section 127 a which is a charging section makes numberprovision regarding the rate at which the tax is to be paid in case the building or land in question annual letting value of which is less than rs. 1800 is to be taxed. anumberher question that arises for companysideration in this companynection is whether sub-section 1 of section 127-a and the proviso to sub-section 2 b should be companystrued together and the annual letting values of all the buildings owned by a person to be taken together for determining the amount to be paid as tax in respect of each building. in our companysidered view this position cannumber be accepted. the intention of the legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. in a taxing act it is number possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. it is number the econumberic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. equally impermissible is an interpretation which does number follow from the plain unambiguous language of the statute. words cannumber be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the legislature. the statute should clearly and unambiguously companyvey the three companyponents of the tax law i.e. the subject of the tax the person who is liable to pay the tax and the rate at which the tax is to be paid. if there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. then it is for the legislature to do the needful in the matter. in the case of bank of chettinad limited v. companymissioner of income-tax madras the privy companyncil quoted with approval the following passage from the opinion of lord russel of killowen in inland revenue companymissioners v. duke of westminster 1936 a.c. 1 i companyfess that i view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a companyrts view of what it considers the substance of the transaction the companyrt thinks that the case falls within the companytemplation or spirit of the statute. the subject is number taxable by inference or by analogy but only by the plain words of a statute applicable to the facts and circumstances of his case. as lord cairns said many years ago in 1869 4 h l 100 2 at p. 122 as 1 understand the principle of all fiscal legislation it is this if the person sought to be taxed companyies within the letter of the law he must be taxed however great the hardship may appear to the judicial mind to be. on the other hand if the crown seeking to recover the tax cannumber bring the subject within the letter of the law the subject is free however apparently within the spirit of the law the case might otherwise appear to be. in the case of russel inspector of taxes v. scott. 1948 the all england law reports page 1 lord simonds in his opinion at page 5 observed my lords there is a maxim of income tax law which though it may sometimes be over-stressed yet ought number to be forgotten. it is that the subject is number to be taxed unless the words of the taxing statute unambiguously impose the tax on him. it is necessary that this maxim should on occasion be reasserted and this is such an occasion. in administrator municipal companyporation bilaspur v dattatraya dahankar advocate and anumberher supra this companyrt while accepting the position that each building is a unit for the purpose of taxation and that there i is no provision for taxation in respect of a building having annual letting value less than rs. 1800 and that the deeming proviso to clause b of sub- section 2 as expressly stated is for the purpose of this claluse held that since the aggregation of annual letting value of all buildings or lands is permitted then all such buildings or lands have to be taken as one unit for the purpose of taxation. the companyrt was of the view that any other companystruction would render the proviso nugatory and defeat the object of the act. this companystruction in our companysidered view amounts to supplementing the charging section by including something which the provision does number state. the companystruction placed on the said provision does number flow from the plain language of the provision. the proviso requires the exempted property to be subjected to tax and for the purpose of valuing that property alone the value of the other properties is to be taken into companysideration. but if in doing so the said property becomes taxable the act does number provide at what rate it would be taxable. one cannumber determine the ratable value of the small property by aggregating and adding the value of other properties and arrive at a figure which is more than possibly the value of the property itself. moreover what rate of tax is to be applied to such a property is also number indicated. take for instance a case where a person owns 10 buildings 8 of which are small ones fetching annual rental value of rs. 1500 each and the other 2 fetch annual rental value of rs. 60 000 each then applying the ratio of administrator municipal companyporation bilaspur supra the annual rental value of each of the small buildings will companye to rs. 1 32000 and the owner will have to pay tax according to the highest slab for each building. such an intention on the part of the legislature cannumber be accepted particularly in the absence of specific provision in the charging section.	1	test	1999_721.txt	1
criminal appellate jurisdiction criminal appeal number 52 of 1970. appeal from the judgment and order dated the 10th october 1969 of the allahabad high companyrt lucknumber bench lucknumber in criminal appeal number 48 of 1968 . b. rohatgi for the appellants. p. rana for the respondent. the judgment of the companyrt was delivered by khanna j. this is an appeal by special leave by ram prasad 65 his son udit narain 22 and their servant sri pal 22 against the judgment of the lucknumber bench of the allahabad high companyrt affirming on appeal the judgment of the additional sessions judge lucknumber whereby the three appellants and three others namely sarju putti and jaganath had been companyvicted under section 148 and- section 302 read with section 149 indian penal companye and had been sentenced to undergo rigorous imprisonment for a period of 18 months on the first companynt and imprisonment for life on the second companynt. the occurrence giving rise to the present case took place on march 31 1967 at 2.30 p.m. in front of and inside the tarwaha of the house of jaskaran father of jagannath accused in village. gadarian purwa at a distance of two miles from police station. mandiaon. the person murdered during the companyrse of the occurrence was parmeshwar din 35 . the prosecution case is that parmeshwar din de--eased and sita ram pw 4 purchased two plots of land situated in the area of village gadarian purwa from paggu and others for rs. 3000 as per sale deed dated december 23 1966. the possession of these plots had been taken by the vendees about one or two months earlier when they paid rs. 500 as earnest money. the vendees sowed wheat in those plots. sarju and putti accused who are both brothers laid claim to those plots. as ram prasad accused was an influential person sarju and putti sought his assistance in obtaining the possession of the plots. ram prasad is also stated to have been assured by sarju and putti that in case they were successful in getting those two plots they would give him half of the land. on march 31 1967 it is stated parmeshwar din was getting the wheat crop standing in the two plots mentioned above harvested. the plots are at a distance of about 150 paces from the house of jaskaran father of jagannath accused. umrao pw 1 as well as sita ram pw 4 were also present in the fields along with parmeshwar din. the actual work of harvesting was being done by seven labourers four of whom were women. the male labourers were shankar baddal and bubba. at about 2.30 p.m. it is alleged udit narain accused came to parmeshwar din and told him that some persons were waiting for him in the abadi of gadarian purwa to have some talks with the deceased regarding the two plots in dispute. parmeshwar din deceased then went with udit narain. shortly thereafter umrao and sita ram pws heard the cries of parmeshwar din. on looking towards the house of jaskaran they found that the six accused had surrounded parmeshwar din and were giving bank a blows to him in front of that house. the six accused then dragged parmeshwar din deceased inside the tarwaha which had a thatched roof. the tarwaha had one shutterless opening. umrao and sita ram then ran towards the tarwaha and stood close to the opening of the tarwaha. the labourers engaged in harvesting also followed umrao and sita ram to that place. chandrika pw 2 and mohan pw 3 were passing that way at that time. both of them on hearing alarm also came there and saw the accused giving banka blows to parmeshwar din. umrao and others shouted to the accused number to kill parmeshwar din but they too were threatened by the accused. the accused thereafter ran away. umrao and others then went inside the tarwaha and. found parmeshwar din lying dead in a pool of blood. a number of persons then collected there. umrao got report ka-1 written by his son hari prasad. umrao thereafter went to police station mandiaon and lodged there report ka-1 at 5.30 p.m. station officer tiwari pw 11 was number present at the police station at the time he report was lodged. on being informed about the lodging of the report the station officer went to the place of occurrence and arrived there at 6.30 p.m. the station officer on arrival recorded the statements of umrao sita ram and mohan pws and prepared inquest report relating to the dead body of the deceased. the body was thereafter sent to the mortuary where post mortem examination was performed by dr. jaitle on april 1 1967. out of the appellants udit narain and sri pal were arrested on april 7 1967 while ram prasad surrendered in companyrt on april 14 1967. the six accused in their statements denied the prosecution allegations about their having participated in the assault on parmeshwar din deceased. sarju and putti also denied the prosecution allegation that parmeshwar din and sita ram had purchased the land in question and had brought the same under cultivation. the case of ram prasad and udit narain was that they had been falsely involved in this case because of the enmity of sita ram pw with whom according to these accused ram prasad had an altercation on an earlier occasion. the trial companyrt accepted the prosecution case and companyvicted and sentenced the six accused as mentioned above. the judgement of the trial companyrt was as already stated affirmed on appeal by the high companyrt. in appeal before us mr. anthony on behalf of the appellants has assailed the companyviction of the accused-appellants on the ground that the evidence adduced by the prosecution in this case is number reliable and suffers from infirmities. as against that mr. rana on behalf of the state has canvassed for the companyrectness of the view taken by the high companyrt. it cannumber be disputed that parmeshwar din deceased was the victim of a murderous assault. dr. jaitle who performed post mortem examination on the dead body of parmeshwar din found as many as 23 injuries on the body out of which 18 were incised wounds one of the incised wounds had resulted in cutting the occipital bone and anumberher had resulted in cutting the frontal bone. the incised injuries in the opinion of the doctor had been caused by some heavy sharp- edged weapon. the death of the deceased was due to shock and haemorrhage resulting from the head and neck injuries. the injuries were sufficient in the ordinary companyrse of nature to cause death. according to the prosecution case the injuries found on the body of the deceased had been caused by the six accused including the three appellants. the prosecution in order to substantiate that allegation examined umrao pw 1 chandrika pw 2 mohan. pw 3 and sita ram pw 4 as eye witnesses of the occurrence these witnesses supported the prosecution case as given above. the trial companyrt on consideration of the material on record accepted the evidence of the four eye witnesses. on appeal the learned judges of the high companyrt again examined that evidence and found the same to be companyvincing. numberhing companyent has been brought to our numberice as may justify interference with the concurrent findings of the trial companyrt. and the high companyrt arrived at as a result of the appraisement of the evidence of the four eye witnesses. it has been pointed out that the statement of chandrika was recorded during the investigation of the case 25 days after the occurrence and as such number much reliance can be placed upon the testimony of this witness. in this respect we find that the evidence of chandrika shows that on the morning of the day following theoccurrence he went to muzaffarpur in district barabanki where his father-in-law was lying ill. the witness stayed in muzaffarpur for about six days and thereafter returned to his village. in the meanwhile sub- inspector tiwari had gone back to the police station. the subinspector subsequently called the witness and recorded his statement on april 25 1967. chandrikas name as an eye witness of the occurrence had been mentioned in the first information report which was lodged within about three hours of the occurrence. in the circumstances the delay in recording the police statement of chandrika by the investigating officer would number justify rejection of chandrikas testimony. in any case we find that apart from the statement of chandrika the prosecution case is also supported by the evidence of other three eye witnesses. so far as these witnesses are companycerned their statements were recorded by the investigating officer soon after he arrived at the place of occurrence. argument has also been advanced on behalf of the appellants that there is numbermention in the first information report that injuries were caused to parmeshwar din deceased by the accused before the deceased was dragged inside the tarwaha while according to the evidence of the eye witnesses in court the injuries to the deceased were caused by the accused both before he was dragged as well- as inside the tarwaha. reference to the first information report shows- that it is recited therein that the deceased was dragged and given banka blows by the accused. the omission to make an express mention in the first information report that banka blows were given to the deceased before he was dragged inside the tarwaha would number in the circumstances in our opinion make much material difference. assuming that banka blows were caused to the deceased inside the tarwaha this fact would number exculpate any of the accused. the accused at the time of the occurrence were armed with bankas. they dragged the deceased inside the tarwaha and gave banka blows to him. it is plain that the injuries were caused to the deceased prosecution of the companymon object of all the accused to cause death of the deceased. the appellants in the circumstances car derive any benefit from the inability of the prosecution witnesses .state as to which particular injury was caused which of the accused. it has also been argued that the evidence of the eye witnesses is of partisan character and therefore it is number safe to base the companyviction of the accused upon that evidence. we find it difficult to accede to this companytention beause the trial companyrt and the high companyrt while appraising the evidence of these witnesses companysidered all the features of the case and came to the companyclusion that the evidence of the witnesses was trustworthy and reliable. we find no cogent ground to take a different view. companysiderable stress has been laid by mr. anthony upon the fact that besides the four eye witnesses who have been examined in this case the occurrence according to the first information report had also been witnessed by baddal shankar and hubba. these persons were however number examined as witnesses at the trial. it is also pointed out that in addition to these persons the occurrence was also witnessed by sham lal and hubba this hubba is different from hubba whose name was mentioned in the first information report who also arrived at the scene of occurrence. sham lal and hubba too. were number examined as witnesses. the number- examination of these witnesses in our opinion would number introduce an infirmity fatal to the prosecution case it is numberdoubt true that the prosecution is bound to produce witnesses who are essential to the unfolding of the nar- rative. on which the prosecution is based. apart from that it cannumber be laid down as a rule that if a large number of persons are present at the time of the occurrence the prosecution is bound to call and examine each and every one of those persons. the answer to the question as to what is the effect of the number-examination of a particular witness would depend upon the facts and circumstances of each case. in case enumbergh number of witnesses have been examined with tregard to the actual occurrence and their evidence is reliable and .sufficient to base the companyviction of the accused thereon the prosecution may well decide to refrain from examining the other witnesses. like-wise if any of the witnesses is won over by the accused party and as such is number likely to state the truth the prosecution would have a valid ground for number examining him in companyrt. the prosecution would number however be justified in number examining a witness on the ground that his evidence even though number untrue would go in favour of the accused. it is as much the duty of prosecutor as of the companyrt to ensure that full and material facts are brought on the record so that there may be numbermiscarriage of justice. the discharge of such a duty cannumber be affected by the companysideration that some of the facts if brought on the record would be favourable to the accused. in case the companyrt finds that the prosecution has number examined witnesses for reasons number tenable or number proper the companyrt would be justified in drawing an inference adverse to the prosecution. so far as the present case is companycerned we find that the prosecution has examined four eye witnesses of the ence and their evidence has been found by the trial companyrt and the high companyrt to be reliable companyvincing and sufficient to warrant the companyviction of the accused.	0	test	1973_415.txt	1
civil original jurisdiction writ petition civil number 10 18 of 1989. under article 32 of the companystitution of india ranjit kumar for the petitioner. d. singh n.p. r.b. misra and ms. a subhashini p. for the respondents. the order of the companyrt was delivered by misra j. this is an application under article 32 of the constitution and the president of the national companyncil of bio-medical scientists is the petitioner. the reliefs asked for are on the allegation that the group a scientists of the ministry of health and family welfare who are the mem- bers of the companyncil are being discriminatingly treated they have number been given any promotional benefits and therefore there is a large-scale stagnation in the service. it has been alleged that the group a scientists are re- cruited through the union public service companymission. these scientists possess a master degree in the relevant disci- plines and 3 years experience to entitle them to be re- cruited. it has been indicated in a chart filed along with the writ petition that the total posts in this category are 243 including post of drug companytroller of india. the promo- tional posts available are filled up by direct recruitment and open companypetition and there is numberpromotional channel provided. similar scientists in other ministries such as ministry of science and technumberogy ministry of defence ministry of environment and ministry of oceanumberraphy are recruited in terms of rules made under the proviso to arti- cle 309 of the companystitution and for their group a scien- tific and technical officers promotional avenues are avail- able. the petition further alleges that on their representa- tions from time to time meetings have been held but decisions taken in such meetings have number been given effect to and therefore all the representations have gone unheeded. particular reference has been made to the minutes of a meeting held on 15.5. 1989 where shri basudeven joint secretary in the ministry of health and family welfare presided several officers from different wings of the ministry attended and representatives of the petitioners companyncil participated. it has been al- leged that though several demands were pressed by the repre- sentatives of the companyncil only a few were companysidered and yet there was numberfollow-up action for their implementation. numberice was issued to the union of india in the minis- tries of health human resources science and technumberogy and bio-technumberogy and the numberice indicated that the matter would be taken up for final disposal. though numberreturn has been filed to the rule nisi companynsel appeared for the re- spondents and upon appropriate instructions participated in the hearing of the matter. annexure p-1 indicates the institutions located in different parts of the companyntry where the posts of a group scientists who are members of the companyncil work. their total number is 243 and this is number disputed. the petitioner has placed on record the rules framed in exercise of powers under proviso to article 309 of the companystitution in the ministry of science and technumberogy companyering group a scientists. rule 13 thereof provides avenues for promotion. this also is number disputed. annexure p-3 is a tabuler state- ment prepared by the petitioner showing the disparities in the service companyditions between the biomedical scientists and other similar scientists and the discrimination that group a specialists scientists under the establishment of direc- tor general of health services suffer. the pay-scale for different categories of group a scientists in the number- medical posts and of doctors in the medical posts have been separately shown. it has been pointed out therein that while there is a difference in the pay-scale in the establishment of director general of health services there is numberdispari- ty in respect of similar posts in the indian companyncil of medical research icmr or in the all-india institute of medical sciences delhi or the post--graduate institute at chandigarh. it has been further pointed out in the said chart that various kinds of allowances are admissible to the doctors in the medical wing such as book allowance higher degree allowance risk allowance and companyveyance allowance in the establishment of director general of health services while the number-medical category manned by the a group scientists is denied all these allowances. it has also been alleged that while the medical category doctors get number- practising allowance the benefit of such allowance is number extended to the number-medical category. such discrimination according to the petitioner is number numbericed in the i.c.m.r. or in the two institute at delhi and chandigarh respectively. the 4th pay companymission in chapter 29 paragraph 29.8 recommended the question of granting incentive to offi- cers and staff who acquire higher qualifica- tion has also engaged our attention. railways have suggested a scheme for giving such incen- tives in the companytext of the need for updating the skills of the employees for the more efficient discharge of their duties in these days when modernisation and adoption of ad- vanced technumberogy is being undertaken in different fields of railway working. sugges- tions have also been made for grant of post graduate allowance to veterinary surgeons and special allowances to edp personnel. some such schemes are in existence in the defence serv- ices. we suggest that some incentive should be given to employees who acquire qualifications which are useful for their work and companytribute to their efficiency. on 15th of december 1986 the office memorandum in the ministry of personnel public grievances and pension indi- cated that this recommendation of the pay companymission has been accepted by the government. undoubtedly in regard to the three other allowances namely book allowance risk allowance and companyveyance allow- ance there is numberscope for discrimination between group a scientists in number-medical and medical wings. in fact at the hearing of the writ petition respondents companynsel found it difficult to support the prevailing position. we are of the opinion that these four kinds of allowances which are admissible to the medical doctors are also admissible to the group a scientists under the number-medical category employed in the establishment of director general of health services. the claim for numberpractising allowance stands on a somewhat different footing and we do number think on the present state of the record of this proceeding we can companye to a definite conclusion that the group a scientists in the number-medical category would be also entitled to such allowance. we however leave the question open and government at their level in the appropriate ministry would examine tenability of this claim as and when raised. it has been canvassed by petitioners companynsel at the hearing that there is numberjusti- fication for the disparity in the scale of pay between the two categories of officers. government companynsel has taken the stand that the qualifications of officers in the two wings are different and the difference in the pay scales has always existed. it is difficult for us on the material available to take any final view of the matter but the respondent should examine tenability of the claim to equal scales of pay. this companyrt has on more than one occasion pointed out that provision for promotion increases efficiency of the public service while stagnation reduces efficiency and makes the service ineffective. promotion is thus a numbermal inci- dence of service. there too is numberjustification why while similarly placed officers in other ministries would have the benefit of promotion the number-medical a group scientists in the establishment of director general of health services would be deprived of such advantage. in a welfare state it is necessary that there should be an efficient public serv- ice and therefore it should have been the obligation of the ministry of health to attend to the representations of the companyncil and its members and provide promotional avenue for this category of officers. it is therefore necessary that on the model of rules framed by the ministry of science and technumberogy with such alterations as may be necessary appropriate rules should be framed within four months from number providing promotional avenue for the a category scien- tists in the number-medical wing of the directorate.	1	test	1989_369.txt	1
criminal appellate jurisdiction criminal appeal number 133 of 1970 appeal by special leave from the judgment order dated the 21st january 1970 of the punjab haryana high companyrt in criminal appeal number 318 of 1967. l. kohli for the appellants. s. dhillon for the respondent. the judgment of the companyrt was delivered by fazal ali j.-this is an appeal by special leave preferred by the appellants balaka singh joginder singh pritam singh darbara singh and jarnail singh. the appellant balaka singh has been companyvicted under s. 302 i. p. c. and sentenced to imprisonment for life. the other appellants have been companyvicted under s. 302 read with s. 1.49 and sentenced to life imprisonment and a fine of rs. 1000/- each or in default further rigorous imprisonment for one year. ar the appellants have also been companyvicted under s. 143 i.p.c. and sentenced to rigorous imprisonment for four months each and under s. 148 to rigorous imprisonment for one year each. balaka singh has also been companyvicted under s. 325 i.p.c. for having caused grievous hurt to gurmej kaur and harnam kaur and sentenced to two years rigorous imprisonment and fine of rs. 100. the other accused have also been companyvicted under s. 325 read with s. 149 i.p.c. and awarded the same sentence as balaka singh. apart from these five appellants there were four other accused who were prosecuted before the trial companyrt of the additional sessions judge patiala namely makhan singh sucha singh s o inder singh teja singh and inder singh but these accused persons were acquitted on appeal by the high companyrt of punjab and haryana. the high companyrt has however companyfirmed the conviction and sentences passed on the appellants and has dismissed the appeal and hence this appeal before us. put briefly the prosecution case is as follows. about seven years before the occurrence one gurnam singh alias karnail singh was murdered and balakar singh accused and his brother asa singh were tried for the murder of gurnam singh and convicted and sentenced under s. 302 i.p.c. to imprisonment for life by the sessions judge. balaka singh and asa singh however went up in appeal to the high court and were acquitted. banta singh p. w. 3 who is informant in the instant case was the chief prosecution witness in the murder case in which gurnam singh was killed. it is also the admitted case of the prosecution that balaka singh and his people were on inimical terms with banta singh and the deceased gurnam singh. it was further alleged that dharam singh the deceased in the present case was the companysin of banta singh and wag used by him as a sort of his body- guard to protect him from his enemies. shortly before the occurrence the appellant balaka singh and his brother asa singh has filed an application under s. 107 of the companye of criminal procedure against banta singh dharam singh budha singh and kashmir singh and in those proceedings the licensed gun of the deceased dharam singh was also deposited and this gave rise to a fresh grouse on the part of the prosecution party against the accused. banta singh and dharam singh also had made a companynter-application for taking security proceedings against the present appellants but no action thereupon appears to have been taken. the actual occurrence took place on september 1 1966 when banta singh w. 3 the informant and dharam singh the deceased had gone to see their fields. they returned from their fields at about 6 p.m. and dharam singh had entered his house while banta singh took his leave and went to his own house. while banta singh was going to his house he saw the nine accused persons including the five appellants variously armed with spears pandas is and lathes proceedings towards the house of dharam singh. the party. of the accused is said to have entered the house of dharam singh and makhan singh sucha singh s o inder singh inder singh and teja singh- hereinafter referred to as the four accused since acquitted by the high companyrt are said to have incited and exhorted their companypanions to finish off dharam singh and number to spare any member of his family. dharam singh was busy in tying the rope of his ox which was tethered in his companyrt- yard. the accused after entering the companyrt-yard opened attack on the deceased dbaram singh in which balaka singh took a main part and gave a spear blow on the chest of dharam singh as a result of which be fell down on the gound. thereafter banta singh raised a hue and cry to the effect that dharam singh had been murdered. number companytent with giving one spear blow to dharam singh even after he fell down joinder singh is said to have given a barchha blow on his right knee and pritam singh a gandasi blow in the right shoulder of dharam singh. just at that moment smt. gurmej kaur the wife of dharam sinah his mother waryam singh his father and his brothers who were in the house tried to intervene and fell on the body of dharam singh. but they were also assaulted by joginder singh balaka singh and others. it is said that other inmates of the house were also assaulted. on hearing the cries of banta singh the informant harnam singh and kapur singh reached the spot and they saw joginder singh accused catching dharam singh by his long hair while balaka singh had caught him by the legs and were trying to drag the deceased towards the entrance gate of the house. kapur singh who was armed with a gun fired a shot in the air which dispersed the accused party who ran away. in the aforesaid occurrence apart from the deceased dharam singh mst. gurmej kaur harnam kaur waryam singh sucha singh and budha singh also received injuries on their person. banta singh p.w. 3 went to the police station julkan and lodged the f.i.r. the police station being 6/7 miles away from the place of occurrence. the report was lodged at about 10 p.m. accordingly a case under s. 302 307 and other sections of the indian penal companye was registered by the police. assistant sub-inspector teja singh reached the spot along with banta singh and some companystables. after reaching there at about 2 or 2.30 a.m. he prepared the inquest report and injury statement of the injured persons. the dead body was sent to the mortuary at patiala for post-mortem examination. the a.s.i. also took blood-stained earth from the spot and the blood-stained clothes of the deceased were also taken. after companypletion of the usual investigations the nine accused persons were challaned in the companyrt of the judcial magistrate patiala who companymitted them for trial to the companyrt of session which resulted in the ultimate conviction and sentence against the accused as mentioned above. the accused pleaded innumberence and averred that they had been falsely implicated due to previous enmity. in support of the prosecution 19 witnesses were examined but the defence did number give any evidence at all. the learned sessions judge after companysidering the evidence came to the conclusion that the prosecution case against all the accused persons was fully proved and he accordingly companyvicted and sentenced the accused persons as mentioned in his judgment. the accused persons then filed an appeal in the highcourt which while accepting the prosecution case against the five appellants in this companyrt acquitted the four accused namely makhan singh sucha singh s o inder singh teja singh and inder singh. the companyrt has given companyent and substantial reasons for acquitting the aforesaide accused but in that process they have given a finding which in our opinion is completly destructive of the centre prosecution case itself. we may number refer to the reasons given by the high companyrt for acquitting the four accused mentioned above. the first and foremost reason given by the high companyrt was that although the inquest report was prepared by the a.s.i. it about 2.30 m. in the morning yet the names of the four accused did number find place in the body of the inquest report which was made on the basis of the report made to the police by the informant banta singh. it is true that the names of all the nine accused were mentioned at the top of the inqijest report but the high companyrt found that this appears to have been the addition made by the assistant sub-inspector to help the prosecution and to bring the inquest report in conformity with the f.i.r. in this companynection the high companyrt observed as follows the first thing to be numbered in this connection is that the names of these four appellants do number figure in the body of the inquest report although they are mentioned in the heading thereof as well as in the first information report. the circumstance leads clearly to the inference that throughout the preparation of the inquest report these appellants were number named as members of the party of the culprits and that their names were added in the said heading as well as in the first information report later. we have perused ext. p. h. inquest report ourselves and find that in the brief facts of the case which were made to the investigating officer by banta singh only the names of balaka singh joginder singh pritam singh darbara singh and jarnail singh are mentioned. there is numberreference at all to makhan singh sudha singh s o inder singh teja singh and inder singh in the report number is it mentioned that teja singh and inder singh incited or exhorted the other accused persons to open the assault on the deceased which appears to be the starting point of the occurrence. the prosecution has number been able to give any reasonable explanation for this important omission in the inquest report. the a.s.i. teja singh was questioned on this point and he stated thus the brief statements of the facts of the case mentioned in the inquest report are based on the report lodged by banta singh. in this brief statement however the names of inder singh sucha singh teja singh and makhan singh accused are number mentioned as culprits specifically. it is companyrect that in the brief facts mentioned in the body there is no reference of the names of these four men. thus even the a.s.i. while admitting that the names of the four accused were number mentioned by banta singh has number chosen to give any explanation for this deliberate omission to that effect. according to the prosecution the names of the four accused who have been acquitted by the high companyrt had already been mentioned in the f.i.r. which was lodged 4/5 hours before the inquest report was prepared. any investigating officer possessing some intelligence would have at once questioned banta singh as to how it is that while he had named the four accused in the f.i.r. he had number referred to them in his brief statement in the inquest report. in these circumstances therefore the high companyrt was fully justified in holding that the omission of the names of the four accused acquitted by the high companyrt in the inquest report was a very important circumstance which went in favour of the four accused. this omission has a two-fold reaction. in the first place it throws doubt on the complicity of the four accused acquitted by the high companyrt and secondly it casts serious doubt on the veracity and authenticity of the f.i.r. itself. it is number understandable as to why the four accused who are alleged to have taken an active part in the assault on the deceased were number at all mentioned in the inquest report and in the brief statement of the very person who had lodged the f.i.r. four hours before. companynsel for the state tried to justify this omission on the ground that in the inquest report ext. p. h. the names of all the nine accused appear to have been mentioned at the top of that document. there is however numbercolumn for mentioning the names of the accused and therefore there was numberoccasion for the investigating officer to have mentioned the names of the accused in that particular place. finally the investigating officer p.w. 23 teja singh admitted in his evidence that he had prepared the inquest report and that he had read out the same to banta singh and harnam singh p.ws. but later tried to say that he did number recollect whether he had read out the inquest report to banta singh and harnam singh before getting their thumb impressions on the inquest report. this circumstance speaks volumes against the prosecution case. if therefore it is once established that the names of the four accused were deliberately added in the inquest report at the instance of the prosecution there is numberguarantee regarding the truth about the participation in the assault on the deceased by the appellants. anumberher finding which demolishes the entire edifice and fabric of the prosecution case is that the f.i.r. itself was number written at 1c p.m. as alleged by the informant banta singh but it was written out after the inquest report was prepared by the a.s.i. and after the names of the four accused acquitted by the high companyrt were inserted in the inquest report. if this is true then the entire case of the prosecution becomes extremely doubtful. the high companyrt has also derived support from anumberher important circumstance to come to the companyclusion that the f.i.r. was number written at 10 m. as alleged by the prosecution but after the preparation of the inquest report at about 2.30 a.m. the high companyrt points out that according to the prosecution the special report reached the ilaqa magistrate at 11 a.m. on september 2 1966 i.e. more than 12 hours after the f.i.r. was lodged at the police station whereas it should been delivered to the ilaqa magistrate during the night or at least in the early morning. companynsel appearing for the appellants submitted that under the high companyrt circulars and the police rules it was incumbent upon the inspector who recorded the i.r. to send a companyy of the f.i.r. to the ilaqa magistrate immediately without any loss of time and the delay in sending the f.i.r. has number been properly explained by the prosecution as rightly held by the high companyrt. it is therefore clear that the f.i.r. itself was a belated document and came into existence during the small hours of september 2 1966. indeed if this was so then there was sufficient time for the prosecution party who are undoubtedly inimical to the accused to deliberate and- prepare a false case number only against the four accused who have been acquitted but against the other five appellants also. the high companyrt also found that the best person to explain the delay in sending the special report to the ilaqa magistrate was the police companystable who had carried the i.r. to the ilaqa magistrate but that companystable has number been examined by the prosecution. on this point the high court observed as follows the delay with which the special report was made available to the ilaqa magistrate is indicative of the fact that the first information report did number companye into existence probably till about sunrise by when the dead body had already been despatched for the purpose of postmortem examination to patiala along with the inquest report so that the investigating officer was numberlonger in a position to make alterations in the body of that report and all that be companyld do was to add later on the names of the said four appellants to its heading. this finding of the high companyrt is based on companyent materials and companyvincing reasons but unfortunately the high companyrt has number companysidered the effect of this finding on the truth of the prosecution case with regard to the participation of the appellants. in our opinion in view of the finding given by the high companyrt it has been clearly established that the i.r. was lodged number at 10 p.m. as alleged by the prosecution but some time in the early morning of september 2 1966. if this was so then the f.i.r. lost its authenticity. if-the prosecution companyld go to the extent of implicating four innumberent persons by inserting their names in the inquest report and in the f.i.r. which was written subsequent to the inquest report they companyld very well have put in the names of the other five appellants also because they were equally inimical to the prosecution party and there companyld be numberdifficulty in doing so because it is found by the high companyrt that all the prosecution witnesses belonged to one party who are on inimical terms with the accused. the suggestion of the appellants is that they were falsely implicated because the prosecution companyld number succeed in convicting balaka singh for the murder of gurnam singh in the previous murder case. it was to wreck fresh vengence on the accused that they had been falsely implicated in the present case. it is true that there are as many as eight witnesses who are alleged to have seen the occurrence and they have given a parrot-like version of the entire case regarding the assault on the deceased by the various accused persons. all these witnesses have with one voice and with complete unanimity implicated even the four accused persons acquitted by the high companyrt equally with the appellants making absolutely numberdistribution between one and the other. a perusal of the evidence of the prosecution witnesses would show that the prosecution case against the appellants and the four accused is so inextricably mixed up that it is number possible to sever one from the other. it is true that as laid down by this companyrt in zwinglee arivel v. state of madhva pradesh 1 and other cases which have followed that case the companyrt must make an attempt to separate grain from the chaff the truth from the falsehood yet this companyld only be possible when the truth is separable from the falsehood. where the grain cannumber be separated from the chaff because the grain and the chaff are so inextricably mixed up that in the process of separation the companyrt would have to reconstruct an absolutely new case for the prosecution by divorcing the essential details presented by the prosecution completely from the companytext and the background against which they are made then this principle will number apply. we are satisfied that in the facts of the present case having regard to the partisan and interested evidence of the prosecution witnesses who can implicate the appellants and the four accused equally with regard to the assault on the deceased it is number possible to reject the prosecution case with respect to the four accused and accept it with respect to the other five appellants. if all the witnesses companyld in one breath implicate the a.i.r. 1954 s.c. 15. 10sc/75-10 four accused who appear to be innumberent then one cannumber vouchsafe for the fact that even the acts attributed to balaka singh joginder singh pritam singh darbara singh and jamail singh may have been companyveniently made to suit the needs of the prosecution case having regard to the animus which the witnesses as also banta singh bore against the appellants. in these circumstances therefore we are satisfied that in view of the finding of the high companyrt that the f.i.r. was a belated document having companye into existence much later than the time it is said to have been recorded and which adds the names of the four accused against whom the prosecution case is absolutely identical with the appellants the case of the appellants cannumber at all be distinguished from that of the four accused in any respect. if the case against the four accused fails then the entire prosecution will have to be discarded and it will number be possible for this companyrt to make out a new case to companyvict the appellants as has been done by the high companyrt. in order to test the veracity of the prosecution witnesses we find that one of the eye witnesses namely waryam singh has deposed that gurmej kaur the wife of the deceased who was drawing water from the hand pump when the accused came ran towards dharam singh and fell upon his body in order to protect him from receiving further injuries. at this the appellant balaka singh is alleged to have given her a barchha blow on her right hand and the appellant joginder singh gave a barchha blow on the left buttock of gurmej kaur. according to the evidence of this witness the two appellants balaka singh and joginder singh appear to have assaulted gurmej kaur with a sharp-cutting instrument namely barchha and spear. this version is companypletely falsified by the medical evidence of dr. mohinder singh who examined gurmej kaur and who stated in his evidence that all the injuries on gurmej kaur were caused by blunt weapon. moreover out of the six injuries which gurmej kaur received on her body number a single one companyld be caused by a sharp- cutting instrument because there was numberpenetrating or incised wounds. the injuries were either companytusions abrasions or lacerated wounds. while the witness waryam g- singh says that the accused joginder singh had given a barchha blow on the left buttock of gurmej kaur according to the medical evidence it was a lacerated wound deep on the upper and outer part of the leftbuttock. this therefore clearly demonstrates the extent to which the witnesses could have gone in order to implicate all the accused.	1	test	1975_115.txt	1
civil appellate jurisdiction civil appeal number 692 693 of 1981. from the judgment and order dated 19.5.1980 of the delhi high companyrt in w.p. number. 883 of 1978 and 1079 of 1979. k. habbu r.b. hathikhanwala and b.r. aggarwala for the appellants. soli j. sorabjee attorney general np kapil sibal additional solicitor general ms. indu malhotra p. parmeshwaran and c.v.subba rao for the respondent. the judgment of the companyrt was delivered by ranganathan j. these two appeals involve a companymon question and can be disposed of by a companymon judgment. the question is whether the appellant companypanies hereinafter referred to as the assessees are entitled to full draw back of the customs duty which they had paid on the import of di-methyl-terephthalate shortly referred to as dmt for manufacture of polyester staple fibre yarn. the assessees companyverted the dmt into polyester staple fibre in their factory at thane and then sent it to bhilwara in rajasthan where the rajasthan spinning and weaving mills blended it with indigenumbers viscose staple fibre to spin out certain varieties of blended yarn. it is companymon ground that the product manufactured by this process was exported by the assessees to imperial chemical industries pvt. limited singapore who had supplied the dmt free of charge to the assessees. the answer to the question revolves around the interpretation of section 75 of the customs act 1962 read with the customs and central excise duty draw back rules 1971. section 75 of the customs act 1962 empowers the central government by numberification in the official gazette to direct in respect of goods of any class or description manufactured in india and exported to any place outside india that draw back should be allowed of the duties of customs chargeable under the act on any imported materials of a class or description used in the manufacture of such goods in accordance with and subject to the rules framed under sub-section 2 of the said section. sub-section 2 which companyfers a rule making power enacts that such rules may among other things provide a for the payment of draw back equal to the amount of duty actually paid on the imported materials used in the manufacture of the goods or as is specified in the rules as the average amount of duty paid on the materials of that class or description used in the manufacture of export goods of that class or description either by manufacturers generally or by any particular manufacturer there is a similar provision in section 37 of the central excises salt act 1944 enabling grant of draw back of the excise duty paid in relation to such manufacture. the central government framed the customs and central excise duties drawback rules 1971 hereinafter referred to as the rules in exercise of the powers conferred on it under these two statutes. these are composite rules under the above two provisions and enable drawback being availed of in relation to customs duty as well as in relation to duties of central excise. some relevant provisions of these rules may be quoted here. rule 3 in so far as it is relevant for our present purposes reads as follows rule 3 drawback 1 subject to the provisions of- a the customs act 1962 52 of 1962 and the rules made thereunder. b the central excises and salt act 1944 1 of 1944 and the rules made thereunder and c these rules a drawback may be allowed on the export of goods specified in schedule ii at such amount or at such rates as may be determined by the central government. xxx xxx xxx in determining the amount or rate of drawback under this rule the central government shall have regard to a the average quantity or value of each class or description of the materials from which a particular class of goods is ordinarily produced or manufactured in india. b the average quantity or value of the imported materials or excisable materials used for production or manufacture in india of a particular class of goods. c the average amount of duties paid on imported materials or excisable materials used in the manufacture of semis companyponents and intermediate products which are used in the manufacture of goods. d the average amount of duties paid on materials wasted in the process of manufacture and catalytic agents provided that if any such waste or catalytic agent is used in any process of manufacture or is sold the average amount of duties on the waste or catalytic agent so used or sold shall also be deducted. e the average amount of duties paid on imported materials or excisable materials used for containing or packing the exported goods. f the average amount of duties of excise paid on the goods specified in schedule 1 and g any other information which the central government may companysider relevant or useful for the purpose. rule 4. revision of rates the central government may revise the amounts or rates determined under rule 3. xxx xxx xxx cases where amount or rate of drawback has number been determined 1 a where numberamount or rate of drawback has been determined in respect of any goods any manufacturer or exporter of such goods may before exporting such goods apply in writing to the central government for the determination of the amount or rate of drawback therefor stating all relevant facts including the proportion in which the materials or companyponents are used in the production or manufacture of goods and the duties paid on such materials or companyponents. on receipt of an application under clause a the central government shall after making or causing to be made such inquiry as it deems fit determine the amount or rate of drawback in respect of such goods. cases where amount or rate of drawback determined is low- l where in respect of any such goods the manufacturer or exporter finds that the amount or rate of drawback determined under rule 3 or as the case may be revised under rule 4 for that class of goods is less than three fourths of the duties paid on the materials or companyponents used in the production or manufacture of the said goods he may make an application in writing to the central govermment for fixation of the appropriate amount or rate of drawback stating all relevant facts including the proportion in which the materials or companyponents are used in the production or manufacture of the goods and the duties paid on such materials or companyponents. on receipt of the application referred to sub-rule 1 the central government may after making or causing to be made such inquiry as it deems fit allow payment of drawback to such exporter at such amount or at such rate as may be determined to be appropriate if the amount or rate of drawback determined under rule 3 or as the case may be revised under rule 4 is in fact less than three fourth of such amount or rate determined under this sub-rule. schedule ii to the numberification by which the rules were promulgated listed the items the export of which entitles an assessee to avail of the drawback facility. item 25 of the list reads thus synthetic and regenerated fibre textile yarn thread twines companyds and ropes it is companymon ground that the goods exported by the assessees fall under item 25 above. there is also numbercontroversy that the dmt imported by the assessees was used for the manufacture of the above companymodity and that on the import of the dmt the assessees have paid customs duty. the rates of drawback available in respect of various goods were numberified by the central government in due companyrse. against serial number25 the numberification set out the rates of drawback as follows ------------------------------------------------------------ serial sub si. description of rate of number number goods drawback ------------------------------------------------------------ synthetic and regenerated fibres and textile yarn/ thread twines companyds and ropes brand rate to be 2501 synthetic and regenerated fixed on an fibre and textile yarn application from thread twines companyds and the individual ropes number elsewhere manufacturer specified. exporter. 2502 a yarn of above 21 bws companynts or above 14 n.f. companynts spun wholly out of either viscose rayon fibre or acetate fibre or polyster fibre polyamide fibre or acrylic fibre or wool or from a companybination of two and number more than two of the above mentioned fibres or a combination of any one of the above mentioned fibres with either companyton or silk but excluding yarn spun out of fibres obtained from fibre wastes yarn waste or fabric wastes by gernetting or by any other process cellulosic fibre companytent rs. 1.80 rupees one and paise eighty only per kg. polyester fibre companytent rs.43.15 rupees forty three and paise fifteen only per kg. acrylic fibre companytent rs.37.75 rupees thirty seven and paise seventy five only per kg. polyamide fibre companytent rs. 16.40 rupees sixteen and paise forty only per kg. wool companytents in the worsted yarn of rs. 18.95 rupees weaving quality made wool eighteen and paise top. ninety five only per kg. in the worsted yarn of rs. 13.55 rupees weaving quality number made from thirteen and paise fifty wool top. five only per kg. in the worsted hosiery rs. 16.65 rupees sixteen yarn and worsted hand knitting and paise sixty five yarn made from wool top. only per kg. in the worsted hosiery yarn rs.11.25 rupees eleven and worsted hand knitting yarn and paise twenty five number made from wool top. only per kg. bye companytent if the yarn is rs.0.85 eighty five dyed paise only per kg. xxx xxx xxx it will be seen from the above table that the assessees are entitled to a drawback of rs.43.15 per kg. of the polyester fibre companytent of the yarn exported by them. we are informed that this is the rate of central excise duty payable in respect of the manufacture of yarn having polyester fibre companytent. for reasons to be stated presently the assessees had to pay numbercentral excise duty for the manufacture and hence there was admittedly no question of the assessee getting a drawback to this extent. the point raised by the assessee is that having paid customs duty on the dmt it was entitled to a drawback in respect of the customs duty paid by it on the dmt. since this was number included in the numberification of the central government the assessees made an application to the ministry of finance on 23.3.1977 requesting that drawback of the entire customs duty may be sanctioned. this request however was rejected by the central government by a communication dated 12.3.1978. this companymunication was in the following terms under rule 3 of the customs and central excise duties drawback rules 1971 all industry rates of drawback on polyester viscose blended yarn have been determined and annumbernced under serial number 2502 of the drawback schedule. the said rates have been determined at the material time after taking into consideration a duty incidence of raw materials used in the manufacture of viscose fibre plus the central excise duty on viscose fibre and b the central excise duty on polyester fibre in respect of polyester yarn. however numberraw material duty for manufacture of polyester yarn was taken into account as the same dmt is available indigenumbersly and is exempted from central excise duty. for the rates determined effective from 18.8.1977 however the duty incidence on dmt has also been taken into companysideration on the basis of weighted average of imported and indigenumbers material. the assessees dissatisfied with this decision of the central government preferred a writ petition in the delhi high companyrt which was dismissed by the high companyrt on 19.5.80. hence the present appeals. at this stage it may be necessary to outline some facts which may be relevant for appreciating the background in which the assessees companynsel urged strongly the equitable if number also legal claims of the appellant for the drawback of the customs duty. companynsel claims that the assessees were almost the first group of entrepreneurs in india to manufacture polyester fibre yarn. they had been fortunate enumbergh to obtain a companytract from the imperial chemical industries singapore. by a letter dated 2.4.75 this companycern agreed to supply free of companyt the dmt required for the manufacture of blended yarn companysisting of 67 per cent polyester and 33 per cent viscose fibre. the dmt was to be companyverted in polyester fibre blended with viscose indigenumbersly and shipped to a customer of the ici in sri lanka. thereupon on 2.6.75 the assessees obtained customs clearance permits for import of 392 tons of dmt and also of 178 tons of viscose staple fibre. eventually however the viscose staple fibre was obtained indigenumbersly and the import permit to this extent was number utilised by the assessee. at the time of obtaining this permit the assessees also obtained permission to companyvert the imported dmt into polyester fibre under customs bond. the companydition attached to the customs clearance permit was in the following terms the firm will companyvert the imported dmt into polyester fibre under customs bond. the firm will then move the polyester fibre so manufactured and the imported viscose staple fibre under bond to the bonded warehouse of rajasthan spinning and weaving mills bhilwara- messrs. rajasthan spinning and weaving mills will then manufacture under bond polyester viscose yarn on behalf of the firm. the polyester viscose fibre yarn will then be exported by the firm to the overseas buyers who have supplied the dmt and viscose staple fibre on ccp basis or their numberinees if these companyditions had been fulfilled the assessees would have had numberproblems. the polyester fibre would have been manufactured under customs bond and this would have obviated payment of customs duty by the assessees. so also the production of the blended yarn at the rajasthan spinning and weaving mills would have been under central excise supervision and numberexcise duty would have been payable on the manufacture. unfortunately however the customs authorities were number in a position to permit the companyversion of the dmt into polyester fibre under customs bond for reasons which are number at present relevant and which are number being challenged in these proceedings. the assesseess request for the manufacture of polyester fibre under customs bond was declined by the customs authorities on 2.4.1976. perhaps anticipating this difficulty the association of polyester staple fibre manufacturers at bombay made an application to the central government on 26.3.1976 praying for exemption from customs duty on dmt required for the manufacture of polyester staple fibre. this letter points out members of this association manufacture polyester staple fibre. one of our members has received an advance licence for the import of dmt a photostat companyy of which we attach herewith. this dmt is to be used for manufacture in polyester fibre and the polyester fibre then converted into yarn to be supplied against export orders. our members wish to explore possibility of larger export business in this manner. indigenumbers supplies of both dmt and glycol are insufficient to meet the domestic market requirements and export business can only be done by import of the two materials. fulfilling export orders by using advance licences as the one issued to our member poses certain problems because the licence stipulated manufacture under customs bond. you will appreciate the difficulty in manufacturing under bond when the fibre for export constitutes only a portion of the total manufacture of the factory. if dmt and glycol could be included in the schedule to the customs numberification gsr 183 the procedural difficulties in manufacturing under bond will number apply. exports of yarn made from raw materials obtained against advance licences companyld earn companysiderable foreign exchange because of the value added during processing. one of the assessees also made a similar request and eventually a numberification was issued on 2nd august 1976 under s. 25 of the customs act exempting dmt from customs duty. the government of india also wrote to one of the present appellants on 9.9.76 drawing attention to the said numberification and stating that with the issue of this numberification. the assessees problem would appear to have been solved. this however was number companyrect. the numberification exempted future imports of dmt from customs duty but the assessees having imported the dmt earlier had to clear the same after paying customs duty thereon. hence their request for a drawback of the customs duty already paid by them the refusal of which has led to the present litigation. on behalf of the appellants it is companytended that the customs act companytains provisions enabling thd government either to exempt goods under section 25 from the levy of customs duty at the time of import or failing this to permit a drawback of customs duty paid in the event of the companyditions set out in section 75 being fulfilled. in the present case an exemption under section 25 of the customs act was in fact numberified but unfortunately this happened only in august 1976. by this time the assessees had already imported the dmt. this they were obliged to do because of a time-bound programme for export of the manufactured fibre to sri lanka. companynsel states that from the very outset the assessees had proceeded on the footing that they would be obtaining exemption from customs and excise duty because apart from getting some companyversion charges from the ici their own margin of profit on the transaction was number substantial. that is why even at the time of obtaining the customs clearance permit they had sought for permission to companyvert dmt into polyester under customs bond. if that had been done there would have been numbernecessity to pay customs duty at all. unfortunately because the department lacked facilities to supervise such an operation the attempt of the assessees was only partially successful in that they were able to get only the production of the blended fibre done under central excise supervision. the initial stage of companyversion from dmt to polyester fibre companyld number be done under customs bond. it is pointed out that the government of india had exempted dmt from customs duty only on the basis of the representations made by the assessees and it is urged that the refusal to grant drawback of customs duty to assessees is wholly unjustified. the object of s. 75 of the customs act read with s. 27 of the central excise act is obviously to provide that in cases where certain goods are imported for companyplete utilisation in the manufacture of goods which are exported the importer should be able to obtain relief in respect of customs and excise duties. in the present case there is numbercontroversy that the d.m.t. imported by the assessee was utilised for the manufacture of polyester staple fibre and that the final product was fully exported to sri lanka. the numberification made under the rules framed for this purpose however provides only for a drawback in respect of the excise duty involved in the manufacture of polyester staple fibre but number the customs duty on the raw material actually imported. sri habbu learned companynsel companytends that this numberification in fact is companytrary to the provision contained in rule 3 which obliges the government in determining the amount or rate of drawback to have regard among other things to the amount of duties paid on imported or excisable material used in the manufacture of the exported goods. he submits that in so far as the rates prescribed by the central government do number take into account the element of import duty on dmt the fixation is number in accordance with the rule. according to him therefore this casefalls under rule 6 which enables an assessee to apply to the central government to determine a drawback where numbere has been determined. the central government he submits was in error in rejecting the assessees application as one falling under rule 7 and therefore number maintainable both in law and equity. having heard the learned companynsel for the assessees at some length we are of opinion that the high companyrt was right in rejecting the assessees contentions. we think that the assessees arguments are based on a basic misapprehension that under the acts and rules a manufacturer is automatically entitled to a drawback of the entire customs and excise duties paid by him if the terms and conditions of s. 75 are fulfilled. though s. 75 of the customs act and s. 37 of the central excises salt act empower the government to provide for the repayment of the customs and excise duties paid by individual manufacturers also the rules as framed rule 3 in particular provides only for a refund of the average amount of duty paid on materials of any particular class or description of goods used for the manufacture of export goods of that class or description by manufacturers generally except to the extent prescribed under rule 7 to be numbericed presently . the rules do number envisage a refund of an amount arithmetically equal to the customs duty or central excise duty which may have been actually paid by an individual importer-cum-manufacturer. if that had been the statutory intendment it would have been simple to provide that in all cases where imported raw materials are fully used in the manufacture of goods which are exported the assessee would be entitled to a drawback of the customs or excise duties paid by him for the import or on the manufacture. on the other hand s. 75 2 requires the amount of drawback to be determined on a companysideration of all the circumstances prevalent in a particular trade and the fact situation relevant in respect of each of various classes of goods imported and manufactured. the need for providing an elaborate process of determination as envisaged in rule 3 is this. there may be different manufacturers of a particular manufactured item. some of them may be using indigenumbers material and some may be importing some of the raw material. similarly in the process of manufacture also there may be difference between manufacturer and manufacturer. that is why the drawback rules provide for a determination of the drawback after taking into account the average amount in respect of each of the various items specified in rule 3 in relation to each type of goods listed in schedule ii. the numberification issued also determines the composite drawback available in respect of both customs and excise duties to importers-cum-manufacturers in respect of various categories of goods. in other words the amount of drawback is number intended to be the amount of the duties that may have been paid by individual manufacturers it is to be determined by companysidering the overall position prevalent in the companyntry in respect of each of the categories of trade in the goods specified in schedule ii. we think that if this basic principle is understood the decision of the govermment would become intelligible and rational. there is numbercontroversy that in this case the goods exported fall under item 25. learned companynsel sought to contend that the goods here fall under sub-item 2501 but this is clearly untenable. sub-item 2501 represents a residuary category which will number be attracted to the goods here which clearly fall under sub-item 2502. the numberification prescribes different amounts of drawback under this itm depending on the companyposition of the yarn and the nature of its companytents. it specifies an amount of rs.43.15 per kg. as the relief by way of drawback available against the goods with which we are companycerned which fall under clause b of item 2502. this much indeed was companyceded before the high companyrt. once we understand the principles on which and the scheme according to which the rates of drawback are to be and are determined as explained earlier the plea of the appellants that the amount of drawback determined is numberhing more than the excise duty payable on manufacture of blended fibre with polyester fibre companytent and that the numberification has erred in overlooking the customs duty paid on imported dmt is wholly untenable. we say this for two reasons. first the rates prescribed companystitute a companyposite rate of drawback fixed having regard to the liabilities under the customs act as well as the central excises salt act. it would number be companyrect in principle to bifurcate the amount so fixed into its two companystituents and to say merely because the amount fixed is equal to one of the duties that the other has number been taken into account. in theory the drawback determined companyld have taken into account both sets of duties in part only. it cannumber be said to be merely the customs duty drawback or central excise duty drawback. though it does appear that the various rates of drawback prescribed under item 2502 are equal to the rates of excise duty payable on the manufacture of the various items referred to therein the nature of exemption granted is one of relief under both enactments. it is immaterial whether this quantum of relief benefits the assessee in respect of one or other or both of the levies which he has to discharge. the attempt to identify and correlate the rebate granted to the central excise duty paid does number therefore appear to be companyrect in principle. but this ground apart we think there is force in the point made by the learned companynsel for the union of india and accepted by the high companyrt that at the time when these drawback rates were fixed the government of india took into account both the import duty as well as the excise duties which would be payable on the manufacture of the goods the export of which was intended to be encouraged. after examining the condition in the trade it was found that d.m.t. was easily available in india at that time and that therefore it would number be necessary to grant any relief in respect of drawback of customs duty on the imported material because that would only result in assessees attempting unnecessarily to import a raw material which was available in the companyntry itself. in fact this is the aspect on which the delhi high companyrt has laid companysiderable emphasis. learned companynsel for the appeallants companytends that this is factually and that this is clearly shown by the very fact that government of india itself in august 1976 decided to grant exemption in respect of customs duty for the import of d.m.t. he submits that if d.m.t. had been easily available indigenumbersly at that time the question of granting exemption under s. 25 would number have appealed to the government at all. he therefore submits that in fixing the rate of drawback the central government had proceeded on the footing that numberimport duty would be payable on the dmt and that it will be sufficient to grant relief in respect of central excise duty alone. we find that on this aspect the position is number so simple as submitted by the learned companynsel for the appellants. we have already extracted reply of the government of india to the assessees representation which clearly mentions that dmt is available indigenumbersly and that therefore numberduty in manufacture of polyester yarn was taken into account. this is a statement of fact and there is numbermaterial placed before us to companytradict the same except for the company- respondence referred to earlier. if one looks carefully at the companyres-pondence one will find that it does number support the assesseescase. for one thing the memorandum submitted by the association of march 1976 itself proceeds on the footing that dmt is available locally but number sufficient to meet the domestic market requirments. this clearly is a reference to something which happened after the present appellants had imported their goods and started the manufacture. indeed it is their claim that they were fore- runners in this field. fol-lowing up on the assessees attempt to obtain imports of dmt and exporting the goods manufactured other polyester staple fibre manufacturers also proposed to explore the possibilities of such imports and exports and what the letter says would only appear to be that the indigenumbers supplies of dmt and glycol may number be enumbergh to meet the domestic market requirements if the business is so expanded. by the time the numberification fixing the rates was issued import duty on dmt had been removed and therefore there was numberpurpose in granting a drawback of customs duty. in these circumstances the customs duty was rightly number taken into account in fixing the rate of drawback. the letter of the government dated 9.9.76 is only an answer to the assessees prayer that its problem may be solved by granting an exemption for dmt from customs duty and refers only to the position after the numberification of exemption. it is number reply to the assessees representation in respect of the past which was filed only much later in 1977. the companyrespondence in the case is therefore of no help to the assessees. it may also be pointed out that the assessees appear to have imported dmt number because it was number locally available but only because it was able to get it free of companyt from the ici which was a benefit which other manufacturers if any companyld number have enjoyed. we are therefore of opinion that high companyrt was right in concluding that the rate of drawback in respect of the goods in ques-tion was fixed after taking into companysideration the aspect of customs duty payable in respect of dmt and that a conscious decision was taken that numberrelief in this respect should be granted as dmt was available in the companyntry itself. it cannumbertherefore be said that this is a case where the fixation is companytrary to the terms of rule 3 and that the assessees application for determination of a rate in his case should be taken as an application under rule 6. rule 6 is also inapplicable for the reason that an application under rule 6 should be made before the export of the manufactured goods which does number seem to be the case here. the assessees reliance on rule 6 therefore fails. it is true the fixation of rates of drawback on the average basis indicated in rule 3 companyld work hardship in individual cases. provi-sion for this companytingency is made in rule 7. the assessees application was rightly treated as one made under this rule and they companyld if at all seek relief only if their case fell within its terms. this rule unfortu-nately does number provide for relief in every case where an individual manufacture has to pay customs and excise duty to a larger extent than that determined for his class of goods. relief is restricted only to cases when the margin of difference is substantial and to the extent specified in rule 7. the high companyrt has discussed this point at length and demonstrated by giving necessary figures how the assessees case does number fulfill the term of the rule and this companyclusion is number in fact challenged by the learned companynsel for the appellants. the government was therefore right in rejecting the appellants request made under section 7 of the drawback rules. for the reasons above mentioned we agree with the high companyrt that the order of the central government rejecting the assesseesapplication was well founded and cannumber be interfered with. learned companynsel for the appellants brings to our numberice a manual published by the directorate of publication. ministry of finance department of revenue explaining the scope of the rules as well as two numberifications issued by the government on 9.6.1978 and 1.2.1982 respectively and submits that the present case falls within the terms of these numberifica-tions. we are constrained to point out that these are numberifications issued subsequent to the period of the companytroversy before us also this is material which was number placed before the authorities or the high companyrt. we therefore find ourselves unable to permit the assessee to rely upon them at this late stage. however having regard to the circumstances and the subsequent policy in the above rules we think it is a fit case in which the central government companyld companysider whether on equitable grounds the assessee can be given relief in respect of the customs duty on dmt paid by it. in this context it is worthwhile numbering that the assessee saved foreign exchange for the companyntry by importing dmt free of cost. the entire manufactured product has also been exported and earned foreign exchange. the appellants also apparently gave impetus to other manufacturers for the export of blended fibre on large scale. if only the appellants had imported the dmt a few months later they would have been entitled to exemption from customs duty and would number have suffered the present handicap. they also did obtain the permission of the government to companyvert dmt into polyester fibre under customs bond but this companyld number be implemented for reasons beyond their companytrol. having regard to all these circumstances it would seem only just and fair that the assessees should number be denied a benefit of which all other persons have since availed of.	0	test	1991_468.txt	1
civil appellate jurisdiction civil appeals number. 1567 of 1968 585 to 1026 and 1027 to 1082 of 1969. appeals by special leave from the orders dated march 28 1968 and july 20 1968 of the labour companyrt 11 u.p. lucknumber in misc. cases number. 102 of 1965 etc. c. chagla harish chandra h. k. purl and bishambar lal for the appellant in all the appeals . p. goyal and v. c. prashar for respondent number 1 in all the appeals . p. nayar for the attorney-general in c.as. number. 585 to 1026 and 1027 to 1082 of 1969 . the judgment of the companyrt was delivered by shah j. these three groups of appeals arise out of orders made by the presiding officer labour companyrt 11 u.p. lucknumber awarding retrenchment companypensation to certain employees of the u.p. electric supply companypany limited in liquidation . in the last group of appeals orders of the labour companyrt awarding in addition thereto companypensation for earned leave number enjoyed by the employees are also challenged. the u.p. electric supply companypany limited-hereinafter called the company-held two licences issued in 1914 by the government of u.p. for generating and distributing electricity within thetowns of allahabad and lucknumber. the periods of the licenses expired in 1964. pursuant to the provisions of paragraph 12 1 in each of the said licenses and in exercise of the power under s. 6 of the indian electricity act 1910 the state electricity board u.p.-hereinafter referred to as the board took over the undertaking of the companypany at allahabad and lucknumber from the mid-night of september 16 1964. the companypany accordingly ceased to carry on the business of generation and distribution of electricity in the areas companyered by the original licences. all the workmen of the undertakings at allahabad and lucknumber were taken over in the employment of the board with effect from september 17 1964 without any break in the companytinuity of employment. on december 22 1964 443 workmen employed in the allahabad undertaking filed before the labour companyrt applications under s. 6-h 2 of the u.p. industrial disputes act 1947 for payment of retrenchment companypensation and salary in lieu of numberice. the work-men submitted that fresh letters of appointment were issued by the board on september 16 1964 taking them in the employment of the board with effect from september 17 1964 in the posts and positions which they previously held but without giving credit for their past services with the companypany. the workmen companytended that they were entitled to retrenchment companypensation and salary in lieu of numberice and prayed for companyputation of those benefits in terms of money and for directions to the companypany to pay them the amount so companyputed. a group of 56 workmen employed at the companypanys undertaking at lucknumber also submitted applications under s. 6h 2 of the p. industrial disputes act for payment of retrenchment compensation and salary in lieu of numberice and also for compensation for accumulated earned leave number enjoyed by them till september 16 1964. in the applications filed by the workmen of the allahabad undertaking the labour companyrt awarded to each workman retrenchment companypensation at the rates specified in the order and also one months salary and companyts. to each workman of the lucknumber undertaking the labour companyrt awarded retrenchment companypensation at the rate specified salary in lieu of one months numberice and also wages for 30 days for earned leave number enjoyed by the workman before the closure of the undertaking and companyts. the companypany has appealed to this companyrt against the orders with special leave. the orders for payment of retrenchment companypensation are resisted by the companypany on two grounds- that the labour companyrt was incompetent to entertain and decide the applications for awarding retrenchment companypensation and that the workmen were number in fact retrenched and in any event since the workmen were admitted to the service of the board without break in companytinuity and on terms number less favourable than the terms enjoyed by them with the company- pany the companypany was under numberliability to pay retrenchment companypensation. some argument was advanced before us that in determining matters relating to the award of retrenchment companypensation the provisions of the industrial disputes act 1947 and number the u.p. industrial disputes act 1947 apply. the question is academic because on the points in companytroversy between the parties the statutory provisions of the industrial disputes act 1947 and the u.p. industrial disputes act 1947 are substantially the same. we may however briefly refer to this argument since relying upon a judgment of this companyrt to be presently numbericed companynsel for the workmen insisted that s. 33-c 2 of the industrial disputes act alone may apply. after the enactment of the industrial disputes act 1947 by the dominion parliament the u.p. industrial disputes act 1947 was enacted by the provincial legislature. the scheme of them two acts is substantially the same. chapter v-a relating to layoff and retrenchment was added in the industrial disputes act by act 43 of 1953 with effect from october 24 1953. from time to time amendments were made in the provisions of the act. by s. 25-j 2 it was provided for the removal of doubts it is hereby declared that numberhing companytained in this chapter shall be deemed to affect the provisions of any other law for the time being in force in any state in so far as that law provides for the settlement of industrial disputes but the rights and liabilities of employers and workmen in so far as they relate to lay-off and retrenchment shall be deter- mined in accordance with the provisions of this chapter. after this sub-section was incorporated in the industrial disputes act 1947 a group of sections including s. 6-r were incorporated in the u.p. industrial disputes act by u.p. act 1 of 1957. section 6-r 2 provided for the removal of doubts it is hereby declared that numberhing companytained in sections 6- h to 6-r shall be deemed to affect the provision of any other law for the time being in force so far as that law provides for the settlement of industrial disputes but the rights and liabilities of employers and workmen in so far as they relate to lay-off and retrenchment shall be determined in accordance with the provisions of sections 6-h to 6-q. by virtue of s. 6-r 2 the provisions of the u.p. industrial disputes act prima facie apply in the matters of lay-off and retrenchment because under the seventh schedule to the constitution legislation in respect of trade unions industrial and labour disputes falls within entry 22 of the companycurrent list and both the state and the union are companypetent to legislate in respect of that field of legislation. whereas by adding s. 25-j 2 it was enacted that under the industrial disputes act 1947 the rights and liabilities of employers and workmen in so far as they relate to lay-off and retrenchment shall be determined in accordance with the provisions of ch. v-a of that act by the u.p. act as amended by act 1 of 1957 s. 6-r 2 enacts that the rights and liabilities of employers and workmen relating to lay-off and retrenchment shall be determined in accordance with the provisions of ss. 6-j to 6-q. companypetence of the state legislature to enact s. 6-r 2 is number denied. act 1 of 1957 received the assent of the president and by virtue of art. 254 2 of the companystitution s. 6-r 2 of the u.p. act prevails numberwithstanding any prior law made by the parliament. the provisions of the p. act including s. 6-r 2 therefore apply in determining the rights and obligations of the parties in respect of retrenchment companypensation. the observation to the companytrary made by this companyrt in rohtak hissar districts electric supply companypany v. state of u.p. 1 which primarily raised a dispute relating to the validity of certain model standing orders proceeded upon a companycession made at the bar and cannumber be regarded as decisive. since the relevant provisions of the two acts on the matter in companytroversy in these groups of appeals are number materially different we do number think it necessary in this case to refer the question to a larger bench. we accordingly propose to refer only to the provisions of the u.p. industrial disputes act 1947. section 4-a of the p. act authorises the state government to companystitute one or more labour companyrts for the adjudication of industrial disputes relating to any matter specified in the first schedule and for performing such other functions as may be assigned to them under the act. the items specified in the first schedule are- the propriety or legality of an order passed by an employer under the standing orders 2 . the application and interpretation of standing orders 3 . discharge or dismissal of workman including reinstatement of or grant of relief to workmen wrongfully dismissed withdrawal of any customary companycession or privilege 1 1966 11 l.l.j. 330. illegality or otherwise of a strike or lock-out and all matters other than those specified in the second schedule. section 4-b authorises the state government to constitute one or more industrial tribunals for the adjudication of industrial disputes relating to any matter whether specified in the first schedule or the second schedule. item 10 of the second schedule relates to retrenchment of workmen and closure of establishment. prima facie disputes relating to retrenchment of workmen and closure of establishment fall within the exclusive competence of the industrial tribunal and number within the companypetence of the labour companyrt constituted under s. 4-a. the companypany had expressly raised a companytention that they had number retrenched the workmen and that the workmen had voluntarily abandoned the companys service by seeking employment with the board even before the companypany closed its undertaking. the workmen companytended by their petitions filed before the labour companyrts that they were retrenched the companypany companytended that the workmen had voluntarily abandoned the employment under the companypany because they found it more profitable to take up employment under the board without any break in the same post and on the same terms and companyditions on which they were employed by the companypany. this clearly raises the question whether there was retrenchment of workmen which gave rise to liability to pay retrenchment companypensation. a dispute relating to retrenchment is exclusively within the companypetence of the industrial tribunal by virtue of item 10 of the second schedule to the u.p. industrial disputes act and is number within the companypetence of the labour companyrt. section 6-h of the u.p. act provides where any money is due to a workman from an employer under the provisions of sections 6-j to 6-r or under a settlement or award or under an award given by an adjudicator or the state industrial tribunal appointed or constituted under this act before the company- mencement of the uttar pradesh industrial disputes amendment and miscellaneous provisions act 1956 the workman may without prejudice to any other mode of recovery make an application to the state government for the recovery of the money due to him and if the state government is satisfied that any amount is so due it shall issue a certificate for that amount to the collector who shall proceed to recover the same as if it were an arrear of land revenue. where any workman is entitled to receive from the employer any benefit which is capable of being companyputed in terms of money the amount at which such benefit should be companyputed may subject to any rules that may be made under this act be determined by such labour companyrt as may be specified in this behalf by the state government and the amount so determined may be recovered as provided for in sub-section 1 . 3 under s. 6-h 2 the labour companyrt was companypetent to determine what each workman was entitled to receive from the employer by way of retrenchment companypensation payable in terms of money and the denial of liability by the companypany did number affect the jurisdiction of the labour companyrt. in several decisions of this companyrt the inter-relation between sub-ss. 1 2 of s. 33-c which are substantially in the same terms as sub-ss. 1 2 of s. 6-h of the u.p. industrial disputes act was examined. it was held by this companyrt in the central bank of india limited v. s. rajagopalan etc. 1 that the scope of s. 33-c 2 is wider than that of s. 33-c 1 . claims made under s. 33-c 1 can only be those which are referrable to settlement award or the relevant provisions of ch. v-a but those limitations are number to be found in s. 33-c 2 . the three categories of claims mentioned in s. 33-c 1 fall under s. 33-c 2 and in that sense s. 33-c 2 can itself be deemed to be a kind of execution proceeding but it is possible that claims number based on settlements awards or made under the provisions of ch. v-a may also be companypetent under s. 33- c 2 . elaborating this thesis gajendragadkar j. who delivered the judgment of the companyrt observed pp. 155-156 there is numberdoubt that the three categories of claims mentioned in s. 33c 1 fall under s. 33c 2 and in that sense s. 33c 2 can itself be deemed to be a kind of execution proceeding but it is possible that claims number based on settlements awards or made under the provisions of chapter v-a may also be competent under s. 33c 2 and that may illustrate its wider scope. we would however like to indicate some of the claims which would number fall under s. 33c 2 because they formed the subject matter of the appeals which have been grouped together for our decision along with the appeals with which we are dealing at present. if an employee is dismissed or demoted and it is his case that the dismissal or demotion is wrongful it would number be open to him to make a claim for the recovery of his salary or wages under s. 33c 2 . his demotion or dismissal may give rise to an industrial dispute which may 1 1964 3 s.c. 140. be appropriately tried but once it is shown that the employer has dismissed or demoted him a claim that the dismissal or demotion is unlawful and therefore the employee continues to be the workman of the employer and is entitled to the benefits due to him under a pre-existing companytract cannumber be made under s. 33c 2 . the same view was reiterated in bombay gas company limited v. gopal bhiva and others 1 . mr. goyal on behalf of the workmen however companytended that in a recent judgment of this companyrt a different view has been expressed. he invited our attention to the board of directors of the south arcot electricity distribution company ltd. v. n. k. mohammad khan etc. 2 . in that case the electricity undertaking was taken over by the government of madras in exercise of the powers companyferred by the madras electricity supply undertakings acquisition act 1954 and the employees of the undertaking were taken over by the new employer. the employees claimed retrenchment companypensation from the old employer under s. 25ff of the industrial disputes act 1947. it was urged before this companyrt that the labour companyrt was incompetent to decide the claim for retrenchment companypensation. this companyrt observed that s. 25ff b applied as the terms of service under the new employer were less favourable than those under the old employer and under the terms of ss. 15 1 2 of the acquisition act and ss. 9a and 10 of the industrial employment standing orders act 1946 liability to pay retrenchment companypensation rested upon the previous employer and on that account the labour companyrt was companypetent to entertain the petitions under s. 33c 2 . the language of s. 25ff in the view of the companyrt made it perfectly clear that if the right to companypensation accrued under the act the workmen became entitled to receive retrenchment compensation when under the madras act the undertaking stood transferred to the state government from the companypany. referring to the companytention that the labour companyrt was number competent to determine the liability to day retrenchment compensation where the liability itself was denied the court referred to the judgments of this companyrt in chief mining engineer east india companyl company limited v. rameswar and others 3 state bank of bikaner 4 and jaipur v. r. l. khandelwal punjab national bank limited v. k. l. kharbanda 5 central bank of india v. p. s. rajagopalan and others 6 and bombay gas companypany limited v. gopal bhiva and others 1 and proceeded to observe that the right 1 1964 2 1969 2 s.c.r. 902. 3 1968 1 s.c.r. 140. 4 1968 1 l.l.j. 589. 5 1962 supp. 2 s.c.r. 977. 6 1964 3 s.c.r. 140. which has been claimed by the various workmen in their applications under s. 33c 2 of the act was a right which accrued to them under s. 25ff of the act and was an existing right at the time when those applications were made and the labour companyrt had jurisdiction to decide in dealing with the applications under that provision whether such a right did or did number exist. the mere denial of that right by the company it was said companyld number take away its jurisdiction and that the order of the labour companyrt was companypetently made. the decision in the central bank of india v. p. s. rajago- palan and others 1 to which we have already referred makes it clear that all disputes relating to claims which may be companyputed in terms of money are number necessarily within the terms of s. 33c 2 . again in chief mining engineer east india companyl company limited v. rameswar and others 2 shelat j. observed that the right to the benefit which is sought to be companyputed under s. 33c 2 must be an existing one that is to say already adjudicated upon or provided for and must arise in the companyrse of and in relation to the relationship between an industrial workman and his employer. since the scope of sub-s. 2 is wider than that of sub-s. 1 and the sub- section is number companyfined to cases arising under an award settlement or under the provisions of ch. v-a there is numberreason to hold that a benefit provided for under a statute or a scheme made thereunder without -there being anything companytrary under such statute or s. 33c 2 cannumber fall within sub-s. 2 . companysequently the benefit provided in the bonus scheme made under the companyl mines provi- dent fund and bonus schemes act 1948 which remains to be companyputed must fall under sub-s. 2 and the labour companyrt therefore had jurisdiction to entertain and try such a claim it being a claim in respect of an existing right arising from the relationship of an industrial workman and his employer. that judgment clearly indicates that in order that a claim may be adjudicated upon under s. 3 3c 2 there must be an existing right and the right must arise under an award settlement or under the provisions of ch. v-a or it must be a benefit provided by a statute or a scheme made thereunder and there must be numberhing .contrary under such statute or s. 3 3c 2 . but the possibility of a mere claim arising under ch. v-a is number envisaged by the companyrt in that case as companyferring jurisdiction upon the labour companyrt to decide matters which are essentially within the jurisdiction of the industrial tribunal. 1 1964 3 s.c.r. 140. 2 1968 1 s.c.r. 140. the legislative intention disclosed by ss. 33 c 1 and 3 3 -c 2 is fairly clear. under s. 33-c 1 where any money is due to a workman from an employer under a settlement or an award or under the provisions of ch. v-a the workman himself or any other person authorised by him in writing in that behalf may make an application to the appropriate government to recover of the money due to him. where the workman who is entitled to receive from the employer any money or any benefit which is capable of being companyputed in terms of money applies in that behalf the labour companyrt may under s. 33-c 2 decide the questions arising as to the amount of money due or as to the amount at which such benefit shall be companyputed. section 33-c 2 is wider than s. 33c 1 . matters which do number fall within the terms of s. 33c 1 may if the workman is shown to be entitled to receive the benefits fall within the terms of s. 33c 2 . if the liability arises from an award settlement or under the provisions of ch. v-a or by virtue of a statute or a scheme made thereunder mere denial by the employer may number be sufficient to negative the claim under s. 33-c 2 before the labour companyrt. where however the right to retrenchment compensation which is the foundation of the claim is itself a matter which is exclusively within the companypetence of the industrial tribunal to be adjudicated upon a reference it would be straining the language of section 33c 2 to hold that the question whether there has been retrenchment may be decided by the labour companyrt. the power of the labour companyrt is to companypute the companypensation claimed to be payable to the workmen on the footing that there has been retrenchment of the workmen. where retrenchment is companyceded and the only matter in dispute is that by virtue of s. 25ff numberliability to pay companypensation has arisen the labour companyrt will be competent to decide the question. in such a case the question is one of companyputation and number of determination of the companyditions precedent to the accrual of liability. where however the dispute is whether workmen have been retrenched and companyputation of the amount is subsidiary or incidental in our judgment the labour companyrt will have no authority to trespass upon the powers of the tribunal with which it is statutorily invested. in the unreported judgment of this companyrt in the board of directors of the south arcot electricity distribution company limited v. n. k. mohammed khan etc. 1 apparently the only argument advanced before this companyrt was that s. 25ff applied to that case having regard to the fact that the terms of employment under the new employer were number less favourable than those immediately applicable to them before the transfer and the court proceeded to hold that the labour companyrt was companypetent to determine the companypensation. 1 1969 2 s.c.r. 902. the finding that the labour companyrt was incompetent to decide .the applications of the workmen would be sufficient to dispose of the appeals before us. but other arguments were advanced before us and which have an important bearing on the claims made we propose briefly to deal with these arguments. assuming that the labour companyrt had jurisdiction to determine the liability of the companypany to pay retrenchment compensation numberorder awarding retrenchment companypensation could still be made without recording a finding that there was retrenchment of the workmen and companypensation was payable for retrenchment. section 6-0 of the u.p. industrial disputes act which in its phraseology is somewhat different from s. 25ff of the industrial -disputes act provides numberwithstanding anything companytained in section 6-n numberworkman shall be entitled to compensation under that section by reason merely of the fact that there has been a change of employers in any case where the ownership or management of the undertaking in which he is employed is transferred whether by agreement or by operation of law from one employer to anumberher provided that- a the service of the workman has number been interrupted by reason of the transfer b the terms and companyditions of service applicable to the workman after such transfer are number in any way less favourable than those applicable to him immediately before the transfer and c the employer to whom the ownership or management of the undertaking is so transferred is under the terms of the transfer or otherwise legally liable to pay to the workman in the event of his retrenchment companypensation on the basis that his service has been companytinuous and has number been interrupted by the transfer. in the present groups of appeals it is companymon ground that -there was numberinterruption resulting from the undertaking being -taken over by the board. the agreements between the board and the workmen to admit the workmen into employment of the board were reached before the undertakings of the company were taken over. the companypany companytended that the terms and companyditions of service applicable to workmen after the transfer were number in any way less favourable to the workmen than those applicable to them immediately before the undertakings were taken over and that the employer to whom the ownership or manage- ment of the undertakings were so transferred was under the terms of the transfer or otherwise legally liable to pay to the workmen in the event of their retrenchment compensation on the basis that their services had been continuous and had number been interrupted by the taking over. the workmen denied that claim. the labour companyrt companyld award compensation only if it determined the matter in companytroversy in favour of the workmen it companyld number assume that the conditions of the proviso to s. 6-0 were fulfilled. section 6-0 is in terms negative. it deprives the workmen of the right to retrenchment companypensation in the companyditions mentioned therein. the companypany asserted that the companyditions precedent to the exercise of jurisdiction did number exist. the workmen asserted the existence of the companyditions. without deciding the issue the labour companyrt companyld number compute the amount of companypensation payable to the workmen. on the assumption that the workmen had been retrenched and their claim fell within the proviso to s. 6-0. it was urged by mr. goyal on behalf of the workmen that this plea was number raised or argued before the labour companyrt and it cannumber be permitted to be raised in this companyrt. but this contention was raised in the reply filed by the companypany and the judgment of the labour companyrt does indicate that its authority to decide that question was disputed. we are unable to hold that the objection though raised was number urged before the labour companyrt and on that account to confirm the decision of the labour companyrt which until the matter in companytroversy was decided companyld number be rendered. even if therefore the labour companyrt was companypetent to entertain the dispute relating to award of retrenchment company- pensation the order made by the labour companyrt must be set aside. one more companytention raised at the bar by mr. chagla for the company may be companysidered. it was urged that the obligation to pay retrenchment companypensation in the event of liability arising must in law be deemed to be taken over by the board. in the board of directors of the south arcot electricity distribution companypany limited v. n. k. mohammad khan etc. 1 to which we have already made a reference it was companytended on behalf of the electricity companypany that the liability to pay retrenchment companynpensation did number fall on the licensee but on the madras government. this companyrt held having regard to the scheme of the act that if retrenchment compensation is payable it is the original undertaking which remains liable and number the undertaking which takes over the business. companynsel however relied upon ss. 6 and 7 of the indian electricity act 1910 in support of his plea that the liability to pay retrenchment companypensation rests upon the 1 1969 2 s.c.r. 902. 14sup. cl/69-4 undertaking which takes over the undertaking. section 6 of the indian electricity act 1910 provides where a license has been granted to pay person number being a local authority the state electricity board shall--- a in the case of a license granted before the companymencement of the indian electricity amendment act 1959 on the expiration of each such period as is specified in the license and b have the option of purchasing the undertaking and such option shall be exercised by the state electricity board serving upon the licensee a numberice in writing of number less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this sub- section. ln the present case numberice was given of termination of the license after the expiry of the period of the original license and the board took over the undertaking of the company. section 7 of the indian electricity act provides where an undertaking is sold under section 6 then upon the companypletion of the sale or on the date on which the undertaking is delivered to the intending purchaser under sub-section 6 of section 6 the undertaking shall vest in the purchaser free from any debt mortgage or similar obligation of the licensee or attaching to the undertaking provided that any such debt mortgage or similar obligation shall attach to the purchase money in substitution for the undertaking the rights powers authorities duties and obligations of the licensee under his license shall stand transferred to the purchaser and such purchaser shall be deemed to be the licensee provided that where the undertaking is sold or delivered to a state electricity board or the state government the license shall cease to have further operation. it is clear that when the undertaking vests in the purchaser any debt mortgage or similar obligation attaches to the purchase money in substitution of the undertaking. the liability to pay retrenchment companypensation is a debt if it arises on transfer it will attach to the purchase money payable to the companypany in substitution for the undertaking. sections 6 and 7 of the indian electricity act do number support the case of the companypany that the liability is enforceable against the board after it takes over the undertakings. the provisions of ss. 57 and 57a of the indian electricity supply act 1948 also do number assist the case of the company. sections 57 57a of the electricity supply act 1948 deal with the licensees charges to companysumers and the rating companymittees. by the sixth schedule dealing with financial principles and their application it is provided by cl. tv that certain amount shall be appropriated towards contingencies reserve from the revenues of each year of account. by cl. v of the sixth schedule it is provided the companytingencies reserve shall number be drawn upon during the currency of the licence except to meet such charges as the state government may approve as being- a expenses or loss of profits arising out of accidents strikes or circumstances which the management companyld number have prevented b expenses on replacement or removal of plant or works other than expenses requisite for numbermal maintenance or renewal c companypensation payable under any law for the time being in force and for which numberother provision is made. on the purchase of the undertaking the contingencies reserve after deduction of the amounts drawn under sub-paragraph 1 shall be handed over to the purchaser and maintained as such companytingencies reserve provided that where the undertaking is purchased by the board or the state government the amount of the reserve companyputed as above shall after further deduction of the amount of companypensation if any payable to the employees of the outgoing licensee under any law for the time being in force be handed over to the board or the state government as the case may be. clause v only provides for the appropriation of the contingencies reserve it requires an undertaking to hand over the companytingencies reserve to the purchaser. if any amount of companypensation is payable to the employees of the outgoing licensee under any law for the time being in force it is chargeable to the companytingencies reserve. if the retrenchment companypensation becomes properly due to the employees of the companypany it would by virtue of cl. v sub- cl. 2 proviso be charged upon the companytingencies reserve and the balance alone would be handed over to the purchaser. it was urged that the companytingencies reserve has been paid over to the purchaser. there is however numberfinding by the labour companyrt in that behalf. if it be found in appropriate proceedings that retrenchment companypensation is payable to the workmen and the companytingencies reserve out of which it is payable has been handed over to the board the charge for payment of that amount may attach to that amount. on that matter we need express numberopinion at this stage. finally it was companytended-and that companytention relates only to the cases of 56 workmen in the lucknumber undertaking-that the workmen who had number availed themselves of earned leave were entitled to companypensation equal to thirty days wages. but we do number think that any such companypensation is statutorily payable. so long as the companypany was carrying on its business it was obliged to give facility for enjoying earned leave to its workmen. but after the companypany closed its business it companyld number obviously give -any earned leave to those workmen number companyld the workmen claim -any compensation for number availing themselves of the leave.	1	test	1969_188.txt	1
civil appellate jurisdiction civil appeal number 387 of 1960. appeal by special leave from the judgment and order dated february 12 1960 of the andhra pradesh high companyrt in writ petition number 5 of 1960. a. choudhuri and k. r. choudhuri for the appellants. ram reddy for respondents number. 1 2 and 6 to 11. 1960. numberember 7. the judgment of gajendragadkar subha rao wanchoo and. mudholkar jj. was delivered by subba rao j. sarkar j. delivered a separate judgment. subba rao j.-this appeal by special leave is directed against the judgment of the high companyrt of judicature at hyderabad dismissing the petition filed by the appellants under art. 226 of the companystitution to issue a writ of quo warranto against respondents 1 to 10 directing them to exhibit an information as to the authority under which they are functioning as members of the vicarabad municipal committee and to restrain them from selling certain plots of land belonging to the municipality to third parties. vica- rabad was originally situate in the part b state of hyderabad and is number in the state of andhra pradesh. the municipal companymittee of vicarabad was companystituted under the hyderabad municipal and town companymittees act xxvii of 1951 . in the year 1953 respondents 1 to 10 were elected and five others who are number parties before us were numberinated to that companymittee. on numberember 27 1953 the rajpramukh of the state of hyderabad published a numberification under the relevant acts in the hyderabad government gazette extraordinary numberifying the above persons as members of the said companymittee. presumably with a view to democratize the local institutions in that part of the companyntry and to bring them on a par with those prevailing in the neighbouring states the hyderabad district municipalities act 1956 xviii of 1956 hereinafter referred to as the act was passed by the hyderabad legislature and it received the assent of the president on august 9 1956. under s. 320 of the act the hyderabad municipal and town companymittees act 1951 xxvii of 1951 and other companynected acts were repealed. as a transitory measure under the same section any committee companystituted under the enactment so repealed was deemed to have been companystituted under the act and the members of the said companymittee were to companytinue to hold office till the first meeting of the companymittee was called under s. 35 of the act. under that provision respondents 1 to 10 and the five numberinated members companytinued to function as members of the municipal companymittee. in or about the year 1958 the said companymittee acquired land measuring acres 15-7 guntas described as varad raja omar bagh for rs. 18000 for the purpose of establishing a grain market gunj . for one reason or other the municipal companymittee was number in a position to companystruct the grain market and run it departmentally. the companymittee therefore after taking the permission of the government resolved by a requisite majority to sell the said land to third parties with a condition that the vendee or vendees should companystruct a building or buildings for running a grain market. there- after the companymittee sold the land in different plots to third parties but the sale deeds were number executed in view of the interim order made in the writ petition by the high court and subsequently in the appeal by this companyrt. in the writ petition the appellants companytended inter alia that the respondents ceased to be members of the municipal committee on the expiry of three years from the date the new act came into force and that therefore they had numberright to sell the land and that in any view the sale made by the companymittee of the property acquired for the purpose of constructing a market was ultra vires the provisions of the act. the respondents companytested the petition on various grounds. the learned judges of the high companyrt dismissed the petition with companyts for the following reasons the old companymittee will companytinue to function till a new committee companyes into existence. section 76 companytemplates that property vested in it under s. 72 f 73 and 74 should be transferred only to government. here the transfer is number in favour of the government. that apart we are told that in this case sanction of the government was obtained at every stage. it cannumber be predicated that the purpose for which the properties are being disposed of is number for a public purpose. it is number disputed that the properties are being sold only to persons who are required to build grain market the act number opposed is number in any way in companyflict with the provisions of ss. 244 245 and 247. it looks to us that the petitioners lack in bona fides and that this petition is number companyceived in the interests of the public . the present appeal as aforesaid was filed by special leave granted by this companyrt. mr. p. a. chowdury learned companynsel for the appellants canvassed the companyrectness of the findings of the high companyrt. his first argument may be summarized thus under s. 320 of the act any companymittee companystituted under the repealed enactment shall be deemed to have been companystituted under the act and the members of the said companymittee shall companytinue to hold office till the first meeting of the companymittee is called under s. 35 of the act. under s. 35 of the act the first meeting of the companymittee shall number be held on a date prior to the date on which the term of the outgoing members expires under s. 34. section 34 of the act provides that the members shall hold office for a term of three years. therefore the term of the members of the companymittee deemed to have been companystituted under s. 320 is three years from the date on which the act came into force. if the term fixed under s. 34 does number apply to the members of the said committee the result will be that the said members will continue to hold office indefinitely for the first meeting of the companymittee companyld number be legally companyvened under the act as s. 16 which enables the companylector to do so imposes a duty on him to hold a general election within three months before the expiry of the term of office of the members of the committee as specified in s. 34 and as numberdefinite term has been prescribed for the members of the companymittee under s. 320 the election machinery fails with the result that the members of the deemed companymittee would companytinue to be members of the said companymittee indefinitely. on this inter- pretation learned companynsel companytends that the section would be void for the following reasons 1 s. 320 1 a of the act would be ultra vires the powers of the state legislature under art. 246 of the companystitution read with entry 5 list ii vii schedule 2 the said section deprives the appellants of the right to equality and protection of the laws guaranteed under art. 14 of the companystitution 3 s. 320 would be void also as inconsistent with the entire scheme of the provisions of the act. let us first test the validity of the companystruction of s. 320 of the act suggested by the learned companynsel. the material part of s. 320 reads the hyderabad municipal and town companymittees act 1951 xxvii of 1951 is hereby repealed provided that- a any companymittee companystituted under the enactment so repealed hereinafter referred to in this section as the said committee shall be deemed to have been companystituted under this act and members of the said companymittee shall companytinue to hold office till the first meeting of the companymittee is called under section 35. the terms of the section are clear and do number lend any scope for argument. the section makes a distinction between the said companymittee and the companymittee elected under the. act and says members of the said companymittee shall companytinue to hold office till the first meeting of the companymittee is called under s. 35 . though the word companymittee is defined in s. 2 5 to mean a municipal or town companymittee established or deemed to be established under the act that definition must give way if there is anything repugnant in the subject or companytext. as the section makes a clear distinction between the said companymittee and the companymittee elected under the act in the companytext the companymittee in s. 320 cannumber mean the companymittee elected under the act. the term fixed for the members of the companymittee companystituted under the act cannumber apply to the members of the companymittee deemed to have been companystituted under the act. section 32 which provides for the culminating stage of the process of election under the act says that the names of all members finally elected to any companymittee shall be forthwith published in the official gazette. section 34 prescribes the term of office of the members so elected. under it except as is otherwise provided in this act members shall hold office for a term of three years. section 320 1 a provides a different term for the members of the companymittee deemed to have been companystituted under the act. thereunder the term is fixed number by any number of years but by the happening of an event. the committee companystituted under s. 320 clearly falls under the exception. but it is suggested that the exception refers only to s. 28 whereunder a member of a companymittee ceases to be one by a supervening disqualification. firstly this section does number fix a term but only imposes a disqualification on the basis of a term fixed under s. 34 secondly assuming that the said section also fixes a term the exception may as well companyer both the deviations from the numbermal rule. that apart sub-s. 2 of s. 34 dispels any doubt that may arise on the companystruction of sub-section 1 of the section. under sub-s. 2 the term of office of such members shall be deemed to companymence on the date of the first meeting called by the companylector under s. 35. section 35 directs the companylector to call a meeting after giving at least five clear days numberice within thirty days from the date of the publication of the names of members under s. 32. this provision clearly indicates that the members of the committee mentioned in s. 34 are only the members elected under the act and number members of tile companymittee deemed to have been elected under the act for in the case of the latter companymittee numberpublication under s. 32 is provided for and therefore the provisions of s. 35 cannumber apply to them. it is therefore manifest that the term prescribed in s. 34 cannumber apply to a member of the deemed companymittee. let us number see whether this interpretation would necessarily lead us to hold that the members of the deemed companymittee under s. 320 1 a would have an indefinite duration. this result it is suggested would flow from a companyrect interpretation of the relevant provisions of s. 16 of the act. the judgment of the high companyrt does number disclose that any argument was addressed before that companyrt on the basis of s. 16 of the act. but we allowed the learned companynsel to raise the point as in effect it is only a link in the chain of his argument to persuade us to hold in his favour on the construction of s. 320. before we companysider this argument in some detail it will be convenient at this stage to numberice some of the well established rules of companystruction which would help us to steer clear of the companyplications created by the act. maxwell on the interpretation of statutes 10th edn. says at p. 7 thus if the choice is between two inter- pretations the narrower of which would fail to achieve the manifest purpose of the legislation we should avoid a construction which would reduce the legislation to futility and should rather accept the bolder companystruction based on the view that parliament would legislate only for the purpose of bringing about an effective result. it is said in craies on statute law 5th edn. at p. 82-- manifest absurdity or futility palpable injustice or absurd inconvenience or anumberaly to be avoided. lord davey in canada sugar refining company v. r. provides anumberher useful guide of companyrect perspective to such a problem in the following words every clause of a statute should be companystrued with reference to the companytext and the other clauses of the act so as so far as possible to make a companysistent enactment of the whole statute or series of statutes relating to the subject-matter. to appreciate the problem presented and to give an adequate answer to the same it would be necessary and companyvenient to numberice the scheme of the act as reflected in the relevant sections namely ss. 16 17 18 20 32 34 and 320. the said scheme of the act may be stated thus under the act there are general elections and elections to casual vacancies. the general elections may be in regard to the first election after the act came into force or to the subsequent elections under the act. section 5 imposes a duty on the government to companystitute a municipal companymittee for each town and numberify the date when it shall companye into existence. section 17 enjoins on the government to issue a numberification calling upon all the companystituencies to elect members in accordance 1 1898 a.c. 735. with the provisions of the act on or before such date or dates as may be specified in the said numberification. section 16 imposes a duty upon the companylector to hold a general election in the manner prescribed within three months before the expiry of the term of office of the members of the committee as specified in s. 34 of the act. sub-section 2 of s. 16 provides for a bye-election for filling up of a casual vacancy. section 18 enables the companylector with the approval of the government to designate or numberinate a returning officer. section 19 imposes a duty upon such an officer to do all such acts and things as may be necessary for effectually companyducting the election in the manner provided by the act and the rules made there under. section 20 authorizes the companylector to issue a numberification in the official gazette appointing the dates for making numberinations for the scrutiny of numberinations for the withdrawal of candidatures and for the holding of the poll. after the elections are held in the manner prescribed the names of all the members finally elected to any companymittee shall be published in the official gazette. except as otherwise provided in the act s. 34 prescribes the term of three years for a member so elected. as a transitory provision till such an election is held s. 320 says that the members of the previous companymittee companystituted under the earlier act shall be deemed to be companystituted under the act and the members thereof shall hold office till the first meeting of the companymittee is called under s. 35 of the act. it is clear from the aforesaid provisions that the government numberifies the dates calling upon all the constituencies to elect the members before such date or dates prescribed the companylector holds the election and fixes the dates for the various stages of the process of election the returning officer appointed by the companylector does all acts and things necessary for effectually companyducting the election. on the general scheme of the act we do number see any legal objection to the companylector holding the first elections under the act. the legal obstacle for such a companyrse is sought to be raised on the wording of s. 16 1 . every general election requisite for the purpose of this act shall be held by the companylector in the manner prescribed within three months before the expiry of the term of office of the members of the companymittee as specified in section 34. the argument is that the companylectors power to hold a general election is companyfined to s. 16 1 and as in the case of the members of the companymittee deemed to have been companystituted under the act the second limb of the section cannumber apply and as the companylectors power is limited by the second limb of the section the companylector has numberpower to hold the first general election under the act. if this interpretation be accepted the act would become a dead-letter and-the obvious intention of the legislature would be defeated. such a construction cannumber be accepted except in cases of absolute intractability of the language used. while the legislature repealed the earlier act with an express intention to companystitute new companymittees on broad based democratic principles by this interpretation the committee under the old act perpetuates itself indefinitely. in our view s. 16 1 does number have any such effect. section 16 1 may be read along with the aforesaid other relevant provisions of the act. if so read it would be clear that it companyld number apply to the first election after the act came into force but should be companyfined to subsequent elections. so far as the first general election is companycerned there is a self-contained and integrated machinery for holding the election without in any way calling in aid the provisions of s. 16 1 . section 17 applies to all elections that is general as well as bye- elections. it applies to the first general election as well as subsequent general elections. the proviso to that section says that for the purpose of holding elections under sub-s. 1 of s. 16 numbersuch numberification shall be issued at any time earlier than four months before the expiry of the term of office of the members of the companymittee as specified in s. 34. the proviso can be given full meaning for it provides only for a case companyered by s. 16 1 and as the first general election is outside the scope of s. 16 1 it also falls outside the scope of the proviso to s. 17. under s. 17 therefore the government in respect of the first general election calls upon all the companystituencies to elect members before the date or dates fixed by it. under s. 20 the companylector fixes the dates for the various stages of the election. the returning officer does all the acts and things necessary for companyducting the election and when the election process is companypleted the names of the members elected are published. all these can be done without reference to s. 16 1 for the companylector is also empowered under s. 20 to hold the elections. in this view there cannumber be any legal difficulty for companyducting the first election after the act came into force. if so the term of the members of the companymittee deemed to have been elected would companye to an end when the first meeting of the companymittee was called under s. 35. the legislature in enacting the law number only assumed but also expected that the government would issue the requisite numberification under s. 17 of the act within a reasonable time from the date when the act came into force. the scheme of the act should be judged on that basis if so judged the sections disclose an integrated scheme giving s. 320 a transitory character. it is companyceded by learned companynsel that if s. 320 1 a is constructed in the manner we do the other points particularised above do number arise for companysideration. before leaving this part of the case we must observe that the difficulty is created number by the provisions of the act but by the fact of the government number proceeding under s. 17 of the act within a reasonable time from the date on which the act came into force. this is a typical case of the legislative intention being obstructed or deflected by the inaction of the executive. mr. ram reddy learned companynsel for the respondents states that there are many good reasons why the government did number implement the act. there may be many such reasons but when the legislature made an act in 1956 with a view to democratize municipal administration in that part of the country so as to bring it on a par with that obtaining in other states it is numberanswer to say that the government had good reasons for number implementing the act. if the government had any such reasons that might be an occasion for moving the legislature to repeal the act or to amend it. if the affected parties had filed a writ of mandamus in time this situation companyld have been avoided but it was number done. we hope and trust that the government would take immediate steps to hold elections to the municipal companymittee so that the body companystituted as early as 1953 under a different act could be replaced by an elected body under the act. even so learned companynsel for the appellants companytends that the municipal companymittee had numberpower to sell the land acquired by it for companystructing a market. to appreciate this companytention it would be companyvenient to numberice the relevant provisions of the act. under s. 72 f all land or other property transferred to the companymittee by the government or the district board or acquired by gift purchase or otherwise for local purposes shall vest in and be under the companytrol of the companymittee. section 73 enables the government in companysultation with the companymittee to direct that any property movable or immovable which is vested in it shall vest in such companymittee. section 74 empowers the government on the request of the companymittee to acquire any land for the purposes of the act. under s. 76 the companymittee may with the sanction of the government transfer to the government any property vested in the committee under ss. 72 f 73 and 74 but number so as to affect any trust or public right subject to which the property is held. learned companynsel companytends that as the land was acquired by the companymittee for the companystruction of a market the companymittee has power to transfer the same to the government only subject to the companyditions laid down in s. 76 and that it has numberpower to sell the land to third parties. this argument ignumberes the express intention of s. 77 of the act. section 77 says subject to such exceptions as the government may by general or special order direct numbercommittee shall transfer any immovable property except in pursuance of a resolution passed at a meeting by a majority of number less than two-third of the whole number of members and in accordance with rules made under this act and numbercommittee shall transfer any property which has been vested in it by the government except with the sanction of the government provided that numberhing in this section shall apply to leases of immovable property for a term number exceeding three years this section companyfers on the companymittee an express power couched in a negative form. negative words are clearly prohibitory and are ordinarily used as a legislative device to make a statute imperative. if the section is recast in an affirmative form it reads to the effect that the committee shall have power to transfer any immovable property if the companyditions laid down under the section are complied with. the companyditions laid down are 1 there shall be a resolution passed at a meeting by a majority of number less than two-third of the whole number of members of the companymittee 2 it shall be in accordance with the rules made under the act 3 in the case of a property vested in it by the government the transfer can be made only with the sanction of the government and 4 the sale is number exempted by the government by general or special order from the operation of s. 77 of the act. it is number disputed that the relevant companyditions have been companyplied with in the present case. if so the power of the companymittee to alienate the property cannumber be questioned. learned companynsel companytends that the provisions of s. 76 govern the situation and that s. 77 may apply only to a property vested in the companymittee under provisions other than those of ss. 72 f 73 and 74 and that further if a wider interpretation was given to s. 77 while under s. 76 the transfer in favour of the government would be subject to a trust or public right under s. 77 it would be free from it if it was transferred to a private party. the first objection has numberforce as there are numbersections other than ss. 72 73 and 74 whereunder the government vests property in a companymittee. the second objection also has numbermerits for the trust or public right-mentioned in s. 76 does number appear to relate to the purpose for which the property is purchased but to the trust or public right existing over the property so alienated by the companymittee. further the proviso to s. 77 which says numberhing in this section shall apply to leases of immovable property for a term number exceeding three years indicates that the main section applies also to the property vested in the companymittee under the previous section for it exempts from the operation of the operative part of s. 77 leases for a term number exceeding three years in respect of properties companyered by the preceding section and other sections. this interpretation need number cause any apprehension that a company- mittee may squander away the municipal property for s. 77 is hedged in by four companyditions and the companyditions afford sufficient guarantee against improper and improvident alienations. in this companytext learned companynsel for the appellants invoked the doctrine of law that an action of a statutory corporation may be ultra vires its powers without being illegal and also the principle that when a statute companyfers an express power a power inconsistent with that expressly given cannumber be implied. it is number necessary to companysider all the decisions cited as learned companynsel for the respondents does number canvass the companyrectness of the said principles. it would therefore be sufficient to numberice two of the decisions cited at the bar. the decision in elizabeth dowager baroness wenlock v. the river dee companypany 1 is relied upon in support of the proposition that when a corporation is authorised to do an act subject to certain conditions it must be deemed to have been prohibited to do the said act except in accordance with the provisions of that act which companyfers the authority on it. where by act 14 15 viet. a companypany was empowered to borrow at interest for the purposes of the companycerned acts subject to certain conditions it was held that the companypany was prohibited by the said act from borrowing except in accordance with the provisions of that act. strong reliance is placed on the decision in attorney-general v. fulham companyporation 1 1885 10 a.c. 354. 2 1921 1 ch.d. 440. there in exercise of the powers companyferred under the baths and wash-houses acts the metropolitan borough of fulham propounded a scheme in substitution of an earlier one whereunder it installed a wash-house to which persons resorted for washing their clothes bringing their own wash materials and utilised the facilities offered by the municipality on payment of the prescribed charges. sarjant j. held that the object of the legislation was to provide for persons who became customers facilities for doing their own washing but the scheme provided for washing by the municipality itself and that therefore it was ultra vires the statute. in companying to that companyclusion the learned judge after companysidering an earlier decision on the subject applied the following principle to the facts of the case before him that recognises that in every case it is for a companyporation of this kind to show that it has affirmatively an authority to do particular acts but that in applying that principle the rule is number to be applied too narrowly and the corporation is entitled to do number only that which is expressly authorised but that which is reasonably incidental to or companysequential upon that which is in terms authorized. the principle so stated is unumberjectionable. the companyrectness of these principles also need number be canvassed for the companystruction we have placed on the provisions of the act does number run companynter to any of these principles. we have held that s. 77 companyfers an express power on the municipal companymittee to sell property subject to the companyditions mentioned therein. therefore the impugned sales are number ultra vires the powers of the companymittee. in view of the said express power numberprohibition can be implied from the provisions of s. 76. learned companynsel further companytends that the statutory power can be exercised only for the purposes sanctioned by the statute that the sales of the acquired land to private persons were number for one of such purposes and that therefore they were void. the principle that a statutory body can only function within the statute is unexcecutionable but the legislature can companyfer a power on a statutory companyporation to sell its land is equally uncontestable. in this case we have held that the statute companyferred such a power on the municipal companymittee subject to stringent limitations. many situations can be visualized when such a sale would be necessary and would be to the benefit of the companyporation. of companyrse the price fetched by such sales can only be utilised for the purposes sanctioned by the act. the last point raised is that the learned judges of the high court were number justified in holding on the materials placed before them that the appellants lacked bona fides and that the petition filed by them was number companyceived in the interests of the public. we do number find any material on the record to sustain this finding. indeed but for the petitioner-appellants the extraordinary situation created by the inaction of the government in the matter of implementing the act affecting thereby the municipal administration of all the districts in telangana area might number have been brought to light. we cannumber describe the action of the appellants either mala fide or frivolous. in the result the appeal fails and is dismissed but in the circumstances without companyts. sarkar j.-the first question is whether the first ten respondents are still members of the municipal companymittee of vicarabad. these persons had been elected to the companymittee in the elections held in 1953 under the hyderabad municipal and town companymit tees act 1951 hyderabad act xxvii of 1951 hereafter called the repealed act. that act was repealed by the hyderabad district municipalities act hyderabad act xviii of 1956 hereafter called the new act which came into force in august 1956. the appellants who are rate-payers of the municipality companytend that on a proper reading of the new act it must be held that these ten respondents have ceased to be members of the companymittee and they seek a writ of quo warranto against the respondents. section 320 of the new act provides that any companymittee constituted under the repealed act shall be deemed to have been companystituted under the new act and its members shall companytinue to hold office till the first meeting of the companymittee is called under s. 35 of the new act. the ten respondents companytend that as admittedly the meeting under s. 35 has number been called their term of office has number yet expired. number s. 35 so far as is material provides that the first meeting of the companymittee shall be called by the companylector within thirty days of the date of publication of the names of members under s. 32. section 32 states that the names of members finally elected to any companymittee shall be forthwith published in the official gazette. it is quite clear therefore that the companymittee mentioned in this section is a companymittee companystituted by an election held under the new act. it would follow that the meeting companytemplated in s. 35 is a meeting of a companymittee companystituted by an election held under the new act. the provisions of that section put this beyond doubt. in order therefore that a meeting of the companymittee contemplated in s. 35 may be held there has first to be an election under the new act to companystitute the companymittee. no such election has yet been held. it is the provision concerning election in the new act that has given rise to the difficulty that arises in this case. section 16 sub-s. 1 gives the power to hold the general elections. it is in these words every general election requisite for the purpose of this act shall be held by the companylector in the manner prescribed within three months before the expiry of the term of office of the members of the companymittee as specified in section 34 section 34 in substance states that except as other. wise provided members of the companymittee shall hold office for a term of three years and that term of office shall be deemed to companymence on the date of the first meeting called under s. it would therefore appear that the members whose term of office is sought to be specified by s. 34 are members elected under the new act for their term is to companymence on the date that they first meet under s. 35 and as earlier stated the meeting under s. 35 is a meeting of members elected under the new act. the companytention for the appellants is that if a. 34 is construed in the way mentioned above the first general election under the new act cannumber be held under s. 16 for an election can be held under that section only within three months before the expiry of the term of office of members elected under the new act and in the case of first election there are ex hypothesi numbersuch members. it is said that as there is numberother provision in the new act for holding a general election the act would then become unworkable for if the first general election cannumber be held numbersubsequent election can be held either. the result it is companytended is that the companymittee elected under the repealed act would continue for ever by virtue of s. 320. such a situation it is said companyld number have been intended by the new act. it is therefore suggested that s. 34 should be companystrued as specifying a term of office of three years from the commencement of the new act for members elected under the repealed act who are under s. 320 to be deemed to form a committee companystituted under the new act. if s. 34 is so construed then the first general election under the new act can properly be held under s. 16. it is on this basis that the appellants companytend that the ten respondents term of office expired in august 1959 and they are in possession of the office number without any warrant. there is numberdoubt that the act raises some difficulty. it was certainly number intended that the members elected to the committee under the repealed act should be given a permanent tenure of office number that there would be numberelections under the new act. yet such a result would appear to follow if the language used in the new act is strictly and literally interpreted. it is however well established that where the language of a statute in its ordinary meaning and grammatical companystruction leads to a manifest companytradiction of the apparent purpose of the enactment or to some inconvenience or absurdity hardship or in justice presumably number intended a companystruction may be put upon it which modifies the meaning of the words and even the structure of the sentence where the main object and intention of a statute are clear it must number be reduced to a nullity by the draftsmans unskilfulness or ignumberance of the law except in a case of necessity or the absolute intractability of the language used. nevertheless the companyrts are very reluctant to substitute words in a statute or to add words to it and it has been said that they will only do so where there is a repugnancy to good bense. see maxwell on statutes 10th ed. p. 229. in seaford companyrt estates limited v. asher 1 denning l. j. said when a defect appears a judge cannumber simply fold his hands and blame the draftsman. he must set to work on the constructive task of finding the intention of parliament and then he must supplement the written word so as to give force and life to the intention of the legislature a judge should ask himself the question how if the makers of the act had themselves companye across this ruck in the texture of it they would have straightened it out ? he must then do as they would have done. a judge must number alter the material of which the act is woven but he can and should iron out the creases. i companyceive it my duty therefore so to read the new act unless i am prevented by the intractability of the language used as to make it carry out the obvious intention of the legislature. number there does number seem to be the slightest doubt that the intention of the makers of the new act was that there should be elections held under it and that the municipal companymittees should be companystituted by such elections to run the administration of the municipalities. the sections to which i have so far referred and the other provisions of the new act make this perfectly plain. thus s. 5 provides for the establishment of municipal companymittees and s. 8 states that the companymittees shall companysist of a certain number of elected members. the other sections show that the companymittees shall have charge of the administration of the municipalities for the benefit of the dwellers within them. it is plain 1 1949 2 all e.r. 155 164. that the entire object of the new act would fail if no general election companyld be held under it. the question then is how should the act be read so as to make it possible to hold general elections under it ? i agree with the learned advocate for the appellants that the only section in the new act providing for general elections being held is s. 16 1 . in my view s. 20 does number authorise the holding of any general election it only provides for a numberification of the date on which the poll shall if necessary be taken. there is numberdoubt that under s. 16 1 the second and all subsequent general elections can be held in regard to such general elections numberdifficulty is created by the language of the section. it would be curious if s. 20 also provided for general elections for then there would be two provisions in the act authorising general elections other than the first. then i find hat all the sections referring to general elections refer to such elections being held under s. 16 1 and number under s. 20. thus s. 31 provides that if at a general election held under s. 16 numbermember is elected a fresh election shall be held. it would follow that if in an election under s. 20 assuming that that section authorises an election numbermember is elected numberfresh election can be held. there would be no reason to make this distinction between elections held under s. 16 and under s. 20. again the proviso to s. 17 requires a certain numberification to be issued within a prescribed time for holding elections under s. 16 1 . if an election can be held under s. 20 numbersuch numberification need be issued for there is numberprovision requiring it. this companyld number have been intended. for all these reasons it seems to me that s. 20 does number companyfer any power to hold any election. i have earlier said that the suggestion for the appellants is that the best way out of the difficulty is to read s. 34 as specifying a term of office of three years companymencing from the companying into force of the new act for the members elected under the repealed act who are to be deemed under s. 320 to be a companymittee companystituted under the new act. it seems to me that this is number a companyrect solution of the problem. first the object of companytinuing the members elected under the repealed act in office is clearly to have what may be called a caretaker companymittee to do the work of the municipality till a companymittee is companystituted by election under the new act. it companyld number have been intended that the committee of the members elected under the repealed act would function for three years after the new act has companye into operation number that such members would have the same term of office as members elected under the new act. secondly i do number find the language used in s. 34 sufficiently tractable to companyer by any alteration a member elected under the repealed act. to meet the suggestion of the appellants a new provision would have really to be enacted and added to s. 34 and this i do number think is permissible. it would be necessary to add to the section a provision that in the case of members elected under the old act the term of office of three years would start running from the companymencement of the new act a provision which is wholly absent in the section as it stands. lastly so read s. 34 would companye into companyflict with s. 320 which expressly provides that the term of office of the members elected under the repealed act would companytinue till the first meeting of the companymittee companystituted under the new act is held under s. 35. this portion of s. 320 would have to be companypletely struck out. it seems to me that the real solution of the difficulty lies in companystruing s. 16 1 so as to authorise the holding of the first general election under it and remove the absurdity of there being numberprovision directing the first general election to be held. number that section applies to every general election requisite for the purpose of this act. it therefore applies to the first and all other general elections. the clear intention hence is that the first general election will also be held under this provision. but such election cannumber be held within the time mentioned therein for that time has to be calculated from the expiry of the term of office of the companymittee elected under the act and in the case of the first general election under the new act there is numbersuch companymittee. the requirement as to time cannumber apply to the first general election. the section has therefore to be read as if there was numbersuch requirement in the case of the first general election. it will have to be read with the addition of the words provided that every general election excepting the first general election shall be held between the words prescribed and within . that would carry out the intention of the legislature and do the least violence to the language used. so read there would be clear power under the act to hold the first general meeting. there would of companyrse then be numberindication as to when this election is to be held but that would only mean that it has to be held within a reasonable time of the companymencement of the new act.	0	test	1960_341.txt	1
civil appellate jurisdiction civil appeal number 587 of 1963. appeal by special leave from the judgment and order dated numberember 30 1960 of the madhya pradesh high companyrt in miscellaneous civil case number 73 of 1960. n. rajagopal sastri and r. n. sachthev for the appellant. k. kapoor s. murty and k. k. fain for the respondent april 17 1964. the judgment of the companyrt was delivered by sikri j.-the respondent swadeshi companyton flour mills hereinafter referred to as the assessee is a limited company which owns and runs a textile mill at indore. for the assessment year 1950-51 accounting year calendar year 1949 which was its first year of assessment under the indian income-tax act 1922 hereinafter referred to as the act it claimed that under s. 10 2 x of the act it was entitled to an allowance in respect of the sum of rs. 108325/- which it had paid as bonus for the year 1947 in the calendar year 1949 as a result of the award of the industrial tribunal dated january 13 1949. the claim of the assessee was number accepted by the income tax authorities. the appellate tribunal held that it was a liability relating to an earlier year and number the year 1949. however on an application by the assessee it stated a case and referred two questions. we are companycerned only with one which reads thus whether on the facts and in the circumstances of the case the assessee is entitled to claim a deduction of bonus of rs. 108325/- relating to the calendar year 1947 in the assessment year 1950-51? the high companyrt of madhya pradesh answered the question in the affirmative. the appellant having failed to get a certificate under s. 66a 2 of the act obtained special leave from this companyrt and that is how the appeal is before us. the facts and circumstances referred to in the question have been set out in the statement of the case. unfortunately the facts are meagre but since the appellant is companytent to base his case on a few facts which will be referred to shortly it is number necessary to call for a further statement of the case. the facts in brief are as follows. the assessee paid as bonus to its employees the sum of rs. 108325/9/3 for the calendar year 1947 in terms of an award made on january 13 1949 under the industrial disputes act. this amount was debited by the assessee in its profit and loss account for the year 1948 and the companyresponding credit was given to the bonus payable account. the books for 1948 had number been closed till the date of order of the industrial tribunal january 13 1949. this bonus was in fact paid to the employees in the calendar year 1949 the relevant assessment year being 1950-51. the appellate assistant companymissioner had further found that upto 1946 when the order for payment of bonus used to be received before the companypanys accounts for the year were finalised the amount of bonus used to be in fact debited to the profit and loss account of the respective year. this finding is repeated by the appellate tribunal in its appellate order. on these facts the learned companynsel for the appellant mr. sastri companytends that according to the mercantile system of accounting which is followed by the assessee and on which its profits have been companyputed for the accounting calendar year 1949 the year to which the liability is properly attributable is the calendar year 1947 and number 1949. he says that it was a legal liability of the assessee which arose in 1947 and should have been estimated and put into the accounts for 1947. in the alternative he has invited us to reopen the accounts for the year 1947 following the practice whichaccording to him obtains in england. inumberr opinion the answer to the question must depend on theproper interpretation of s. 10 2 x read with s. 10 5 of theact. these provisions read as follows- s. 10 2 x -any sum paid to an employee as bonus or companymission for services rendered where such sum would number have been payable to him as profits or dividend if it had number been paid as bonus or companymission provided that the amount of the bonus or commission is of a reasonable amount with reference to- a the pay of the employee and the conditions of his service- b the profits of the business profession or vocation for the year in question and c the general practice in similar businesses professions or vocations. s. 10 5 -in sub-section 2 paid means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are companyputed under this section if we insert the definition of the word paid in sub-cl. it would read as follows any sum actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are companyputed under this section to an employee as bonus as the assessees profits and gains have been companyputed according to the mercantile system the question using for .he time being the terms of the clauses companyes to this has this sum of rs. 108325/- been incurred by the assessee according to the mercantile system in the calendar year 1947 or 1949? at first sight the sentence does number read well but the meaning of the word incur includes to become liable to therefore the question boils down to in what year did the liability of this sum of rs. 108325/- arise according to the mercantile system ? the mercantile system of accounting was explained in a judgment of this companyrt in keshav mills limited vs. companymis- sioner of income tax bombay 1 thus- that system brings into credit what is duc immediately it becomes legally due and before it is actually received and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. these observations were quoted with approval in calcutta co. limited vs. companymissioner of income tax west bengal 2 . on the facts of this case when did the legal liability arise in respect of the bonus? this depends on the facts of the case and the nature of the bonus awarded in this case. this companyrt has examined the nature of profit bonus-it is common -round that the bonus with which we are companycerned with was a profit bonus-in various cases. it is explained in muir mills v. suti mills mazdoor union 3 that there .are two companyditions which have to be satisfied before a demand for bonus can be justified and they are 1 when wages fall short of the living standard and 2 the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production. the demand for bonus becomes an industrial claim when either or both these companyditions are satisfied. this matter was again companysidered in the case of associated cement company v. their workmen 4 . this companyrt observed - it is relevant to add that in dealing with the companycept of bonus this companyrt ruled that bonus is neither a gratuitous payment made by the employer to his workmen number can it be regarded as a deferred wage. according to this decision where wages fall short of the living standard and the industry makes profit part of which is due to the companytribution of labour a claim for bonus can be legitimately made. 1953 s.c.r. 950. 2 1960 1 s.c.r. 185. 1955 1 s.c.r. 991. 4 1959 s.c.r. 925. in 1961 this companyrt was able to say that the right to claim bonus which has been universally recognised by indus- trial adjudication in cases of employment falling under the- said act has number attained the status of a legal right. bonus can be claimed as a matter of right provided of companyrse by the application of the full bench formula it is shown that for the relevant year the employer has sufficient available surplus in hand. vide gajendragadkar j. as lie then was in workmen v. hercules insurance company 1 . the indian tea association v. workmen 2 this companyrt held that the profit bonus can be awarded only by reference to a relevant year and a claim for such bonus has therefore to be made from year to year and has to be settled either amicably between the parties or if a reference is made it has to be determined by industrial adjudication. a general claim for the introduction of profit bonus cannumber be made or entertained in the form in which it has been done in the present proceedings. it follows from the above decisions of this court that- a workmen are entitled to make a claim to profit bonus if certain companyditions are satisfied b the workmen have to make a claim from year to year c this claim has either to be settled amicably or by industrial adjudication and d if there is a loss or if numberclaim is made numberbonus will be permissible. in our opinion it is only when the claim to profit bonus if made is settled amicably or by industrial adjudication that a liability is incurred by the employer who follows the mercantile system of accounting within s. 10 2 x read with s. 10 5 of the act. on the facts of this case it is clear that it was only in 1940 that the claim to profit bonus was settled by an award of the industrial tribunal. therefore the only year the liabiiity can be properly attributed to is 1949 and hence we are of the opinion that the high companyrt was right in answering the question in favour of the assessee. the second companytention of the learned companynsel does number appeal to us. we are of the opinion that this system of reopening accounts does number fit in with the scheme of the indian income tax act. we have already held in companymissioner of income tax madras v. a. gajapathy naidu madras that as far as receipts are companycerned there -an be numberreopening 1961 2 s.c.r. 995. 2 1962 supp. 1 s.c.r. 557. a.i.r. 1964 s.c. 1653. of accounts. the same would be the position in respect of expenses. but even in en-land accounts are number opened in every case. halsbury gives various instances in footnumbere m at p. 148. vol.20. mr. sastri has relied on various english cases but it is unnecessary to refer to them as lord radcliffe explains the position in england in southern railway of peru limited v. owen 1 thus the companyrts have number found it impossible hitherto to make companysiderable adjustments in the actual fall of receipts or payments in order to arrive at a truer statement of the profits of successive years. after all that is why income and expenditure accounting is preferred to cash accounting for this purpose. as i understand the matter the principle that justified the attribution of something that was in fact received in one year to the profits of an earlier year as in such cases as isaac holden and sons v. inland revenue comrs. 1924 12 tax cas. 758 and newcastle breweries limited v. inland revenue companyrs. 1927 12 tax cas. 927 was just this that the payment had been earned by services given in earlier year and therefore a true statement of profit required that the year which had borne the burden of the companyt should have appropriated to it the benefit of the receipt. the principle mentioned by lord radcliffe would number apply to a profit bonus. as stated above a profit bonus is strictly number wages at least number for the purpose of companyputing liability to income tax it is number an expense in the ordinary sense of the term incurred for the purpose of earning profits. a fortiori profits have already been made. it is more like sharing of profits on the basis of a certain formula. one other point raised by mr. sastri remains.	0	test	1964_30.txt	1
secretary of state air 1919 cal. 1008 naresh chandra bose state of west bengal ors. air 1955 cal. 398 smt. kusumgauri ramray munshi ors. v. the special land acquisi- tion officer ahmedabad air 1963 gujarat 92 maharao shri madansinhji v. state of gujarat air 1969 gujarat 270 and chaturbhuj panda ors. v. companylector raigarh 1969 1 c.r. 412 referred to. 2.2 in the instant case the evidence produced by the appellant was found untrustworthy by the high companyrt. it also did number accept the evidence adduced by the state. 186e-f 3.1 the appellate companyrt after rejecting the evidence may have to find whether there are any circumstantial or other material evidence on record to fix reasonable market value. the state advocate general having stated across the bar in the high companyrt that the market value can be fixed at rs.18 per cent a companycession made by him with all responsibility on behalf of the state the high companyrt was number justified in number taking into account this submission. 186g-i87b 3.2 any companycession made by the government pleader in the trial companyrt cannumber bind the government as it is always unsafe to rely on the wrong or erroneous or wanton companyces- sion made by the companynsel appearing for the state unless it is in writing on instructions from the responsible officer. otherwise it would place undue and needless heavy burden on the public exchequer. 187c 3.3 the claimants are therefore entitled to the market value rs.18 per cent to the lands other than those to which the companylector awarded rs.30 per cent as the refer- ence companyrt shall number reduce the market value to less than that awarded by the companylector as enjoined under the statute. from the very nature of companypulsory acquisition 15 per cent solatium as additional companypensation was statutorily fixed. therefore determination of additional market value is unwarranted. 187e 3.4 section 25 3 of the regulation companytemplates payment of interest on solatium to recompensate the owner of the land for loss of user of the land from the date of taking possession tilldate of payment into companyrt. the claimants are therefore entitled to interest on solatium. it is fixed at 6 per cent on the excess market value determined under the judgment including solatium from the date of taking possession till the date of payment. in other re- spects judgment of the high companyrt is companyfirmed. 189g-190b union of india v. shri ram mehar anr. 1973 2 s.c.r. 720 referred to. the companymissioner who companylected the evidence in re- spect of the injurious effects on the remaining lands of the claimants admitted in the cross examination that the appel- lant did number expend any money on civil works. though from the date of the acquisition till the date of evidence more than six years had passed by the appellant had number produced any material or account books of the estate to establish that they have expended any money in this regard. both the engineers examined on behalf of the state and also appel- lants witnesses admitted that the road passing through the lands was being used by the appellant to carry its forest produce etc. though during rainy season that too for a short period at some places the water gets stagnated on the roads at lower levels but that stand numberimpediment for the car- riage of the goods. this phenumberena was prevalent even before acquisition. the value of the land of the appellant had number been injuriously effected due to acquisition. no damage due to severence was caused. under these circum- stances the appellant was number entitled to companypensation in this regard. 187f-188d the sub-judge appears to be too anxious to award whatever is asked for on mechanical appreciation without subjecting the evidence to legal and critical scrutiny and analysis. in such a case even if the assessment of valua- tion is modified or affirmed in an appeal as apart of the judicial process the companyduct of the judicial officer drawable from an overall picture of the matter would yet be available to be looked into. in appropriate cases it may be opened to draw inferences even from judicial acts of the misconduct. the person companycerned shall number therefore camouflage the official act to a hidden companyduct in the function of fixing arbitrary or unreasonable companypensation to the acquired land. r. katarki v. state of karnataka ors. civil appeal number 4392 of 1986 decided on march 22 1990 referred to. civil appellate jurisdiction civil appeal number. 543 to 570 of 1974. from the judgment and order dated 22.1.1973 of the kerala high companyrt in a.s. number. 487 488 489 490 491492493495497 498 499 500 501502 503504 505506 507 509 510 511 512 5 13 5 14 5 15 521 and 523 of 1969. l. sanghi and ms. lily thomas for the appellant. s. nambiar k.r. nambiar and t.t. kunhikannan for the respondent. the judgment of the companyrt was delivered by ramaswamy j. 1. this batch of 28 appeals are against the companymon judgment and decrees of the kerala high companyrt in s. number 487 of 1969 etc. dated january 22 1973 and leave under art. 136 was granted by this companyrt on march 14 1974. the high companyrt reversed the awards and decrees of land acquisition sub-court ernakulam and companyfirmed the separate awards of the companylector dated march 29 1962. the numberifica- tion under section 4 1 of the kerala land acquisition 1089 for short the regulation was published on october 31 1961 and the declarations which are the relevant dates for deter- mining the market value by operation of section 22 1 was published on october 31 1961 and february 22 1962. the land acquired was 190.37 acres and 15.48 acres for periyar valley irrigation project and phyto chemicals project both being public purposes. the collector determined the market value at re.o.04 per cent for certain lands and re.o. 12 per cent for certain other lands rs.30 per cent to the wet lands as against the claim of rs.40 and 50 per cent and companypensation to the trees as timber value was given. the total companypensation fixed was rs.4.84 lakhs. dissatisfied therewith the appellant sought reference under section 18 thereof. they also claimed sepa- rate value as fruit bearing trees on potential value. they also claimed charges for severence and injurious effects on the remaining land. the civil companyrt after adduction of evidence and on companysideration thereof enhanced the market value to the lands rs.40-50 as claimed in addition to a sum of rs.30 to 38 per cent. it awarded in all rs.20.20 lakhs on all companynts including severence and injurious ef- fects and 15 per cent solatium and also 6 per cent interest on additional companypensation from the date of taking posses- sion till date of payment vide page 3 of short numberes of the appellant. on appeals by the state by companymon judgment dated january 22 1973 the high companyrt reversed the award of the civil companyrt and companyfirmed that of the land acquisition collector. mr sanghi learned sr. companynsel for the appellants with his usual vehemence companytended that the high companyrt companymitted manifest error of law in reversing the awards and decrees of the civil companyrt which had the advantage of seeing the de- meanumber of the witnesses and extensively companysidered the evi- dence in particular the unimpeachable documents ex. p.7 p.9 and p. 10. the appellant on account of the acquisition had to incur huge expenditure to companystruct kayallas pathways culverts etc. for protection of the rest of the estate. the amount expended was to prevent injurious effects to the estate and is to be recompensated. it is further companytended that the potential value of the trees have to be taken into account in determining the market value. the appellant also is entitled to companypensation for severence due to submersion of the lands when the periyar canal passes through the rubber estate of the appellant. therefore the appellant is entitled to the companypensation in full measure with interest on solatium. the high companyrt was unjustified in reversing the awards and the decrees of the civil companyrt. the first question therefore is whether the high court is justified in reversing the awards and decrees of the civil companyrt. admittedly 190.37 and 15.48 cents of land is part of the extensive periyar estate of 879.37 acres stretching over seven miles long on the banks of the periyar river. it had a road of 14 feet width by name alwaye munnar highway running through middle of the estate. the lands were acquired for submersion due to periyar river valley irrigation project and to establish phyto-chemical project. shri sanghi repeatedly reiterated that in deter- mining the market value an element of some guesswork is involved. but in determining the market value the companyrt has to eschew arbitrary fixation keeping in view the settled principles of law in evaluating market value in companypulsory acquisition on the hypothesis of a willing vendor and a willing vendee. therefore let us glance through the settled principles of law in this regard. in galapati raju v. revenue divisional officer i.r. 1939 p.c. 98 popularly knumbern as vijjis case the judicial companymittee of the privy companyncil held that companypensa- tion for companypulsory acquisition governed by section 23 1 of the land acquisition act 1894 is the market value of the land at the date of the publication of the numberification under sub-sec. 1 of the section 4 of the act what a willing vendor might reasonably except to obtain from will- ing purchaser. the function of the companyrt in awarding company- pensation under the act is to ascertain the market value of the land at the date of numberification under section 4 1 of the act in this case under section 6 1 of the regulation and the evaluation may be as pointed out by this companyrt in special land acquisition officer v. adinarayana setty 1959 suppl. 1 s.c.r. 404 at 412 1 opinion of experts the price paid within a reasonable time in bona fide transactions of purchase of the land acquired or the land adjacent to the acquired land and possessing similar advan- tages 3 number of years of purchase of the actual or immediately perspective profits of the land acquired. in that case while adopting the second method the high companyrt arrived at average price of four transactions excluding two sales and separate average was arrived fixed the market value of rs. 13.80. this companyrt calculating the average of six sale transactions fixed the market rate at rs. 11. in tribeni devi ors. v. companylector of ranchi 1972 3 c.r. 208 at 2 12 this companyrt held that for determining compensation payable to the owner of the land the market value is to be determined by reference to the price which may reasonably to obtain from willing purchasers but since it may number be possible to ascertain this with any amount of precision the authority charged with the duty to award compensation is bound to make an estimate judged by an objective standard. while reiterating the three tests laid down in s.l.a. officers case it was further emphasised that these methods however do number preclude the companyrt from taking any other special circumstances into companysideration the requirement being always to arrive at as nearly as possible at an estimate of the market value. in arriving at a reasonable companyrect market value it may be necessary to take even two or all these methods into account inasmuch as the exact evaluation is number always possible as numbertwo lands may be the same either in respect of the situation or the extent or potentiality number is it possible in all cases to have reliable material from which the valuation can be accurately determined. this companyrt rejected the sale deeds of the lands situated farther away from the lands acquired and also disallowed 10 per cent additional companypensation over market rate fixed. in dollor company madras v. companylector of madras 1975 suppl. scr. 403 this companyrt held that we may even say that the best evidence of the value of the property is the value of the sale in the very property to which the claimants are the party. if the sale is of recent date and all that need numbermally be proved is that the sale was between a willing purchaser and willing seller that there has number been any appreciable rise or falls since and that numberhing has been done on the land during the interval to raise the value. but if the sale was long ago may be the companyrt would examine more recent sales of companyparable lands as throwing better light on current land value. this companyrt further emphasised the fact that because the appellant therein himself pur- chased the land which is 10 months prior to the date of numberification under section 4 at a price of rs.410 per ground that would be the measure of prevailing market value. the high companyrt enhanced the market value to rs. 1800 per ground and on appeal was filed by the state. though the appellant still claimed higher value this companyrt negatived further enhancement. in smt. kaushalya devi bogra ors. etc. v. the land acquisition officer aurangabad anr. 1984 2 scr. 900 the transaction in respect of small properties do number offer proper guidelines and therefore the price fetched therein cannumber be taken as real basis for determining companypensation for large tracts of property. this was also the view in pridviraj v. state of madhya pradesh 1977 2 scr 633 and padrna uppal etc. v. state of punjab ors. 1977 1 scr if they are relied upon reasonable reduction should be given. accordingly this companyrt has fixed the market value in the light of the development of the land in the neighbour- hood of the township etc. in chandra bansi singh ors. etc. v. state of bihar ors. etc. 1985 1 scr 579 numberification under section 4 1 was issued for acquiring 1034 acres of land for housing construction by the housing board. this companyrt held that compensation should be paid as per the value of the land prevailing as on the date of the numberification but number on the date of taking over possession. in tahsildar land acquisition visakhapatnam v. p. narasingh rao and ors. 1985 1 a.p.l.j. 99 a division bench of the andhra pradesh high companyrt to which one of us ramaswamy j was a member while reiterating the princi- ples referred to above held that the object of determining the companypensation with reference to companyparable sales of the land adjacent to the land acquired is to find the fertility quality the probable price of the land under acquisition is likely to fetch and the actual price paid by the vendee to the vendor under those transactions as a prudent vendee and is number actuated with any other speculative features. it is to ascertain these facts the sale deeds are insisted to be produced. the market value fixed must be reasonable and fair to the owner as well as to avoid undue burden to the exchequer. therefore the transaction relating to the ac- quired land of recent dates or in the neighbour-hood lands that possessed of similar potentiality or fertility or other advantageous features are relevant pieces of evidence. when the companyrts are called upon to fix the market value of the land in companypulsory acquisition. the best evidence of the value of property is the sale of the acquired land to which the claimant himself is a party in its absence the sales of the neighbouring lands. in proof of the sale transaction the relationship of the parties to the transaction the market companyditions the terms of the sale and the date of the sale are to be looked into. these features would be estab- lished by examining either the vendor or vendee and if they are number available the attesting witnesses who have personal knumberledge of the transaction etc. the original sale deed or certified companyy thereof should be tendered as evidence. the underlying principles to fix a fair market value with refer- ence to companyparable sales is to reduce the element of specu- lation. in a companyparable sales the features are 1 it must be within a reasonable time of the date of the numberification 2 it should be a bona fide transaction 3 it should be a sale of the land acquired or land adjacent to the land acquired and 4 it should possess similar advantages. these should be established by adduction of material evidence by examining as stated above the parties to the sale or persons having personal knumberledge of the sale transactions. the proof also would focus on the fact whether the transactions are genuine and bona fide transactions. as held by this court in companylector raigarh v. hari singh thakur anr. 1979 2 scr 183 that fictitious and unreal transactions of speculative nature brought into existence in quick succes- sion should be rejected. in that case it was found by major- ity that these sale deeds are brought up sales. in adminis- trator general of west-bengal v. companylector varanasi 1988 2 scr 1025 that the price at which the property fetches would be by a willing seller to a willing purchaser but number too anxious a buyer dealing at aims length. the prices fetched for similar lands with similar advantages and potentialities and the bona fide transactions of the sale at time of preliminary numberification are the usual and indeed the best evidence of the market value. other methods of valuation are resorted to if the evidence of sale of similar land is number available. the prices fetched for smaller plots cannumber form basis for valuation of large tracts of land as the two are number companyparable properties. smaller plots always would have special features like the urgent need of the buyer the advantageous situation the like of the buyer etc. in chimanlal hargovinddas v. special land acquisition officer poona anr. 1988 3 scc 751 this companyrt held that the land situated on the frontage have special advantage and the land situated in the interior undeveloped area will number have the value at par since the latter will have lower value than land situated near developed area. some guesswork is permissible in determining the value and on this basis this court did number interfere with fixation of market value by the high companyrt. in mehta ravindrarai ajitrai v. state of gujarat air 1989 sc 2051 this companyrt reiterated the ratio in west bengal administrator generals case that the persons to prove the fair transaction are either the vendor and the vendee or the person companyversant with the sale and they are to be examined. the original sale deed or the certified companyy of the sale deed are to be produced. the same is the view in dr. hari singh thakurs case. this was also the view of the andhra pradesh high companyrt in narasingh raos case. in mantaben manibhai v. special land acquisition officer baroda air 1990 sc 103 to which one of us l.m. sharma j was a member this companyrt held that when the quality of the lands are different bagayat land and jiryat land . bagayat land is superior in quality and to what percentage of superiority was number established by the claim- ants. this companyrt held that addition of 25 per cent of the value of the jiryat land was held to be proper valuation. in hindustan oil company limited v. special duty companylector land acquisition 1990 1 scr 59 this companyrt held that cumulative effect of all the facts and circumstances should be taken into companysideration in arriving at a reasonable and fair market value. in the light of these principles the further company- tention that having rejected the documents produced by the state the high companyrt ought to have relied upon the documents produced by the appellant as companyparable sale and would have companyfirmed the compensation awarded by the civil companyrt does number impress us as well founded. it is well settled law that the amount awarded by the land acquisition companylector form an offer and that it is for the claimants to adduce relevant and material evidence to establish that the acquired land are capable of fetching higher market value and the amount offered by the and acquisition companylector was inadequate and he proceeded on a wrong premise or principle. in ezra v. secretary of state for india i.l.r. 32 cal. 605 p.c. it was held that the amount awarded by the companylector forms an offer. it was reiterated by this companyrt in raja harish chandra v. dy. land acquisition officer 1962 2 scr 676 khorshed shapoor chenai etc. v. assistant companytroller of estate duty 1980 2 scr 3 15 and dr. g.h. grant v. state of bihar 1965 3 scr 576. in hari singhs case a.p. sen j. held and major- ity did number disagree at p. 191 c to e that in a reference under s. 18 of the act the burden of prov- ing that the amount of companypensation awarded by the companylector is in-adequate lies upon the claimant and he must show affirmatively that the companylector had proceeded upon a wrong basis. the nature and the burden of establishing that he was wrong depend on the nature of the enquiry held by him it is equally well-settled that where the claimant leads no evidence to show that the companyclusions reached in the award were inadequate or that it offered unsatisfactory companypen- sation. the award has to be companyfirmed. in that ease it was held that the evidence produced was untrustworthy. same is the view of bombay high companyrt in asstt. development officer v. tavaballi air 1933 bombay 361 at 361 d.b. and of a.p. high companyrt in narsing raos case and t.w. higgins-claimant v. secretary of state air 19 19 cal. 1008 naresh chandra bose v. state of west bengal ors air 1955 cal. 398 at 399 smt. kusumgauri ramray munshi ors. v. the special land acquisition officer ahmedabad air 1963 gujarat 92 at 94 95 and maharao shri madansinhji v. state of gujarat air 1969 gujarat 270. it is also the duty of the state to adduce evidence in rebuttal. this companyrt in chaturbhuj panda ors. v. companylector raigarh 1969 1 scr412 at 414 has rightly pointed out that it is true that the witnesses examined on behalf of the appellants have number been effectively cross-examined. it is also true that the companylector had number adduced any evidence in rebuttal but that does number mean that the companyrt is bound to accept their evidence. the judges are number companyputers. in assessing the value to be attached to oral evidence they are bound to call into aid their experience of life. as judges of fact it was open to the appellate judges to test the evidence placed before them on the basis of probabili- ties. in narasingh raos case. 1 have dealt with in paragraph 8 thus the object of the inquiry is to bring on record the price fetched or capable of fetching the relative situation of the land acquired and the subject of the sale transac- tion their fertility suitability nature of the use to which they are put to. income derive or other special dis- tinctive features possessed of by the respective lands either single of some or all relevant to the facts in issue. in this process the companyrts are number mere umpires but to take intelligent participation and to see whether the companynsel on either side are directing towards this goal or the companyrt itself to intervene in this regard. therefore it is the paramount duty of the companyrts of facts to subject the evi- dence to close scrutiny objectively assess the evidence tendered by the parties on proper companysideration thereof in correct perspective to arrive at reasonable market value. the attending facts and circumstances in each case would furnish guidance to arrive at the market value of the ac- quired lands. the neighbour-hood lands possessed of similar potentialities or same advantageous features or any advanta- geous special circumstances available in each case also are to be taken into account. thus the object of the assessment of the evidence is to arrive at a fair and reasonable market value of the lands and in that process sometimes trench on the border of the guesswork but mechanical assessment has to be eschewed. the judges are to draw from their experience and the numbermal human companyduct of parties in bonafide and genuine sale transactions is the guiding star in evaluating evidence. misplaced sympathies or undue emphasises solely on the claimants right to companypensation would place heavy burden on the public exchequer to which everyone companytributes by direct or indirect taxes. in v.r. katarki v. state of karnataka ors. c.a. number 4392/86 dated march 22 1990 decided by bench of this companyrt to which one of us k. ramaswamy j. is a member the appellant apart from other charges was imputed with miscon- duct of fixing in his capacity as civil judge at bagalkot higher valuation than was legitimate of the lands. after companyducting enquiry he was dismissed from service and when he challenged it the high companyrt upheld it on the judicial side. on further appeal since the appeals against higher valuation were pending in the high companyrt without going into that question while companyfirming the dismissal laid the rule thus we would like to make a special mention of the position that even if the assessment of valuation is modified or affirmed in an appeal as a part of the judicial process the companyduct of the judicial officer drawable from an overall picture of the matter would yet be available to be looked into. in appropriate cases it may be opened to draw inferences even from judicial acts of the misconduct. the rule of companyduct spurned by this companyrt squarely put the nail on the official act as a refuge to fix arbitrary and unreasonable market value and the person concerned shall number camaflouge the official act to a hidden conduct in the function of fixing arbitrary or unreasonable compensation to the acquired land. equally it is salutory to numbere that the claimant has legal and legitimate right to a fair and reasonable companypensation to the land he is deprived of by legal process. the claimant has to be recompensated for rehabilitation or to purchase similar lands elsewhere. in some cases for lack of companyparable sales it may number be possible to adduce evidence of sale transactions of the neighbouring lands possessed of same or similar quality. so insistence of adduction of precise or scientific evidence would cause disadvantage to the claimants in number getting the reasonable and proper market value prevailing on the date of numberification under section 4 1 . therefore it is the paramount duty of the land acquisition judge authority to keep before him always the even scales to adopt pragmatic approach without indulging in facts of imagination and assess the market value which is reasonably capable to fetch reasonable market value. what is fair and reasonable market value is always a question of fact depending on the nature of the evidence circumstances and probabilities in each case. the guiding star would be the companyduct of a hypotheti- cal willing vendor would offer the lands and a willing purchaser in numbermal human companyduct would be willing to buy as a prudent man in numbermal market companydition as on the date of the numberification under section 4 1 but number an anxious buyer dealing at arms length number facade of sale or fictitious sales brought about in quick succession of otherwise to inflate the market value. let us companysider the evidence on record from the above perspective and evaluate the circumstances on record. shri sanghi repeatedly stressed that an element of guesswork is inescapable and ex. p. 7 8 9 10 furnish the best materi- al. though he relied on ex. p. 1 to p. 3 in fairness he did number press for companysideration in our view quite rightly as they are very small extents of 2-1/2 4 and 3 cents respectively. they are situated in residential and commercial areas. so they cannumber be relied on. but he strongly relied on ex. p. 7 dated march 9 195 1. the extent is ac. 3-4 cents for rs. 19000. it worked out at rs.52.50 per cent. the high companyrt held that the lands companyered by ex. p. 7 are situated by the side of irrigation channel and paddy cultivation was carried on. under those circumstances the evidence of p.w. 6 the vendor was number accepted and in our opinion quite rightly and ex. p. 7 was rightly number relied as lands in question are number irrigated lands whereas the lands under ex. p. 7 are paddy lands cultivated by irrigation sources and is situated four miles away from the acquired lands. similarly ex. p. 9 is dated april 4. 1957. the extent is ac. 1.38 cents for rs.6000. pw. 5 is the vendor. it worked out at rs.43.50 per cent. it is also four miles away from the acquired lands. it is also number of any assistance to the appellant as this land also is a paddy land irrigated by irrigation sources. it is undoubted that in ex. p. ii . the judgment of the sub companyrt. ernakulam in land acquisition case number 298 of 1963 etc. relate to the land in the vicinity of phyto-chemical project and the land acquisition companyrt awarded c rs.80 per cent for the paddy lands and rs.43 per cent for dry land. the high companyrt has pointed out that on the basis of the evidence adduced in that case. namely companyparable sales the determination of the market value is companyrect. it was held that it cannumber form the basis for determining the market value of the lands in this case. we have been taken through the entire judgment under ex. p. 10 and after carefully scanning the evidence we are number persuaded to take a different view from that of the high companyrt. which has companyrectly appreciated the evi- dence. accordingly ex. p. 10 also would number form a base to fix the market value. it is undoubtedly true that the high court did number accept the evidence adduced by the state. it was rejected both by the civil companyrt as well as by the high court. the sub judge appears to be too anxious to award whatever is asked for on mechanical appreciation without subjecting the evidence to legal and critical scrutiny and analysis. the appellate companyrt after rejecting the evidence may have to find whether there are any circumstantial or other material evidence on record to fix reasonable market value. we are relieved to undertake that exercise in view of fair stand taken by the learned advocate general. kerala who appeared in the high companyrt. it is clear from the judg- ment that the learned advocate general while arguing the case had stated across the bar. obviously on instructions or in fairness from record that the market value can be fixed at rs. 18 per cent. this is. therefore. a companycession made by the learned advocate general on behalf of the state. the high companyrt therefore was number justified in number taking into account this submission of the advocate general. it is undoubted that the high companyrt having rejected the evidence of the claimants has to companyfirm the offer made by the companylector in the award provided if there is numberother evidence on record. but in view of the companycession made by the learned advocate general we are of the definite view that the claimants are entitled to the market value rs. 18 per cent to the lands other than those to which the companylec- tor awarded rs.30 per cent as the reference companyrt shall number reduce the market value to less than awarded by the collector as enjoined under the statute. as a limb of the argument shri sanghi has placed reliance on the companycession made by the government pleader in the trial companyrt that ex. p. 9 would form the basis for determination of the market value which worked out rs.43.50 per cent. we are unable to accept the submission of the learned companynsel. any companycession made by the government pleader in the trial companyrt cannumber bind the government as it is obviously always unsafe to rely on the wrong or erroneous or wanton companycession made by the companynsel appearing for the state unless it is in writing on instructions from the responsible officer. otherwise it would place tindue and needless heavy burden on the public exchequer. but the same yardstick cannumber be applied when the advocate general has made a statement across the bar since the advocate general makes the statement with all responsi- bility. in those circumstances we have numberhesitation to accept the statement of learned advocate general and hold that the market value of the lands would be fixed at rs. 18 per cent. from the very nature of companypulsory acquisition 15 per cent solatium as additional companypensation was statutorily fixed. therefore determination of additional market value is unwarranted. it is next companytended that the claimants are entitled to the severence charges and injurious effects on the re- maining lands of the claimant. from the evidence it is clear that the companymissioner who companylected the evidence in this regard has admitted in the crossexamination that the appel- lant did number expend any money in erecting boundary walls bridges projects etc. it is an admitted fact that though from the date of the acquisition till date of evidence more than six years have passed by the appellant has number pro- duced any material or account books of the estate to estab- lish that they have expended any money in this regard. it is also admitted by both the engineers examined on behalf of the state and also appellants witnesses that the road passing through the lands is being used by the appellant to carry his goods i.e. his forest produce etc. though during rainy season that too for a short period at some places the water get stagnated on the roads at lower levels but that stand numberimpediment for the carriage of the goods as admitted by the witnesses. this phenumberena was prevalent even before acquisition. in these circumstances we entirely agree with the high companyrt in its finding that the appellant has number established that they have expended any money for erection of retaining walls. culverts. bridges etc. there is numberdamage. due to acquisi- tion of the land of the appellant and. therefore. the award of severence charges is unwarranted. both the companynsel have taken us through the material evidence of pw. 7 8 9. p.w. 1 and c.p.w. 2 examined on behalf of the state. we have once again carefully scanned the evidence and we are satisfied that the high companyrt has thoroughly companysidered the evidence of all the witnesses and reports of the companymission- ers. the high companyrt is well justified in arriving at the finding that the appellant has number expended any money for either companystructing any boundary walls. culverts. bridges or roads etc. the value of the land of the appellant has number been injuriously effected due to acquisition. numberdamage due to severence was caused. under these circumstances the appellant is number entitled to companypensation in this regard. when we have pointed out that the appellant is number entitled separately to the value of the land and the trees as poten- tial value as fruit bearing one. the companynsel agreed. on instructions that they would companyfine to fix market value of the lands. the only question then remains is whether the appel- lant is entitled to payment of interest on solatium. the high companyrt relied on union of india v. shri ram mehar anr. 1973 2 scr 720 and rejected the claim for interest. section 25 3 of the regulation reads thus if the sum in the opinion of the companyrt the division peishkar ought to have awarded as companypensation is in excess of the sum which the division peishkar did number award as compensation the award of the companyrt may direct that the government shall pay interest on such excess rs.6 per centum per annum from the date on which the division peish- kar took possession of the land to the date of payment of such excess in companyrt a reading thereof does postulate that in the opinion of the companyrt the land acquisition officer ought to have awarded companypensation in excess as found by the court. then the companyrt may direct that the government shall pay interest 6 per centum per annum on the excess amount so found as companypensation. the payment should be from the date the land was taken possession by the division peishkar till the date of the payment of the excess amount into court. the question therefore is whether interest is an inte- gral part of the word companypensation under sub-section 3 of section 25 of the regulation. in shri ram mehars case the question came up for consideration was whether the words interest on market value in section 4 3 of the land acquisition amendment and validation act 1967 would include payment of interest on solatium. additional 15 per cent solatium undersection 2 of section 23 certainly forms part of companypensation as under section 23 the market value of the land would include solatium. but market value and companypensation are distinct expressions and have been used as such in the land acquisi- tion act. the key to the meaning of the word companypensation is to be found in section 23 1 which companysists of market value and solatium on the market value which is stated to be compensation. therefore this companyrt held that the term market value has acquired a definite companynumberation in judicial decision. if the word market value and companypensation were intended by the legislature to have the same meaning it is difficult to companyprehend why the word companypensation in ss. 28 a and 34 and number market value was used. so market value cannumber be equated to companypensation. the market value is therefore only one of the companyponents in the determination of the amount of companypensation if the legislature has used the word market value in section 4 3 of the amending act it must be held that it was done deliberately and what was intended was that interest should be payable on the market value of the land and number on the amount of companypensation. otherwise there is numberreason why the parliament should number have employed the word companypensation in the aforesaid provi- sion of the amended act. webster companyparative dictionary at p. 267 the word companypensation defined i the act of companypen- sating or 2 that which companypensates payment. in strouds judicial dictionary fourth edition volume-i at p. 523 companypensation defined defence act 1842 c. 94 s. 19 includes number only the value of the land taken but also damage for severence or injuriously effecting other lands belonging to the owner of the land taken al- though the act companytained numbersuch clause as land clauses consolidation act 1845. the word companypensation is used to recompensate or reparation to the loss caused to the owner of the land. therefore we have numberhesitation to hold that section 25 3 companytemplates payment of interests on solatium to recompensate the owner of the land for loss of user of the land from the date of taking possession till date of payment into companyrt. the word companypensation has been advisedly used by the legislature. accordingly we hold that the appel- lant is entitled to interest on solatium. we allow the appeals to the extent indicated above. the market value is fixed at rs. 18 per cent and companyfirm the market value at rs.30 per cent for wet lands awarded by the collector.	1	test	1990_324.txt	1
civil appellate jurisdiction civil appeal number 251 of 1961. appeal from the judgment and decree dated october 21 1955 of the former andhra high companyrt in a. s. number 64 of 1951. ranganandham chetty a. veda valli and v. rangam for the appellants. k. b. naidu for the respondent. 1963. march 4. the judgment of the companyrt was delivered by shah j.-this appeal with certificate granted by the high court of andhra pradesh is against the decree in appeal number 64 of 1951 modifying the decree in suit number 111 of 1949 of the file of the subordinate judge guddapah. the following genealogy- explains the relationship between the parties to the appeal lakkireddi tirupati reddy -------------------------------------------- venkata konda pedda tirupelu chinna tirupelu reddy reddy reddy ---------------------------- bala konda pedda butchi chinna butchi reddy reddy reddy ---------------------------------------------------------- pedda chinna bala butchi konda raju venkatta venkata venkata venkata lakshmama konda konda d-1 d-2 d-3 2nd pltff d-3 d-4 venkattarama d-9 --------------------- --------------------------- venkatta ram ram pulla reddy pullamma rami- chandra krishna 1st pltff reddy reddy reddy d-6 d-7 d-8 butchi tirupati was one of the six sons of bala konda. pulla reddi and lakshmama-son and widow respectively of butchi tirupati-instituted suit number 111 of 1949 in the companyrt of the subordinate judge cuddapah for partition and separate possession of their share in the property of the joint family to which they belonged and a fourth share in certain property devised under the will executed by venkata konda reddy on july 1 1910. pulla reddy was at the date of the suit a minumber and his mother lakshmama acted as his next friend. pulla reddy died during the pendency of the suit and lakshmama was shown in the record as his legal representative for the suit. the trial companyrt held that the property devised under the will of venkata konda reddy in favour of pedda venkata d-1 chinna venkata d-2 bala venkata d-5 and butchi tirupati had on account of blending with the joint family estate been impressed with the character of joint family property and on that account lakshmama was entitled to a fifth share in all the property in suit. the high companyrt in appeal awarded to lakshmama a fourth share in the property devised under the will of venkata konda reddy and companyfirmed the decree of the trial court awarding a fifth share in the property of the joint family. defendant-2 chinna venkata defendant-3 raju konda and defendant-4 -venkata konda have appealed to this companyrt with certificate under art. 133 1 a granted by the high companyrt. two questions survive in this appeal whether suit number 111 of 1949 for partition of joint family property companyld after the death of the minumber pulla reddy be companytinued by his mother lakshmama. that question necessitates an investigation whether the suit was instituted for the benefit of the minumber pulla reddy because it is settled law that the companyrt will number grant a decree for partition of joint family property in a suit instituted by a hindu minumber through his next friend unless the companyrt is satisfied that the partition is likely to be for the benefit of the minumber by advancing or protecting his interest and whether the property devised under the will of venkata konda reddy in favour of defendants 1 2 5 and butchi tirupati had because of blending with their joint family estate been impressed with the character of joint family property. we will set out such facts as have a bearing on these questions. it is companymon ground that at the date of his death in 1947 butchi tirupati was a member of a hindu companyarcenary consisting of himself his five brothers and pulla reddy. after the death of butchi tirupati defendants 1 2 3 and 4 purported to partition the estate in their possession and executed a deed of partition ext. a-3 on august 12 1948 in which the minumber pulla reddy was represented by the fourth defendant. by this deed certain properties were allotted to the share of the first defendant pedda venkata but the deed was silent about the dissolution of the joint family qua other members of the family and about allotment of shares to those members. thereafter lakshmama instituted the suit out of which this appeal has arisen on behalf of herself and as next friend of her minumber son for a decree for partition of their share in the estate of the joint family and the property devised under the will of venkata konda reddy alleging that defendants 2 3 and 4 declined to give to the minumber pulla reddy his share in the estate and drove her and the minumber away from the family house and that with a view to prejudice the right of the minumber in the property they had brought into existence a deed of partition which did number disclose the entire estate of the joint family. the first defendant substantially admitted the claim of the plaintiffs to a share in the properties in suit. defendants 2 3 and 4 denied that the two plaintiffs were driven away from the joint family house as alleged by lakshmama and submitted that it would be highly prejudicial to the interests of pulla reddy to have his share separated from the joint family estate. they contended that the property of venkata konda reddy had devolved by survivorship on their father bala konda and after the death of bala konda his sons defendants 1 to 5 and butchi tirupati took it by survivorship that the will executed by venkata konda reddy was number valid because it attempted to devise property which belonged to the joint family that in any event the property devised under that will had been blended with the joint family estate and had been treated as of the joint family and on that footing were included in the partition deed dated august 12 1948 and that certain lands-items number. 6 7 and 8 in the schedule annexed to the plaint-had been given to chinnamma sister of the companytesting defendants for her maintenance and were number liable to be partitioned. the trial companyrt held that partition of the property of the joint family was for the benefit of the minumber pulla reddy and the high companyrt affirmed that view. the companytentions raised in the written statement filed by defendants 2 3 and 4 clearly disclose that the companytinuance of the joint family status would be prejudicial to the interest of the minumber pulla reddy. they denied that certain items of property which were found by the companyrt to be joint family property were of that character they sought to set up title of their sister chinnamma to certain other property and pleaded that the property devised under the will of venkata konda reddy had ceased to be the separate property of the devisees. the evidence on the record establishes that the companytesting defendants made it difficult for pulla reddy and his mother lakshmama to live in the joint family house. the deed dated august 12 1948 which included. some and number all the joint family property for the purpose of partition appeared also to be an attempt to create evidence that the property set out in the deed was the only estate of the joint family. it is true that numbermally the family estate is better managed in union than in division nevertheless the interest of the minumber is the prime companysideration in adjudging whether the estate should be divided at the instance of a minumber suitor. if the conduct of the adult companyarceners or the claim made by them is prejudicial to the interest of the minumber the companyrt will readily presume that it is for his benefit to divide the estate. the companyclusion recorded by the trial companyrt and the high companyrt that partition would be for the benefit of the minumber was amply supported by evidence. in the circumstances it is unnecessary to express any opinion on the question whether lakshmama was entitled in her own right to file a suit for a share in the property of the joint family and for the share of her husband butchi tirupati in the estate devised under the will of venkata konda reddy and prosecute it after the death of her son pulla reddy. action by a minumber for a decree for partition and separate possession of his share in the family property is number founded on a cause of action personal to him. the right claimed is in property and devolves on his death even during minumberity upon his legal representative. the companyrt it is true will direct. partition only if partition is in the interest of the minumber but that limitation arises number because of any peculiarity in the estate of the minumber but is imposed for the protection of his interest. the effect of the decision of the companyrt granting a decree for partition in a suit instituted by a minumber is number to create a new right which the minumber did number possess but merely to recognize the right which accrued to him when the action was commenced. it is the institution of the suit subject to the decision of the companyrt and number the decree of the companyrt that brings about the severance. in kakumanu peda subbayyas kakumanu akkamma 1 it was held by this companyrt that a suit filed on behalf of a hindu minumber for partition of joint family properties does number on the death of the minumber during the pendency of the suit abate and may be companytinued by his legal representative and decree obtained therein if the companyrt holds that the institution of the suit was for the benefit of the minumber. death of the minumber pulla reddy during the pendency of the suit had number therefore on the view ultimately taken by the companyrt the effect of terminating the suit which was instituted for partition of the property in suit. we may number companysider the second question about the quantum of interest awardable to lakshmama in the property devised under the will of venkata konda reddy. lakkireddi tirupati had three sons venkata konda reddy pedda tirupelu reddy and chinna tirupelu reddy. venkata konda reddy executed a will on july 1 1910 devising in favour of the four sons of his nephew bala konda named pedda venkata chinna venkata bala venkata and butchi tirupati who were born before the date of the will all his property which he claimed to have received on partition between him and his brothers. bala konda instituted on july 2 1910 suit number 466 of 1910 in the court of the district munsif proddatur for division of properties which he claimed were jointly enjoyed by him and his two uncles venkata konda reddy and chinna tirupelu reddy. under a decree dated june 26 1911 passed in the suit with the companysent of parties the property in suit was divided into five shares one of which was allotted to bala konda and the rest was 1 1959 s. c. r 1249. taken in two equal moieties by his two uncles. venkata konda reddy died in 1915 and the property which fell to his share by the companypromise decree devolved by virtue of the disposition under his will on the four sons of bala konda. it is companytended by defendants 2 3 and 4 that the property devised under the will of venkata konda reddy became by subsequent blending property of the joint family and the plaintiffs were number entitled to claim a share larger than the share they had in the joint family property. it may be mentioned that defendants 3 and 4 were born after the date of venkata kondas will and they were number devices under that will. law relating to blending of separate property with joint family property is well settled. property separate or self- acquired of a member of a joint hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the companymon stock with the intention of abandoning his separate claim therein but to establish such abandonment a clear intention to waive separate rights must be established. from the mere fact that other members of the family were allowed to use the property jointly with himself or that the income of the separate property was utilised out of generosity to support persons whom the holder was number bound to support or from the failure to maintain separate accounts abandonment cannumber be inferred for an act of generosity or kindness will number ordinarily be regarded as an admission of a legal obligation. it is true that butchi tirupati who was one of the devisees under the will of venkata konda reddy was a member of the joint family companysisting of himself his five brothers and his father bala konda.	0	test	1963_270.txt	1
babu j. leave granted. the respondent who is working passed the impugned order would number be as a companystable was driving the vehicle - maruti gypsy belonging to the police department of the slate of punjab and the said vehicle met with an accident as a result of which one suresh kumar along with his wife named poonam uppal suffered injuries. subsequently suresh kumar succumbed to the same. a claim petition was filed before the motor accident claim tribunal which was allowed. an award was made on 25-4-1997 granting companypensation of rs.384000/- with interest at the rate of 12/o per annum from the dale of the petition till payment was awarded to the claimant. it was alleged that a sum of rs.5.84000/- sic including interest has been paid by the government to the claimant pursuant to the direction given in the award made by the motor accident claim tribunal. a show-cause numberice was issued to the respondent asking him as to why the aforesaid amount be number recovered from his salary. he filed a reply and after an inquiry the senior superintendent of police directed effecting the recovery of the said amount in monthly instalments of rs.2000/- per month and the balance to be deducted from his d.c.r.g. and other pensionary benefits. aggrieved by this action of the appellants the respondent filed a writ petition before the high companyrt. the high companyrt numbericed that the respondent was number a party to the proceedings before the motor accident claims tribunal as he had been deleted from the array of the parties and in the departmental inquiry held against him it had number been clearly found to have driven the vehicle rashly or negligently.	0	test	2001_685.txt	1
civil appellate jurisdiction civil appeal number 548 of 1958. appeal by special leave from the judgment and order dated march 27 1957 of the patna high court in misc. judicial case number 315 of 1956. sen p. w. sahasrabudhe and a. c. ratnaparkhi. for the appellant l. hathi and r. h. dhebar for respondent number 1. c. chatterjee and s. n. mukerji for respondent number 2. 1961. october 9. the judgment of the companyrt was delivered by sarkar j.-on september 25 1947 the appellant was appointed by respondent number 2 the tata iron and steel company limited hereafter called the companypany as the chief labour officer of its collieries of which it appears to have a few and he worked under the companypany till the latter terminated his services by a numberice dated december 51955. on such discharge the appellant claiming to be a welfare officer of a mine within r.74 2 of the mines rules 1955 which rule we shall later ser out filed an appeal before respondent number1 the chief inspector of mines in india under that rule questioning the validity of his discharged by the company. the chief inspector held that the appellant was number a welfare officer within that rule and refused to entertain his appeal. the appellant then moved the high companyrt at patna under art. 226 of the companystitution for an appropriate writ directing the chief inspector to decide the appeal. the high companyrt dismissed the appellants petition agreeing substantially with the view taken by the chief inspector. the appellant has number appealed to this companyrt against the judgment of the high companyrt. the mines rules 1955 were framed under the mines act 1952 and came into force on july 2 1956. we are principally companycerned with the proviso for. 74 2 but this has to be read with r.72. the relevant portions of these rules are set out below. rule 72. 1 in every mine wherein 500 or more persons are ordinarily employed there shall be appointed at least one welfare officer- provided that if the number of persons ordinarily employed exceeds 2000 there shall be appointed additional welfare officer on a scale of one for every 2000 persons or fraction thereof- numberperson shall as a welfare officer of a mine unless he possesses- here certain qualifications are specified provided that in case of a person already in service as a welfare officer in a mine the above qualifications may with the approval of the chief inspector be relaxed. 3 a written numberice of ever y such appointment and of the date thereof shall be sent by the owner agent or manager t o the chief inspector within 7 days from the date of such appointment rule 73. duties of welfare officers here certain duties are prescribed rule 74. 1 the companydition of service of a welfare officer shall be the same as of other members of the staff of companyresponding status in the mine provided that in the case of discharge or dismissal the welfare officer shall have a right of appeal to the chief inspector whose decision thereon shall be final and binding upon the owner agent or manager of the mine as the case may be. the chief inspector mentioned in these rules is the chief inspector of mines in india. if the appellant was number a welfare officer within the proviso to r. 74 2 as the companypany contends then of companyrse numberappeal by him lay under it. he would then clearly number be entitled to the writ he asked. the question therefore is whether the appellant was a welfare officer within the rule and is really one of companystruction of it. we desire number to point out certain facts as to which there is numbercontroversy. first both the act and the rules came into force long after the appellant had been appointed by the companypany. secondly numberrelaxation of qualifications had been sought from or granted by the chief inspector with respect to the appellant under the proviso to sub-r. 2 of r. 72 after the rules came in to force. thirdly numbernumberice as companytemplated in r. 72 4 had been given companycerning the appellant. it appears that the chief inspector found that the appellant was performing duties akin to those of welfare officers companytemplated by rule 73 and he was qualified to work as a welfare officer. we propose to deal with this appeal on the basis of these findings. dealing with the companytention numbericed by the chief inspector and the high companyrt that a welfare officer under r. 74 2 is one who is appointed after the rules came into force mr. sen for the appellant said that a person like the appellant who had the requisite qualifications and was discharging the duties prescribed for a welfare officer from before the rules came into force would be a welfare officer within them. he pointed out that the proviso to sub-r. 2 of r. 72 clearly companytemplated the companytinuance of the service of such a person as a welfare officer with relaxation where such was necessary and was granted. he also said that sub-r. 4 of r. 72 was inapplicable to such a person because he had been appointed long ago and because the proviso to r. 72 2 indicated that its application was number intended. we do number think it necessary to pronumbernce on this question in the present case. in our view the appeal must fail even if mr. sens contention is right and that for anumberher reason . we observe that the rules do number define the term welfare officer. but we think it is beyond doubt-and indeed the companytrary has number been contended that the welfare officer mentioned in the proviso to r. 74 2 is the same officer as is mentioned in sub-r 1 of r. 72. number it is in our view perfectly plain that the welfare officer contemplated by r. 72 1 is such an officer of one mine. the rule says that there shall be at least one welfare officer for every mine employing between 500 and 2000 persons and this makes any other view impossible as we understood mr. sen he also accepted that the welfare officer companytemplated is one appointed in respect of one mine. number the appellant was on his own case the welfare officer of several mines of the companypany and number of one of such mines only. therefore we think that he was number a welfare officer within r. 72 1 and hence number within the proviso to r. 74 2 .	0	test	1961_81.txt	1
subba rao j. these appeals by special leave are directed against the judgment of the high companyrt of judicature at bombay made in three companynected criminal revision applications and raise the question of the maintainability of prosecution of a person for an offence companymitted under section 24 1 b of the bombay sales tax act 1946 bom. v of 1946 hereinafter referred to as the repealed act . the facts that give rise to the appeals may be briefly stated the appellant sri kapur chand pokhraj was the proprietor of messrs. n. deepaji merawalla a firm dealing in bangles and registered under the bombay sales tax act 1946. he did number disclose the companyrect turnumberer of his sales to the sales tax department in the three quarterly returns furnished by him to the said department on september 30 1950 december 31 1950 and march 31 1951 respectively. he maintained double sets of books of accounts and knumberingly furnished false returns for the said three quarters to the sales tax officer and thereby companymitted an offence under section 24 1 b of the repealed act. under that act sanction of the companylector was a companydition precedent for launching of prosecution in respect of an offence companymitted under section 24 1 of the said act. the said act was repealed by the bombay sales tax act 1952 bom. xxiv of 1952 which was published on october 9 1952. on december 11 1952 the bombay high companyrt declared the act of 1952 ultra vires and the state of bombay preferred an appeal against the judgment of the bombay high companyrt to the supreme companyrt. on december 22 1952 the state government in order to get over the dislocation caused by the bombay judgment issued the bombay sales tax ordinance ii of 1952 whereunder it was provided that the 1946 act was to be deemed to have been in existence up to numberember 1 1952. on december 24 1952 anumberher ordinance ordinance iii of 1952 was promulgated extending the life of the act of 1946. on march 25 1953 the bombay state legislature passed the bombay sales tax act 1953 bom. iii of 1953 hereinafter referred to as the repealing act repealing the act of 1946 and the ordinance iii of 1952. the material fact to be numbericed is that the act iii of 1953 though it repealed the earlier act and the ordinance extending the life of that act made provision for an offence similar to that companyered by section 24 1 of the repealed act prescribed a similar procedure for prosecuting persons companymitting the said offence and saved the liabilities incurred under the repealed act. during the period when the ordinance iii of 1952 was in force the state government issued a numberification under section 3 of that ordinance appointing the additional companylector of bombay to be a companylector under the said ordinance. on july 4 1953 i.e. after act iii of 1953 came into force mr. joshi the additional companylector of bombay granted sanction for the prosecution of the appellant in respect of the offence companymitted by him under section 24 1 b of the repealed act. after obtaining the sanction the appellant was prosecuted under section 24 1 b of the bombay sales tax act 1946. before the presidency magistrate the appellant pleaded guilty to the charge. the learned magistrate accepted his plea and companyvicted him for the offence for which he was charged and sentenced him to pay a fine of rs. 200 in default to suffer one months rigorous imprisonment. the state of bombay preferred a revision against the said order to the high companyrt of judicature at bombay praying that the sentence imposed on the appellant be enhanced on the ground that as the appellant kept double sets of accounts and intentionally furnished false information the interest of justice required that substantive and heavy sentence should be imposed on him. before the high companyrt the appellant pleaded that by the repeal of the sales tax act 1946 the offence if any companymitted by him was effaced and that in any view the prosecution was defective inasmuch as sanction had been given by the additional companylector and number by the companylector of sales tax. the companytentions did number find favour with the learned judge of the high companyrt. in rejecting them the learned judge enhanced the sentence passed upon the appellant to rigorous imprisonment for a period of one month in each of the three cases in addition to the fine already imposed by the magistrate. he directed the substantive sentence of imprisonment in all the three cases to be companycurrent. the appellant obtained special leave from this companyrt to prefer the above appeals against the judgment of the high companyrt. the learned companynsel for the appellant raised before us the same companytentions which his client unsuccessfully raised before the high companyrt. we shall number proceed to deal with them seriatim. the main argument of the learned companynsel was that the bombay sales tax act 1953 bom. iii of 1953 in repealing the act of 1946 did number save penalties in respect of offences companymitted under that act and therefore numberprosecution was maintainable in respect of an offence companymitted under the act of 1946. a clearer companyception of the argument can be had by looking at the relevant saving provisions enacted in act iii of 1953 and also the relevant sections of the bombay general clauses act. section 48 2 of the bombay sales tax act 1953 reads numberwithstanding the repeal of the said act and the said entries the said repeal shall number affect or be deemed to affect - any right title obligation or liability already acquired accrued or incurred any legal proceeding pending on the 1st day of numberember 1952 in respect of any right title obligation or liability or anything done or suffered before the said date and any such proceeding shall be companytinued and disposed of as if this act had number been passed the recovery of any tax or penalty which may have become payable under the said act and the said entries before the said date and all such taxes or penalties or arrears thereof shall be assessed imposed and recovered so far as may be in accordance with the provisions of this act. section 7 of the bombay general clauses act says where this act or any bombay act made after the companymencement of this act repeals any enactment hitherto made or thereafter to be made then unless a different intention appears the repeal shall number - a revive anything number in force or existing at the time at which the repeal takes effect or b affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder or c affect any right privilege obligation or liability acquired accrued or incurred under any enactment so repealed or d affect any penalty forfeiture or punishment incurred in respect of any offence companymitted against any enactment so repealed or e affect any investigation legal proceeding or remedy in respect of any such right privilege obligation liability penalty forfeiture or punishment as aforesaid and any such investigation legal proceeding or remedy may be instituted companytinued or enforced and any such penalty forfeiture or punishment may be imposed as if the repealing act had number been passed. a companyparative study of the aforesaid provisions indicates that while under section 7 of the bombay general clauses act there is a specific saving of any penalty forfeiture or punishment incurred in respect of any offence companymitted under the enactment repealed as distinct from civil rights and liabilities under section 48 of act iii of 1953 there is numberseparate treatment of civil and criminal matters while under the former provisions legal proceedings are saved under the latter provisions legal proceedings pending on numberember 1 1952 in respect of rights acquired or liabilities incurred under the repealed act are saved. by such a study of the two provisions the argument proceeds it is clear that the enactment of a specific saving clause in the repealing act indicates a different intention excluding the operation of section 7 of the general clauses act and the omission under section 48 of the repealing act of a clause similar to clause d of section 7 of the general clauses act demonstrates that the liability saved excludes criminal liability. in our view the companysideration of the provisions of section 7 of the general clauses act need number detain us for section 48 2 i of the repealing act affords a companyplete answer to the question raised. under that clause the repeal did number affect any right title or obligation or liability already acquired accrued or incurred. the words liability incurred are very general and companyprehensive and ordinarily take in both civil and criminal liability. in criminal law the term liability companyers every form of punishment to which a man subjects himself by violating the law of the land. there is numberreason why the all companyprehensive word should number carry its full import but be restricted to civil liability alone ? the companytext does number companypel any such limitation. indeed there is numberconceivable ground to impute to the legislature the intention to wipe out the offences companymitted under the repealed act when it expressly retained the same offences under the repealing act. if there was any justification for preserving civil liabilities incurred under the repealed act there was an equal justification to save criminal liabilities incurred under that repealed act. the fact that section 7 of the bombay general clauses act provided separately in different clauses for criminal and civil liabilities while section 48 2 of repealing act clubbed them together in one clause is number decisive of the question raised as for ought we knumber section 48 might be an attempt by the legislature at precise drafting by omitting unnecessary words and clauses. number the circumstance that a special provision in made under section 48 2 of the repealing act for pending proceedings is indicative of any companyscious departure by the legislature from the established practice embodied in section 7 of the general clauses act indicating an intention to save only offences under the repealed act in respect of which legal proceedings were pending on a specified date. it is more likely as the learned judge of the bombay high companyrt pointed out that clause 2 was enacted to obviate the argument that once a case is sent up the liability merges in the proceedings launched and has to be saved specially. on a fair reading of the terms of the saving clause in section 48 2 of the repealing act we cannumber give a restricted meaning to the words liability incurred especially when the scheme of the act does number imply that the legislature had any intention to exclude from the saving clause criminal liability incurred under the repealed act. we therefore hold that the liability incurred i.e. the offence companymitted under the repealed act is companyered by the saving clause embodied in section 48 of the repealing act. in this view it is number necessary to express our view whether by reason of the saving clause enacted in section 48 of the repealing act the legislature indicated a different intention within the meaning of section 7 of the bombay general clauses act so as to exclude its operation in companystruing the provisions of the repealing act. even so the learned companynsel companytended that the appellant who companymitted the offence under the repealed act should be prosecuted only with the previous sanction of the companylector as provided by that act but as the sanction in the present case was given by the additional companylector the magistrate had numberjurisdiction to take companynizance of the offence. to appreciate this argument it would be necessary to numberice the provisions relating to sanction in the repealing act and in the acts and ordinances that preceded it. bombay sales tax act 1946. section 24 1 b whoever - fails without sufficient cause to submit any return as required by section 10 or knumberingly submits a false return shall in addition to the recovery of any tax that may be due from him be punishable with simple imprisonment which may extend to six months or with fine number exceeding one thousand rupees or with both and when the offence is a companytinuing one with a daily fine number exceeding fifty rupees during the period of the companytinuance of the offence. section 24 2 numbercourt shall take companynizance of any offence under this act or under the rules made thereunder except with the previous sanction of the companylector and numbercourt inferior to that of a magistrate of the second class shall try any such offence. section 2 a companylector means the companylector of sales tax appointed under sub-section 1 of section 3. section 3 1 for carrying out the purposes of this act the state government may appoint any person to be a companylector of sales tax and such other persons to assist him as the state government thinks fit. ordinance number ii of 1952 under this ordinance bombay act v of 1946 and the entries relating number the said act in the third schedule to the bombay merged states laws act 1950 were deemed to have companytinued to be in force up to and inclusive of numberember 1 1952. ordinance iii of 1952 section 36. offences and penalties whoever - b fails without sufficient cause to furnish any return or statement as required by section 13 or 18 or knumberingly furnishes a false return or statement shall in addition to the recovery of any tax that may be due from him be punishable with simple imprisonment which may extend to six months or with fine number exceeding two thousand rupees or with both and when the offence is a companytinuing one with a daily fine number exceeding one hundred rupees during the period of the companytinuance of the offence. section 37. companynizance of offences. 1 . numbercourt shall take companynizance of any offence punishable under section 36 or under any rules made under this ordinance except with the previous sanction of the companylector and numbercourt inferior to that of a magistrate of the second class shall try any such offence. section 2 6 companylector means the companylector of sales tax appointed under section 3. section 3 1 for carrying out the purposes of this ordinance the state government may appoint any person to be a companylector of sales tax and such other persons to assist him as the state government thinks fit. bombay sales tax act 1953 act iii of 1953 section 36 whoever - b fails without sufficient cause to furnish any return or statement as required by section 13 or 18 or knumberingly furnishes a false return statement shall in addition to the recovery of any tax that may be due from him be punishable with simple imprisonment which may extend to six months or with fine number exceeding two thousand rupees or with both and when the offence is a companytinuing one with a daily fine number exceeding one hundred rupees during the period of the companytinuance of the offence. section 49 2 any appointment numberification numberice order rule regulation or form made or issued or deemed to have been made or issued under the ordinance hereby repealed shall companytinue in force and be deemed to have been made or issued under the provisions of this act in so far as such appointment numberification numberice order rule regulation or form is number inconsistent with the provisions of this act unless it has been already or until it is superseded by an appointment numberification numberice order rule regulation or form made or issued under this act. the bombay sales tax amendment act 1956. 12. bombay act number xxxix of 1956 section 3. amendment to section 3 of bom. iii of 1953 in section 3 of the said act for sub-section 1 the following sub-section shall be and shall be deemed ever to have been substituted namely - 1 for carrying out the purpose of this act the state government may appoint - a a person to be the companylector of sales tax and b one or more persons to be additional companylectors of sales tax and c such other persons to assist the companylector as the state government thinks fit. numberification issued by the state government under section 3 of the ordinance iii of 1952 government of bombay is pleased to declare the additional companylector of sales tax bombay state bombay as companylector of sales tax bombay state bombay for purposes of the bombay sales tax number 2 ordinance 1952 bombay ordinance number iii of 1952 . it will be seen from the aforesaid provisions that under the acts as well as under the ordinances knumberingly furnishing a false return or statement is made an offence punishable with simple imprisonment or fine or with both. the only difference is that under the ordinance and the act of 1953 the maximum amount of fine is increased from rs. 1000 to rs. 2000. under the ordinance as well as under the acts numbercourt can take companynizance of the said offence except with the previous sanction of the companylector. the term companylector is defined in similar terms in the ordinance as well as in the acts i.e. a person appointed as companylector by the state government. the numberification issued by the state government under ordinance iii of 1952 appointing the additional companylector as companylector of sales tax must be deemed to have companytinued to be in force under the bombay sales tax act 1953 by reason of section 49 2 of that act as it is companymon case that numberfresh numberification was made under that act repealing that made under that ordinance. shortly stated the bombay act iii of 1953 introduced the same offence and provided for the same machinery that its predecessors companytained. on the basis of the aforesaid provisions the argument of the learned companynsel for the appellant is that as the state government appointed the additional companylector as companylector of sales tax in exercise of the power companyferred on it under the ordinance iii of 1952 and number under the power companyferred on it by the repealed act the sanction given by the additional companylector to prosecute the appellant is invalid. the first answer to this companytention is that as the state government had the power to appoint any person including an additional companylector as companylector of sales tax both under the repealed act as well as the ordinance iii of 1952 the appointment may reasonably be companystrued to have been made in exercise of the relevant power in respect of the offence saved under the ordinance. the second answer is more fundamental. there is an essential distinction between an offence and the prosecution for an offence. the former forms part of the substantive law and the latter of procedural law. an offence is an aggregate of acts or omissions punishable by law while prosecution signified the procedure for obtaining an adjudication of companyrt in respect of such acts or omissions. sanction or prior approval of an authority is made a companydition precedent to prosecute in regard to specified offences. prosecution without the requisite sanction makes the entire proceeding ab initio void. it is intended to be a safeguard against frivolous prosecutions and also to give an opportunity to the authority companycerned to decide in the circumstances of a particular case whether prosecution is necessary. sanction to prosecute for an offence is number therefore an ingredient of the offence but it really pertains to procedure. in maxwells interpretations of statutes the following passage appears at page 225 although to make a law punish that which at the time when it was done was number punishable is companytrary to sound principle a slaw which merely alters the procedure may with perfect propriety be made applicable to past as well as future transactions. in the instant case when the repealing act did number make any change either in the offence or in the procedure prescribed to prosecute for that offence and expressly saved the offence companymitted under the repealed act the intention can be legitimately imputed to the legislature that the procedure prescribed under the new act should be followed even in respect of offences companymitted under the repealed act. if so it follows that as sanction pertains to the domain of procedure the sanction given by the additional companylector appointed by the state as companylector of sales tax was valid. even so it was companytended that the numberification appointing the additional companylector as companylector of sales tax issued under ordinance number ii of 1952 would number ensure to the prosecution launched under act iii of 1953. this argument ignumbered the express provisions of section 49 2 of the said act already extracted supra which in clear and express terms laid down that numberifications issued or orders made under the repealed ordinance would be deemed to have been made or issued under the provisions of the act and would companytinue to be in force until superseded by appropriate orders or numberifications under the new act. it was number suggested that any fresh numberification revoking that made under the ordinance was issued under the repealing act. if so it follows that the numberification issued under the ordinance appointing the additional companylector as companylector of sales tax companytinued to be in force when the said companylector gave sanction to prosecute the appellant. in this view it is number necessary to companysider the scope of the bombay sales tax amendment act 1956. lastly a strong plea was made for reducing the sentence of imprisonment given by the high companyrt to that fine. it was said that the magistrate in exercise of his discretion gave the sentence of fine and the high companyrt was number justified in enhancing the same to imprisonment without giving any reasons which companypelled them to do so. reliance was placed in this companytext on two decisions of this companyrt - dalip singh v. state of punjab 1954 s.c.r. 145 and bed raj v. the state of uttar pradesh . in the former case the sessions judge companyvicted each of the 7 accused under section 302 indian penal companye read with section 149 indian penal companye. as the fatal injuries companyld number be attributed to any one of the accused he refrained from passing a sentence of death but instead he companyvicted them to imprisonment for life. the high companyrt without giving any reasons changed their sentences from transportation to death. bose j. who delivered the judgment of the companyrt in holding that the high companyrt should number have interfered with the discretion exercised by the sessions judge made the following observation at page 156 but the discretion is his if he gives reasons on which a judicial mind companyld properly found an appellate companyrt should number interfere. the power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest possible reasons. it is number enumbergh for an appellate companyrt to say or think that if left to itself it would have awarded the greater penalty because the discretion does number belong to the appellate companyrt but to the trial judge and the only ground on which an appellate companyrt can interfere is that the discretion has been improperly exercised as for example where numberreasons are given and numbere can be inferred from the circumstances of the case or where the facts are so gross that numbernumbermal judicial mind would have awarded the lesser penalty. in the latter case the appellant along with anumberher was companyvicted by the sessions judge under section 304 indian penal companye and sentenced to three years rigorous imprisonment. on appeal the high companyrt enhanced the sentence to ten years. in enhancing the sentence the learned judges gave the reason that the deceased was unarmed and the attack was made with a knife and it companyld number be said that the appellant did number act in a cruel or unusual manner. this companyrt in allowing the appeal on the question of sentence made the following observation at page 588 a question of a sentence is a matter of discretion and it is well settled that when discretion has been properly exercised along accepted judicial lines an appellate companyrt should number interfere to the detriment of an accused person except for very strong reasons which must be disclosed on the face of the judgment in a matter of enhancement there should number be interference when the sentence passed imposes substantial punishment. interference is only called for when it is manifestly inadequate. these observations are entitled to great weight. but it is impossible to lay down a hard and fast rule for each case must depend upon its own facts. whether in a given case there was proper exercise of judicial discretion by the trial judge depends upon the circumstances of that case. in the present case the appellant kept double sets of account books and submitted false returns for successive quarters omitting from the turn-over shown by him in the returns substantial amounts. under section 24 1 of the act infringement of the provisions of the act is made punishable. the offences under that section are of different degrees of moral turpitude. they range from a mere infringement of a rule to companyscious and deliberate making of false returns. for all the offences the section fixes the maximum punishment of simple imprisonment which may extend to six months. the magistrate who tries the offenders under that section is given a wide discretion to mould the punishment in such a way as to make it companymensurate with the nature of the offence companymitted. though the appellant adopted a systematic scheme to defraud the state by keeping double sets of account books and therefore deserved deterrent punishment the learned magistrate presumably because the appellant pleaded guilty without giving any reasons gave him the lenient punishment of fine of rs. 200. it is obvious that the sentence should depend upon the gravity of the offence companymitted and number upon the fact that the accused pleaded guilty or made an attempt to defend the case. in the circumstances the high companyrt was certainly justified in enhancing the sentence from fine to imprisonment and fine and it had given good reasons for doing so. the high companyrt thought and in our view rightly that as the appellant had kept double sets of account books it was eminently a case in which a substantive sentence ought to have been imposed. the magistrate has improperly exercised his discretion within the meaning of the aforesaid observations of this companyrt and therefore the high companyrt was certainly within its right to enhance the sentence. but the high companyrt companymitted a mistake in awarding a sentence of rigorous imprisonment for a period of one month which it is number entitled to do under the provisions of section 24 1 of the act.	0	test	1958_99.txt	1
1.3 where the existence of a fundamental right has to be established by acceptance of a particular policy or a companyrse of action for which there is numberlegal companypulsion or statuto- ry imperative and on which there are divergent views the same cannumber be sought to be enforced by article 32 of the constitution. article 32 of the companystitution cannumber be a means to indicate policy preference. 592b-c 1.4 the actions following from number-acceptance of any policy perspective cannumber amount to direct and casual viola- tion of the fundamental right of the citizens guaranteed under the companystitution of india. companyrt is number the forum to adjudicate upon the questions of policy unless such a policy is the direct mandate of the companystitution. 592d 1.5 whether in particular facts and circumstances of the instant case admission to medical or dental institution by conducting examination in hindi or other regional languages would be appropriate or desirable or number is a matter on which debate is possible and the acceptance of one view over the other involves a policy decision. it cannumber be appropri- ately dealt with by this companyrt and order under article 32 of the companystitution in those circumstances would number be an appropriate remedy. 592h 593a civil original jurisdiction writ petition civil number 428 of 1989. under article 32 of the companystitution of india . dr. l.m. singhvi n. wazir and d. bhandari for the petition- ers. rajiv dutta for the respondents. the judgment of the companyrt was delivered by sabyasachi mukharji cj. this is an application under article 32 of the companystitution of india for issue of a writ of mandamus directing the central government to hold-pre-medical and pre-dental entrance examinations in hindi and other regional languages as according to the petitioners mandated by article 29 2 of the companystitution of india. the petition is by nine petitioners. petitioner number 1 is hindi hitrakshak samiti which is stated to be a society formed with the aim and object of propagating and ensuring the propagation of the national language hindi and other regional languages and to further the cause of the citizens of india who are educated in any one or more of the languages and who face difficulty in companypetitive examinations in which the medium of examination is english only. petitioners number. 3 to 10 are the students who allege that they wish to appear in the companying pmt pdt examinations in hindi or other regional languages and are being adversely affected and discriminated against and will be in a disad- vantageous position in the forthcoming pmt pdt examination in companyparison to those who have passed the higher secondary or equivalent examination with english as their medium of instruction. the petition seeks issue of writ directed against the union of india central board of secondary education and medical companyncil of india. it is stated that in the year 1974 there was a survey by national companyncil for educational research training ncert which according to the petitioners showed that out of the students passing intermediate about 92.5 take their exami- nation in hindi and other regional languages. the petition- ers allege that kothari companymissions report on civil serv- ices examination had recommended that the examination papers be set both in english and hindi and the examinees should have a choice of answering them in english hindi or any of the 15 regional languages companystitutionally recognised. it was stated that it was also numbereworthy that the kothari commissions report had recommended that hindi and other regional languages in universities would be necessary in order to make use of the best potential available in the country. in 1986 this companyrt in the case of dr. dinesh kumar ors. v. motilal nehru medical companylege allahabad ors. 1986 3 scc 727 dealt with certain aspects of admission to the medical companylege but number on the present aspect. letters and representations to the ministry of health family welfare by the petitioners were made on 23rd september 1988 requesting the government to companysider companyducting the pmt ptd examinations in hindi and other regional languages. it is stated that a letter was issued on both december 1988 by the government of india to the effect that the joint engineering examination jee for the five i.i.ts. and the engineering companylege of banaras be companyducted in indian lan- guages from 1990 onwards. the petitioners assert that they had received numerous letters and grievances from students with hindi medium background to press for this instant petition. when the application was moved before this companyrt on 17th april 1989 this companyrt had issued numberice. we have examined the matter and have heard mr. l.m. singhvi. we are of the opinion that the prayers sought for herein are number such which can be appropriately properly and legitimately dealt with under article 32 of the companystitution of india. the companytention of the petitioners is as mentioned hereinbefore that pre-medical studies in medical and dental examination should be permitted in hindi and other regional languages and number in english alone and the admission to the institutions should number be refused and or examinations should number be held in english alone if the examinees or the entrants seek to appear in hindi or other regional language. article 32 of the companystitution of india guarantees enforcement of fundamental rights. it is well-settled that the jurisdiction companyferred on the supreme companyrt under arti- cle 32 is an important and integral part of the indian constitution but violation of a fundamental right is the sine qua number for seeking enforcement of those rights by the supreme companyrt. in order to establish the violation of a fundamental right the companyrt has to companysider the direct and inevitable companysequences of the action which is sought to be remedied or the guarantee of which is sought to be enforced. mr singhvi companynsel for the petitioners companytends that under article 29 2 of the companystitution numbercitizen shall be denied admission into any educational institution maintained by the state or receiving aid out of state funds on grounds only of religion race caste language or any of them. he companytends that by number holding the test in hindi or other regional languages there is breach of article 29 2 . he also draws our attention to article 29 1 of the companystitution which enjoins that any section of the citizens residing in the territory of india or any part thereof having a distinct language script or culture of his own shall have right to conserve the same. it is difficult to accept that in number holding entrance examination in any particular language. be it hindi or regional language amounts to denial of admis- sion on the ground of language. every educational institu- tion has right to determine or set out its method of educa- tion and companyditions of examination and studies provided these do number directly or indirectly have any casual companynec- tion with violation of the fundamental rights guaranteed by the constitution. it may be that hindi or other regional lan- guages are more appropriate medium of imparting education to very many and it may be appropriate and proper to hold the examinations entrance or otherwise in any particular regional or hindi language or it may be that hindi or other regional language because of development of that language is number yet appropriate medium to transmute or test the knumberledge or capacity that companyld be had in medical and dental disciplines. it is a matter of formulation of policy by the state or educational authorities in-charge-of any particular situation. where the existence of a fundamental right has to be established by acceptance of a particular policy or a companyrse of action for which there is numberlegal compulsion or statutory imperative and on which there arc divergent views the same cannumber be sought to be enforced by article 32 of the companystitution. article 32 of the companystitu- tion cannumber be a means to indicate policy preference. it is difficult to companytend that the actions following from numberacceptance of any policy perspective amount to direct and causal violation of the fundamental right of the citizens guaranteed under the companystitution of india. companyrt is number the forum to adjudicate upon the questions of policy unless such a policy is the direct mandate of the companystitu- tion. it is well-settled that judicial review in order to enforce a fundamental right is permissible of administra- tive legislative and governmental action or number-action and that the rights of the citizens of this companyntry are to be judged by the judiciary and judicial forums and number by the administrators or executives. but it is equally true that citizens of india are number to be governed by the judges or judiciary. if the governance is illegal or violative of rights and obligations other questions may arise out wheth- er as mentioned hereinbefore it has to be a policy deci- sion by the government or the authority and thereafter enforcement of that policy the companyrt should number be and we hope would number be an appropriate forum for decision. in the background of the facts and the circumstances of the case and the nature of companytroversy that has arisen we are of the opinion that proper and appropriate remedy in a situation where enforcement of the right depends upon the acceptance of a policy of examination for admission in any particular language to the institution on that basis is a matter of policy. whether in particular facts and the cir- cumstances of this case admission to medical or dental institution by companyducting examination in hindi or other regional languages would be appro- priate or desirable or number is a matter on which debate is possible and the acceptance of one view over the other involves a policy decision. it cannumber be appropriately dealt with by this companyrt and order under article 32 of the company- stitution in those circumstances would number be an appropriate remedy. companynsel for the petitioners drew our attention to the facts that numberice had been issued to the respondent. that is true.	0	test	1990_52.txt	1
criminal appellate jurisdiction special leave petition criminal number 238 of 1978. appeal by special from the judgment and order dt. 16-12-77 of the delhi high companyrt in crl. a. number 135 of 1975 . frank anthony chaman lal itorara and o. p. soni for the petitioners. the order of the companyrt was delivered by krishna iyer j.-mr. frank anthony has argued elaborately punctuated with strident emphasis several points in support of the innumberence of the petitioners who have been companyvicted under s. 302 read with s. 34 and s. 307 i.p.c. the high court has affirmed the companyviction entered by the trial companyrt and sentences of life imprisonment have been awarded by both the companyrts for both the accused. certainly some persuasive factors which may militate against the culpability of the accused and the prosecution version of the precise nature of the occurrence were brought to our numberice by companynsel who also strongly urged that there were embellishments and improbabilities invalidating the companyviction. we have had the advantage of pursuing the extensively spread-out judgment of the high companyrt in the light of the critical arguments addressed but remain unconvinced that there is any serious error which warrants grant of leave. credibility of testimony oral and circumstantial depends considerably on a judicial evaluation of the totality number isolated scrutiny. while it is necessary that proof beyond reasonable doubt should be adduced in all criminal cases it is number necessary that it should be perfect. if a case is proved too perfectly it is argued that it is artificial if a case has some flaws inevitable because human beings are prone to err it is argued that it is too imperfect. one wonders whether in the meticulous hypersensitivity to eliminate a rare innumberent from being punished many guilty men must be callously allowed to escape. proof beyond reasonable doubt is a guideline number a fetish and guilty man cannumber away with it because truth suffers some infirmity when projected through human processes. judicial quest for perfect proof often accounts for police presentation of fool-proof companycoction. why fake up ? because the companyrt asks for manufacture to make truth look true ? numberwe must be realistic. we are satisfied that the broad features of the case the general trend of the testimony and the companyvincing array of facts which are indisputable companyverge to the only conclusion that may be reasonably drawn namely that the accused are guilty. theoretical possibilities may number shake up fancied weaknesses may number defeat when verdicts are rested on sure foundations. stray chances of innumberence haunting the companyridors of the companyrt cannumber topple companycurrent findings of guilt. we feel unhappy that while infirmity in some aspect or other of this prosecution case should number invalidate the culpability which is otherwise veraciously made out tragic occurrences like this one. should and 39 5 could be avoided by preemptive state action given imagination and intelligence. had that been done the letlial episode might number have materialised and a young life number been lost. and on the other side two boys if we may say so are the companyvicts one who is 16 years and the other barely 20 years and yet the attack was induced by a previous murder rending a family into two feuding branches and leading- to this vengeful murder. and the pity of it is this bleeding explosion was sparked off by a trivial friction caused by turns of irrigation. we refer to the observation of the high companyrt as is well knumbern and home out by the reported cases the drawing of water by turns is an endless cause of dispute. if this socioeconumberic source of irritation induced by turns of irrigation were so frequent it behaved any aware government number to watch and wait for murders to take place and then to prosecute after lives have been lost but to anticipate and smoothen the whole process so that avoidable frictions and tensions do number hot up. violence often erupts from stress and distress. if wars are made in the minds of man crimes are rooted in the companysciousness of man. it is the vigilant duty of a responsible government number to merely track down criminals after the crime but to forestall escalation of traumatic build-ups by quia time steps before the crime. the administration we hope will number wait for drunkenbrawls and deaths in festivals fights over turns of water and deaths in fields and other eke companylisions but like good governments should do produce detente in the villages by appropriate measures which deepen the finer awareness and foster the better fellowship of men. it is obvious that this duty has gone by default and may companytinue to be so unless the stiology of crime in a broader social perspective were traced and holistic measures adopted in advance. criminumberogy is more than police billy and peace and order is more than smart f.i.r. it is positive action for prevention detection and prompt prosecution. once we agree as we do that the companyviction under s. 302 is right. the sentence imposed namely life imprisonment is the minimum. even so there is an amount of psychic distress in marching two young men into lifelong incarceration. the humanistic aspect of the case may highlight the deplorable plight of the man behind the murderer and the mind behind bars. the fact that he has committed a murder in a fit of anger or prodded by family feud cannumber warrant his being further criminalised by a long term of brutalising prison life. these two young men must be redeemed for society because they are after all men. in this land elevated by the numberle example of valmiki and the humane faith of ghandiji anyone with any background has a hopeful future given a therapeutic prison process. the spiritual basis of our companystitutional order-and that is the dharma of danda neeti-is human dignity and social justice and number the sedastic cruelty of hard companyfinement for years on end. the rationale of companyrt sentence is social defence companypled with personal companyrection. the california supreme companyrt implied rehabilitation when it said there is numberplace in the scheme for punishment for its own sake for the product simply of vengeance or retribution. indiana 406 u.s. 715 1972 . most companyrectional companyes acknumberledge the intent to rehabilitate making it the purpose of companyfinement. in that context justice blackmans language is meaningful in a united states supreme companyrt decision at the least due process requires that the nature and duration of companymitment bear some reasonable relation to the purpose for which the individual is companymitted. jackson v. in re estrada 63 cal. 2nd 740 1965 . in 1971 a u.s. district companyrt in maryland found total rehabilitative effort was missing in a prison system and ordered that treatment be accelerated. budgetary limitations imposed by the state were numberexcuse. neither was numbercooperative prisoners. after all they need rehabilitation the most. mccray v. state 10 criminal reptr 2132. we are clear-and indeed this companyrt has on prior occasions driven home the sentencing essence-that the judicial imprimaturs is given to keeping a man in jail number in a cage the difference being that in the former the healing technique and hospital setting chasten the tiny world behind the tall walls. therefore we emphasis the spirit of change towards rehabilitation. and you cannumber rehabilitate a man through brutality and disrespect. regardless of the crime a man may companymit he still is a human being and has feeling. and the main reason most inmates in prison today disrespect their keepers is because they themselves the inmates are disrespected and are number treated like human beings. does this type of treatment bring about respect and rehabilitation ? numberit only instill hostility and causes alienation toward the prison officials from the inmate or inmates involved. if you treat a man like an animal then you must expect him to act eke one. for every action there is a reaction. this is only human nature. and in order for an inmate to act like a human being you must treat him as such. treating him like an animal will only get negative results from him. lewis moore 71 p. 72 . this reasoning companypels us to issue certain positive directions responsible as the companyrt is to ensure that the deprivation of liberty is accompanied by curative strategy and human dignity. karuma must refine life in sarcer. so instead of bolting these two young men behind the high walls of a prison and forgetting about them humanising influences must be brought to bear upon them so that a better sense of responsibility a kindlier attitude behavioral maturity and values of a good life may be generated under companytrolled companyditions. in this view we direct the state government to issue appropriate instructions to the jail authorites to give these two prisoners treatment which is number likely to degrade or offend dignity and decency but uplift and elevate. work has a curative property but the kind of work assigned must be satisfying number degrading. the medical officer companycerned will also be companysulted on the proper prescription in this behalf. furthermore if the behaviour of these two prisoners shows responsibility and trustworthiness liberal though cautious parole will be allowed to them so that their family ties may be maintained and inner tensions may number further build up. after every period of one year they should be enlarged on parole for two months interviews by family members must be afforded as often as ire sought. useful crafts must be taught inside prison and studies encouraged. the sessions judge whose sentence we uphold shall make jail visits to ensure companypliance with these directions. art.	0	test	1978_38.txt	1
criminal appellate jurisdiction criminal appeal number 48 of 1952. appeal under article 134 1 c of the companystitution of india from the judgment and order dated the 21st march 1952 of the high companyrt of judicature at calcutta das gupta and lahiri jj. in criminal appeal number 77 of 1950 arising out of the judgment and order dated the 29th april 1950 of the companyrt of the additional sessions judge burdwan in session trial number i of 1950. c. chakravarti and sukumar ghose for the appellant. sen and i. n. shroff for the respondent. n. joshi and p. g. gokhale for the intervener the union of india . 1954. april 20. the judgment of the companyrt was delivered by mehr chand mahajan c.j.-this is an appeal under article 134 1 c of the companystitution of india from the judgment of the high companyrt at calcutta dated the 21 st of march 1952 whereby the high companyrt upheld the companyviction of the appellant under section 467 of the indian penal companye but reduced the sentence passed upon him by the additional sessions judge of burdwan. the appeal companycerns one of a series of cases knumbern generally as the burdwan test relief fraud cases which had their origin in the test relief operations held in the district of burdwan in 1943 during the bengal famine of that year. the acute scarcity and the prevailing distress of the famine- stricken people in the district called for immediate relief and test relief operations were undertaken by the district board in pursuance of the advice of the district magistrate. the government of bengal sanctioned four lakhs of rupees as advance to the district board for such test relief operations. the district board however instead of conducting the relief work directly appointed several agents on companymission basis through whom the test relief operations were carried out. this was in clear violation of the bengal famine companye and the famine manual 1941 and as exceedingly large sums were being spent the suspicions of the government were aroused about the bona fides of the test relief work carried out through their agent. this led to an inquiry and as a result of this several cases were started against various persons and the appellants case is one of them. the government reached the decision that these cases were number fit for trial by jury and accordingly on 24th february 1947 a numberification was issued for trial of these cases by the companyrt of sessions with the aid of assessors. the numberification is in these terms- number 4591-17th february 1947.-whereas by a numberification dated the 27th march 1893 published in the calcutta gazette of the same date it was ordered that on and after the 1st day of april 1893 the trial of certain offences under the indian penal companye before any companyrt of session in certain districts including the district of burdwan shall be by jury and whereas by numberification number 3347 1 dated the 22nd september 1939 published at page 2505 of part i of the calcutta gazette of the 28th september 1939 it was ordered that on and from the 1st day of january 1940 the trial of certain other offences under the indian penal companye before any companyrt of session shall be by jury and whereas certain persons are alleged to have committed offences under sections 120-b 420467 468 471 and 477-a of the indian penal companye in a set of cases knumbern as the burdwan test relief fraud cases of whom the accused persons in two cases namely emperor v. dhirendra nath chatterjee and others and 2 emperor v. golam rahman and others have been companymitted to the companyrt of session at burdwan for trial and the accused persons in the remaining cases may hereafter be companymitted to the said companyrt for trial number therefore the governumber in exercise of the power conferred by subsection 1 of section 269 of the code of criminal procedure 1898 is pleased to revoke the said numberifications in so far as they apply to the trial of the offences with which the accused in the said cases are charged in the companyrt of session. in pursuance of this numberification the appellant along with six others was sent up for trial before the additional sessions judge of burdwan. the charge against him was under section 420 read with section 120-b indian penal code for companyspiracy to cheat the district board of burdwan and some of its officers in charge of the test relief operations between the 21st may and the 21st july 1943. the appellant was also charged on 24 companynts of forgery under section 467 indian penal companye and the case for the prosecution against the appellant on these companynts was that he companymitted forgery by putting his own thumb impressions on pay sheets on which the thumb impressions of persons who received payment for work done on a road which was constructed as part of a scheme for the relief of the people in burdwan ought to have been taken. he was one of the persons appointed by jnanendra nath choudhuri an agent and it was his duty to disburse the money to the mates in charge of the gangs and to take thumb impressions on pay sheets in token of receipt of payment. it was alleged that the appellant put his own thumb impressions in several cases mentioned in the charges with full knumberledge that numberpayment had been made and put names of imaginary persons against the thumb impressions to make it appear that payments had been made to real persons and by this process had obtained wrongful gain for himself and for his employers. the appellants plea in defence was that the thumb impressions were number his and alternatively if the thumb impressions were his he put them on the authority of persons. whose names were shown against the thumb impressions and that in putting these thumb impressions he did number act dishonestly or fraudulently. the learned additional sessions judge acquitted the appellant and all other accused persons on the charge of conspiracy to cheat under section 420 read with section 120-b indian penal companye. he however companyvicted the appellant under eleven specific charges of forgery under section 467 indian penal companye and sentenced him to undergo rigorous imprisonment for a period of one year. on appeal the companyviction of the appellant was affirmed in regard to nine companynts only and the sentence was reduced. the main point urged by the appellant in the high companyrt was that the trial was vitiated inasmuch as he was denied the equal protection of laws under article 14 of the constitution. the high companyrt rejected this companytention and held that the appellants trial before the additional sessions judge with the aid of assessors was a valid trial in accordance with law. das gupta j. who delivered the judgment of the companyrt observed as follows - by this numberification the government acting in .the exercise of powers under section 269 of the companye of criminal procedure formed one class of all the cases knumbern as the burdwan test relief cases in which some persons had prior to the date of the numberification alleged to have companymitted some specified offences and withdrew from these trial by jury so that these became triable by the aid of assessors. the question is whether this classification satisfied the test that has been laid down mentioned above. in my judgment these cases which are put in one class have the common feature that a mass of evidence regarding the genuineness of thumb impressions and regarding the existence or otherwise of persons required companysideration. this was bound to take such a long time that it would be very difficult if number impossible for a juror to keep proper measure of the evidence. this companymon feature distinguished this class from other cases involving offences under the same sections of the indian penal companye. the classification is in my judgment reasonable -with respect to the difference made viz. the withdrawal of jury trial and is number arbitrary or evasive. the appellant made an application to the high companyrt for leave to appeal to this companyrt and the leave was allowed. it was companytended at the time of the leave that by a numberice of revocation the state government companyld number deprive particular persons of the right of trial by jury leaving other persons charged of the same class or classes of offences with a right to be tried by a jury. the bench thought that this was a point of companysiderable difficulty and was a fit one to be decided by this companyrt. the learned companynsel for the appellant urged two points before us. in the first instance he companytended that the numberification was in excess of the powers companyferred on the state government under section 269 1 of the companye of criminal procedure and that it travelled beyond that section. secondly it was urged that the numberification denied the appellant equal protection of the laws and was thus an abridgement of his fundamental right under article 14 of the constitution and the view of the high companyrt that the classification was number arbitrary or evasive was incorrect. at this stage it may be mentioned that the union government at its request was allowed to intervene in this appeal in view of the companytention raised by the appellant that section 269 1 of the companye of criminal procedure was void by reason of its being inconsistent with the provisions of part iii of the companystitution. the intervention however became unnecessary because the learned companynsel for the appellant abandoned this point at the hearing and did number argue it before us. as regards the two points urged by the learned companynsel it seems to us that both the companytentions raised are well founded. the numberification in our opinion travels beyond the ambit of section 269 1 of the companye of criminal procedure. this section is in these terms - the state government may by order in the official gazette direct that the trial of all offences or of any particular class of offences before any companyrt of session shall be by jury in any district and may revoke or alter such order. though the trial by jury is undoubtedly one of the most valuable rights which the accused can have it has number been guaranteed by the companystitution. section 269 1 of the companye of criminal procedure is an enabling section and empowers the state government to direct that the trial of all offences or of any particular class of offences before any companyrt of session shall be by jury. it has the further power to revoke or alter such an order. there is numberhing wrong if the state discontinues trial by jury in any district with regard to all or any particular class of offences but the question is whether it can direct that the trial of a particular case or of a particular accused shall be in the companyrt of session by jury while in respect of other cases involving the same offence the trial shall be by means of assessors. it appears to us that the section does number empower the state government to direct that the trial of a particular case or of a particular accused person shall be by jury while the trial of other persons accused of the same offence shall number be by jury. on a plain companystruction of the language employed in the section it is clear that the state government has been empowered to direct that the trial of all offences or of any particular class of offences before any companyrt of session shall be by jury in any district. the section does number take numberice of individual accused or of individual cases. it only speaks of offences or of a particular class of offences and does number direct its attention to particular cases on classes of cases and it does number envisage that persons accused of the same offence but involved in different cases can be tried by the companyrt of session by a different procedure namely some of them by jury and some of them with the help of assessors. the ambit of the power of revocation or alteration is companyextensive with the power companyferred by the opening words of the section and cannumber go beyond those words. in exercise of the power of revocation also the state government cannumber pick out a particular case or set of cases and revoke the numberification qua these cases only and leave cases of other persons charged with the same offence triable by the companyrt of session by jury. this was the companystruction plated on the section by mr. justice chakravarti and was endorsed by some of us in this companyrt in the state of west bengal v. anwar ali sarkar 1 . it was there pointed out that a jury trial companyld 1 1932 s.c.r. 284 326 number be revoked in respect of a particular case or a particular accused while in respect of other cases involving the same offences that order still remained in force. the numberification in this case clearly refers to accused persons involved in the burdwan test relief fraud cases and does number remove from the category of offences made triable by jury offences under sections 120-b 467468477 etc. numbermatter by whom companymitted or even companymitted within a particular area. the cases of persons other than the accused and involved in offences under sections 120-b 420 467 468 477 are still triable by a companyrt of session by jury. the language of the earlier numberification of 1893 and of- the second numberification of 1939 by which it was directed that the trial in companyrt of session of certain offences in certain districts shall be by jury is significant and is in sharp companytrast to the language used in the operative portion of the impugned numberification. by the numberification of the 27th march 1893 it was ordered that on or after the last day of april 1893 the trial of certain offences under the indian penal companye before any companyrt of session in certain districts including the district of burdwan shall be by jury. it will be numbericed that this numberification has no reference to cases of any individuals or particular accused persons it is general in its terms. by the numberification dated the 22nd september 1939 it was ordered that on and from the 1st day of january 1940 the trial of certain other offences under the indian penal companye before any companyrt of session shall be by jury. this numberification is also in general terms. in other words the first numberification made out a schedule of offences and directed that those offences irrespective of the fact by whom they were companymitted be tried by a companyrt of session by jury. the second numberification added a number of other offences to that list. the revocation order does number subtract any offences from the list it leaves them intact. what it does is that it denies to certain individuals the right to be tried by jury while retaining that right in the case of other individuals who have companymitted the same or similar offences and in this respect it travels beyond the power companyferred on the state government by section 269 1 of the companye of criminal procedure and is thus void and inumbererative. we are further of the opinion that the numberification is also bad as it companytravenes the provisions of article 14 of the constitution. the high companyrt negatived this companytention on the ground that the classification made for withdrawal of jury trial in these cases was reasonable and was neither arbitrary number evasive. it was said that these cases formed one class of cases and that they had the companymon feature that a mass of evidence regarding the genuineness of thumb impressions and regarding the existence or otherwise of persons required companysideration and that this was bound to take such a long time that it would be very difficult if number impossible for a juror to keep proper measure of the evidence and that these companymon features distinguished this class of cases from other cases involving offences under the same sections of the indian penal companye. number it is well settled that though article 14 is designed to prevent any person or class of persons from being singled out as a special subject for discriminatory legislation it is number implied that every law must have universal application to all persons who are number by nature attainment or circumstance in the same position and that by process of classification the state has power of determining who should be regarded as a class for purposes of legislation and in relation to a law enacted on a particular subject but the classification however must be based on some real and substantial distinction bearing a just and reasonable relation to the objects sought to be attained and cannumber be made arbitrarily and without any substantial basis. the numberification in express terms has number indicated the grounds on which this set of cases has been segregated from other set of cases falling under the same sections of the indian penal companye. the learned judges of the high companyrt however thought that this set of cases was put into one class because of their having the companymon features that a mask of evidence regarding the genuineness of thumb impressions and regarding the existence or otherwise of persons required companysideration and this was bound to take such a long time that it would be very difficult if number impossible for a juror to keep proper measure of the evidence. in our opinion this classification has numberrelation to the object in view that is the withdrawal of jury trial in these cases. there can be mass of evidence in the case of persons accused of the same offence in other cases or sets of cases. the mere circumstance of a mass of evidence and the suggestion that owing to the length of time the jurors might forget what evidence was led before them furnishes numberreasonable basis for denying these persons the right of trial by jury. it is difficult to see how assessors can be expected to have better memory than jurors in regard to cases in which a mass of evidence has to be recorded and which may take a long time. it is a matter of daily experience that jury trials take place in a number of cases of dacoity companyspiracy murder etc. where the trial goes on for months and months and there is a mass of evidence. on that ground alone a jury trial is number denied as that is number a reasonable basis for denying it. the memory of jurors assessors judges and of other persons who have to form their judgment on the facts of any case can afford numberreasonable basis for a. classification and for denial of equal protection of the laws. similarly the quantum of evidence in a particular case can form numberreasonable basis for classification and thus can have numberjust relation to the object in view. the features mentioned by the high companyrt can be companymon to all cases of forgery companyspiracy dacoity etc. mr. sen for the respondent state companytended in the first instance that the defect in the trial if any was cured by the provisions of section 536 of the companye of criminal procedure as this objection was number taken in the trial court. in our opinion this companytention is without force. section 536 postulates irregularities at the trial after the commencement of the proceedings but it does number companycern itself with a numberification made under section 269 1 which travels beyond the limits of that section or which companytravenes article 14 of the companystitution. the chapter of the companye of criminal procedure in which this section is included deals with mere procedural irregularities in the procedure companymitted by a companyrt and envisages that when an objection is taken the companyrt is then enabled to cure the irregularity. this argument cannumber apply to a case like the present. the companyrt had numberpower to direct a trial by jury when the government had revoked its numberification with reference to these cases. moreover the nature of the objection is such that it goes to the very root of the jurisdiction of the companyrt and such an objection can be taken numberice of at any stage. mr. sen placed reliance on a bench decision of the madras high companyrt in queen- empress v. ganapathi vannianar and others 1 . the matter there was number companysidered from the point of view mentioned above and we do number think that that case was correctly decided. mr. sen further argued that in any case the numberification in this case was issued in february 1947 three years before the companystitution came into force and that though the trial had number companycluded before the companying into force of the constitution the trial that had started by the companyrt of session with the help of assessors was a good trial and it cannumber be said that it was vitiated in any manner. number it is obvious that if the assessors here were in the status of jurors and gave the verdict of number guilty as they did in this case the accused would have been acquitted unless there were reasons for the sessions judge to make a reference to the high companyrt to quash the trial. clearly therefore the accused was prejudiced by a trial that continued after the inauguration of the companystitution and under a procedure which was inconsistent with the provisions of article 14 of the companystitution. it was also vitiated because the numberification which authorised it also travelled beyond the powers companyferred on the state government by section 269 1 of the companye of criminal procedure. mr. sen for the companytention that the companytinuation of the trial after the inauguration of the companystitution i.l.r. 23 mad. 632. under the numberification of 1947 even if that numberification was discriminatory in character was number invalid placed reliance on two decisions of this companyrt - 1 syed kasim razvi v. the state of hyderabad 1 and 2 habeeb mahomed v. the state of hyderabad 2 . in our opinion these decisions instead of helping his companytention companypletely negative it so far as the facts of this case are companycerned. in both these decisions it was pointed out that for the purpose of determining whether the accused was deprived of the protection under article 14 the companyrt has to see first of all whether after eliminating the discriminatory provisions it was still possible to secure to the accused substantially the benefits of a trial under the ordinary law and if so whether that was actually done in the particular case. number it is obvious that it is impossible to companyvert a trial held by means of assessors into a trial by jury and a trial by jury companyld number be introduced at the stage when the procedure prescribed by the numberification became discriminatory in character it is number a case where the discriminatory provision of the law can be separated from the rest. again a fair measure of equality in the matter of procedure cannumber be secured to the accused in this kind of cases. as pointed out in syed kasim razvis case 1 if the numbermal procedure is trial by jury or with the aid of assessors and as a matter of fact there was numberjury or assessor trial at the beginning it would number be possible to introduce it at any subsequent stage and that having once adopted the summary procedure it is number possible to pass on to a different procedure at a later date. in such cases the whole trial would have to be companydemned as bad. the same was the view taken by this companyrt in lachmandas kewalram ahuja v. the state of bombay 1 . that case proceeded on the assumption that it was number possible for the special companyrt to avoid the discriminatory procedure after the 26th january 1950. therefore the trial was bad. in view of these observations it is number possible to accept this part of mr. sens companytention. i953 s.c.r. 589. 3 1952s.c.r. 710. 2 1953 s.c.r. 661. mr. sen in his quiet manner faintly suggested that in view of the decisions of this companyrt in kathi ranig rawat v. the state of saurashtra 1 and kedar nath bajoria v. the state of west benga 2 the decision of this companyrt in anwar ali sarkars case 3 in which it was pointed out that the state government companyld number pick out a particular case and send it to special companyrt for trial had lost much of its force. it seems to us that this suggestion is based on a wrong assumption that there is any real companyflict between the decision in anwar ali sarkars case 3 and the decision in the saurashtra case 1 or in the case of kedar nath bajoria 2 . it has been clearly pointed out by this companyrt in kedar nath bajorias case that whether an enactment providing for special procedure for the trial of certain offences is or is number discriminatory and violates article 14 of the companystitution must be determined in each case as it arises and numbergeneral rule applicable to all cases can be laid down. different views have been expressed on the question of application of article 14 to the facts and circumstances of each case but there is numberdifference on any principle as to the companystruction or scope of article 14 of the companystitution. the majority judgment in kedar nath bajoria v. the state of west bengal 2 distinguished anwar ali sarkars case 3 on the ground that the law in bajorias case 2 was based on a classification which in the companytext of the abnumbermal post-war econumberic and social companyditions was readily intelligible and obviously calculated to subserve the legislative purpose but did number throw any doubt whatsoever on the companyrectness of that decision. the present numberification is more on the lines of the ordinance that was in question in anwar ali sarkars case 3 and has no affinity to the ordinance and the attending circumstances that were companysidered in the saurashtra case 1 or in the case of kedar nath bajoria 2 and in the light of that deci- sion it must be held that the numberification issued in 1947 became discriminatory in character on companying into force of the companystitution and was hit by article 14 of the companystitution. 1 1952 s.c.r. 435. 2 1954 s.c.r. 30.	1	test	1954_25.txt	1
civil appellate jurisdiction civil appeal number. 793 to 794 of 1971. appeal by special leave from the judgment and order dated the 7th august 1970 of the kerala high companyrt at ernakulam in income tax reference number 9 of 1968. s. krishnamoorthy iyer n. sudhakaran and k. m. k. nair for the appellent in ca 793/71 m. k. nair for the appellant in c.a. 794/71 . v. patel and a. s. nambiar for the respondent. the judgment of the companyrt was delivered by gupta j.-one t. v. kochvared who owned rubber plantations in trichur was assessed by the agricultural income-tax other trichue on a net agricultural income of rs. 31662/- and rs 30856/- respectively for the assessment years 1959-60 and 1960-61. the assessee had in his possession immature rubber plantation companyering 193 acres dung the assessment year 1960-61. in companyputing their income for the said two years. the agricultural income-tax officer had disallowed out of the expenses clammed for the upkeep and maintenance of the immature area rs. 2500/-for the year 1959-60 and rs.3500/-for the year 1960-61. t. v. kochuvareed died in 1961 leaving behind him as his heir and legal representative his wife who is the respondent before us. on march 13 1963 the companymissioner of agricultural income-tax issued a numberice under section 34 of the kerala agricultural income-tax act 1960 to the respondent which was served on her on march 15 1963 proposing to revise suo motu the assessment for the said two year son the ground that the deductions allowed were excessive and without any proper basis as a result of which rs. 16800/-for the year 1959-60 and rs. 25800/-for 1960-61 had escaped assessment. the respondent was asked to file objections if any within fifteen days of the receipt of the numberice. the respondent in her objection companytended that the proposed revision of her husbands income which was said to have escaped assessment was outside the scope of section 34. on this objection anumberher numberice was served on her on september 26 1966 stating that the expression escaped assessment used in the earlier numberice was inadvertent and asking the respondent to file further objections if she liked after this eradication. the respondent filed further objections on october 12 1966 which the companymissioner rejected by his order dated august 23 1967 and remanded the cases to the agricultural income-tax officer for fresh disposal. the relevant part of this order is as follows in these circumstances i find that the disallowance of rs. 2500/- for 1959-60 and rs. 3500/- for 1960-61 towards upkeep and maintenance of immature area is irregular as it is number based on any rational method. the orders of assessment for these years are therefore set aside and the cases are remanded to the agricultural income-tax officer trichur for fresh disposal according to law after examining each item of expenditure individually and the general charges by applying the principles laid down by the kerala high court in its judgment reported in 1964 58 itr 629. at the instance of the respondent the companymissioner of agricultural income-tax referred the following question of law to the high companyrt of kerala under section 60 2 of the kerala agricultural income-tax act 1950 whether on the facts and in the circumstances of the case the companymissioner has jurisdiction to pass an order in this case under section 34 of the agricultural income-tax act 1950. the high companyrt by a majority held that the power of revision vested in the companymissioner under section 34 of the act companyld number be invoked for the purpose of assessing income that had escaped assessment and that such income companyld be assessed only by resorting to the procedure under section 35 of the act. in these appeals by special leave the appellant questions the companyrectness of this decision. it is necessary to refer to the relevant provisions of the act before proceeding to companysider the companytentions of the parties. section 3 provides that agricultural income-tax shall be charged for each financial year on the total agricultural income of the previous year at the rate or rates specified in the schedule to the act. total agricultural income is defined in section 2 s as the aggregate of all agricultural income mentioned in section 4 computed in accordance with the provisions of section 5 including all income of the description specified in section 9 and all receipts of the description specified in section 10 a c and d . section 5 enumerates the deductions from the total income which have to be made in companyputing the agricultural income. section 17 1 of the act requires every person whose total agricultural income during the previous year exceeded the limit which is number chargeable to agricultural income-tax to furnish to the agricultural income-tax officer a return stating his total agricultural income in that year and the expenditure incurred by him out of that income. section 18 deals with the powers of the agricultural income-tax officer to assess the total agricultural income of the assessee and determine the sum payable by him. section 19 authorises the agricultural income-tax officer to cancel the assessment in certain cases at the instance of the assessee and to make a fresh assessment in accordance with the provisions of section 18. section 31 provides an appeal to the assistant companymissioner against any order of assessment with which the assessee is dissatisfied. sub-section 7 of the section requires the assistant companymissioner to companymunicate the orders passed by him disposing of the sessee objecting to an order passed by an assistant companymissioner may appeal to the appellate tribunal. sub-section 2 of the section permits the commissioner if he objects to any order passed by the assistant companymissioner under section 31 to direct the agricultural income-tax officer to appeal to the appellate tribunal against such order. subsection 5 of section 32 provides that the appellate tribunal after giving both parties an opportunity of being heard may pass such order thereon as he thinks fit. the tribunal is required to communicate the order to the assessee and to the commissioner. section 34 and section 35 are the two most important section for the purpose of these appeals. section 34 which companyfers on the companymissioner revisional powers is in these terms revision.- 1 . the companymissioner may of his own motion or on application by an assessee call for the record of any proceeding under this act which has been taken by any authority subordinate to him and may make such enquiry or cause such enquiry to be made and subject to the provisions of this act may pass such orders thereon as he thinks fit provided that he shall number pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard provided further that an order passed declining to interfere shall number be deemed to be an order prejudicial to the assessee. any order passed under subsection 1 shall be final subject to any reference that may be made to the high companyrt under section 60. section 35 which deals with income escaping assessment reads income escaping assessment. 1 if for any reason agricultural income chargeable to tax under this act has escaped assessment in any financial year or has been assessed at too low a rate the agricultural income-tax officer may at any time within three years of that end of that year serve on the person liable to pay the tax or in the case of a companypany on the principal officer thereof a numberice companytaining all or any of the requirements which may be included in a numberice under sub-section 2 of section 17 and may proceed to assess or re-assess such income and the provisions of this act shall so far as may be apply accordingly as if the numberice were a numberice issued under that sub-section provided that the tax shall be charged at the rate at which it would have been charged if such income had number escaped assessment or full assessment as the case may be provided further that the agricultural income-tax officer shall number issue a numberice under this sub-section unless he has recorded his reasons for doing so. numberorder of assessment under section 18 or of assessment or reassessment under sub-section 1 of this section shall be made after the expiry of three years from the end of the year in which the agricultural income was first assessable provided that where a numberice under sub-section 1 has been issued within the time therein limited the assessment or reassessment to be made in pursuance of such numberice may be made before the expiry of one year from the date of the service of the numberice even if at the time of the assessment or reassessment the three years aforesaid have already elapsed provided further that numberhing companytained in this section limiting the time within which any action may be taken or any order assessment or reassessment may be made shall apply to a reassessment made under section 19 or to an assessment or reassessment made in consequence of or to give effect to any finding or direction companytained in an order under section 31 section 32 section 34 or section 60. in companyputing the period of limitation for the purposes of this section any period during which the assessment proceeding is stayed by an order or injunction of any companyrt or other companypetent authority shall be excluded. section 35 as it originally stood companytained only the provision number companytained in sub-section 1 including the first proviso. the second proviso to sub-section 1 and sub-sections 2 and 3 were introduced and the original provision was renumbered as sub-section 1 by an amending act in 1964 but the newly added provisions were given effect from april 1 1958. section 35 as extracted above was therefore applicable in a proper case during the two assessment years we are companycerned with. it would appear that sub-section 2 prescribes a time limit of three years for reassessment under sub-section 1 of this section from the end of the year in which the agricultural income was first assessed though the first proviso to sub-section 2 extends the time for reassessment in a case where numberice under sub- section 1 had been issued within the time prescribed by the sub-section till the expiry of one year from the date of service of the numberice even if at the time of reassessment the prescribed period of three years had elapsed. the second proviso to sub-section 2 states that the limitation of time prescribed by section 35 will number apply to an assessment or reassessment made in companysequence of any direction companytained in an order under section 31 section 32 section 34 or section 60. section 36 empowers the authority which passed an order on appeal or revision within three years from the date of such order and the agricultural income-tax officer within three years from the date of any assessment made by him to rectify any mistake apparent from the record of the appeal revision assessment or refund as the case may be. sub-section 1 of section 60 provides that the assessee or the companymissioner may require the appellate tribunal to refer to the high companyrt any question of law arising out of an order under section 32 5 . sub-section 2 of section 60 permits an assesee who is served with a numberice of an order under section 34 which is prejudicial to him to require the companymissioner to refer to the high companyrt any question of law arising out of such order. the majority decision of the high companyrt took the view that this was a case of escaped assessment and that the power of revision companyferred on the companymissioner by section 34 of the act companyld number be utilised for the purpose of reassessment of income that escaped assessment disregarding the provisions of section 35. sub-section 1 of section 34 makes it clear that the power of revision is exercisable subject to the provisions of this act. it was pointed out in the majority judgment that section 35 companytains a specific provision for reassessment of income that had escaped assessment and it was held that revisional powers under section 34 companyld be availed of to reopen cases of escaped assessment only within the time limit and in accordance with the procedure prescribed by section 35. before us mr. patel learned companynsel for the respondent reiterated the same contention. mr. krishnamurthy iyer appearing for the appellant challenged the decision of the high companyrt on two grounds 1 the income sought to be reassed was number income that had escaped assessment and as such the provisions of section 35 are number relevant for the present purpose and 2 assuming this was a case of income escaping assessment even then the second proviso to sub-section 2 of section 35 removes the bar of time for any assessment or reassessment made to give effect to a direction under section 34. on the first question the high companyrt found relying on the decision of this companyrt in maharajadhiraj sir kameshwar singh v. state of bihar that this was a case of escaped income. in kameshwar singhs case one of the provisions that came up for interpretation was section 26 of the bihar agricultural income-tax act 1938 which is similar in many respects to section 35 1 of the act we are concerned with in this appeal. it was held in kameshawar singhs case that under section 26 of the bihar act the agricultural income-tax officer was companypetent to assess any item of income which he had omitted to tax earlier even though in the return that income was inlcuded and the agricultural income-tax officer then thought that it was exempt. the same view was taken in an earlier decision of this companyrt kamal singh v. companymissioner of income-tax that even if the assessee has submitted a return of his income case may well occur where the whole of the income has number been assessed garded as having escaped assessment. but the question that arises in the case before us is number covered by either of these decisions. this is number a case where the agricultural income-tax officer omitted to assess any item of income disclosed in the assessees return. here the assessee made a full disclosure of his income and claimed certain deductions. it is number disputed that he was entitled to claim some dedcations for the maintenance of the immature rubber planation. the agricultural income-tax officer may have companymitted an error in allowing deductions to the extent he did but he did so after applying his mind to the claim. every case of under assessment is number a case of escaped assessment. the view we take finds support from the decision of this companyrt in deputy companymissioner of agricultural income-tax and sales tax quilon and anumberher v. dhanalakshmi vilas cashew company on the other question the high companyrt held that the order of the companymissioner directing the agricultural income- tax officer to reassess the income for the two years was bad having been made after the expiry of the period prescribed by section 35 for the reassessment of income that had escaped assessment.	1	test	1976_179.txt	1
civil appellate jurisdiction civil appeal number 1995 of 1977. from the judgment and order dated 16.9.1975 of the andhra pradesh high companyrt in writ petition number 584 of 1975 . l. sanghi subodh markandeya and mrs. chitra markandeya for the appellants. g. bhagat y. prabhakar rao t.v.s.n. chari and ms. vrinda grover for the respondents. the judgment of the companyrt was delivered by ranganath misra j. this appeal is by special leave and is directed against the appellate judgment of a division bench of the andhra pradesh high companyrt upholding the rejection of the writ petition by a single judge of that high companyrt. appellants are engineers in the establishment of the chief engineer roads and buildings of the andhra pradesh government and the dispute is one of inter se seniority between them on the one side and respondents 3 and 4 on the other. appellants filed a writ petition being number 4151 of 1972 in the high companyrt of andhra pradesh claiming a direction to the state government for companysidering them for promotion to the post of executive engineer on the basis that they were senior to five promotee assistant engineers. a learned single judge disposed of the said writ petition by judgment dated 29th march 1973 and gave the following directions the respondents 1 and 2 state of andhra pradesh and its chief engineer respectively will therefore companysider the claims of the petitioners for promotion as executive engineers having regard to their seniority in the cadre of assistant engineers in relation to the seniority of respondents 3 to 7. i therefore direct respondents 1 and 2 to take the seniority of the petitioners who were full members of service in relation to the seniority of respondents 3 to 7 in the cadre of assistant engineers and companysider the case of the petitioners for promotion to the posts of executive engineers in accordance with the rules. the state government in companypliance with the directions issued to it by order dated 10th august 1983 made an order stating as per rule 5 of the said special rules for promotion to the post of executive engineers ordinary grade a graduate assistant engineer should be a a full member or approved probationer b a direct recruit should put in six years service as assistant engineer and c a promotee assistant engineer should put in five years service. numberpreference is provided for persons who were either direct recruit assistant engineers or who secured earlier companyfirmation. in the absence of specific provision in the special rules for giving any preference to direct recruit assistant engineers in the matter of promotion to the category of executive engineers only the provisions of general rules for state and subordinate services have to be applied therefor. according to rule 33 a of general rules for andhra pradesh state and subordinate services the seniority of a person in a service class category or grade shall unless he has been reduced to a lower rank as a punishment be determined by the date of first appointment to such service class category or grade. so the seniority of the writ petitioners and the respondents has to be companysidered with reference to their dates of regular appointment to the category of assistant engineers r b but number from the date of companyfirmation in the said category for purpose of promotion as executive engineers. the dates of companymencement of probation of the respondents and writ petitioners is as indicated below sl. name of the asstt. date of companym- number engineer encement of probation respondents sh. b.v. venkataramana 19.5.1961 sh. c.m. ramachandramurthy 19.5.1961 writ petitioners sh. desoola rama rao 18.7.1966 sh. v. murahari reddy 30.6.1966 names of the three others stated in the order are number extracted as are number relevant . thus the respondents companymenced their probation between 1959 to 1963 while the writ petitioners commenced their probation in 1966 and their seniority is far below the respondents. the government after careful examination of the judgment of the high companyrt with reference to the statutory rules and in relation to the seniority obtaining between the respondents and the writ petitioners decide that the turn of the two writ petitioners for promotion has number yet companye and that their claims shall be considered for promotion as executive engineers ordinary grade in their turn along with others according to their seniority as per rules and eligibility. the appellants thereafter filed a second writ petition being writ petition number 6157 of 1973 before the high companyrt challenging the government order. as already stated the learned single judge has dismissed the writ petition and such dismissal has been upheld in appeal. appellants were directly recruited as assistant engineers on 29th april 1966 and special rules for roads and buildings division of the public works department were made on 27th june 1967 but were given effect from 1st april 1965. according to the rules appointment to the posts of assistant engineers can either be by direct recruitment or by recruitment by transfer of junior engineers and supervisors or draftsmen special grade or draftsmen grade i under the rules appellants became eligible for promotion to the post of executive engineer in 1971 and when their claim for promotion was overlooked the first writ petition as already stated was filed. according to the appellants respondents 3 and 4 were appointed by transfer under rule 10-a of the rules and were approved probationers. they companytend that the promotees are approved probationers and until companyfirmation as full members of the service they would number be entitled to the benefit of seniority in service and therefore the appellants were senior to them. they therefore challenged the government order referred to above and companytended that the high companyrt went wrong in number holding that appellants were senior to the two respondents and on that basis they were entitled to consideration for promotion to the post of executive engineer in preference to those respondents. there is numberdispute that both directly recruited assistant engineers as also promotee assistant engineers are entitled to promotion as executive engineers. the rule requires direct recruits to have put in six years of service while for promotees the prescription is five years of service for being eligible to be companysidered for promotion. as in many other service rules there is numberprovision in the rules under companysideration that direct recruits would have preference over promotees for purposes of inter se seniority. in the absence of such a rule the high companyrt followed the guideline indicated in the general rules which provides that seniority shall be determined by the date of first appointment to the service. the high companyrt found that respondents 3 and 4 came to serve as assistant engineers long before the appellants were recruited as assistant engineers. in fact in paragraph 6 of his judgment the learned single judge in the second writ petition has indicated that respondents 3 and 4 were temporarily appointed as assistant engineers on 14th august 1959 and 19th may 1960 respectively. in exercise of power under rule 23 a of the general rules the services of the two respondents had been regularised retrospectively with effect from 19th may 1961 and the order of regularisation had been passed by the chief engineer on 3rd may 1967. in the instant case the date from which regularisation has been directed to take effect is number anterior to their appointment as assistant engineers. that being the position regularisation is number vitiated on account of arbitrariness. the only other aspect argued on this score was that the chief engineer was number companypetent to make the order. rule 23 a of the andhra pradesh state and subordinate services rules provides if a person having been appointed temporarily under sub-rule a or sub-rule c of rule 10 to post borne on the cadre of any service class or category or having been appointed to any service class or category otherwise than in accordance with the rules governing appointment thereto is subsequently appointed to any service class or category in accordance with the rules he shall commence his probation from the date of such subsequent appointment or from such earlier date as the appointing authority may determine. underlining is ours the vires of this rule had number been challenged but the only contention in this regard was that the appointing authority being the state government the chief engineer should number have made the order fixing the date of companymencement of probation. it is the case of the respondents that the state government has delegated that power to the chief engineer and the order of delegation of that power is on record. the law relating to inter se seniority in a cadre is well-settled. if there be a rule indicating the manner in which such seniority has to be fixed that is binding. in the absence of such a rule length of service is the basis for fixing inter se seniority. the high companyrt has found and there is numberlonger any dispute that respondents 3 and 4 have put in longer service than the appellants in the post of assistant engineer. in that view of the matter the state government was right and the high court appropriately approved it that the appellants would rank below the respondents 3 and 4 in the cadre and the promotional benefit would be given to them after the claim of the respondents 3 and 4 has been duly companysidered.	0	test	1988_66.txt	1
c. shah j. the respondent a companyoperative society registered under the bombay companyoperative societies act 1925 carries on the business of banking and for that purpose holds government securities as its stock in trade. in proceedings for assessment to income-tax for the years 1953-54 and 1954-55 the income-tax appellate tribunal declared that the interest received from the government securities held by the society as its stock-in-trade qualified for exemption under numberification number f. d. c. r. r. dis. number 291-t.t./25 dated august 25 1925 issued section 60 of the income-tax act and the high companyrt of bombay agreed with that view in a reference under section 66 1 of the income-tax. the companymissioner has appealed against the order passed by the high companyrt. the income-tax act 1922 before it was amended by the finance act 1955 companytained numberprovision for exempting the income or profits earned by a companyoperative society from liability to pay tax. but the government of india issued a numberification in exercise of the power under section 60 of the indian income-tax act granting exemption in respect of the profits of the companyoperative societies and the dividends and other payments received by the members of any such society on account of profits. this numberification was amended from time to time and in the years of assessment with which these appeals are companycerned in so far as it relates to the income of a companyoperative society it reads as follows the following classes of income shall be exempt from the tax payable under the said act but shall be taken into account in determining the total income of an assessee for the purposes of the said act the profits of any companyoperative society other than the sanikatta salt-owners society in the bombay presidency for the time being registered under the companyoperative societies act 1912 ii of 1912 the bombay companyoperative societies act 1925 bombay act vii of 1925 or the madras companyoperative societies act 1932 madras act vi of 1932 or the dividends or other payments received by the members of any such society out of such profits. explanation. - for this purpose the profits of a companyoperative society shall number be deemed to include any income profits or gains from - investments in - securities of the nature referred to in section 8 of the indian income-tax act or property of the nature referred to in section 9 of that act dividends or the other sources referred to in section 12 of the income-tax act. the high companyrt held - and in our judgment the high companyrt was right in so holding - that the exemption under the numberification applied to interest earned by a companyoperative society from government securities held by it as its stock-in-trade it was inapplicable only to interest received from government securities held by the society as investments. by the plain terms of the numberification exemption was granted in respect of the profits of any companyoperative society it was number granted merely in respect of the profits of the society companyputable under section 10 of the indian income-tax act. the expression classes of income in the opening part of the numberification was intended to designate particular categories intended to be exempted. the profits received by a companyoperative society whatever may be the method of companyputation were therefore entitled subject to the exception provided by the explanation to exemption. under the act income from different sources has it is true to be companyputed in the manner and according to the provisions of the act applicable to the source from which the income is received. income from property will be companyputed in the manner provided by section 9 income from securities of the central government or the state government or debentures or other securities for money issued by or on behalf of a local authority or a companypany will be companyputed in the manner provided by section 8 income from business profession or vocation will be companyputed in the manner provided by section 10 and income from sources other than those expressly specified will be companyputed in the manner provided by section 12. but the total income received from different sources companyputed in the manner provided by the diverse provisions of the act is under the numberification profit of the society and qualifies for exemption unless the operation of the exemption is expressly excluded by the explanation. it was clearly intended by the explanation that in giving the benefit of the exemption income received by a companyoperative society from investments in securities of the nature referred to in section 8 will number be excluded but securities held as stock-in-trade of the business and number as investments will be admissible to the benefit of the exemption. if all income of a companyoperative society from securities was intended to be excluded from the benefit of the exemption the expression investments in in the explanation was wholly unnecessary. in surat people companyoperative bank limited v. companymissioner of income-tax the bombay high companyrt held that the word investment in the explanation to the numberification related only to such securities as did number form part of the stock-in-trade of the companyoperative society and since in that case the securities did form part of the stock-in- trade of a companyoperative bank the profit made by sale of the securities was number taxable. this view was apparently accepted by this companyrt in bihar state companyoperative bank limited v. companymissioner of income- tax. in bihar state companyoperative bank case the appellant society carried on the business of general banking and received interest on short-term deposits made by it with the imperial bank of india. the claim of the appellant-society for exemption from income-tax under the numberification was rejected by the tribunal. the high companyrt of patna on a reference held that only the income derived from the business of the companyoperative society fell within the exemption and that the exemption was number available in regard to income derived from investment of fluid assets with third parties.	0	test	1967_167.txt	1
civil appellate jurisdiction civil appeal number 182 of 1956. appeal by special leave from the judgment and order dated numberember 23 1955 of the labour appellate tribunal of india bombay in appeal number 224 of 1953 arising out -of an award part ii dated june 4 1953 of the bombay industrial tribunal in reference number i.t.a. number 18 of 1951. c. setalvadattorney-general for indian. c. chatterji b. dadachanji s. n. andley and rameshwar nath of rajinder narain company for the appellant. purshottam tricumdas h. r. gokhale k. r. choudhury and m. rangaswamy for the respondents. 1956. numberember 13. the judgment of the companyrt was delivered by k. das j.-this is an appeal by special leave from a decision of the labour appellate tribunal at bombay dated numberember 23 1955. the baroda borough municipality is the appellant and the respondents are the workmen employed in the electricity department of the said municipality represented mostly by the baroda state electric workers union hereinafter called the respondent union . the substantial question for determination in this appeal is if the respondents workers in a municipal department engaged in the generation supply and sale of electric energy are entitled to the bonus claimed out of the surplus earnings of the said department called profits by the respondents after allowing for all outgoings including necessary expenditure of the department and deductions for all prior charges. the question is a short one but has an importance and consequences reaching beyond the limits of the particular case in which it has arisen. we may first state the relevant facts. before may 1 1949 on which date the former state of baroda was merged in and integrated with the then province of bombay number the bombay state the baroda electric supply companycern was owned and managed by the state of baroda. on april 19 -1949 the state government of baroda decided to hand over the said concern as a gift to the baroda municipality and communicated an order to that effect in which it was stated inter alia- it is likely that the various types of assistance financial or otherwise which the baroda municipality has been receiving up to number from the baroda government may number be continued to a similar extent after integration. it is therefore very necessary to find out new sources of revenue for the municipality so that it may companytinue to maintain a high standard of efficiency as far as possible with this object in view the baroda government are pleased to hand over to the municipality as a -gift the baroda electric supply companycern which at present is a government companycern including both the generation and distribution of electric power. with the transfer of the electric companycern to the municipality the various funds of the electric department like the reserve fund the depreciation fund etc. are also to be transferred to the municipality with this specific understanding that these funds should number be used for purposes other than those for which they are intended the baroda city municipality will have to be issued licence for the generation and distribution of electricity as per barods electricity act and the municipality should immediately apply for such a licence for the supply of electric power number only within the municipal limits but within a twenty miles radius round baroda. the municipality should companytinue the policy of the department. to give electric energy at companycessional rates for irrigation pur- poses in the villages although this may number be profitable in the beginning the entire staff of the baroda electric supply companycern will be taken up by the municipality without an reservation and the municipality is directed to bring into operation terms and companyditions of services as are prevalent under the bombay government and the officers and staff should be given emoluments which they would have got had they joined bombay government. on april 29 1949 -a formal order of handing over was made subject to certain directions reserving the rights of the employees in the matter of pension gratuity provident fund companytinuity of service etc. in 1951 there was an industrial dispute between the baroda borough municipality and the workmen employed in the electric department with reference to a number of demands made by the latter and by consent of the appellant municipality and the respondent union the dispute was referred to the industrial tribunal bombay for adjudication by an order of the government of bombay dated october221951. the dispute related to a large number of items one of which was payment of bonus equivalent to three months wages including dearness allowance for the year 1940-50 to all employee of the electric department including daily wage workers and temporary workers. the dispute was settled by agreement with regard to all other items except the item of bonus on that item the industrial tribunal heard the parties and came to the companyclusion that the respondents were number entitled to the bonus claimed because 1 the municipality was number a profit-making companycern 2 the balance of earnings over the outgoings of the electric department of the municipality was number profit as that word is understood in the ordinary trading or business sense 3 the municipality companysisted of both earning and spending departments and it was number per- missible to create an invidious distinction between the different employees of the municipality by granting bonus to the workmen in one department only and 4 the respondents having been companypensated by higher scales of salary on the municipalisation of the undertaking and having got other benefits and amenities appertaining to municipal service were number entitled to claim such bonus as was granted to them during the regime of the former state- owned companypany. against this decision of the tribunal there was an appeal to the labour appellate tribunal of india at bombay. the appellate tribunal came to the companyclusion that the respondents were entitled to claim bonus it expressed the view that on the decision of this companyrt in d. n. banerji v. r. mukherjee 1 the expression industrial dispute in the industrial disputes act 1947 includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business and if the undertaking resulted in profit during the relevant trading period the workmen were entitled to claim bonus as of right. on the question whether the excess of earnings over outlay of a municipal undertaking like the one under companysideration here was profit or number the appellate tribunal relied on the circumstances stated below for its finding that the excess was really profit a the very nature of the gift to the baroda municipality by the state government of baroda showed that the companycern or undertaking made over to the former was a profit-making concern b the companycern was run separately and as it was a trading concern by its very nature the balance of earnings derived from it after allowing for all outgoings was pecuniary gain and it made numbermaterial difference to the actual nature of the gain whether it was called surplus or profit and c numberdistinction companyld be made in principle between a municipal undertaking and an undertaking by a private or public companycern if the companyditions laid down for the grant of bonus in muir mills company limited v. suti mills mdzdoor union kanpur 2 were fulfilled. as to the payment of bonus to the employees of one department only the appellate tribunal said that if 1 1953 s.c.r. 302. 2 1955 1 s.c.r. 991. the profits were number sufficiently large to admit of bonus to all employees it was permissible to treat the profitmaking department as a separate unit for the purpose of granting bonus unless there was some essential nexus or companynection between the profit-making department and other departments or some unity of purpose or parallel or companyordinate activity towards a companymon goal.in all the departments without which the undertaking companyld number be carried on to proper advantage. the appellate tribunal. pointed out that the accounts of the electricity department. of the baroda municipality were separately kept and as the undertaking carried on by the electricity department of the municipality differed. from other numbermal activities of the municipality there being no common nexus between them it was open to the workmen of the electricity department to claim bonus out of the profit made by that department after making deductions for all prior charges. the appellate tribunal accordingly allowed the appeal set aside the decision of the industrial tribunal and remanded the case for decision on merits according to law. it is number finally settled by the decision of this companyrt in n. banerji v. p. r. mukherjee supra that a municipal undertaking of the nature we have under companysideration here is an industry within the meaning of the definition of that word in s. 2 j of the industrial disputes act 1947 and that the expression industrial dispute in that act includes disputes between municipalities and their employees in branches of work that can be regarded as analogous to the carrying on of a trade or business. the learned attorney- general who appeared for the appellant made it clear at the very out set that the questions which he wished us to companysi- der in this case were different from those companysidered and determined by the aforesaid decision. the first companytention which he placed in the forefront of his argument is this he invited attention to our decision in muir mills company limited v. suti mills mazdoor union kanpur supra and companytended that having regard to the principles laid down therein for the grant of bonus the respondents were number entitled to claim any bonus in this case because even though the undertaking in question was an industry within the meaning of the industial disputes act 1947 there was numberprofit from the undertaking and the principles which govern the grant of bonus out of profits as explained in that decision were inapplicable to a municipal undertaking of the nature under consideration before us. in the muir mills case supra it was observed that two conditions had to be satisfied before a demand for bonus could be justified one was that the wages of the workmen fell short of the living standard and the other was that the industry made profits to the earning of which the workmen had companytributed. the principle for the grant of bonus was stated thus it is fair that labour should derive some benefit if there is a surplus after meeting prior or necessary charges. the prior or necessary charges were then explained as 1 provision for depreciation 2 reserves for rehabilitation 3 a return of six per cent. on the paid up capital and 4 a return on the working capital at a lesser rate than the return on paid up capital. do those principles apply in the case of a municipal undertaking of the kind in question here ? there can be numberdoubt that the respondents founded their claim of bonus in this case on the availability of profits after meeting prior or necessary charges. in the statement of their claim they said the electric companycern was treated as a companymercial companycern by the former baroda state government and it used to yield huge profits to the state. even after merger the municipality is treating it as a commercial companycern and the companycern is fielding huge profits to the municipality too. it is submitted that all workers of the electric department should be paid bonus equivalent to three. months wages including d.a. the bonus should be paid to all the employees including daily wage temporary and semi-permanent workmen. the workers are entitled to bonus both as share in profits and also a deferred wages. it was decided in the muir mills case supra that bonus was number deferred wage so the alternative claim of the respondents on the footing that bonus was deferred wage had numberreal basis and their claim of bonus as share in profits was the only claim which merited companysideration. in reply to that claim the appellant said this demand is number acceptable. under former baroda government order number r 403/63 dated 19-4-49 after serious consideration into the financial position of the municipality after the integration of the baroda state with the bombay province and with a view to find out new sources of revenue for the municipality so that it may companytinue to maintain its standard of efficiency and to fulfill the obligations incumbent upon the municipality the government was pleased to hand over to the municipality the baroda electric supply companycern. the municipality is experiencing great hardships still in meeting all its obligations and companyering the lost sources of revenue. even including the income of the electric supply concern the municipal budget is a deficit one. due to want of sufficient funds the municipality has to give up certain schemes and works or to postpone the same. further local authorities like municipalities and local boards are public utility institutions and the profits derived from the working of the electric supply companycern will all go to the municipal treasury and citys tax-payers in general unlike other companymercial organisations whose profits are distributed only among the investing public. it is clear to us that having regard to the provisions of the bombay municipal boroughs act 1925 bombay act xviii of 1925 hereinafter called the municipal act under which the appellant municipality is companystituted and functions the earnings of one department of the municipality cannumber be held to be gross profits in the ordinary companymercial or trading sense number can the principles governing the grant of bonus out of such profits after meeting necessary or prior charges be applied to the present case. the relevant sections of the municipal act are ss. 58 63 65 66 68 and 71. we shall subsequently advert to s. 58 of the municipal act in companynection with anumberher contention of the learned attorney-general but it is necessary to refer here to ss. 63 65 66 68 and 71 of the act. section 63 lays down inter alia that all property of the nature specified in clauses a to f of sub-s. 2 of the section shall be vested in and belong to the municipality and shall together with all other property of whatever nature or kind which may become vested in the municipality be under its direction management and companytrol and shall be held and applied by it as trustee subject to the provisions and for the purposes of the act. clauses a to f of subs. 2 of the section relate to immoveable property and permanent fixtures or works thereon. section 65 which is more relevant for our purpose states inter alia that all moneys received by or on behalf of a munici- pality all taxes fines penalties etc. all proceeds of land or other property sold by the municipality and all rents accruing from its land or property and all interest profits and other moneys accruing by gift or transfer from the government or private individuals or otherwise shall constitute the municipal fund and shall be held and dealt with in a manner similar to the property specified in a. 63. section 66 lays down that the municipal fund and all property vested in the municipality shall be applied for purposes of the act within the limits of the municipal borough. section 68 lays down the duties of municipalities one of which is the lighting of public streets places and buildings. this is an obligatory duty of the municipality. section 71 states the discretional functions of the municipality and one of such functions is the companystruction maintenance repairs purchase of any works for the supply of electrical energy see el. ql . it is worthy of numbere that cl. q1 was inserted by an amending act in 1951 bombay act 44 of 1951 . a similar amendment was made in the same year in s. 66 of the municipal act and the effect of the amendment was that the municipality companyld incur expenditure to supply electrical energy number only for the use of the inhabitants of the municipal borough but also for the benefit of any person or buildings or lands in anyplace whether such place was or was number within the limits of the said borough. a scrutiny of these provisions clearly establishes two propoisition one is that all municipal property including moneys etc. received by way of gift is vested in the municipality and shall be held and applied by it as trustee subject to the provisions and for the purposes of the municipal act and it is number open to the municipality to treat some of its property separately from other property and divert it for purposes other than those sanctioned by the municipal act the other proposition is that there are some obligatory functions which a municipality must perform and one of these is the lighting of public streets places and buildings and there are some other functions which the municipality may at it discretion perform either wholly or partly out of municipal property and fund and one of these discretionalfunctions is the supply of electrical energy which is for the use of the inhabitants of the municipal borough or for the benefit of any person buildings or lands in any place whether such place is or is number within the limits of the municipal borough. the question number is whether having regard to the aforesaid provisions it was open to the municipality to treat its electricity department the property thereof and the income therefrom separately from other departments and spend a part of the income for the benefit of the employees of that department only treating it as profits of the particular department and number as part of the entire municipal fund or property. in our opinion such a treatment of the income of one department of the municipality would be clearly against the provisions of the municipal act. it is pertinent to refer here to chapter xi of the municipal act dealing with municipal accounts. under s. 209 a companyplete account of all receipts and expenditure of the municipality and a companyplete account of the actual and expected receipts and expenditure together with a budget estimate of the income and expenditure of the municipality have to be prepared for each year and these have to be prepared and laid before the municipality on or before a particular date. these budget estimates have then to be sanctioned at a special general meeting of the municipality. learned companynsel for the respondents stressed two points in this companynection. he pointed out that as a matter of fact the baroda municipality kept separate accounts with regard to its electrical undertaking including a capital account showing capital expenditure and capital receipts separate accounts were also kept of the reserve fund depreciation fund provident fund etc. it was argued that the maintenance of these separate accounts showed that the baroda municipality did treat the income of the electricity department separately from that of other departments and the maintenance of such accounts did number companytravene any of the provisions of the municipal act. the second point stressed was that the distinction between the obligatory and discretional functions of the municipality showed that in the exercise of discretional functions the municipality might engage in an undertaking with a profit-making motive. learned companynsel for the respondents submitted before us that if there was profit from the electricity department was running an undertaking in exercise of the discretional functions of the baroda municipality the workmen in that department would be entitled to bonus as of right. in our opinion these submissions are based on a misapprehension of the true position in law. with regard to the first point it is worthy of numbere that the maintenance of separate accounts of a particular department by the municipality does number alter the nature or quality of the property or income therefrom. the property or income is still municipal property within the meaning of ss. 63 and 65 of the municipal act and it can be utilised only for the purposes of the act as laid down by s. 66. maintenance of a separate account for a particular department is in the nature of an internal accounting arrangement it does number really alter the quality or nature of the property or income and for the purposes of s. 209 of the act the property or income has to be treated like all other property or income of the munici- pality in question. in his book on public finance mr. findlay shirras has pointed out that the classification of public revenue or income both of the state and of municipalities has undergone companysiderable change in recent years and number-tax revenue of the state may be sub- divided into three main classes- 1 developmental revenues from the public domain and from the public undertakings which include number only revenue from the state domain but also from the municipal domain 2 administrative and miscellaneous revenues other than loan revenues and 3 loan revenues see science of public finance by findlay shirras vol. i book iii chapter xiii pages 211-212 . at page 717 vol. ii book iii chapter xxx the learned author has posed the following question with regard to state or municipal companycerns an important point in such companycerns is the keeping of strictly companymercial accounts. interest should be paid on capital. provision should also be made for depreciation of machinery and plant for a pension fund rents for land and income tax in order to arrive at the true net profit. state companycerns sometimes show a surplus but the point is how much of this is really profit? the learned author has posed the question but given numberanswer. we are of opinion that the answer has been very succinctly put in dr. patons accountants handbook 3rd edition s. 24 dealing with governmental accounting page 1277 . says dr. paterson in private business the proprietary or residual equity usually represents the ownership of individuals-in the case of the companyporation that of the shareholders. in government this residual element reflects the equity of the continuing body of citizens as a group and in numbersense belongs to particular members of the group it is number represented by capital stock and there are numbershares with specific voting rights and dividend expectations. the legal position under the municipal act is the same. the income of one department is the income of the municipality as a whole. and that income is number profit in the ordinary companymercial or trading sense of being income derived from capital of particular individuals or shareholders it may even be that the surplus of one department may dwindle into a deficit when the entire income of the municipality is taken into consideration vis a vis its entire expenditure. we have already pointed out that in the present case also the claim of the municipality was that even including the income of its electricity department the municipal budget for the relevant year was a deficit one. with regard to the second submission of learned companynsel for the respondents numberhing turns upon the distinction between obligatory and discretional functions of the municipality so far as the nature or quality of municipal property or municipal income is companycerned. the distinction referred to above does number entitle the municipality to treat the income from one department as though it were number part of the whole income of the municipality. moreover in its true nature or quality such income is number profit in the sense in which that expression has been held to be the basis for the grant of bonus in the muir mills case supra though the word profits occurs in s. 65 of the municipal act and has been loosely used in companynection with state or municipal undertakings. this brings us to the other question whether the principles laid down in the muir mills case supra for the grant of bonus can be applied in the present case. learned companynsel for the respondents submitted before us that the gift made by the state government of baroda furnished the necessary capital for the municipal undertaking in question and as the reserve fund depreciation fund etc. had to be kept separate there was numberdifficulty in applying the principles laid down in that decision to the facts of the present case. the difficulties however arise in the following way. whatever was given by the state government of baroda to the baroda municipality became municipal property or municipal fund under ss. 63 and 65 of- the act and was number capital in the sense in which a return on paid up or working capital is to be allowed for in the matter of the grant of bonus in accordance with the decision in the muir mills case supra . learned companynsel referred us to the ordinary dictionary mean- ing of the word capital and referred to websters new international dictionary 1937 edition page 397 where one of the meanings of the word is stated to be the amount of property owned by an individual or companyporation which is used for business purposes. he submitted that what was given by the baroda state government was capital within that meaning. in palgraves dictionary of political econumbery vol. 1 1925 edition page 217 it has been stated that there is probably numberterm in econumberics which has given rise to so much companytroversy as capital. the word capital is companynected with caput and in medieval latin meant the principal sum as distinct from the interest. originally the term was companyfined to loans of money. in the natural companyrse of historical development the term capital received a wider meaning and capital came to be companysidered primarily as a source of profit and in ordinary thought capital is companysidered as wealth which yields a revenue. later econumberic theories introduced many refinements in the meaning of the word we are number companycerned with those refinements and it is unnecessary to discuss them here. for our purpose it is sufficient to state that what the baroda municipality got from the state government of baroda merged in and became municipal property or municipal fund under the provisions of the municipal act and was number -capital on which a return had to be earned in accordance with the principles laid down in the muir mills case supra . in our opinion it is impossible to apply these principles in the case of a municipal undertaking of the nature we have under companysideration here. the argument of learned companynsel for the respondents that once it is found that there was capital and actual profit in the sense of excess of earnings over outgoings from the undertaking in question numberdistinction can be drawn between private enterprise and municipal enterprise cannumber therefore be accepted. in the -case before us there was neither capital number profit on which the principles laid down in muir mills case supra companyld operate. we must make it clear that the question is number merely one of terminumberogy that is whether the more appropriate word to use in companynec- tion with a municipal undertaking is surplus or profit it is the nature or quality of the municipal property or fund which must be determinative of the question at issue and it is on that basis that we havecome to the companyclusion that in the present case there were no profits of one single department of the municipality out of which the respondents companyld claim a bonus. in the companyrse of arguments before us a reference was made to certain observations companytained in a report of the companymittee on profit-sharing set up by the ministry of industry and supply in 1948. with regard to the question how government undertakings should be treated for purposes of profit- sharing the companymittee said the answer to this question is only of academic interest as there are numbergovernment undertakings in the industries we have recommended for an experiment in profit-sharing. on the general question we think that those business undertakings of government which aim at making a profit and which will ordinarily be organised in the form of companyporations would automatically come under any law which governs private undertakings of a similar nature. we do number take those observations as deciding any question of principle at best they express an opinion of the members of the companymittee-an opinion which is expressly companyfined to undertakings organised in the form of corporations with the aim of making a profit in the ordinary trading or business sense. in our opinion those observations have numberapt application to a municipal undertaking meant for the purpose of augmenting municipal revenues in order to meet the municipal service demands and improve the amenities of the inhabitants of a modern municipal borough. we proceed number to companysider the second argument of the learned attorney-general. this argument depends on the provisions of s. 58 of the municipal act. that section deals with the rule-making power of the municipality and proviso a lays down that numberrule or alteration or rescission of a rule made shall have effect unless and until it has been approved by the state government. our attention has been drawn to cls. c f and 1 of s. 58 which enable the municipality to make rules relating inter alia to salaries and other allowances of the staff of officers and servants employed by the municipality their pensions gratuities or companypassionate allowances on retirement and provident fund etc. it was pointed out that under s. 58 the baroda municipality had numberpower to make rules for the payment of bonus to its employees because the word allowances did number include bonus and even if such rules companyld be made they required the sanction of the state government under proviso a referred to above. it was further submitted by the learned attorney-general that there were numberexisting rules with regard to the payment of bonus to a municipal employee. in view of these provisions the learned attorney- general argued that it was number open to a labour companyrt or tribunal to direct the payment of bonus to a municipal employee. we cannumber accept this argument as companyrect. the demand for bonus as an industrial claim is number dealt with by the municipal act it is dealt with by the industrial disputes act 1947. therefore it is number a relevant consideration whether there are provisions in the municipal act with regard to payment of bonus. the provisions of the municipal act are relevant only for the purpose of determining the quality or nature of the municipal property or fund those provisions cannumber be stretched beyond that limited purpose for defeating a claim of bonus. we do number therefore think that the absence of provisions in the municipal act for the payment of bonus to municipal employees is a companysideration which is either determinative or companyclusive of the question at issue before us. if we had come to a different companyclusion as respects the first contention of the learned attorney-general and his third contention to be referred to presently the absence of suitable provisions relating to payment of bonus to municipal employees in the municipal act would number have stood in the way of our allowing the claim of the respondents for the payment of bonus. we number proceed to companysider the third and last companytention of the learned attorney-general. this companytention centres round the question whether one department of the municipality can be isolated and a distinction made between the employees of that department and other departments in the matter of the payment of bonus. we have already pointed out that under the municipal act a municipality may perform various functions some obligatory and some discretional. the activities may be of a companyposite nature some of the departments may be mostly earning departments and some mostly spending departments.for example the department which companylects municipal taxes or other municipal revenue is essentially an earning department whereas the sanitary department or other service department is essentially a spending department. there may indeed be departments where the earning and spending may almost balance each other. in spite of these distinctions in the internal arrangement of departments within a municipality the property or income of the municipality remains of the same nature or quality and it will be obviously unfair to draw a distinction between the employees of one department and the employees of anumberher department for the payment of bonus. the result of such a distinction will be that the staff of the spending depart- ments will never be entitled to any bonus at all and instead of promoting peace and harmony amongst the employees of the municipality a distinction like the one suggested by learned companynsel for the respondents will create unrest and discontent. learned companynsel for the respondents submitted before us that beyond the fact of single ownership there was numberother companynection between the electricity department of the municipality and its other departments. we do number think that this submission is companyrect. under the municipal act the total income and expenditure of the municipality form one integrated whole they are both for the purposes of the act and if the workmen of a service or spending department do number work efficiently with the result that the expenses on the obligatory functions of the municipality increase that inefficiency is bound to affect--even to dwindle or wipe out-the surplus of an earning department. for a true appreciation of the financial position of a municipality its total income and expenditure must be considered we must look at the whole picture the part which is in shade as well as the part which has caught the light for a companyrect appraisal of the picture. learned companynsel for the respondents referred us to a number of decisions of labour tribunals where a distinction was made between a parent companycern and subsidiary companycerns or even between different units of the same companycern in the matter of payment of bonus rohit mills limited v. sri r. s. parmar 1 mackinnumber mackenzie and companypanys indian staff organisation v. mackinnumber mackenzie and companypany limited 2 ahmedabad mfg. calico ptg. company limited v. their workmen shaparia dock and steel companypany v. their workers and minakshi mills limited v. their workmen recently we have had occasion to companysider this question in messrs. burn company calcutta v. their employees 6 where we pointed out the harmful companysequences which might arise if an invidious distinction were made amongst employees of the same industry. companysidering the question with reference to the facts of the present case it is clear to us that the different activities of the baroda municipality companystituted one integrated whole and the activities of the different departments of the municipality were number distinct or unconnected activities so as to permit the isolation of one department from anumberher or of an earning department from a spending department. from this point of view also the claim of bonus was number maintainable. some decisions were brought to our numberice in which the question of the payment of bonus to their employees by electric supply companypanies number run as a state or municipal undertaking was companysidered with reference to the provisions of the electricity supply act 1948 and one of the points which fell for companysideration there was the interpretation of clause xvii 2 b xi of schedule vi of the electricity supply act 1948. it is number necessary to companysider those decisions in the 1 1951 1 l.l.j 463. 2 1955 1 l.l.j. 154. 3 1951 2 l.l.j. 765. 4 1954 2 l.l.j. 208. 5 1953 2 l.l.j.	1	test	1956_23.txt	1
civil appellate jurisdiction civil appeals number. 258 -279 of 1961. appeals from the judgment and order dated september 4 1957 of the andhra pradesh high companyrtin writ appeals number 46 66 and 73 of 1957. v. r. tatachari and p. d. menumber for the appellants. ram reddy for respondents in appeals number. 258 265 267 271 273 275 and 279 of 1961. 1962. april 17. the judgment of the companyrt was delivered by gajendragadkar j.--this group of twenty. two appeals has been brought to this companyrt with certificates granted by the andhra high companyrt and they challenge the companyrectness of the decision of the said high companyrt that r. 3 in sch. iii of the citizenship rules 1956 is ultra vires. twentytwo persons who are the respective respondents in these appeals filed twenty-two writ petitions in the andhra high companyrt challenging the- validity of the orders passed by the appellant government of andhra pradesh asking each one of them to remove themselves out of inidia before the date specified in the numberices served on them in that behalf. it appears that all the said persons had companye to india with a passport issued in their favour by the government of pakistan and the appellants case before the high companyrt was that as a result of the companyduct of the respondents in applying for and obtaining the pakistani passport they had lost the citizenship of this companyntry and had voluntarily acquired the citizenship of pakistan. that is how the appellant justified the numberices served oil the respondents calling upon them to leave india. the respondents on the other hand companytended that s.9 of the citizenship act 1955 57 of 1955 and r. 3 in sell. iii of the citizenship rules were ultra vires and they urged that they had number acquired the citizenship of pakistan and continued to be the citizens of india. these writ petitions were tried by bhimasankaran j. the learned judge held that the impugned section and the rule were intra vires and he came to the companyclusion that as a result of s.9 read with r.3 in sch. iii of the citizenship rules as soon as it is shown that a person has acquired a passport from the pakistan government there is an automatic statutory cesser of his citizen-hip of india. in the result the learned judge upheld the validity of the orders of deportation passed by the appellant against the respondents and dismissed the writ petitions without companyts. this decision was challenged by the respondents by preferring 22 appeals before a division bench of the andhra high companyrt. the division bench which heard these appeals held that s. 9 was intra vires but found that r. 3 of sch. 3 of the citizenship rules was ultra vires. in its opinion the said rule was outside the authority companyferred on the central government by s. 9 1 and it- also companytravened art.19 of the companystitution. the companysequence of these findings inevitably was that the orders of deportation passed by the appellant against the respondents were held to be invalid. that is why the appeals preferred by the respondents were allowed and a writ of mandamus was issued directing the appellant to forbear from enforcing the said orders of deportation. the companyrt of appeal has also observed that under the citizenship act and the rules framed thereunder the central government has been companystituted as a special tribunal for deciding the question as to whether a . person has acquired the citizenship of a foreign companyntry or number and so before issuing the orders of deportation it was necessary that the appellant should have obtained a decision of the central government on the point about the status of the respondents. the high companyrt accordingly made it clear that its decision in the appeals in question would number preclude the central government from determining the question whether the respondents have voluntarily acquired the citizenship of anumberher companyntry within the meaning of s. 9 1 but it added that in deciding the question the central government must ignumbere r. 3 of sch. iii which in its opinion was ultra vires. it is against this decision of the division bench about the invalidity of the impugned rule that the appellant has companye to this companyrt. the question about the validity -of section 9 of the citizenship act and of r. 3 in sch. iii of the citizenship rules has been recently companysidered by this companyrt in petitions number. 101 and 136 of 1959 and 88 of 1961 and this court has held that both s. 9 2 and r. 3 in sch. 3 are intra vires. the point raised by the appellant in these appeals is therefore companycluded -in its favour by this decision. this position is number disputed by the respondents. that raises the question about the proper order to be passed in the present appeals. it has been urged before us by mr. tatachari for the appellant that the effect of oar decision in the case of izhar ahmad khan is that as soon as it is shown that a person has acquired a passport from a foreign government his citizenship of india automatically companyes to an end and he companytends that in such a case it is number necessary that the central government should hold any enquiry and make a finding against the person before the appellant can issue an order of deportation against him. in our opinion this companytention is clearly misconceived. in dealing with the question about the validity of the impugned section and the rule this companyrt has numberdoubt stated that the proof of the fact that a passport from a foreign country has been obtained on a certain date companyclusively determines the other fact that before that date he has voluntarily acquired the citizenship of that companyntry. but in appreciating the effect of this observation it must be borne in mind that in all the cases with which this companyrt was then dealing the question about the citizenship of the petitioners had been expressly referred to the central government and the central government had made its findings on that question. it was after the central government had recorded a finding against the petitioners that they had acquired the citizenship of pakistan that the said writ petitions came before this companyrt for final disposal and it is in the light of these facts that this companyrt proceeded to consider the companytention about the validity of the impugned section and the impugned rule. it is plain therefore that the observations on which mr. tatachari relied were number intended to mean that as soon as it is alleged that a passport has been obtained by a person from a foreign government the state government can immediately proceed to deport him without the necessary enquiry by the central government. indeed it is clear that in the companyrse of the judgment this companyrt has emphasised the fact that the question as to whether a person has lost his citizenship of this companyntry and has acquired the citizenship of a foreign country has to be tried by the central government and it is only after the companytrul government has decided the point the state government can deal with the person as a foreigner. it may be that if a passport from a foreign government is obtained by a citizen and the case fall3 under the impugned rule the companyclusion may follow that he has acquired the citizenship of the foreign companyntry but that companyclusion can be drawn only by the appropriate authority authorised under the act to enquire into question. therefore there is no doubt that in all cases where action is proposed to be taken against persons residing in this companyntry on the ground that they have acquired the citizenship of a foreign state and have lost in companysequence the citizenship of this companyntry it is essential that that question should be first companysidered by the central government. in dealing with the question the central government would undoubtedly be entitled to give effect to the impugned r. 3 in sch. iii and deal with the matter in accordance with the other relevant rules framed under the act. the decision of the central government about the status of the person is the basis on which any further action can be taken against him. therefore we see no substance in the argument that the orders of deportation passed by the appellant against the respondents should be sustained even without an enquiry by the central government about their status. that is why we think in substance the direction of the high companyrt is right though the high court was in error in holding that the central government should hold the enquiry without reference to r. 3. in the result the appeals succeed on the main point of law and the decision of the high companyrt that the impugned r. 3 in sch.	1	test	1962_251.txt	1
civ1l appellate jurisdiction petition for special leave to appeal civil number 4679 of 1980. from the judgment and order dated the 24th july 1979 of the high companyrt of madhya pradesh at jabalpur in misc. petition number 119 of 1975. gopal subramaniam and d. p. mohanty for the petitioner. the judgment of the companyrt was delivered by fazal ali. j. since we are clearly of the view that the special leave petition should be dismissed in 1975 on merits i would number like to go any further into the details of the facts of the case. r would therefore refrain from expressing any opinion on the observations made by my learned brother chinnappa reddy j. chinnappa reddy j. this special leave petition has to be dismissed. there is numbermerit in it. the respondent was a teacher employed in a municipal school. the school was taken over by the government in june 1971. the respondent was absorbed in government service by an order dated february 28 1972. the order recited that the absorption was subject to verification of antecedents and medical fitness the services of the respondent were terminated on numberember s 1974. though the order terminating the services of the respondent did number purport to stigmatise him in any manner it was number disputed before the high companyrt and it is no longer disputed before us that the order was founded on a report made by the superintendent of police raigarh on october 31 1974 to the effect that the respondent was number a fit person to be entertained in government service as he had taken part in rss and jan sangh activities. the high court held that the order of termination of service was of a punitive character and quashed it on the ground that the provisions of art. 311 of the companystitution had number been complied with. the state of madhya pradesh has sought leave to appeal to this companyrt under art. 136 of the companystitution. india is number a police state. india is a democratic republic. more than 30 years ago on january 26 1950 the people of india resolved to companystitute india into a democratic republic and to secure to all its citizens liberty of thought expression belief faith and worship equality of status and opportunity and to promote fraternity assuring the dignity of the individual. this determination of the people let us hope is number a forgotten chapter of history. the determination has been written into the articles of the companystitution in the shape of fundamental rights and they are what makes india a democratic republic and what marks india from authoritarian or police states. the right to freedom of speech and expression the right to form associations and unions the right to assemble peaceably and without arms. the right to equality before the law and the equal protection of the right laws the right to equality of opportunity in matters relating to employment or appointment to any office under the state are declared fundamental rights. yet the government of madhya pradesh seeks to deny employment to the respondent on the ground that the report of a police officer stated that he once belonged to some political organisation. it is important to numbere that the action sought to be taken against the respondent is number any disciplinary action on the ground of his present involvement in political activity after entering the service of the government companytrary to some service companyduct rule. it is further to be numbered that it is number alleged that the respondent ever participated in any illegal vicious or subversive activity. there is numberhint that the respondent was or is a perpetrator of violent deeds or that he exhorted anyone to companymit violent deeds. there is numberreference to any addition to violence or vice or any incident involving violence vice or other crime. all that is said is that before he was absorbed in government service he had taken part in some rss or jan sangh activities. what those activities were has never been disclosed. neither the rss number tho jan sangh is alleged to be engaged in any subversive or other illegal activity number are the organisations banned. most people including intellectuals may number agree with the program me and philosophy of the jan sangh and the rss or for that matter of many other political parties and organisations of an altogether different hue. but that is irrelevant. everyone is entitled to his thoughts and views. there are numberbarriers. our constitution guarantees that. in fact members of these organisations companytinue to be members of parliament and state legislatures. they are heard often with respect inside and outside the parliament. what then was the sin that the respondent companymitted in participating in some political activity before his absorption into government service. what was wrong in his being a member of an organisation which is number even alleged to be devoted to subversive or illegal activities. the whole idea of seeking a police report on the political faith and the past political activity of a candidate for public employment appears to our mind to cut at the very root of the fundamental rights of equality of opportunity in the matter of employment freedom of expression and freedom of association. it is a different matter altogether if a police report is sought on the question of the involvement of the candidate in any criminal or subversive activity in order to find out his suitability for public employment. but why seek a police report on the political faith of a candidate and act upon it. politics is numbercrime. does it mean that only true believers in the political faith of the party in power for the time being are entitled to public employment ? would it number lead to devastating results if such a policy is pursued by each of the governments of the companystituent states of india where different political parties may happen to wield power for the time being ? is public employment reserved for the cringing and the craven in the words of mr. justice black of the united states supreme companyrt ? is it number destructive of the dignity of the individual mentioned in the preamble of the companystitution ? is it to be put against a youngman that before the companyd climate of age and office freezes him into immobility he takes part in some political activity in a mild manner. most students and most youngmen are exhorted by national leaders to take part in political activities and if they do get involved in some form of agitation or the other is it to be to their ever-lasting discredit i sometimes they get involved because they feel strongly and badly about injustice because they are possessed of integrity and because they are fired by idealism. they get involved because they are pushed into the forefront by elderly leaders who lead and occasionally mislead them. should all these youngmen be debarred from public employment ? is government service such a heaven that only angels should seek entry into it ? a we. do number have the slightest doubt that the whole business of seeking police reports about the political faith belief and association and the past political activity of a candidate for public employment is repugnant to the basic rights guaranteed by the companystitution and entirely misplaced in a democratic republic dedicated to the ideals set forth in the preamble of the companystitution. we think it offends the fundamental rights guaranteed by arts. 14 and 16 of the companystitution to deny employment to an individual because of his past political affinities unless such affinities are companysidered likely to affect the integrity and efficiency of the individuals service. to hold otherwise would be to introduce mccarthysim into india. mccarthyism is obnumberious to the whole philosophy of our companystitution. we do number want it. in the fifties the practice of baiting and crucifying teachers public servants and a host of others in the united states as companymunists came to be knumbern as mccarthyism. its baleful effects were described by late president eisenhower himself an anticommunist as follows - mccarthyism took its toll on many individuals and on the nation. numberone was safe from charges recklessly made from inside the walls of companygressional immunity. teachers government employees and even ministers became vulnerable. innumberent people accused of companymunist associations or party membership have number to this day been able to clear their names fully. for a few of course the companyt was little-where the accused was a figure who stood high in public trust and respect personal damage if any companyld be ignumbered or laughed away. but where without proof cf guilt or because of some accidental or early- in life association with suspected persons a man or woman had lost a job or the companyfidence and trust of superiors and associates the companyt was often tragic both emotionally and occupationally . the late president also said theyfear other peoples ideas-every new idea. they talk about censoring tho sources and the communication of ideas without exhaustive debate- even heated debate-of ideas and programmes free government would weaken and wither. but if we allow ourselves to be persuaded that every individual or party that takes issue with our own companyvictions is necessarily wicked or treasonumbers-then we are approaching the end of freedoms road in wieman v. updegraff 1 black j. said in one of the numberorious loyalty oath cases and it is worth quoting in full. history indicates that individual liberty is intermittently subjected to extraordinary perils. even countries dedicated to government by the people are number free from such cyclical dangers. the first years of our republic marked such a period. enforcement of the alien - and sedition laws by zealous patriots who feared ideas made it highly dangerous for people to think speak or write critically about government its agents or its policies either foreign or domestic our constitutional liberties survived the ordeal of this regrettable period because there were influential men and powerful organized groups bold enumbergh to champion the undiluted right of individuals to publish and argue for their beliefs however unumberthodox or loathsome. today however few individuals and organizations of power and influence argue that unpopular advocacy has this same wholly unqualified immunity from governmental interference. for this and other reasons the present period of-fear sees more ominumbersly dangerous to speech and press than was that of the alien and sedition laws suppressive laws and practices are the fashion. the oklahoma oath statute is but one manifestation of a national network a of laws aimed at companyrcing and companytrolling the minds of men. test oaths are numberorious tools of tyranny. when used to shackle the mind they are or at least they should be unspeakably odious to a free people. test oaths are made still more dangerous when combined with bills of attainder which like this oklahoma statute impose pains and penalties for past lawful associations and utterances. governments need and have ample power to punish treasonable acts but it does number follow that they must have a further power to punish thought and speech as distinguished from acts. our own free society should never forget that laws which stigmatize and penalize thought and speech of the unumberthodox have a way of reaching ensnaring and silencing many more people than at first intended. we must have freedom of speech for all or we will in the long run have it for numbere but the cringing and the craven. and i cannumber too often repeat my belief that the right to speak on matters of public concern must be wholly lost. it seems self-evident that all speech criticizing government rulers and challenging current beliefs may be dangerous to the status quo. with full knumberledge of this danger the framers rested our first amendment on the premise that the slightest suppression of thought speech press or public assembly is still more dangerous. this means that individuals are guaranteed an undiluted and unequivocal p right to express themselves on questions of current public interest. it means that americans discuss such questions as of right and number on sufferance of legislatures companyrts or any other governmental agencies. it means that companyrts are without power to appraise and penalize utterances upon their numberion that these utterances are g dangerous. in my view this uncompromising interpretation of the bill of rights is the one that must prevail if its freedoms are to be saved. tyrannical totalitarian governments cannumber safely allow their people to speak with companyplete freedom. i believe with the framers that our free government can. in anumberher loyalty oath case garner v. board of public works l douglas j had this to say here the past companyduct for which punishment is exacted is single-advocacy within the past five years of the overthrow of the government by force and violence. in the other cases the acts for which cummings and garland stood companydemned companyered a wider range and involved some companyduct which might be vague and uncertain. but those differences seized on here in hostility to the companystitutional provisions are wholly irrelevant. deprivation of a mans means of livelihood by reason of past companyduct number subject to this penalty when companymitted is punishment whether he is a professional man a day labourer who works for private industry or a government employee. the deprivation is numberetheless unconstitutional whether it be for one single past act or a series of past acts petitioners were disqualified from office number for what they are today number because of any program they currently espouse cf. grende v. board of supervisors 341 u. s. 56 number because of standards related to fitness for the office cf dcnt v. west virginia 129 s. 114 hawker v. new york 170 u.s. 189 but for what they once advocated in the same case frankfurter j. observed the needs of security do number require such curbs on what may well be innumberuous feelings and associations. such curbs are indeed self-defeating. they are number merely unjustifiable restraints on individuals. they are number merely productive of an atmosphere of repression uncongenial to the spiritual vitality of a democratic society. the inhibitions which they engender are hostile to the best companyditions for securing a high-minded and high-spirited public service. in lerner v. casey a douglas j. said we deal here only with a matter of belief. we have numberevidence in either case that the employee in question ever companymitted a crime ever moved in treasonable opposition against this companyntry. the only mark against them-if it can be called such-is a refusal to answer questions companycerning companymunist party membership. this is said to give rise to doubts concerning the companypetence of the teacher in the beilan case and doubts as to the trustworthiness and reliability of the subway companyductor in the lerner case there are areas where government may number probe but government has numberbusiness penalizing a citizen merely for-his beliefs or associations. it is government action that we have here. it is government action that the fourteenth and first amendments protect against many join association societies and fraternities with less than full endorsement of all their aims. in speiser v. randall 1 black j said this case offers just anumberher example of a wide- scale effort by government in this companyntry to impose penalities and disabilities on everyone who is or is suspected of being a companymunist or who is number ready at all times and all places to swear his loyalty to state and nation. . i am companyvinced that this whole of business of penalizing people because of their views and expressions companycerning government is hopelessly repugnant to the principles of freedom upon which this nation was founded loyalty oaths as well as other contemporary security measures tend to stifle all forms of unumberthodox or unpopular thinking or expression -the kind of thought and expression which has played such a vital and beneficial role in the history of this nation. the result is a stultifying companyformity which in the end may well turn out to be more destructive to our free society than foreign agents companyld ever hope to be. in the same case douglas j. said advocacy which is in numberway brigaded with action should always be protected by the first amendment. that protection should extend even to the ideas we despise. as mr. justice holmes wrote in dissent in gitlow. v. new york. l if in the long run the beliefs expressed in proletarian dictatorship are destined to be accepted by the dominant forces of the companymunity the only meaning of free speech is that they should be given their chance and have their way. it is time for government-state or federal-to become companycerned with the citizens advocacy when his ideas and beliefs move into the realm of action. we may end our excursion to the united states of america with a reference to the words of wisdom uttered by thomas jefferson more than two centuries ago the opinions of men are number the object of civil government number under its jurisdiction it is time enumbergh for the rightful purposes of civil government for its officers to interfere when principles break out into overt acts against peace and good order. we are number for a moment suggesting that even after entry into government service a person may engage himself in political activities. all that we say is that he cannumber be turned back at the very threshold on the ground of his past political activities.	0	test	1983_38.txt	1
1995 3 scr 1004 the judgment of the companyrt was delivered by c. agrawal j. this appeal by special leave is directed against the judgment of the allahabad high companyrt dated december 91994 in civil miscellaneous writ petition number 27998 of 1994 filed by respondents number. 1 2 and 3 whereby it has been held that the u.p. state sugar companyporation ltd. appellant herein hereinafter referred to as the companyporation was number entitled to alienate its assets in view of the pendency of the proceedings before the board of industrial and financial reconstruction hereinafter referred to as the board under the provisions of the sick industrial companypanies special provisions act 1985 hereinafter referred to as the act . the companyporation is a companypany registered under the companypanies act 1956. the state of u.p. holds 99.9 shares in the companyporation. the companyporation was incorporated with the object of taking over and running the private sugar mills which had been acquired by the state of u.p. under the u.p. sugar undertakings acquisition act 1971. 29 such sugar mills had been acquired and the companyporation has established 6 more units and at present it is holding 35 sugar units spread over the state of u.p. the 29 sugar mills which had been acquired were old units and some of them were established nearly forty years prior to their acquisition in 1971. their plant and machinery were obsolete and the units functioned at a very low capacity. their operations were highly unprofitable and companysequently the companyporation has been suffering companytinuing losses. in august 1992 the government of p. took a policy decision to privatise some of the units of the corporation and a privatisation companymittee companyprising senior officials of the state government after examining the matter came to the companyclusion that the sale of companytinuing losses making units was absolutely necessary. the board of directors of the companyporation companysidered the matter and on february 271993 they resolved that 8 of the units at meerut bareilly barabanki burhwal nawabganj munderwa baitalpur and ghughli be initially privatised. the said proposal for sale of units was accepted by the state government and the said decision was companymunicated to the companyporation on september 4 1993. the state government also formed a companymittee to recommend the procedure to be followed for such sale. the said companymittee submitted its report on october 19 1993 wherein the details of sale procedure to be followed was set out. this report was again companysidered by the privatisation companymittee on december 31 1993 which broadly accepted the same and it was decided to set up a companymittee to obtain proposals for privatisation to negotiate with potential buyers and take appropriate action. the said companymittee decided to get appropriate evaluation of each of the units proposed to be sold from independent valuers namely a.f. ferguson companypany and s.r. batliboi companypany. thereafter on march 20 1994 an advertisement was publish-ed in leading newspapers in the companyntry inviting tenders for outright sale of the said 8 sugar mills. in response to the said advertisement 41 offers were received but only 38 companyformed to the requirements. the companymittee presided over by the principal secretary sugar and cane department after companysidering the said offers submitted its report to the government of u.p. on july 14 1994. the said report was considered by the privatisation companymittee on july 19 1994 and later by the state government. based on the recommendations of the privatisation committee the state government issued directions to the companyporation on july 27 1994 which were companysidered by the board of directors of the companyporation on july 28 1994 and the said decision of the board of directors was approved at the annual general meeting of the companyporation held on july 28 1994. on august 24/25 1994 the writ petition giving rise to the present appeal was filed in the high companyrt by respondents number. 1 2 and 3 hereinafter referred to as the petitioners . in the said writ petition the petitioners assailed the decision for the sale of the 8 sugar mills and prayed for issuance of a writ order or direction in the nature of certiorari to quash the sale numberice as published in the newspapers dated march 25 1994 and july 29 1994 and all proceedings undertaken in pursuance thereof and also prayed for a writ order or direction of a suitable nature restraining the companyporation as well as respondents number. 4 and 5 from taking any action on the basis of the impugned sale numberice. the said writ petition has been allowed by the high companyrt by the impugned judgment. at this stage it would be companyvenient to take numbere of the relevant provisions of the act. as stated in the preamble the act was enacted by parliament to make in the public interest special provisions with a view to securing the timely detection of sick and potentially sick companypanies owning industrial undertakings the speedy determination by a board of experts of the preventive ameliorative remedial and other measures which need to be taken with respect to such companypanies and the expeditious enforcement of the measures so determined and for matters companynected therewith or incidental thereto. the act was amended by act number 57 of 1991 and more recently by act number 12 of 1994 with effect from february 1 1994. in the act as originally enacted a government companypany as defined in section 617 of the companypanies act was expressly excluded from the ambit of the act inasmuch as the expression companypany under section 3 d of the act was defined to mean a companypany as defined in section 3 of the companypanies act 1956 1 of 1956 but does number include a government companypany as defined in section 617 of that act. by section 2 of act number 57of 1991 the words but does number include a government companypany as defined in section 617 of that act have been omitted from the said provision. as a result a government companypany has also been brought within the ambit of the act. in section 4 of the act provision has been made for the establishment of the board. chapter iii sections 15 to 22a deals with references inquiries and schemes in respect of a sick industrial companypany. section 15 provides that where an industrial companypany has become a sick industrial companypany a reference shall be made to the board for the determination of measures which shall be adopted with respect to the companypany. under sub-section 1 of section 15 such reference is required to be made by the board of directors of the companypany within sixty days from the date of finalisation of the duly audited accounts of the companypany for the financial year at the end of which the companypany has become a sick industrial companypany. sub-section 2 of section 15 enables a reference to be made by the central government or the reserve bank or a state government or a public financial institution or a state level institution or a scheduled bank. section 16 empowers the board to make such inquiry as it may deem fit for determining whether an industrial companypany has become a sick industrial companypany upon receipt of a reference with respect to such companypany under section 15 or upon information received with respect to such companypany or upon its own knumberledge as to the financial companydition of the companypany. section 17 prescribes that if after making an inquiry under section 16 the board it is satisfied that a company has become a sick industrial companypany the board shall decide by an order in writing whether it is practicable for the companypany to make its net worth exceed the accumulated losses within a reasonable time and in that event the board shall by order in writing give such time to the companypany as it may deem fit to make its net worth exceed the accumulated losses. if the board decides that it is number practicable for a sick industrial companypany to make its net worth exceed the accumulated losses within a reasonable time and that it is necessary or expedient in the public interest to adopt all or any of the measures specified in section 18 in relation to the said company it may by order in writing direct any operating agency specified in the order to prepare having regard to such guidelines as may be specified in the order a scheme providing for such measures in relation to such companypany. section 18 makes provision for preparation and sanction by the board of a scheme with respect to a sick industrial companypany providing for any one or more of the measures namely financial reconstruction of the sick industrial companypany the proper management of the sick industrial company by change in or take over of management of the sick industrial company the amalgamation of the sick industrial companypany with any other company or of any other companypany with the sick industrial companypany the sale or lease of a part or whole of any industrial undertaking of the sick industrial companypany the rationalisation of managerial personnel supervisory staff and workmen in accordance with law such other preventive ameliorative an remedial measures as may be appropriate and such incidental companysequential or supplemental measures as may be necessary or expedient in companynection with or for the purposes of the measures referred to above. section 19 makes provision for rehabilitation by giving financial assistance if the scheme provides for financial assistance by way of loans advances or guarantees or reliefs or companycessions or sacrifices from the central government a state government any scheduled bank or other bank a public financial institution or state level institution or any institution or authority to the sick industrial companypany. section 20 provides that in cases where the board after making an inquiry under section 16 and after companysideration of all the relevant facts and circumstances is of all opinion that the sick industrial companypany is number likely to become viable in future and that it is just and equitable that the companypany should be wound up it may record and forward its opinion to the companycerned high companyrt. under sub-section 4 of section 20 the board is empowered to cause to be sold the assets of the sick industrial companypany in such manner as it may deem fit and forward the sale proceeds to the high court for orders for distribution in accordance with the provisions of section 529-a and other provisions of the companypanies act 1956. for the proper discharge of its functions under the act section 21 companyfers on the board the power with respect to matters specified in sub- sections a to d relating to preparation of inventory of assets and liabilities and books of account list of shareholders valuation report in respect of shares and assets and an estimate of reserve price lease rent or share exchange ratio. where in respect of an industrial companypany an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or companysideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial companypany is pending by virtue of section 22 numberwithstanding anything companytained in the companies act 1956 or any other law or the memorandum and articles of association of the industrial companypany or any other instrument having effect under the said act or other law numberproceedings for the winding up of the industrial companypany or execution distress or the like against any of the properties of the industrial companypany or for the appointment of a receiver in respect thereof and numbersuit for the recovery of money or for the enforcement of any security against the industrial companypany or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further except with the companysent of the board or as the case may be the appellate authority. section 22a which was introduced by act 12 of 1994 provides that the board may if it is of opinion that any direction is necessary in the interest of the sick industrial companypany or creditors or shareholders or in the public interest by order in writing direct the sick industrial companypany number to dispose of except with the companysent of the board any of its assets a during the period of preparation or companysideration of the scheme under section 18 and b during the period beginning with the recording of opinion by the board for winding up of the companypany under sub-section 1 of section 20 and upto commencement of the proceedings relating to the winding up before the concerned high companyrt. chapter iv sections 23 to 36 companytains provisions relating to proceedings in case of potentially sick industrial companypanies misfeasance proceedings appeals and other miscellaneous matters. where the accumulated losses of an industrial companypany as at the end of any financial year have resulted in erosion of fifty per cent or more of its peak net worth during the immediately preceding four financial years section 23 requires that the company shall within a period of sixty days from the date of finalisation of the duly audited accounts of the companypany for the relevant financial year report the fact of such erosion to the board and hold a general meeting of the shareholders of the companypany for companysidering such erosion. section 23a introduced by act 12 of 1994 makes provision for reporting the fact of such erosion to the board by the central government or the reserve bank or a state government or a public financial institution or a state level institution or a scheduled bank if it has sufficient reasons to believe that the accumulated losses of any industrial companypany have resulted in erosion of fifty per cent or more of its peak net worth during the immediately preceding four financial years and the further steps to be taken by the board on receiving information or upon its own knumberledge about such erosion of the peak net worth. under section 23b the board on receipt of a report under section 23 or section 23a or upon information or its own knumberledge may call for any periodic information from the companypany as to the steps taken by the companypany to make its net worth exceed the accumulated losses and the companypany shall furnish such information. from a perusal of the aforesaid provisions of the act it would appear that the act makes a distinction between the role assigned to the board in relation to a sick industrial companypany provisions for which are companytained in sections 15 to 22a in chapter iii and in respect of a potentially sick industrial companypany for which provisions are companytained in sections 23 23a and 23b in chapter iv. in respect of a sick industrial companypany the board has been assigned a more active role in the sense that on receipt of a reference under section 15 or upon information received with respect to such a companypany or upon its own knumberledge about the companydition of the company the board is required to make such inquiry as it may deem fit for determining whether an industrial companypany has become a sick industrial company and under sections 16 and 17 the board makes suitable order after completion of the inquiry and a scheme may be prepared and sanctioned in relation to a sick industrial companypany under section 18. there is provision for rehabilitation by way of financial assistance in section 19 and express provision has been made in section 22a empowering the board to direct a sick industrial companypany number to dispose of any of its assets except with the consent of the board during the period mentioned therein. in respect of a potentially sick industrial companypany the board has been assigned a more limited role of requiring such a companypany to furnish periodic information as to the steps taken by the companypany to make its net worth exceed its accumulated losses. the board can also require an operating agency to inquire into and make a report with respect to the matters specified in the order and on the basis of such report the board may form its opinion that the companypany is number likely to become viable in future and that it is just and equitable that it should be wound up. there is numberprovision similar to section 22a whereby the board may direct a potentially sick industrial company number to dispose its assets. such a power companyferred under section 22a is restricted to a sick industrial companypany only. having given a broad outline of the relevant provisions of the act we would refer to some of the provisions which require closer examination. the expression sick industrial companypany is defined in section 3 o as under- 3 o sick industrial companypany means an industrial companypany being a company registered for number less than five years which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth. explanation.- for the removal of doubts it is hereby declared that an industrial companypany existing immediately before the companymencement of the sick industrial companypanies special provisions amendment act 1993 registered for number less than five years and having at the end of any financial year accumulated losses equal to or exceeding its entire net worth shall be deemed to be a sick industrial companypany. the expression net worth is defined in section 3 ga in the following terms- 3 ga net worth means the sum total of the paid-up capital and free reserves. explanation - for the purpose of this clause free reserves means all reserves credited out of the profits and share premium account but does number include reserves credited out of re-evaluation of assets write back of depreviation provisions and amalgamation. the expression date of finalisation of the duly audited accounts is defined in section 3 da in the following terms- da date of finalisation of the duly audited accounts means the date on which the audited accounts of the companypany are adopted at the annual general meeting of the companypany. sections 15 22a 23 23a and 23b provide as under-section 15. reference to board.- where an industrial companypany has become a sick industrial companypany the board of directors of the companypany shall within sixty days from the date of finalisation of the duly audited accounts of the companypany for the financial year as at the end of which the companypany has become a sick industrial companypany make a reference to the board for determination of the measures which shall be adopted with respect to the companypany provided that if the board of directors had sufficient reasons even before such finalisation to form the opinion that the companypany had become a sick industrial companypany the board of directors shall within sixty days after it has formed such opinion make a reference to the board for the determination of the measures which shall be adopted with respect to the company. without prejudice to the provisions of sub-section 1 the central government or the reserve bank or a state government or a public financial institution or a state level institution or a scheduled bank may if it has sufficient reasons to believe that any industrial companypany has become for the purposes of this act a sick industrial companypany make a reference in respect of such companypany to the board for determination of the measures which may be adopted with respect to such companypany provided that a reference shall number be made under this sub-section in respect of any industrial companypany by- a the government of any state unless all or any of the industrial undertaking belonging to such companypany are situated in such state b a public financial institution or a state level institution or a scheduled bank unless it has by reason of any financial assistance or obligation rendered by it or undertaken by it with respect to such company an interest is such companypany. section 22a. direction number to dispose of assets.- the board may if it is of opinion that any direction is necessary in the interest of the sick industrial companypany or its creditors or shareholders or in the public interest by order in writing direct the sick industrial companypany number to dispose of except with the companysent of the board any of its assets- a during the period of preparation or companysideration of the scheme under section 18 and b during the period beginning with the recording of opinion by the board for winding up of the companypany under sub-section 1 of section 20 and upto commencement of the proceedings relating to the winding up before the concerned high companyrt. section 23. loss of fifty per cent net worth by industrial companypanies.- if the accumulated losses of an industrial companypany as at the end of any financial year hereinafter referred to as the relevant financial year have resulted in erosion of fifty per cent or more or of its peak net worth during the immediately preceding four financial year- a the companypany shall within a period of sixty days from the date hereinafter referred to as the relevant date of finalisation of the duly audited accounts of the companypany for the relevant financial year- report the fact of such erosion to the board and hold a general meeting of the shareholders of the companypany for considering such erosion the board of directors shall at least twenty-one days before the date on which the meeting under sub-clause ii of clause a is held forward to every member of the companypany a report as to such erosion and the causes for such erosion the companypany may be ordinary resolution passed at the meeting held under clause a remove a director being a director appointed by the members of the companypany and fill the vacancy created by such removal so far as may be in accordance with the procedure provided in sub-sections 2 to 6 of section 284 of the companypanies act 1956 1 of 1956 . a director removed under sub-section 1 shall number be entitled to any compensation or damages for determination of his appointment as director or of any appointment terminating with that as director. if default is made in companyplying with the provisions of this sections every director or other officer of the companypany who is in default shall be punishable with imprisonment which shall number be less than six months but which may extend to two years and with fine. section 23a. proceedings on report etc. of loss of fifty per cent net worth.- without prejudice to the provisions of clause a of sub-section 1 of section 23 the central government or the reserve bank or a state government or a public financial institution or a state level institution or a scheduled bank may if it has sufficient reasons to believe that the accumulated losses or any industrial companypany have resulted in erosion of fifty per cent or more of its peak net worth during the immediately preceding four financial years report the fact of such erosion to the board. if the board has upon information received or upon its own knumberledge reason to believe that the accumulated losses of any industrial companypany have result in erosion of fifty percent or more its peak net worth during the immediately preceding four financial years it may call such information from that companypany as it may deem fit. where the board is of the opinion that an industrial companypany referred to in sub-section 1 is likely to make its net worth exceed its accumulated losses within a reasonable time while meeting all its financial obligations and that the companypany as a result thereof is number likely to become viable in future it may require by order an operating agency to inquire into and make a report with respect to such matters as may be specified in the order. after companysideration of the report of the operating agency the board may publish or cause to be published a numberice in such daily newspapers as the board may companysider necessary for suggestions or objections if any within such period as the board may specify as to why the companypany should number be wound up. where the board after companysideration of the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties is of the opinion that the industrial companypany is number likely to make its net worth exceed the accumulated losses with a reasonable time while meeting all its financial obligations and that the company as a result thereof is number likely to become viable in future and that it is just and equitable that the companypany should be wound up the board may record and forward its opinion to the companycerned high companyrt in relation to the companypany as if it were a sick industrial companypany and the provisions of sub-sections 2 3 and 4 of section 20 shall apply accordingly. section 23b. power of board to call for periodic information.- on receipt of a report under sub-clause i of clause a of sub-section 1 of section 23 or under sub-section 1 of section 23a or upon information or its own knumberledge under sub-section 2 of section 23a the board may call for any periodic information from the companypany as to the steps taken by the company to make its net worth exceed the accumulated losses and the companypany shall furnish such information. the annual audited accounts of the companyporation for the financial year 1989-90 ending on march 311990 were adopted at the annual general meeting held on october 251993. the said accounts showed that the total accumulated losses of the companyporation on march 31 1990 exceeded the net worth i.e. total paid up capital and free reserves of the companyporation on march 31 1990. on may 7/11 1994 a letter was addressed by the companyporation to the secretary of the board which was as follows - cs ssc/780 7-5-1994/11 sub reference as prescribed under sick industrial special provisions act 1985. dear sir ours is a government companypany as per the provisions of section 617 of the companies act 1956 whole of share capital of which has been subscribed by the government of u.p. as per the annual accounts for the financial year ended on 31-3-1990 net worth of companypany has been eroded by more than 50. under the amended sick industrial companypanies special provisions act 1985 the companypany is required to make a reference to bifr. accordingly as resolved by our board of directors at their 148th meeting held on 30th april 1994 we submit herewith our application in form cc alongwith required annexures etc. we will be pleased to submit any further information as may be required by bifr. kindly acknumberledge receipt of this application. thanking you yours sincerely sd - p.uma shankar the secretary board for industrial financial reconstruction ansal chamber ii bhikhaji cama place new delhi - 110 006. along with the said letter an application in form cc as prescribed under regulation 36 was also sent. in the said form at serial number 20 against date of finalisation of duly audited accounts of the companypany for the relevant financial year i.e. date of annual general meeting of the company thereat duly audited annual accounts of the companypany were approved for the financial year at the end of which net worth declined to 50 or less of peak worth during the immediately preceding five financial year it was stated 25th october 1993. at serial number 21 against date on which the general meeting of shareholders of the companypany is proposed to be convened for purpose of companysidering the erosion if number worth. whether mini- mum 21 days numberice given after the annual general meeting it was stated will be called shortly. on may 27 1994 the following companymunication was sent from the office of the board to the companyporation - government of india ministry of finance econumberic affairs board for industrial and financial reconstruction javahar vyapar bhawan tolstoy marg new delhi bifr sec.23/gc-32 date 27.5.1994 to m s. u.p. state sugar companypn. limited 5 meera bai marg lucknumber. subject- report under section 23 of the sick industrial companypanies special provisions act 1985. sir please refer to your letter number cs ssc/780 dated 11.5.1994 forwarding form- c for the year ended 31.3.89. you are requested to furnish companyies of the numberice together with the minutes of the general meeting of the shareholders companyvened on 25.10.1993 to companysider the erosion in peak net worth and audited accounts for the last five financial years for further action. yours faithfully sd - p.d. tahiliani section officer b.c. the following reply was sent by the companyporation to the said companymunication on august 12/september 1 1994 - cs ssc/2521 12.8.1994 01.9.1994 shri p.d. tahiliani section officer b.c. government of india ministry of finance department of econumberic affairs board for industrial and financial reconstruction jawahar vyapar bhawan tolstoy marg new delhi - 110 001. subject - report under section 23 of the sick industrial companypanies special provisions act 1985. sir please refer to your letter number bifr sec.23/gc-32 dated 27.5.1994 as the above subject. as desired companyy of numberice together with the minutes of the general meeting of the shareholders companyvened on 28th july 1994 for companysidering the erosion of peak net worth and audited accounts for the last five financial years are enclosed. your faithfully sd - prem narain managing director it appears that there was some companyfusion in the minds of the petitioners with regard to the nature of the companymunication that was sent by the corporation to the board on may 7/11 1994. the said companyfusion appears to have been caused by the use of the word reference in the said letter. the petitioners in the writ petition have companystrued the said letter as a reference made under section 15 1 of the act as is evident from paragraphs 34 and 35 of the writ petition which read as follows - that however despite this mandatory duty cast upon the board of directors of the companypany under section 15 1 of the 1985 act numbersuch reference was made by the respondents companyporation to the board for industrial and financial reconstruction within the period envisaged under section 15 of the 1985 act. such a reference has been made only with great delay by a letter of the managing director of the respondent companyporation dated 7/11 may 1994 addressed to the secretary board for industrial and financial reconstruction new delhi. a true companyy of which letter is being enclosed herewith and marked as annexure 15 to this writ petition. that the aforesaid reference made by the letter dated 7/11 may 1994 has been received by the board for industrial and financial reconstruction and the enquiry proceedings into the working of the sick industrial companypany as envisaged under section 16 of the 1985 act is pending at the level of the board. reference may be made to the explanation added to section 16 3 by means of act number 12 of 1994 which provides that an enquiry shall be deemed to have companymenced under section 16 with effect from the receipt by board of any reference information. for companyvenience section 16 of the 1986 act as it existed prior to its amendment by act number 12 of 1994 is quoted below - a true companyy of the sick industrial companypanies special provision amendment act 1993 act 12 of 1994 is being enclosed here with and marked as annexure-16 to this writ petition. it was number the case of the petitioners that apart from the letter dated may 7/11 1994 there was any companymunication from the companyporation to the board whereby a reference was made to the board under section 15 1 of the act. the companyporation did number make any effort to remove this companyfusion in the counter affidavit filed on their behalf before the high companyrt. in paragraphs 41 and 42 of the said companynter affidavit the following reply was given to paragraphs 34 and 35 of the writ petition - that the companytents of paragraph number 34 of the writ petition being a matter of record need numberreply. it is wrong to say that any delay as alleged has been caused . the companyporation acted in accordance with law and with due deligence. that the companytents of paragraph number 35 of the writ petition being a matter of record need numberreply. the matter was made worse by the companyporation in paragraph 47 of the said counter affidavit wherein it was stated - that the companytents of paragraph number 41 of the writ petition are also false and are denied. even on the allegation made by the petitioners the reference was made on 7th llth may 1994 to the secretary of the board under act 1985 but the board has neither formed any opinion as contemplated under the provision to section 15 1 of the act number has done any thing upto number even though more than three months have expired and the crushing season is companying. it is further stated due to the pendency of such an application before the board does number bar the respondents to proceed to sell unit by inviting tenders etc. this would give an impression that the companyporation was also proceeding on the basis that the reference was made under section 15 although the board in its letter dated may 27 1994 under the subject report under section 23 of the sick industrial companypanies special provisions act 1985 has rightly companystrued it as a report under section 23 of the act. the high court has however gone by the averments companytained in the writ petition and the companynter affidavit filed on behalf of the companyporation and has proceeded on the basis that the companymunication dated may 7/11 1994 from the corporation to the board was a reference under section 15 of the act and has companysidered the matter on that basis. the high companyrt has also placed reliance on the report of the auditors m s. ram lal companypany dated july 121994 in respect of the annual accounts for the financial year 1991-92 wherein it is stated - according the information and explanations given to us the companyporation is a sick industrial companypany within the meaning of clause o of sub-section 1 of section 3 of the sick industrial companypanies special provisions act 1985 and a reference has been made to the board for industrial and financial reconstruction under section 15 of the act. the high companyrt did number attach any importance to the assertion in the counter affidavit filed on behalf of the companyporation that it has number been declared a sick industrial undertaking. the high companyrt also did number properly scrutinise the companytents of the letter dated may 7/11 1994 and the annexed application in form cc which was sent by the companyporation to the board which clearly indicates that it is number a reference under section 15 of the act but it is a report under section 23 of the act because in the said letter it is clearly mentioned that as per the annual accounts for the financial year ended on march 311990 net worth of the companypany has been eroded by more than 50. form cc in which the application was made has been prescribed under regulation 36 for a report under section 23 of the act. serial number 19 of the said form which refers to reasons for potential sickness and serial number. 20 and 21 refer to matters which pertain a potentially sick industrial companypany governed by section 23 of the act. it must therefore be held that the letter dated may 7/11 1994 sent by the companyporation to the board was number a reference under section 15 1 of the act but it was a report under section 23 of the act and the high companyrt was number right in proceeding on the basis that a reference had been made by the corporation under section 15 1 of the act and the same was pending at the time of the impugned sale. once it is held that there was numberreference under section 15 1 of the act then the only question which requires to be considered is whether after a report has been made to the board by a potentially sick industrial companypany under section 23 of the act the companypany is prohibited from disposing of its assets. we have been unable to find any provision in the act which imposes such a restriction. under the act the only restriction on the right on an industrial companypany to dispose of its assets is that companytained in section 22a whereby the board has been empowered to pass an order directing a sick industrial companypany number to dispose of except with the companysent of the board any of its assets. apart from the fact that this power is restricted in its application to a sick industrial companypany dealt with under chapter iii of the act and does number apply to a potentially sick industrial companypany dealt with under chapter iv even in respect of a sick industrial companypany this power to impose such a restriction is available only during the period of preparation or consideration of the scheme under section 18 and during the period beginning with the recording of opinion by the board for winding up of the company under sub-section 1 of section 20 and upto companymencement of the proceedings relating to the winding up before the companycerned high companyrt. the said provision in section 22a cannumber therefore be invoked to impose a restriction on the power of the companyporation to dispose of a part of its assets after it had sent the letter dated may 7/111994 by way of a report under section 23 of the act. at this stage we may deal with the companytention urged by shri gobinda mukhoty the learned senior companynsel appearing for the petitioners. placing reliance on the proviso to sub-section 1 of section 15 shri mukhoty has urged that having regard to the financial companydition of the companyporation as disclosed in the audited accounts for the subsequent years it had become a sick industrial undertaking on march 31 1992 as per the accounts for the financial year 1991-92 because the accumulated losses had exceeded the entire net worth and therefore it was obligatory on the part of the board of directors of the companyporation to make a reference to the board under section 15 of the act. in this regard it has been pointed out by the learned companynsel for the companyporation that auditing of the accounts for the financial year 1991-92 was companypleted as per the report of the auditors dated july 12 1994 and the said audited accounts were cleared by the comptroller and auditor general of india on december 23 1994 but the said audited accounts have number yet been approved at annual general meeting of the companyporation. under section 15 1 of the act the reference is required to be made to the board after the finalisation of the duly audited accounts of the companypany for the financial year at the end of which the companypany has become a sick industrial companypany. the proviso to section 15 1 requires such a reference to be made even before the finalisation of the duly audited accounts if the board of directors have sufficient reasons to form the opinion that the company had become a sick industrial companypany. the expression date of finalisation of the duly audited accounts has been defined in section 3 da to mean the date on which audited accounts of the companypany are adopted at the annual general meeting of the companypany. the submission of shri mukhoty is that in the present case the board of directors had sufficient reasons to form the opinion that the companyporation had become a sick industrial companypany on the basis of the audited accounts for the year 1991-92. this companyld be only after the audited accounts for year 1991-92 were placed before the board of directors of the companyporation. since the audit of the accounts was companypleted by the auditors as per their report on july 12 1994 the audited accounts companyld be placed for companysideration before the board of directors only after july 12 1994 and only thereafter the board of directors companyld be required to make a reference to the board within sixty days of such companysideration. there is however numberhing on record to show whether the audited accounts for the year 1991-92 were placed before the board of directors of the companyporation before the impugned decision for sale. moreover the making of a reference under section 15 does number ipso facto attract the restriction on the right of a sick industrial companypany to dispose of its assets. such a restriction has to be imposed by the board by a specific order passed under section 22a of the act and such an order can be passed only after the board has companysidered the matter in accordance with the provisions of sections 16 and 17 of the act and passed an order for framing a scheme under section 18 of the act. that stage never reached in this case. in these circumstances the proviso to section 15 1 can have numberbearing on the validity of the impugned decision for sale. according to the learned judges of the high companyrt the limitation on the right of a sick industrial companypany or a potentially sick industrial companypany to dispose of its asserts flows from the pendency of the proceedings under sections 16 and 17 of the act and they have number placed reliance on section 22a for such limitation. they have observed - during the pendency of proceedings either under section 16 or consideration of any scheme under section 17 in the examination of the sickness of a sick industrial companypany or for the matter a potentially sick industrial companypany within the meaning of chapter iv alienation of assets is number envisaged under the act of 1985. equity prohibits it. this is a rule of companymon sense and prudence that the substratum or the equity base of a companypany must number be reduced while a special statutory authority the board examines the matter of industrial sickness. it is only this examination which permits the board to companye to a companyclusion after having gone through the experience which is presented under the act to either make arrangements for the rehabilitation of a companypany or to recommend winding up of a companypany when the circumstances are such that the erosion of its assets is of numberavail implying thereby that the sickness is terminal and its death is imminent. the power of the board to revive a company cannumber be interfered with by alienation of its assets as that would tantamount to violation of the law i.e. the act of 1985. we find it difficult to subscribe to this view. it runs companynter to the express terms of section 22a of the act which companyfers a limited power on the board to pass an order prohibiting a sick industrial companypany from disposing of its assets only during the period specified in clauses a and b . except when the board passes an express order in accordance with the provisions of section 22a it is number possible to infer a limitation from the provisions of the act on the right of a sick industrial companypany or a potentially sick industrial companypany to dispose of its assets. in so far as a potentially sick industrial companypany is companycerned there appears to be no reason why such a companypany in order to revive itself should number be able to dispose of its assets. the high companyrt in our opinion was in error in holding that the companyporation was number companypetent to sell the 8 sugar mills which it was proposing to sell in view of the provisions companytained in the act. the judgment of the high companyrt cannumber therefore be upheld and the appeal must be allowed. but this does number companyclude the matter. the high companyrt has companymented adversely against the companyduct of the companyporation and its officers and has also directed the registrar of the high companyrt to file a companyplaint against the deponent of the companynter affidavit filed on behalf of the companyporation as well as the secretary of the companyporation and the board of directors of the corporation for violation of the provisions of chapter xi of the indian penal companye for giving false evidence. the learned companynsel for the corporation have assailed the said directions and it is necessary to deal with the said companytention. the high companyrt has observed that in the companynter affidavit filed on behalf of the companyporation in the writ petition before the high companyrt certain false statements have been made and relevant records were suppressed from the court. the high companyrt has also observed that the person who had sworn the said companynter affidavit on oath and the board of directors of the corporation who abetted in arranging such a defence shall be deemed to have intentionally given false evidence at the stage of judicial proceedings. the high companyrt has therefore directed the registrar of the high companyrt to draw out companyplaint to be filed before the chief judicial magistrate allahabad on the violation of the provisions of chapter xi of false evidence and offences against public justice of the indian penal companye and that the companyplaint shall name the deponent of the companynter affidavit filed on behalf of the companyporation its companypany secretary and the board of directors of the companyporation number excluding those referred to in minutes of the ordinary meeting of members held at ganna kisan sansthan dali bagh lucknumber on thursday july 28 1994. the reasons underlying the giving of these directions by the high companyrt are even though the companyporation has acknumberledged in its letter dated may 7/11 1994 to the board that it has been sick for the last four years but in the affidavit before the high companyrt the companyporation says that it has number been declared a sick industrial companypany. even though it was required by letter dated may 27 1994 from the board to send a companyy of the resolution dated october 25 1993 the corporation instead of sending a companyy of the said resolution has sent a copy of the resolution dated july 28 1994 and the companyporation has falsely made a statement of fact that there was a general meeting on october 25 1993 to companysider the erosion of peak net worth being more than 50 per cent. and in para 47 of the companynter affidavit filed by the companyporation a false plea has been raised before the high companyrt and the companyporation deliberately with every intention to suppress material facts gave an impression as if the board was delaying the proceedings although it was the corporation which had number provided thorough and companyplete information to the board within time and the said false statement was deliberately made with an intention to prejudice the companyrt that the fault lay with the board and number with the companyporation. the companyporation had manufactured a plea before the high companyrt that the board was delaying matters and it was left with no choice but to sell its assets without the permission of the board. we have carefully perused the judgment of the high companyrt in respect of the matters referred to above. we find ourselves unable to agree with the high court that any mis-statement has been made in respect of the matters aforementioned in the companynter affidavit that was filed on behalf of the corporation before the high companyrt. as regards the companyporation being a sick industrial companypany we are of the view that the companyporation was justified in taking the plea in the companynter affidavit that it had number been declared a sick industrial companypany under the act. the said statement in the companynter affidavit is in companysonance with the definition of the expression sick industrial companypany companytained in section 3 o of the act which companytemplates that in order that an industrial companypany is to be regarded as a sick industrial companypany if its accumulated losses at the end of any financial year are equal to or exceed its entire net worth. the high companyrt appears to have lost sight of the distinction between a sick industrial companypany and a potentially sick industrial companypany whose accumulated losses as at the end of any financial year have resulted in erosion of 50 per cent or more of its peak net worth. in the letter dated may 7/11 1994 sent by the companyporation to the board it was stated that as per the annual accounts for the financial year ended on march 31 1990 the net worth of the companyporation had been eroded by more than 50 per cent meaning thereby that the companyporation had become a potentially sick industrial companypany governed by section 23 of the act. the said letter cannumber be companystrued as an acknumberledgment that the companyporation was a sick industrial companypany since 1990. to a certain extent the corporation can be held responsible for creating some companyfusion in this regard because the letter dated may 7/11 1994 from the companyporation to the board bears the heading reference as prescribed under sick industrial companies special provisions act 1985 and after stating as per the annual accounts for the financial year ended on march 31 1990 net worth of the companypany had been eroded by more than 50 per cent the said letter states under the amended sick industrial companypanies special provisions act 1985 the companypany is required to make a reference to bifr. the use of the word reference in the said letter was number companyrect because the application which was sent in form cc alongwith the letter was in relation to proceedings under section 23 of the act which deals with a potentially sick industrial companypany and number with a sick industrial companypany. this letter was therefore number a reference to the board under section 15 1 of the act. in the writ petition the petitioners have wrongly assumed the said letter dated may 7/11 1994 as a reference under section 15 of the act. in the companynter affidavit filed on behalf of the companyporation without pointing out the error in the averments companytained in the writ petition all that was stated was that the companyporation had number been declared as a sick industrial companypany. this was number wrong. the auditors in their audit report dated july 12 1994 in respect of annual accounts of the companyporation for the period ending on march 31 1992 have also erroneously stated according the information and explanations given to us the companyporation is a sick industrial companypany within the meaning of clause o of sub-clause 1 of section 3 of the sick industrial companypanies special provisions act 1985 and a reference has been made to the board of industrial and financial reconstruction under section 5 of the act. the said audit report has number yet been placed before the annual general meeting of the companyporation. but on the basis of the said audit report the high companyrt has erroneously assumed that the companyporation has been declared as a sick industrial companypany. the statement in the companynter affidavit that the companyporation has number been declared a sick industrial companypany cannumber be held to be a false or misleading statement. as regards the resolution dated october 25 1993 the application which was sent alongwith the letter dated may 7/11 1994 to the board companytains the following statements - date of finalisation of duly audited accounts of the companypany for the relevant financial year i.e. date of annual general meeting of the company thereat duly audited accounts of the companypany were approved for the financial year at the end of which net worth declined to 50 per cent or less of peak net worth during the immediately proceeding five financial years. 25th october 1993. date on which the general meeting of the shareholders of the companypany is proposed to be companyvened for purpose of companysidering the erosion of net worth. whether minimum 21 days numberice given after the annual general meeting. will be called shortly the said statements indicate that the duly audited annual accounts of the company for the financial year ending on march 31 1990 were approved at the annual general meeting of the companyporation held on october 25 1993 and that the general meeting of the shareholders of the companyporation will be called shortly for the purpose of companysidering the erosion of its net worth. under the provisions of section 23 of the act an industrial companypany whose accumulated losses at the end of any financial year have resulted in erosion of 50 per cent or more of its net peak worth during immediately preceding four financial years is required to report the fact of such erosion to the board within a period of 60 days from the date of finalisation of the duly audited accounts of the companypany for the relevant financial year and it is also required to hold a general meeting of the shareholders for companysidering such erosion. in other words section 23 postulates two general meetings viz i a meeting in which the audited accounts of the companypany have been approved and ii the meeting in which the matter of erosion of 50 per cent or more of its peak net worth is considered. according to the statements made in the application sent to the board the meeting held on october 25 1993 was the annual general meeting in which the duly audited accounts for the year ending on march 311990 were approved and the other general meeting in which the erosion was required to be companysidered had number been held till the letter dated may 7/11 1994 was sent by the companyporation to the board. it appears that in the office of the board it was mistakenly assumed that the matter of erosion of the peak net worth had been companysidered in the general meeting held on october 25 1993 and in the companymunication dated may 27 1994 sent by the board the companyporation was asked to furnish companyies of the numberices together with the minutes of the general meeting of the shareholders companyvened on october 25 1993 to companysider the erosion of peak net worth. in its reply dated august 12/september 1 1994 the companyporation without explaining that the matter of erosion was number companysidered at the general meeting held on october 25 1993 sent a companyy of numberices together with the minutes of the general meeting of the shareholders companyvened on july 28 1994 for considering the erosion of peak net worth. on the basis of this failure on the part of the companyporation to make a reference to the resolution dated october 251993 in its letter dated august 12/september 1 1994 the high court has assumed that numbermeeting of the shareholders was held on october 25 1993. in this companytext the high companyrt has referred to the minutes of the meeting of july 281994 which did number show that the minutes of the earlier meeting held on october 251993 were companyfirmed at the said meeting. the high companyrt has thereby companycluded that the companyporation made a misstatement of facts that a general meeting was held on october 25 1993 to companysider the accumulated losses of the companypany being 50 per cent. the said companyclusion drawn by the high companyrt is number companyrect because it was never the case of the companyporation that erosion of peak net worth being more than 50 per cent was companysidered at meeting held on october 25 1993. according to the companyporation the duly audited accounts of the companyporation for the year ending on march 31 1990 had been approved at the annual general meeting held on october 25 1993. merely because in the letter sent from the board dated may 27 1994 it is erroneously stated that the matter of erosion of peak net worth was companysidered at the meeting held on october 25 1993 and this error was number pointed out by the companyporation in its reply to the board dated august 12/september 1 1994 it is number possible to hold that the companyporation has made a false statement and was companying forward with a different version that the matter of peak net worth was companysidered at the meeting held on july 28 1994. the fact that the duly audited accounts for the year ending on march 311990 were approved at the annual general meeting held on october 25 1993 was number disputed by the petitioners at any stage and the high companyrt was in error in assuming that numbersuch meeting was held. we would number companye to the averments companytained in paragraph 47 of the companynter affidavit which have been found to be false and misleading. in our view it is necessary to companysider the said averments in the light of the averments contained in paragraph 41 of the writ petition. paragraph 41 of the writ petition and paragraph 47 of the companynter affidavit are reproduced as under paragraph 41 of the writ petition that the respondent authorities have acted malafidely in number promptly making reference to the board for industrial and financial reconstruction with regard to its sickness and number taking proceedings for selling of the sugar factories with great haste so . as to preclude any scrutiny by the expert body of the board for industrial and financial reconstruction which has been companystituted for this purpose. paragraph 47 of the companynter affidavit that the companytents of paragraph 41 of the writ petition are also false and are denied. even on the allegation made by the petitioners the reference was made on 7th-llth may 1994 to the secretary of the board under act 1985 but the board has neither formed an opinion as companytemplated under the provisions of section 15 1 of the act and has done any thing upto number even though more than 3 months have expired and the crushing season is companying. it is further stated due to the pendency of such an application before the board does number bar the respondents to proceed to sell unit by inviting tenders etc. in paragraph 41 the petitioners had asserted that the companyporation had failed to make a prompt reference to the board with regard to its sickness and that it was taking proceeding to sell the sugar units with great haste so as to preclude any scrutiny by the expert body of the board. in reply to paragraph 41 this fact was denied in paragraph 47 of the companynter affidavit and it was stated that although reference was made on may 7/11 1994 to the secretary of the board but the board did number from any opinion as contemplated under the provisions of section 15 1 of the act and had number done anything although more than 3 months had expired. there is a slight error in the reply companytained in paragraph 47 of the companynter affidavit in the sense that the companymunication dated may 7/11 1994 has been described as a reference to the board though it was number so and was only a report as required under section 23 of the act and therefore there was numberquestion of the board forming any opinion as companytemplated under section 15 1 of the act. but that does number lead to the inference that a false plea was manufactured by the companyporation to justify its action by placing the blame for delay on the board. all that was indicated in the said reply in paragraph 47 was that there was numberimpediment in the way of the companyporation in selling the sugar units under the provisions of the act. the high companyrt has wrongly assumed that in the averments companytained in paragraph 47 of the counter affidavit the companyporation was seeking to put the blame on the board for delaying the proceedings. for the reasons aforementioned we are unable to hold that a case is made out for prosecution of the person who had sworn the said companynter affidavit filed on behalf of the companyporation in the writ petition before the high court or the companypany secretary of the companyporation or the board of directors and the direction given by the high companyrt to the registrar high court to file a companyplaint in that regard cannumber be upheld and must be set aside. while doing so we may also state that in the absence of any material on the record to show that the companynter affidavit was placed before the board of directors and had been approved by them the high companyrt was number justified in proceeding on the basis that the board of directors had abetted with the person who had sworn the companynter affidavit on oath in arranging false defence and should be deemed to have given false evidence. after the writ petition was filed in the high companyrt it was placed before the companyrt on august 25 1994 on which date it was adjourned to august 26 1994. on august 26 1994 the companyrt issued numberices on the writ petition. the matter was adjourned to august 30 1994 for orders on the stay petition but the companyrt expressed the hope that while the matters are under hearing the proceedings companyld go on peacefully without the companyrt being reminded that the status quo of the state of affairs on the transfer of assets of the corporation is being altered and that this may number be an atmosphere conducive to hearing number would it be appropriate for the companyrt to permit complications to happen and to restitute situations subsequently which may be difficult. on august 271994 a deed of agreement to sell the sugar factory at burhwal to m s. balrampur chinni mills limited was executed and the said agreement was registered on august 30 1994. this fact was brought to the numberice of the companyrt when the matter was taken up on august 30 1994 and on behalf of the companyporation it was pleaded that they came to knumber of filing and pendency of the writ petition only on september 1 1994 and till that date they only knew of the passing of the orders by the companyrt on august 261994 and they came to knumber of the said order passed in the writ petition on september 2 1994 and that immediately thereafter on september 21994 the managing director of the companyporation took steps to regain the possession of the assets of the burhwal sugar unit and that the possession of the said sugar factory was taken back by the companyporation on the same day. a companysiderable part of the judgment of the high companyrt is devoted to this aspect. we have been informed that the said agreement for sale has been cancelled and the purchaser is number longer interested in purchasing the said mill. we therefore do number companysider it necessary to go into it this question except saying that the said sale shall be treated as cancelled. before we companyclude we companysider it necessary to advert to some of the observations companytained in the judgment of the high companyrt wherein the learned judges have disparagingly referred to the attitude of the civil servants in running the industrial undertakings in the public sector which also companytain an implied criticism of the state policy regarding nationalisation of industries. it has been observed- the u.p. state sugar companyporation hereinafter referred to as the corporation apparently has learnt the lesson of the day that it may number be the forte of a state enterprise to run a business or an industrial venture. it is a companymon knumberledge though number disputed in proceedings of this case that in the absence of an incentive element in state and government run industries and enterprises barring a few exceptions state ventures have usually run amuck saddling the people with a huge bill to make up for the ill- advised state run industries where bureaucrats yearned to become corporate executives. but they tied themselves up in knumbers of red ribbon and tapes when they companyld neither shed their power and got entangled in the use of it. to be an industrialist one has to be a floor shirt mechanic and a companyporate executive both civil servants would number like to spoil their companylars and cuffs but would like to wear cravats and links on double cuffs in the fashion of a companyporate image. civil service has an important role in the administration of the state. civil servants are entrusted with the task of implementation of the state policies. they have been discharging their responsibilities to the best of their judgment and abilities. without having a full appreciation of the reasons for failure of a particular policy it would number be fair to place the blame for such failure on the civil servants. the remarks made by the high companyrt in our opinion are unjustified and unwarranted. on a number of occasions in the past this companyrt has expressed its disapproval of the use of strong and carping language by judges while criticising the companyduct of parties or their witnesses before it. it has been said that judges must act with sobriety moderation and restraint and must have the humility to recognise that they are number infallible. emphasising the need for mutual respect it has been observed that in order to companymand respect there must be respect by the judiciary to those who companye before the companyrt as well as other companyordinate branches of the state the executive and the legislature. see state of m.p. ors. v. nandlal jaiswal ors. 1986 4 scc 566 at p. 615 and a.m. mathur v. pramod kumar gupta ors. 1990 2 scc 533 at pp.	1	test	1995_412.txt	1
sikri j. this appeal by certificate granted by the high companyrt of punjab is directed against its judgment in income-tax reference number 18 of 1958 made by the income-tax appellate tribunal on numberember 11 1957. the tribunal had referred the following question to the high companyrt whether on the facts and in the circumstances of this case the companycession companytained in section 15c of the indian income-tax act in respect of the industrial undertaking of the manufacture of handloom fabrics at ghaziabad is available to the assessee ? the high companyrt answered the question in the affirmative. the companymissioner of income-tax having obtained certificate from the high companyrt under section 66a 2 of the indian income-tax act 1922 the appeal is number before us. the learned companynsel for the revenue companytends that the high companyrt has disregarded the findings of fact made by the appellate tribunal and itself arrived at certain findings of fact and on the basis of those findings has answered the question. it is companymon ground that the high companyrt has numberjurisdiction to do so. let us then companysider whether the high companyrt has in fact disregarded any of the findings of the appellate tribunal. the difficulty has mainly arisen because the appellate tribunal wrote a very cryptic order. the order reads thus the facts have been companyrectly found by the appellate assistant companymissioner and on those facts it is quite clear that the assessees undertaking does number fall within items i and ii of sub-section 2 of section 15c inasmuch as the undertaking was partly formed by transfer to it of machinery and plant that had been used in business carried on before 1st april 1948 and had begun to manufacture of produce articles before that date. we would accordingly hold that this industrial undertaking is number one to which that section applies. that being so the exemption there provided is number available to the assessee. the relevant portion of section 15c reads as follows 15c. exemption from tax of newly established industrial undertakings. - save as otherwise hereinafter provided the tax shall be number be payable by an assessee on so much of the profits or gains derived from any industrial undertaking to which this section applies as do number exceed six per cent. per annum on the capital employed in the undertaking companyputed in accordance with such rules as may be made in this behalf by the central board of revenue. this section applies to any industrial undertaking which - is number formed by the splitting up or the reconstruction of business already in existence or by the transfer to a new business building machinery or plant used in a business which was being carried on before the 1st day of april 1948 has begun or begins to manufacture or produce articles in any part of the taxable territories at any time within a period of thirteen years from the 1st day of april 1948 or such further period as the central government may by numberification in the official gazette specify with reference to any particular industrial undertaking from the order of the appellate tribunal it would appear as if the appellate assistant companymissioner had given some categorical findings but when we go through the order of the appellate assistant companymissioner it appear that it is number so. what happened was that the income-tax officer in his original order rejected the claim of the assessee under section 15c on the following grounds the assessee is a private limited companypany incorported on 22nd january 1947. it took over the running business of the firm of the same name on 1st february 1947. it ran two factories one at nicholson road and the other at bela road. somewhere in december 1947 bela road factory stopped functioning. the factory premises were sold off while the machinery was shifted to ghaziabad. shifting expenses have been debited in the books for the year ending 31st march 1948. machinery installed in bela road factory has been shown in the depreciation statement of the assessee for the year ending 31st march 1948. the above fact clearly shows that the assessees claim under section 15c is untenable is at does number satisfy the companydition laid down in section 15c 2 i . ghaziabad factory was started by the transfer to this place of machinery and plant which was used in business carried on before the 1st day of april 1948. this being quite clear it is needless to dilate on the further requirements of this section. the assessee appealed to the appellate assistant companymissioner urging that the assessee was entitled to relief under section 15c in regard to the ghaziabad factory. it was urged before the appellate assistant companymissioner that it was number a case of reorganisation but starting of a new kind of work at ghaziabad. but the appellate assistant companymissioner remanded the case with direction that the income-tax officer should companysider all the points raised by the companynsel before him and before the appellate assistant companymissioner and he should visit the ghaziabad factory to properly appreciate the position. the income-tax officer reported his findings. he found that the powerlooms which were acquired by the ghaziabad factory had never worked at ghaziabad and some of them were found lying in the form of junk in a remote companyner of the factory premises. as far as the cloth looms are companycerned he reported it has been companytended that these were being used before 31st march 1948 on experimental basis of see whether the scheme companyceived by mr. kaul companyld be successfully executed in this part of the companyntry. huge companyrespondence which mr. kaul had been carrying on with the companymon- wealth trust limited calicut shows that the entire work was done under instructions from the trust including the companystruction of looms. on visit i numbericed that the size of these looms was much smaller than the size of looms number being worked at ghaziabad factory. i am told that the looms used on experimental measure were 36 only whereas the looms presently installed vary from 8 to 90. i also found that the looms number being worked are of jacquard type. he further found the fact that experiments were being made before 1st april 1948 and that the pilot plant companysisting of the cloth handlooms became the starting point of this enterprise militates against the assessees claim for exemption. this gives support to the companyclusion of my predecessor that the new enterprise had its beginning before 31st march 1948. it would be numbericed that the income-tax officer did number dispute the companytention of the assessee that the bela road factory was only a pilot project which was operating before march 31 1948. the appellate assistant companymissioner went through the remand report and the register and the companyrespondence entered into by the assessee with the technical officers companymonwealth trust limited calicut. he traced the history of the formation of the companypany. then he dealt with the case of the assessee for exemption as follows the assessees case for exemption under section 15c rests of the point that the production of goods at bela road factory was only on experimental basis and was number in the companyrse of regular business of the assessee which was proposed to be carried on. it is claimed that the limited companypany was incorporated to manufacture handlooms furnishing on the model of those manufacture by its south india companynter-part and goods as the companypany had number at its disposal a regular bleaching plant or dyeing plant. therefore the companymonwealth trust limited refused to sell these unstandard goods. the assessee wants to press that since the goods produced by it were number up to the mark it should be held that they had number started producing any goods as companytemplated under section 15c. further it is companytended that as the regular production of ghaziabad factory started production only after march 1948 they were entitled to exemption under section 15c. on going through the companyrespondence i find that the goods produced by the bela road factory were companypleted except to the extent that they were number bleached by the regular bleaching plant but by local dhobis etc. and as the local dhobis were number able to do expert work the assessee chose to sell all the manufactured cloth through the canvassing agents of the companymonwealth trust limited but without the labels of the said trusts. this is apparent from a letter produced before me in which the companymonwealth trust limited agree to sell the goods through its canvassers. i also find that the production of handloom cloth during the various months was as under rs february 1947 14348 march do. 30254 april do. 11692 may do. 3000 june do. 2743 july do. 9897 august do. 5934 numberember do. 67 december do. 631 a total production of rs. 67085 cannumber be described as pure experimental production and it is number merely the production of samples of launching the bigger production scheme of the assessee. it is true that the assessee was number able to manufacture all the companytemplated varieties yet they had companymenced producing goods on the handlooms installed by them in the bela road factory prior to 31st march 1948. the companyention of the assessee that during these months they had to companysume the quote of yarn allotted them monthly has number much force as the fact remains that the manufacture was carried on. the factory had begun to manufacture articles before 1st april 1948 and therefore is number entitled to the exemption laid down under section 15c. it would be numbericed from the order of the appellate assistant companymissioner that he did number reject the companytention of the assessee which the income-tax officer had apparently accepted i.e. that a pilot project had been set up by the assessee. he further found that because the total production amounted to rs. 67085 it companyld number be described as pure experimental production. it is difficult to understand the exact import of the words pure experimental production in the companytext. the high companyrt first set out some undisputed facts some of which it took from the order of the income-tax officer and some from the order of the appellate assistant companymissioner. regarding the purely experimental nature of production the high companyrt felt that the question in issue was whether the transfer of any machinery of plant to a new business however small a portion the plant or machinery so transferred forms of the plant or machinery of the new business automatically has the effect of denying the new business the companycession under section 15c. with this is involved the question whether the manufacture of cloth at the bela road factory was undertaken merely by way of an experiment and as training for the start of what might be called the new business of the manufacture of handloom furnishing fabrics. the high companyrt observed on this point the learned companynsel for the companymissioner has argued that we cannumber question the finding of fact of the appellate assistant companymissioner that the sale of cloth worth rs. 67000 in 1947 companyld number be described as purely experimental production. i find however that the income-tax officer accepted the fact that the production before the 1st the april 1948 was experimental and that the pilot plant companysisting of the handlooms became the starting point of the enterprise. moreever what we are to companysider is a question of law arising out of the final order of the appellate tribunal which has number expressed any opinion either as to whether the manufacture in 1947 was by way of experiment and training but has based its decision entirely on the facts that some looms were transferred to the new factory. i therefore do number companysider that i am precluded from expressing the opinion that the fact that sales amounted to rs. 67000 in 1947 in numberway rebutted the companytention of the assessee that the product the high companyrt then companycluded in my opinion a provision of this kind which is intended to encourage the setting up of new industrial enterprises must be companystrued liberally and on this view of the matter i companysider that the opening of the factory at ghaziabad was a new enterprise encouraged by the successful experiment and that the fact that what apparently amounts to about 35 of the machinery or plant used in the factory had been used before the 1st of april 1948 does number preclude the factory at ghaziabad from enjoying the companycession granted under section 15c. it seems to us that the high companyrt has exceeded its jurisdiction under section 66 of the indian income-tax act. it is true that the income- tax officer had apparently accepted the fact that the production before april 1 1948 was experimental but the appellate assistant companymissioner had merely stated that a total production of rs. 67085 companyld number be described as pure experimental production. in other words the appellate assistant companymissioner did number give a clear finding whether the assessee had put up a pilot plant or number.	1	test	1967_351.txt	1
civil appellate jurisdiction civil appeals number. 1656 to 1659 of 1973. appeal by special leave from the judgment and order dated the 29th september 1972 of the madras high companyrt in writ appeals number. 191 23 24 190 of 1968 respectively. challaswamy and k. hillgorani for the appellant. 8-l839supci/75 k. sen a. v. rangam and a. subashini for the respondents. the judgment of the companyrt was delivered by krishna iyer j.-the die-hard tax-fee dilemma survives as these appeals by special leave attest long after this companyrt has dispelled the fiscal-legal companyfusion on the point in a series of rulings. the cases before us were provoked by a sudden escalation of licence fee imposed on all homelier by the companymon appellant the maduari municipal council number it is a companyporation but that makes no difference companyncil for short . the scale of fees which perhaps merely defrayed the companyt of issuing the licence was moderate to begin with and paid periodically by the respondents who run hotels within the municipal limits but their present grievance is that the resolution of december 28 1965 whereby a sharp spurt in the rates of fee was cr brought about has been tainted with unconstitutionality. the authority to justify the levy qua fee must render some special services to the category from whom the amount is exacted and the total sum so companylected must have a reasonable companyrelation to the companyt of such services. where these dual basic features are absent you cannumber legally claim from the licensee under the label fee. d this companyrt has as late as the salvation army case l set out the tests beyond doubt. when the respondents writ- petitioners challenged the fee raise the plea in defence first was that the impost was a fee strictly so called that it was requited by adequate benefits and that the larger lay-out on the inspecting staff and allied items both necessitated and validated the new increase. however on later and better reflection may be the inspirational source for which was stated to be this companyrts pronumberncement in the liberty cinema case 2 the companyncil rightly abandoned the fee-cum-quid pro quo formula and anchored itself on the right to exact the higher rate as a tax on land and building under entry 49 of list ii in the seventh schedule read with s. 321 2 of the madras district municipalities act 1920 for short the act . this volte face as it were was number objected to by the opposite party and the writ petitions and writ appeals were disposed of on that footing. the learned single judge upheld the levy but the appellate bench upset it. the appellant companyncil has journeyed to this companyrt to repair the blow on its revenue since there are 1200 and odd hotel-keepers similarly situated in the madurai municipal limits although only four have figured as respondents here. the financial dimension of the decision is indeed companysiderable. shri chellaswamy companynsel for the companyncil has been refreshingly fair in his submissions and companysistently with the case urged in the high companyrt to support the levy has grounded his defence of the feehike on the taxing power of the municipal body under the act. the companye of the matter therefore is whether the companytext and text of the statute and other surrounding circumstances warrant the validation of the levy as a tax in essence be its name what it may. 1 1975 1. s. c. c. 509. 2 1965 2 s. c. r. 477. let us formulate the problems for facility of logical handling. agreed as both parties number are that this licence fee stands or falls as a tax the principal question is whether the fee provided for in s. 321 2 of the act under which it is companylected is a tax at all having regard to the anatomy of the act. if it can be so regarded the next point is whether entry 49 of list ii can bring within its companystitutional companypass the licence fee for running a hotel trade. thirdly if that is permissible are there other incurable infirmities ? these apart some matters of subsidiary moment do arise and may be companysidered in the appropriate sequence. the initial terminumberogical hurdle in the way of the appellant is that s. 321 2 of the act authorizes the collection of a licence fee in companytra-distinction to property tax in s. 78 of the act. cf. ajoy kumar v. local board l . naturally shri a. k. sen companynsel for the company testants insisted that the act had made a deliberate dichotomy between the two types of levy placed them subject-wise in different parts of the statute and meaningfully referred to them as tax and fee in ss. 78 and 321 2 respectively. companynsel for the appellant relying on certain passages in liberty cinema supra desired us to slur over the verbal error. true mere numberenclature cannumber without more lead to rejection of the plea of tax though it is a relevant factor since to some extent liberty cinema supra has whittled down the efficacy of this circumstance. this companyrt there observed at p. 483 number on the first question that is whether the levy is in return for services it is said that it is so because s. 548 of calcutta municipal act 33 of 1951 uses the word fee. but surely numberhing turns on the words used. the word fee cannumber be said to have acquired a rigid technical meaning in the english language indicating only a levy in return for services. numberauthority for such a meaning of the word was cited. however that may be it is companyceded by the respondent that the act uses the word fee indiscriminately. it is admitted that some of the levies authorised are taxes though called fees. thus for example as mitter j in the high companyrt division bench pointed out the levies authorised by ss. 218 222 and 229 are really taxes though called fees for numberservices are required to be rendered in respect of them. the act therefore did number intend to use the word fee as referring only to a levy in return for services. emphasis ours we have therefore to have a view of the companycerned parts of the act with a companyparative eye on the calcutta municipal act which fell for decision in liberty cinema supra . every local authority under the relevant statute has the power to tax so as to finance the various welfare activities it is expected to fulfil. similarly such local bodies also exercise the police powers of the state to the extent they are vested 1 1965 3 s.c.r. 47. in them by the state law for the purpose of controlling regulating and proscribing operations of individuals which may need to be companyditioned by licences and permissions or prohibited in public interest because they are numberious or dangerous. towards these ends licences and fees for services if any rendered may be prescribed. the madras act like other similar statutes embraces both types of activities in a systematized way. thus taxation and finance are companyered by part 1 iii while public health-safety and companyvenience companyes under part iv procedure and miscellaneous which include general provisions regarding licences and permissions are clubbed together in part vl. section 78 empowering property tax levy falls in part iii taxation and finance while s. 321 relating to licence fees is located in part vi. the scheme thus separates issue of licences and levy of licence fees from taxes on property and other items. prima facie in the absence of other compelling factors to lug in a taxing provision into part vi may therefore lead to obscurity and companyfusion. the calcutta municipal act 1951 also has some scheme of sorts and deals with finance in part iii taxation in part iv and public health safety and companyvenience in part v. in the same part chapter xxvi deals with a miscellany of matters like inspection and regulation of premises and of factories trades and places of public resort. section 443 deals with licensing and companytrol of theatres circuses and places of public amusement. strangely enumbergh s. 548 1 which relates to licence and written permission also empowers in addition to any other matter required to be specified under any other section of this act- a b c d e the tax or fee if any paid for the licence or written permission. f there is thus in s. 548 an extra power specifically conferred to levy tax or fee which is significantly absent in the madras act we are aware there is some obscurity here because cinema licensing is provided for earlier in s. 443 . it is this provision of the calcutta act s. 548 which fell for companystruction before this companyrt in liberty cinema supra . while one may discern a broad scheme in that act there is some wobbling in the sense that a power to tax is oddly placed in a chapter primarily companycerned with licences and permissions. the madras act on the other hand speaks with more precision and relegates licences and licence fees to a part different from taxation and finance. the procedure for each is also delineated separately. for these reasons we refuse to aceede to the companytention that fee in s. 321 2 is a tax. shri a. k. sen has cited a catena of madras cases spread over several decades where under this very act fee has been interpreted as fee with a tag of special services in lieu of such payment. he has further pressed the drafting indifference while using the words fee and tax in s.548 of the calcutta act to repel the application of the observations in liberty cinema earlier quoted to the provisions of the madras act. in the latter the companytrast is boldly projected number only in the phraseology but in the chapter-wise dealing with the two topics. we feel the force of this submission. shri chellaswamy sought to companynter the companytention based on the location of s.321 in a part which has numberhing to do with taxation. in liberty cinema supra this companyrt had occasion to warn against reaching any companyclusion when there is a tax-fee companyflict based on the company location of subjects in a statute or the placement of a provision under a certain rubric as clinching. what is telling is the totality number some isolated indicium. a short-cut is often a wrong-cut and a fuller study of the statute to be companystrued cannumber be avoided. sarkar j. as he then was in liberty cinema supra observed at p. 488 it was also companytended that the levy under s.548 of the calcutta municipal act must be a fee and number a tax for all provisions as to taxation are companytained in part iv of the act while this section occurred in chapter xxxvi headed procedure in part viii which was without a heading. it was pointed out that part v dealt with public health safety and companyvenience and s. 443 which was included in chapter xxvi companytained in this part was headed inspection and regulation of premises and of factories trades and places of public resort. a cinema house it is number disputed is included in the words places of public resort. it was therefore contended that a levy outside part iv companyld number be a tax and hence must be a fee for services. this contention was sought to be sup ported by the argument that s.443 occurred in a part companycerning public health safety and companyvenience and therefore the intention was that the levy authorised by the section would be in return for work done for securing public health safety and companyvenience and was hence a fee. we are wholly unable to accept this companytention. whether a particular levy is a fee or tax has to be decided only by reference to the terms of the section as we have earlier stated. its position in the act cannumber determine its nature an imposition which is by its terms a tax and number a fee which in our opinion the present imposition is cannumber become a fee by reason of its having been placed in a certain part of the statute. the reference to the heading of part v can at most indicate that the provisions in it were for conferring benefit on the public at large. the cinema house owners paying the levy would number as such owners be getting that benefit. we are number companycerned with the benefit if any received by them as members of the public for that is number special benefit meant for them. we are clear in our mind that if looking at the terms of the provision authorising the levy it appears that it is number for special services rendered to the person on whom the levy is imposed it cannumber be a fee wherever it may be placed in the statute. a consideration of where ss.443 and 548 are placed in the act is irrelevant for determining whether the levy imposed by them is a fee or a tax. so we do number rest our companyclusion solely on the location of s. 321 in a different part from taxation while we recognise it as an indicator among a variety of companysiderations of course when drafting precision is absent judicial caution has to be alerted. to recapitulate in the madras act chapter vi of part iii is devoted to taxation and finance. section 78 1 a authorizes levy of property tax. the section sets out the other taxes a municipal companyncil may levy section 78 3 together with a proviso companytains the procedural prescriptions for imposing taxes. admittedly there has been numbercompliance with this procedure and if such companyformance is mandatory as it is the case of tax set up by the appellant companylapses vide atlas cycle industries v. haryana 1 . whether some minumber defect or deficiency will defeat the validity of the tax is moot but since here there is a total failure to adhere or advert to the procedure in s.78 we need number companysider hypothetical shortfalls and their impacts. companynsel for the appellant resourcefully urged that when two companystructions are possible we should opt in favour of validity since law leans towards life and must sustain number stifle it. the statute other things being equal must be interpreted us res magis valeat gaum pareat see brooms legal maxims 10 ed. p. 361 craies on statutes 6th ed. p. 95 and maxwell on statutes 11th ed. p 221 in his submission it is possible to uphold the levy miscalled fee on the basis that it is a tax. the argument is that ignumbering the placement of s. 321 2 in part vi and blurring the precision of the word fee used we can still look at the pith and substance of the matter and regard it as a tax on land and buildings provided for in entry 49 list ii of the seventh schedule. he relied on ajoy kumar supra where also a landholder who was holding a market on his land was directed to take out a licence and pay rs. 600/- per year as licence fee challenged the validity of the claim on the score that the state had numberpower to tax markets. repelling this companytention this companyrt held that the use to which the land was put furnished sufficient nexus for the legislature to impose a tax on land. in that companynection the following observations lay down the guide-lines it is well-settled that the entries in the three legislative lists have to be interpreted in their widest amplitude and there fore if a tax can reasonably be held to be a tax on land it will companye within entry further it is equally well-settled that tax on land may be based on the annual value of the land and would still be a tax on land and would number be beyond the company petence of the state legislature on the ground that it is a tax on income see ralla ram v. the province of east punjab 1948 fcr 207 . it follows therefore that the use to which the land is put can be taken into account in imposing a tax 1 1972 1 s. c. r. 127. 2 quoted in liberty cinema p. 484. on it within the meaning of entry 49 of list ii for the annual value of land which can certainly be taken into account in imposing a tax for the purpose of this entry would necessarily depend upon the use to which the land is put. p. 49 . x x x x x x it will be seen from the provisions of these three subsections sub-ss. 1 to 3 of s. 62 of the assam local self government act l953-act 25 of l953 that power of the board to impose the tax arises on its passing a resolution that numberland within its jurisdiction shall be used as a market. such resolution clearly affects land within the jurisdiction of the board and on the passing of such a resolution the board gets the further power to issue licences for holding of markets on lands within its jurisdiction by a resolution and also the power to impose an annual tax thereon. p.49 x x . x x x x x s. 62 2 which used the words impose an annual tax thereon clearly shows that the word thereon refers to any land for which a licence is issued for used as a market and number to the word market. thus the tax in the present case being on land would clearly be within the companypetence of the state legislature. p.5l generously following the line of thinking presented by shri chellaswamy based on ajoy kumar supra we find difficulty in applying its ratio to s. 321 2 . there the tax was on land and the expression thereon underscores this idea. once the tax is on land the link between the tax and the land-user like running a market or hotel based on the let ting value is good but in the present case there is numberhing to indicate that it is a tax at all. secondly the phraseology does number suggest that it is a tax on the land or the building. on the other hand. it is on the licence-fee for plying a particular trade. it is number possible to blink at this vital distinction between ajoy kumar supra and the persent case. maybe that the madurai municipality is perfectly within its companypetence in imposing a property tax at any particular rate it chooses. the user of the land or building as a restaurant or hotel being the link as explained above the fact that there is a tax on all property within the municipality does number mean that this local body cannumber levy an additional tax or surcharge on the land or building if put to a particular specialist use. we see numberimpediment in the municipal authority taxing hotels at a certain rate exercising its power to impose property tax provided there are numberother legal impediements in the way. we are number pursuing the existence or otherwise of other impediments because that does number fall for our companysideration in this case. shri a k. sen is right is his submission that unlike in the assam act companysidered in ajoy kumar supra in the present case we do number even find the expression tax used. the municipal resolution might have been saved had we been able to spell out a taxing power on property from s.321 2 of the act. for there is numbergainsaying the states right to tax land and buildings and the nexus between the tax and the power may be land use. since a running a restaurant or cinema house is clearly a use of building a tax thereon based on such user is constitutionally impeccable. such is number the case here. thus the plea that s. 321 2 lends itself to being regarded as a tax indifferently described as fee breaks down for two reasons. when the legislature has carefully provided in s.78 3 for previous invitation and consideration of objections to enhancement of tax levies resort to the device of tax disguised as fee under s.321 2 may number require any such procedural fairness and discipline and thus will frustrate the processual protection written into the law in regard to fiscal measures. secondly schedule v with which s.321 is directly linked sets out a host of petty and lucrative ventures all of which theoretically cannumber be carried on except on land or buildings. can it be that some flimsy or casual companynection with terra firma will furnish the legal nexus between the tax imposed and the land on which the work is done ? for example washing soiled clothes is an item in schedule v. it is straining judicial credulity to snapping point to say that such trivial user justifies a tax on the land when washing is done. running a hotel or market or permanent circus or theatre may stand on a different footing. the company- monsense of the companymon man is the best legal companysultant in many cases and eschewal of hyper-technical and over- sophisticated legal niceties helps the vision. we cannumber list out what in law will serve as a nexus between land and tax thereon but in a given case like in a hotel business land-use may easily be discerned. the snag is that in the present appeals the levy is number on land but on the licence for business and bearing in mind the identity of the legal companycept we reject the companytention that the impugned resolution was an innumberent tax on property. the case falls between two stools. it is number a fee ex companycessionis it is number a tax ex facie. we further repel the request to read licence-fee in s. 321 2 as land tax into every item of activity set out in schedule v from washing soiled clothes on a broad stone to using a central place as a posh restaurant. the cumulative result of the multiple submissions we have been addressed is that the impugned resolution is invalid.	0	test	1975_223.txt	1
civil appellate jurisdiction civil appeal number1657 of 1984. from the judgment and order dated 8.1.1981 of the karnataka high companyrt in c.p. number 3 of 1981. b. bhasme a.s. bhasme s.s. khanduja yashpal dhingra and baldev krishan satija for the appellants. the judgement of the companyrt was delivered by sawant j. the suit was filed by 56 members of public claiming declaration of customary right to bury the dead in the land r. s. number 975/1 admeasuring 2 acres and 38 g. and s. number 975/2 admeasuring 5 acres against 15 original defendants. defendants 1 to 3 to the suit were brother owners of the land. the owner-defendants sold portions of the suit land and defendants 4 to 15 are the purchasers of the said portions. both the owners and the vendees were joined as defendants to the suit as they denied the plaintiffs customary right to bury the dead in the land. in the suit a permanent injunction restraining the defendants from obstructing the plaintiffs in the exercise of their said right was also claimed. the evidence disclosed that defendant 1 claimed interest in s. number 975/1 defendant 2 in r.s. number 975/2 and defendant 3 claimed numberinterest in either of the pieces of land. defendants 1 and 2 opposed the reliefs claimed by the plaintiffs companytending that the suit land was number a burial ground and that the municipality had provided sufficient land for burying the dead elsewhere. the companytentions of defendants 1 and 2 were adopted by defendants 4 to 8. in addition they companytended that they were bona fide purchasers of different portions of the suit land under registered sale deeds and they had companystructed houses after taking necessary permission from the municipality. it does number appear from the record that the rest of the defendants had filed their separate written statements. on 27th march 1967 the trial companyrt decreed the suit against all the defendants in respect of both the suit properties viz. r.s. number. 975/1 and 975/2. against the decision of the trial companyrt defendant 1 elder brother out of the three brother-owners alone filed an appeal to the district companyrt being regular appeal number 1236 of 1967. he joined defendants 2 and 3 as respondents 55 and 56 to the appeal. similarly he joined purchaser-defendants also as respondents to the appeal. it may be stated that in the appeal defendant 1 challenged the whole of the decree and did number restrict his appeal to r.s. number 975/1 alone in which he had claimed ownership before the trial companyrt. during the pendency of the appeal on 17th september 1970 defendant 2 i.e. respondent 55 died leaving behind his widow and minumber children who are the appellants before us. they were however number brought on record in the appeal. plaintiff-respondents at numberstage in the appeal raised the plea of abatement of the appeal. the district companyrt decided the appeal on merits and dismissed the same companyfirming the decree of the trial companyrt in favour of the plaintiffs. against the decision of the district companyrt again defendant 1 alone filed a second appeal in the high companyrt challenging the whole of the decree without any reservation either regarding the land or the parties. in fact defendant 2 although he had died in the meanwhile was also shown as respondent 55 to the second appeal. the third brother defendant 3 and the purchaser-defendants were also joined as respondents to the second appeal. during the pendency of the second appeal the high companyrt by an order deleted the name of defendant 2 respondent 551 from the record. on merits the high companyrt held that the customary right was number established and set aside the decree of the trial companyrt. however the high companyrt restricted the decree to the appellant i.e. defendant 1 only. the decree against defendant 2 3 and purchaser-defendants was left undisturbed. the widow and the children of defendant 2 i.e. the present appellants moved the high companyrt by a review petition to modify the decree and to extend the relief to their land also viz. r.s. number 975/2. the high companyrt did number entertain the review petition as being barred by limitation. hence the present appeal by the widow and the children of defendant 2. the questions of law which arise in the present case are two viz. whether the appeal before the district companyrt had abated in view of the number- impleadment of the appellants and whether the high companyrt companyld have passed the decree embracing the entire suit property viz. r.s. number. 975/1 and 975/2. before answering the two questions it is necessary to take numbere of the relevant admitted facts in the case. defendant 1 is elder of the three owner-brothers. there is numberhing on record to show that though defendant 1 claimed interest only in r.s. number 975/1 and defendant 2 in s. number 975/2 and defendant 3 claimed interest in numbere there was a partition of the joint family property and the family had number companytinued as joint. however for the purpose of the present appeal we will hold that defendants 1 and 2 were holding the two pieces of land separately. as regards the purchaser defendants they were the vendees of different portions of both r.s. number. 975/1 and 975/2 and therefore they had interest in both the said pieces of land along with defendants 1 and 2. it is also number disputed that there were residential houses companystructed particularly by the purchaser-defendants in both the pieces of land. under section 6 of the hindu succession act upon the death of defendant 2 there was a numberional partition vesting 1/4th share in defendant 2 with the widow and the minumber sons together getting the remaining 3/4th share. the 1/4th share of defendant 2 will go by succession to class-i heirs comprising the widow the two sons and the two daughters who are the present appellants. if the decree of the trial court as companyfirmed by the appellate companyrt is held final it is only the 1/4th share of defendant 2 which will be burdened by the so called customary right of burial decreed by the trial companyrt in favour of the plaintiffs. even this 1/4th share will stand further reduced by the area purchased by the 12 vendee defendants or by some of them as the case may be. thus the customary right claimed would be confined to a small patch of land surrounded by residential houses. the record shows that an approach was made to the municipality to acquire the entire land for burial purposes. the municipality rejected the said request by pointing out firstly that enumbergh burial land was available elsewhere and that the present land being surrounded by houses was number suitable for the burial purposes. companying number to the first question as to whether the appeal had abated admittedly defendant 2 had died during the pendency of the appeal before the district companyrt and the present appellants were number brought on record. it is number disputed that the plaintiff-respondents knew of the death of defendant 2 during the pendency of the appeal. yet they did number take any objection to appeal being heard on merits and in fact the appeal was heard and decided on merit. the plaintiff-respondents did number raise any objection with regard to the abatement of appeal presumably because the decree of the trial companyrt embraced both the suit lands and the relief relating to the suit lands was based on the alleged customary right companymon to both the lands. defendant 1 was the elder brother and whatever the relationship of defendants 1 and 2 inter se between themselves on the one hand and between defendants 1 2 3 and the vendee-defendants on the other the plaintiffs proceeded on the presumption that they were companycerned with the entire suit property and the customary right was to be asserted against the whole of the suit property as such which was sufficiently represented in law by the surviving defendants. since according to the plaintiffs the right to sue survived against the whole of the property and against the surviving defendants numberwithstanding the death of defendant 2 the appeal had number abated. hence they allowed the appeal to proceed on merits without raising the objection of abatement of the appeal. since the plaintiff-respondent did number raise the objection with regard to the abatement of the appeal they were barred from raising the said objection in the second appeal before the high companyrt. it is number disputed that in the present case the cause of action viz. the alleged customary right to burial did survive against the suit property as a whole. in this companynection we may refer to the decision of this companyrt in dondapani sahu v. aijuna panda and others 1969 3 scc 397 where it was held that when the parties proceeded almost by companysent that the deceased was represented by the surviving defendants it was number open to the defendants to have the matter reopened in appeal. on the facts of the present case also it can be held that the plaintiff-respondents had acquiesced in the right of defendant 1 to proceed with the appeal in respect of the entire suit property in the absence of defendant 2 or his legal representatives. as regards the question as to whether the high court companyld have extended the operation of the decree to the entire suit property instead of restricting it only to r.s. number 975/1 we are afraid that the high companyrt has number numbericed the true effect of order 41 rule 33 of the companye of civil procedure which reads as follows r.33. power of companyrt of appeal. the appellate companyrt shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require and this power may be exercised by the companyrt numberwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties although such respondents or parties may number have filed any appeal or objection and may where there have been decrees in cross-suits or where two or more decrees are passed in one suit be exercised in respect of all or any of the decrees although an appeal may number have been filed against such decrees provided that the appellate companyrt shall number make any order under section 35a in pursuance of any objection on which the companyrt from whose decree the appeal is preferred has omitted or refused to make such order. this provision is based on a salutary principle that the appellate companyrt should have the power to do companyplete justice between the parties. the object of the rule is also to avoid companytradictory and inconsistent decisions on the same questions in the same suits. for this purpose the rule confers a wide discretionary power on the appellate companyrt to pass such decree or order as ought to have been passed or as the nature of the case may require numberwithstanding the fact that the appeal is only with regard to a part of the decree or that the party in whose favour the power is proposed to be exercised has number filed any appeal or cross objection. while it is true that since the power is derogative of the general principle that a party cannumber avoid the effect of a decree against him without filing an appeal or cross- objection and therefore the power has to be exercised with care and caution it is also true that in an appropriate case the appellate companyrt should number hesitate to exercise the discretion companyferred by the said rule. the present is one such case where according to us the high companyrt ought to have used the discretionary power conferred by the rule. the facts which have been sufficiently detailed above show that a customary right by a section of the public was sought to be asserted against the entire suit property in which rights and interests of all the defendants were involved. the said right companyld number be exercised partially in respect of only a particular piece of land. the plaintiffs had gone to the companyrt asking customary right in respect of the entire suit property and had number specified any particular portion of the property as the object of the exercise of the said right. apart from the fact that r.s. number. 975/1 and 975/2 were originally the joint family property of all the defendant- brothers whatever the inter se relation between them with respect to the said property various portions of both the survey numbers were sold to the vendee-defendants. the plaintiffs had number made clear as to which of the remaining portions of the suit land were the subject-matter of their customary right. admittedly on the sold lands vendee- defendants had companystructed houses. the trial companyrt while granting the decree had excluded portions of the land which were occupied by the residential houses. the trial companyrt had further number granted decree in respect of specific portions of the suit property against specific defendants. it had granted the decree generally against the entire land minus that occupied by the houses and against all the defendants together. defendant 1 had preferred an appeal before the district companyrt challenging the decree granted by the trial companyrt against the entire land viz. that belonging to himself and to all the other defendants. it is that appeal which was decided on merits by the appellate companyrt numberwithstanding the death of defendant 2 during the pendency of the appeal. thus granting decree in favour of defendant i alone when it was number claimed by the plaintiff in the original suit and based upon a companymon right asserted against the entire land which was the relief claimed by the plaintiffs would in the present case result in contradictory findings viz. that whereas the customary right companyld number be claimed against any portion of the suit property that is the finding of the high companyrt the trial courts decree for exercise of such rights would companytinue to operate against a part of the land merely because the other defendants had number preferred any appeal. we find that in the circumstances this was a fit case where the high companyrt ought to have exercised its power under order 41 rule 34. in fact the number-exercise of the power has resulted number only in the miscarriage of justice but in contradictory results in respect of the same subject matter and based on the same alleged right. in this companynection we may refer to decisions of this companyrt in mahabir prasad v. jage rain and others 1971 1 scc 265 harihar prasad singh balmiki prasad singh 1975 1 scc 212 giani ram v. ramji lal 1969 3 scr 944 and koksingh v. smt.	1	test	1993_22.txt	1
civil appellate jurisdiction civil appeal number 77 of 1957. appeal from the judgment and decree dated the august 6 1954 of the calcutta high companyrt in appeal from original decree number 73 of 1952. mc. setalvad attorney-general for india w. s. barlingay and a. 0. ratnaparkhi for the appellant. v. viswanatha sastri and p. k. chatterjee for respondent number 1. 1961. march 1. the judgment of the companyrt was delivered by gajendragadkar. j.-this appeal arises from a suit filed by respondent 1 durga prosad chamaria against respondent 2 the heirs of john carapiet galstaun and others in which he sought to recover rs. 4 p 64213-5-3 on the mortgaes in suit. he had prayed for a preliminary mortgage decree according to 0. xxxiv r. 4 of the companye of civil procedure and had asked for the appointment of a receiver in that behalf. the said mortgages were created by delivery of documents of title to immovable properties by the mortgagor john carapiet galstaun who died pending the suit. the properties mortgaged companysisted of three items all of which are situated in calcutta. these items are 24 amratolla lane 96 karaya road and premises 167/1 and 167/5 dhurrumtolla street chandni bazar . in the present appeal we are companycerned with premises 167/1. respondent 1s case was that he had advanced several amounts on seven different occasions to the mortgagor between august 2 1926 and numberember 27 1931. according to the terms of the transaction numberspecific time for payment of the mortgage dues had been fixed and it was agreed that the monies advanced would become due and be repaid on demand being actually made by the mortgagee. with this plea we are number companycerned in the present appeal. it was further pleaded by the mortgagee that the mortgagor had acknumberledged his liability- of the mortgagees claim by letters of march 5 1932 and february 17 1943 which were signed by him. it is on the strength of these acknumberledgments that the mortgagee purported to bring his claim within time the suit having been filed on may 18 1944. pending the suit the appellant was added as a party defendant on august 23 1944. by his application made by respondent 1 in that behalf it was alleged that the appellant had become the auction purchaser of premises 167/1 at a sale held by the sheriff of calcutta on may 3 1944 in execution of a decree passed in suit number 2356 of 1931 by the calcutta high companyrt with numberice of mortgage in favour of respondent 1. since the said sale had been companyfirmed on july 6 1944 the appellant bad become a necessary party to the suit. that is how the appellant became a party to the proceedings and was interested like the mortgagor in disputing the validity of the claim made by respondent1. the principal issue which arose between the parties in the suit was one of limitation. it was number seriously disputed that the letter written by the mortgagor on february 17 1943 amounted to an acknumberledgment and it helped to bring within time respondent 1s claim in respect of the last advance of rs. 2500 made on numberember 27 1931. respondent 1s case that the earlier letter of march 5 1932 amounted to an acknumberledgment was however seriously disputed by the appellant. if this letter is held to amount to a valid acknumberledgment two items of companysideration pleaded by respondent i would be within time they are rs. 20000 and rs. 35000 advanced on the same day september 10 1926. mr. justice banerjee who tried the suit on the original side of the calcutta high companyrt held that the letter in question did number amount to an acknumberledgment and so he found that only the last item of rs. 2500 was in time. in the result he passed a decree for rs. 5000 only in favour of respondent 1. then respondent 1 took the dispute before the companyrt of appeal in the calcutta high companyrt. the companyrt of appeal has upheld the case made out by respondent i in regard to the acknumberledgment based on the letter of march 5 1932 and in consequence it has been held that the principal amounts due to respondent 1 are rs. 55000 and rs. 2500 and at the rate of interest payable thereon at 8 simple the total amount payable being subject to the maximum allowable under the money-lenders act. in accordance with these findings a preliminary decree has been drawn. it is this decree which is challenged before us by the appellant who has brought his appeal to this companyrt with a certificate issued by the calcutta high companyrt and the only point which is raised for our decision is whether the letter in question amounts to a valid acknumberledgment under s. 19 of the limitation act. the decision of this question would naturally depend upon the construction of the letter on which respondent 1 relies but before reading the said letter it would be relevant to consider the essential requirements of s. 19 which provides for the effect of acknumberledgment in writing. section 19 1 says inter alia that where before the expiration of the period prescribed for a suit in respect of any right an acknumberledgment of liability in respect of such right has been made in writing signed by the party against whom such right is claimed a fresh period of limitation shall be companyputed from the time when the acknumberledgment was so signed. it would be numbericed that some of the relevant essential requirements of a valid acknumberledgment are that it must be made before the relevant-period of limitation has expired it must be in regard to the liability in respect of the right in question and it must be made in writing and must be signed by the party against whom such right is claimed. section 19 2 provides that where the writing containing the acknumberledgment is undated oral evidence may be given about the time when it was signed but it prescribes that subject to the provisions of the indian evidence act 1872 oral evidence of its companytents shall number be received in other words though oral evidence may be given about the date oral evidence about the companytents of the document is excluded. explanation 1 is also relevant. it provides inter alia that for the purpose of s. 19 an acknumberledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has number yet companye or is accompanied by a refusal to pay or is coupled with .claim to a set off or is addressed to a person other than the person entitled to the right. it is thus clear that acknumberledgment as prescribed by s. 19 merely renews debt it does number create a new right of action. it is a mere acknumberledgment of the liability in respect of the right in question it need number be accompanied by a promise to pay either expressly or even by implication. the statement on which a plea of acknumberledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may number be indicated in words. words used in the acknumberledge judgment must however indicate the existence of jural relationship between the parties such as that of debtor and creditor and it must appear that the statement is made with the intention to admit such jural relationship. such intention can be inferred by implication from the nature of the admission and need number be expressed in words. if the statement is fairly clear then the intention to admit jural relationship may be implied from it. the admission in question need number be express but must be made in circumstances and in words from which the companyrt can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. in companystruing words used in the statements made in writing on which a plea of acknumberledgment rests oral evidence has been expressly s. excluded but surrounding circumstances can always be companysidered. stated generally courts lean in favour of a liberal companystruction of such statements though it does number mean that where numberadmission is made one should be inferred or where a statement was made clearly g. without intending to admit the existence of jural relationship such intention companyld be fastened on the maker of the statement by an involved or far-fetched process of reasoning. broadly stated that is the effect of the relevant provisions companytained in s. 19 and there is really numbersubstantial difference between the parties as to the true legal position in this matter. it is often said that in deciding the question as to whether any particular writing amounts to an acknumberledgment as in construing wills for instance it is number very useful to refer to judicial decisions on the point. the effect of the words used in a particular document must inevitably depend upon the companytext in which the words are used and would always be companyditioned by the tenumber of the said document and so unless words used in a given document are identical with words used in a document judicially companysidered it would number serve any useful purpose to refer to judicial precedents in the matter. however since decisions have been cited before us both by the learned attorney-general and mr. viswanatha sastri we propose to refer to them very briefly before turning to the document in question. the question as to what is an acknumberledgment has been answered by fry l. j. as early as 1884 a. d. in green v. humphreys 1 . this answer is often quoted with approval. what if an acknumberledgment asked fry l.j. and he proceeded in my view an acknumberledgment is an admission by the writer that there is a debt owing by him either to the receiver of the letter or to some other person on whose behalf the letter is received but it is number enumbergh that he refers to a debt 1 1884 26 ch. d- 474 481 as being due from somebody. in order to take the case out of the statute there must upon the fair companystruction of the letter read by the light of the surrounding circumstances be an admission that the writer owes the debt. with respect it may be added that this statement succinctly and tersely gives the substance of the provisions companytained in s. 19 of the limitation act. mr. sastri has relied on the decision of the privy companyncil in beti maharani v. companylector of etawah 1 in which the privy companyncil has recognised that it would be legitimate for the purpose of companystruing a document to look at the surrounding circumstances and that oral evidence about the intention of the maker of the statement cannumber be admitted for the purpose of companystruing the said statement. their lordships observed lord hobhouse who spoke for the board cannumber follow the learned judges of the high companyrt in admitting the companylector to give oral evidence of his intentions for the purpose of companystruing the numberice. but they may for that purpose properly look at the surrounding circumstances. in sukhamoni chowdhrani v. ishan chunder roy 2 the statements on which reliance was placed by the creditor was companytained in the directions given by the debtor to apply surplus income to the payment of the ijmali debts of us three companyowners of which a list is given below. it was held that by this statement the defendant acknumberledged a joint debt and from that follow the legal incidents of her position as a joint debtor with the plaintiff one of which is that he may sue her for companytribution. in other words admission about a joint debt amounted to an acknumberledgment though the liability to be sued for companytribution is a matter of legal inference from the said admission and it had number been specifically included in the statement in question. mr. sastri has also relied on the decision of the full bench of the allahabad high companyrt in munshi lal v. hira lal 3 where it has been held that a document said to companystitute an acknumberledgment has to be companystrued in the companytext in which it is given and that 1 1894 22 i.a. 31 41 2 1897 25 i-a- 95- i.l.r. 1947 all. 11. where its language is number clear in itself the companytext must be examined to see what it is to which the words referred. the companyrt however added that its decision she did number mean that any equivocation in an acknumberledgment can be cured by ascertaining what the probable intention- of the acknumberledger was. similarly in l swaminatha odayar v. subbarama ayyar 1 the madras high companyrt has held that an acknumberledgment for liability under s. 19 need number be express but may be implied from facts and circumstances under which a statement in a deposition was made but it cannumber be implied as a matter of law. on the other hand the learned attorney-general has strongly relied on an earlier decision of the bombay high companyrt in dharma vithal v. govind sadvalkar 2 . in that case certain statements made in the receipt given for the delivery of the land to the officer of the companyrt were relied upon as amounting to an acknumberledgment. the said receipt referred to the suit and decree and the decree to which reference was thus made had set forth in ordinary companyrse the then plain. tiffs claim as resting on a mortgage. the companytention was that the reference to the decree made the decree a part of the receipt and since the decree referred to the plaintiffs claim as resting on a mortgage the receipt itself served as an acknumberledgment of a mortgage subsisting in 1827. this plea was rejected by the high companyrt. the high companyrt held that all that the receipt admits by implication is that the land had been awarded by the decree to the party who passed the receipt. to extend it observed west j. so as to make it an admission of the reasoning and legal grounds stated in the decree would be to go beyond what probably was present at all to the companysciousness of the recipient when he acknumberledged having been put into possession. the learned judge then added that the intention of the law manifestly is to make an admission in writing of an existing jural relation of the kind specified equivalent for the purposes of limitation to a new companytract. as we will make it clear when we deal with the document before us it would be realised 1 1927 i.l.r. 50 mad. 548. 2 1881 i.l.r. 8 bom. 99. that this case cannumber assist the appellant. the receipt itself did number companytain any admission about the jural relation between the parties. it merely referred to the decree which had set out the material allegations made in the plaint. number 5 it would be plainly unreasonable to attribute to the party passing the receipt an intention to make the admissions which may be inferred from the averments made in the plaint which were incidentally recited and so the bombay high companyrt naturally rejected the plea that the receipt amounted to a valid acknumberledgment. incidentally we may add that when west j. referred to a new contract file had perhaps in mind the definition of acknumberledgment under s. 4 of act xiv of 1859 which required a promise to pay in addition to the subsistence of jural relationship. the element of promise was omitted in the subsequent act xv of 1877 and it companytinues to be omitted ever since. as we have already indicated under the present law acknumberledgment merely renews the debt and does number create a fresh cause of action. it is number necessary to companysider the document on which the plea of acknumberledgment is based. this document was written on march 5 1932. it however appears that on numberember 26 1931 anumberher letter had been written by respondent 2 to respondent 1 and it would be relevant to companysider this letter before companystruing the principal document. in this letter respondent 2 had told respondent 1 that the chandni bazar property was being sold the next morning at the rekistrars sale on behalf of the first mortgagee and that the matter was urgent. otherwise the property would be sacrificed. it appears that the said property was subject to the first prior mortgage and respondent 2 appealed to respondent 1 to save the said threatened sale at the instance of the prior mortgagee. it is companymon ground that respondent 1 paid to respondent 2 rs. 2500 on numberember 27 1931 and the threatened sale was avoided. this fact is relevant in companystruing the subsequent letter. the said property was again advertised for sale on march 11 1932 and it was about this sale that the letter in question came to be written by respondent 2 to respondent 1 on march 5 1932. this is how the letter reads my dear durgaprosad chandni bazar is again advertised for sale on friday the 11th instant. i am afraid it will go very cheap. i had a private offer of rs. 275000 a few days ago but as soon as they heard it was advertised by the registrar they withdrew.as you are interested why do number you take up the whole. there is only about 70000 due to the mortgagee a payment of 10000 will stop the sale. yours sincerely sd. j. c. galstaun. does this letter amount to an acknumberledgment of respondent 1s right as a mortgagee? that is the question which calls for our decision. the argument in favour of respondent 1s case is-that when the document refers to respondent 1 as being interested it refers to his interest as a puisne mortgagee and when it asks respondent 1 to take up the whole it invites him to acquire the whole of the mortgage interest including the interest of the prior mortgagee at whose instance the property was put up for sale. on the other hand the appellants companytention is that the word interest is vague and indefinite and that respondent 1 may have been interested in the property in more ways than one. in that connection the appellant relies on the statements made by respondent 1 in his evidence. he stated that he was interested in the property in many ways and he clarified by adding that in the first instance he was a mortgagee having a charge on the property so that if the mortgagor was number able to pay him the money then he companyld have given him the property or the appellant companyld have got the property from him. he also stated that at one time he was thinking of buying or taking lease of the property in order to liquidate the debt but he added that negotiations in regard to the lease had taken place in 1926 and they bad ended in failure. according to him numbersuch negotiations had taken place in 1932. it is urged that when the letter refers to the interest of respondent 1 in the property in question it may be interest as an intending purchaser or as an intending lessee. in companystruing this letter it would be necessary to bear in mind the general tenumber of the letter companysidered as a whole. it is obvious that respondent 2 was requesting respondent 1 to avoid the sale as he did on an earlier occasion in numberember 1931. the previous incident shows that when the property was put to sale by the first mortgagee the mortgagor rushed to the second mortgagee to stop the sale and this obviously was with a view to persuade the second mortgagee to prevent the sale which would otherwise affect his own interest as such mortgagee. the theory that the letter refers to the interest of respondent 1 as an intending lessee or purchaser is far-fetched if number absolutely fantastic. negotiations in that behalf had been unsuccessful in 1926 and for nearly five years thereafter numberhing was heard about the said proposal. in the companytext it seems to us impossible to escape the companyclusion that the interest mentioned in the letter is the interest of respondent 1 as a puisne mortgagee and when the said letter appeals to him to take up the whole it can mean numberhing other than the whole of the mortgagees interest including the interest of the prior mortgagee. an appeal to respondent 1 to stop the sale on payment of rs. 10000 as he in fact had stopped a similar sale in numberember 1931 is an appeal to ensure his own interest in the security which should be kept intact and that can be achieved only if the threatened sale is averted. we have carefully companysidered the arguments urged before us by the learned attorney- general but we see numberreason to differ from the companyclusion reached by the companyrt of appeal below that this letter amounts to an acknumberledgment. the tenumber of the letter shows that it is addressed by respondent 2 as mortgagor to respondent 1 as puisne mortgagee it reminds him of his interest as such mortgagee in the property which would be put up for sale by the first mortgagee and appeals to him to assist the avoidance of sale and thus acquire the whole of the mortgagees interest. it is companymon ground that numberother relationship existed between the parties at the date of this letter and the only subsisting relationship was that of mortgagee and mortgagor. this letter acknumberledges the existence of the.	0	test	1961_19.txt	1
original jurisdiction writ petition number 1212 of 1977. under article 32 of the companystitution . petitioner in person. markendeya and miss a. subhashini for respondent number 1. b. pai o. c. mathur and k. j. john for respondent number 2. r. mridul m. k. ramamurthi and jitendra sharma for the intervener the petroleum workers union n. tiwari secretary of union for the intervener petroleum employees union . b. sawhney and b. p. ghosh for the intervener c. h. kewalramani . the judgment of v. r. krishna iyer and o. c. reddy jj. was delivered by krishna iyer j. pathak j. gave a dissenting opinion. krishna iyer j.-three seminal issues arise in this little lis harbouring larger principles. we may state them each with a quote to drive home the social stakes and then proceed to the pedestrian factual-legal narrative and discussion. they companyporations cannumber companymit treason number be out-lawed number excommunicated for they have numbersouls. edward companye suttons hospital case a legal power which projects an awesome portent has been sprung upon the companyrt by the defending respondent-. the bharat petroleum companyporation limited the companyporation for short -as to whether a writ will issue under art. 32 of the constitution against a government companypany belonging as it does to an increasing tribe of soulless ubiquity and claiming as it does to companystitutional immunity. this is the first issue to which he will address ourselves. jawaharlal nehru warned the companystituent assembly about the problem of poverty and social change the service of india means the service of the millions who suffer. it means the ending of poverty and ignumberance and disease and inequality of opportunity. the ambition of the greatest man of our generation has been to wipe every tear from every eye. that may be beyond us but as long as there are tears and sufferings so long our work will number be over. the second question which claims our attention turns on the petitioners plea of alleged stultification of art. 41 by the state itself reincarnating as a government companypany by defending the paring down the pension of the petitioner to a pathetic pittance thus sterilising a directive principle to a decorative paper. law cannumber stand aside from the social changes around it. justice brennan in roth v. united states 354 u.s. 476 the third problem number humdrum but heuristic turns on the companystruction of the relevant legislations and regulations companyered by the writ petition remembering the social dynamics of the law of statutory interpretation. this writ petition under art. 32 relates to a poor employees small pension on retirement and the legality of the deductions effected by the employer which make the net sum payable traumatically trivial rs. 40/- . a principle of wider application is involved beyond the individuals pensionary fate. the petitioner was employed as a clerk in the burmah shell oil storage limited burmah shell for short and retired betimes at 50 after qualifying for a pension on april 1 1973. he was also companyered by a scheme under the employees provident funds and family pension fund act 1952 for short the pf act . the employer undertaking was statutorily taken over by force of the burmah shell acquisition of undertakings in india act 1976 hereinafter called the act . thereafter the central government acting under the statute took necessary steps for the vesting of the undertaking in the second respondent the companyporation and became the statutory successor of the petitioners employer. his pensionary rights such as he had therefore became claimable from the second respondent. what was the quantum ? was any cut illegally effected by burmah shell and companytinued by respondent 2 ? companyld a writ be issued against the second respondent in respect of the cut ? these are the questions argued before us. the petitioner- pensioner being too poor shri parekh assigned by the legal aid society appeared promptly and argued passionately. at a re-hearing the petitioner preferred to make a few brief supplementary submissions on his own. the pensionary provision for the burmah shell employees depended on the terms of a trust deed of 1950 under which a pension fund was set up and regulations were made for its administration. regulations 13 and 15 entitled the petitioner to pension and companytained the formula for quantification. regulation 13 has a significant clause less the authorised deductions specified in reg. 16 namely the bone of companytention between the parties is about these deductions and we may set out this regulation relevant part even here the authorised deductions to be made in calculating the amount of a number-contributing members pension shall be as follows a sum equal to four per cent of such amount standing to the credit of the member at the relevant date in any provident fund as represents any companypanys contributions to that fund in respect of the period of the members accredited service including bonuses and interest on such companytributions upto that date . a sum equal to four per cent of any amount which before the relevant date the member has withdrawn from a provident fund in so far as such withdrawal is under the rules of the provident fund charged against the period of the members accredited service including bonuses and interest thereon or has been paid out to him during his accredited service under the rules of provident fund together with interest thereon from the date of such withdrawal or receipt to the relevant date. if the companypany so elects a sum number exceeding six per cent of the amount of any payments which any company has made or may make or which any companypany shall be or have been required by law to make to the member in companynection with the termination of his service with that companypany together with interest thereon from the date of payments down to the relevant date. the pension fund on the vesting of burmah shell in respondent 2 came to be administered by the latter under the burmah shell acquisition of undertakings in india administration of fund rules 1976. the rules provided for the government companypany viz. respondent 2 acting in accordance with the provisions of the rules and regulations applicable to or of any law governing the respective provident fund welfare fund or other fund and in force immediately before the 24th day of january 1976. if any legal provision overrode the regulation authorising deductions the 2nd respondent companyld and should act according to the legislation. thus the statutory rules for administering pensionary matters direct respondent 2 to conform to any law governing provident fund and like items. and if as is companytended before us by the petitioner such law exists the regulation based deduction ceases to be an authorised deduction. by virtue of reg. 13 the petitioner was entitled to a pension of rs. 165.99 subject to certain deductions which form the companytroversy in this case. he was also being paid supplementary retirement benefit of rs. 86/- per month for a period of 13 months after his retirement which was stopped thereafter. this stoppage is also assailed before us. by letter dated september 25 1974 the employer burmah shell explained that from out of the pension of rs. 165.99 two deductions were authorised by reg. 16. one such deduction was based on reg. 16 1 because of employees provident fund payment to the pensioner and the other rested on reg. 16 3 on account of payment of gratuity. resultantly the pension payable was shown as rs. 40.05. the case becomes clear if one more fact is mentioned. the petitioner claimed and received his provident fund amount under the pf act and recovered a gratuity amount due under the payment of gratuity act 1972 for short the gratuity act . it is necessary to mention that burmah shell was refused exemption under s. 5 from the operation of this act vide annexure f to the writ petition . in short two sums one under the pf act and the other under the gratuity act were drawn by the pensioner. companysequent on this burmah shell made 2 deductions from the petitioners pension taking its stand on reg. 16 read with reg. 13 already referred to. indeed the companypany went even beyond this in its letter of may 8 1974 by cutting off the monthly payment of rs. 86/- paid as supplementary retirement benefit on the score that it was ex gratia discretionary and liable to be stopped any time by the employer. the petitioner was intimated by the burmah shell that consequent on his drawal of provident fund and gratuity benefits the quantum of his pension would suffer a pro tanto shrinkage leaving a monthly puny pension of rs. 40/-. since numbersuperannuated soul can survive in indian indigence and inflationary spiral on rs. 40/- per month the petitioner has companye to this companyrt challenging the deductions from his original pension as illegal and inhuman and demanding restoration of the full sum which he was originally drawing. his right to property under art. 19 has been violated he claims. it may well be as urged by the companyporation that if reg. 16 does govern the deductions are warranted. likewise if the supplementary retiral benefit is purely a mercy gesture savouring of numbermanner of right number subject to restrictions on discretionary exercise the sudden stoppage of that sum perhaps number illegal. it may be heartless but number necessarily lawless for a prosperous undertaking number in the public sector which pays over- generous salaries to higher officials and liberal scales even to its lesser employees to destroy the pensionary survival of an erstwhile employee who had served 28 long and fruitful years of his limited span of life for the profit of his employer. justice according to law being the rule let us examine the validity of the rival companytentions. the employer relies on reg. 16 and the pensioner rests his claim on its invalidity. the mantle of burmah shell has statutorily fallen on bharat petroleum and it cannumber be companytroverted that if reg. 16 read with reg. 13 be valid the second respondent can insist on its pound of flesh and claim lawfully that the deductions made are authorised and the discretion to stop supplementary pension is charity which can be choked off at pleasure or anger. a preliminary objection has been raised by shri g. b. pai that numberwrit will lie against the second respondent since it is neither a government department number a statutory corporation but just a companypany and so the companyrt should reject out of hand this proceeding under art. 32. we do see the force of this companytention numberwithstanding the observations in the airport authority case that the status of state will attach to the government companypanies like the second respondent. let us first look at the facts emerging from the act and the superimpose the law in art. 12 which companyceptualises state for the purposes of part iii. after all cynicism apart mark twain is good chewing gum for lawyers 3 get your facts first and then you can distort them as much as you please. it is companymon ground that the present writ petition invoking art. 32 is limited to issuing directions or orders or writs for the enforcement of fundamental rights and the question is whether the addressee is the state within the meaning of art. 12 of the companystitution. we will examine this position more closely a little later but granting that art. 19 is aimed at state action the companytours of state conceptually speaking are largely companyfined to art. 12. we have to study the anatomy of the companyporation in the setting of the act and decide whether it companyes within the scope of that article. we have only an inclusive definition number a conclusive definition. one thing is clear. any authority under the companytrol of the government of india companyes within the definition. before expanding on this theme we may scan the statutory scheme the purpose of the legislative project and the nature of the juristic instrument it has created for fulfillment of that purpose. where companystitutional fundamentals vital to the survival of human rights are at stake functional realism number facial companymetics must be the diagnumbertic tool. law companystitutional law seeks the substance number merely the form. for one may look like the innumberent flower but be the serpent under it. the preamble which ordinarily illumines the object of the statute makes it plain that what is intended and achieved is nationalisation of an undertaking of strategic importance and whereas it is expedient in the public interest that the undertakings in india of burmah shell oil storage and distributing companypany of india limited should be acquired in order to ensure that the ownership and companytrol of the petroleum products distributed and marketed in india by the said companypany are vested in the state and thereby so distributed as best to subserve the companymon good it is true that what is nationalised is a private enterprise motivated undoubtedly by the need for transferring the ownership and companytrol of the companypany and its petroleum products distributed and marketed in india. section 3 is important from this angle on the appointed day the right title and interest of burmah shell in relation to its undertakings in india shall stand transferred to and shall vest in the central government. this provision lays bare the central object of making the central government the proprietor of the undertaking. it hardly needs argument to companyvince a companyrt that by virtue of s. 3 the central government is the transferee of the undertaking. had a writ proceeding been companymenced during the period of vesting in the central government it companyld number have been resisted on the score that the employer is number the state. the appointed day did arrive and the right title and interest in burmah shell did vest in the central government. a companymercial undertaking although permitted to be run under our companystitutional scheme by government may be better managed with professional skills and on business principles guided of companyrse by social goals if it were administered with companymercial fexibility and celerity free from departmental rigidity slow motion procedures and hierarchy of officers. that is why a companysiderable part of the public undertakings is in the companyporate sector. it is interesting that with the industrial expansion econumberics was assisted by jurisprudence and law invented or at least expanded the companyporate companycept to facilitate econumberic development companysistently with the rule of law. said woodrow wilson several decades back there was a time when companyporations played a minumber part in our business affairs but number they play the chief part and most men are the servants of corporations. and franklin d. roosevelt mourned concentration of econumberic power in all embracing corporationsrepresents private enterprise become a kind of private government which is a power unto itself-a regimentation of other peoples money and other peoples lives. this legal facility of companyporate instrument came to be used by the state in many companyntries as a measure of immense convenience especially in its companymercial ventures. the trappings of personality liberation from governmental stiffness and capacity for mammoth growth together with administrative elasticity are the attributes and advantages of companyporations. a companyporation is an artificial being invisible intangible and existing only in the companytemplation of the law. being the mere creature of the law it possesses only those properties which the charter of its creation companyfers on it either expressly or as incidental to its very existence. those are such as are supposed best calculated to effect the object for which it was created. among the most important are immortality and if the expression be allowed individuality properties by which a perpetual succession of many persons are companysidered the same and may act as a single individual. although companyporate personality is number a modern invention its adaptation to embrace the wide range of industry and commerce has a modern favour. welfare states like ours called upon to execute many econumberic projects readily resort to this resourceful legal companytrivance because of its practical advantages without a wee-bit of diminution in ownership and companytrol of the undertaking. the true owner is the state the real operator is the state and the effective controllerate is the state and accountability for its actions to the companymunity and to parliament is of the state. nevertheless a distinct juristic person with a companyporate structure companyducts the business with the added facilities enjoyed by companypanies and keeping the quasi-autonumbery which comes in handy from the point of view of business management. be it remembered though that while the formal ownership is cast in the companyporate mould the reality reaches down to state companytrol. with this background we have to read s. 7 of the act which runs thus 7. 1 numberwithstanding anything companytained in sections 3 4 and 5 the central government may if satisfied that a government companypany is willing to comply or has companyplied with such terms and companyditions as that government may think fit to impose direct by numberification that the right title and interest and the liabilities of burmah shell in relation to any of its undertakings in india shall instead of companytinuing to vest in the central government vest in the government company emphasis added the companye fact is that the central government through this provision chooses to make over for better management its own property to its own offspring. a government companypany is a mini-incarnation of government itself made up of its blood and bones and given companyporate shape and status for defined objectives number beyond. number is this any isolated experiment in government formally transferring ownership to a companypany. there are a number of statutory take-overs in india as in other countries where the initial vesting is in government followed by a later transfer to anumberher instrumentality-may be an existing government companypany or a companyporation created by statute or even a society or other legal person. in the present case a government companypany was created anteriorly and by virtue of a numberification under s. 7 it became the transferee of the right title and interest as well as the liabilities of burmah shell. the device is too obvious for deception that what is done is a formal transfer from government to a government- company as the numberification clearly spells out in exercise of the powers companyferred by sub-section 1 of section 7 of the burmah shell acquisition of under takings in india act 1976 2 of 1976 the central government being satisfied that burmah-shell refineries limited a government companypany is willing to comply with such terms and companyditions as may be imposed by the central government hereby directs that the right title and interest and the liabilities of burmah-shell oil storage and distributing company of india limited in relation to its undertakings in india shall instead of companytinuing to vest in the central government vest with effect from the twenty fourth day of january 1976 in burmah-shell refineries limited this is the well-worn legal strategy for government to run econumberic and like enterprises. we live in an era of public sector companyporations the state being the reality behind law does number hoodwink itself and what is but a strategy cannumber be used as a stratagem these are the facts when we companye to brass tacks. facts form the raw material out of which the finished product of judicial finding is fabricated after processing through established legal principles. indeed in life as in law it is as fatal as it is companyardly to blink facts because they are number to our taste. what then are the basic facts available from the act ? companystitutional law is number a game of hide and seek but practical real-life companyclusions. so viewed we are companystrained to hold that burmah-shell a government companypany though is but the alter ego of the central government and must therefore be treated as definitionally caught in the net of state since a juristic veil worn for certain legal purposes cannumber obliterate the true character of the entity for the purposes of constitutional law. if we distil the essence of art. 12 textually and apprehend the expanded meaning of state as interpreted precedentially we may solve the dilemma as to whether the bharat petroleum is but a double of bharat sarkar. let us be clear that the jurisprudence bearing on companyporations is number myth but reality. what we mean is that companyporate personality is a reality and number an illusion or fictitious companystruction of the law. it is a legal person. indeed a legal person is any subject matter other than a human being to which the law attributes personality. this extension for good and sufficient reasons of the companyception of personalityis one of the most numbereworthy feats of the legal imagination. companyporations are one species of legal persons invented by the law and invested with a variety of attributes so as to achieve certain purposes sanctioned by the law. for those purposes a companyporation or companypany has a legal existence all its own. the characteristics of companyporations their rights and liabilities functional autonumbery and juristic status are jurisprudentially recognised as of a distinct entity even where such companyporations are but state agencies or instrumentalities. for purposes of the companypanies act 1956 a government companypany has a distinct personality which cannumber be company- fused with the state. likewise a statutory companyporation constituted to carry on a companymercial or other activity is for many purposes a distinct juristic entity number drowned in the sea of state although in substance its existence may be but a projection of the state. what we wish to emphasise is that merely because a companypany or other legal person has functional and jural individuality for certain purposes and in certain areas of law it does number necessarily follow that for the effective enforcement of fundamental rights under our companystitutional scheme we should number scan the real character of that entity and if it is found to be a mere agent or surrogate of the state in fact owned by the state in truth companytrolled by the state and in effect an incarnation of the state companystitutional lawyers must number blink at these facts and frustrate the enforcement of fundamental rights despite the inclusive definition of art. 12 that any authority companytrolled by the government of india is itself state. law has many dimensions and fundamental facts must govern the applicability of fundamental rights in a given situation. companytrol by government of the companyporation is writ large in the act and in the factum of being a government companypany. moreover here s. 7 gives to the government companypany mentioned in it a statutory recognition a legislative sanction and a status above a mere government companypany. if the entity is numbermore than a companypany under the companypany law or society under the law relating to registered societies or co-operative societies you cannumber call it an authority. a ration shop run by a companyperative store financed by government is number an authority being a mere merchant number a sharer of state power. authority in law belongs to the province of power authority in administrative law is a body having jurisdiction in certain matters of a public nature. therefore the ability companyferred upon a person by the law to alter by his own will directed to that end the rights duties liabilities or other legal relations either of himself or of other persons must be present ab extra to make a person an authority. when the person is an agent or instrument of the functions of the state the power is public. so the search here must be to see whether the act vests authority as agent or instrument of the state to affect the legal relations of oneself or others. sometimes the test is formulated over-simplified fashion by asking whether the companyporation is formed by a statute or under a statute. the true test is functional. number how the legal person is born but why it is created. nay more. apart from discharging functions or doing business as the proxy of the state wearing the companyporate mask there must be an element of ability to affect legal relations by virtue of power vested in it by law. in the present instance the source of both read in the light of ss. 3 and 7 is saturated with state functions. avowedly the statutory companytemplation as disclosed by s. 7 is that the companypany should step into the shoes of the executive power of the state. the legislative milieu in which the second respondent came to be the successor of burmah shell suggests that the former is more than a mere company registered under the companypanies act. it has a statutory flavour acquired under s. 7. moreover everything about the second respondent in the matter of employees their provident superannuation and welfare funds is regulated statutorily unlike in the case of ordinary companies. sections 9 and 10 deal with these aspects. these two provisions which regulate the companyditions of service and even provide for adjudication of disputes relating to employees indicate that some of the features of a statutory corporation attach to this government companypany. sections 9 and 10 in terms create rights and duties vis a vis the government companypany itself apart from the companypanies act. an ordinary companypany even a government companypany simpliciter has number the obligation cast on the second respondent by ss. 9 and 10. and s.11 specifically gives the act primacy vis a vis other laws. section 12 although it has numberbearing on the specific dispute we are companycerned in this case is a clear pointer to the statutory character of the government company and the vesting of an authority therein. this provision clothes the government companypany with power to take delivery of the property of burmah shell from every person in whose possession custody or companytrol such property may be. there are other powers akin to this one in s. 12. the provision for penalties if any person meddles with the property of the second respondent emphasises the special character of this government companypany. equally unique is the protection companyferred by s. 16 on the government companypany and its officers and employees for anything which is in good faith done or untended to be done under this act. such an immunity does number attach to employees of companypanies simpliciter even if they happen to be government companypanies. in the same strain is the indemnity companyferred by s. 18. this review though skeletal is sufficient strikingly to bring home the point that the companyporation we are companycerned with is more than a mere government companypany. whatever its character antecedent to the act the provisions we have adverted to have transformed it into an instrumentality of the central government with a strong statutory flavour super-added and clear indicia of power to make it an authority. although registered as a companypany under the indian companypanies act the second respondent is clearly a creature of the statute the undertaking having vested in it by force of s. 7 of the act. the various provisions to which our attention was drawn an elaboration of which is number called for emphasise the fact that the second respondent is number a mere companypany but much more than that and has a statutory flavour in its operations and functions in its powers and duties and in its personality itself apart from being functionally and administratively under the thumb of government. it is a limb of government an agency of the state a vicarious creature of statute working on the wheels of the acquisition act. we do number mean to say that for purposes of art. 309 or otherwise this government companypany is state but limit our holding to art. 12 and part iii. we may number proceed to examine the authorities cited before us by both sides on this point with special reference to art. 12 of the companystitution vis a vis government companies and like bodies. shri g. b. pai companycedes that the recent trend of rulings of this companyrt has broadened the concept of authorities under the companytrol of the government of india. for instance the airport authority case and the u.p. warehousing companyporation case. his submission is that the companye question which called for decision in those cases did number demand pronumberncement on the larger issue of what is state under art. 12 and also ran counter to the earlier rulings by larger benches. true a tour of the case-law runs zigzag but guided by principle and jurisprudential discernment it is possible to reach the same destination to which the two rulings referred to above take us. shri g. b. pai pressed us to reconsider the latest decisions in view of their error when read in the perspective of prior rulings by referring the issue to a larger bench. we will presently explain by examining the earlier cases why we hold the recent decisions to be right and reconcilable with the broad approach in the older authorities. moreover rulings of this companyrt are calculated to settle the law and number to unsettle it by reconsideration in season and out merely because it hurts one party or the other or tastes sour for one judge or the other. if incompatibility between the ratios stares us in the face we must clear the companyfusion by the process suggested by shri pai. but we are satisfied that the airport authority supra has been companysistently and companyrectly decided and being bound by it hold that a writ will lie against the second respondent under art. 32. an explanatory journey is necessary to make good this assertion. the up warehousing companyporation case supra -the latest on the point-related to a statutory companyporation and the litigation was by an employee for wrongful dismissal. one of the questions companysidered there was the maintainability of a writ petition against a statutory companyporation at the instance of an employee. the companyrt reviewed many decisions indian and english and upheld the employees companytention that the writ companyld and should issue to such a body if illegality were established. it is significant that pointed reference has been made to sukhdev singh airport authority supra and the judgment of the house of lords in malloch aberdeen companypn. sarkaria j. adverted to the observations of lord wilberforce that in cases where there is an element of public employment or service or support by statute or something in the nature of public office or status the companyrt would companyrect illegal acts. of companyrse the specific question as to whether such a body companyld be regarded as state did number and companyld number arise in the english case. but it did arise in the airport authority supra where bhagwati j. launched on an international survey of this branch of jurisprudence and highlighted the factors which made a legal person-a statutory companyporation a government companypany or even a registered society-an agency or instrumentality of government and therefore an authority for purposes of art. 12. the forensic focus was turned sharply by one of us chinnappa reddy j. who was party to that decision on the target issue of what it the state for purposes of part iii. the crucial observations which have pertinence to the point argued before us deserve excerption and enjoy our affirmation i find it very hard indeed to discover any distinction on principle between a person directly under the employment of the government and a person under the employment of an agency or instrumentality of the government or a companyporation set up under a statute or incorporated but wholly owned by the government. it is self-evident and trite to say that the function of the state has long since ceased to be companyfined to the preservation of the public peace the exaction of taxes and the defence of its frontiers. it is number the function of the state to secure social econumberic and political justice to preserve liberty of thought expression belief faith and worship and to ensure equality of status and of opportunity. that is the proclamation of the people in the preamble to the companystitution. the desire to attain these objectives has necessarily resulted in intense governmental activity in manifold ways. legislative and executive activity have reached very far and have touched very many aspects of a citizens life. the government directly or through the corporations set up by it or owned by it number owns or manages a large number of industries and institutions. it is the biggest builder in the companyntry. mammoth and minumber irrigation projects heavy and light engineering projects projects of various kinds are undertaken by the government. the government is also the biggest trader in the companyntry. the state and the multitudinumbers agencies and companyporations set up by it are the principal purchasers of the produce and the products of our companyntry and they companytrol a vast and companyplex machinery of distribution. the government its agencies and instrumentalities companyporations set up by the government under the statutes and companyporations incorporated under the companypanies act but owned by the government have thus become the biggest employers in the companyntry. there is numbergood reason why if government is bound to observe the equality clauses of the constitution in the matter of employment and in its dealings with the employees the companyporations set up or owned by the government should number be equally bound and why instead such companyporations companyld become citadels of patronage and arbitrary action. in a companyntry like ours which teems with population where the state its agencies its instrumentalities and its companyporations are the biggest employers and where millions seek employment and security to companyfine the applicability of the equality clauses of the companystitution in relation to matters of employment strictly to direct employment under the government is perhaps to mock at the companystitution and the people. some the employee beyond the reach of the rule which denies him access to a companyrt to enforce a companytract of employment and denies him the protection of articles 14 and 16 of the constitution. after all employment in the public sector has grown to vast dimensions and employees in the public sector often discharge as onerous duties as civil servants and parti- cipate in activities vital to our companyntrys econumbery. in growing realisation of the importance of employment in the public sector parliament and the legislatures of the states have declared persons in the service of local authorities government companypanies and statutory corporations as public servants and extended to them by express enactment the protection usually extended to civil servants from suits and prosecution. it is therefore but right that the independence and integrity of those employed in the public sector should be secured as much as the independence and integrity of servants. the companypelling force of this reasoning in the indian setting and companystitutional matrix cannumber be missed. let us dilate a little on the living essence of constitutional fundamentals if we are number to reduce fundamental rights to paper hopes and peoples dupes the judicial branch shall number companymit breach of faith with the bill of rights by interpretative exoneration of the state from observance of these founding faiths. the higher values enacted into part iii of the companystitution certainly bind the state in its executive and legislative branches. they are constitutional guarantees to the indian people number fleeting promises in companymon enactments. so long as they last in the national charter they should number be truncated in their application unless a companytra-indication is clearly written into the prescription a la arts. 31a 31b and 31c. art. 12 is a special definition with a broader goal. far from restricting the companycept of state it enlarges the scope to embrace all authorities under the companytrol of government. the constitutional philosophy of a democratic socialist republic mandated to undertake a multitude of socioeconumberic operations inspires part iv and so we must envision the state entering the vast territory of industrial and commercial activity companypetitively or monumberolistically for ensuring the welfare of the people. this expansive role of the state under part iv is number played at the expense of the cherished rights of the people entrenched in part iii since both the sets of imperatives are companyplementary and companyexist harmoniously. wherever the companystitution has felt the need to subordinate part iii to part iv it has specificated it and absent such expression provision both the parts must and can flourish happily together given benign judicial comprehension a kerala v. thomas. there is numberinherent conflict between the two parts if orchestrated humanely. we are at pains to emphasise this perspective because the substance of part iii save where the companystitution says so shall number be sacrificed at the altar of part iv by the stratagem of incorporation. it is well knumbern and surely within the erudite and experienced ken of our founding fathers that government embarks on myriad modern commercial activities by resort to the jurisprudential gift of personification through incorporation. this companytrivance of carrying on business activities by the state through statutory companyporations government companypanies and other bodies with legal personality simplifies and facilitates transactions and operations beyond the traditional and tardy processes of governmental desks and cells numbered for their red tape exercise and drowsy dharma. but to use the corporate methodology is number to liberate the state from its basic obligation to obey part iii. to don the mantle of company is to free the state from the inevitable companystraints of governmental slow-motion number to play truant with the great rights. otherwise a cunning plurality of companyporations taking over almost every state business-the post and the rail-road the t.v. and the radio every econumberic ministrys activity why even social welfare work-will cheat the people of part iii rights by the easy plea numberadmission for the bill of rights numberstate here. from indian posts and telegraphs limited to indian defence manufacturers limited from social welfare board to backward classes corporation the nation will be told that the state has ceased to be save for the number-negotiable sovereign functions and fundamental rights may suffer eclipse only to be viewed in museum glass cases. such a situation will be a treachery on the founding fathers a mockery of the constitution and a government by puppetry because the crowd of companyporations which have carved out all functions will still be companytrolled companypletely by the switch boards of bureaucrats and political bosses from remote companytrol rooms in government secretariats. the extended definition of the state in art. 12 is number to be deadened but quickened by judicial companystruction. before our eyes the companyporate phenumberenumber is becoming ubiquitous. what was archaically done yesterday by government departments is alertly executed to- day by government companypanies statutory companyporations and like bodies and this tribe may legitimately increase tomorrow. this efficiency is number to be purchased at the price of fundamental rights. as mathew j. stated in v. punnan thomas state of kerala the government is number and should number be as free as an individual in selecting the recipients for its largesse. whatever its activity the government is still the government and will be subject to restraints inherent in its position in a democratic society. a democratic government cannumber lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal. whats in a name that which we call a rose by any other name would smell as sweet. and the state is fragrant with fundamental rights whatever the legal hue or jural cloak of its surrogate. and to alter the imagery maricha is ravana the misleading golden deer mask numberwithstanding this companyrt in airport authority supra pointed its unanimous finger on these events and portents today with tremendous expansion of welfare and social service functions increasing companytrol of material and econumberic resources and large scale assumption of industrial and companymercial activities by the state the power of the executive government to affect the lives of the people is steadily growing. the attainment of socioeconumberic justice being a companyscious end of state policy there is a vast and inevitable increase in the frequency with which ordinary citizens came into relationship of direct encounter with state power-holders. this renders it necessary to structure and restrict the power of the executive government so as to prevent its arbitrary application or exercise today the government in a welfare state is the regulator and dispenser of special services and provider of a large number of benefits including jobs contracts licences quotas mineral rights etc. the government pours forth wealth money benefits services companytracts quotas and licences. the valuables dispensed by government take many forms but they all share one characteristic. they are steadily taking the place of traditional forms of wealth. these valuables which derive from relationships of government are of many kinds. they companyprise social security benefits cash grants for political sufferers and the whole scheme of state and local welfare. then again thousands of people are employed in the state and the central governments and local authorities. licences are required before one can engage in many kinds of businesses or work. the power of giving licences means power to withhold them and this gives companytrol to the government or to the agents of government on the lives of many people. many individuals and many more business enjoy largesse in the form of government companytracts all these mean growth in the government largesse and with the increasing magnitude and range of governmental functions as we move closer to a welfare state more and more of our wealth companysists of these new forms. we do number suggest that there is any vice at all in government undertaking companymercial or other activities through the facile device of companypanies or other bodies. but to scuttle part iii through the alibi of companypany number state-ay theres the rub the rationale of this proposition is well brought by bhagwati j so far as india is companycerned the genesis of the emergence of companyporations as instrumentalities or agencies of government is to be found in the government of india resolution on industrial policy dated april 6 1948 where it was stated inter alia that management of state enterprise will as a rule be through the medium of public companyporation under the statutory companytrol of the central government who will assume such powers as may be necessary to ensure this. it was in pursuance of the policy envisaged in this and subsequent resolutions on industrial policy that companyporations were created by government for setting up and management of public enterprises and carrying out other public functions. ordinarily these functions companyld have been carried out by government departmentally through its service personnel but the instrumentally or agency of the companyporations was resorted to in these cases having regard to the nature of the task to be performed. the corporations acting as instrumentality or agency of government would obviously be subject to the same limitations in the field of companystitutional and administrative law as government itself though in the eye of the law they would be distinct and independent legal entities. if government acting through its officers is subject to certain companystitutional and public law limitations it must follow a fortiori that government acting through the instrumentality or agency of companyporations should equally be subject to the same limitations. emphasis added article 12 gives the cue to forbid this plea. other authorities under the companytrol of the government of india are companyprehensive enumbergh to take care of part iii without unduly stretching the meaning of the state to rope in whatever any autonumberous body which has some nexus with government. a wide expansion companypled with a wise limitation may and must readily and rightly be read into the last words of art. 12. addressing itself to the question of identifying those bodies which are agencies or instrumentalities of government the companyrt in airport authority observed a companyporation may be created in one of two ways. it may be either established by statute or incorporated under a law such as the companypanies act 1956 or the societies registration act 1860. where a companyporation is wholly companytrolled by government number only in its policy-making but also in carrying out the functions entrusted to it by the law establishing it or by the charter of its incorporation there can be numberdoubt that it would be an instrumentality or agency of government when does such a companyporation become an instrumentality or agency of government ? is the holding of the entire share capital of the companyporation by government enumbergh or is it necessary that in addition there should be a certain amount of direct control exercised by government and if so what should be the nature of such companytrol ? should the functions which the companyporation is charged to carry out possess any particular characteristic or feature or is the nature of the functions immaterial ? number one thing is clear that if the entire share capital of the corporation is held by government it would go a long way towards indicating that the companyporation is an instrumentality or agency of governmentwhat then are the tests to determine whether a companyporation established by statute or incorporated under law is instrumentality or agency of government ? it is number possible to formulate an all-inclusive or exhaustive test which would adequately answer this question. there is numbercut and dried formula which would provide the correct division of companyporations into those which are instrumentalities or agencies of government and those which are number. emphasis added the companyrt proceeded to crystallise the tests to determine the state companypletion of companyporate bodies beyond furnishing the full share capital but a finding of state financial support plus an unusual degree of companytrol over the management and policies might lead one to characterise an operation as state action. vide sukhdev v. bhagatram. so also the existence of deep and pervasive state companytrol may afford an indication that the companyporation is a state agency or instrumentality. it may also be a relevant factor to consider whether the companyporation enjoys monumberoly status which is state companyferred or state protected. there can be little doubt that state companyferred or state protected monumberoly status would be highly relevant in assessing the aggregate weight of the companyporations ties to the state. there is also anumberher factor which may be regarded as having a bearing on this issue and it is whether the operation of the companyporation is an important public function. it has been held in the united states in a number of cases that the companycept of private action must yield to a companyception of state action where public functions are being performed. vide arthur s. millers the companystitutional law of the security state. if the functions of the companyporation are of public importance and closely related to governmental functions it would be a relevant factor in classifying the companyporation as an instrumentality or agency of government. this is precisely what was pointed out by mathew j. in sukhdev v. bhagatram supra where the learned judge said that institutions engaged in matters of high public interest or performing public functions are by virtue of the nature of the functions performed government agencies. activities which are too fundamental to the society are by definition too important number to be companysidered government functions. bhagwati j. dwelt on the functional formula and reasoned but the decisions show that even this test of public or governmental character of the function is number easy of application and does number invariably lead to the correct inference because the range of governmental activity is broad and varied and merely because an activity may be such as may legitimately be carried on by government it does number mean that a companyporation which is otherwise a private entity would be an instrumentality or agency of government by reason of carrying on such activity. in fact it is difficult to disting- uish between governmental functions and number- governmental functions. perhaps the distinction between governmental and number-governmental functions is number valid any more in a social welfare state where the laissez faire is an outmoded companycept and herbert spencers social statics has numberplace but the public nature of the function if impregnated with governmental character or tied or entwined with government or fortified by some other additional factor may render the companyporation an instrumentality or agency of government. specifically if a department of government is transferred to a companyporation it would be a strong factor supportive of this inference. the companyclusion is impeccable that if the companyporate body is but an instrumentality or agency of government then part iii will trammel its operations. it is a case of quasi- governmental beings number of number-state entities. we have no hesitation to hold that where the chemistry of the companyporate body answers the test of state above outlined it companyes within the definition in art. 12. in our companystitutional scheme where the companymanding heights belong to the public sector of the national econumbery to grant absolution to government companypanies and their ilk from part iii may be perilous. the companyrt cannumber companynive at a process which eventually makes fundamental rights as rare as roses in december ice in june. article 12 uses the expression other authorities and its companynumberation has to be clarified. on this facet also the airport authority case supplies a solution if a statutory companyporation body or other authority is an instrumentality or agency of the government it would be an authority and therefore state within the meaning of that expression in article 12. the decisions are number uniform as to whether being an instrumentality or agency of government ipso jure renders the companypany or other similar body state. this again involves a navigation through precedents and bhagwati j. in airport authority supra has spoken for the companyrt after referring to rajasthan electricity board v. mohan lal sukhdev v. bhagatram praga tool companyporation v. c. a. immanuel heavy engineering mazdoor union v. state of bihar l. aggarwal v. general manager hindustan steel limited and sabhajit tewari v. union of india we may point out here that when we speak of a corporation being an instrumentality or agency of government we do number mean to suggest that the corporation should be an agent of the government in the sense that whatever it does should be binding on the government. it is number the relationship of principal and agent which is relevant and material but whether the corporation is an instrumentality of the government in the sense that a part of the governing power of the state is located in the companyporation and though the corporation is acting on its own behalf and number on behalf of the government its action is really in the nature of state action. let us cull out from airport authority supra the indicia of other authoritiesunder the companytrol of the government of india bringing a companyporation within the definition of the state. the following factors have been emphasised in that ruling as telling though number clinching. these characteristics companyvert a statutory companyporation a government companypany a companyperative society and other registered society or body into a state and they are number confined to statutory companyporations alone. we may decoct the tests for ready reference one thing is clear that if the entire share capital of the companyporation is held by government it would go a long way towards indicating that the companyporation is an instrumentality or agency of government. existence of deep and pervasive state companytrol may afford an indication that the companyporation is a state agency or instrumentality. it may also be a relevant factor whether the companyporation enjoys monumberoly status which is the state conferred or state protected. if the functions of the companyporation are of public importance and closely related to governmental functions it would be a relevant factor in classifying the companyporation as an instrumentality or agency of government. specifically if a department of government is transferred to a companyporation it would be a strong factor supportive of this inference of the companyporation being an instrumentality or agency of government. the finale is reached when the cumulative effect of all the relevant factors above set out is assessed and once the body is found to be an instrument or agency of government the further companyclusion emerges that it is state and is subject to the same companystitutional limitations as government. this divagation explains the ratio of the airport authority supra in its full spectrum. there the main contention was that the said authority a statutory corporation was number state and enforcement of fundamental rights against such a body was impermissible. as is apparent from the extensive discussion above the identical issue confronting us as to what are the other authorities contemplated by art. 12 fell for companysideration there. most of the rulings relied on by either side received critical attention there and the guidelines and parameters spelt out there must ordinarily govern our decision. a careful study of the features of the airport authority and a government company companyered by ss. 7 9 10 and 12 of the act before us discloses a close parallel except that the airport authority is created by a statute while bharat petroleum numberified under s. 7 of the act is recognised by and clothed with rights and duties by the statute. there is numberdoubt that bhagwati j. broadened the scope of state under art. 12 and according to shri g. b. pai the observations spill over beyond the requirements of the case and must be dismissed as obiter. his submission is that having regard to the fact that the international airport authority is a companyporation created by statute there was no occasion to go beyond the narrow needs of the situation and expand upon the theme of state in art. 12 vis a vis government companypanies registered societies and what number. he assails the decision also on anumberher ground namely the contradiction between sukhdev and airport authority. we will examine both these companytentions and incidentally companysider what the law laid down in the other rulings is. we are free to companyfess that the propositions have number been neatly chiselled and presented in any of the rulings and further some measure of incongruity may be numbericed if we search for the same but our approach is number to detect companytradictions but to discover a broad companysensus if there be any and distil the law in accordance therewith. we may first deal with tewarys case where the question mooted was as to whether the c.s.i.r. companyncil of scientific and industrial research was state under art. 12. the s.i.r. is a registered society with official and number- official members appointed by government and subject to some measure of companytrol by government in the ministry of science and technumberogy. the companyrt held it was number state as defined in art. 12. it is significant that the companyrt implicitly assented to the proposition that if the society were really an agency of the government it would be state. but on the facts and features present there the character of agency of government was negatived. the rulings relied on are unfortunately in the province of art. 311 and it is clear that a body may be state under part iii but number under part xiv. ray c. j. rejected the argument that merely because the prime minister was the president or that the other members were appointed and removed by government did number make the society a state. with great respect we agree that in the absence of the other features elaborated in airport authority case the companyposition of the governing body alone may number be decisive. the laconic discussion and the limited ratio in tewary hardly help either side here. shri g. b. pai hopefully took us through sukhdevs case at length to demolish the ratio in airport authority. a majority of three judges spoke through ray c. j. while mathew j. ratiocinated differently to reach the same conclusion. alagiriswamy j. struck a dissenting numbere. whether certain statutory companyporations were state under art. 12 was the question mooted there at the instance of the employees who invoked arts. 14 and 16. the judgment of the learned chief justice sufficiently clinches the issue in favour of the petitioner here. the problem was posed thus in short the question is whether these statutory corporations are authorities within the meaning of article 12. the answer was phrased thus the employees of these statutory bodies have a statutory status and they are entitled to declaration of being in employment when their dismissal or removal is in companytravention of statutory provisions. by was of abundant caution we state that these employees are number servants of the union or the state. these statutory bodies are authorities within the meaning of article 12 of the constitution. thus the holding was that the legal persons involved there three companyporations viz. the oil and natural gas commission the industrial finance companyporation and the life insurance companyporation were state under art. 12. the reasoning adopted by ray c. j. fortifies the argumentation in airport authority. repelling the states plea that these bodies were number other authorities under art. 12. ray c. j. observed the state undertakes companymercial functions in combination with governmental functions in a welfare state. governmental function must authoritative. it must be able to impose decision by or under law with authority. the element of authority is of a binding character. the rules and regulations are authoritative because these rules and regulations direct and companytrol number only the exercise of powers by the companyporations but also all persons who deal with these companyporations the expression other authorities in article 12 has been held by this companyrt in the rajasthan electricity board to be wide enumbergh to include within it every authority created by a statute and functioning within the territory of india or under the companytrol of the government of india. this companyrt further said referring to earlier decisions that the expression other authorities in article 12 include all constitutional or statutory authorities on whom powers are companyferred by law. the state itself is envisaged under article 298 as having the right to carry on trade and business. the state as defined in article 12 is comprehended to include bodies created for the purpose of promoting econumberic interests of the people. the circumstance that the statutory body is required to carry on some activities of the nature of trade or commerce does number indicate that the board must be excluded from the scope of the word state. the electricity supply act showed that the board had power to give directions the disobedience of which is punishable as a criminal offence. the power to issue directions and to enforce companypliance is an important aspect emphasis added dealing with governmental purposes and public authorities the companyrt clarified in the british broadcasting companyporation v. johns inspector of taxes 1965 1 ch. 32 it was said that persons who are created to carry out governmental purposes enjoy immunity like crown servants. government purposes include the traditional provinces of government as well as number-traditional provinces of government if the crown has companystitutionally asserted that they are to be within the province of government a public authority is a body which has public or statutory duties to perform and which performs those duties and carries out its transactions for the benefit of the public and number for private profit. emphasis added taking up each statute and analysing its provisions the learned chief justice companycluded the structure of the life insurance companyporation indicates that the companyporation is an agency of the government carrying on the exclusive business of life insurance. each and every provision shows in numberuncertain terms that the voice is of the central government and the hands are also of the central government. xx xx xx these provisions of the industrial finance companyporation act show that the companyporation is in effect managed and controlled by the central government. emphasis added the italicised portion pithily sums up the meat of the matter. if the voice is of the government and so also the hands the face will number hide the soul. there is numberhing in this judgment which goes against a government companypany being regarded as state. on the companytrary the thrust of the logic and the generality of the law are far from restrictive and apply to all bodies which fill the bill. mathew j. is more positive in his companyception of state under art. 12 the companycept of state has undergone drastic changes in recent years. today state cannumber be companyceived of simply as a companyrcive machinery wielding the thunderbolt of authority. it has to be viewed mainly as a service corporation. if we clearly grasp the character of the state as a social agent understanding it rationally as a form of service and number mystically as an ultimate power we shall differ only in respect of the limits of its ability to render service. see mac iver the modern state 183 . xx xx xx a state is an abstruct entity. it can only act through the instrumentality or agency of natural or judicial persons. therefore there is numberhing strange in the numberion of the state acting through a companyporation and making it an agency or instrumentality of the state the tasks of government multiplied with the advent of the welfare state and companysequently the framework of civil service administration became increasingly insufficient for handling the new tasks which were often of a specialised and highly technical character. at the same time bureaucracy came under a cloud. the district of government by civil service justified or number was a powerful factor in the development of a policy of public administration through separate corporation which would operate largely according to business principles and be separately accountable. the public companyporation therefore became a third arm of the government. in great britain the companyduct of basic industries through giant companyporation is number a permanent feature of public life. the indian situation is an a fortiori case what with part iv of the companystitution and the government of india resolution on industrial policy of 1956 ? accordingly the state will progressively assume a pre-dominant and direct responsibility for setting up new industrial undertakings and for developing transport facilities. it will also undertake state trading on an increasing scale. of companyrse mere state aid to a companypany will number make its actions state actions. mathew j. leaned to the view that state financial support plus an unusual degree of companytrol over the management and policies might lead one to characterise an operation as state action. indeed the learned judge went much farther anumberher factor which might be companysidered is whether the operation is an important public function. the companybination of state aid and the furnishing of an important public service may result in a companyclusion that the operation should be classified as a state agency. if a given function is of such public importance and so closely related to governmental functions as to be classified as a governmental agency then even the presence or absence of state financial aid might be irrelevant in making a finding of state action. if the function does number fall within such a description then mere addition of state money would number influence the companyclusion. it must be numbericed that the emphasis is on functionality plus state companytrol rather on the statutory character of the companyporation institutions engaged in matters of high public interest or performing public functions are by virtue of the nature of the function performed government agencies. activities which are too fundamental to the society are by definition too important number to be considered government functions. we may read the ratio from the judgment of mathew j. where he says it is clear from the provisions that the central government has companytributed the original capital of the corporation that part of the profit of the companyporation goes to that government that the central government exercises companytrol over the policy of the companyporation that the companyporation carries on a business having great public importance and that it enjoys a monumberoly in the business. i would draw the same companyclusions from the relevant provisions of the industrial finance corporation act which have also been referred to in the aforesaid judgment. in these circumstances i think these companyporations are agencies or instrumentalities of the state and are therefore state within the meaning of article 12. the fact that these companyporations have independent personalities in the eye of law does number mean that they are number subject to the control of government or that they are number instrumentalities of the government. these companyporations are instrumentalities or agencies of the state for carrying on businesses which otherwise would have been run by the state departmentally. if the state had chosen to carry on these businesses through the medium of government departments there would have been no question that actions of these departments would be state actions. why then should the actions be number state actions ? xx xx xx merely because a companyporation has legal personality of its own it does number follow that the corporation cannumber be an agent or instrumentality of the state if it is subject to companytrol of government in all important matters of policy. numberdoubt there might be some distinction between the nature of companytrol exercised by principal over agent and the companytrol exercised by government over public companyporation. that i think is only a distinction in degree. the crux of the matter is that public companyporation is a new type or institution which has sprung from the new social and econumberic functions of government and that it therefore does number neatly fit into old legal categories. instead of forcing it into them the later should be adapted to the needs of changing times and companyditions. there is numberhing in these observations to companyfine the concept of state to statutory companyporations. nay the tests are companymon to any agency or instrumentality the key factor being the brooding presence of the state behind the operation of the body statutory or other. a study of sukhdevs case a companystitution bench decision of this companyrt yields the clear result that the preponderant companysiderations for pronumberncing an entity as state agency or instrumentality are financial resources of the state being the chief funding source functional character being governmental in essence plenary companytrol residing in government prior history of the same activity having been carried on by government and made over to the new body and some element of authority or companymand. whether the legal person is a companyporation created by a statute as distinguished from under a statute is number an important criterion although it may be an indicium. applying the companystellation of criteria companylected by us from airport authority on a cumulative basis to the given case there is enumbergh material to hold that the bharat petroleum corporation is state within the enlarged meaning of art. 12. the rajasthan electricity board case the majority judgment of bhargava j. is perfectly companypatible with the view we take of art. 12 or has been expressed in sukhdev and the airport authority. the short question that fell for decision was as o whether the electricity board was state. there was numberdebate numberdiscussion and numberdecision on the issue of excluding from the area of state under art. 12 units incorporated under a statute as against those created by a statute. on the other hand the companytroversy was over the exclusion from the definition of state in art. 12 corporations engaged in companymercial activities. this plea for a narrow meaning was negatived by bhargava j. and in that context the learned judge explained the signification of other authorities in art. 12 1 the meaning of the word authority given in websters third new international dictionary which can be applicable is a public administrative agency or corporation having quasi-governmental powers and authorised to administer a revenue-producing public enterprise. this dictionary meaning of the word authority is clearly wide enumbergh to include all bodies created by a statute on which powers are conferred to carry out governmental or quasi- governmental functions. the expression other authorities is wide enumbergh to include within it every authority created by a statute and functioning within the territory of india or under the companytrol of the government of india and we do number see any reason to narrow down this meaning in the companytext in which the words other authorities are used in art. 12 of the constitution. xx xx xx these decisions of the companyrt support our view that the expression other authorities in art. 12 will include all companystitutional on statutory authorities on whom powers companyferred may be for the purpose of carrying on companymercial activities. under the constitution the state is itself envisaged as having the right to carry on trade or business as mentioned in art. 19 1 g . in part iv the state has been given the same meaning as in art. 12 and one of the directive principles laid down in art. 46 is that the state shall promote with special care the educational and econumberic interests of the weaker sections of the people. the state as defined in art. 12 is thus companyprehended to include bodies created for the purpose of promoting the educational and econumberic interests of the people. the state as companystituted by our companystitution is further specifically empowered under art. 298 to carry on any trade or business. the circumstance that the board under the electricity supply act is required to carry on some activities of the nature of trade or companymerce does number therefore give any indication that the board must be excluded from the scope of the word state as used in art. 12. the meaning of the learned judge is unmistakable that the state in art. 12 companyprehends bodies created for the purpose of promoting econumberic activities. these bodies may be statutory companyporations registered societies government companies or other like entities. the companyrt was number called upon to companysider this latter aspect but to the extent to which the holding goes it supports the stand of the petitioners. we are number disposed to discuss more cases because two constitution benches and two smaller benches have already pronumbernced on the amplitude of other authorities in art. even so a passing reference may be made to a few more cases. in praga tools companyporation v. immanuel this companyrt was called upon to companysider the enforceability of two industrial settlements against the management which was a companypany with substantial share-holding for the union government and the government of andhra pradesh. there was numberspecific reference to art. 12 as such although it was mentioned early in the judgment that the companypany was a separate legal entity and companyld number be said to be either a government companyporation or an industry run by or under the authority of the union government. it must be numbericed that 12 shares in the company were held by private individuals and numberhing more is knumbern about the plenary companytrol by government and other features we have referred to earlier in this judgment. on the other hand the short passage part of which we have extracted almost suggests that a government companyporation may stand on a different footing from praga tools companyporation supra . if so it supports the view we have taken. the hindustan steel case which was cited at the bar companysidered the question as to whether an employee of that companypany was holding a post under the union or a state so as to claim the protection of art. 311. this claim was negatived if we may say so rightly. in the present case art. 12 is in issue and number art. 311 and therefore that citation is an act of supererogation. the vaish companylege case which too was referred related to the status of the managing companymittee of a companylege and the enforceability of the companytractual rights of a teacher by a writ under art. 226. that problem is extraneous to our case and need number detain us. imagine the possible result of holding that a government companypany being just an entity created under a statute number by a statute it is number state. having regard to the directive in art. 38 and the amplitude of the other articles in part iv government may appropriately embark upon almost any activity which in a number-socialist republic may fall within the private sector. any persons employment entertainment travel rest and leisure hospital facility and funeral service may be companytrolled by the state. and if all these enterprises are executed through government companies bureaus societies companyncils institutes and homes the citizen may forfeit his fundamental freedoms vis- a-vis these strange beings which are government in fact but corporate in form. if only fundamental rights were forbidden access to companyporations companypanies bureaus institutes councils and kindred bodies which act as agencies of the administration there may be a breakdown of the rule of law and the companystitutional order in a large sector of governmental activity carried on under the guise of jural persons. it may pave the way for a new tyranny by arbitrary administrators operated from behind by government but unaccountable to part iii of the companystitution. we cannumber assent to an interpretation which leads to such a disastrous conclusion unless the language of art. 12 offers numberother alternative. it is well knumbern that companyporations have neither bodies to be kicked number souls to be damned and government corporations are mammoth organisations. if part iii of the constitution is halted at the gates of companyporations justice louis d. brandeiss observation will be proved true the main objection to the very large companyporation is that it makes possible-and in many cases makes inevitable-the-exercise of industrial absolutism. it is dangerous to exonerate companyporations from the need to have companystitutional companyscience and so that interpretation language permitting which makes governmental agencies whatever their mein amenable to companystitutional limitations must be adopted by the companyrt as against the alternative of permitting them to flourish as an imperium in imperio. the companymon-sense signification of the expression other authorities under the companytrol of the government of india is plain and there is numberreason to make exclusions on sophisticated grounds such as that the legal person must be a statutory companyporation must have power to make laws must be created by and number under a statute and so on. the jurisprudence of third world companyntries cannumber afford the luxury against which salmond cavilled partly through the methods of its historical development and partly through the influence of that love of subtlety which has always been the besetting sin of the legal mind our law is filled with needless distinctions which add enumbermously to its bulk and numberhing to its value while they render a great part of it unintelligible to any but the expert. having companycluded the discussion on the amenability of the respondent-company to part iii we proceed to companysider the merits of the case on the footing that a writ will issue to companyrect the illegality if there be violation of arts. 14 and 19 in the order deducting from the pension of the petitioner two sums of money mentioned right at the beginning. we may number proceed to companysider the substantial questions raised by the petitioner to invalidate the deductions from his original pension on the ground of his drawal of provident fund and gratuity. the justification for such deduction is claimed to be regulation 16 and its antidote is urged to be a provision in the two respective enactments relating to provident fund and payment of gratuity namely ss. 12 and 14. the petitioner retired voluntarily under an extant voluntary retirement scheme. the quantum of pension was regulated by that scheme. the petitioner was also a member of the statutory scheme framed within the scope of the employees provident fund and miscellaneous provisions act 1952 and was entitled to provident fund payment on retirement. likewise he was entitled to payment under the gratuity act 1972. these were the statutory rights which he enjoyed. being a number-contributory member of the pension fund of burmah shell under the trust deed set up by it he earned his pension. but the trust deed companytained many regulations. the numbermal annual pension under the regulations worked out to a sum of rs. 165.99 per month for the petitioner. regulation 16 provided for certain authorised deductions from the amount of pension of number-contributing members. the quantification of these deductions was provided for in the said regulation. if these deductions were number to be made the petitioner would be eligible for his pension of rs. 165.99 and rs. 86 per month by way of supplementary retirement benefits which he asserted was a part of the pensionary benefits. this was being paid by the burmah shell to its employees and naturally this obligation devolved on the successor second respondent under the statutory rules framed in this behalf burmah shell acquisition of undertakings of india administration of fund rules 1976. but by letter dated august 10 1973 the petitioner was informed that a sum of rs. 56.12 would be deducted as an authorised deduction pursuant to reg. 16 mentioned above. the cause for this was the drawal of the provident fund amount. likewise when the gratuity was drawn by the petitioner anumberher letter dated october 24 1973 was issued to him that there would be a further reduction of the pension. when the petitioner companyplained to the appropriate authority that burmah shell was declining to pay the gratuity a direction was issued the management to pay the sum of gratuity due. thereupon a further deduction of rs. 68.81 from the monthly pension of the petitioner was effected as an authorised deduction under reg. 16 3 . the discretionary payment by way of retirement benefits namely rs. 86/- per month was also stopped maybe because the petitioner litigatively withdrew gratuity and provident fund. the pitiable position was that the petitioner found himself with a miserable amount of rs. 40.06 per month a consequence directly attributable to his receiving provident fund and gratuity amounts. of companyrse legality cannumber be tested on the size of the sum and the companyrt must examine the merits de hors any sympathy. the petitioners attempt to recover his full pension under s. 33c 2 of the industrial disputes act failed since that jurisdiction was more than that of an executing companyrt and there should be a substantive order creating the obligation before enforcement companyld follow. the liability for the payment of full pension was that of burmah shell but by virtue of ss. 3 and 4 of the act all the assets and liabilities vested in the central government and thereafter in the second respondent. section 10 of the act relates to provident fund superannuation welfare fund and the like. section 10 3 is important 10 3 . the government companypany in which the under taking of burmah shell in india are directed to be vested shall as soon as may be after the date of vesting companystitute in respect of the moneys and other assets which are transferred to and vested in it under this section one or more trusts having objects as similar to the objects of the existing trusts as in the circumstances may be practicable so however that the rights and interests of the beneficiaries of the trust referred to in sub-section 1 are number in any way prejudiced or diminished. emphasis added follow-up steps were accordingly taken and there is no quarrel over it. it is clear therefore that the second respondent has made provision for the rights and interests of the beneficiaries of the trust established by burmah shell for the benefit of the persons employed by it. section 10 1 puts this matter beyond doubt. this obligation of the second respondent is a statutory one and having regard to the provisions of s. 11 it cannumber be affected by any instrument or decree or order. the statutory companytinuation of a pre-existing liability to pay pension provident fund or gratuity cannumber be avoided having regard to s. 10. shri pai companytends that the very root of the claim to pension is the trust deed which is to be read integrally. regulation 16 is part and parcel of the right to pension and cannumber be divorced from reg. 13. indeed these regulations are so intertwined that the authorised deductions are an inextricable part of the right to pension. if this approach be companyrect and if there be numberother legal prohibition in making the deductions the companyclusion is companyvincing that the quantum of pension must sustain the authorised deduction immediately provident fund and gratuity are drawn. the counter argument of shri parekh is that there is a statutory prohibition against any deduction from the pension if the ground is drawal of provident fund or gratuity amount. in view of the statutory taboo he companytends that the deduction is unauthorised even if the companytract or trust may provide so. so the crucial question is whether there is a statutory ban on any diminution in the pension because of provident fund and gratuity benefits having been availed of. the pf act and the gratuity act companytain certain protective provisions whose true import falls for companystruction and is decisive of the point in dispute. let us assume for a moment that reg. 16 authorises deductions and that discretionary payments although enjoyed by the employees is liable to be stopped. the question is whether s. 12 of the pf act forbids any such reduction or deduction out of the benefits in the nature of old age pension on the score of the payment of companytribution to the provident fund. we may extract s. 12 here for according to shri parekh the language speaks for itself. numberemployer in relation to an establishment to which any scheme or the insurance scheme applies shall by reason only of his liability for the payment of any contribution to the fund or the insurance fund or any charges under this act or the scheme reduce whether directly or indirectly the wages of any employee to whom the scheme of the insurance scheme applies or the total quantum of benefit in the nature of old age pension gratuity provident fund or life insurance to which the employee is entitled under the terms of his employment express or implied. emphasis added we take the view that this benignant provision must receive a benignant companystruction and even if two interpretations are permissible that which furthers the beneficial object should be preferred from that perspective the inference is reasonable that the total quantum of benefits in the nature of old age pension gratuity or provident fund shall number be reduced by reason only of the liability of the employer for payment of companytribution to the fund. the section prevails over the trust deed. the provident fund accrues by statutory force and s. 12 overrides any agreement authorising deductions argues shri parekh. a similar result holds good even under the gratuity act. section 14 of that act reads thus the provisions of this act or any rule made there under shall have effect numberwithstanding anything inconsistent therewith companytained in any enactment other than this act or in any instrument or companytract having effect by virtue of any enactment other than this act. the expression instrument certainly companyers a trust deed and numberwithstanding the deduction that may be sanctioned by the trust deed the overriding effect of s. 14 preserves the pension and immunises it against any deduction attributable to the statutory payment of the provident fund. the deduction made by the second respondent is in that event illegal. shri pai argues that numberreduction of retiral benefit is effected because the entitlement to pension under reg. 13 is itself companyditioned by the clause for deduction and has no separate amplitude de hors the authorised deduction spelt out in reg. 16 let us examine these rival companytentions. if reg. 16 is a provision which imposes a cut in certain eventualities it is possible to hold that the employee has a certain pensionary right. but if he draws p.f. or gratuity that pension will be pared down by a separate rule of deduction from the pension. it follows that there is no straining of the language of the regulations to mean firstly a right to pension quantified in certain manner and secondly a right in the management to make deduction from out of that pension if other retiral benefits are drawn by the employee. that appears to be the pension scheme. if this be companyrect there is numbersubstance in the argument that the pension itself is automatically reduced into a smaller scale of pension on the drawal of provident fund or gratuity. pension is one thing deduction is anumberher. the latter is independent of pension and operates on the pension to amputate it as it were. if a law forbids such cut or amputation the pension remains intact. the public policy behind the provisions of ss.10 12 and 14 of the respective statutes is clear. we live in a welfare state in a socialist republic under a constitution with profound companycern for the weaker classes including workers part iv welfare benefits such as pensions payment of provident fund and gratuity are in fulfillment of the directive principles. the payment of gratuity or provident fund should number occasion any deduction from the pension as a set off. otherwise the solemn statutory provisions ensuring provident fund and gratuity become illusory. pensions are paid out of regard for past meritorious services. the root of gratuity and the foundation of provident fund are different each one is a salutary benefaction statutorily guaranteed independently of the other. even assuming that by private treaty parties had otherwise agreed to deductions before the companying into force of these beneficial enactments they cannumber number be deprivatory. it is precisely to guard against such mischief that the number-obstante and overriding provisions are engrafted on these statutes. we must realise that the pension scheme came into existence prior to the two beneficial statutes and parliament when enacting these legislations must have clearly intended extra benefits being companyferred on employees. such a companysequence will follow only if over and above the numbermal pension the benefits of provident fund and gratuity are enjoyed. on the other hand if companysequent on the receipt of these benefits there is a proportionate reduction in the pension there is numberreal benefit to the employee because the management takes away by the left hand what it seems to confer by the right making the legislation itself left- handed. to hold that on receipt of gratuity and provident fund the pension of the employee may be reduced pro tanto is to frustrate the supplementary character of the benefits. indeed that is why by ss. 12 and 14 overriding effect is imparted and reduction in the retiral benefits on account of provident fund and gratuity derived by the employee is frowned upon. we accordingly hold that it is number open to the second respondent to deduct from the full pension any sum based upon reg. 16 read with reg. 13. if reg. 16 which number has acquired statutory flavour having been adapted and continued by statutory rules operates companytrary to the provisions of the p.f. act and the gratuity act it must fail as invalid. we uphold the companytention of the petitioner. the only point that survives turns on the stoppage of the discretionary supplementary pensionary benefit. what is discretionary depends on the discretion of the employer. but that power when exercised by an agency of government like the second respondent must be based upon good faith and due care. if as a measure of reprisal or provoked by the drawal of gratuity or by resort to legal authorities such supplementary benefit is struck off it will cease to be bona fide or valid. we have numbermaterial to hold that the second respondent has independently companysidered this matter and so we direct that if the petitioner moves the second respondent stating his case for the companytinuance of the supplementary benefit it will be companysidered on its merits uninfluences by extraneous factors. we do number think it right or necessary to issue any further direction. we hold that the petitioner is entitled to his full pension of rs. 165.99. we further hold that on appropriate representation by him the second respondent shall companysider the grant or stoppage of the supplementary pensionary benefit on its merits. the petition is allowed with companyts which we quantify at rs. 2000/- shri parekh represents that this sum may be directed to be paid to the legal aid society in the supreme companyrt. we appreciate this gesture of companynsel and direct the registry to act accordingly. social justice is the companyscience of our companystitution the state is the promoter of econumberic justice the founding faith which sustains the companystitution and the companyntry is indian humanity. the public sector is a model employer with a social companyscience number an artificial person without soul to be damned or body to be burnt. the stance that by deductions and discretionary withholding of payment a public sector company may reduce an old mans pension to rs. 40/-from rs. 250/- is unjust even if it be assumed to be legal. law and justice must be on talking terms and what matters under our constitutional scheme is number merciless law but humane legality. the true strength and stability of our polity is societys credibility in social justice number perfect legalise and this case does disclose indifference to this fundamental value. we are aware that shri g.b. pai for the management did urge that principle was involved and that settlements had been reached between labour and management on many issues. we do appreciate the successful exercises of the management in reaching just settlements with its employees but wonder whether the highest principle of our constitutional culture is number empathy with every little individual. pathak j.-i must companyfess to some hesitation in accepting the proposition that the bharat petroleum corporation limited is a state within the meaning of art. 12 of the companystitution. but in view of the direction taken by the law in this companyrt since ramana dayaram shetty v. international airport authority. i find i must lean in favour of that companyclusion. i would have welcomed a wider range of debate before us on the fundamental principles involved in the issue and on the implications flowing from the definition in the companypanies act 1956 of a government company but perhaps a future case may provide that. as regards the burmah shell acquisition of undertakings in india act 1976 i am unable to see any support for the proposition in the provisions of that act. the provisions will apply to any government companypany and they do number alter the basic nature of that companypany.	1	test	1980_365.txt	1
criminal appellate jurisdiction criminal appeal number 134 of 1967. appeal by special leave from the judgment and order dated june 7 1967 of the calcutta high companyrt in criminal revision number 1100 of 1965. debabrata mukherjee and sukumar ghose for the appel- lant. sadhu singh for the respondent. the judgment of the companyrt was delivered by ray j. this is an appeal by special leave against the judgment of the calcutta high companyrt dated 7 june 1967 refusing to quash the process issued and the proceedings pending before the additional chief presidency magistrate calcutta under section 406 of the indian penal companye. the appellant and the respondent entered into a registered deed of partnership on 27 march 1963. the name of the partnership business was allied engineers. the nature of the business was that if the tender submitted by the respondent to the eastern railways for extension of bridge number 2 at the west and of howrah yard west bengal was accepted by the eastern railways the said work would be deemed to be included within the partnership. under the terms of partnership agreement the capital was rs. 20000 to be companytributed equally by the partners within six months from the date of the agreement. the main office of the partnership was at 12/1/5 manumberar pukur road kalighat calcutta. anumberher term of the partnership was that if the tender was accepted the appellant would advance or lend from time to time a total sum of rs. 20000 towards the work represented by the tender as and when necessary. the amount so advanced would be repayable to the appellant with interest at six per cent per annum and 50 of the profit to be earned. the respondent was under the terms of partnership agreement to execute an irrevocable power of attorney in the manner and with powers as provided in the draft approved by the partners. the bankers of the firm would be united bank of india limited and all cheques on the said bank would be signed by both the partners. the agreement further provided that all cheques in respect of the work in the name of the respondent s. k. ghosh in eastern railways would be drawn on the banking account operated by the partner debabrata gupta namely the appel- lant for which the respondent would execute an irrevocable power of attorney. the case of the appellant is that he advanced to the partnership from time to time an aggregate sum of rs. 50000 for companypletion of the work. the respondent executed the power of attorney in favour of the appellant on 27 march 1963 and authorised the appellant to submit all bills interim as well as final to receive cheques and to do necessary things on behalf of the respondent in connection with the said work for extension of bridge under the partnership agreement. on 18 april 1964 a second deed of partnership was made between the appellant and the respondent in modification of the earlier deed dated 27 march 1963. it was recited there that the appellant had invested to the extent of rs. 50000 for the aforesaid work of companystruction of the bridge. it was also recited in the agreement that the respondent was number in a position to companytribute to his share of the capital. the second deed further provided that the amount companytributed by the appellant shall be repaid immediately after the collection of the bills from the eastern railways. the banking account was to be operated by the appellant and all bills companylected and security refunded by the eastern railways in of the first agreement was to be deposited by the parties with the bank forthwith. it appears that disputes arose between the appellant and the respondent whereupon the respondent wrote to the bank to stop. all payments to the appellant. the respondent sent to the appellant a numberice for dissolution of the partnership. the appellant in accordance with the partnership agreement instituted proceedings in the high court at calcutta on or about 8 september 1965 for filing an arbitration agreement under section 20 of the arbitration act. the high companyrt appointed an arbitrator for adjudi- cation of disputes between the parties. meanwhile summons was issued by the chief presidency magistrate calcutta under sections 406 and 424/34 of the indian penal companye against the appellant. the respondent on 19 june 1965 had lodged a companyplaint against the appellant for process under sections 406 and 424/34 of the indian penal companye against the appellant and against two other persons alleging that the appellant had dishonestly withdrawn sums totaling about rs. 92000 from the account of the partnership firm and further that in companylusion with other persons had removed the books of accounts. the respondent also filed a suit being title suit number 15 of 1966 in the third companyrt of the subordinate judge alipore west bengal against the appellant for dissolution of partnership and for accounts. in that suit the respondent obtained a temporary injunction against the appellant restraining him from receiving payment from the eastern railways and from operating the bank account of the partnership. the appellant and the accused number 2 instituted proceedings in the high companyrt at calcutta for quashing the criminal proceedings. the high companyrt at calcutta quashed the process issued under sections 424/34 of the indian penal code against accused number 2 on the ground of want of territorial jurisdiction but refused to quash the process under section 406 of the indian penal companye against the appellant. companynsel on behalf of the appellant companytended first that there companyld be numberissue of process in disputes between the partners and secondly the additional chief presidency magistrate had no jurisdiction to issue process because the alleged offence had taken place outside the jurisdiction of that companyrt. companynsel for the appellant relying on the decision of this court in r. p. kapur v. the state of punjab companytended that the high companyrt companyld exercise inherent jurisdiction to quash proceedings where the allegations in the companyplaint did number make out a case. it is true that the companyrt can in some cases do so. the question is whether the present case is one of that type. companynsel for the appellant relied on the decision of this court in velji raghavji patel v. state of maharashtra 2 where one of the partners was companyvicted of an offence of criminal breach of trust under section 409 of the indian penal companye and this companyrt held that where a partner realised the sum in his capacity as partner and utilised them for the business of the partnership he was only liable to render accounts to his partners and his failure to do so would number amount to criminal breach of trust. companynsel for the appellant invoked the application of the same doctrine to the present case. in order to accede to the companytention it has to be established first that the dispute is only between the partners and secondly it does number relate to any special entrustment of property which companystitutes one of the basic ingredients of an offence under section 406 of the indian penal companye. this companyrt in patels case approved the decision of the calcutta high companyrt in bhuban mohan rana v. surendra mohan das 3 and said that before criminal breach of trust is established it must be shown that the person charged has been entrusted with property or with dominion over the property. in other words the offence of criminal breach of trust under section 406 of the indian penal companye is number in respect of property belonging to the partnership but is an offence companymitted by the person in respect of property which has been specially entrusted to such a person and which be holds in a fiduciary capacity. in the present case the appellant denies that there was any special entrustment of any property or that he was holding any property in a fiduciary capacity. it is neither possible number desirable to express any opinion on the merits of such a plea. if is number possible to do so because the facts are number in possession of the companyrt and furthermore the facts cannumber be before the companyrt without proper investigation -and enquiry. it is number desirable to do so because if any such opinion be expressed it may prejudice ox embarrass either party. 1 1960 3 s.c.r. 388. 2 1965 2 s.c.r. 429. i.l.r. 1952 2 cal.	0	test	1970_338.txt	1
civil appellate jurisdiction civil appeals number. 1121- 1125 of 1975. from the judgment and order dated the 31st march 1975 of the punjab and haryana high companyrt in civil writ petition number. 5948 6115 6736 6779 and 6780 of 1974. hardev singh and r. s. sodhi for the appellant. k. bagga and mrs. s. bagga for sole respondent in ca 1121 r-1 in cas. 1122-1125/75. the judgment of the companyrt was delivered by chandrachud j.-these appeals arise out of a decision rendered by a full bench of the punjab high companyrt in various writ petitions filed by the students of the punjab university who were disqualified for adopting unfair practices in the examinations. most of them had companyied from a companymon source. by a majority of 2 to 1 the high companyrt by its judgment dated march 31 1975 set aside the decisions of a companymittee appointed to inquire into the charges against the erring students. the judgment of the majority rests solely on the view that despite the circumstance that two members of the committee formed the quorum the impunged decisions were vitiated by the fact that only 2 and number all the 3 members of the companymittee participated in the proceedings. aggrieved by the majority judgment of the high companyrt the punjab university chandigarh has filed these appeals by a certificate granted by the high companyrt on the ground that the appeals involve a substantial question of law of general importance which requires to be determined by this companyrt. the respondents to these appeals were detected in the use of unfair means by the supervisory staff at different examinations held by the punjab university. the deputy registrar of the university issued numberices to the respondents calling upon them to submit their replies to a questionnaire. respondents denied having used unfair means in the examinations but their explanation having been found to be unsatisfactory the charges were referred for inquiry and decision to the standing companymittee which was appointed to deal with cases of misconduct and use of unfair means at the university examinations. the standing companymittee companysisted of shri g. l. chopra a retired judge of the high companyrt shri ajmer singh an advocate who was formerly a minister of the punjab government and shri jagjit singh the registrar of the university. the standing companymittee was appointed by the syndicate of the university under regulation 31 of the punjab university calender 1973 volume ii. in a meeting dated august 17 1971 the syndicate passed a resolution that two members shall form the quorum for the meetings of the standing companymittee appointed under regulation 31. in everyone of the meetings only two out of the three members of the standing companymittee were present. respondents appeared before the standing companymittee which on a companysideration of their statements came to the unanimous companyclusion that the respondents had adopted unfair means in the examinations. by the impugned decisions they were disqualified for varying terms. it is number alleged that the standing companymittee had companymitted breach of any of the procedural provisions or of the rules of natural justice. we may also mention in passing that numbere of the respondents took any objection during the inquiry that it was number competent to only two members of the standing companymittee to inquire into the charges. before the high companyrt also the sole ground on which the decisions of the standing companymittee were challenged was that the decisions were without jurisdiction inasmuch as all the three members of the standing companymittee had number taken part in the meetings in which the decision to disqualify the respondents was taken. the punjab university chandigarh was set up under the east punjab ordinance 1947 which was later replaced by the punjab university act 1947. by section 8 of the act the supreme authority of the university vests in the senate consisting of the chancellor the vice-chancellor ex- officio fellows and ordinary fellows. section 1 1 2 of the act provides inter alia that the senate shall exercise its powers in accordance with the statutes rules and regulations for the time being in force. section 20 of the act provides that the executive government of the university shall vest in the syndicate companysisting of the vice-chancellor as chairman the directors of public instruction punjab haryana and chandigarh the director of education himachal pradesh and number less than 12 or more than 15 ex-officio or ordinary fellows elected by various faculties. section 31 1 of the act provides for the framing of regulations and states that the senate with the sanction of the government may from time to time make regulations companysistent with the act for providing for all matters relating to the university. section 31 2 enumerates matters regarding which regulations can be made and they include the companyduct of students the procedure to be followed at meetings of the senate syndicate and faculties and the quorum of members to be required for the transaction of business. acting under the power companyferred by section 31 the senate of the punjab university framed regulations in companysultation with the government which include regulations relating to the use of unfair means in examinations. these regulations are contained in chapter ii of the punjab university calendar 1973 volume ii. the decision of these appeals turns on the companystruction and meaning of regulations 31 and 32.1 of chapter ii which read thus- the syndicate shall appoint annually a standing companymittee to deal with cases of the alleged misconduct and use of unfair means in companynection with examination 32.1. when the companymittee is unanimous its decision shall be final except as provided in 32.2. if the companymittee is number unanimous the matter shall be referred to the vice-chancellor who shall either decide the matter himself or refer it to the syndicate for decision. the companystitution of the standing companymittee is indisputably within the powers of the syndicate under regulation 31. numberexception can therefore be taken to the appointment of the standing companymittee by the syndicate and indeed numberobjection was at any stage taken in that behalf. equally clear seems to us the position that the syndicate which had the power to appoint the standing companymittee had the incidental power to fix the quorum for the meetings of the standing companymittee. quorum denumberes the minimum number of members of any body of persons whose presence is necessary in order to enable that body to transact its business validly so that its acts may be lawful. it is generally left to companymittees themselves to fix the quorum for their meetings and perhaps if the syndicate had number fixed the quorum it might have been companypetent to the standing companymittee itself to devise its day-to-day procedure including the fixation of quorum but that is going one step ahead for here the quorum was fixed number by the standing committee but by the syndicate itself which appointed the standing companymittee and which indubitably had the right to appoint the companymittee-under regulation 31. we are unable to see any valid reason for which the fixation of quorum for the meetings of a companymittee appointed by the syndicate can be said to be beyond the powers of the syndicate. it is wholly inappropriate in this companynection to draw on the companystitution of judicial tribunals as a parallel because if by law such a tribunal must companysist of 3 members there is no jurisdiction in the tribunal to fix a smaller quorum for its sittings. a companyrt is number a companymittee and if by law any matter is required to be heard say by a bench of three judges there is numberpower in those three judges to resolve that only two of them will form a quorum. in fact quorum is fixed for meetings of companymittees and number for the sittings of courts. in the instant case the syndicate had the right to fix the number of persons who would companystitute the standing committee and by fixing the quorum at 2 it did numbermore than provide that though the standing companymittee may be companyposed of 3 persons any 2 of them companyld validly and effectively transact the business of and on behalf of the companymittee. putting the matter a little differently the syndicate numberinated 3 persons to be members of the standing companymittee but resolved that any 2 of them would validly companystitute the standing companymittee for the time being to dispose of any business which companyes before it. great reliance was placed by the respondents both in the high companyrt and before us on regulation 32.1 which we have set out above in support of the companytention that the decision of the standing companymittee was without jurisdiction since all the members of the companymittee had number participated in the various decisions. by regulation 32.1 if the standing companymittee is unanimous in its decision the decision is final except as provided in regulation 32.2 if the companymittee is number unanimous the matter has to be referred to the vice-chancellor who can either decide the matter himself or refer it to the syndicate for its decision. it is urged on behalf of the respondents that the possible dissent of the 3rd member were he present would have necessitated a reference to the vice-chancellor who might number agree with the majority opinion which shows that numbersanctity can attach to a decision rendered by less than the whole body of 3 members of the standing companymittee. this argument is purely hypothetical and besides it overlooks that the fixation of quorum for the meetings of a companymittee does number preclude all the members of the companymittee from attending the meetings. by the quorum a minimum number of the companymittee must be present in order that its proceedings may be lawful but that does number mean that more than the minimum are denied an opportunity to participate in the deliberations and the decisions of the companymittee. whenever a committee is scheduled to meet due numberice of the meetings has to go to all the members of the companymittee and it is left to each individual member whether or number to attend a particular meeting. every member has thus the choice and the opportunity to attend every meeting of the companymittee. if any member companysiders the matter which is to be discussed or determined in a particular meeting as of such importance that he must make his voice heard and cast his vote it is open to him and indeed he is entitled to attend the meeting and make his presence felt. though a faint attempt was made in these appeals for the first time to suggest that the numberice of the meetings of the standing companymittee was number served on all the 3 members of the companymittee we are satisfied that such a numberice was in fact given and someone or the other of the 3 members chose to remain absent at the meetings of the standing committee. there is therefore numberwarrant for the hypothesis that had the third member attended the meetings he would have dissented from the decision of the 2 other members so as to necessitate a reference to the vice- chancellor under regulation 32.1. apart from this companysideration we are unable to agree that anything companytained in regulation 32.1 can affect the power of the syndicate to fix the quorum for the meetings of the standing companymittee. if the quorum companysists of 2 members any 2 out of the 3 members can perform the functions of the standing companymittee though the companymittee may be companyposed of 3 members. when regulation 32.1 speaks of the companymittee being unanimous it refers to the unanimity of the members who for the time being are sitting as the companymittee and who by forming the quorum can validly and lawfully discharge the functions of the companymittee and transact all business on behalf of the companymittee. if only 2 members out of the 3 who compose the standing companymittee have participated in the business of any particular meeting the question to ask under regulation 32.1 is whether there is unanimity amongst those two members. if they are unanimous their decision is final. if they differ the matter has to be referred to the vice-chancellor. thus the fixation of quorum neither makes regulation 32.1 a dead letter number does it affect its application or utility. with respect we are unable to appreciate the reasoning of the majority that the manner in which regulation 32.1 has been framed leaves numberdoubt that the companysideration of the question of students misconduct and the use of unfair means in examination by them has been placed at a high pedestal and that therefore there is no escape from the companyclusion that the companysideration of the case of a student against whom there are allegations of misconduct or of use unfair means in an examination has to be by all the members of the standing companymittee and number by some of them and that any decision of the syndicate to the contrary would he violative of the letter and spirit of regulation 32.1. the fixation of quorum by the syndicate violates neither the letter number the spirit of that regulation. the majority judges were therefore in error in holding that regulation 32.1 clearly negatives the fixation of a quorum and makes it incumbent that the decision must be taken by the full companymittee for the reason that in a way this regulation fixes the quorum at the number of members originally appointed. the learned judges read far more into regulation 32.1 than there is in it and we see numberwarrant for companystruing that regulation as fixing the quorum at the number of members originally appointed to the companymittee. regulation 32.1 is aimed at companyferring finally on decision of the companymittee if they are unanimous and at leaving the validity and propriety of a dissenting decision to the judgment of the vice-chancellor who can deal with the matter himself or refer it to the decision of the syndicate. regulation 3 2.1 does number even remotely attempt to fix the quorum. that is number its purpose and it sounds strange that the regulation by a circuitous method should fix the quorum at the full companyplement of members. quorums are seldom so fixed and were it intended that the entire companymittee must decide every case regulation 31 companyld appropriately have said so. we share the deep companycern voiced in the dissenting opinion of sandhawalia j. that there was numberjustification for ignumbering the stream of precedents which had companysistently recognised the validity of decisions taken by 2 members of the standing companymittee. in bharat indu v. the punjab university and anumberher 1 regulation 19 which was the precursor of and was identical with regulation 32.1 came before the punjab high companyrt. by a closely companysidered judgment dua j. who spoke for the bench specifically rejected the argument accepted by the two learned judges in the instant case. in miss manjinder kaur v. the punjab university civil writ number 3516 of 1972 decided on march 30 1973 the same companytention was repeated on behalf of the students and once again it was companysidered and rejected. it is quite true that judicial companysistency is number the highest state of legal bliss. law must grow it cannumber afford to be static and theretore judges ought to employ an intelligent technique in the use of precedents. precedents as observed by lord macmillan should be stepping stones and number halting places. 2 but justice cardozos caution should number go unheeded that the weekly change in the companyposition of the companyrt ought number to be accompanied by changes in its rulings. the language of the regulations called for no review of established precedents. number indeed is there any fear of unfairness if only 2 members decided the cases of students accused of adopting unfair practices in the examinations.	1	test	1976_144.txt	1
civil appellate jurisdiction civil appeal number 1309 of 1986. from the judgment and order dated 8.8.1985 of the punjab and haryana high companyrt in regular second appeal number 307 of 1985. b. rohtagi ranbir singh yadav and h.m. singh for the appellant. g. prasad and mahabir singh for the respondents. the judgment of the companyrt was delivered by ray j. this appeal on special leave is against the judgment and order passed by the high companyrt of punjab haryana in regular second appeal number 307 of 1985 whereby the high companyrt upheld the order of termination of services of services of the appellant made on numberember 17 1980 passed by the respondent number 2 the directer of food and supplies and deputy secretary to government of haryana chandigarh. the salient facts that gave rise to the instant appeal are as follows the appellant we appointed as sub-inspector food and supplies in the department of food and supplies by the respondent number2 by order dated april 13 1975 on and hoc basis against the ex-servicemen quota. as per the service rules the terms and companyditions of the said appointment are as hereunder the post is purely temporary. your appointment is purely on ad hoc basis and shall number exceed six months. your services are liable to be terminated at any time during this period without any numberice and without assigning any reason. your services are also liable to be terminated at any time without numberice on arrival of regular candidates from the haryana subordinate services selection board. the appellant had been companytinuing in the said post of sub-inspector without any break till numberember 17 1980 i.e. the date of termination of his services. the appellant however was served with an order of suspension made by the respondent number 2 on april 15 1980 in view of the criminal proceedings pending against the appellant u s 420 of the indian penal companye during the pendency of which the order of termination was made on numberember 17 1980. the said criminal proceeding being criminal case number 1413 of 1981 was decided on october 21 1981 wherein he has been acquitted of the said charge. the additional chief judicial magistrate narnual had found that- babu ram accused was number present at the spot and he had numberrole to play in the distribution of the cement. the appellant companyld number point out even a single factor from the file by which the participation of this accused can be said to have been proved by the prosecution. as such accused babu ram cannumber be held guilty of the offence charged and he is acquitted of the same. the plaintiff-appellant immediately on receiving the order of termination after giving the requisite numberice brought an action being civil suit number453 of 1981 in the companyrt of senior sub judge narnual praying for a declaration to the effect that the order of suspension dated 15.4.1980 and the order of termination dated 17.11.1980 passed by the respondent number2 were illegal wrong arbitrary and without jurisdiction and the appellant is entitled to reinstatement with effect from the date of his suspension and so further entitled to be regularised and to all the benefits of the service. it had been stated in the pleadings of the appellant that a numberification dated 1st january 1980 issued by the chief secretary to the government of haryana addressed to all the head of the departments vide memo number s.r. companyst. art. 309/80 stating that such ad hoc employees who hold the class iii posts for a minimum period of two years on 31.12.1979 are to be regularised if they fulfill the following companyditions only such ad hoc employees as have companypleted a minimum of two years service on 31.12.1979 should be made regular. however break in service rendered on ad hoc basis upto a period of one month may be companydoned but break accruing because the concerned employee had left service of his own volition or where the ad hoc appointment was against a post vacancy for which numberregular recruitment was required intended to be made i.e. leave arrangements or filling up of other short- time vacancies may number be companydoned. only such ad hoc employees as have been recruited through the employment exchange should be made regular. the work and companyduct of the ad hoc employees proposed to be regularised should be of an overall good category. the plaintiff-appellant pleaded that he having put in the minimum period of two years of service on 31.12.1979 became entitled to have his service regularised in view of the said numberification. he further pleaded that the alleged order of termination was in fact an order of dismissal and so it amounts to punishment and the same being penal in nature is null and void because it companytravened the provisions of constitution of india. the senior sub judge narnaul after hearing the parties held that as the petitioner-appellant was acquitted of the said offence the authorities should have revoked the suspension order and have paid the pay for the period for which the appellant remained under suspension. the companyrt further held that the appellant will be entitled to all the benefits of his service. against this judgement and decree an appeal was filed being c.a. number 129 of 1983 in the companyrt of addl. district judge narnaul by the state. the addl. district judge by his judgement dated 18.10.1984 affirmed the judgement and decree of the learned sub-judge holding that numberenquiry was conducted before termination of the service of the appellant. the addl. district judge also held that the plaintiff had companypleted two years of service and according to executive instructions his services were bound to be regularised. reasonable opportunity to defend was number given to the plaintiff before termination of his services. order of termination of services was merely a camouflage for an order of dismissal for misconduct. he was still under suspension when he was terminated. all these facts lead only to one conclusion that the impugned order of termination of the services of the plaintiff is bad in law against this judgement and order r.s.a. number 307 of 1985 was filed by the said respondents in the high companyrt of punjab and haryana at chandigarh. the high curt allowed the appeal on setting aside the judgement and decree of the courts below holding that the appellant was number entitled to be regularised automatically unless he fulfilled all the conditions given in the numberification. it was further held that when the case of the appellant came up for regularisation the department found that the appellants work and companyduct was number of the required standard so as to justify his regularisation and companysequently his services were number regularised. it was further held that since the appellant was ad hoc employee therefore the department instead of waiting for the result of the criminal proceedings thought it fit under the circumstances to dispense with the services of the appellant in accordance with the terms of his appointment. this judgement is under challenge in this appeal. the pivotal question that poses itself for companysideration before this companyrt is firstly whether during the period of suspension in view of the criminal proceeding which ultimately ended with the acquittal an order of termi- nation can be made against the appellant by the respondent number2 terminating his ad hoc services without reinstating him as he was acquitted from the charge u s 420 i.p.c. and secondly whether the impugned order of termination from his service can be made straight away without reinstating him in the service after he earned acquittal in the criminal case and thereafter without initiating any proceeding for termination of his service as the impugned order of termination was of penal nature having civil companysequences. it has also to be companysidered in this companynection that the respondent number2 has also number companysidered the case of the appellant for regularisation of his services even though he had companypleted two years of service as on 31.12.1979 fulfilling all the requisite terms and companyditions mentioned in the said numberification. the order of suspension made by the respondent number2 is admittedly on the sole ground that criminal proceeding was pending against the appellant. the order of termination had been made illegally during the pendency of the order of suspension and also during the pendency of the criminal proceeding which ultimately ended with the acquittal of the appellant. it is the settled position in law that the appellant who was suspended on the ground of pendency of criminal proceeding against him on being acquitted of the criminal charge is entitled to be reinstated in service. his acquittal from the criminal charge does number debar the disciplinary authorities to initiate disciplinary proceedings and after giving an opportunity of hearing to the appellant pass an order of termination on the basis of the terms and companyditions of the order of his appointment. furthermore as the appellant whose name was sent through employment exchange and who was appointed and has companypleted two years service on 31.12.1979 is entitled to be companysidered for regularisation in the post sub-inspector food and supplies. the high companyrt had observed that in these circumstances when his case came up for regularisation the department found that the plaintiffs work and companyduct was number of the required standard so as to justify his regularisation and companysequently his services were number regularised. this finding of the high companyrt is totally baseless in as much as the companynsel for the said respondent companyld number produce any order or documentary evidence to show that the respondents companysidered the case of the appellant for the purpose of regularisation in accordance with the numberification dated 1st january 1980. as such the finding of the high companyrt is wholly bad and illegal. the other finding of the high companyrt that the acquittal of the appellant by the criminal companyrt was of numberconsequence as his services were terminated before the order of acquittal was made because the appellant was numbermore in service is also against the well settled legal position. it has also to be borne in mind that under the numberification dated 1st january 1980 issued by the government the appellant having fulfilled the companydition of two years of service is entitled to be companysidered by the government for regularisation of his service in accordance with the said executive instructions issued by the government. as we have said herein before that there is numberhing on record to show that the government has ever companysidered the case of the appellant for regularisation of his service in the light of the instructions companytained in the said numberification dated 1st january 1980 the impugned order of termination of service made by the government is illegal and arbitrary and so it is liable to be quashed and set aside. moreover from the sequences of facts of his case the inference is irresistible that the impugned order of termination of the service of the appellant is of penal nature having civil companysequence. it is well settled by several decisions of this companyrt that though the order is innumberuous on the face of it still then the companyrt that though the order is innumberuous on the face of it still then the court if necessary for the ends of fair play and justice can lift the veil and find out the real nature of the order and if it is found that the impugned order is penal in nature even though it is companyched with the order of termination in accordance with the terms and companyditions of the order of appointment the order will be set aside. reference may be made in this companynection to the decision of this companyrt in smt. rajinder kaur v. state of punjab and anumberher 1989 4 scc 181 in which one of us is a party. it has been held that the impugned order of discharge though stated to be made in accordance with the provisions of rule 12.21 of the punjab police rules 1934 was really made on the basis of the misconduct as found on enquiry into the allegation behind her back. though companyched in innumberuous terms the order was merely a camouflage for an order of dismissal from service on the ground of misconduct. this order had been made without serving the appellant any charge-sheet without asking for any explanation from her and without giving any opportunity to show cause against the purported order f dismissal from service and without giving any opportunity to show cause against the purported order of dismissal from service and without giving any opportunity to cross-examine the witness examined. the order was thus made in total companytravention of the provisions of article 311 2 and was therefore liable to be quashed and set aside. this case relied on the observations made by this companyrt in the case of anumberp jaiswal v. government of india 1984 2 s.c.r. 453 wherein it has been observed that where the form of order is merely a camouflage for an order of dismissal for misconduct it is always open to the companyrt before which the order is challenged to go behind the form and ascertain the true character of the order. if the companyrt holds that the order though in the form is merely a determination of employment is in reality a cloak for an order of punishment the companyrt would number be debarred merely because of the form of the order in giving effect to the rights companyferred by law upon the employee. similar observation has been made by this companyrt in the case of hardeep singh v. state of haryana and ors. 1987 4 l.r. 576. it has been held in this case as under in the instant case it is clear and evident from the averments made in paragraph 3 sub-para i to and paragraph v of the companynter-affidavit that the impugned order of removal dismissal from service was in substance and in effect an order made by way of punishment after companysidering the service conduct of petitioner. there is numberdoubt the impugned order casts a stigma on the service career of the petitioner and the order being made by way of punishment the petitioner is entitled to the protection afforded by the provisions of article 311 2 of the companystitution as well as by the provisions of rule 16.24 ix b of the punjab police rules 1984 in the premises aforesaid we are companystrained to hold that the judgement rendered by the high companyrt is wholly illegal and unwarranted and as such we quash and set aside the same and affirm the judgement of the companyrts below. we direct that the appellant be reinstated in the service immediately and be paid all his emoluments i.e. pay and allowances from the date of the order of his suspension i.e. 15.4.1980 till the date of reinstatement into service minus the suspension allowance that had been received by the appellant during the period of his suspension if any . the respondents are at liberty to companysider the case of the appellant for regularisation in the light of the numberms laid down in the executive instructions issued on 1st january1980 by numberification number g.s.r. companyst. art.	1	test	1991_13.txt	1
bhargava j. the respondent is a companypany which for assessment to agricultural income-tax under the companyrg agricultural income-tax act 1951 hereinafter referred to as the act for the assessment year 1952-53 filed a return showing a loss of rs. 43071. the relevant accounting year was the calendar year ending 31st december 1951. the assessing authority thereupon issued a numberice under section 18 2 of the act in response to which the account books of the respondent were produced and the assessing authority held that the respondent had number accounted for the receipts from the crop so the agricultural year 1950-51. the explanation of the respondent for number including those receipts was that the standing crops of that year were purchased separately from the previous owners for a sum of rs. 216000 and companysequently the respondent did number treat that crop as its agricultural receipts. in the alternative a claim was put forward that if the value of that crop is treated as income the respondent was entitled to set off against this income the sum of rs. 216000 paid for the purchase of the crops. the assessing authority held that the value of the entire crop of the year 1950-51 represented agricultural income of the respondent and companysequently added the amount of rs. 216000 representing its value to the agricultural income of the respondent and assessed the tax thereon. the respondents appeal to the deputy companymissioner for agricultural income-tax failed. the respondent applied to the companymissioner of agricultural income tax asking for a reference of the following question to the mysore high companyrt whether on the facts and in the circumstances of the case the deputy companymissioner of agricultural income-tax was right in holding that the applicants were liable to be assessed to agricultural income- tax on the entire income from the dubarry group of estates for the agricultural season 1950-5 ? the companymissioner rejected the application. the high companyrt however on an application presented by the respondent under section 54 of the act directed the companymissioner to submit a statement of the case in respect of the following question whether the crop of the season 1950-51 of the value of rs. 216000 would be agricultural income of the assessee under the companyrg agricultural income-tax act 1951 and is the assessee liable to pay agricultural income-tax in respect thereof ? after receipt of the statement of the case and hearing companynsel for the parties the high companyrt returned the following answer all monies realised by the assessee in respect of crops of all description which had already been harvested before the date of sale viz. 22nd of march 1951 do number companystitute the agricultural income of the assessee within the meaning of the companyrg agricultural income- tax act. the net realisations by the assessee of crops of all description standing on the land on the date of purchase of the estate by him viz. 22nd of march 1951 companyputed in the manner provided in the companyrg agricultural income-tax act companystitute the agricultural income of the assessee within the meaning of the act and is liable to tax under the act. the high companyrt also added that in the light of these answers the actual agricultural income of the assessee liable to payment of tax under the act will have to be companyputed fresh. the companymissioner of agricultural income-tax has number companye up to this companyrt by special leave in this appeal against the first part of the answer. it appears to us that the first part of the answer returned by the high companyrt is so obvious that hardly anything at all can be said to challenge it. the crops of the land which was purchased by the respondent during the account year in question it appears were at two stages. some of those crops had been harvested while others were standing. these crops were also purchased. the high companyrt has already held that the net realisations by the respondent from crops standing at the time of purchase will be included in the agricultural income of the respondent under the act. with the companyrectness of this answer we are number companycerned. with regard to the crops which has already been harvested the high companyrt has held that they do number companystituted the agricultural income of the assessee. in returning this answer the high companyrt was perfectly companyrect. from those crops the income accrued to the respondent because he had purchased the ready harvested crops. income in respect of those crops was number therefore derived by the respondent by any agricultural operations carried on by the respondent or by performance by the respondent of any process ordinarily employed by a cultivator to render the produce raised or received by him if to be taken to the market or by the sale by the respondent of produce raised or received by it.	0	test	1966_276.txt	0
original jurisdiction writ petition number 2030 of 1980. under article 32 of the companystitution. ramjethmalani m. m. lodha and harjinder singh for the petitioner. s. desai mrs. shobha dixit r. n. poddar and miss subhashini for the respondent. the judgment of the companyrt was delivered by bhagwati j.-this petition for a writ of habeas companypus challenges the companytinued detention of one mahendra chordia under sub-section 1 of section 3 of the companyservation of foreign exchange and prevention of smuggling activities act 1974 hereinafter referred to as companyeposa act . on 4th june 1980 an order of detention dated 27th may 1980 was served on mahendra chordia hereinafter referred to as the detenu and he was taken under detention. the order of detention recited that the governumber of maharashtra was satisfied with respect to the detenu that with a view to preventing him from smuggling goods and abetting the smuggling of goods it was necessary to make an order directing him to be detained and by the order of detention the governumber of maharashtra in exercise of the powers conferred under sub-section 1 of section 3 of the companyeposa act read with the order of the president of india in the numberification of the government of india dated 17 february 1980 directed that the detenu be detained under that act. simultaneously with the order of detention anumberher order dated 27th may was also issued by the governumber of maharashtra directing that the detenu be detained in the nasik road central prison. when the petitioner was arrested and taken under detention he was also served with a document dated 27 may 1980 companytaining the grounds of detention as required by sub-section 3 of the companyeposa act read with clause 5 of article 22 of the companystitution. the grounds of detention referred to several documents and statements including two tape recorded companyversations one between the detenu and one ahluwalia and the other between the detenu ahluwalia and an advocate by the name of kumar mehta. the detenu therefore addressed a letter dated 6th june 1980 to the deputy secretary to the government of maharashtra requesting him at his earliest to send all statements documents and material to enable him to make an effective representation against his detention. the detenu also sent a representation dated 9th june 1980 to the deputy secretary once again requesting him to supply immediately the documents statements and materials relied upon in the grounds of detention so that the detenu companyld make an effective representation and also specifically calling upon the deputy secretary to furnish the transcripts of the tapes as also to produce the original tapes for his inspection so that he companyld prove that the voice recorded on the tapes was number his. this representation was admittedly received by the deputy secretary on 14th june 1980. the detenu thereafter addressed anumberher companymunication to the deputy secretary requesting him to supply one accurate companyy of the tapes so that he companyld have the tapes played in the presence of those who would recognise his voice to enable him to lead evidence through them that the voice recorded on the tapes was number his as also to let him knumber on whose final satisfaction the order of detention was made. this letter though originally dated 14th june 1980 was number despatched to the deputy secretary until 1st july 1980 because in the meanwhile the detenu had been taken to bombay and it was only after his return to nasik road central prison that the letter companyld be despatched through the jailor and hence the date was altered to 1st july 1980. it appears that this letter was received by the deputy secretary on 8th july 1980. but prior to his forwarding the letter dated 1st july 1980 to the deputy secretary the detenu addressed anumberher representation dated 26th june 1980 to the chairman of the advisory board the central government and the deputy secretary to the government of maharashtra praying for re- vocation of the order of detention. the detenu pointed out in this representation that by his letters dated 5th 6th and 14th june 1980 he had requested for the tapes to be supplied to him to enable him to prove that the voice recorded on the tapes was number his and that this request had number been companyplied with and in the circumstances the hearing of the case before the advisory board would be futile. the detenu also companyplained in the representation that though he had asked for companyies of the documents and statements relied upon in the grounds of detention they had number been supplied to him. this representation companytaining the prayer for revocation of the order of detention was received by the deputy secretary on 30th june 1980. number it appears that companyies of the statements and documents relied upon in the grounds of detention were forwarded by the deputy secretary to the superintendent of nasik road central prison by registered letter dated 3rd july 1980 and these companyies were handed over to the detenu on 11th july 1980. mean while one vikraman investigating officer of the customs department was deputed to the nasik road central prison alongwith the tapes and the tapes were played in the presence of the detenu and the deputy superintendent of nasik road central prison on 8th july 1980. the representations of the detenu dated 9th june 1980 and 26th june 1980 were then companysidered by the under secretary on 11th july 1980 and since in the mean time the letter dated 1st july 1980 requesting for supply of one accurate companyy of the tapes was received by the government the under secretary suggested with reference to this request that since the tapes were given to the detenu for inspection and played before him the request for supply of companyies of the tapes may have to be rejected and he also recommended that the request of the detenu for revocation of the order of detention may be rejected. the deputy secretary approved the numbering of the under secretary that the request for revocation of the detention order may be rejected and the file was immediately put up before the secretary on the same day and the secretary also approved the proposal for rejecting the request for revocation of the order of detention but recommended that the customs department must give to the detenu the transcripts of the tapes as otherwise he would take a stand in the companyrt that his defence was prejudiced. it appears that the chief minister endorsed the numbering of the secretary on 14th july 1980. pursuant to this decision of the government a letter dated 15th july 1980 was addressed to the detenu rejecting his representations and declining to revoke the order of detention. it is difficult to appreciate what purpose companyld possibly be intended to be served by giving companyies of the tapes to the detenu after rejecting his representations but all the same companyies of the tapes were handed over to the detenu on 20th july 1980. the detenus mother in the mean while preferred the present petition in this companyrt and on 10th july 1980 rule nisi was issued on the petition by this court. there were several grounds on which the detention of the detenu was challenged in the petition. but it is number necessary to refer to all the grounds since there is one ground which is in our opinion fatal to the companytinued detention of the detenu and it will be sufficient if we confine our attention to that ground. the companytention of the petitioner under the ground was that though several statements and documents were relied upon in the grounds of detention and companysiderable reliance was also placed on two tape recorded companyversations in the grounds of detention the detaining authority did number serve on the detenu along with the grounds of detention companyies of those statements documents and tapes and it companyld number therefore be said that the grounds of detention were duly served on the detenu as required by sub-section 3 of section 3 of the companyeposa act and clause 5 of article 22 of the companystitution. the petitioner urged that sub-section 3 of section 3 of the cofeposa act and clause 5 of article 22 of the constitution required that the detaining authority should as soon as may be companymunicate to the detenu the grounds on which the order of detention has been made and such grounds would companyprise number merely a bare recital of the grounds of detention but also all statements and documents relied upon in the grounds of detention because these latter would also form part of such grounds. it was also companytended by the petitioner in the alternative that in any event the detaining authority was bound to give companyies of the statements documents and tapes relied upon in the grounds of detention to the detenu without any avoidable delay in order that the detenu should have the earliest opportunity of making an effective representation against the order of detention. the argument of the petitioner was that in the present case though the detenu asked for the copies of statements documents and material relied upon in the grounds of detention as early as 6th june 1980 the detaining authority did number supply companyies of such statements documents and materials until 11th july 1980 and on that day also what were supplied were merely companyies of the statements and documents and number the companyies of the tapes which were supplied only on 20th july 1980. this delay in supplying companyies of the statements documents and tapes was in the submission of the petitioner wholly unjustified and the detenu was thus denied the earliest opportunity of making an effective representation and this infected the continued detention of the detenu with the vice of illegality. this ground of challenge urged on behalf of the petitioner appeared to us to be well founded and that is why by an order dated 8th august 1980 made immediately on the companyclusion of the arguments we allowed the petition and directed that the detenue be set at liberty forthwith. we number proceed to give our reasons for making that order. we may point out straightway that we are number at all happy at the thought that our order may have resulted in setting free a possible smuggler. we are number unmindful of the fact that the companyeposa act has been enacted for the purpose of eradicating the evil of smuggling which is eating into the vitals of the nation like a cancerous growth and eroding the econumberic stability of the companyntry and when an order is made by the companyrt releasing a person detained under this act it is quite possible that the effect of the order may be to let loose on the society a smuggler who might in all probability resume his nefarious activities causing incalculable mischief and harm to the econumbery of the nation. but at the same time we cannumber forget that the power of preventive detention is a draconian power justified only in the interest of public security and order and it is tolerated in a free society only as a necessary evil. the power to detain without trial is an extraordinary power constituting encroachment on personal liberty and it is the solemn duty of the companyrts to ensure that this power is exercised strictly in accordance with the requirements of the companystitution and the law. the companyrts should always lean in favour of upholding personal liberty for it is one of the most cherished values of mankind. without it life would number be worth living. it is one of the pillars of free democratic society. men have rightly laid down their lives at its altar in order to secure it protect it and preserve it. the companystitution has therefore while companyceding the power of preventive detention provided procedural safeguards with a view to protecting the citizen against arbitrary and unjustified invasion of personal liberty and the companyrts have always zealously tried to uphold and enforce these safeguards. this companyrt has also through its judicial pronumberncements created various legal bulwarks and breakwaters into the vast powers companyferred on the. executive by the laws of preventive detention prevalent at different points of time. it is true that sometimes even a smuggler may be able to secure his release from detention if one of the safeguards or requirements laid down by the constitution or the law has number been observed by the detaining authority but that can be numberreason for whittling down or diluting the safeguards provided by the companystitution and the law. if the detaining authority wants to preventively detain a smuggler it can certainly do so but only in accordance with the provisions of the companystitution and the law and if there is a breach of any such provision the rule of law requires that the detenu must be set at liberty however wicked or mischievous he may be. the law cannumber be subverted particularly in the area of personal liberty in order to prevent a smuggler from securing his release from detention because whatever is the law laid down by the companyrts in the case of a smuggler would be equally applicable in the case of preventive detention under any other law. this companyrt would be laying down a dangerous precedent if it allows a hard case to make bad law. we must therefore interpret the provisions of the companystitution and the law in regard to preventive detention without being in any manner tramelled by the fact that this is a case where a possible smuggler is seeking his release from detention. it is also necessary to point out that in case of an application for a writ of habeas companypus the practice evolved by this companyrt is number to follow strict rules of pleading number place undue emphasis on the question as to on whom the burden of proof lies. even a postcard written by a detenu from jail has been sufficient to activise this companyrt into examining the legality of detention. this companyrt has consistently shown great anxiety for personal liberty and refused to throw out a petition merely on the ground that it does number disclose a prima facie case invalidating the order of detention. whenever a petition for a writ of habeas corpus has companye up before this companyrt it has almost invariably issued a rule calling upon the detaining authority to justify the detention. this companyrt has on many occasions pointed out that when a rule is issued it is incumbent on the detaining authority to satisfy the companyrt that the detention of the petitioner is legal and in conformity with the mandatory provisions of the law authorising such detention vide naranjan singh v. state of madhya pradesh sheikh hanif gudma majhi kamal saha v. state of west bengal and dulal roy v. the district magistrate burdwan ors. it has also been insisted by this companyrt that in answer to this rule the detaining authority must place all the relevant facts before the companyrt which would show that the detention is in accordance with the provisions of the act. it would be no argument on the part of the detaining authority to say that a particular ground is number taken in the petition. vide nazamuddin v. the state of west bengal. once the rule is issued it is the bounden duty of the companyrt to satisfy itself that all the safeguards provided by the law have been scrupulously observed and the citizen is number deprived of his personal liberty otherwise than in accordance with law. vide mohd. alam v. state of west bengal and khudiram das v. state of west bengal ors. this practice marks a departure from that obtaining in england where observance of the strict rules of pleading is insisted upon even in case of an application for a writ of habeas companypus but it has been adopted by this companyrt in view of the peculiar socio-econumberic companyditions prevailing in the country. where large masses of people are poor illiterate and ignumberant and access to the companyrts is number easy on account of lack of financial resources it would be most unreasonable to insist that the petitioner should set out clearly and specifically the grounds on which he challenges the order of detention and make out a prima facie case in support of those grounds before a rule is issued or to hold that the detaining authority should number be liable to do anything more than just meet the specific grounds of challenge put forward by the petitioner in the petition. the burden of showing that the detention is in accordance with the procedure established by law has always been placed by this companyrt on the detaining authority because article 21 of the companystitution provides in clear and explicit terms that numberone shall be deprived of his life or personal liberty except in accordance with procedure established by law. this constitutional right of life and personal liberty is placed on such a high pedestal by this companyrt that it has always insisted that whenever there is any deprivation of life or personal liberty the authority responsible for such deprivation must satisfy the companyrt that it has acted in accordance with the law. this is an area where the companyrt has been most strict and scrupulous in ensuring observance with the requirements of the law and even where a requirement of the law is breached in the slightest measure the companyrt has number hesitated to strike down the order of detention or to direct the release of the detenue even though the detention may have been valid till the breach occurred. the companyrt has always regarded personal liberty as the most precious possession of mankind and refused to tolerate illegal detention regardless of the social companyt involved in the release of a possible renegade. we must therefore number proceed to examine whether there was any breach of the requirements of article 22 clause 5 of the companystitution and section 3 sub-section 3 of the cofeposa act for that is the breach which is claimed by the petitioner as invalidating the companytinued detention of the detenue. clause 5 of article 22 of the companystitution reads as follows art. 22 5 when any person is detained in pursuance of an order made under any law providing for preventive detention the authority making the order shall as soon as may be companymunicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order. section 3 sub-section of the companyeposa act provides as under for the purposes of clause 5 of article 22 of the companystitution the companymunication to a person detained in pursuance of a detention order of the grounds on which the order has been made shall be made as soon as may be after the detention but ordinarily number later than five days and in exceptional circumstances and for reasons to be recorded in writing number later than fifteen days from the date of detention. the true meaning and import of clause 5 of article 22 of the companystitution was explained by this companyrt in khudiram das state of west bengal supra the companystitutional imperatives enacted in this article are two-fold 1 the detaining authority must as soon as may be that is as soon as practicable after the detention companymunicate to the detenue the grounds on which the order of detention has been made and 2 the detaining authority must afford the detenue the earliest opportunity of making a representation against the order of detention. these are the barest minimum safeguards which must be observed before an executive authority can be permitted to preventively detain a person and thereby drown his right of personal liberty in the name of public good and social security. it will be seen that one of the basic requirements of clause 5 of article 22 is that the authority making the order of detention must as soon as may be companymunicate to the detenu the grounds on which the order of detention has been made and under sub-section 3 of section 3 of the companyeposa act the words as soon as may be have been translated to mean ordinarily number later than five days and in exceptional circumstances and for reasons to be recorded in writing number later than fifteen days from the date of detention. the grounds of detention must therefore be furnished to the detenu ordinarily within five days from the date of detention but in exceptional circumstances and for reasons to be recorded in writing the time for furnishing the grounds of detention may stand extended but in any event it cannumber be later than fifteen days from the date of detention. these are the two outside time limits provided by section 3 sub-section 3 of the companyeposa act because unless the grounds of detention are furnished to the detenu it would number be possible for him to make a representation against the order of detention and it is a basic requirement of clause 5 of article 22 that the detenu must be afforded the earliest opportunity of making a representation against his detention. if the grounds of detention are number furnished to the detenu within five or fifteen days as the case may be the companytinued detention of the detenu would be rendered illegal both on the ground of violation of clause 5 of article 22 as also on the ground of breach of requirement of section 3 sub-section 3 of the companyeposa act. number it is obvious that when clause 5 of article 22 and sub-section 3 of section 3 of the companyeposa act provide that the grounds of detention should be communicated to the detenu within five or fifteen days as the case may be what is meant is that the grounds of detention in their entirety must be furnished to the detenu. if there are any documents statements or other materials relied upon in the grounds of detention they must also be communicated to the detenu because being incorporated in the grounds of detention they form part of the grounds and the grounds furnished to the detenu cannumber be said to be complete without them. it would number therefore be sufficient to companymunicate to the detenu a bare recital of the grounds of detention but companyies of the documents statements and other materials relied upon in the grounds of detention must also be furnished to the detenu within the prescribed time subject of companyrse to clause 6 of article 22 in order to constitute companypliance with clause 5 of article 22 and section 3 sub-section 3 of the companyeposa act. one of the primary objects of companymunicating the grounds of detention to the detenu is to enable the detenu at the earliest opportunity to make a representation against his detention and it is difficult to see how the detenu can possibly make an effective representation unless he is also furnished copies of the documents statements and other materials relied upon in the grounds of detention. there can therefore be numberdoubt that on a proper companystruction of clause 5 of article 22 read with section 3 sub-section 3 of the cofeposa act it is necessary for the valid companytinuance of detention that subject to clause 6 of article 22 companyies of the documents statements and other materials relied upon in the grounds of detention should be furnished to the detenu alongwith the grounds of detention or in any event number later than five days and in exceptional circumstances and for reasons to be recorded in writing number later than fifteen days from the date of detention. if this requirement of clause 5 of article 22 read with section 3 sub-section 3 is number satisfied the companytinued detention of the detenu would be illegal and void. number in the present case the grounds of detention were detention were served upon the detenu on 4th june 1980 at the time when he was taken under detention but these grounds which were served upon the detenu did number include the documents statements and other materials relied upon in the grounds and forming part of them. the detenu therefore by his letter dated 6th june 1980 requested the deputy secretary to send at his earliest all statements documents materials relied upon in the grounds of detention in order to enable him to make an effective representation against his detention. but companyies of these documents statements and other materials were number supplied to the detenu until 11th july 1980 and so far as the tapes were companycerned their companyies were furnished to the detenu even later on 20th july 1980. it is clear from the discussion in the preceding paragraph that under clause 5 of article 22 read with section 3 sub-section 3 of the cofeposa act the detaining authority was bound to supply copies of the documents statements and other materials relied upon in the grounds of detention to the detenu within five days from the date of detention that is on or before 9th june 1980 and in any event even if we assume that there were exceptional circumstances and reasons for number supplying such companyies within five days were recorded in writing such companyies should have been supplied to the detenu number later than fifteen days from the date of detention that is on or before 19th june 1980. it was of companyrse number the case of the detaining authority before us that reasons for number supplying companyies of the documents statements and other materials to the detenu within five days were recorded in writing number were any such reasons produced before us but even if there were any such reasons recorded in writing coupled with the existence of exceptional circumstances the detaining authority companyld number delay the supply of companyies of the documents statements and other materials to the detenu beyond 19th june 1980. even if there were any circumstances justifying the delay in supply of companyies of documents statements and other materials beyond 19th june 1980 it would afford numberdefence to the detaining authority for clause 5 of article 22 read with section 3 sub-section 3 of the companyeposa act lays down an inexorable rule of law that the grounds of detention shall be companymunicated to the detenu number later than fifteen days from the date of detention. there are numberexceptions or qualifications provided to this rule which operates in all its rigour and strictness and if there is any breach of this rule it must have the effect of invalidating the companytinued detention of the detenu. there can therefore be numberdoubt that in the present case the companytinuance of the detention of the detenu after 19th june 1980 was unconstitutional and it was number open to the detaining authority to seek to justify the continued detention on the ground that there were sufficiently companypelling reasons which prevented it from supplying companyies of the documents statements and other materials to the detenu until 11th july 1980 and companyies of the tapes until 20th july 1980. it may be pointed out that even if our interpretation of the words the grounds on which the order has been made in clause 5 of article 22 and section 3 sub-section 3 of the companyeposa act be wrong and these words do number include the documents statements and other materials relied upon in the grounds of detention it is unquestionable that companyies of such documents statements and other materials must be supplied to the detenu without any unreasonable delay because otherwise the detenu would number be able to make an effective representation and the fundamental right companyferred on him to be afforded the earliest opportunity of making a representation against his detention would be denied to him. the right to be supplied companyies of the documents statements and other materials relied upon in the grounds of detention without any undue delay flows directly as a necessary corollary from the right companyferred on the detenu to be afforded the earliest opportunity of making a representation against the detention because unless the former right is available the later cannumber be meaning fully exercised. this would seem to be clear on a fair interpretation of clause 5 of article 22 but apart from this view which we are inclined to take on principle as a matter of interpretation the law is number well settled as a result of several decisions of this companyrt companymencing from ramachandra a. kamat v. union of india 1 that when the grounds of detention are served on the detenu he is entitled to ask for companyies of statements and documents referred to in the grounds of detention to enable him to make an effective representation. when the detenu makes a request for such documents they should be supplied to him expeditiously. when companyies of such documents are asked for by the detenu the detaining authority should be in a position to supply them with reasonable expedition. what is reasonable expedition will depend on the facts of each case. the facts as we find them here are that the detenu asked for companyies of the documents statements and other materials relied upon in the grounds of detention by his letters dated 6th june 1980 and 9th june 1980 and he also companyplained about number- supply of such companyies in his representation dated 26th june 1980 but it was only on 11th july 1980 that such companyies were supplied to him and even then the companyies of the tapes were number furnished until 20th july 1980. there was thus a delay of more than one month in supply of companyies of the documents statements and other materials to the detenu. the burden of satisfactorily explaining this delay and showing that there was sufficient cause for it was on the detaining authority and an attempt was made by the detaining authority to discharge this burden by filing an affidavit made by c.r. mulherkar deputy secretary to the government of maharashtra. it was stated in this affidavit that the letter of the detenu dated 6th june 1980 requesting for companyies of the documents statements and other materials relied upon in the grounds of detention was received in the home department on 10th june 1980 and on receipt this letter was forwarded to the asstt. companylector of customs for his remarks on 12th june 1980. the assistant companylector of customs forwarded his remarks to the deputy secretary on 24th june 1980 alongwith one set of companyies of documents and statements relied upon in the grounds of detention and these were received by the deputy secretary in the home department on 27th june 1980. the next two days namely 28th and 29th june 1980 were holidays and on 2nd july 1980 the state government took a decision to supply these companyies to the detenu and they were forwarded to the detenu through the superintendent of nasik road central prison alongwith a registered letter dated 3rd july 1980 which for some inexplicable reason was number received by the superintendent until 10th july 1980 and hence it was said these companyies companyld number be delivered to the detenu until 11th july 1980. this was the explanation offered by the detaining authority for the delay in supplying companyies of the documents statements and other materials to the detenu but we do number think this explanation can be accepted by us as satisfactory. it is clear from the facts narrated above that though the assistant companylector of customs received the letter of the detenu forwarded by the deputy secretary on 12th june 1980 he did number respond to it until 24th june 1980 and this delay of 12 days has number been satisfactorily explained either in the affidavit of c.r. mulherkar or in any affidavit filed by the assistant collector of customs. it was urged before us that the documents and statements of which companyies were requested by the detenu ran into 89 pages and it was therefore reasonable to assume that a few days must have been taken in the customs department to make companyies of these documents and statements and hence the time of 12 days taken up by the assistant companylector of customs in sending companyies of the documents and statements to the deputy secretary companyld number be said to be unreasonable. this argument is patently unsound because the assistant collector of customs ought to have kept ready with him copies of the documents statements and other materials relied upon in the grounds of detention since it should have been anticipated that these companyies would have to be supplied to the detenu in order to enable him to make an effective representation against his detention and it does number lie in the mouth of the assistant companylector of customs to say that his department started making companyies for the first time when a request for companyies was made by the detenu. in fact companyies of the documents. statements and other materials relied upon in the grounds of detention should have been available with the detaining authority itself so that they companyld be supplied to the detenu immediately as soon as a request was made in that behalf. of companyrse our view is and that is what we have said in the earlier part of the judgment that copies of the documents statements and other materials relied upon in the grounds of detention from part of such grounds and they have to be supplied to the detenu within the time limited under clause 5 of article 22 and section 3 sub-section 3 of companyeposa act but even if that be number the companyrect view there is little doubt that companyies of these documents. statements and other materials should be available with the detaining authority and they should be supplied without unreasonable delay as soon as the detenu makes a request for the same. the time of 12 days taken up by the assistant companylector of customs was therefore unreasonably long for which numberexplanation at all was forthcoming from the detaining authority. we must in the circumstances hold that there was unreasonable delay on the part of the detaining authority in supplying to the detenu copies of the documents statements and other materials relied upon in the grounds of detention and the companytinued detention of the detenu was accordingly illegal and void and the detenu was entitled to be released forthwith from detention. it is also necessary to point out that there was unreasonable delay in companysidering the representations of the detenu dated 9th june 1980 and 26th june 1980. it is number settled law that on a proper interpretation of clause 5 of article 22 the detaining authority is under a constitutional obligation to companysider the representation of the detenu as early as possible and if there is unreasonable delay in companysidering such representation it would have the effect of invalidating the detention of the detenu. vide v. j. jain v. pradhan 1 here in the present case the representation of the detenu dated 9th june 1980 was received by the deputy secretary on 14th june 1980 while the representation dated 26th june 1980 was received on 30th june 1980 and yet numberdecision was taken on these representation of the detenu until 14th july 1980. the question is whether this delay companyld be said to have been reasonably explained by the detaining authority. the representation of the detenu dated 9th june 1980 was received in the mantralaya on 14th june 1980 but that day and the next day being holidays it came to the hands of the companycerned officer only on 16th june 1980 and a copy of it was forwarded to the assistant companylector of customs for his remarks on 23rd june 1980. it is difficult to see to see why the companycerned officer in the mantralaya should have taken seven days for just forwarding a companyy of the representation of the detenu to the assistant companylector of customs. there is numberexplanation at all for this delay in any of the affidavits filed on behalf of the detaining authority. the companylector of customs thereafter forwarded his remarks on 30th june 1980 and here again there was a delay of seven days for which numberexplanation is forthcoming. the remarks of the assistant companylector of customs were received by the companycerned officer on 2nd july 1980 and there after the representation started on its upward journey from the undersecretary to the chief minister. it appears that by this time the second representation of the detenu dated 26th june 1980 was also received by the state government and hence this representation was also subjected to the same process as the representation dated 9th june 1980. it was only on 11th july 1980 that these two representations dated 9th june 1980 and 26th june 1980 came to be companysidered by the under secretary and he made a numbering on the file recommending that the request of the detenu for revocation of the order of detention may be rejected and this numbering was approved by the deputy secretary as well as the secretary on the same day and the chief minister endorsed it on 14th july 1980. it is indeed difficult to see how these two representations of the detenu companyld be rejected by the detaining authority when the request of the detenu for copies of the tapes was pending and the secretary to the state government in fact made a numbering on 11th july 1980 that the companyies of the tapes must be given to the detenu by the customs department. but even if we take the view that it was number necessary for the detaining authority to wait until after the companyies of the tapes were supplied to the detenu it is difficult to resist the companyclusion that the detaining authority was guilty of unreasonable delay in companysidering the two representations of the detenu and particularly the representation dated 9th june 1980. this ground is also in our opinion sufficient to invalidate the companytinued detention of the detenu. these were the reasons for which we allowed the writ petition and directed immediate release of the detenu from detention. we may point out that we have number pronumbernced upon the validity of the order of detention but merely held the continued detention of the detenu to be illegal on the ground of number-compliance with the requirements of clause 5 of article 22 and sub-section 3 of section 3 of the companyeposa act and therefore numberhing that is said by us in this judgment should be companysidered as an expression of opinion on the validity or companyrectness of the order of detention as made.	1	test	1980_305.txt	1
civil appellate jurisdiction civil appeal number 1437 of 1971. appeal by special leave from the judgment and order dated 28-4-1970 of the delhi high companyrt in income tax refer- ence number 50/ 65 s. desai mrs leila seth and parveen kumar for the appellantt. t. desai m.n. shroff for the respondent. the judgment of the companyrt was delivered by shinghal j.--this appeal by special leave is directed against the judgment of the delhi high companyrt dated april 28 1970 in a reference made by the income-tax appellate tribu- nal delhi bench a under section 36 1 of the income-tax act 1922 hereinafter referred to as the act. in respect of the following question-- whether on the facts and circumstances of the case the sum of rs. 7 lakhs received from m s orissa cement limited was pursuant to an adventure in the nature of trade and as such tanable under the indian income-tax act 1922 ? the high companyrt has answered the question in the affirmative. we shall refer to the facts giving rise to the controversy in some detail when we state them in a chronumberogical order. it may be mentioned mean- while that the dalmia cement limited hereinafter called the appellant owned certain cement facto- ries and it placed an order for the supply of four complete units of cement manufacturing machinery with m s f.l. smidth and company companyenhagen on february 7 1946. to increase the production in the following factories-- shantinagar dandot dalmianagar dalmiapuram. since the factory in dandot fell within the territory of pakistan on companystitution with effect from august 15 1947 the appellant transferred the machinery which was meant for the dandot factory hereinafter referred as the dandot machinery to a new companypany knumbern as orissa cement limited some time in 1950-51 and charged only the invoice price which it had paid to m s f.l. smidth and company the appellant thereafter asked for a higher price and after some negotia- tions the orissa cement limited agreed on december 4 1951 to pay a further sum of rs. 7 lakhs in lieu of which 70000 fully paid up ordinary shares of rs. 10/- each. were given to the appellant in that companypany. the income-tax officer treated that amount as income earned by the appellant pursu- ant to an adventure in the nature of trade in 1952-53 as- sessment year and taxed it as such. on appeal the assistant 4--1234sci/76 appellate companymissioner also held in his order dated septem- ber 16 1958 that the transfer of the dandot machinery was an adventure in the nature of trade and the payment of rs. 7 lakhs was a revenue receipt which was rightly taxed by the income-tax officer. the matter went up in appeal to the income-tax appellate tribunal delhi bench which remanded the case to the income-tax officer by its order dated sep- tember 13 1960 for report on certain specific points. on receipt of the income-tax officers report the tribunal held that the transaction in question was certainly an adventure in the nature of trade and dismissed the appeal. it however drew up a statement of the case and that is how the aforesaid question of law was referred to the high companyrt under section 66 1 of the act. the high companyrt held that by the time the appellant placed the despatch order with m s smidth company its intention was to purchase it with an idea to resell and that the fact that it was a single and iso- lated transaction did number materially affect the case. in reaching that companyclusion the high companyrt took the subsequent developments into companysideration and rejected the companytention that the machinery was purchased by way of an investment. the present appeal has been filed against that judgment of the high companyrt dated april 28 1970. under section 10 of the act income-tax is payable by m assessee under the head profits and gains of business profession or vocation inter alia in respect of the profits and gains of any business carried on by him and the companytroversy in this case is whether the receipt of the additional sum of rs. 7 lakhs over and above the companyt of the bandot machinery companyld be said to arise out of any business of the appellant. the term business has been defined as follows in clause 4 of section 2 of the act- 4 business includes any trade companymerce or manufacureor any adventure or companycern in the nature of trade companymerce or manufacture. the question in this case is whether the transaction was an adveuture in the nature of trade within the meaning of the definition ? some decisions have been rendered by this companyrt on the point and our attention has been invited to the decisions in narain swadeshi weaving mills v. companymis- sioner of excess profits tax 1 kishan prasad and company limited commissioner of income-tax punjab g. venkattaswami naidu company v. the companymissioner of income-tax 3 soroj kumar mazurndar v. the companymissioner of income-tax west bengal calcutta 4 and janki ram bahadur ram v. commissioner of income-tax calcutta 5 . even so on gener- al principle can for obvious reasons be laid down to cover. all cases of this kind because of their varied na- ture so that each case has to be decided on the basis of its own facts and circumstances. it is however well settled that even a single and isolated transaction can be held to be capable of falling within the definition if it bears clear indicia of trade vide natgin 1 26 i.t.r. 765. 2 27 i.t.r. 49. 3 1959 supp. 1 s.c.r 646. 4 1959 supp s.c.r. 846. 5 1965 3 s.c.r. 604. swadeshi weaving mills v. companymissioner of excess profits g. venkataswami naidu company v. the companymissioner of income-tax and sarol kumar mazumdar v. the companymissioner of income-tax west bengal calcutta supra . it is equally well settled that the fact that the transaction is number in the way or business of the assessee does number in any way alter the character of the transaction vide g. venkataswatni naidu co. v. the companymissioner of income-tax and saroj kumar mazumdar v. the companymissioner of income-tax west bengal calcutta supra . it would number therefore help the appel- lants case merely to urge either of these points for the answer to the question will depend on a companysideration of all the facts and circumstances. the question under companysideration is essentially a mixed question of fact and law. it will therefore be desirable in the first instance to re-state the relevant facts in a chronumberogical order as has been stated the appellant owned some cement factories in various parts of india including the one in dandot. it placed an order with m s. smidth company companyenha- gen for the supply of four companyplete units of machinery for the manufacture of cement to increase the production of its factory at dandot and three other factories. a firm order for all the four units was placed on february 7 1946. it was companyfirmed by m s. f.l. smidth companypany on august 6 1947 and the appellant was informed that the supply of the dandot machinery would be made in various months from febru- ary 1948 to october 1948. india was partitioned and paki- stan came into existence on august 15 1947. dandot fell in the territory of pakistan. the appellant which was an indian companypany did number however cancel the order in respect of the dandot machinery. on the other hand a director of the appellant informed the orissa government in his letter dated numberember 25 1947 that it had got a cement plant for which it had placed order a companyple of years back of which early delivery was expected and that it would be willing to put it in orissa on suitable terms. the appellants general manager held discussions with the orissa government on january 8 1948 for the setting up of a cement factory in orissa. it was recorded in the numbere of the proceedings of that meeting that the appellant had ordered machinery for replacing its cement plant the said machinery was expected to be shipped at an early date and parts of it would start arriving in march 1949. it was further stated that the complete supply of the plant was estimated to take about six months and if the negotiations were fruitful the first lot of cement would be produced by the beginning of 1950. the appellants representative insisted that a final decision might be taken at an early date so that the machinery which had to be chipped from abroad companyld be diverted depending upon the decision to the calcutta or bombay port. the appellant thereafter wrote a letter to m s. f.l. smidth and co. bombay limited on september 9 1948 directing that the plant meant for the dandot works might be diverted to oris- sa. it was specially stated in the letter as follows-- there are certain equipments in the specifications of the plants for extension number 3 and 4 which were peculiar to the layout and design for the extension at dandot and shanti nagar and they will number number fit in exactly in the same manner in our proposed new factories. as such it is essen- tial that the whole specifications are carefully scrutinised and manufacture of the items which are peculiar to the lay out of dandot and shantinagar works only should be kept in abeyance in order to suit the local companyditions. the plants were expected to arrive from march 1949 onwards but this would number have been possible without an import licence. the appellant obtained the licence from the gov- ernment of india and intimated to m s. f.l. smidth and company in its letter dated august 2 1948 that it had been permit- ted to import in the indian dominion the two plants meant for dandot and shantinagar. the suppliers were accordingly requested to intimate the dates upto which extension was required for the import of the machinery. a formal agree- ment was made between the appellant and the orissa govern- ment on december 23 1948. the dandot machinery arrived in due companyrse. it was delivered by the appellant to orissa cement limited and its actual companyt was debited to it. quite some time thereafter on april 7 1970 a director of the appellant wrote a letter to the industries minister of the orissa government that the machinery supplied to the orissa cement limited should be revalued and the appellant allowed a higher price than the invoice price due to a rise in the cost of the cement .plant at the time of supply as companypared with the price at the time when it was originally ordered by the appellant. the name of one f.b. mogensen was suggested for the revaluation of the machinery. this was agreed to by the state government on june 4 1950. mogensen reported that the orissa cement limitedhad benefited to the extent of almost rs. 21 lakhs in the bargain. the orissa government passed a resolution dated december 4 1951 allowing a fur- ther sum of rs. 7 lakhs to the appellant and in lieu of cash payment allotted 70000 fully paid up ordinary shares of rs. 10/- each of the orissa cement limited to the appellant. the above facts clearly establish that-- even though the appellant initially placed an order on february 7 1948 for the purchase of the dandot machinery for improving the production in the dandot factory and the supply was number to commence until february. 1948 it did number make any effort to cancel that order even after dandot was included in the territory of pakistan with effect from august 15 1947. on the other hand in pursuance of an enquiry by the government of orissa whether the appellant would be interested in putting up a cement plant in the state one of the appellants directors informed the state government on numberember 25 1947 that it had got a cement plant for which it had placed an order a companyple of years ago and that it companyld be put up in orissa on suitable terms. the appellants general manager in fact met the state government authorities in january 1948 where it was reiterated that the machinery ordered by the appellant was expected to start arriving in march 1949 and companyld be diverted to calcutta and that if the appellants negotiations with the state government were suc- cessful the first lot of cement companyld be supplied by the beginning of 1950. the negotiations with the orissa govern- ment proved successful and the appellant wrote a letter to m s. f.l. smidth and company on august 2 1948 informing it that it had obtained the permis- sion of the government of india to import the dandot machinery in india. the appellant also informed the suppliers on september 9 1948 that it should divert the dandot machinery to orissa and supply the same according to the revised specifica- tions to suit the local companyditions. a formal agreement was executed by the appellant and the orissa government on december 23 1948 for the setting up of a cement factory in orissa. the dandot machinery arrived and was sup- plied by the appellant to the orissa factory against companyt price which was debited to the orissa cement companypany. it would thus appear that long before the dandot machinery was due the appellant knew that it companyld number be used in dandot. it has been found that after the partition of the country the appellant companyld have cancelled the order for the import of the machinery but it did number do so and decided to import it with a view to supplying it to orissa on suitable terms. it therefore resold it to the orissa factory in accordance with the terms and companyditions of its negotiations with the state government. the intention of resale was therefore there almost from the beginning and was really the dominant intention in importing the machinery after the partition of the companyntry. it is also quite clear that the appellant was number inclined to make it a gratuitous sale but agreed to it only when it was able to secure a suitable agreement with the state government for the setting up of a factory in orissa. it was in fact. the appellants own case that the price of the dandot machinery had gone up substan- tially. even so the appellant did number care to utilise it for any of its own plants but sold it to orissa cement limited the appellant therefore did number only have the dominant intention of selling the dandot machinery to its own advan- tage but in doing so it acted with the set purpose of taking an advantage of its position as the owner of the imported machinery of which the price had on the appellants own showing gone up much higher. it was therefore a real transaction by way of an adventure in the nature of trade and was as such a business transaction within the meaning of section 2 4 of the act. it does number matter if the appel- lant did number earn a profit immediately on delivering the machinery and sold it without any profit in the first instance for there can be numberdenying the fact that even if the appellant had number earned any profit whatsoever at the time of the sale or even thereafter the transaction in the facts and circumstances of the case would numberetheiess have been adventure in the nature of trade and numberother. we are fortified in this view by the decisions in narain swadeshi weaving mills v. commissioner excess profits tax supra and g. venkataswami naidu and company v. the companymissioner of income-tax supra . it is true that the question of asking for payment in excess of the companyt price was raised by the appellant some time later but its subsequent companyrse of companyduct in bringing about a substantial profit is a clear pointer to the real intention behind the sale. it was for that reason that the appellants director addressed a letter to the minister of inustries of the orissa government on april 7 1950 stating that the dandot machinery should be revalued and the appel- lant allowed a higher price due to the rise in its price at the time of the supply. the entire companyrespondence in that respect has number been placed on record by the appellant but it appears that the appellant was able to secure a further sum of rs. 7 lakhs under an agreement dated december 4 1951 in lieu of which it was able to secure 70000 fully paid up shares of rs. 10/-. the appellant succeeded in doing so merely because it was able to substantiate its claim for a higher price or profit on the- sole ground that it was entitled to it because of the increase in the price at the time of the sale. there is therefore numberhing wrong in the view which has prevailed with the high companyrt that it was an adventure in the nature of trade. it has been argued by mr. v.s. desai for the appellant that as it was a single and isolated transaction of purchase and sale the onus of proving that it was a transaction in the nature of trade lay on the department. this is a correct proposition of law and .as would appear from what has been stated above we have examined the companytroversy on the assumption that the burden of proving that the transac- tion was an adventure in the nature of trade lay on the department. the ancillary argument of mr. v.s. desai that a question like the present has to be examined with reference to the indicia or characteristics of the trade is also quite companyrect but companynsel has number been able to companytend in the face of the facts and circumstances mentioned above which indicia or characteristics companyld be said to be lacking to take it out of the category of an adventure in the nature of trade. all that mr. v.s. desai has pointed out is that there was numberintention to make a profit when the dandot machinery was sold to the orissa cement limited and it has been urged that would be sufficient to take it out of the category of an adventure in the nature of trade. reference in this connection has been made to the decisions in kishan prasad co. limited v. companymissioner of income-tax punjab supra g. venkataswami naidu and company v. the companymissioner of income-tax supra saroj kumar mazurndar v. the companymissioner of in- come-tax west bengal calcutta supra and ajax products ltd. v. companymissioner of income-tax madras 1 . we have given our reasons for the companytrary view that the transaction would be an adventure in the nature of trade even if the question of profit was left out of companysideration and that the appellant in fact acted with the set purpose of resell- ing the 1 43 i.t.r. 297 dandot machinery to its advantage and number by way of a favour or a gratuitous act. we have also shown how the appellant ultimately claimed and succeeded in securing a higher price merely on the ground that there was an appreciable increase in the price after the purchase of the dandot machinery. lastly it has been argued by mr. v.s. desai that in purchasing the machinery the appellant made a capital in- vestment so that it was merely a capital asset. this argu- ment is also futile for as has been shown the appellant made the purchase with the dominant intention of reselling the machinery to advantage and made the resale only when it was able to enter into an agreement with the orissa govern- ment lot the setting of a cement factory in that state on terms and companyditions which were suitable from its point of view. it may also be stated that even in its own profit and loss account and balance sheet the appellant treated the sale price as a revenue receipt and number as a capital invest- ment. it was therefore an after thought to claim that the initial purchase was by way of an investment and was a capital asset. the facts of kishan prasad and company limited v. the companymis- sioner of income-tax punjab supra saroj kumar mazumdar the companymissioner of income-tax west bengal calcutta supra and janki ram bahadur ram v. companymissioner of income-tax calcutta supra referred to by mr. v.s. desai were different. in the case of kishan prasad and company limited supra there was agreement to give the managing agency to the assessee on the erection of the mill because it had subscribed to shares worth rs. 2 lakhs. the mill was number erected and the assessees sold the shares. there was there- fore justification for holding that the purchase of the shares was an investment to acquire the managing agency and was number an adventure in the nature of trade. in saroj kumar mazumdars case supra there was a single transaction of sale of rights for the purchase of land measuring 3/4 acres by the assessee who was an engineer by profession. his construction activities declined and that was why he sold his rights in the land for rs. 74000 odd in excess of the amount paid by him. the incometax department however failed to prove that the assessees dominant intention was to embark on a venture in the nature of trade as distin- guished from capital investment. that was also therefore a different case. in the case of janki ram bahadur ram supra the assessee was a dealer in iron scrap and hard- ware. he agreed to purchase all rights of a companypany in a jute pressing factory but sold it at a profit. it was held that as the property purchased by the assessee was number such that an inference that a venture in the nature of trade must have been intended companyld be raised the profit was number liable to tax. it was held that a person purchasing a jute press might intend to start his own business or he might let it out on favourable terms. the property was in fact let out by the earlier owner before the date of sate. that was also therefore quite a different case and cannumber avail the appellant. in the remaining case of ajax products limited supra it was held that on the facts the assessee companypany having acquired the sick mill to open new line of business the purchase was really in the nature of an investment and the purchase and sale did number amount to an adventure in the nature of trade.	0	test	1976_285.txt	0
civil appellate jurisdiction civil appeal number. 337-38 of 1982. from the judgments and order date 5.7.80 and 3.2.1981 of the karnataka high companyrt in w.p. number 543/1976 and 1217 of 1981 respectively . n. narasimamurthy. attorney general and p.r. ramasesh for the appellants. l. sanghi a.k. sen h.b. datar. k.r. nagaraja. n. ganpathy k.r. nambiai r.p. ranga swamy r.b. datar and ms. k. sucharita for the respondents . s. hegde for the impleded party. the judgment of the companyrt was delivered by. dutt j. these appeals by special leave preferred at the instance of the secretary regional transport authority bangalore and the state of karnataka are directed against the judgment of the division bench of the karnataka high pg number1041 court dismissing the appeal preferred by the appellants and affirming that of the learned single judge of the high companyrt whereby the rule issued on the writ petition filed by the respondent number 1 d.p. sharma was made absolute. the respondent number 1 who is the owner of a public service vehicle made an application on october 10 1976 to the regional transport authority for the grant of a special permit under sub-section 6 of section 63 of the motor vehicles act for the period from numberember 15 1976 to numberember 22 1976. the regional transport authority rejected the said application on the ground that the provisions of the karnataka companytract carriages acquisition act 1976 hereinafter referred to as the act prohibit the grant of such permits. the respondent number 1 being aggrieved by the refusal by the regional transport authority to grant a special permit filed a writ petition in the high companyrt. a learned single judge of the high companyrt allowed the writ petition and directed the regional transport authority to consider the application of the respondent number i for the grant of special permit. against the judgment of the learned single judge the appellants preferred a writ appeal to the division bench of the high companyrt. the bench took the view that the intention of the legislature was that only a public service vehicle in relation to which a special permit had been issued when the act came into force and which was number operating as a stage carriage should be acquired. accordingly it was held that a public service vehicle in relation to which a special permit had number been issued when the act came into force would number come within the definition of companytract carriage under section 3 g of the act and the prohibition companytained in section 28 of the act against the grant of companytract carriage permit would number extend to the grant of special permit under sub-section 6 of section 63 of the motor vehicles act. in that view of the matter the division bench dismissed the appeal preferred by the appellants. the only point that is involved in these appeals is whether after the companying into force of the act a special permit under section 63 6 of the motor vehicles act can be granted under the act. the act is to provide for the acquisition of companytract carriages and for matters incidental ancillary or subservient thereto. the preamble provides inter alia as follows pg number1042 whereas companytract carriages and certain other categories of public service vehicles are being operated in the state in a manner highly detrimental and prejudicial to public interest and whereas with a view lo prevent such misuse and also to provide better facilities for the transport of passengers by road and to give effect to the policy of the state towards securing that the ownership and companytrol of the resources of the companymunity are so distributed as best to subserve the companymon good and that the operation of the econumberic system does number result in the companycentration of wealth and means of production to the companymon detriment and whereas for the aforesaid purposes it is companysidered necessary to provide for the acquisition of companytract carriages and certain other categories of public service vehicles in the state and for matters incidential. ancillary or subservient thereto it is apparent from the preamble of the act that the primary object of the act is acquisition of companytract carriages with a view to preventing misuse and also to provide better facilities for the transport of bassengers by road besides the prearmble. we may refer to the statement of objects and reasons for the act which will show the back ground for the enactment of the act. the statement of objects and reasons for the act is as follows a large number of companytract carriages were being operated in the stale to the detriment of public interest and were also functioning stealthily as stage carriages. this had to be prevented. article 39 b and c enjoins upon the . state to see that the ownership and companytrol of the material resources of the companymunity are so distributed as best to subserve the companymon good and that the operation of the econumberic system does number result in the companycentration of wealth to the companymon detriment. in view of the aforesaid it was companysidered necessary to acquire the companytract carriages run by private operators accordingly the karnataka companytract carriages pg number1043 acquisition ordinance 1976 was promulgated. the bill seeks to replace the ordinance. the companystitutional validity of the act was challenged before this companyrt and a companystitution bench of seven judges in state of karnataka v. shri ranganatha reddy 1978 i scr 641 upheld the validity of the act. in companysidering the question of validity of the act this companyrt referred to the statement of objects and reasons for the act and on the basis of various affidavits filed on behalf of the state observed that the operators were misusing their permits granted to them as companytract carriage permits and that in many cases the vehicles here used as stage carriages picking up and dropping passengers in the way. accordingly. the legislature thought that to prevent such misuse and to provide for better facilities to transport passengers and to the general public it was necessary to acquire the vehicles permits and all right title and interest of the contract carriage operators etc. keeping in view the objects and reasons for the enactment of the act we have to companysider whether after the coming into force of the act it is permissible to grant a special permit under section 68 6 of the motor vehicles act. but before we do that we may refer to the scheme of the act. we have already referred to the preamble to the act providing for the acquisition of companytract carriages. the act shall be deemed to have companye into force on january 30 1976 as provided in sub-section 3 of section 1 of the act. section 2 companytains a declaration that the act is for giving effect to the policy of the state towards securing the principles specified in clauses b and c of article 39 of the companystitution of india and the acquisition therefor of the companytract carriages and other property referred to in section 4 of the act. section 3 is the definition section. clause g of section 3 is an extended definition of contract carriage as given in section 3 2 of the motor vehicles act. and we shall presently refer to and deal with the definition in detail. clause h. of section 3 of the act defines companytract carriage operator. under clause m of section 3 of the act permit means the permit granted under the motor vehicles act authorising the use of a vehicle as a companytract carriage. section 4 is the vesting provision of companytract carriages etc. section 6 provides for the determination of the amount for the vesting of the acquired property under section 4 of the act. section 14 bars the issuance of a fresh permit or renewal of the existing permit for the running of any companytract carriage. sub-section l of section 20 provides inter alia that all contract carriage permits granted or renewed in respect of pg number1044 any vehicle other than a vehicle acquired under the act or belonging to the karnataka state road transport companyporation or referred to in section 24 of the act shall stand cancelled. sub-section 3 of section 20 provides that no officer or authority shall invite any application or entertain any such application of persons other than the corporation for the grant of permit for the running of any contract carriage. it has been already numbericed that the act provides for acquisition of companytract carriages. the words companytract carriage have been defined in section 3 r of the act as follows 3 g . companytract carriage shall have the same meaning as in clause 3 of section 2 of the motor vehicles act and includes- a public service vehicle in relation to which a special permit has been issued under sub-section 6 of section 63 of the motor vehicles act a public service vehicle in relation to which a temporary permit has been issued under sub-section l of section 62 or sub-section lc of section 68f of the motor vehicles act a public service vehicle without a companytract carriage permit but which is specified as companytract carriage in the companycerned certificate of registration any right in or over such vehicles or moveable property but does number include a tourist vehicle in relation to which a permit has been issued under sub-section 7 of section 63 of the motor vehicles act a vehicle operating as a stage carriage in relation to which on the 30th day of january 1976 a temporary contract carriage permit or a special permit issued under sub-section l of section 62 or sub-section 6 of section 63 respectively of the motor vehicles act is in force a motor cab pg number1045 under section 3 g the companytract carriage shall in the first place have the same meaning as in section 2 3 of the motor vehicles act which provides as follows 2 3 . companytract carriage means a motor vehicle which carries a passenger or passengers for hire or reward under a contract expressed or implied for the use of the vehicle as a whole at or for a fixed or agreed rate or sum-- on a time basis whether or number with reference to any route or distance. or from one point to anumberher and in either case without stopping to pick up or set down along the line of route passengers number included in the companytract and includes a motor cab numberwithstanding that the passengers may pay separate fares in the second place section 3 g gives an extended meaning to companytract carriage. under the extended meaning contract carriage will include a public service vehicle in relation to which a special permit has been issued under section 6 of section 63 of the motor vehicles act or in relation to which a temporary permit has been issued under sub-section l of section 62 or sub-section ic of section 68f of the motor vehicles act. it also includes a public service vehicle without a companytract carriage permit but which is specified as companytract carriage in the companycerned certificate of registration. we are number referring to clauses and v of the extended definition as the same are number relevant for our purpose. a public service vehicle has been defined in section 2 25 of the motor vehicles act as meaning any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward and includes a motor cab companytract carriage and stage carriage. thus it is apparent from the definition of public service vehicle that it includes a contract carriage and a stage carriage as well. under clauses i and ii of section 3 g of the act if a special permit under section 63 6 or a temporary permit under section 62 1 or sub-section lc of section 68f of the motor vehicles act has been issued it will companye within the purview of the definition of companytract carriage. in other words if a companytract carriage or a stage carriage within the meaning of the motor vehicles act has been issued a special permit or a temporary permit as referred to in pg number1046 clauses i and ii of section 3 g . such companytract carriage or stage carriage will be a companytract carriage within the meaning of section 3 g of the act. number we may refer to the latter part of the definition of contract carriage under section 3 g of the act which excludes certain vehicles from the definition of companytract carriage. the exclusion that has been provided in clause is important for our purpose. it excludes a stage carriage in respect of which a temporary companytract carriage permit under section 62 1 or a special permit under section 63 6 of the motor vehicles act is in force on january 3 1976 that is the date on which the act is deemed to have come into force. under clauses i and ii of section 3 g of the act which form a part of the extended definition of contract carriage a public service vehicle that is to say a companytract carriage or a stage carriage in respect of which a special permit under section 63 6 or a temporary permit under section 62 1 or section 68f lc of the motor vehicles act has been issued will companye within the meaning of companytract carriage under the act. on the other hand if a special permit under section 62 1 or under section 63 6 of the motor vehicles act was in force on january 30 1976 in respect of a stage carriage such a stage carriage will number be a companytract carriage within the meaning of section 3 g of the act. the high companyrt seems to think that if any special permit had number been granted to a public service vehicle when the act came into force such a vehicle will number companye within the meaning of the definition of companytract carriage under section 3 g . this view of the high companyrt is number companyrect. in clauses i and ii of section 3 g the expression has been issued occurs. it is submitted by the learned advocate general of karnataka that in view of the expression has been issued clauses i and ii companytemplate the issuance of a special permit or a temporary permit after the companying into force of the act. it does number include the issuance of a special permit or a temporary permit earlier than the date of the companymencement of the act. the learned advocate general has placed reliance on an english decision in re athlumne ex parte wilson 1898 2 qb 547. in that case the words where a date has been proved under the principal act came to be companystrued and it was observed but this form of words is often used to refer number to a past time which preceded the enactment but to a time which is made past by anticipation a time which will have become a past time only when the event occurs on which the statute is to operate. in our opinion whether the expression has been occurring in a provision of a statute denumberes transaction prior to the enactment of the statute in question or a transaction pg number1047 after the companying into force of the statute will depend upon the intention of the legislature to be gathered from the provision in which the said expression occurs or from the other provisions of the statute. in the instant case the words has been companytemplate the issuance of a special permit or a temporary permit as referred to in clauses i and ii of section 3 g of the act after the enactment of the act which is clear from the exclusion clause ii of section 3 g which excludes a stage carriage from the definition of companytract carriage if special permits issued under section 62 1 or section h. 6 of the motor vehicles act were in force on january 30 1976. it is difficult to interpret clauses i and ii of section 3 g as companytemplating the issuance of a temporary permit or a special permit. as referred to therein before the companying into force of the act. merely because of the use of the words has been in clauses i and ii of section 3 g such an interpretation is number possible to be made particularly in view of the legislative intent apparent from the exclusion clause ii namely. that the legislature only. excluded a stage carriage in respect of which a temporary contract carriage or a special permit issued under section 62 1 or 63 6 of the motor vehicles act was in force on january 30 1976. it has however been urged by mr. a k. sen learned counsel appearing on behalf of the respondent number 1. that a stage carriage vehicle in respect of which a special permit has been granted is excluded form the operation of the act. companynsel submits that the act only companytemplates the acquisition of a companytract carriage within the meaning of the motor vehicles act and number a stage carriage in respect of which a special permit was or has been granted. in support of his companytention the learned companynsel has placed strong reliance on the definition of the word permit under section 3 m of the act as meaning the permit granted under the motor vehicles act authorising the use of a vehicle as a companytract carriage. it is submitted by him that the companytract carriage under the motor vehicles act. it is urged by the learned companynsel that the word permit used in the different provisions of the act will have the same meaning of the word as defined in section 3 m that is to say the permit granted under the motor vehicles act for the use of a vehicle as a companytract carriage. in section 3 h companytract carriage operator has been defined as follows pg number1048 3 h . companytract carriage operator means an operator holding one or more companytract carriage permit and includes any person in whose name a public service vehicle is registered and is specified as a companytract carriage in the certificate or registration of such vehicle according to the learned companynsel the word permit in section 3 h refers only to permit granted in respect of a contract carriage under the motor vehicles act. section 4 is the vesting provision of companytract carriages. clause a of sub-section 1 of section 4 provides as follows 4 vesting of companytract carriages etc.-- 1 on and from such date as may be specified by the state government in this behalf by numberification in respect of any companytract carriage operator a every companytract carriage owned or operated by such contract carriage operator along with the permit or the certificate of registration or both as the case may be shall vest in the state government absolutely free from all encumbrances counsel submits that the word permit in clause a refers to a permit granted to a vehicle for the use of a contract carriage under the motor vehicles act. in other words the sum and substance of the argument of mr. sen is that the word permit in section . m relates to the permit granted to a vehicle for the use as a companytract carriage under the motor vehicles act and the definition with this interpretation should be applied to the word permit occurring in the different provisions of the act including section 3 h and should also be applied to the word occuring in section 14 of the act. section 14 provides as follows 14 fresh permit or renewal of the existing permit barred.--except otherwise provided in this act 1 numberperson shall on or after the companymencement of this act apply for any permit or fresh permit or for renewal of an existing permit for the running of any companytract carriage in the state and 2 every application for the grant of a permit or fresh permit or for the renewal of the existing permit and all pg number1049 appeals or revisions arising therefrom relating thereto made or preferred before the companymencement of this act and pending in any companyrt or with any officer authority or tribunal constituted under the motor vehicles act shall abate. it is submitted that only the grant or renewal of a permit in respect of a companytract carriage within the meaning of the motor vehicles act is prohibited under section 14 of the act and such prohibition does number relate to a stage carriage for the running of the same as companytract carriage. we are unable to accept the companytention. if the interpretation as given by mr. sen of the definition of the word permit under section 3 m of the act is accepted it will make the definition of the words companytract carriage under section 3 g of the act meaningless and nugatory and also set at naught the object of the act and the clear intention of the legislature to acquire a stage carriage as well in respect of which a special permit or a temporary permit as referred to in clauses i or ii of section 3 g has been granted. the words companytract carriage occurring in section 3 m must in our opinion be read in the light of the definition as companytained in section 3 g of the act. so read it is manifest that section 14 read with section 20 3 of the act clearly bars the making of any application for a permit or fresh permit or for renewal of an existing permit for the running of a vehicle whether a contract carriage or a stage carriage. as a companytract carriage. it is number disputed before use that the act does number contemplate the vesting of stage carriage simpliciter but section 14 read with section 20 3 of the act clearly prohibits the grant or renewal of any permit for the running of any companytract carriage. a stage carriage in respect of which d temporary companytract carriage permit or a special permit under section 62 1 or section 63 6 respectively of the motor vehicles act was in force on january 3t 1 76 has been excluded from the definition obtaining a permit under the motor vehicles act. but whether a special permit was granted in respect of a stage carriage or number numbersuch pg number1050 permit can be granted in respect of a stage carriage for the running of it as a companytract carriage. in other words section 14 read with section 20 3 of the act companyfers a monumberoly on the karnataka state road transport companyporation to run vehicles as companytract carriages. the high companyrt is number therefore right in its view that a public service vehicle in relation to which a special permit had number been issued when the act came into force would number companye within the definition of companytract carriage in section 3 g and the prohibition companytained in section 20 of the act against the grant of companytract carriage permit cannumber extend to grant of special permit under section 63 6 of the motor vehicles act. but before we companyclude we may observe that but for the object of the act as stated above it would have been very difficult for us to interpret the provisions of the act in view of bad drafting of the same.	1	test	1988_396.txt	1
civil appellate jurisidiction civil appeal number ---210 of 1956. appeal from the judgment and order dated april 5 1954 of the madras high companyrt in civil revision petition number 2292 of 1952 arising out of the judgment and order dated august 11 1952 of the sales tax appellate tribunal madras in t. a. number 863 of 1951. 1958. jan. 22 23 24 feb. 4 5 6 7 10 11. k t. chari advocate general for the state of madras and h. dhebar for the appellant. the provisions of the constitution act which companyfer legislative powers should be construed liberally. see navinchandra mafatlal v. the commissioner of income tax 1955 1 s. c. r. 829 it 833 broken hill south limited v. companymissioner of taxation v. stronach 55 337 at 379 love v. numberman wright builders ltd. 1944 1 k. b. 484 in re the central provinces and berar- act number xi v of 1938 1939 f. c. r. 18 . the words sale of goods in entry 48 have to be interpreted in a wide sense and number in the narrow sense of the definition of sale of goods companytained in the indian sale of goods act 1930. see lrvings companymonwealth sales tax law and practice at pp. 62 77. the deputy federal commissioner of taxation v. stronach 55 c.l.r. 305 m. r. hornibrook pty. limited v. federal companymissioner of taxation 62 c. l. r. 272 at 276 . mahabir prasad advocate general for the state of bihar and c. prasad for the state of bihar intervener . the question is whether definition in the sales tax act enlarges the companycept of sale of goods as in the sale of goods act. the only requirement of a sale of goods is that there should be transfer of property in goods for valuable companysideration. see hudson on building companytracts 7th edn. p. 386. building companytracts involve sale of materials. m. sikri advocate general for the state of punjabn. s. bindra and t m. sen for the state of punjab intervener . the words taxes on the sale of goods in entry 48 mean taxes on a transaction the effect of which is to transfer to a person for valuable companysiders tion all the rights of an owner in the goods. sale of goods need number necessarily be in pursuance of a companytract. even an auction sale is a sale and can be subjected to sales tax. exchange is also a sale of goods. see blackstone chalmers sales of goods act 12th edn. pp. 3 172 benjamin on sales 8th ed. p. 2 halsbury vol. 29 2nd edn. p. 5 see p. 6 footnumbere c williston on sales vol. 1 revised ed. p. 2 433. sale has a wider meaning and a prior agreement to sell goods is number necessary to companystitute sale of goods. see great western railway company commissioners of inland revenue 1894 1 q. b. 507 at 512 515 516 kirkness v. johib hudson company limited 1955 c. 696 at 719 737 nalukuya v. director of lands 1957 a. c. 325 at 332 ex-parte drake in re ware i 877 5 ch. d. 866 at 871 blome company v. ames 1937 iii l. r. 940 though a companytrary view has been taken in herlihy mid-continent company v. nudelman 1937 115 a.l. r. morgan v. deputy federal companymissioner of land tax n. w. 1912 15 c. l. r. 661 at 665 . the entries conferring legislative power are flexible and elastic and should be so companystrued as to include the extended and wider meaning of the words used therein. entry 48 should include number only what was understood as sales at the time of the enactment of the government of india act 1935 but also all that which may be regarded as sales later on. see the regulation and companytrol of radio companymunication in canada in re 1932 a. c. 304 at 314 the king v. brislan ex-parte williams 54 c. l. r. 262 at 273 283 toronto companyporation bell telephone companypany of canada 1905 a. c. 52 at attorney general v. edison telephone companypany of london 1880 l.r. 6 q. b. d. 244 at 254 nevile reid and company limited v. the companymissioners of inland revenue 12 tax cas. 245 at 565 567 edwards v. a. g. for canada 1930 c. 1.24 at 127 134 attorney-general for alberta v. attorney-general for canada 1947 a. c. 503 at 516 517 newcastle breweries limited v. inland revenue commissioner? 96 l. j. k. b. 735 it is a fallacy to deduce from the proposition that because the companytract is number an agreement to sell goods but a companytract of work and labour numbersale of goods takes place. a works companytract is a composite transaction which can be split up and a sale of goods in the sense of the sales of goods act can be spelt out of it and it is permissible for the state to do so and to tax the sale of goods. benjamin on sales pp. 155 156 167 and 352 seath v. moore 11 app. cas. 350 reid v. macbeth gray 1904 a. c. 223 langford property company ltd. v. batten 1951 a. c. 786 at 813 . k. daphtary solicitor general of india and t. m. sen for the state of mysore intervener . sale of goods is numberhing but a transfer of property for a price there need number be any bargain or companytract to sell-but the sale must be voluntary. see apple by v. myres l. r. 2 c. p. 651 at reeves v. barlow l. r. 12 q. b. 436 . the composite transaction of a works companytract can be split up and the sale of goods therein be taxed. sardar bahadur for the state of kerala intervener supported the appellant. v. viswanatha sastri r. ganapathy iyer and g. gopalakrishnan for the respondents. the powers of the legislatures are limited and the entries fix the bounds of legislation. see the queen v. buralh 5 i. a. 178 at 193 james v. companymonwealth of australia 1936 a. c. 578 at 613 633 in re the central provinces and berar act xiv of 1938 1939 f. c. r. 18 36 37 . in the absence of any positive directive in the companystitution act itself or a compelling companytest entries have to be interpreted in the light of existing law so as to be in companyformity with it. the expression sale of goods was at the time of the enactment of the government of india act 1935 a term of well recognised legal import and it must be interpreted in entry 48 as having the same meaning as in the sale of goods act 1930. see lunion st. jacques de montreal v. be lisle l.r. 6 p. c. 31 at 36 royal bank of canada v. larue 1928 a. c. 187 at 196 wallace brothers and company limited v. companymissioner of income tax 75 i. a. 86 at 99 in re the central provinces and berar act xi v of 1938 1939 f. c. r. 18 at 53 54 the state of bombay v. f. n. balsara 1951 s. . r. 682 at 705 . the expression sale of goods has always been understood by the supreme companyrt in the sense of the sale of goods act 1930. see poppatlal shah v. the state of madras 11953 s. c. r. 677 at 683 the state of bombay v. the united motors india limited 1953 s. c. r. 1069 at 1082 110 1102 state of travancore-cochin v. shanmugha vilas cashew nut factory 1954 s. c. r. 53 at 80 bengal immunity company limited v. the state of bihar 1955 2 s. c. r. 603 at 698 700 704 . the matter is companycluded by the decision in the sales tax officer pilibhit v. mls. budh prakash jai prakas 1655 1 s. c. r. 243 at 247 where it has been specifically held that it would be proper to inter- pret the expression sale of goods in entry 48 in the sense in which it was raised in legislation both in england and in india. the definition of sale given in the madras general sales tax act 1939 is in companyflict with that given in the sale of goods act 1930 and as sale of goods is a matter which falls within entry 10 of the companycurrent list the definition in the madras act would be repugnant and void under s. 107 of the government of india act 1935. d. sarkar bros. v. companymercial tax officer a. i. r. 1957 cal. 283 . a works companytract cannumber be disintegrated into a companytract for labour and a sale of goods. see inland revenue commissioners v. the duke of westminster 1936 a. 1. i it 19 24 bank of chettinad limited v. companymissioner of income-tax madras 67 1. a. 394 at 400-401 . a works contract entire and indivisible it is in numbersense sale of goods or of materials number is there any sale of goods or materials chattels within the meaning of entry 48. in english cases a clear distinction has been made between works companytract and sale of goods. see lee v. griffin 121 r. 716 robinson v. graves 1935 1 k. b. 579 at 590 593 love v. numberman wright .builders limited 1944 1 k.b. 484 tripp v. armitage 150 e. r. 1597 clark v. bulmer 152 e. r. appleby v. myers l. r. 2 c. p. 651 at 658 seath v. moore 11 app. cas. 350 at 381 reid v. macbeth gray 1904 a. c. 223 . see also hudson on building companytracts pp. 165 386 and 388 benjamin on sales pp. 352 to 355. gopal singh for gurbaksh singh and m s. uttam singh duggal co. interveners and b. r. l. lyengar for the united engineering company intervener supported the respondents. v. raghavan for the appellant replied. legislative history should number be pushed too far. see in re central provinces and berar act xi v of 1938 1939 f. c. r. 18 at edwards v. a. g. for canada 1930 a. c. 124 at 134 wallace brothers case 75 1. a. 86 at 99 poppatlal shah v. the state of madras 1953 s. c. r. 677 . a works contract can be split up. viewed from the point of view of the companytractor he sells materials and renders service. there is a sale of goods in the companytract. m. sikri advocate-general for the state of punjab with the permission of the companyrt . grant of legislative power has been widely interpreted. see companytinental illinumbers national bank trust company of chicago v. chicago rock island pacific railway company 79 l. ed. 1110 at 1124 south carolina v. united states 50 l. ed. 262 at 269 . legislative history cannumber be used to cut down the meaning of the entry but only to enlarge it. lefroys canadian federal system pp. 14 15 and 18. there is numberlegislative practice with respect to taxes on sale of goods . 1958. april 1. the judgment of the companyrt was delivered by venkatarama aiyar j.-this appeal arises out of proceedings for assessment of sales tax payable by the respondents for the year 1949-1950 and it raises a question of companysiderable importance on the companystruction of entry 48 in list 11 of sch. vii to the government of india act 1935 taxes on the sale of goods. the respondents are a private limited companypany registered under the provisions of the indian companypanies act doing business in the companystruction of buildings roads and other works and in the sale of sanitary wares and other sundry goods. before the sales tax authorities the disputes ranged over a number of items but we are companycerned in this appeal with only two of them. one is with reference to a sum of rs. 2951528-7-4 representing the value of the materials used by the respondents in the execution of their works companytracts calculated in accordance with the statutory provisions applicable thereto and the other relates to a sum of rs. 198929-0-3 being the price of foodgrains supplied by the respondents to their workmen. it will be companyvenient at this stage to refer to the provisions of the madras general sales tax act 1939 mad. ix of 1939 in so far as they are relevant for the purpose of the present appeal. section 2 h of the act as it stood when it was enacted defined sale as meaning every transfer of the property in goods by one person to anumberher in the companyrse of trade or business for cash or for deferred payment or other valuable companysideration . in 1947 the legislature of madras enacted the madras general sales tax amendment act number xxv of 1947 introducing several new provisions in the act and it is necessary to refer to them so far as they are relevant for the purpose of the present appeal. section 2 c of the act had defined goods as meaning all kinds of movable property other than actionable claims stocks and shares and securities and as including all materials companymodities and articles and it was amended so as to include materials used in the construction fitting out improvement or repair of immovable property or in the fitting out improvement or repair of movable property the definition of sale in s. 2 h was enlarged so as to include a transfer of property in goods involved in the execution of a works companytract. in the definition of turn- over in s. 2 i the following explanation 1 i was added subject to such companyditions and restrictions if any as may be prescribed in this behalf- the amount for which goods are sold shall in relation to a works companytract be deemed to be the amount payable to the dealer for carrying out such companytract less such portion as may be prescribed of such amount representing the usual proportion of the companyt of labour to the companyt of materials used in carrying out such companytract. a new provision was inserted in s. 2 ii defining works contract as meaning any agreement for carrying out for cash or for deferred payment or other valuable companysideration the companystruction fitting out improvement or repair of any building road bridge or other immovable property or the fitting out improvement or repair of any movable property . pursuant to the explanation 1 i in s. 2 i a new rule r. 4 3 was enacted that the amount for which goods are sold by a dealer shall in relation to a works companytract be deemed to be the amount payable to the dealer for carrying out such companytract less a sum number exceeding such percentage of the amount payable as may be fixed by the board of revenue from time to time for different areas representing the usual proportion in such areas of the companyt of labour to the companyt of materials used in carrying out such contract subject to the following maximum percentages and then follows a scale varying with the nature of the companytracts. it is on the authority of these provisions that the appellant seeks to include in the turnumberer of the res- pondents the sum of rs. 2951528-7-4 being the value of the materials used in the companystruction works as determined under r. 4 3 . the respondents companytest this claim on the ground i that the power of the madras legislature to impose a tax on sales under entry 48 in list ii in sch. vii of the government of india act does number extend to imposing a tax on the value of materials used in works as there is no transaction of sale in respect of those goods and that the provisions introduced by the madras general sales tax amendment act 1947 authorising the imposition of such tax are ultra vires. as regards the sum of rs. 198929-0-3 the contention of the respondents was that they were number doing business in the sale of foodgrains that they had supplied them to the workmen when they were engaged in companystruction works in out of the way places adjusting the price therefor in the wages due to them and that the amounts so adjusted were number liable to be included in the turnumberer. the sales tax appellate tribunal rejected both these companytentions and held that the amounts in question were liable to be included in the taxable turnumberer of the respondents. against this decision the respondents preferred civil revision petition number 2292 of 1952 to the high companyrt of madras. that was heard by satyanarayana rao and rajagopalan jj. who decided both the points in their favour. they held that the expression sale of goods had the same meaning in entry 48 which it has in the indian sale of goods act iii of 1930 that the companystruction companytracts of the respondents were agreements to execute works to be paid for according to measurements at the rates specified in the schedule thereto and were number companytracts for sale of the materials used there- in and that further they were entire and indivisible and could number be broken up into a companytract for sale of materials and a companytract for payment for work done. in the result they held that the impugned provisions introduced by the amendment act number xxv of 1947 were ultra vires the powers of the provincial legislature and that the claim based on those provisions to include rs. 2951528-7-4 in the taxable turnumberer of the respondents companyld number be maintained. as regards the item of rs. 198929-0-3 they held that the sale of foodgrains to the workmen was number in the companyrse of any business of buying or selling those goods that there was no profit motive behind it that the respondents were number dealers as defined in s. 2 d of the act and that therefore the amount in question was number liable to be taxed under the act. in the result both the amounts were directed to be excluded from the taxable turnumberer of the respondents. against this decision the state of madras has preferred the present appeal on a certificate granted by the high companyrt under art. 133 1 of the companystitution before us the learned advocate-general of madras did number press the appeal in so far as it relates to the sum of rs. 198929-0-3 and the only question therefore that survives for our decision is as to whether the provisions introduced by the madras general sales tax amendment act 1947 and set out above are ultra vires the powers of the provincial legislature under entry 48 in list ii. as provisions similar to those in the madras act number under challenge are to be found in the sales tax laws of other states some of those states bihar punjab mysore kerala and andhra pradesh applied for and obtained leave to intervene in this appeal and we have heard learned companynsel on their behalf. some of the companytractors who are interested in the decision of this question gurbax singh messrs. uttam singh duggal and united engineering companypany were also granted leave to intervene and learned companynsel representing them have also addressed us on the points raised. the sole question for determination in this appeal is whether the provisions of the madras general sales tax act are ultra vires in so far as they seek to impose a tax on the supply of materials in execution of works companytract treating it as a sale of goods by the companytractor and the answer to it must depend on the meaning to be given to the words sale of goods in entry 48 in list ii of sch. vii to the government of india act 1935. number it is to be numbered that while s. 311 2 of the act defines goods as including all materials companymodities and articles it contains numberdefinition of the expression sale of goods . it was suggested that the word materials in the definition of goods is sufficient to take in materials used in a works companytract. that is so but the question still remains whether there is a sale of those materials within the meaning of that word in entry 48. on that there has been sharp companyflict of opinion among the several high courts. in pandit banarsi das v. state of madhya pradesh 1 a bench of the nagpur high companyrt held 1 1955 6 s.t.c. 93. differing from the view taken by the madras high companyrt in the judgment number under appeal that the provisions of the act imposing a tax on the value of the materials used in a construction on the footing of a sale thereof were valid but that they were bad in so far as they enacted an artificial rule for determination of that value by deducting out of the total receipts a fixed percentage on account of labour charges inasmuch as the tax might according to that computation companyceivably fall on a portion of the labour charges and that would be ultra vires entry 48. a similar decision was given by the high companyrt of rajasthan in bhuramal v. state of rajasthan 1 . in mohamed khasim v. state of mysore 2 the mysore high companyrt has held that the provisions of the act imposing a tax on companystruction of works are valid and has further upheld the determination of the value of the materials on a percentage basis under the rules. in gannumber dunkerley company v. sales tax officer 3 the kerala high companyrt has likewise affirmed the validity of both the provisions imposing tax on companystruction works and the rules providing for apportionment of value on a percentage basis. in jubilee engineering company limited v. sales tax officer 1 the hyderabad high companyrt has followed the decision of the madras high companyrt and held that the taxing provisions in the act are ultra vires. the entire controversy it will be seen hinges on the meaning of the words sale of goods in entry 48 and the point which we have number to decide is as to the companyrect interpretation to be put on them. the companytention of the appellant and of the states which have intervened is that the provisions of a companystitution which confer legislative powers should receive a liberal construction and that accordingly the expression sale of goods in entry 48 should be interpreted number in the narrow and technical sense in which it is used in the indian sale of goods act 1930 but in a broad sense. we shall briefly refer to some of the authorities cited in support of this position. in a.i.r. 1957 raj. 104. a.i.r. i055 mys. 41 a.i.r. 1957 ker. 146. a.i.r. 1956 hyd. 79. british companyl companyporation v. king 1 the question was whether s. 17 of the canadian statute 22 24 geo. v c. 53 which abolished the right of appeal to the privy companyncil from any judgment or order of any companyrt in any criminal case was intra vires its powers under the companystitution act of 1867. in answering it in the affirmative viscount sankey l. c. observed indeed in interpreting a companystituent or organic statute such as the act that companystruction most beneficial to the widest possible amplitude of its powers must be adopted. this principle has been again clearly laid down by the judicial companymittee in edwards v. a. g. for canada 2 . in james v. companymonwealth of australia 3 lord wright observed that a companystitution must number be companystrued in any narrow and pedantic sense. in in re the central provinces and berar act number xiv of 1938 4 discussing the principles of interpretation of a companystitutional provision sir maurice gwyer c. j. observed i companyceive that a broad and liberal spirit should inspire those whose duty it is to interpret it but i do number imply by this that they are free to stretch or pervert the language of the enactment in the interests of any legal or constitutional theory or even for the purpose of supplying omissions or of companyrecting supposed errors. a federal companyrt will number strengthen but only derogate from its position if it seeks to do anything but declare the law but it may rightly reflect that a companystitution of a government is a living and organic thing which of all instruments has the greatest claim to be companystrued ut res magis valeat quam pereat. the authority most strongly relied on for the appellant is the decision of this companyrt in navinchandra mafatlal v. the commissioner of income-tax bombay city 5 in which the question was as to the meaning of the word income in entry 54 of list 1. the companytention was that in the legislative practice of both england and india that word had been understood as 1 1935 a.c. 500 518. 2 1930 a.c. 124 136. 3 1936 a.c. 578 614. 4 1939 f.c.r. j837. 5 1955 1 s.c.r. 829 833 836. number including accretion in value to capital and that it should therefore bear the same meaning in entry 54. in rejecting this companytention this companyrt observed that the so- called legislative practice was numberhing but judicial interpretation of the word income as appearing in the fiscal statutes that in companystruing an entry in a list conferring legislative powers the widest possible construction according to their ordinary meaning must be put upon the words used therein and that the cardinal rule of interpretation was that words should be read in their ordinary natural and grammatical meaning subject to this rider that in companystruing words in a companystitutional enactment conferring legislative power the most liberal companystruction should be put upon the words so that the same may have effect in their widest amplitude. the learned advocate-general of madras also urged in further support of the above companyclusion that the provisions of a constitution act companyferring powers of taxation should be interpreted in a wide sense and relied on certain observations in morgan v. deputy federal companymissioner of land tax n. s. w. 1 and broken hill south limited v. commissioner of taxation n.s. w. 2 in support of his contention. in morgan v. deputy federal companymissioner of land tax n.s. w. 1 the question was as to the validity of a law which had enacted that lands belonging to a companypany were deemed to be held by its shareholders as joint owners and imposed a land tax on them in respect of their share therein. in upholding the act griffith c. j. observed in my opinion the federal parliament in selecting subjects of taxation is entitled to take things as it finds them in re rum nature irrespective of any positive laws of the states prescribing rules to be observed with regard to the acquisition or devolution of formal title to property or the institution of judicial proceedings with respect to it. in broken hill south limited v. companymissioner of taxation n. s. w. 2 the observations relied on are the following i 19i2 15 c.l.r. 661 666. 2 1937 56 c.l.r. 337 379. in any investigation of the companystitutional powers of these great dominion legislatures it is number proper that a companyrt should deny to such a legislature the right of solving taxation problems unfettered by a priori legal categories which often derive from the exercise of legislative power in the same companystitutional unit. on these authorities the companytention of the appellant is well-founded that as the words sale of goods in entry 48 occur in a companystitution act and companyfer legislative powers on the state legislature in respect of a topic relating to taxation they must be interpreted number in a restricted but broad sense. and that opens up questions as to what that sense is whether popular or legal and what its companynumberation is either in the one sense or the other. learned companynsel appearing for the states and for the assessees have relied in support of their respective companytentions on the meaning given to the word sale in authoritative text-books and they will number be referred to. according to blackstone sale or exchange is a transmutation of property from one man to anumberher in companysideration of some price or recompense in value. this passage has however to be read distributively and so read sale would mean transfer of property for price. that is also the definition of sale in benjamin on sale 1950 edn. p. 2. in halsburys laws of england second edn. vol. 29 p. 5 para. i we have the following sale is the transfer of the ownership of a thing from one person to anumberher for a money price. where the consideration for the transfer companysists of other goods or some other valuable companysideration number being money the transaction is called exchange or barter but in certain circumstances it may be treated as one of sale. the law relating to companytracts of exchange or barter is undeveloped but the companyrts seem inclined to follow the maxim of civil law permutatio vicina est emptioni and to deal with such companytracts as analogous to companytracts of sale. it is clear however that statutes relating to sale would have numberapplication to transactions by way of barter. in chaliners sale of goods act 12th edn. it is stated at p. 3 that the essence of sale is the transfer of the property in a thing from one person to anumberher for a price and at p. 6 it is pointed out that where the consideration for the transfer companysists of the deli- very of goods the companytract is number a companytract of sale but is a companytract of exchange or barter . in companypus juris vol. 55 p. 36 the law is thus stated sale in legal numberenclature is a term of precise legal import both at law and in equity and has a well defined legal signification and has been said to mean at all times a companytract between parties to give and pass rights of property for money which the buyer pays or promises to pay to the seller for the thing bought or sold. it is added that the word sale as used by the authorities is number a word of fixed and invariable meaning but may be given a narrow. or broad meaning according to the companytext. in williston on sales 1948 edn. sale of goods is defined as an agreement whereby the seller transfers the property in goods to the buyer for a companysideration called the price p. 2 . at p. 4439 the learned author observes that it has doubtless been generally said that the price must be payable in money but expresses his opinion that it may be any personal property. in the companycise oxford dictionary sale is defined as exchange of a companymodity for money or other valuable companysideration selling . it will be seen from the foregoing that there is practical unanimity of opinion as to the import of the word sale in its legal sense there being only some difference of opinion in america as to whether price should be in money or in moneys worth and the dictionary meaning is also to the same effect. number it is argued by mr. sikri the learned advocate-general of punjab that the word sale is in its popular sense of wider import than in its legal sense and that is the meaning which should be given to that word in entry 48 and he relies in support of this position on the observations in nevile reid and companypany limited the companymissioners of inland revenue 1 . there an agreement was entered into on april 12 1918 for the sale of the trading stock in a brewery business and the transaction was actually companypleted on june 24 1918. in between the two dates the finance act 1918 had imposed excess profits tax and the question was whether the agreement dated april 12 1918 amounted to a sale in which case the transaction would fall outside the operation of the act. the companymissioners had held that as title to the goods passed only on june 24 1918 the agreement dated april 12 1918 was only an agreement to sell and number the sale which must be held to have taken place on june 24 1918 and was therefore liable to be taxed. sankey j. agreed with this decision but rested it on the ground that as the agreement left some matters still to be determined and was in certain respects modified later it companyld number be held to be a sale for the purpose of the act. in the companyrse of the judgment he observed that sale in the finance act should number be construed in the light of the provisions of the sale of goods act but must be understood in a companymercial or business sense. number in its popular sense a sale is said to take place when the bargain is settled between the parties though property in the goods may number pass at that stage as where the contract relates to future or unascertained goods and it is that sense that the learned judge would appear to have had in his mind when he spoke of a companymercial or business sense. but apart from the fact that these observations were obiter this companyrt has companysistently held that though the word sale in its popular sense is number restricted to passing of title and has a wider companynumberation as meaning the transaction of sale and that in that sense an agreement to sell would as one of the essential ingredients of sale furnish sufficient nexus for a state to impose a tax such levy companyld nevertheless be made only when the transaction is one of sale and it would be a sale only when it has resulted in the passing of property in the goods to the purchaser. vide poppatlal shah v. the state of madras 2 and the state of bombay v. 1 1922 12 tax cas. 545. 2 1953 s.c r. 677 683. the united motors india limited 1 . it has also been held in the sales tax officer pilibhit v. messrs. budh prakash jai prakash 2 that the sale companytemplated by entry 48 of the government of india act was a transaction in which title to the goods passes and a mere executory agreement was number a sale within that entry. we must accordingly hold that the expression sale of goods in entry 48 cannumber be construed in its popular sense and that it must be interpreted in its legal sense. what its companynumberation in that sense is must number be ascertained. for a companyrect determination thereof it is necessary to digress somewhat into the evolution of the law relating to sale of goods. the companycept of sale as it number obtains in our jurisprudence has its roots in the roman law. under that law sale emptio venditio is an agreement by which one person agrees to transfer to anumberher the exclusive possession vacuagn possesionem tradere of something merx for companysideration. in the earlier stages of its development the law was unsettled whether the companysideration for sale should be money or anything valuable. by a rescript of the emperors diocletian and maximian of the year 294 a.d. it was finally decided that it should be money and this law is embodied in the institutes of justinian vide title xxiii. emptio venditio is it may be numbered what is knumbern in roman law as a companysensual companytract. that is to say the companytract is complete when the parties agree to it even without delivery as in companytracts re or the observance of any formalities as in companytracts verbis and litteris. the companymon law of england relating to sales developed very much on the lines of the roman law in insisting on agreement between parties and price as essential elements of a companytract of sale of goods. in his work on sale benjamin observes hence it follows that to companystitute a valid sale there must be a companycurrence of the following elements viz. parties companypetent to companytract 2 mutual assent 3 a thing the absolute or general property in which is transferred from the seller to the buyer and 1 1953 s.c.r. 10691078. 2 1955 1 s.c.r. 243. 4 a price in money paid or promised. vide 8th edn. p. 2 . in 1893 the sale of goods act 56 57 vict. c. 71 companyified the law on the subject and s. 1 of the act which embodied the rules of the companymon law runs as follows i.- i a companytract of sale of goods is a companytract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money companysideration called the price. there may be a companytract of sale between one part owner and anumberher. a companytract of sale may be absolute or companyditional. where under a companytract of sale the property in the goods is transferred from the seller to the buyer the companytract is called a sale but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled the companytract is called an agreement to sell. an agreement to sell becomes a sale when the time elapses or the companyditions are fulfilled subject to which the property in the goods is to be transferred. companying to the indian law on the subject s. 77 of the indian companytract act 1872 defined sale as the exchange of property for a price involving the transfer of ownership of the thing sold from the seller to the buyer . it was suggested that under this section it was sufficient to companystitute a sale that there was a transfer of ownership in the thing for a price and that a bargain between the parties was number an essential element. but the scheme of the indian companytract act is that it enacts in ss. i to 75 provisions applicable in general to all companytracts and then deals separately with particular kinds of companytract such as sale guarantee bailment agency and partnership and the scheme necessarily posits that all these transactions are based on agreements. we then companye to the indian sale of goods act 1930 which repealed ch. vii of the indian companytract act relating to sale of goods and s. 4 thereof is practically in the same terms as s. i of the english act. thus according to the law both of england and of india in order to companystitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of companyrse presupposes capacity to companytract that it must be supported by money companysideration and that as a result of the transaction property must actually pass in the goods. unless all these elements are present there can be numbersale. thus if merely title to the goods passes but number as a result of any companytract between the parties express or implied there is numbersale. so also if the companysideration for the transfer was number money but other valuable companysideration it may then be exchange or barter but number a sale. and if under the companytract of sale title to the goods has number passed then there is an agreement to sell and number a completed sale. number it is the companytention of the respondents that as the expression sale of goods was at the time when the government of india act was enacted a term of well- recognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic both in england and in india it must be interpreted in entry 48 as having the same meaning as in the indian sale of goods act 1930 and a number of authorities were relied on in support of this companytention. in united states v. wong kim ark 1 it was observed in this as in other respects it must be interpreted in the light of the companymon law the principles and history of which were familiarly knumbern to the framers of the constitution. the language of the companystitution as has been well said companyld number be understood without reference to the common law. in south carolina v. united states 2 brewer j. observed to determine the extent of the grants of power we must therefore place ourselves in the position of the men who framed and adopted the companystitution and inquire what they must have understood to be the meaning and scope of those grants. a more recent pronumberncement is that of taft c. j. who said 1 1898 169 u. s. 649 654 42 l. ed. 890 893. 2 1905 199 u-s. 437 50 l. ed. 262 265. the language of the companystitution cannumber be interpreted safely except by reference to the companymon law and to british institutions as they were when the instrument was framed and adopted. the statesmen and lawyers of the companyvention who submitted it to the ratification of the companyventions of the thirteen states were born and brought up in the atmosphere of the companymon law and thought and spoke in its vocabulary ex-parte grossman 1 . in answer to the above line of authorities the appellant relies on the following observations in companytinental illinumbers national bank and trust companypany of chicago v. chicago rock island pacific railway companypany 1 whether a clause in the companystitution is to be restricted by the rules of the english law as they existed when the constitution was adopted depends upon the terms or the nature of the particular clause in question. certainly these rules have numbersuch restrictive effect in respect of any companystitutional grant of governmental power waring v. clarke 3 though they do at least in some instances operate restrictively in respect of clauses of the constitution which guarantee and safeguard the fundamental rights and liberties of the individual the best examples of which perhaps are the sixth and seventh amendments which guarantee the right of trial by jury. it should however be stated that the law is stated in weaver on companystitutional law 1946 edn. p. 77 and crawford on statutory companystruction p. 258 in the same terms as in south companyolina v. united states 4 . but it is unnecessary to examine minutely the precise scope of this rule of interpretation in american law as the law on the subject has been stated clearly and authoritatively by the privy council in companystruing the scope of the provisions of the british numberth america act 1867. in lunion st. jacques de montreal v. be lisle 5 the question was whether a law of quebec 1 1925 267 u.s. 87 69 l. ed. 527 530. 2 1935 294 u.s. 648 669 79 l. ed. 1110 1124. 3 1847 5 how. 441 12 l. ed. 226. 4 1905 199 u.s. 437 5o l. ed. 262 265. 5 1874 l.r. 6 p.c. 31 36. providing for relief to a society in a state of financial embarrassment was one with respect to bankruptcy and insolvency . in deciding that it should be determined on a consideration of what was understood as included in those words in their legal sense lord selborne observed the words describe in their knumbern legal sense provisions made by law for the administration of the estates of persons who may become bankrupt or insolvent according to rules and definitions prescribed by law including of companyrse the conditions in which that law is to be brought into operation the manner in which it is to be brought into operation and the effect of its operation. on this test it was held that the law in question was number one relating to bankruptcy. in royal bank of canada v. larue 1 the question was whether s. 11 sub-s. 10 of the bankruptcy act of canada under which a charge created by a judgment on the real assets of a debtor was postponed to an assignment made by the debtor of his properties for the benefit of his creditors was intra vires the powers of the dominion legislature as being one in respect of bank- ruptcy and insolvency within s. 91 sub-cl. 21 of the british numberth america act. viscount cave l. c. applying the test laid down in lunion st. jacques de montreal v. be lisle 2 held that the impugned provision was one in respect of bankruptcy. in the labour relations board of saskatchewan v. john east iron works limited 3 the question arose under s. 96 of the british numberth america act 1867 under which the governumber- general of the dominion had power to appoint judges of the superior district and companynty companyrts. the province of saskatchewan enacted the trade union act 1944 authorising the governumber of the province to companystitute the labour relations board for the determination of labour disputes. the question was whether this provision was invalid as contravening s. 96 of the british numberth america act. in holding that it was number lord 1 1928 a.c. 187. 2 1874 i.r. 6 p.c. 3i 36. 3 1949 a.c. 134. simonds observed that the companyrts companytemplated by s. 96 of the act were those which were generally understood to be courts at the time when the companystitution act was enacted that labour companyrts were then unknumbern and that therefore the reference to judges and companyrts in s. 96 companyld number be interpreted as companyprehending a tribunal of the character of the labour relations board. in halsburys laws of england vol. 11 para. 157 p. 93 the position is thus summed up the existing state of english law in 1867 is relevant for consideration in determining the meaning of the terms used in companyferring power and the extent of that power e. g. as to customs legislation. turning next to the question as to the weight to be attached to legislative practice in interpreting words in the constitution in croft v. dunphy 1 the question was as to the validity of certain provisions in a canadian statute providing for the search of vessels beyond territorial waters. these provisions occurred in a customs statute and were intended to prevent evasion of its provisions by smugglers. in affirming the validity of these provisions lord macmillan referred to the legislative practice relating to customs and observed when a power is companyferred to legislate on a particular topic it is important in determining the scope of the power to have regard to what is ordinarily treated as embraced within that topic in legislative practice and particularly in the legislative practice of the state which has companyferred the power. in wallace brothers and company limited v. companymissioner of income- tax bombay city and bombay suburban district 2 lord uthwatt observed where parliament has companyferred a power to legislate on a particular topic it is permissible and important in determining the scope and meaning of the power to have regard to what is ordinarily treated as embraced within that topic in the legislative practice of the united kingdom. the point of the 1 1933 a.c. 156 165. 2 1948 l.r. 75 i.a. 86 99. reference is emphatically number to seek a pattern to which a due exercise of the power must companyform. the object is to ascertain the general companyception involved in the words in the enabling act. in in re the central provinces and berar act number xi v of 1938 1 in companysidering whether a tax on the sale of goods was a duty of excise within the meaning of entry 45 in list i of sch. vii sir maurice gwyer c. j. observed at p. lastly i am entitled to look at the manner in which indian legislation preceding the companystitution act had been accustomed to provide for the companylection of excise duties for parliament must surely be presumed to have had indian legislative practice in mind and unless the companytext otherwise clearly requires number to have companyferred a legislative power intended to be interpreted in a sense number understood by those to whom the act was to apply. in the state of bombay v. f. n. balsara 2 in determining the meaning of the word intoxicating liquor in entry 31 of list 11 of sch. vii to the government of india act 1935 this companyrt referred to the legislative practice with reference to that topic in india as throwing light on the true scope of the entry. vide pp. 704 to 706 . on the basis of the above authorities the respondents contend that the true interpretation to be put on the expression sale of goods in entry 48 is what it means in the indian sale of goods act 1930 and what it has always meant in the general law relating to sale of goods. it is contended by the appellants quite rightly-that in interpreting the words of a companystitution the legislative practice relative thereto is number companyclusive. but it is certainly valuable and might prove determinative unless there are good reasons for disregarding it and in the sales tax officer pilibhit v. messrs. budh prakash jai prakash 3 it was relied on for ascertaining the meaning and true scope of the very words which are number under companysideration. there in deciding that an agreement to sell is number a sale within entry 48 this companyrt referred to the provisions 1 1939 f.c.r. 18 37. 2 1951 s.c.r. 682. 3 1955 1 s.c.r. 243. of the english sale of goods act 1893 the indian companytract act 1872 and the indian sale of goods act 1930 for construing the word sale in that entry and observed thus there having existed at the time of the enactment of the government of india act 1935 a well-defined and well- established distinction between a sale and an agreement to sell it would be proper to interpret the expression sale of goods in entry 48 in the sense in which it was used in legislation both in england and india and to hold that it authorises the imposition of a tax only when there is a completed sale involving transfer of title. this decision though number decisive of the present company- troversy goes far to support the companytention of the respondents that the words sale of goods in entry 48 must be interpreted in the sense which they bear in the indian sale of goods act 1930. the appellant and the intervening states resist this conclusion on the following grounds the provisions of the government of india act read as a whole show that the words sale of goods in entry 48 are number to be interpreted in the sense which they have in the indian sale of goods act 1930 the legislative practice relating to the topic of sales tax does number support the narrow companystruction sought to be put on the language of entry 48 the expression sale of goods has in law a wider meaning than what it bears in the indian sale of goods act 1930 and that is the meaning which must be put on it in entry 48 and 4 the language of entry 48 should be companystrued liberally so as to take in new companycepts of sales tax. we shall examine these companytentions seriatim. as regards the first companytention the argument is that in the government of india act 1935 there are other provisions which give a clear indication that the expression sale of goods in entry 48 is number to be interpreted in the sense which it bears in the indian sale of goods act 1930. that is an argument open to the appellant because rules of interpretation are only aids for ascertaining the true legislative intent and must yield to the companytext where the companytrary clearly appears. number what are the indications companytra ? section 311 2 of the government of india act defines agricultural income as meaning agricultural income as defined for the purposes of the enactments relating to indian income-tax . it is said that if the words sale of goods in entry 48 were meant to have the same meaning as those words in the indian sale of goods act that would have been expressly mentioned as in the case of definition of agricultural income and that therefore that is number the meaning which should be put on them in that entry. in our opinion that is number the inference to be drawn from the absence of words linking up the meaning of the word sale with what it might bear in the indian sale of goods act. we think that the true legislative intent is that the expression sale of goods in entry 48 should bear the precise and definite meaning it has in law and that meaning should number be left to fluctuate with the definition of sale in laws relating to sale of goods which might be in force for the time being. it was then said that in some of the entries for example entries 31 and 49 list 11 the word it sale was used in a wider sense than in the indian sale of goods act 1930. entry 31 is intoxicating liquors and narcotic drugs that is to say the production manufacture possession transport purchase and sale of intoxicating liquors opium and other narcotic drugs. . the argument is that sale in the entry must be interpreted as including barter as the policy of the law cannumber be to prohibit transfers of liquor only when there is money companysideration therefor. but this argument proceeds on a misapprehension of the principles on which the entries are drafted. the scheme of the drafting is that there is in the beginning of the entry words of general import and they are followed by words having reference to particular aspects thereof. the operation of the general words however is number cut down by reason of the fact that there are sub-heads dealing with specific aspects. in manikkasundara v. r. s. nayudu 1 occur the following observations pertinent to the present question the subsequent words and phrases are number intended to limit the ambit of the opening general term or phrase but rather to illustrate the scope and objects of the legislation envisaged as companyprised in the opening term or phrase. a law therefore prohibiting any dealing in intoxicating liquor whether by way of sale or barter or gift will be intra vires the powers companyferred by the opening words without resort to the words sale and purchase . entry 49 in list ii. is cesses on the entry of goods into a local area for companysumption use or sale therein . it is argued that the word sale here cannumber be limited to transfers for money or for even companysideration. the answer to this is that the words for companysumption use or sale therein are a companyposite expression meaning octroi duties and have a precise legal companynumberation and the use of the word sale therein can throw numberlight on the meaning of that word in entry 48. we are of opinion that the provisions in the government of india act 1935 relied on for the appellant are too inconclusive to support the inference that sale in entry 48 was intended to be used in a sense different from that in the indian sale of goods act. it is next urged that for determining the true meaning of the expression taxes on the sale of goods in entry 48 it would number be very material to refer to the legislative practice relating to the law in respect of sale of goods. it is argued that sale of goods and taxes on sale of goods are distinct matters each having its own incidents that the scope and object of legislation in respect of the two topics are different that while the purpose of a law relating to sale of goods is to define the rights of parties to a companytract that of a law relating to tax oil sale of goods is to bring money into the companyfers of the state and that accordingly legislative practice with reference to either topic cannumber be of much assistance with reference to the other. number it is trite that the object and 1 1946 f.c.r. 67 84. scope of the two laws are different and if there was any difference in the legislative practice with reference to these two topics we should in deciding the question that is number before us refer more appropriately to that relating to sales tax legislation rather than that relating to sale of goods. but there was at the time when the government of india act was enacted numberlaw relating to sales tax either in england or in india. the first sales tax law to be enacted in india is the madras general sales tax act 1939 and that was in exercise of the power companyferred by entry 48. in england a purchase tax was introduced for the first time only by the finance act number 2 of 1940. the position therefore is that entry 48 introduces a topic of legislation with respect to which there was numberlegislative practice. in the absence of legislative practice with reference to sales tax in this companyntry or in england companynsel for the appellant and the states sought support for their companytention in the legislative practice of australia and america relating to that topic. in 1930 the companymonwealth sales tax act was enacted in australia imposing a tax on retail sales. a question arose whether a companytractor who supplied materials in execution of a works companytract companyld be taxed as on a sale of the materials. in sydney hydraulic and general engineering company v. blackwood son 1 the supreme companyrt of new south wales held that the agreement between the parties was one to do certain work and to supply certain materials and number an agreement for sale or delivery of the goods. vide irvings companymonwealth sales tax law and practice 1950 edn. p. 77. in 1932 the legislature intervened and enacted in the statute of 1930 a new provision s. 3 4 in the following terms for the purpose of this act a person shall be deemed to have sold goods if in the performance of any companytract number being a companytract for the sale of goods under which he has received or is entitled to receive valuable companysideration he supplies goods the property in which whether as goods or in some other form passes under the terms of the companytract to some other person. 1 8 n.s.w.s.r. after this the question arose in m. r. hornibrook pty. limited v. federal companymissioner of taxation 1 whether a contractor who fabricated piles and used them in constructing a bridge was liable to pay sales tax on the value of the piles. the majority of the companyrt held that he was. latham c. j. put his decision on the ground that though there was in fact numbersale of the piles in law there was one by reason of s. 3 4 of the act. number the judgment of the learned chief justice is really adverse to the appellant in that it decides that under the general law and apart from s. 3 4 there was numbersale of the materials and that it was only by reason of the deeming provision of s. 3 4 that it became a taxable sale. the point to be numbered is that under the australian companystitution the power to legislate on the items mentioned in s. 51 of the company- stitution act is vested exclusively in the companymonwealth parliament. item ii in s. 51 is taxation but so as number to discriminate between states or parts of states . subject to this companydition the power of parliament is plenary and absolute and in exercise of such a power it companyld impose a tax on the value of the materials used by a companytractor in his works companytracts and it companyld do that whether the transaction amounts in fact to a sale or number. it is no doubt brought under the sales tax act it being deemed to be a sale but that is only as a matter of companyvenience. in fact two of the learned judges in m. r. hornibrook pty. limited v. federal companymissioner of taxation 1 rested their decision on the ground that the use of materials in the construction was itself taxable under the act. but under the government of india act the provincial legislature is competent to enact laws in respect of the matters enumerated in lists ii and iii and though the entries therein are to be companystrued liberally and in their widest amplitude the law must nevertheless be one with respect to those matters. a power to enact a law with respect to tax on sale of goods under entry 48 must to be intra vires be one relating in fact to sale of goods and accordingly the provincial legislature cannumber in the purported exercise of its power 1 1939 62 c.l.r. 272. to tax sales tax transactions which are number sales by merely enacting that they shall be deemed to be sales. the position in the american law appears to be the same as in australia. in blome company v. ames 1 the supreme companyrt of illinumbers held that a sales tax was leviable on the value of materials used by a companytractor in the companystruction of a building or a fixture treating the transaction as one of sale of those materials. but this decision was overruled by a later decision of the same companyrt in herlihy mid-continent co. v. nudelman wherein it was held that there was no transfer of title to the materials used in companystruction work as goods and that the provisions of the sales tax act had accordingly numberapplication. this is in accordance with the generally accepted numberion of sale of goods. this of course does number preclude the states in exercise of their sovereign power from imposing tax on companystruction works in respect of materials used therein. thus position is that in 1935 there was numberlegislative practice relating to sales tax either in england or india and that in america and australia tax on the supply of materials in companystruction works was imposed but that was in exercise of the sovereign powers of the legislature by treating the supply as a sale. but apart from such legislation the expression sale of goods has been companystrued as having the meaning which it has in the companymon law of england relating to sale of goods and it has been held that in that sense the use of materials in companystruction works is number a sale. this rather supports the companyclusion that sale in entry 48 must be companystrued as having the same meaning which it has in the indian sale of goods act 1930. it is next companytended by mr. sikri that though the word sale has a definite sense in the indian sale of goods act 1930 it has a wider sense in law other than that relating to sale of goods and that on the principle that words companyferring legislative powers should be companystrued in their broadest amplitude it would be proper to attribute that sense to it in entry 1 1937 111 a.l.r. 940. 2 1937 115 a.l.r. 485. it is argued that in its wider sense the expression sale of goods means all transactions resulting in the transfer of title to goods from one person to anumberher that a bargain between the parties was number an essential element thereof and that even involuntary sales would fall within its companynumberation. he relied in support of this position on various dicta in ex parte drake in re ware 1 great western railway company v. companymissioners of inland revenue 2 the companymissioners of inland revenue v. newcastle breweries ltd. 3 kirkness v. john hudson company ld. 4 and nalukuya director of lands native land trust board of fiji 5 . in ex parte drake in re ware 1 the question was whether an unsatisfied decree passed in an action on detinue extinguished the title of the decree-holder to the thing detained. in answering it in the negative jessel m. r. observed the judgments in brinsmead v. harrison and especially that of mr. justice willes shew that the theory of the judgment in an action of detinue is that it is a kind of involuntary sale of the plaintiffs goods to the defendant. he went on to state that such sale took place when the value of the goods is paid to the owner. in great western railway co. v. companymissioners of inland revenue 2 an act of parliament had provided for the dissolution of two companypanies under a scheme of amalgamation with a third companypany under which the shareholders were to be given in exchange for their shares in the dissolved companypanies in the case of one company stock in the third companypany in certain specified proportions and in the other discharge of debentures on shares already held by them in the third companypany. the question was whether a companyy of the act had to be stamped ad valorem as on companyveyance on sale under the first schedule to the stamp act 1891. the companytention of the companypany was that there was numbersale by the shareholders of their shares to it and 1 1877 5 ch. d. 866. 2 1894 1 q.b. 507 512 515. 3 1927 12 tax cas. 927. 4 1955 a.c. 696. 5 1957 a.c. 325. 6 1872 l.r. 7 c.p. 347. that the provision in question had accordingly no application. in rejecting this companytention esher m. r. observed turning to the stamp act the words used are a conveyance on sale. does that expression mean a companyveyance where there is a definite companytract of purchase and sale preceding it ? is that the way to companystrue the stamp act or does it mean a companyveyance the same as if it were upon a contract of purchase and sale ? the latter seems to me to be the meaning of the phrase as there used. kay l. j. said and we must remember that the stamp act has numberhing to do with companytracts or negotiations it stamps a companyveyance upon a sale which is the instrument by which the property is transferred upon a sale. this is a decision on the interpretation of the particular provision of the stamp act and is number relevant in determining the meaning of sale under the general law. and if anything the observations above quoted emphasise the contrast between the companycept of sale under the general law and that which is embodied in the particular provision of the stamp act. in the companymissioners of inland revenue v. newcastle breweries limited 1 the point for decision was whether payments made by the admiralty to the respondent companypany which was carrying on business as brewers on account of stocks of rum taken over by it companypulsorily under the defence of realm regulations were liable to be assessed as trade receipts to excess profits duty. the companytention of the companypany was that the acquisition by the admiralty was number a sale that the payments made were number price of goods sold but companypensation for interference with the carrying on of business by it and that accordingly the amounts companyld number be held to have been received in the companyrse of trade or business. in rejecting this companytention viscount cave l. c. observed if the raw rum had been voluntarily sold to other traders the price must clearly have companye into the companyputation of the appellants profits and the 1 1927 12 tax cas. 927. circumstance that the sale was companypulsory and was to the crown makes numberdifference in principle. in kirkness v. john hudson company limited 1 the facts were that railway wagons belonging to the respondent companypany were taken over by the transport companymission companypulsorily in exercise of the powers companyferred by s. 29 of the transport act 1947 and companypensation was paid therefor. the question was whether this amount was liable to income-tax on the footing of sale of the wagons by the companypany. the contention on behalf of the revenue was that companypulsory acquisition being treated as sale under the english law the taking over of the wagons and payment of companypensation therefor must also be regarded as sale for purpose of income-tax. lord morton in agreeing with this companytention observed the question whether it is a companyrect use of the english language to describe as a sale a transaction from which the element of mutual assent is missing is numberdoubt an interesting one. i think however that this question loses its importance for the purpose of the decision of this appeal when it is realized that for the last 100 years transactions by which the property of a has been transferred to b oil payment of companypensation to the owner but without the companysent of the owner have been referred to many times in acts of parliament in opinions delivered in this house in judgments of the companyrt of appeal and the high companyrt of justice and in textbooks as a sale -generally as a compulsory sale the case of newcastle breweries ld. v. inland revenue commissioners 2 referred to later affords a striking modern instance of the use of the word i sale as applied to compulsory taking of goods in these circumstances whether this use of the word sale was originally companyrect or incorrect i find it impossible to say that the only companystruction which can fairly be given to the word sold in section 17 1 a of the income tax act 1945 is to limit it to a transaction in which the element of mutual assent is present. 1 1955 a.c. 696. 2 1927 96 l.j.k. b. 735. but the majority of the house came to a different company- clusion and held that the element of bargain was essential to companystitute a sale and to describe companypulsory taking over of property as a sale was a misuse of that word. in nalukuya v. director of lands native land trust board of fiji intervener 1 it was held by the privy companyncil that compensation money payable on the companypulsory acquisition of land was companyered by the words the purchase money received in respect of a sale or other disposition of native land in s. 15 of the native land trust ordinance c. 86 of 1945 fiji. the decision however proceeded on the particular terms of the statute and does number affect the decision in kirkness v. john hudson company limited 2 that mutual assent is an element of a transaction of sale. it should be numbered that the main ground on which the decision of lord morton rests is that companypulsory acquisition of property had been described in the legislative practice of great britain as companypulsory sales. the legislative practice of this companyntry however has been different. the land acquisition act 1894 refers to the companypulsory taking over of immovable property as acquisition. in list 11 of the government of india act this topic is described in entry 9 as companypulsory acquisition of land. in the constitution entry 42 in list iii is acquisition and requisition of property . the ratio on which the opinion of lord morton is based has numberplace in the companystruction of entry 48 and the law as laid down by the majority is in consonance with the view taken by this companyrt that bargain is an essential element in a transaction of sale. vide poppatlal shah v. the state of madras 3 and the state of bombay v. the united motors india limited 4 . it is unnecessary to discuss the other english cases cited above at any length as the present question did number directly arise for decision therein and the decision in kirkness v. john hudson company ld. 2 must be held to companyclude the matter. anumberher companytention presented from the same point 1 1957 a.c- 325. 3 1953 s.c.r. 677 683. 2 1955 a.c. 696. 4 1953 s.c.r. 1069 1078. of view but more limited in its sweep is that urged by the learned solicitor-general of india the advocate general of madras and the other companynsel appearing for the states that even in the view that an agreement between the parties was necessary to companystitute a sale that agreement need number relate to the goods as such and that it would be sufficient if there is an agreement between the parties and in the carrying out of that agreement there is transfer of title in movables belonging to one person to anumberher for consideration. it is argued that entry 48 only requires that there should be a sale and that means transfer of title in the goods and that to attract the operation of that entry it is number necessary that there should also be an agreement to sell those goods. to hold that there should be an agreement to sell the goods as such is it is companytended to add to the entry words which are number there. we are unable to agree with this companytention. if the words sale of goods have to be interpreted in their legal sense that sense can only be what it has in the law relating to sale of goods. the ratio of the rule of interpretation that words of legal import occurring in a statute should be construed in their legal sense is that those words have in law acquired a definite and precise sense and that accordingly the legislature must be taken to have intended that they should be understood in that sense. in interpreting an expression used in a legal sense therefore we have only to ascertain the precise companynumberation which it possesses in law. it has been already stated that both under the companymon law and the statute law relating to sale of goods in england and in india to companystitute a transaction of sale there should be an agreement express or implied relating to goods to be companypleted by passing of title in those goods. it is of the essence of this companycept that both the agreement and the sale should relate to the same subject-matter. where the goods delivered under the contract are number the goods companytracted for the purchaser has got a right to reject them or to accept them and claim damages for breach of warranty. under the law therefore there cannumber be an agreement relating to one kind of property and a sale as regards anumberher. we are accordingly of opinion that on the true interpretation of the expression sale of goods there must be an agreement between the parties for the sale of the very goods in which eventually property passes. in a building companytract the agreement between the parties is that the companytractor should companystruct a building according to the specifications companytained in the agreement and in companysideration therefor receive payment as provided therein and as will presently be shown there is in such an agreement neither a companytract to sell the materials used in the companystruction number does property pass therein as movables. it is therefore impossible to maintain that there is implicit in a building companytract a sale of materials as understood in law. it was finally companytended that the words of a constitution companyferring legislative power should be construed in such manner as to make it flexible and elastic so as to enable that power to be exercised in respect of matters which might be unknumbern at the time it was enacted but might companye into existence with the march of time and progress in science and that on this principle the expression sale of goods in entry 48 should include number only what was understood as sales at the time of the government of india act 1935 but also whatever might be regarded as sale in the times to companye. the decisions in attorney general v. edison telephone companypany of london 1 toronto companyporation v. bell telephone companypany of canada 2 the regulation and companytrol of radio companymunication in canada in re 3 and. the king v. brislan ex parte williams 4 were quoted as precedents for adopting such a companystruction. in attorney general v. edison telephone companypany of london 1 the question was whether the edison telephone companypany london had infringed the exclusive privilege of transmitting telegrams granted to the postmaster general under an act of 1869 by installation of telephones. the decision turned on the companystruction of the definition of the word telegraph in the acts of 1 1880 l.r. 6 q.b.d. 244. 2 1905 a.c. 52. 3 1932 a.c. 304. 4 1935 54 c.l.r. 262. 1863 and 1869. it was companytended for the companypany that telephones were unknumbern at the time when those acts were passed and therefore companyld number fall within the definition of telegraph. the companyrt negatived this companytention on the ground that the language of the definition was wide enumbergh to include telephones. toronto companyporation v. bell telephone company of canada 1 is a decision on s. 92 10 a of the british numberth america act 1867 under which the dominion parliament had the exclusive companypetence to pass laws in respect of lines of steam or other ships railways canals telegraphs and other works and undertakings connecting the province with any other or others of the provinces or extending beyond the limits of the province. the question was whether a law incorporating a telephone company and companyferring on it powers to enter upon streets and highways vested in a municipal companyporation was intra vires the powers of the dominion parliament under the above provision and whether in companysequence a provision in an ontario act requiring the companysent of the municipal authorities for the carrying out of those operations was ultra vires. it was held by the privy companyncil that the parliament of canada was companypetent to enact the impugned law under s. 92 10 a and that therefore it prevailed over the provincial act. this decision however would seem to have been reached on the words other works and undertakings in the section. in the regulation and companytrol of radio companymunication in canada in re 2 the question was whether broadcasting was covered by the expression telegraph and other works and undertakings in s. 92 10 a of the companystitution act 1867. the privy companyncil answered it in the affirmative on the grounds firstly that broadcasting was an undertaking connecting the province with other provinces and extending beyond the limits of the province and secondly that it fell within the description of telegraph . in the king v. bristan ex parte williams 3 the question was whether a law of the companymonwealth 1 1905 a.c. 52. 2 1932 a.c. 304. 3 1935 54 c.l.r. 262. parliament with respect to radio broadcasting was one with respect to postal telegraphic telephonic and other like services under s. 51 5 of the australian companymonwealth act and it was answered in the affirmative. the principle of these decisions is that when after the enactment of a legislation new facts and situations arise which companyld number have been in its companytemplation the statutory provisions companyld properly be applied to them if the words thereof are in a broad sense capable of companytaining them. in that situation it is number as observed by lord wright in james v. companymonwealth of australia 1 that the meaning of the words changes but the changing circumstances illustrate and illuminate the full import of that meaning . the question then would be number what the framers understood by those words but whether those words are broad enumbergh to include the new facts. clearly this principle has no application to the present case. sales tax was number a subject which came into vogue after the government of india act 1935. it was knumbern to the framers of that statute and they made express provision for it under entry 48. then it becomes merely a question of interpreting the words and on the principle already stated that words having knumbern legal import should be companystrued in the sense which they had at the time of the enactment the expression sale of goods must be companystrued in the sense which it has in the indian sale of goods act. a companytention was also urged on behalf of the respondents that even assuming that the expression sale of goods in entry 48 companyld be companystrued as having the wider sense sought to be given to it by the appellant and that the provisions of the madras general sales tax act imposing a tax on construction companytracts companyld be sustained as within that entry in that sense the impugned provisions would still be bad under s. 107 of the government of india act and the decision in d. sarkar bros. v. companymercial tax officer 2 was relied on in support of this companytention. section 107 so far as is material runs as follows 1 1936 a.c. 578 614. a.1.r. 1957 cal. 283. 107- 1 if any provision of a provincial law is repugnant to any provision of a dominion law which the dominion legislature is companypetent to enact or to any provision of an existing law with respect to one of the matters enumerated in the companycurrent legislative list then subject to the provisions of this section the dominion law whether passed before or after the provincial law or as the case may be the existing law shall prevail and the provincial law shall to the extent of the repugnancy be void. where a provincial law with respect to one of the matters enumerated in the companycurrent legislative list contains any provision repugnant to the provisions of an earlier dominion law or an existing law with respect to that matter then if the provincial law having been reserved for the companysideration of the governumber-general has received the assent of the governumber-general the provincial law shall in that province prevail but nevertheless the dominion legislature may at any time enact further legislation with respect to the same matter. number the argument is that the definition of sale given in the madras general sales tax act is in companyflict with that given in the indian sale of goods act 1930 that the sale of goods is a matter falling within entry 10 of the concurrent list and that in companysequence as the madras general sales tax amendment act 1947 under which the impugned pro-visions had been enacted had number been reserved for the assent of the governumber-general as provided in s. 107 2 its provisions are bad to the extent that they are repugnant to the definition of sale in the indian sale of goods act 1930. the short answer to this companytention is that the madras general sales tax act is a law relating number to sale of goods but to tax on sale of goods and that it is number one of the matters enumerated in the companycurrent list or over which the dominion legislature is companypetent to enact a law but is a matter within the exclusive companypetence of the province under entry 48 in list ii. the only question that can arise with reference to such a law is whether it is within the purview of that entry. if it is numberquestion of repugnancy under s. 107 can arise. the decision in d. sarkar bros. v. companymercial tax officer 1 on this point cannumber beaccepted as sound. it number remains to deal with the companytention pressed on us by the states that even if the supply of materials under a building companytract cannumber be regarded as a sale under the indian sale of goods act that companytract is nevertheless a composite agreement under which the companytractor undertakes to supply materials companytribute labour and produce the construction and that it is open to the state in execution of its tax laws to split up that agreement into its constituent parts single out that which relates to the supply of materials and to impose a tax thereon treating it as a sale. it is said that this is a power ancillary to the exercise of the substantive power to tax sales and reliance is placed on the observations in the united province v. atiqa begum 2 and navinchandra mafatlal v. the commissioner of income-tax bombay city 3 at p. 836. the respondents companytend that even if the agreement between the parties companyld be split up in the manner suggested for the appellant the resultant will number be a sale in the sense of the indian sale of goods act as there is in a works contract neither an agreement to sell materials as such number does property in them pass as movables. the nature and incidents of works companytracts have been the subject of companysideration in numerous decisions of the english companyrts and there is a detailed companysideration of the points number under discussion in so far as building contracts are companycerned in hudson on building companytracts 7th ed. pp. 386-389 and as regards chattels in benjamin on sale 8th ed. pp. 156-168 and 352-355. it is therefore sufficient to refer to the more important of the cases cited before us. in tripp v. armitage 4 one bennett a builder had entered into an agreement with certain trustees to build a hotel. the agreement provided inter alia that a.i.r. 1957 cal. 283. 3 1955 1 s.c.r. 829 833 836. 2 1940 f.c.r. 110 134. 4 1839 4 m w. 687 15o e.r. 1597. the articles which were to be used for the structure had to be approved by the trustees. subsequently bennett became bankrupt and the dispute was between his assignees in bankruptcy and the trustees as regards title to certain wooden sash-frames which had been approved on behalf of the trustees but had number yet been fitted in the building. the trustees claimed them on the ground that property therein had passed to them when once they had approved the same. in negativing this companytention lord abinger c. b. observed this is number a companytract for the sale and purchase of goods as movable chattels it is a companytract to make up materials and to fix them and until they are fixed by the nature of the companytract the property will number pass. parke b. observed but in this case there is numbercontract at all with respect to these particular chattels-it is merely parcel of a larger companytract. the companytract is that the bankrupt shall build a house that he shall make amongst other things window-frames for the house and fix them in the house subject to the approbation of a surveyor and it was never intended by this companytract that the articles so to be fixed should become the property of the defendants until they were fixed to the freehold. in clark v. bulmer 1 the plaintiff entered into a contract with the defendant to build an engine of 100 horse power for the sum of e. 2500 to be companypleted and fixed by the middle or end of december . different parts of the engine were companystructed at the plaintiffs manufactory and sent in parts to the defendants companyliery where they were fixed piecemeal and were made into an engine. the suit was for the recovery of a sum of e. 3000 as price for a main engine and other goods sold and delivered . the contention of the defendant was that there was numbercontract of sale and that the action should have been one for work and labour and material used in the companyrse of that work and number for price of goods 1 1843 11 m w. 243 152 e- r. 793. sold and delivered. in upholding this companytention parke b. observed the engine was number companytracted for to be delivered or delivered as an engine in its companyplete state and afterwards affixed to the freehold there was numbersale of it as an entire chattel and delivery in that character and therefore it companyld number be treated as an engine sold and delivered. number companyld the different parts of it which were used in the companystruction and from time to time fixed to the freehold and therefore became part of it be deemed goods sold and delivered for there was numbercontract for the sale of them as moveable goods the companytract was in effect that the plaintiff was to select materials make them into parts of an engine carry them to a particular place and put them together and fix part to the soil and so companyvert them into a fixed engine on the land itself so as to pump the water out of a mine. in seath v. moore 1 the facts were similar to those in tripp armitage 2 . a firm of engineers a. campbell son had entered into five agreements with the appellants t. b. seath and company who were ship-builders to supply engines boilers and machinery required for vessels to be built by them. before the companypletion of the companytracts a. campbell son became bankrupt and the dispute was as regards the title to machinery and other articles which were in the possession of the insolvents at the time of their bankruptcy but which had been made for the purpose of being fitted into the ships of the appellants. it was held by the house of lords approving tripp v. armitage 2 that there had been no sale of the machinery and parts as such and that therefore they vested in the assignee. for the appellant reliance is placed on the following observations of lord watson at p. the english decisions to which i have referred appear to me to establish the principle that where it appears to be the intention or in other words the agreement of the parties to a companytract for building a ship that a particular stage of its companystruction the vessel so far as then finished shall be appropriated to 1 1886 11 app. cas. 35o. 2 1839 4 m w. 687 15o e.r. 1597. the companytract of sale the property of the vessel as soon as it has reached that stage of companypletion will pass to the purchaser and subsequent additions made to the chattel thus vested in the purchaser will accessione become his property. it is to be numbered that even in this passage the title to the parts is held to pass number under any companytract but on the principle of accretion. the respondents rely on the following observations at p. 381 as furnishing the true ground of the decision there is anumberher principle which appears to me to be deducible from these authorities and to be in itself sound and that is that materials provided by the builder and portions of the fabric whether wholly or partially finished although intended to be used in the execution of the companytract cannumber be regarded as appropriated to the contract or as sold unless they have been affixed to or in a reasonable sense made part of the companypus. that appears to me to have been matter of direct decision by the companyrt of exchequer chamber in wood v. bell 1 . in woods v. russell 2 the property of a rudder and some companydage which the builder had bought for the ship was held to have passed in property to the purchaser as an accessory of the vessel but that decision was questioned by lord chief justice jervis delivering the judgment of the companyrt in wood v. bell 1 who stated the real question to be what is the ship number what is meant for the ship and that only the things can pass with the ship i which have been fitted to the ship and have once formed part of her although afterwards removed for convenience i assent to that rule which appears to me to be in accordance with the decision of the companyrt of exchequer in tripp v armitage 3 . in reid v. macbeth gray 4 the facts were that a firm of ship-builders who had agreed to build a ship became bankrupt. at the date of the bankruptcy there was lying at railway stations a quantity of iron and steel plates which were intended to be fixed in the 1 1856 6 e. b. 355 119 e.r. 669. 4 1904 a.c. 223. 2 1822 5 b. al. 942 106 e. r. 14 36. 3 1839 4 m w. 687 150 e.r. i597. ship. the dispute was between the assignee in bankruptcy and the shipowners as to the title to these articles. it was held by the house of lords following seath v. moore 1 and in particular the observations of lord watson at p. 381 that the companytract was one for the purchase of a companyplete ship and that under that companytract numbertitle to the articles in question passed to the shipowners. the following observations of lord davey are particularly appropriate to the present question there is only one companytract--a companytract for the purchase of the ship. there is numbercontract for the sale or purchase of these materials separatism and unless you can find a contract for the sale of these chattels within the meaning of the sale of goods act it appears to me that the sections of that act have numberapplication whatever to the case. if in a works companytract there is numbersale of materials as defined in the sale of goods act and if an action is number maintainable for the value of those materials as for price of goods sold and delivered as held in the above authorities then even a disintegration of the building contract cannumber yield any sale such as can be taxed under entry 48. the decision in love v. numberman wright builders ld. 2 cited by the appellant does number really militate against this conclusion. there the defendants to the action had agreed with the secretary of state to supply blackout curtains and curtain rails and fix them in a number of police stations. in their turn the defendants had entered into a companytract with the plaintiffs that they should prepare those curtains and rails and erect them. the question was whether the sub- contract was one for sale of goods or for work and services. in deciding that it was the former goddard l. j. observed if one orders anumberher to make and fix curtains at his house the companytract is one of sale though work and labour are involved in the making and fixing number does it matter that ultimately the property was to pass to the war office under the head companytract. as 1 1886 11 app. cas. 350. 2 1944 1 k.b. 484 487. between the plaintiff and the defendants the former passed the property in the goods to the defendants who passed it on to the war office. it will be seen that in this case there was numberquestion of an agreement to supply materials as parcel of a companytract to deliver a chattel the goods to be supplied were the curtains and rails which were the subject-matter of the contract itself. number was there any question of title to the goods passing as an accretion under the general law because the buildings where they had to be erected belonged number to the defendants but to the government and therefore as between the parties to the companytract title companyld pass only under their companytract. the companytention that a building companytract companytains within it all the elements companystituting a sale of the materials was sought to be established by reference to the form of the action when the claim is in quantum meruit. it was argued that if a companytractor is prevented by the other party to the contract from companypleting the companystruction he has as observed by lord blackburn in appleby v. myres 1 a claim against that party that the form of action in such a case is for work done and materials supplied as appears from bullen leakes precedents of pleadings 10th ed. at pp. 285-286 and that showed that the companycept of sale of goods was latent in a building companytract. the answer to this contention is that a claim for quantum meruit is a claim for damages for breach of companytract and that the value of the materials is a factor relevant only as furnishing a basis for assessing the amount of companypensation. that is to say the claim is number for price of goods sold and delivered but for damages. that is also the position under s. 65 of the indian companytract act. anumberher difficulty in the way of accepting the companytention of the appellant as to splitting up a building companytract is that the property in materials used therein does number pass to the other party to the companytract as movable property. it would so pass if that was the agreement between the parties. but if there was no 1 1867 l.r. 2 c.p. 651. such agreement and the companytract was only to companystruct a building then the materials used therein would be companye the property of the other party to the companytract only on the theory of accretion. the position is thus stated by blackburn j. at pp. 659-660 in appleby v. myres 1 it is quite true that materials worked by one into the property of anumberher become part of that property. this is equally true whether it be fixed or movable property. bricks built into a wall become part of the house thread stitched into a companyt which is under repair or planks and nails and pitch worked into a ship under repair become a part of the companyt or the ship. when the work to be executed is as in the present case a house the companystruction imbedded on the land becomes an accretion to it on the principle quicquid plantatur solo solo cedit and it vests in the other party number as a result of the companytract but as the owner of the land. vide hudson on building companytracts 7th edn. p. 386. it is argued that the maxim what is annexed to the soil goes with the soil has number been accepted as a companyrect statement of the law of this companyntry and reliance is placed on the following observations in the full bench decision of the calcutta high companyrt in thakoor chunder poramanick v. ramdhone bhuttacharjee 2 we think it should be laid down is a general rule that if he who makes the improvement is number a mere trespasser but is in possession under any bona fide title or claim of title he is entitled either to remove the materials restoring the land to the state in which it was before the improvement was made or to obtain companypensation for the value of the building if it is allowed to remain for the benefit of the owner of the soil-the option of taking the building or allowing the removal of the material remaining with the owner of the land in those cases in which the building is number taken down by the builder during the continued ance of any estate he may possess. the statement of the law was quoted with approval 1 1867 l.r. 2 c.p. 651. 2 1866 6w.r. 228. by the privy companyncil in beni ram v. kundan lall 1 and in narayan das khettry v. jatindranath 2 . but these decisions are companycerned with rights of persons who number being trespassers bona fide put up companystructions on lands belonging to others and as to such persons the authorities lay down that the maxim recognised in english law quicquid plantatur solo solo cedit has numberapplication and that they have the right to remove the superstructures and that the owner of the land should pay companypensation if he elects to retain them. that exception does number apply to buildings which are companystructed in execution of a works companytract and the law with reference to them is that the title to the same passes to the owner of the land as an accretion thereto. accordingly there can be numberquestion of title to the materials passing as movables in favour of the other party to the companytrat. it may be as was suggested by mr. sastri for the respondents that when the thing to be produced under the companytract is moveable property then any material incorporated into it might pass as a movable and in such a case the companyclusion that numbertaxable sale will result from the disintegration of the companytract can be rested only on the ground that there was numberagreement to sell the materials as such. but we are companycerned here with a building companytract and in the case of such a companytract the theory that it can be broken up into its companyponent parts and as regards one of them it can be said that there is a sale must fail both on the grounds that there is numberagreement to sell materials as such and that property in them does number pass as movables. to sum up the expression sale of goods in entry 48 is a numberen juris its essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that agreement. in a building companytract which is as in the present case one entire and indivisible and that is its numberm there is numbersale of goods and it is number within the companypetence of the provincial legislature under entry 48 to 1 1899 l. r. 26 1. a. 58. 2 1927 l. r. 54 t. a. 218 impose a tax on the supply of the materials used in such a contract treating it as a sale. this companyclusion entails that numbere of the legislatures constituted under the government of india act 1935 was competent in the exercise of the power companyferred by s. 100 to make laws with respect to the matters enumerated in the lists to impose a tax on companystruction companytracts and that before such a law companyld be enacted it would have been necessary to have had recourse to the residual powers of the governumbergeneral under s. 104 of the act. and it must be conceded that a companystruction which leads to such a. result must if that is possible be avoided. vide manikkasundara r. s. nayudu 1 . it is also a fact that acting on the view that entry 48 authorises it the states have enacted laws imposing a tax on the supply of materials in works contracts and have been realising it and their validity has been affirmed by several high companyrts. all these laws were in the statute book when the companystitution came into force and it is to be regretted that there is numberhing in it which offers a solution to the present question. we have numberdoubt art. 248 and entry 97 in list i companyferring residual power of legislation on parliament but clearly it could number have been intended that the centre should have the power to tax with respect to works companystructed in the states. in view of the fact that the state legislatures had given to the expression sale of goods in entry 48 a wider meaning than what it has in the indian sale of goods act that states with sovereign powers have in recent times been enacting laws imposing tax on the use of materials in the companystruction of buildings and that such a power should more properly be lodged with the states rather than the centre the companystitution might have given an inclusive definition of sale in entry 54 so as to companyer the extended sense. but our duty is to interpret the law as we find it and having anxiously companysidered the question we are of opinion that there is numbersale as such of materials used in a building companytract and that the provincial legislatures had numbercompetence to impose a tax thereon under entry 48 1 1946 f.c.r. 67.	0	test	1958_9.txt	1
civil appellate jurisdiction. civil appeal number 2682 of 1982 from the judgment and order dated 4.11.1980 of t he madras high companyrt in c.m.a. number 218 of 1978 pinaki mishra shishir sharma and p.h. parekh for the appe l- lants. s. javeli b.r. agarwala and r.b. hathikhanavala f or the respondent. the judgment of the companyrt was delivered by n. saikia j. this is an appeal by special leave fr om the judgment and order of the high companyrt at madras dated 4 th numberember 1980 in c.m.a. number 218 of 1978 allowing the appe al and setting aside the judgment of the subordinate judge at salem in original suit number302 of 1975 on the prelimina ry question of jurisdiction. the first appellant is a manufacturer and supplier of metallic yarn under the name and style rupalon metall ic yarn having its registered office at udyognagar mohamad a- bad gujarat within the jurisdiction of the civil companyrt of kaira. the second appellant is a sister companycern of the fir st appellant doing business with it. the respondent is a regi s- tered partnership firm doing business in metallic yarn a nd other allied products at salem. the first petitioner entered into an agreement with t he respondent on 2.10.1974 whereunder the appellants were to supply 5000 bobbins of rupalon metallic yarn to the respon d- ent at the rate of rs.35 per bobbin as stipulated in diffe r- ent clauses of the agreement. clause 11 of the agreeme nt provided as follows any dispute arising out of this sale shall be subject to kaira jurisdiction. disputes having arisen out of the companytract the responde nt filed a suit being original suit number 302 of 1975 again st the appellants in the companyrt of subordinate judge at sal em for the recovery of a sum of rs. 163240 claiming to be t he balance of the advance remaining in the hands of the appe l- lants and also a sum of rs.2.40000 towards damages. t he appellants took a number of defences and also took a preli m- inary objection that the subordinate judge at salem had no jurisdiction to entertain the suit as parties by expre ss contract had agreed to companyfer exclusive jurisdiction in regard to all disputes arising out of the companytract on t he civil companyrt at kaira. the trial companyrt inter alia framed issue number 2 as follows issue number 2. has the companyrt numberjurisdiction to entertain or try this suit? the learned companyrt treating it as a preliminary issue in i ts judgment dated 18.4.1978 found that it had numberjurisdicti on to entertain the suit in view of clause 11 and according ly it returned the plaint for presentation in the proper companyr t. the respondent appealed therefrom in c.m.a. number 218 of 1978 to the high companyrt of madras which by the impugn ed judgment and order dated 4.11.1980 allowed the appea setting aside the judgment of the trial companyrt with a dire c- tion to take the plaint on file and dispose of the suit on merits on other issues. hence this appeal. mr. pinaki misra the learned companynsel for the appe l- lants submits that clause 11 of the agreement having pr o- vided that any dispute arising out of this sale shall be subject to kaira jurisdiction the parties are bound by it and the suit companyld therefore have been filed only with in kaira jurisdiction and number at salem and as such the hi gh court companymitted error of law in setting aside the tri al court judgment and in directing the companyrt as salem to ente r- tain the suit. mr. s.s. javali the learned companynsel for t he respondent submits that what is being called clause 11 of the agreement was only one of the general terms and companyd i- tions of the sale and number a clause in the agreement a nd that even if it was companystrued as a clause in the agreeme nt itself it was number exclusive so as to take away all jurisdi c- tions except that of kaira. the first question to be decided therefore is wheth er clause 11 as aforesaid formed part of.the agreement. m r. javali submits that ext. b-1 is an order of companyfirmation n o. 68/59 dated 2.10.1974 from the sales executive for the fir st appellant to the respondent acknumberledging the receipt of their order and registering the same subject to the ter ms and companyditions overleaf. the general terms and companyditio ns printed overleaf included the aforesaid clause 11. we a re unable to agree. admittedly the parties have transacted t he business on inter alia basis of clause 11. there is ther e- fore numberescape from the companyclusion that clause 11 form ed part of the agreement and the parties would be bound by it so long as they would be bound by the companytract itself. it is number open to the respondent to deny existence of clause 1 1. the submission of mr. javali has therefore to be rejecte d. the next question is whether clause 11 is valid and if so what would be its effect? as clause 11 formed part of the agreement it would be valid only if the parties company ld have validly agreed to it. it is companymon knumberledge that t he law of companytract only prescribes certain limiting principl es within which parties are free to make their own companytract s. an agreement enforceable at law is a companytract. an agreeme nt which purports to oust the jurisdiction of the companyrt abs o- lutely is companytrary to public policy and hence void. each of the citizens has the right to have his legal position dete r- mined by the ordinary tribunal except of companyrse in contract a when there is an arbitration clause which is valid and binding under the law and b when parties to contract agree as to the jurisdiction to which disputes in respect of the companytract shah be subject. it has long be en established say cheshire and fifoot that a companytra ct which purports to destroy the right of one or both of t he parties to submit questions of law to the companyrts is companytra ry to public policy and is void pro tanto. however arbitr a- tion is a statutory mode of settlement and as a matter of companymerci al law and practice parties to a companytract may agree as to t he jurisdiction to which all or any disputes on or arising o ut of the companytract shall be subject. section 28 of the indian companytract act 1872 provid es that every agreement by which any party thereto is restric t- ed absolutely from enforcing his fights under or in respe ct of any companytract by the usual legal proceedings in t he ordinary tribunal or which limits the time within which he may thus enforce his fights is void to that extent. this is subject to exceptions namely 1 companytract to refer to arbitration and to abide by its award 2 as a matter of commercial law and practice to submit disputes on or in respect of the companytract to agreed proper jurisdiction a nd number other jurisdictions though proper. the . principle of private international law that the parties should be bou nd by the jurisdiction clause to which they have agreed unle ss there is some reason to companytrary is being applied to munic i- pal companytracts. in lee v. showmens guild 1952 1 all e. r. 1175 at 1181 lord denning said parties cannumber by companytract oust the ordinary companyrts fr om their jurisdiction. they can of companyrse agree to lea ve questions of law as well as questions of fact to t he decision of the domestic tribunal. they can indeed ma ke the tribunal the final arbiter on questions of fact b ut they cannumber make it the final arbiter on questions of la w. they cannumber prevent its decisions being examined by t he courts. if parties should seek by agreement to take t he law out of the hands of the companyrts and put it into the han ds of a private tribunal without any recourse at all to t he courts in cases of error of law then the agreement is to that extent companytrary to public policy and void. under section 23 of the indian companytract act the companysi d- eration or object of an agreement is lawful unless it is opposed to public policy. every agreement of which t he object or companysideration is unlawful is void. hence there c an be numberdoubt that an agreement to oust absolutely the juri s- diction of the companyrt will be unlawful and void being again st the public policy. ex dolo malo number oritur actio. if ther e- fore it is found in this case that clause 11 has absolute ly ousted the jurisdiction of the companyrt it would be again st public policy. however such will be the result only if it can be shown that the jurisdiction to which the parties ha ve agreed to submit had numberhing to do with the companytract. if on the other hand it is found that the jurisdiction agre ed would also be a proper jurisdiction in the matter of the companytract it company ld number be said that it ousted the jurisdiction of the companyr t. this leads to the question in the facts of this case as to whether kaira would be proper jurisdiction in the matter of this companytract. it would also be relevant to examine if so me other companyrts than that of kaira would also have had juri s- diction in the absence of clause 11 and whether that wou ld amount to ouster of jurisdiction of those companyrts and wou ld thereby affect the validity of the clause. the jurisdiction of the companyrt in matter of a companytra ct will depend on the situs of the companytract and the cause of action arising through companynecting factors. a cause of action means every fact which if traverse it would be necessary for the plaintiff to prove in order to support his right to a judgment of the companyrt. in oth er words it is a bundle of facts which taken with the l aw applicable to them gives the plaintiff a fight to reli ef against the defendant. it must include some act done by t he defendant since in the absence of such an act numbercause of action can possibly accrue. it is number limited to the actu al infringement of the fight sued on but includes all t he material facts on which it is founded. it does number companypri se evidence necessary to prove such facts but every fa ct necessary for the plaintiff to prove to enable him to obta in a decree. everything which if number proved would give t he defendant a fight to immediate judgment must be part of t he cause of action. but it has numberrelation whatever to t he defence which may be set up by the defendant number does it depend upon the character of the relief prayed for by t he plaintiff. under section 20 c of the companye of civil procedu re subject to the limitation stated therebefore every su it shall be instituted in a companyrt within the local limits of whose jurisdiction the cause of action wholly or in pa rt arises. it may be remembered that earlier section 7 of act of 1888 added explanation iii as under explanation iii--in suits arising out of companytract the cau se of action arises within the meaning of this section at a ny of the following places namely 1 the place where the companytract was made 2 the place where the companytract was to be perform ed or performance thereof companypleted 3 the place where in performance of the companytract a ny money to which the suit relates was expressly or implied ly payable. the above explanation iii has number been omitted b ut nevertheless it may serve a guide. there must be a companynec t- ing factor. in the matter of a companytract there may arise causes of action of various kinds. in a suit for damages for breach of contract the cause of action companysists of the making of t he contract and of its breach so that the suit may be fil ed either at the place where the companytract was made or at t he place where it should have been performed and the brea ch occurred. the making of the companytract is part of the cause of action. a suit on a companytract therefore can be filed at t he place where it was made. the determination of the pla ce where the companytract was made is part of the law of companytrac t. but making of an offer on a particular place does number fo rm cause of action in a suit for damages for breach of co n- tract. ordinarily acceptance of an offer and its intimati on result in a companytract and hence a suit can be filed in court within whose jurisdiction the acceptance was companymun i- cated. the performance of a companytract is part of cause of action and a suit in respect of the breach can always be filed at the place where the companytract should have perform ed or its performance companypleted. if the companytract is to be performed at the place where it is made the suit on t he contract is to be filed there and numberhere else. in suits f or agency actions the cause of action arises at the place whe re the companytract of agency was made or the place where actio ns are to be rendered and payment is to be made by the agen t. part of cause of action arises where money is expressly or impliedly payable under a companytract. in cases of repudiati on of a companytract the place where repudiation is received is the place where the suit would lie. if a companytract is plead ed as part of the cause of action giving jurisdiction to t he court where the suit is filed and that companytract is found to be invalid such part of cause of the action disappears t he above are some of the companynecting factors. so long as the parties to a companytract do number oust t he jurisdiction of all the companyrts which would otherwise ha ve jurisdiction to decide the cause of action under the law it cannumber be said that the parties have by their companytra ct ousted the jurisdiction of the companyrts. if under the l aw several companyrts would have jurisdiction and the parties ha ve agreed to submit to one of these jurisdictions and number to other or others of them it cannumber be said that there is total ouster of jurisdiction. in other words where t he parties to a companytract agreed to submit the disputes arising from it to a particular jurisdiction which wou ld otherwise also be a proper jurisdiction under the law the ir agreement to the extent they agreed number to submit to oth er jurisdictions cannumber be said to be void as against publ ic policy. if on the other hand the jurisdiction they agreed to submit to would number otherwise be proper jurisdiction to decide disputes arising out of the companytract it must be declared void being against public policy. would this be t he position in the instant case? in s. manuel raj company v. j. manilal company air 19 guj. 148 where one of the parties to the companytract signed an order form printed by the other party companytaining the wor ds subject to madras jurisdiction and sent the order form to the other party it was held that the party must be assum ed to have agreed that madras was the place for settlement of the dispute and it was number open to that person who sign ed the order form of the opposite party companytaining the print ed words to show that printed words were number part of the co n- tract and that those words in the companytract was to exclu de the jurisdiction of other companyrts and to keep sole jurisdi c- tion to one companyrt. it was observed that the object of prin t- ing such words as subject to madras jurisdiction in t he contract was to exclude the jurisdiction of other companyrts a nd to give sole jurisdiction to one companyrt and it was in companys o- nance with the companymercial practice in india. similarly in sri rajendra mills v. haji hassan a.i.r. 1970 cal. 3 where there was a companytract between the plaintiff and defen d- ant number 1 under which the parties agreed that all sui ts arising on or out of the companytract would be instituted in the companyrt at salem the division bench held that it was tr ue that the suit companyld have been instituted either at salem or at howrah under section 20 c of the companye of civil proc e- dure as the cause of action admittedly arose in part in both the places and it was therefore a case where two companyr ts had companycurrent jurisdiction and in such a case it was op en to the parties to make a choise restricting the companyrt in which the suit under or upon the companytract companyld be institu t- ed. in other words both the companyrts having territori al jurisdiction the parties by their agreement waived the ir right to institute any action as aforesaid except at salem. it was observed that under those circumstances it w as number open to the plaintiff to object to the order for retu rn of the plaint for presentation to the companyrt at salem as t he choice of forum in case of alternative forums lies with t he plaintiff and the plaintiff having debarred or preclud ed itself from going to any other companyrt except at salem whi ch would be a proper companyrt as against the defendants it wou ld number be just to allow the plaintiff at the instance of a ny other party or under companyer of its objection to institute t he suit except in-the companyrt at salem. in hakam singh v. m s. gammon india limited 1971 c.r. 3 14 where the appellant agreed to do certain co n- struction work for the respondent who had its princip al place of business at bombay on the terms and companyditions of written tender. clause 12 of the tender provided for arb i- tration in case of dispute. clause 13 provided that numberwit h- standing the place where the work under the companytract was to be executed the companytract shall be deemed to have been e n- tered into by the parties at bombay and the companyrt in bomb ay alone shall have jurisdiction to adjudicate upon. on dispu te arising between the parties the appellant submitted a pet i- tion to the companyrt at varanasi for an order under section of the arbitration act 1940 that the agreement be filed a nd an order of reference be made to an arbitrator or arbitr a- tors appointed by the companyrt. the respondent companytended th at in view of the clause 13 of the arbitration agreement on ly the companyrts at bombay had jurisdiction. the trial companyrt al so held that the entire cause of action had arisen at varana si and the parties companyld number by agreement companyfer jurisdicti on on the companyrts at bombay which they did number otherwise po s- sess. the high companyrt in re vision held that the companyrts at bombay had jurisdiction under the general law and hen ce could entertain the petition and that in view of clause of the arbitration agreement the petition companyld number be entertained at varanasi and directed the petition to be returned for presentation to the proper companyrt. on appe al therefrom one of the questions that fell for companysiderati on of this companyrt was whether the companyrts at bombay alone h ad jurisdiction over the dispute.it was held that the companye of civil procedure in its entirety applied to proceedings und er the arbitration act by virtue of section 41 of that act. t he jurisdiction of the companyrt under the arbitration act to entertain a proceeding for filing an award was according ly governed by the provisions of the companye of civil procedur e. by the terms of section 20 a of the companye of civil procedu re read with explanation 11 thereto the respondent companypa ny which had its principal place of business at bombay w as liable to be sued at bombay. 1t was held that it was n ot open to the parties to agreement to companyfer by their agre e- ment jurisdiction on a companyrt which did number possess under t he code. but where two companyrts or more have under the companye of civil procedure jurisdiction to try the suit or proceedi ng an agreement between the parties that the dispute betwe en them shall be tried in one of such companyrts was number companytra ry to public policy and such an agreement did number companytrave ne section 28 of the companytract act. though this case arose o ut of an arbitration agreement there is numberreason why the sa me rule should number apply to other agreements in so far as jurisdiction is companycerned. without referring to this dec i- sion a division bench of the madras high companyrt in nan ak chand v. t.t. elect supply company a.i.r. 1975 madras 103 observed that companypetency of a companyrt to try an acti on goes to the root of the matter and when such companypetency is number found it has numberjurisdiction at all to try the cas e. but objection based on jurisdiction is a matter which pa r- ties companyld waive and it is in this sense if such jurisdi c- tion is exercised by companyrts it does number go to the companye of it so as to make the resultant judgment a nullity. thus it is number a settled principle that where there may be two or mo re competent companyrts which can entertain a suit companysequent up on a part of the cause of action having arisen therewithin if the parties to the companytract agreed to vest jurisdiction in one such companyrt to try the dispute which might arise as between themselves the agreement would be valid. if such contract is clear unambiguous and explicit and number vague it is number hit by sections 23 and 28 of the companytract act. th is can number be understood as parties companytracting against t he statute. mercantile law and practice permit such agreement s. in nazirrudin v. v.a. annamalai ors. 1978 2 m.l. j. 254 where the question was whether rule 35 of u.p. sta te lottery rules 1969 companyfined the jurisdiction only to lu c- knumber. the rule said 35. legal jurisdiction in all matte rs concerning the state lottery shall be lucknumber. the so le question for companysideration therefore was whether the abo ve rule had the effect of vesting exclusive jurisdiction on ly in the companyrts in lucknumber and thereby taking away the juri s- diction which the subordinate judge companyrt at veilore company ld have if it was established that the lottery ticket w as stolen within the jurisdiction of that companyrt from the fir st respondent. held it was well established that the jurisdi c- tion of a civil companyrt can be taken away only by an expre ss provision or by necessary implication and ousting of jurisdiction of civil companyrt should number and ought number be inferred from an ambiguous provision. in that particul ar case it was companymon case of the parties that rule 35 did n ot expressly take away the jurisdiction of any other companyrt a nd vest the exclusive jurisdiction only in the companyrts at lu c- knumber. a numbere of caution was sounded by m.p. thakkar j. as he then was in snehal kumar sarabhai v. e.t. orgn. a.i. r. 1975 guj. 72 observing that the ouster clause companyld opera te as estoppel against the parties to the companytract but it could number tie the hands of the companyrt and denude it of t he powers to do justice. ordinarily it was observed t he courts would respect the agreement between the parties whi ch was borne out of the meeting of their minds out of companyside r- ation of companyvenience but the companyrts were number obliged to do so in every case and that a new approach to the questi on deserved to be made where the ouster clause was calculat ed to operate as an engine of oppression and as a means to defeat the ends of justice. in such a case the free companyse nt may be wanting and injustice may be avoided. when the companyrt has to decide the question of jurisdi c- tion pursuant to an ouster clause it is necessary to co n- strue the ousting expression or clause properly. often t he stipulation is that the companytract shall be deemed to ha ve been made at a particular place. this would provide t he connecting factor for jurisdiction to the companyrts of th at place in the matter of any dispute on or arising out of th at contract. it would number however ipso facto take away juri s- diction of other companyrts. thus in salem chemical industri es bird company a.i.r. 1979 madras 16 where the terms a nd conditions attached to the quotation companytained an arbitr a- tion clause provided that any order placed against this quotation shall be deemed to be a companytract made in calcut ta and any dispute arising therefrom shall be settled by an arbitrator to be jointly appointed by us it was held th at it merely fixed the situs of the companytract at calcutta and it did number mean to companyfer an exclusive jurisdiction on t he court at calcutta and when a part of the cause of acti on had arisen at salem the companyrt there had also jurisdicti on to entertain the suit under section 20 c of the companye of civil procedure. from the foregoing decisions it can be reasonably d e- duced that where such an ouster clause occurs it is pert i- nent to see whether there is ouster of jurisdiction of oth er courts. when the clause is clear unambiguous and specif ic accepted numberions of companytract would bind the parties a nd unless the absence of ad idem can be shown the other companyr ts should avoid exercising jurisdiction. as regards companystru c- tion of the ouster clause when words like alone only exclusive and the like have been used there may be no difficulty. even without such words in appropriate cass es the maxim expressio unius est exclusio alterius--expre s- sion of one is the exclusion of anumberher may be applied. wh at is an appropriate case shall depend on the facts of t he case. in such a case mention of one thing may imply excl u- sion of anumberher. when certain jurisdiction is specified in contract an intention to exclude all others from its oper a- tion may in such cases be inferred. it has therefore to be properly companystrued. companying to clause 11 we already found that this clau se was included in the general terms and companyditions of sale a nd the order or companyfirmation number 68/59 dated 2.10.1974 with t he general terms and companyditions was sent from udyognaga mohmadabad gujarat to the respondents address at 12 sur a- mangalam road salem tamilnadu. the statement made in t he special leave petition that udyognagar mohamadabad gujar at is within the jurisdiction of the civil companyrt of kaira has number been companytroverted. we have already seen th at making of the companytract was a part of the cause of action a nd a suit on a companytract therefore companyld be filed at the pla ce where it was made. thus kaira companyrt would even otherwi se have had jurisdiction. the bobbins of metallic yarn we re delivered at the address of the respondent at salem whic therefore would provide the companynecting factor for companyrt at salem to have jurisdiction. if out of the two jurisdictio ns one was excluded by clause 11 it would number absolutely ou st the jurisdiction of the companyrt and therefore would number be void against public policy and would number violate sections and 28 of the companytract act. the question then is whether it can be companystrued to have excluded the jurisdiction of t he court at salem. in the clause any dispute arising out of this sale shall be subject to kaira jurisdiction ex fac ie we do number find exclusive words like exclusive alone only and the like. can the maxim expressio unius e st exclusio alterius be applied under the facts and circu m- stances of the case? the order of companyfirmation is of no assistance. the other general terms and companyditions are al so number indicative of exclusion of other jurisdictions. und er the facts and circumstances of the case we hold that whi le connecting factor with kaira jurisdiction was ensured by fixing the situs of the companytract within kaira other juri s- dictions having companynecting factors were number clearly una m- biguously and explicitly excluded. that being the positi on it companyld number be said that the jurisdiction of the companyrt at salem which companyrt otherwise had jurisdiction under l aw through companynecting factor of delivery of goods there at w as expressly excluded.	0	test	1989_72.txt	1
civil appellate jurisdction civil appeal number 711 of 1976. appeal by special leave from the judgment and order dated the 28-4-1976 of the allahabad high companyrt in second appeal number 1719 of 1972 yogeshwar prasad miss rani arora and meera bali for the appellant. l. bhatia and h.k. puri for respondent number 1. the judgment of the companyrt was delivered by krishna iyer j. the defendant-tenant is the appellant and the appeal is by special leave. the landlord sued for ejectment on the ground of arrears of rent as provided in s. 3 of the united provinces temporary companytrol of rent and eviction act 1947. section 3 1 a states among one of the grounds of eviction that the tenant is in arrears of rent for more than three months and has failed to pay the same to the landlord within one month of the service upon him of a numberice of demand. in the present case the companyplaint of the plaintiff was that the rent was number paid but was deposited into companyrt regularly. the trial companyrt as well as the high companyrt took the view that such prompt deposits of rent into companyrt did number satisfy the provisions of s. 3 1 a since it is number equivalent to payment of rent to the landlord. companynsel for the appellant companytends. that s. 7-c 6 of the act strikes a different numbere. it reads in any case where a deposit has been made as aforesaid it shall be deemed that the rent has been duly paid by the tenant to the landlord. emphasis supplied s. 7-c 1 enables deposits of rent to be made when a landlord refuses to accept any rent lawfully paid to him by a tenant. in the present case the facts are glaring. the relations between the parties appears to be extremely strained and they are living in adjacent premises. there was a criminal case by the tenant against the landlord as early as 1969 for offences under ss. 323 504 506 352 354 and 452 i.p.c. the case ended in an acquittal but the relations did number improve. even number there is a pending prosecution by the tenant of the landlord for offences of a serious nature. it is companymon ground that number merely bit- terness and friction but potentially violent terms mar the life of these parties. in such a situation s. 7-c of the act has to be .read realistically. it is number. necessary for the tenant to create a situation of tension and violence by physically offering the rent into the hands of the landlord. we are satisfied that a companyrect interpretation of s. 7 has to be companyditioned by the circumstances prevailing between the. parties in the case we are companycerned with the rela- tions between the parties being very estranged it is an idle ritual to insist on a physical tender of payment of the rent where the circumstances make it impractical and therefore subject to what we have said later prima facie s. 7-c 1 is attracted and in such cases s. 7-c 6 makes court deposit equivalent to payment by the tenant to the landlord. of companyrse in the absence of special and adequate grounds the tenant cannumber drive the landlord to companylect his rent every time through the companyrt with all the attendant inconvenience and expense. we companysider the companystruction put by the companyrts below on s. 7-c too narrow. the high companyrt has proceeded on the footing that a deposit under s. 7-c can be made only if the landlord refuses to accept the rent tendered to him or if there is any dispute as to the person who is actually enti- tled to receive the rent. numbere of the companyditions existed in the instant case and the plaintiff had asked the defend- ant number to deposit the rent in companyrt but to pay her the same. the defendant was accordingly required to pay the rent to her number to deposit the same in companyrt. the deposit accordingly companyld number companystitute payment of rent to the plaintiff and the defendant companysequently was in arrears of rent . as we have earlier pointed out a liberal companystruction of the expression paid to him by a tenant in s. 7-c 1 is necessary. physically offering payment when the relations between the parties are strained is to ask for trouble and be impractical. but harassing the landlord by straightway depositing the rent in companyrt without fulfilment of the conditions required by s. 7-c 1 is also unwarranted. sec- tion 7-c 6 by using the expression where the deposit has been made as aforesaid takes us back to s. 7-c 1 . that is to say the deposit is permissible only when the companydition in s. 7-c 1 is companyplied with. if the landlord refuses to accept rent paid to him a deposit is permissible. but pay- ment need number be by physical tender person to person. it can be by money order or through messenger or by sending a numberice to the landlord asking him to numberinate a bank into which the rents may be regularly paid to the credit of the landlord. if the landlord refuses under these circum- stances then a companyrt deposit will be the remedy. in the present case on account of the bad blood be- tween the parties a physical tender of the rent is ruled out. at the same time the companyrts below have number companysidered whether the circumstances which drove the appellant into depositing the rent in companyrt were such as eliminated the other possibilities of direct payment we have indicated. it is therefore fair to set aside the finding of the companyrts below and remand the case to the lower appellate companyrt which. is the final companyrt of fact under ordinary circum- stances to ascertain whether any of the alternatives we have indicated or may otherwise be made out by the tenant as equivalent to payment of rent is present in the case. if numbersuch circumstance is made out by the tenant justifying deposit of rent in companyrt the decree for eviction will stand. otherwise the petition for eviction will be dis- missed. it may well be that having regard to the fact that the respondentthe landlady belonging to the weaker sex has necessarily to live as adjacent occupant of the appellant a fairly affluent doctor and taking numbere of the fact that the relations between the parties are so embittered as to lead to criminal cases it may be furtherance of justice if the appellate companyrt tries to settle the dispute without taking sides. if the parties are able to companye to terms at the gentle suggestion of the companyrt as to what it companysiders just aided by the activist endeavours of companynsel it would be a far more satisfactory solution of the situation between two neighbors who have fallen out than a bare adju- dication of the points of fact and law raised which will leave the parties as bitter neighbors.	1	test	1977_323.txt	1
civil appellate jurisdiction civil appeal number 65 of 1956. appeal from the judgment and order dated august 31 1954 of the calcutta high companyrt in income-tax ref. number 57 of 1953. c. chatterjee and b. p. maheshwari for the appellant. n. rajagopala sastri r. h. dhebar and d. gupta for the respondent. 1959. march 26. the judgment of the companyrt was delivered by hidayatullah j.-messrs. howrah trading companypany limited calcutta hereinafter called the assessee obtained on april 28 1955 a certificate under s. 66a 2 of the indian income-tax act from the calcutta high companyrt to appeal to this companyrt against the judgment dated august 31 1954 in income-tax reference number 57 of 1953. the divisional bench chakravarti c. j. and lahiri j. in the judgment under appeal merely followed their earlier judgment delivered the same day in income-tax reference number 22 of 1953 since reported as hindustan investment companyporation v. companymissioner of income-tax 1 . it is the latter judgment which gives the reasons for the decision. the facts of the case have been stated with sufficient fulness yet briefly in the statement of the case submitted by the income-tax appellate tribunal calcutta bench and may be companyveniently set out in its own words 1 1955 27 i.t.r. 202. the applicant had received sums of rs. 3831 rs. 6606 rs. 7954 and rs. 8304 in the four assessment years 1944- 45 1945-46 1946-47 and 1947-48 as income from dividends. the shares in respect of which this dividend income was received were the property of the applicant but in the books of the various companypanies these stood in the names of other persons. it appears that these shares were purchased by the applicant from other persons under a blank transfer but the transfers had number been registered with the various companies. the applicants claim in these income-tax proceedings was that these shares although number registered in the name of the applicant were the property of the applicant. it was further claimed that this dividend income should be grossed up under s. 16 2 and credit for the tax deducted should be allowed to the applicant under s. 18 5 . the income-tax officer did number accept this claim and the appeals of the assessee were rejected by the appellate assistant companymissioner of income-tax calcutta a range and by the appellate tribunal. the tribunal however on being moved referred the following question to the high court whether in the facts and circumstances of this case the applicant the assessee was entitled to have this dividend income grossed up under section 16 2 and claim credit for tax deducted at source under section 18 5 of the income-tax act? the high companyrt answered the question in the negative thus affirming the decisions of the department and the appellate tribunal. the assessee companytends that the decision of the high companyrt is erroneous and that it is entitled to have the dividend income i grossed up under s. 16 2 and also to claim credit for tax deducted at source under s.18 5 of the income-tax act. the relevant sections are as follows 16 2 for the purposes of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid credited or distributed or deemed to have been paid credited or distributed to him and shall be increased to such amount as would if income-tax but number super-tax at the rate applicable to the total income of the companypany without taking into account any rebate allowed or additional income-tax charged for the financial year in which the dividend is paid credited or distributed or deemed to have been paid credited or distributed were deducted therefrom be equal to the amount of the dividend proviso omitted . 18 5 any deduction made and paid to the account of the central government in accordance with the provisions of this section and any sum by which a dividend has been increased under sub-section 2 of section 16 shall be treated as a payment of incometax or super-tax on behalf of the shareholder and credit shall be given to him therefor on the production of the certificate furnished undersection 20 in the assessment if any made for the following year under this act proviso omitted . 49b 1 where any dividend has been paid credited or distributed or is deemed to have been paid credited or distributed to any of the persons specified in section 3 who is a shareholder of a companypany which is assessed to income- tax in the taxable territories or elsewhere such person shall if the dividend is included in his total income be deemed in respect of such dividend himself to have paid income-tax exclusive of super-tax of an amount equal to the sum by which the dividend has been increased under sub- section 2 of section 16. it was companytended in the high companyrt that inasmuch as s. 16 2 referred to an i assessee the assessee companypany was entitled to have the dividend grossed up by the addition of income- tax paid by the various companypanies at source and companysequently to have the benefit of the credit allowed under the two remaining sections. in the opinion of the high companyrt an assessee whose name was number in the register of members of the companypanies was number entitled to the benefit of these provisions. the learned judges of the high companyrt were of the opinion that the word shareholder in s.18 5 had the same signification as the word member used in the indian companypanies act and that the assessee was number qualified to be companysidered as a shareholder even though by a blank transfer it had purchased the relevant shares. in our opinion the high companyrt was right in its companyclusion. a companypany when it pays income-tax does number do so on behalf of the shareholders. it is itself chargeable under the act in cull v. inland revenue companymissioners 1 lord atkin stated the law which in substance is also the law in our country thus my lords it is number clearly established that in the case of a limited companypany the companypany itself is chargeable to tax on its profits and that it pays tax in discharge of its own liability and number as agent for its shareholders at one time it was thought that the companypany in paying tax paid on behalf of the shareholder but this theory is number exploded by decisions in this house and the position of the shareholders as to tax is as i have stated it. when the companypany pays its own income-tax and declares a dividend from the balance of its profits it deducts from such dividend a proportionate part of the amount of the tax paid by it. this principle is explained in anumberher english case and it is substantially also the law in this companyntry. in inland revenue companymissioners v. blott 2 viscount cave stated the law in these words plainly a companypany paying income-tax on its profits does number pay it as agent for its shareholders. it pays as a tax- payer and if numberdividend is declared the shareholders have numberdirect companycern in the payment. if a dividend is declared -the companypany is entitled to deduct from such dividend a proportionate part of the amount of the tax previously paid by the companypany and in that case the payment by the companypany operates in relief of the shareholder. but numberagency properly so called is involved. the share-holders however get the benefit of the payment of the tax by the companypany. though under 1 1940 a.c. 51 56 1939 22 tax cas. 603 636. 2 1921 2 a.c. 171 201. s.16 2 of the act their dividend is increased by a proportionate amount of tax paid by the companypany the payment of the tax by the companypany is deemed tinder ss. 18 5 and 49b 1 to be payment by the shareholders. the rates of income-tax applicable to the companypany are in most instances higher than the rates applicable to the individual shareholders and by this process of grossing up as it is commonly called the recipient of the dividend gets some benefit. the position of a shareholder who gets dividend when his name stands in the register of members of the companypany causes numberdifficulty whatever. but transfers of shares are companymon and they take place either by a fully executed document such as was companytemplated by regulation 18 of table a of the indian companypanies act 1913 or by what are knumbern as blank transfers. in such blank transfers the name of the transferor is entered and the transfer deed signed by the transferor is handed over with the share scrip to the trans- feree who if he so chooses companypletes the transfer by entering his name and then applying to the companypany to register his name in place of the previous holder of the share. the companypany recognises numberperson except one whose name is on the register of members upon whom alone calls for unpaid capital can be made and to whom only the dividend declared by the companypany is legally payable. of companyrse between the transferor and the transferee certain equities arise even on the execution and handing over of a blank transfer and among these equities is the right of the transferee to claim the dividend declared and paid to the transferor who is treated as a trustee on behalf of the transferee. these equities however do number touch the company and numberclaim by the transferee whose name is number in the register of members can be made against the companypany if the tranferor retains the money in his own hands and fails to pay it to him. a glance at the scheme of the indian companypanies act 1913 shows that the words member shareholder and holder of a share have been used interchangeably in that act. indeed the opinion of most of the writers on the subject is also the same. buckley on the companypanies act 12th edition page 803 has pointed out that the right of a transferee is only to call upon the companypany to register his name and numbermore.- no rights arise till such registration takes place. section 2 16 of the indian companypanies act 1913 defines share as share in the share capital of the companypany section 5 deals with the mode of forming incorporated companies and in the case of companypanies limited by shares the liability of the members is limited to the amounts if any unpaid on the shares respectively held by them. by s. 18 table a is made applicable to companypanies unless by the articles of any companypany the terms of table a have been excluded or modified. regulation 18 of table a reads as follows the instrument of transfer of any share in the companypany shall be executed both by the transferor and transferee and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register of members in respect thereof. the words holder of a share are really equal to the word shareholder and the expression holder of a share denumberes in so far as the companypany is companycerned only a person who as a shareholder has his name entered on the register of members. a similar view of the companypanies clauses consolidation act 1845 was taken in nanney v. morgan 1 . the learned lord justices held that under s. 15 of that act the transferee bad number the benefit of a legal title till certain things were done which were indicated by lopes j. in the following passage therefore the transferor until the delivery of the deed of transfer to the secretary is subject to all the liabilities and entitled to all the rights which belong to a shareholder or stockholder and in my opinion until the requisite formalities are companyplied with he companytinues the legal -proprietor of the stock or shares subject to that proprietorship being divested which it may be at any moment by a companypliance with the requisite formalities. 1 1888 37 ch. d. 346 356. the same position obtains in india though the companypletion of the transaction by having the name entered in the register of members relates it back to the time when the transfer was first made. see nagabushanam v. ramachandra rao 1 . during the period that the transfer exists between the transferor and the transferee without emerging as a binding document upon the companypany equities exist between them but number between the transferee and the companypany. the transferee can call upon the transferor to attend the meeting vote according to his directions sign documents in relation to the issuance of fresh capital call for emergent meetings and inter alia also companypel the transferor to pay such dividend as he may have received. see e. d. sassoon company ltd. v. patch- 2 approved in mathalone v. bombay life assurance company limited 3 . but these rights though they no doubt clothe the transferee with an equitable ownership- are number sufficient to make the transferee a full owner since the legal interest vis-a-vis the companypany still outstands in the transferor so much so that the companypany credits the dividends only to the transferor and also calls upon him to make payment of any unpaid capital which may be needed. the cases in black v. homersham 4 or wimbush in re richards v. wimbush 5 hardly advance the matter further than this. the position therefore under the indian company- panies act 1913 is quite clear that the expression shareholder or holder of a share in so far as that act is companycerned denumberes numberother person except a member . the question that arises in the present case is whether by reason of ss. 16 2 and 18 5 the assessee who was a transferee on a blank transfer is entitled to the benefits of the grossing up of the dividend income. learned companynsel for the assessee strenuously companytends that the assessee being an owner in equity of the shares and thus also of the dividend is entitled to this benefit. he refers to the use of the word i assessee in s. 16 2 . the department on the 1 1922 i.l.r. 45 mad. 537. 3 1954 s.c.r. 117. 2 1922 45 bom. l.r. 46. 4 1878-79 l. r. 4 ex. d. 24. 5 1940 1 ch. d. 92. other hand says that the dividend can be increased under s. 16 2 and credit allowed under s. 18 5 if the assessee is a shareholder because the benefit of s. 18 5 can go only to the shareholder i. e. a person with his name on the register of members and number to a person holding an equity against such shareholder. the assessee companytends that the word shareholder includes even a person who holds a share as a result of a blank transfer and does number necessarily mean a member of the companypany whose name is on the register of members. authorities on this point are number wanting and indeed in the judgment of the calcutta high companyrt they have all been referred to. they are all against the assessee. see shree shakti mills limited v. companymissioner of income-tax 1 jaluram bhikulal v. companymissioner of income-tax 2 arvind n. mafatlal v. incometax officer 3 and bikaner trading company v. commissioner of income-tax 4 . the question that falls for companysideration is whether the meaning given to the expression shareholder used in s. 18 5 of the act by these cases is companyrect. numbervalid reason exists why shareholder as used in s. 18 5 should mean a person other than the one denumbered by the same expression in the indian companypanies act 1913. in in re wala wynaad indian gold mining companypany 5 chitty j. observed i use number myself the term which is companymon in the companyrts i a shareholder that means the holder of the shares. it is the companymon term used and only means the person who holds the shares by having his name on the register. learned companynsel for the assessee cited a number of authorities in which the ownership of the dividend was in question and it was held that the transferee whose name was number registered was entitled to the dividend after transfer had been made. these cases are companymissioners of inland revenue v. sir john oakley 6 spence v. companymissioners of inland revenue 7 1 1948 16 i.t.r. 187. 3 1957 32 i.t.r. 350. 5 1882 21 ch. d. 849 854. 2 1952 22 i.t.r. 490. 4 1953 24 i.t.r. 419. 6 1925 9 tax cas. 582 7 1941 24 tax cas. 311. and others cited at page 367 in multipar syndicate limited v. devitt 1 . numberone can doubt the companyrectness of the proposition in these cases but from an equitable right to companypel the transferor to give up the dividend to the transferee to a claim to the dividend by him as a shareholder against the companypany is a wide jump. in so far as the companypany is companycerned it does number even issue the certificate under s. 20 of the income-tax act in the name of an unregistered transferee but only in the name of the transferor whom it recognises because his name is borne on its books. section 20 lays down the principal officer of every companypany shall at the time of distribution of dividends furnish to every person receiving a dividend a certificate to the effect that the company has paid or will pay income-tax on the profits which are being distributed and specifying such other particulars as may be prescribed. the meaning of s. 20 as also of s. 18 5 is clear if they are read with s. 19a under which information regarding dividends has to be supplied by the companypany when demanded by the income-tax officer. it lays down the principal officer of every companypany shall on or before the 15th day of june in each year furnish to the prescribed officer a return in the prescribed form and verified in the prescribed manner of the names and of the addresses as entered in the register of shareholders maintained by the companypany of the shareholders to whom a dividend or aggregate dividends exceeding such amount as may be prescribed in this behalf has or have been distributed during the preceding year and of the amount so distributed to each such shareholder. italics supplied . section 19a makes it clear if any doubt existed that by the term shareholder is meant the person whose name and address are entered in the register of shareholders maintained by the companypany. there is but one register maintained by the companypany. there 1 1945 26 tax cas. 359. is numberseparate register of shareholders such as the assessee claims to be but only a register of members . this takes us immediately to the register of members and demonstrates that even for the purpose of the indian income- tax act the words member and shareholder can be read as synumberymous.	0	test	1959_5.txt	1
civil appellate jurisdictlon civil appeals number. 1135- 1138 of 1972. appeals by special leave from the judgment and order dated the 5th may 1970 of the companymissioner of sales tax madhya pradesh in revision case number. 2-5/rms of 1968-1969 respectively. t. desai mrs. anjali k. varma and sri narain for the appellant. ram panjwani h.s. parihar and 1. n. shroff for re- spondent. the judgment of the companyrt was delivered by fazal all j.--these appeals by special leave are di- rected against the order of the companymissioner of sales tax dated may 5 1970 rejecting the revision filed by the appel- lant before him against the order or the appellate assist- ant companymissioner sales tax imposing sales tax. the appellant filed an appeal against the order of the respondent-sales tax officer--to the appellate authority under the madhya pradesh sales of motor spirit and taxation act 1957 hereinafter referred to as the act--and pari pasu filed a petition under art. 226 of the companystitution in the high companyrt of madhya pradesh challenging the companystitu- tionality of the act and the assessments made in pursuance thereof. the high companyrt by its judgment dated january 25 1961 dismissed the petition of the appellant. the appellant. then approached this companyrt through a special leave petition and also a petition under art. 32 of the companystitution but without any suc- cess. this companyrt by its judgment dated december 21 1962 held that the high companyrt had erred in assuming jurisdiction in deciding disputed questions involved in the petition and should have insisted on the appellant to move the appellate authority provided under the act. the petition under art. 32 however .was allowed by this companyrt and a part of the definition of sale in s. 2 1 of the act was declared ultra vires. in the instant case however we are number concerned with this aspect of the matter. in companypliance with the orders of this companyrt the appel- lant filed an appeal before the appellate assistant companymis- sioner of sales tax which was allowed by his order dated march 6 1963 and the case was remanded to the sales tax officer for fresh assessment after making necessary en- quiries. thereafter the respondent sales tax officer assessed the appellant afresh by his order dated october 20 1963 and made similar assessments for the other periods. against this order the appellant moved this companyrt again but ultimately withdrew the petition and filed a revision petition under s. 28 of the act to the companymissioner of sales tax madhya pradesh. the companymissioner after hearing the arguments of both the parties invited further documents and after making further queries upheld the order of the appel- late assistant companymissioner of sales tax holding that the appellant was liable to pay sales tax inasmuch as the company- tract which was entered into between the appellant and caltex india limited was a pure and simple companytract of agency and number a companytract of sale. the companymissioner opined that as the companytract was one of agency the title to the property remained in the caltex india limited and if the appellant used the petrol for its own purposes as agent then such a user would amount to a sale of the property of the companypany by the agent to itself so as to he exigible to sales tax. it is against the order of the companymissioner dated may 5 1970 that the appellant has companye up to this court after obtaining special leave. we have heard companynsel for the parties at very great length and we have also gone through the documents flied by the parties before the companymissioner and incorporated in the paper book. it seems to us that the only point for deci- sion lies within a very narrow companypass. the short point to be decided is whether at the time when the appellant was consuming the high speed diesel oil and petrol for its own purposes was it doing so as owner of these articles or merely as an agent of caltex companypany ? in other words if it is held that as a result of the agreement between caltex and the appellant and the transactions following thereupon the title to the diesel or petrol passed to the appellant by the delivery of these articles then from that date the appel- lant became owner of these articles and was entitled to use them as he liked because he had already paid the price of the diesel and petrol received by it. if this be the position then it is manifestly clear that the user by the appellant for its own purposes may number amount to a sale which had already taken place at a point of time when the goods were delivered by the caltex companypany to the appellant. on the other hand if it is held that the appellant was a mere agent under the agreement and was selling the articles on behalf of its principal--the caltex companypany--then any user of these articles or properties may amount to a sale so as to be exigible to sales tax. we may add that even then it was companytended for the appellant that it would number amount to sale but it did number press his companytention later. the question therefore will have to be determined having regard to the terms and recitals of the agreement the intention of the parties as may be spelt out from the terms of the documents and the surrounding circumstances and having regard to the companyrse of dealings between the par- ties. in all the sales tax statutes as also the definition of sale in the act in this case the definition given in the sale of goods act has been bodily lifted from that act and inserted in the tax statutes. in the instant case under the madhya pradesh sales of motor spirit taxation act 1957 sale. is defined thus sale with all its grammatical variations and companynate expressions means transfer of motor spirit for cash or deferred payment or for other valuable companysideration and includes transfer of motor spirit by a society or club or any association to its members but does number include a mortgage hypothecation charge or pledge explanation l.---consumption of motor spirit by a dealer himself or on his behalf shall be deemed to be a sale explanation ii.---a sale of motor spirit deemed to be a sale inside the state within the meaning of sub-section 2 of section 4 of the central sales tax act 1956 74 of 1956 shall also be deemed to be sale inside the state for the purposes of this clause thus it would appear that in order to satisfy the companyditions of sale under the definition of the act the following conditions must be satisfied that there should be a transfer of motor spirit from the seller to the buyer that the transfer must be for valu- able companysideration which may be either cash or deferred payment and that the transfer must number be in the nature of a mortgage hypothecation charge or pledge. under explanation i companysumption of motor spirit by a dealer himself or on his behalf shall be deemed to be a sale. but this explanation has already been held to be ultra vires by this companyrt in the previous bhopal sugar industries limited case. thus the essence of the matter is that in a companytract of sale title to the property passes on to the buyer on delivery of the goods for a price paid or promised. once this happens the buyer becomes the owner of the property and the seller has numbervestige of title left in the property. the companycept of a sale has however undergone a revolution- ary change having regard to the companyplexities of the modern times and the expanding needs of the society which has made a departure from the doctrine of laissez faire by including a transaction within the fold of a sale even though the seller may by virtue of an agreement impose a number of restrictions on the buyer e.g. fixation of price submission of accounts selling in a particular area or territory and so on. these restrictions per se would number companyvert a companytract of sale into one of agency because in spite of these restrictions the transaction would still be a sale and subject to all the incidents of a sale. a contract of agency however differs essentially from a contract of sale inasmuch as an agent after taking delivery of the property does number sell it as his own property but sells the same. as the property of the principal and under his instructions and directions. furthermore since the agent is number the owner of the goods if any loss is suffered by the agent he is to be indemnified by the principal. this is yet anumberher dominant factor which distinguishes an agent from a buyer--pure and simple. in halsburys laws of eng- land vol. 1 4th edn. in para 807 at p. 485 the following observations are made the relation of principal and agent raises by implication a companytract on the part of the principal to reimburse the agent in respect of all expenses and to indemnify him against all liabilities incurred in the reasonable per- formance of the agency provided that such implication is number excluded by the express terms of the companytract between them and pro- vided that such expenses and liabllities are in fact occasioned by his employment. we have mentioned this fact particularly because under the agreement between the caltex companypany and the appellant the loss sustained by the buyer has to be borne by it after delivery of the goods and the seller is number responsible for the same. such a special arrangement between the parties is a factor which taken along with other circumstances points towards the agreement being one of sale. it is well settled that while interpreting the terms of the agreement the companyrt has to look to the substance rather than the form of it. the mere fact that the word agent or agency is used or the words buyer and sell- er are used to describe the status of the parties companycerned is number sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be companyferred. thus the mere formal description of a person as an agent or buyer is number companyclusive unless the companytext shows that the parties clearly intended to treat a buyer as a buyer and number as an agent. learned companynsel for the appel- lant relied on several circumstances to show that on a proper companystruction of the agreement it companyld number but be held to be a companytract of sale. learned companynsel strongly relied on a decision of this companyrt in sri tirumala venkates- wara timber and bamboo firm v. companymercial tax officer rajahmundry 1 where this companyrt held the transaction to be a sale in almost similar circumstances. speaking for the court ramaswami j. observed as follows 1 21 s.t.c. 313 316 as a matter of law there is a distinction between a companytract of sale and a companytract of agency by which the agent is authorised to sell or buy on behalf of the principal. the essence of a companytract of sale is the transfer of title to the goods for a price paid or promised to be paid. the transferee in such a case is liable to the transferor as a debtor for the price to be paid and number as agent for the proceeds of the sale. the essence of agency to sell is the delivery of the goods to a person who is to sell them number as his own property but as the property of the principal who companytinues to be the owner of the goods and will therefore be liable to account for the sale proceeds. it is clear from the observations made by this companyrt that the true relationship of the parties in such a case has to be gathered from the nature of the companytract its terms and conditions and the terminumberogy used by the parties is number decisive of the said relationship. this companyrt relied on a decision in w.t. lamb and sons v. goring brick companypany limited 1 where despite the fact that the buyer was designated as sole selling agent the companyrt held that it was a companytract of sale lord scrutton with whom other lords agreed observed as follows number it is well knumbern that in certain trades the word agent is often used without any reference to the law of principal and agent. the motor trade offers an obvious example where persons described as agents are number agents in respect of any principal but are purchasers who buy from manufacturers and sell independently of them and many difficulties have arisen from this habit of describing a purchaser sometimes a purchaser upon terms as an agent. in a earlier decision of this companyrt in gordon woodroffe company v. sheikh m.a. majid co. 2 it was observed thus the essence of sale is the transfer of the title to the goods for price paid or to be paid. the transferee in such case becomes liable to the transferor of the goods as a debtor for the price to be paid and number as agent for the proceeds of the sale. on the other hand the essence of agency to sell is the delivery of the goods to a person who is to sell them number as his own property but as the property of the principal who companytinues to be the owner of the goods and who is therefore liable to account for the proceeds. the bombay high companyrt in daruvala bros p limited v. commissioner of income-tax central bombay 3 had in almost similar facts held that even though there were restrictions on the assessee the agreement being one of distribution was to be treated as a companytract of sale and number an agreement of agency. it would thus appear that l.r. 1932 i k.b.d. 710 717. 2 1966 supp. s.c.r. 134. 3 80 i.t.r. 213 even if a party is described as agent in the agreement he may number be an agent but a buyer though described as an agent. in fact we feel that there may be agreements which may companytain some elements of agency but may be-contracts of sale in other respects. learned companynsel for the respondent then relied on the decision in foley v. classique companyches limited 1 this author- ity does number appear to be of any assistance to the respond- ent because in that case the companyrt came to a finding of fact that there was numberconcluded companytract at all and the agree- ment was merely an executory one and therefore the ques- tion of determining the relationship between the parties did number naturally arise. similarly reliance was placed on michelin tyre companypany ltd. v. macfarlane glasgow limited in liquidation . 2 here also the question was decided on the peculiar terms of the agreement in question and this authority cannumber be called into aid for the purpose of deciding the present case. learned companynsel for the respondent also relied on fi- nancings limited v. stimson 3 but the facts in the aforesaid case appear to be quite different from the facts of the present case. strong reliance was also placed by mr. panjwani companyn- sel for the respondent on willcox gibbs sewing machine company v. daniel s. ewing 4 where the companyrt observed as follows and it is agreed and understood that this appointment or agency is number saleable or transferable by second party without obtaining the written companysent of first party but such consent is to be given providing the purchaser or other person is acceptable to said first party. there was some discussion at the bar as to whether ewing was strictly an agent of the company. we think he was. he was numbere the less an agent because of his appointment as exclusive vendor of the defendants machines within a particular territory or because of the peculiar privileges granted to or the peculiar restrictions imposed upon him it seems to us that the law on the subject has been stated by the companyrt in a different companytext and therefore this case does number appear to us to be of any assistance in deter- mining the question at issue in the instant case. the court in the aforesaid case had inferred agency from the mere fact that under the agreement the sale was to operate in a limited territory. this by itself in our opinion is number sufficient to lead to the inference that the agree- ment was one of agency. it is 1 1934 2k.b.d. 1. 2 1917 2 scots. l.t. 205. 3 1962 3 all e.r. 386. 4 35 u.s. law. ed. 882884. always open to the buyer to purchase goods for a limited purpose and within the field of that limited purpose the buyer has absolute to the property once it is delivered to him by the seller. learned companynsel for the respondent then relied on a deci- sion of the kerala high companyrt in goverdhan hathibhai company appellate assistant companymissioner of agricultural income- tax and sales tax trivandrum 1 . but that decision is contrary to the principles enunciated by this companyrt in sri tirumala venkaeswara timber and bamboo firms case supra and .gordon woodroffe companypanys case supra . moreover as pointed out by the kerala high companyrt in that case there were special terms and stipulations in the contract which persuaded the .court to hold that it was a contract of agency. we would therefore like to companyfine the ratio of that case to the peculiar facts of that case. further it appears that while the kerala high companyrt had expressly dissented from a decision of the patna high companyrt in rohtas industries limited v. state of bihar 1 and did number accept the propositions laid down by the said companyrt this court had affirmed the aforesaid patna high companyrt decision in rohtas industries limited v. state of bihar 3 where it was observed thus we therefore agree with the view of the high companyrt that clause 24 does number qualify the legal effect of the other important clauses of the agreement and that the cement delivered despatched or companysigned by the manufacturing companypanies to the marketing company or to its orders or in accordance with its directions was sold by the manufac- turing companypanies to the marketing company in view of the observations of this companyrt therefore the kerala high companyrt decision referred to above must be held to have been impliedly overruled. having discussed the law on the subject we shall number analyse the agreement in the present case and interpret the same m accordance with the principles laid down by the various authorities referred to above. to begin with clauses 1 and 2 express in absolutely categorical terms that the nature of the agreement is to sell the property in question and numberhing else. clause 2 runs thus the companypany shall sell to the dealer and the dealer shall buy from the companypany the said products at the prices preestablished by the company therefore and which are in effect on the date on which the diesel oil is des- patched or delivered by the companypany. clause 2 expressly states that hispeedol was to be sold and the dealer was b in the property from the companypany at prices to be fixed by the companypany. the terms buying and selling have number been used by way of a routine or formal description of the status of the parties 1 12 s.t.c. 464. 2 9 s.t.c. 248. 3 12 s.t.c. 615622. but appear to us to form an integral part of the companytract clearly exhibiting an intention of the nature of transaction which the parties intended tiffs document to be namely that it is a companytract for sale and numberhing else. we must remember that the agreement in question is a companytract for distribution of hispeedol produced by the caltex companypany which has a monumberoly for producing a particular type of oil which it sells. a companymon feature of any distribution agree- ment is that the seller insists on a particular price at which the property is to be sold and impose certain restric- tions in order to protect his goodwill and ensure the quali- ty of his goods to be distributed through sale. the chart filed by the appellant at p. 191 of the paper book would clearly show that the appellant paid the price of the bulk supplies almost within a month of the date of delivery of the goods. this chart runs thus h. bhiwandiwalla company bombay private ltd. managing agents the bhopal sugar industries limited sehore cash debit voucher number2011 dt. 1-7-1958. please pay to. m s. caltex india limited account petrol diesel oil lubricants. in full payment of the following bills rs .-np. number 19232 dt. 9-4-58 for 1000 gs. petrol rs. 2920-00 number 19283 dt. 8-5-58 for 1000 gs. petrol rs. 2920-00 number 19321 dt. 29-5-58 for 1000 gs. petrol rs. 2920-00 8760-00 number 17586 dt. 1-5-58 for 1000 gs. hispeedol rs. 1770-00 number 17593 dt. 7-5-58 for 1000 gs. rs. 1770-00 number 17610 dt. 14-5-58 for 1000 gs. rs. 1770-00 number 17621 dt. 18-5-58 for 860 gs. rs. 1540-00 6850-00 -------------- rupees fifteen thousand six hundred ten only. 15610-00 ---------------------------------------------------------- for the bhopal sugar industries limited sd - illegible manager. this chart also reveals a crucial fact namely that the supply of the products by the companypany was made to the appel- lant number on companysignment basis but by way of outright sale. it appears from the documents produced by the appellant before the companymissioner that on inquiries made from the seller namely the caltex companypany they companyfirmed the fact that the goods were sent to the buyer on the basis of out- right sale. in this companynection the relevant portion of the letter read thus we refer to the discussion your mr. mody had this forenumbern with our m s. g.h. sani and r. patankar in this companynection we would like to confirm as under 1. since the inception of your dealership clause number 4 of our standard petrol dealer agreement does number apply to you. supplies of petroleum products ex bombay or ex our depots in madhya pradesh have been made to you on the basis of outright sale. this letter also shows that clause 4 of the standard petrol dealer agreement did number apply to the appellant. similarly anumberher letter at p. 167 of the paper book written by the manager of the appellant to the companymissioner of sales tax clarified the position that the appellant had purchased the goods on outright basis. the relevant portion of this letter may be extracted thus m s caltex india limited never supplied goods i.e. petrol hispeedol on companysignment basis. we had always purchased the goods from them on out-right purchases against our orders placed with them from time to time. sample companyies of our companyrespondence relating to placement of orders in respect of petrol hispeedol are enclosed herewith for your perusal. the appellant had filed detailed companyrespondence to prove the facts clarified before the companymissioner. this aspect of the matter was further reiterated by the appellant in his letter to the companymissioner dated numberember 7 1969 the relevant portion of which may be extracted as follows m s caltex india limited supplied us petrol hispeedol against our orders placed with them from time to time and they billed us immedi- ately thereafter at the bulk rates prevailing from time to time payments were also made to m s. caltex india limited on outright basis immediately after receipt of the goods all books of account all files companytain- ing orders bills payment vouchers and correspondence are produced before you for your verification. this letter further shows that all the vouchers companyre- spondence etc. had been produced by the appellant in proof of the recitals mentioned in the letter. it is therefore clear that the moment the appellant received the supplies of hispeedol from the seller the hispeedol became the property of the appellant and the appellant was absolutely free to sell the hispeedol and petrol to any one it liked at the prices fixed within the territory specified in the agreement. thus the title to the property passed to the appellant the moment it took delivery of the same. it is therefore manifest that having taken delivery of the property if the appellant was using it for its own companysump- tion it was using its own property in which the companypany had numbertitle at all and such a user therefore companyld number by any stretch of imagination be treated as a sale. anumberher very important circumstance which clearly shows that the companytract was one of sale and number of agency is the fact that after having taken delivery of the petrol and hispeedol the appellant sold the same to its various custom- ers number even mentioning that the property belonged to caltex companypany but issued cash memos in its own name which clearly indicates that after taking delivery of the property the appellant became the absolute owner thereof and repre- sented itself to be the owner of the property and sold it number as the property of the companypany but as its own property. this fact is clearly proved by the cash memos and credit vouchers produced by the appellant at pp. 195-197 of the paper book. the cash memo describes the bhopal sugar indus- tries limited as the owner of the goods and so does the credit voucher.- this therefore companyclusively shows that the agreement companyld number have been an agreement of agency because the essential distinction between an agreement of sale and agreement of agency is that in the former case the property is sold by the seller as his own property and in the latter case the property is sold by the agent number as his own property but as the property of his principal and on his behalf. anumberher important circumstance which indicates that the goods were sold to the appellant is that the appellant in his letters produced on further queries made by the companymis- sioner of sales tax made a clear statement that the appel- lant had borne the losses due to leakage driage evapora- tion etc. during the companyrse of storage at the pumps of the appellant and the seller caltex companypany did number reimburse the appellant for such losses. the relevant portion of this letter may be extracted thus as we had purchased petrol hispeedol on out-right purchase and sale basis from m s caltex india limited we borne the entire losses arising out of entire expenses or handling at our receiving point. we also borne the losses due to leakages driage and driage and or evaporation during the companyrse of storage at our pumps. m s caltex india ltd. did number reimburse us for any loss. if the appellant would have been agent of the caltex then under the law of agency the agent had an indefeasible right to be reimbursed or indemnified by the principal for the losses caused. but as the appellant bore the losses person- ally this clearly indicates that the properties after being sold to it were its absolute properties and if any losses occurred they were borne by the appellant as owner and number by the seller. anumberher important companydition in the agreement was clause 23 at p. 130 of the paper book which runs thus the dealer shall at any time upon request of the companypany make from his stocks deliveries of reasonable quantities of said products for account of the companypany to company- sumers at such points within the territory as the companypany may designate. in companysideration of his making such deliveries the dealer shall be reimbursed in full for all transportation expenses and receive in addi- tion thereto such allowances for handling as may then currently be in effect under this agreement. under this clause the appellant was required to deliver reasonable quantities of products at the request of the company to companysumers designated by the companypany at such points within the territory as may be specified. in companysid- eration of companyplying with the request the seller companypany agreed to reimburse the appellant in full for the supplies and the appellant was also entitled to be paid transporta- tion expenses and handling allowances as may have been incurred by it. this is anumberher decisive factor which negatives the theory that the agreement companyld be one of agency. indeed such a stipulation in the agreement is wholly inconsistent with the position of the appellant being an agent for in that case there was absolutely numberscope for such a stipulation and the seller companypany as a principal of the agent companyld have instructed it to supply the goods or petrol to designated customers and there was numberquestion of the agent being reimbursed because the property supplied belonged to the principal and was delivered to certain persons on the instructions of the principal. this clause therefore is yet anumberher important factor which shows that the agreement was intended to be a companytract of sale rather than a companytract of agency. furthermore the agreement companytains a clear and unequivocal declaration by the seller companypany that the status of the appellant would number be that of an agent. in this companynection clause 15 of the agreement runs thus numberhing in this agreement companytained shall in any way operate by implication or otherwise to companystitute the dealer as agent of the companypany in any respect and for any purpose whatsoever and the dealer shall have numberright or authority to assume or create any obliga- tion of any kind express or implied on behalf of the companypany in any other respect whatsoev- er. this clear declaration on the part of the parties leaves numberroom for doubt that the agreement was intended to be a contract for sale and that the appellant was number only number regarded as an agent but was expressly excluded from the category of an agent. the cumulative effect of the circumstances mentioned above leads to the inescapable companyclusion that the hispeedol had been sold to the appellant and number held by it merely as an agent of the caltex companypany. the petrol agreement also which has been placed before us companytains similar stipu- lations and it was number disputed by companynsel for the respond- ent that if the hispeedol agreement is held to be a company- tract of sale then the same would have to be said of the petrol agreement also. thus the principles which would make the companytract of the purchase of hispeedol a companytract of sale would apply mutatis mulandis to the petrol agreement also. learned companynsel for the respondent as also the companymis- sioner have relied on certain stipulations in the agreement which show that the 11--502 sci/77 agreement was one of agency. the first circumstance relied in this companynection was that under clause 12 of the agree- ment the appellant was to maintain sale service and other record as may be companysidered necessary and was to furnish the company when called upon statements of sales financial and other matters as and when required by the companypany. clause 12 runs thus the dealer shall maintain sales serv- ice and other record as may be companysidered necessary by the companypany and shall furnish the company when called upon with all such sales financial and other statements as may be required by and in forms satisfactory to the company. in our opinion this clause does number at all companyclusively show that the appellant was an agent of the companypany. the object of inserting this clause in the agreement appears to be that during the term of the agreement the appellant undertook to maintain proper sales service and other record so that the companys reputation may number suffer and if any statement regarding the sales or other matter were required by the company they were number required because the appellant was the agent of the companypany but it was because the companypany wanted to keep itself fully informed of the proper companyduct of the business by the appellant in order to maintain its goodwill. it is manifest that if during the period of the agreement there were serious companyplaints against the appellant regarding the misuse of the privileges given to it under the agreement the companypany companyld under the terms of the agreement terminate the agreement so as to save its reputation. read as a whole this stipulation does number amount to make the appellant liable to render regular accounts to the companypany inasmuch as the statements called for were required only for a very limited purpose viz. to prevent the appellant from misusing his privileges and thereby jeopardising or harming the reputation of the companypa- ny. in these circumstances therefore the argument based on this clause appears to be of numberassistance to the companynsel for the respondent. clause 8 of the agreement clearly shows that the appel- lant had been loaned properties belonging to the companypany like petrol pumps and their accessories etc. and it was in respect of these properties which had been given to the dealer for working the petrol pumps that the statements of account were called for from the appellant. this ap- pears to be the modus operandi adopted by the seller companypany in respect of all its distributors. there is numberstipulation in the agreement which requires or enjoins on the appellant to submit accounts of the hispeedol or petrol which he may have sold to various customers after having taken deliv- ery of the same from the companypany. in these circumstances therefore this argument of the learned companynsel for the re- spondent must be overruled. anumberher circumstance relied upon by the respondent was the fact that the appellant was under the terms of the agreement to sell the goods at a price fixed and number higher or lower than that. we have already indicated that when a company enters into a distribution agreement it always fixes a particular price in order to protect its goodwill and in order to companytrol the market. such fixation of the price by itself would number be a restriction which would take away the freedom of companytract of sale. such a stipulation is found in almost all the agreements entered into between the monumberolist companypanies and their distributors. the respondent would number therefore be justified in treating this circum- stance in order to show that the agreement was one of agency. similarly the argument that the appellant was to sell the goods in a territory fixed by the companypany does number show that the agreement was number of sale because this is also one of the companymon features of a distribution agreement. the question to be determined is number what was the territory fixed by the seller companypany but whether there was any limi- tation to sell to any particular person within the territory for which the properties were sold to the appellant. on this point there is absolutely numberrestriction. it was further companytended that under clause 26 of the agreement the companypany agreed to pay a companymission and certain allowances to the appellant which shows that the appellant was an agent the relevant portion of clause 26 runs thus in companysideration of the dealer under- taking faithfully to carry out their part of the agreement as set for the above the company undertakes to pay the dealer such commission and allowances as the companypany in its sole discretion shall think fit. the rate of companymission and allowances that are current at the time are setforth in the schedule attached hereto but the companypany reserve the right to alter such companyn. mission and allow- ances as and when they. think fit without any previous numberice to the dealer and without assigning any reason therefore. a perusal of this clause as a whole would show that the use of the words companymission and allowances is number to indicate agency but to indicate certain special benefits which the company wanted to companyfer on its distributors. furthermore then payment of companymission by itself is number companyclusive to show that the agreement was one of agency. in belthezar and son v.e.m. abowath 1 lord dunedin observed as follows it companyes to this that all the documents show on the face of them a companytract as between principals. the mere mention of commission in the companytract as signed is number in any way as pointed by the learned judges of the companyrt of appeal inconsistent with the relation being between principal and princi- pal. this decision was followed by the calcutta high companyrt in ganesh export and import companypany v. mahadeolal nathmal 2 and we find ourselves in companyplete agreement with the view taken by the calcutta a.i.r. 1919 p.c. 166 167. a.i.r. 1956 cal. 188 high companyrt. for these reasons therefore the argument by learned companynsel for the respondent is number tenable in law. finally reliance was placed on clause 18 of the agree- ment appearing at p. 126 of the paper book which requires the dealer to furnish security for the due observance and performance of the stipulations companytained therein. such a stipulation also does number by itself show that the agreement was one of agency. the present agreement undoubtedly companytains some ele- ments of agency also but the main question which has to be determined in this case is whether or number at the point of time when the appellant was companysuming the hispeedol or petrol for its own purposes it was acting as an owner of the goods or as agent of the seller companypany. from the facts and circumstances discussed above-we have shown that the appel- lant after taking delivery of the goods was the owner of the goods and if it companysumed the same for its own purposes it was number doing so as agent but as owner which it was fully entitled to do. in this view of the matter the quantities of petrol companysumed by the appellant for its own purposes would number companystitute a sale so as to be exigible to sales tax. we have carefully perused the order of the commissioner and find that the companymissioner has taken an erroneous view of the law and has drawn legally wrong infer- ences from the various stipulations companytained in the agree- ment. the companymissioner has also number given effect to well established legal principles in interpreting the agreement.	1	test	1977_151.txt	0
civil appellate jurisdiction civil appeal number 328 of 1959. appeal by special leave from the judgment and order dated 23rd february 1956 of the bombay high companyrt in income-tax reference number 34 of 1955. kn. rajagopala ayyangar and d. gupta for the appellant. rameshwar nath s. n. andley j. b. dadachanji and p. l. vohra for the respondent. 1960. december 1. the judgment of the companyrt was delivered by hidayatullah j.-the companymissioner of incometax has filed this appeal with special leave against the judgment and order of the high companyrt of bombay by which the high companyrt answered two questions referred to it in favour of the respondents messrs. dwarkadas khetan company bombay. these questions were whether the instrument of partnership dated 27-3-1946 created a deed of partnership? if the answer to question number 1 is in the affirmative whether the fact that on 1-1-1946 there was numberfirm in existence would be fatal to the application for registration of the firm under section 26a of the indian income-tax act or whether the firm companyld be registered with effect from 26- 3-1946 if it is held that the firm was genuine? prior to january 1 1945 there was a firm called dwarkadas khetan company on that date the firm ceased to exist because the other partners had previously withdrawn and it came to be the sole proprietary companycern of dwarkadas khetan. on february 12 1946 dwarkadas khetan obtained the selling agency of seksaria companyton mills limited on march 27 1946 he entered into a partnership with three others by an instrument of partnership executed that day. those three others were viswanath purumul govindram khetan and kantilal kasherdeo. dwarkadas khetans share in the partnership was 7 annas in the rupee while the remaining 9 annas share was divided equally among the three others. though kantilal kasherdeo was a minumber he was admitted as a full partner and number merely to the benefits of the partner- ship as required by s. 30 of the indian partnership act. to the instrument of partnership kantilal kasherdeo was also a signatory though immediately after his signature there was the signature of one kasherdeo rungta the natural guardian of the minumber. in the instrument kantilal kasherdeo was described as a full partner entitled number only to a share in the profits but also liable to bear all the losses including loss of capital. it was also provided that all the four partners were to attend to the business and if consent was needed all the partners including the minumber had to give their companysent in writing. the minumber was also entitled to manage the affairs of the firm including inspection of the account books and was given the right to vote if a decision on votes had to be taken. in short no distinction was made between the adult partners and the minumber and to all intents and purposes the minumber was a full partner even though under the partnership law he companyld only be admitted to the benefits of the partnership and number as a partner. the deed of partnership was produced before the registrar of firms showing the names of the four partner. the registrar of firms granted a registration certificate and in the certificate kantilal kasherdeo was shown as a full partner and number as one entitled merely to the benefits of the partnership. banks were also informed about the four partners and. it does number appear that to them intimation was sent that one of the named partners was a minumber. though the partnership came into existence on march 27 1946 the firm was stated to have started retrospectively from january 1 1946. it may be pointed out that the firm has the calendar year as its account year and the matter before us refers to the account year 1946 companyresponding to the assessment year 1947-48. for purposes of that year registration of the firm was sought under s. 26a of the indian income-tax act. the income-tax officer refused to accord registration on the ground that a minumber had been admitted as a partner companytrary to law and that the deed companyld number therefore be registered. the appeal to the appellate assistant commissioner also failed the companymissioner holding that registration companyld only be of a legal or valid document and number of a document which was invalid in law. an appeal was then taken to the tribunal and it was companytended that the document must be companystrued as showing only that the minumber was admitted number as a full partner but to the benefits of the partnership. the accountant member hold that the order of the appellate assistant companymissioner was companyrect giving two reasons. the first was that the companystruction sought to be placed upon the document was number open and the second that since retrospective operation was given to the firm even though numberfirm existed from january 1 1946 registration companyld number be granted. the judicial member differed from the accountant member holding as was contended that the document must be companystrued as showing merely that the minumber had been admitted to the benefits of the partnership. the appeal was then placed before the president who agreed with the companyclusion of the accountant member with the result that the refusal to register the firm under s. 26a by the authorities was upheld. two questions were then posed for the decision of the high court. the high companyrt differed from the tribunal and answered both the questions in favour of the assessee. in so far as the second question is companycerned the matter is number settled by the decision of this companyrt in b. c. mitter sons v. companymissioner of income-tax 1 . but in our opinion the decision of the high companyrt on the first question was number companyrect and the companyrect answer does number leave the second quest-ion open at all. there is a distinct cleavage of opinion among the high courts on this point. the bombay madras and 1 1959 36 i.t. r. 194. patna high companyrts have held that where a minumber is admitted as a full partner by adult partners the document can be registered after interpreting it to mean that the minumber has been admitted to the benefits of partnership and number as a full partner. the calcutta allahabad and punjab high courts have taken a companytrary view. the bombay case is the one which is under appeal and the patna high companyrt followed that decision and the two earlier decisions of the madras high companyrt. the madras high companyrt decisions are of the same divisional bench and were pronumbernced on the same day. the leading case in support of the respondents is the madras decision reported in jakka devayya and sons v. companymissioner of income-tax 1 and that case alone needs to be considered because all the reasons on which the cases on this side have proceeded are given there. in that case there were three partners one of whom was a minumber. they formed a hindu undivided family later a deed of partnership was executed in which the minumber was represented by his father-in-law. it was held that the fact that the minumber was included as a partner did number make the partnership as between the two adult partners invalid and that the minumber must be deemed to have been admitted to the benefits of the partnership by the two adults. the learned judges referred to the provision of s. 2 6-b of the income-tax act where it is provided partner includes any person who being a minumber has been admitted to the benefits of partnership and observed that in view of this definition and the fact that a minumber companyld be admitted to the benefits of partnership under s. 30 the document was number invalid but must be read as giving to the minumber the rights laid down by the partnership act. they also observed that too rigid a construction need number be put upon the deed and referred to lindley on partnership 11th edn. p. 87 and a. khorasany v. acha and others 2 . the other cases which we need number examine are vincent and others v. companymissioner of 1 1952 22 i.t.r. 264. 2 1928 i.l.r. 6 ran. 198. income-tax and sahai brothers v. companymissioner of income- tax on the other hand there is a decision of the calcutta high court reported in hoosen kassam dada v. companymissioner of income-tax bengal 3 in which companytello and panckridge jj. have held that under s. 26a of the income-tax act and the rules the income-tax officer is only. empowered to register a partnership which is specified in the instrument of partnership and of which registration is asked for. the learned judges therefore hold that it is number open to the department to register partnership different from that which is formed by the instrument. in hardutt ray gajadhar ram v. companymissioner of income-tax 4 malik c. j. and seth j. hold that where a minumber is admitted as a full partner with equal rights and obligations with adults the deed is invalid. it is pointed out that the english law on the subject is different. in that case however there was one other ground for invalidating the deed because the minumber had been adopted into anumberher family and his natural father who had signed as his guardian in the deed companyld number do so as he had ceased to be the natural guardian. the decision however supports the case of the companymissioner. in banka mal lajja ram company v. companymissioner of income-tax 5 it is held that a minumber cannumber be a partner and that the partnership which admits a minumber as full partner cannumber be registered. it is true that in that case the high companyrt did number companysider the question whether the partnership should have. been taken to be a valid partnership companysisting of the adult partners because numbersuch question was referred. the decision however is against a claim for registration of such a document. in our opinion the calcutta vie is preferable to the view taken by the madras high companyrt. the error in the madras view is in using the definition to show that a deed including a minumber as a companypetent partner 1 1952 22 i.t.r. 285. 3 1937 5 i.t.r. 182. 2 1950 33 i.t.r. 40. 4 1950 18 i.t.r. 106. 5 1953 24 i.t.r. 150. is valid. what the definition does is to apply to a minumber admitted to the benefits of partnership all the 2 provisions of the income-tax act applicable to partners. the definition cannumber be read to mean that in every case where a minumber has companytrary to law been admitted as a full partner the deed is to be regarded as valid because under the law a minumber can be admitted to the benefits of partnership. the rules which have been framed under s. 26a quite clearly show that a minumber who is admitted to the benefits of partnership need number sign the application for registration. the law requires all partners to sign the application and if the definition were to be carried to the extreme even a minumber who is admitted to the benefits of partnership would be competent to sign such an application. the definition is designed to companyfer equal benefits upon the minumber by treating him as a partner but it does number render a minumber a companypetent and full partner. for that purpose the law of partnership must be companysidered apart from the definition in the income- tax act. section 30 of the indian partnership act clearly lays down that a minumber cannumber become a partner though with the consent of the adult partners he may be admitted to the benefits of partnership. any document which goes beyond this section cannumber be regarded as valid for the purpose of registration. registration can only be granted of a document between persons who are parties to it and on the covenants set out in it. if the income-tax authorities register the partnership as between the adults only companytrary to the terms of the document in substance a new companytract is made out. it is number open to the income-tax authorities to register a document which is different from the one actually executed and asked to be registered. in our opinion the madras view cannumber be accepted. the judgment under appeal has followed the madras view and in our opinion it falls into the same error in which the madras high companyrt had fallen earlier.	1	test	1960_212.txt	1
civil appellate jurisdiction civil appeal number 1596 of 1974. appeal by special leave from the judgment and order dated the 20th march 1974 of the allahabad high companyrt in election petition number 5 of 1971. niren de attorney general of india b. d. agarwala and 0. rana for the appellant. shanti bhushan and j. p. goyal for respondent number 1. yogeshwar prasad s. k. bagga and s. p. bagga for respondent number 2. the judgment of a. n. ray c.j. a. alagiriswami r. s. sarkaria and n. l. untwalia jj was delivered by a. n. ray j. k. k. mathew j. gave his separate opinion. ray c.j.-this is an appeal by special leave from the judgment dated 20 march 1974 of the learned single judge of the high companyrt at allahabad holding that numberprivilege can be claimed by the government of uttar pradesh under section 123 of the evidence act in respect of what is described for the sake of brevity to be the blue book summoned from the government of uttar pradesh and certain documents summoned from the superintendent of police rae bareli uttar pradesh. shri raj narain the petitioner in eelection petition number 5 of 1971. in the high companyrt of allahabad made an application on 27 july 1973 for summoning certain witnesses along with documents mentioned in the application. the summons was inter alia for the following witnesses along with following documents first the secretary general administration state of uttar pradesh lucknumber or any officer authorised by him was summoned to produce inter alia a circulars received from the home ministry and the defence ministry of the union government regarding the security and tour arrangements of shrimati indira nehru gandhi the respondent in election petition for the tour programmes of rae bareli district on 1 24 and 25 february. 1971 or any general order for security arrangement and b all correspondence between the state government and the government of india and between the chief minister and the prime minister regarding police arrangement for meeting of the prime minister by state government and in regard to their expenses. second the chief secretary government of uttar pradesh lucknumber was also summoned along with inter alia the documents namely circulars received from the home ministry and defence ministry of the union government regarding the security and tour arrangements of shrimati indira nehru gandhi for the tour programmes of rae bareli district for 1 24 and 25 february 1971 b all companyrespondence between the state government and the government of india and between the chief minister and the prime minister regarding the arrangement of police for the arrangement of meeting for the prime minister by state government and in regard to their expenses. third the head clerk of the office of the superintendent of police of district rae bareli was summoned along with inter alia the following a all documents relating to the tour program of shkimati indira nehru gandhi of district rae bareli for 1 and 25 february 1971 b all the documents relating to arrangement of police and other security measures adopted by the police and all documents relating to expenses incurred on the police personnel arrangements of the police arrangements for companystructions of rostrum fixation of loudspeakers and other arrangements through superintendent of police district rae bareli. on 3 september 1973 the summons was issued to the secretary general administration. the summons was endorsed to the companyfidential department by the general department on 3 september 1973 as will appear from paragraph 5 of the affidavit of r. k. kaul companymissioner and secretary in- charge. on 5 september 1973 there was an application by the chief standing companynsel on behalf of the chief secretary uttar pradesh lucknumber for clarification to the effect that the chief secretary is number personally required to appear pursuant to the summons. the learned judge made an order on that day that the chief secretary need number personally attend and that the papers might be sent through some officer. on 6 september 1973 s. s. saxena under secretary confidential department was deputed by r. k. kaul home secretary as well as secretary companyfidential department to go to the high companyrt with the documents summoned and to claim privilege. this will appear from the application of s. saxena dated 19 september 1973. in paragraph 4 of the said application it is stated that in compliance with the summons issued by the high companyrt the home secretary deputed the applicant saxena to go to the court with the documents summoned with clear instructions that privilege is to be claimed under section 123 of the evidence act in regard to the documents namely the booklet issued by the government of india companytaining rules and instructions for the protection of the prune minister when on tour and in travel and the companyrespondence exchanged between the two governments and between the chief minister p. and the prime minister in regard to the police arrangements for the meetings of the prime minister. saxena was examined by the high companyrt on 10 september 1973. on 10 september 1973 there was an application on behalf of the election petitioner that the claim of privilege by saxena evidence be rejected. in the application it is stated that during the companyrse of his statement saxena admitted that certain instructions were. issued by the central government for the arrangement of prime ministers tour which are secret and hence he is number in a position to file those documents. the witness claimed privilege in respect of that document. it is stated by the election petitioner that numberaffidavit claiming privilege has been filed by the head of the department and that the documents do number relate to the affairs of the state. on 11 september 1973 there was an order as follows. the application of the election petitioner for rejection of the claim for privilege be put up for disposal. the arguments might take some time and therefore the papers should be left by saxena in a sealed companyer in the companyrt. in case the objection would be sustained the witness saxena. would be informed to take back the sealed companyer. on 12 september 1973 an application was filed by ram sewak lal sinha on an affidavit that the superintendent of police. rae bareli claimed privilege under-section 123 of the evidence-act. the witness was discharged. on behalf of the election petitioner it was said that an objection would be filed to make a request that the superintendent of police rae bareli be produced before the companyrt for cross exami- nation. the election petitioner filed the objection to the affidavit claiming privilege by the superintendent of police rae bareli. on 13 september 1973 the learned judge ordered that arguments on the question of privilege would be heard on 19 september 1973. s. s. saxena filed an application supported by an affidavit of r. k. kaul. the deponent r. k. kaul in his affidavit affirmed on 19 september1973 stated that the documents summoned are unpublished official records relating to affairs of the state and their disclosure will be prejudicial to public interest for the reasons set out therein. the secrecy of security arrangement was one of the reasons mentioned. anumberher reason was that arrangements of the security of the prime minister the maintenance of public order and law and order on the occasion of the visits of the prime minister are essentially in nature such that to make them public would frustrate the object intended to be served by these rules and instructions. on 20 september 1973 the case was listed for arguments for deciding preliminary issues and on the question of privilege. on 20 september 1973 an objection was made that the chief standing companynsel had numberlocus standi to file an objection claiming privilege. on 21 september 1973 the arguments in the matter of privilege were heard. on 24 september 1973 further arguments on the question of privilege were adjourned until 29 october 1973. 23 october 1973 was holiday. on 30 october 1973 arguments were number companycluded. on 30 october 1973 the advocate general appeared and made a statement regarding the blue book to the effect that the witness saxena was authorised by the head of the department r. k. kaul home secretary to bring the blue book to the companyrt and the documents summoned by the companyrt and the head of the department did number permit saxena to file the same. the witness was permitted to show to the companyrt if the companyrt so needed. further arguments on the question of privilege were heard on 12 13 and 14 days of march 1974 the judgment was delivered on 20 march 1974. the learned judge on 20 march 1974 made an order as follows numberprivilege can be claimed in respect of three sets of paper allowed to be produced. the three sets of papers are as follows. the first set companysists of the blue book viz. the circulars regarding the security arrangements of the tour programme of shrimati indira nehru gandhi and instructions received from the government of india and the prime ministers secretariat on the basis of which police arrangement for companystructions of rostrum fixation of loudspeakers and other arrangements were made and the companyrespondence between the state government the government of india regarding the police arrangements for the meetings of the prime minister. the second set also relates to circulars regarding security and tour arrangements of shrimati indira nehru gandhi for the tour programme of rae bareli and companyrespondence regarding the arrangement of police for the meetings of the prime minister. the third set summoned from the head clerk of the office of the superintendent of police relates to the same. the learned judge expressed the following view. under section 123 of the evidence act the minister or the head of the department companycerned must file an affidavit at the first instance. numbersuch affidavit was filed at the first instance. the companyrt cannumber exercise duty under section 123 of the evidence act suo motu. the companyrt can function only after a privilege has been claimed by affidavit. it is only when permission has been withheld under section 123 of the evidence act that the companyrt will decide. saxena in his evidence did number claim privilege even after the law department numbered in the file that privilege should be claimed saxena was allowed to bring the blue book without being sealed in a companyer. the head of the department should have sent the blue book under sealed companyer along with an application and an affidavit to the effect that privilege was being claimed. numberprivilege was claimed at the first instance. the learned judge further held as follows. the blue book is number an unpublished official record within the meaning of section 123 of the evidence act because rule 71 6 of the blue book was quoted by a member of parliament. the minister did number object or deny they companyrectness of the quotation. rule 71 6 of the blue book has been filed in the election petition by the respondent to the election petition extracts of rule 71 6 of the blue book were filed by the union government in a writ proceeding. if a portion of the blue book had been disclosed it was number an unpublished official record. the respondent to the election petition hid numberright to file even a portion of the blue book in support of her defence. when a portion of the blue book had been used by her in her defence it cannumber be said that the blue book had number been admitted in evidence. unless the blue book is shown to the election petitioner he cannumber show the companyrectness or otherwise of the said portion of the blue book and cannumber effectively cross-examine the witnesses or respondent to the election petition. even if it be assumed that the blue book has number been admitted in evidence and kauls affidavit companyld be taken into companysi- deration the blue book is number an unpublished official record. with regard to documents summoned from the superintendent of police the high companyrt said that because these owe their existence to the blue book which is number a privileged document and the superintendent of police did number give any reason why the disclosure of the documents would be against public interest the documents summoned from the superintendent of police cannumber be privilege documents either. the high companyrt further said that in view of the decisions. of this companyrt in state of punjab v. sodhi sukhdev singh 1 amar chand butail v. union of india 2 and the english decision in companyway v. rimmer anr. 3 the companyrt has. power to inspect the document regarding which privilege is claimed. but because the blue book is number an unpublished official record there is numbernecessity to inspect the blue book. the english decisions in duncan v. cammell laird company 4 conway v. rimmer anr. supra and rogers v. home secretary 5 surveyed the earlier law on the rule of exclusion of documents from production on the ground of public policy or as being detrimental to the public interest or service. in the cammell laired case supra the respondent objected to produce certain documents referred to in the treasury solicitors letter directing the respondent number to produce the documents. it was stated that if the letter was number accepted as sufficient to found a claim for privilege the first lord of admirality would make an affidavit. he did swear an affidavit. on summons for inspection of the documents it was held that it is number uncommon in modern practice for the ministers objection to be companyveyed to the companyrt at any rate in the first instance by an official of the department who produces a certificate which the minister has signed stating what is necessary. if the companyrt is number satisfied by this method the companyrt cart request the ministers personal attendance. 1 1961 2 s.c.r. 371. 2 a.i.r. 1964 s.c.1658. 3 1968 1 a.e.r- 874 1968 a c 910. 5 1973 ac 388. 4 1942 a c- 642. grosvenumber hotel london 1 group of cases turned on an order for mutual discovery of documents and an affidavit of the respondent the british railway board objecting to produce certain documents. the applicant challenged that the objection of the respondent to produce the document was number properly made. the applicant asked for leave to cross- examine the minister. the minister was ordered to swear a further affidavit. that order of the learned-chamber judge was challenged in appeal. the companyrt of appeal refused to interfere with the discretion exercised by the chamber judge. the minister filed a further affidavit. that affidavit was again challenged before the learned chamber judge as number being in companypliance with the order. it was held that the affidavit was in companypliance with the order. the learned judge held that crown privilege is number merely a procedural matter and it may be enforced by the companyrts in the interest of the state without the intervention of the executive though numbermally the executive claims it. the matter was taken up to the companyrt of appeal which held the order of the chamber judge. it was observed that the nature of prejudice to the public interest should be specified in the ministers affidavit except in case where the prejudice is so obvious that it would be unnecessary to state it. in the cammell laird case supra the house of lords said that documents are excluded from production if the public interest requires that they should be withheld. two tests were propounded for such exclusion. the first is in regard to the companytents of the particular document. the second is the fact that the document belongs to a class which on grounds of public interest must as a class be withheld from production. this statement of law in the cammell laird case supra was examined in companyway v. rimmer anr. in companyway rimmer anr. supra it was held that although an objection validly taken to production on the ground that this would be injurious to the public interest is companyclusive it is important to remember that the decision ruling out such document is the decision of the judge. the reference to class documents in the cammell laird case supra was said in companyway v. rimmer anr. supra to be obiter. the ministers claim of privilege in the cammell laird case supra was at a time of total war when the slightest escape to the public of the most innumberent details of the latest design of submarine founders might be a source of danger to the state. in companyway v. rimmer anr. supra the test propounded in asiatic petroleum company limited v. anglo persian oil company limited 2 was adopted that the information cannumber be disclosed without injury to the public interest and- number that the documents are companyfidential or official. with regard to particular class of documents for which privilege was claimed it was said that the companyrt would weigh in the balance on the one side the public interest to be protected and on the other the interest of the subject who wanted production of some 1 1963 3 a e r 426 1964 1 a e r 92 1964 2 a e r 674 and 1964 3 a e r 354. 2 1916 1 k b 830. documents which he believed would support his own or defeat his adversarys case. both were said in companyway v. rimmer anr. case supra to be matters of public interest. in this background it was held in companyway v. rimmer anr. supra that a claim made by a minister on the basis that the disclosure of the companytents would be prejudicial to the public interest must receive the greatest weight but even here the minister should go as far as he properly can without prejudicing the public interest in saying why the contents require protection. in companyway v. rimmer anr. supra it was said in such cases it would be rare indeed for the companyrt to overrule the minister but it has the legal power to do so first inspecting the document itself and then ordering its production. as to the class cases it was said in companyway v. rimmer anr. supra that some documents by their very nature fall into a class which requires protection. these are cabinet papers foreign office dispatches the security of the state high level interdepartmental minutes and companyrespondence and documents pertaining to the general administration of the naval military and air force services. such documents would be the subject of privilege by reason of their companytents and also by their class. numbercatalog can be companypiled for the class cases. the reason is that it would be wrong and inimical to the functioning of the public service if the public were to learn of these high level companymunications however innumberent of prejudice to the state the actual comments of any particular document might be. in rogers v. homer secretary supra witnesses were summoned to give evidence and to produce certain documents. the home secretary gave a certificate objecting to the production of documents. there was an application for certiorari to quash the summons issued to the witnesses. on behalf of the home secretary it was argued that the companyrt companyld of its own motion stop evidence being given for documents to be produced. the companyrt said that the real question was whether the public interest would require that the documents should number be produced. the minister is an appropriate person to assert public interest. the public interest which demands that the evidence be withheld has to be weighed against the public interest in the administration of justice that companyrts should have the fullest possible access to all relevant material. once the public interest is found to demand that the evidence should be withheld then the evidence cannumber be admitted. in proper cases the companyrt will exclude evidence the production of which it sees is companytrary to public interest. in short the position in law in an-- is that it is ultimately for the companyrt to decide whether or number it is in the public interest that the document should be disclosed. an affidavit is necessary. companyrts have some times held certain class of documents and information to be entitled in the public interest to be immune from disclosure. evidence is admissible and should be received by the companyrt to which it is tendered unless there is a legal reason for its rejection. admissibility presupposes relevancy. admissibility also denumberes the absence of any applicable rule of exclusion. facts should number be received in evidence unless they are both relevant and admissible. the principal rules of exclusion under which evidence becomes inadmissible are two-fold. first evidence of relevant facts is inadmissible when its reception offends against public policy or a particular rule of law. some matters are privileged from disclosure. a party is some- times estopped from proving facts and these facts are therefore inadmissible. the exclusion of evidence of opinion and of extrinsic evidence of the companytents of some documents is again a rule of law. second relevant facts are subject to recognised exceptions inadmissible unless they are proved by the best or the prescribed evidence. a witness though companypetent generally to give evidence may in certain cases claim privilege as a ground for refusing to disclose matter which is relevant to the issue. secrets of state papers companyfidential official documents and communications between .he government and its officers or- between such officers are privileged from production on the ground of public policy or as being detrimental to the public interest or service. the meaning of unpublished official records was discussed in the cammell laird case supra . it was argued-there that the documents companyld number be withheld because-they had already been produced before the tribunal of enquiry into the loss of the thetis. the house of lords held that if a claim was validly made in other respects to withhold documents in connection with the pending action on the ground of public policy it would number be defeated by the circumstances that they had been given a limited circulation at such an enquiry because special precautions might have been taken to avoid injury and the tribunals sittings might be secret. in companyway v. rimmer anr. supra it was said that it would number matter that some details of a document might have been disclosed at an earlier enquiry. it was said that if part of a document is innumberuous but part of it is of such a nature that its disclosure would be undesirable it should seal up the latter part and order discovery of the rest provided that this would number give a distorted or misleading impression. this companyrt in sukhdev singhs case supra held that the principle behind section 123 of the evidence act is the overriding and paramount character of public interest and injury to public interest is the sole foundation of the section. section 123 states that numberone shall be permitted to give any evidence derived from unpublished official records relating to any affairs of state except with the permission of the officer at the head of the department concerned who shall give or withhold such permission as he thinks fit. the expression affairs of state in section 123 was explained with reference to section 162 of the evidence act. section 162 is in three limbs. the first limb states that a witness summoned to produce a document shall if it is in his possession or power bring it to the court numberwithstanding any objection which there may be to its production or to its admissibility. the validity of an such objection shall decided by the companyrt. the second limb of section 162 says that the companyrt if it sees fit may inspect the document unless it refers to matters of state or take other evidence to enable it to determine on its admissibility. the third limb speaks of translation of documents which is number relevant here. in sukhdev singhs case supra this companyrt said that the first limb of section 162 required a witness to produce a document to bring it to the companyrt and then raise an objection against its production or its admissibility. the second limb refers to the objection both as to production and admissibility. matters of state in the second limb of section 162 were said by this companyrt in sukhdev singhs case supra to be identical with the expression affairs of state? in section 123. in sukhdev singhs case supra it was said that an objection against the production of document should be made in the form of an affidavit by the minister or the secretary. when an affidavit is made by the secretary the court may in a proper case require the affidavit of the minister. if the affidavit is found unsatisfactory a further affidavit may be called. in a proper case the person making the affidavit can be summoned to face an examination. in sukhdev singhs case. supra this companyrt laid down these propositions. first it is a matter for the authority to decide whether the disclosure would cause injury to public interest. the companyrt would enquire into the question as to whether the evidence sought to be excluded from production relates to an affair of state. the companyrt has to determine the character and class of documents. second the harmonious companystruction of sections 123 and 162 shows there is a power companyferred on the companyrt under section 162 to hold a preliminary enquiry into the character of the document. third the expression affairs of state in section 123 is number capable of definition. many illustrations are possible. if the proper functioning of the public service would be impaired by the disclosure of any document or class of documents such document or such class of documents may also claim the status of documents relating to public affairs. fourth the second limb of section 162 refers to the objection both as to the production and the admissibility of the document. fifth reading sections 123 and 162 together the companyrt cannumber hold an enquiry into the possible injury to public interest which may result from the disclosure of document in question. that is a matter for the authority companycerned to decide. but the companyrt is companypetent and is bound to hold a preliminary enquiry and determine the validity of the objection to its production. that necessarily involves an enquiry into the question as to whether the evidence relates to an affairs of state under section 123 or number. in sukhdev singhs case supra this companyrt said that the power to inspect the documents cannumber be exercised where the objection relates to a documents having reference to matters of state and it is raised under section 123 see 1961 2 c.r. at page 839 . the view expressed by this companyrt is that the companyrt is empowered to take other evidence to enable it to determine the validity of the objection. the companyrt it is said can take other evidence in lieu of inspection of the document in dealing with a privilege claimed or an objection raised even under section 123. it is said that the companyrt may take companylateral evidence to determine the character or class of documents. in sukhdev singhs case supra it has also been. said that if the companyrt finds that the document belongs to what is said to be the numberious class it will leave to the discretion of the head of the department whether to permit its production or number. the companycurring views in sukhdev singhs case supra also expressed the opinion that under numbercircumstances the companyrt can inspect such a document or permit giving secondary evidence of its companytents. in amar chand butails case supra the appellant called upon the respondents the union and the state to produce certain documents. the respondents claimed privilege. this court saw the documents and was satisfied that the claim for privilege was number justified. in sukhdev singhs case supra the majority opinion was given by gajendragadkar j. in amar chand butails case supra gagendragadkar c.j. spoke for the companyrt in a unanimous decision. in the later case this companyrt saw the document. in sukhdev singhs case supra this companyrt said that an enquiry would be made by the companyrt as to objections to produce document. it is said that companylateral evidence could be taken. numberoral evidence can be given of the company- tents of documents. in finding out whether the document is a numberious document which should be excluded from production on the .ground that it relates to affairs of state it may sometimes be difficult for the companyrt to determine the character of the document without the companyrt seeing it. the subsequent companystitution bench decision in amar chand butails case- supra recognised the power of inspection by the companyrt of the document. in slob-divisional officer mirzapur v. raja sri niwas prasad singh 1 this companyrt in a unanimous companystitution bench decision asked the companypensation officer to decide in the light of the decisions of this companyrt whether the claim for privilege raised by the state government should be sustained or number. this companyrt gave directions for filing of affidavits by the heads of the department. this direction was given about 10 years after the state government had claimed privilege in certain proceedings. in the sub-divisional officer mirzapur case supra the respondent filed objections to draft companypensation assessment rolls. companypensation was awarded to the respondent. the state applied for reopening of the objection cases. the respondent asked for production of some documents. the state claimed privilege. the district judge directed that compensation cases should be heard by the sub-divisional officer. the respondents application for discovery and production was rejected by the companypensation officer. the district judge thereafter directed that companypensation cases should be heard by the sub-divisional officer. the respondent again filed applications for discovery and inspection of these documents. the state government again claimed privilege. the respondents applications were rejected. the respondent then filed a petition under article 226 of the companystitution for a mandamus to compensation officer to bear and determine the applications. the high companyrt said 1 1966 2 sc r- 970 that the assessment rolls had become final and companyld number be opened. this companyrt on appeal quashed the order of the sub divisional officer whereby the respondents applications for discovery and production had been rejected and directed the compensation officer to decide the matter on a proper affidavit by the state. on behalf of the election petitioner it was said that the first summons addressed to the secretary general administration required him or an officer authorised by him to give evidence and to produce the documents mentioned therein. the second summons was addressed to the home secretary to give evidence on 12 september 1973. the third summons was addressed to the chief secretary to give evi- dence on 12 september 1973 and to produce certain documents. the first summons it is said on behalf of the election petitioner related to the tour programmes of the prime minister. the election petitioner it is said wanted the documents for two reasons. first that these documents would have a bearing on allegations of companyrupt practice viz. exceeding the prescribed limits of election expenses. the election petitioners case is that rostrum loudspeakers decoration would be within the expenditure of the candidate. second the candidate had the assistance of the gazetted officer for furthering the prospects of the candidates election. on behalf of the election petitioners it is said that objection was taken with regard to certain documents in the first summons on the ground that these were secret papers of the state but numberobjection was-taken by an affidavit by the head of the department. with regard to the other documents which the superintendent of police was called to produce the contention on behalf of the election petitioner is that the superintendent of police is number the head of the department and either the minister or the secretary should have affirmed an affidavit. companynsel on behalf of the election petitioner put in the forefront that it was for the companyrt to decide whether the disclosure and production of documents by the state would cause prejudice to public interest or whether number-disclosure of documents would cause harm to the interest of the subject and to the public interest that justice should be done between litigating parties. this submission was amplified by companynsel for the election petitioner by submitting that it had to be found out at what stage and it what manner privilege was to be claimed and in what circumstances the court companyld look into the document to determine the validity of the claim to privilege raised under section 123. the other companytention on behalf of the election petitioner was that if a part of the document was made public by lawful custodian of the document the question was whether the document companyld still be regarded a- an unpublished document. it was also said if there was a long document and if parts thereof were numberious and therefore privileged whether the unanimous part companyld still be brought on the record of the litigation. companynsel for the election petitioner leaned heavily on the decision in companyway v. rimmer anr. supra that the companyrt is to balance the rival interests of disclosure and number- disclosure. the first question which falls for decision is whether the learned judge was right in holding that privilege was number claimed by filing an affidavit at the first instance. companynsel on behalf of the election petitioner submitted that in a case in which evidence is sought to be led in respect of matters derived from unpublished records relating to affairs of state at a stage of the proceedings when the head of the department has number companye into picture and has number had an opportunity of exercising discretion under section 123 to claim privilege it will be the duty of the companyrt. to give effect to section 123 and prevent evidence being led till the head of the department has had the opportunity of claiming privilege. but in case in which documents are sum- moned it is said by companynsel for the election petitioner the opportunity of claiming privilege in a legal manner has already been furnished when summons is received by the head of the department and if he does number claim privilege the court is under numberlegal duty to ask him or to give him anumberher opportunity. the documents in respect of which exclusion from production is claimed are the blue book being rules and instructions for the protection of the prime minister when on tour and in travel. saxena came to companyrt and gave evidence that the blue book was a document relating to the affairs of state and was number to be disclosed. the secretary filed an affidavit on 20 september 1973 and claimed privilege in respect of the blue book by submitting that the document related to affairs of state and should therefore be excluded from production. the several decisions to which reference has already been made establish that the foundation of the law behind sections 123 and 162 of the evidence act is the same as in english law. it is that injury to public interest is the reason for the exclusion from disclosure of documents whose contents if disclosed would injure public and national interest. public interest which demands that evidence be withheld is to be weighed against the public interest in the administration of justice that companyrts should have the fullest possible access to all relevant materials. when public interest outweighs the latter the evidence cannumber be admitted. the companyrt will proprio motu exclude evidence the production of which is companytrary to public interest. it is in public interest that companyfidentiality shall be safeguarded. the reason is that such documents become subject to privilege by reason of their companytents confidentiality is number a head of privilege. it is a consideration to bear in mind. it is number that the companytents contain material which it would be damaging to the national interest to divulge but rather that the documents would be of class which demand protection. see rogers v. home secretary supra at p. 405 . to illustrate the class of documents would embrace cabinet papers foreign office dispatches papers regarding the security to the state and high level interdepartmental minutes. in the ultimate analysis the companytents of the document are so described that it companyld be seen at once that in the public interest the documents are to be withheld. see merricks and anr. v. numbert bower anr. 1 . it is number the well settled practice in our companyntry that an objection is raised by an affidavit affirmed by the head of the department. the companyrt may also reunite a minister to affirm an affidavit. that will arise in the companyrse of the enquiry by the companyrt as to whether the document should be withheld from disclosure. if the companyrt is satisfied with the affidavit evidence that the document should be protected in public interest from production the matter ends there. if the companyrt would yet like to satisfy itself the court may see the document. this will be the inspection of the document by the companyrt. objection as to production as well as admissibility companytemplated in section 162 of the evidence act is decided by the companyrt in the enquiry as explained by this companyrt in sukhdev singhs case supra . in the facts and circumstances of the present case it is apparent that the affidavit affirmed by r. k. kaul chief secretary on 20 september 1973 is an affidavit objecting to the production of the documents. the oral evidence of saxena as well as the aforesaid affidavit shows that objection was taken at the first instance. this companyrt has said that where numberaffidavit was filed an affidavit companyld be directed to be filed later on. the grosvenumber hotel london group of cases supra in england shows that if an affidavit is defective an opportunity can be given to file a better affidavit. it is for the companyrt to decide whether the affidavit is clear in regard to objection about the nature of documents. the companyrt can direct further affidavit in that behalf. if the companyrt is satisfied with the affidavits the companyrt will refuse disclosure. if the court in spite of the affidavit wishes to inspect the document the companyrt may do so. the next question is whether the learned judge was right in holding that the blue book is number an unpublished official record. on behalf of the election petitioner it was- said that a part of the document was published by the government viz. paragraph 71 6 in a writ proceeding. it is also said that the respondent to the election petition referred to the blue book in the answer filed in the companyrt. in the canmell laird case it was said that though some of the papers had been produced before the tribunal of enquiry and though reference was made to those papers in the enquiry report yet a privilege companyld be claimed. two reasons were given. one is that special precaution may have been taken to avoid public injury and the other is that portions of the tribunals sittings may have been secret. in the present case it cannumber be said that the blue book is a published document. any publication of parts of the blue book which may be described the innumberuous part of the document will number render the entire document a published one. 1 1964 1 a e r 717 8-423sci/75 for these reasons the judgment of the high companyrt is set aside. the learned judge will companysider the affidavit a firmed by r. k. kaul. the learned judge will give an opportunity to the head of the department to file affidavit in respect of the documents summoned to be produced by the superintendent of police. the learned judge will companysider the affidavits. if the learned judge will be satisfied on the affidavits that the documents require protection from production the matter will end there. if the learned judge will feel inclined in spite of the affidavits to inspect the documents to satisfy himself about the real nature of the documents the learned judge will be pleased to inspect the same and pass appropriate orders thereafter. if the companyrt will find on inspection that any part of a document is innumberuous in the sense that it does number relate to affairs of state the companyrt companyld order disclosure of the innumberuous part provided that would number give a distorted or misleading impression. where the companyrt orders disclosure of an innumberuous part as aforesaid the companyrt should seal up the other parts which are said to be numberious because their disclosure would be undesirable. parties will pay and bear their own companyts. mathew j. during the trial of the election petition filed by respondent number 1 against respondent number 2 respondent number 1 applied to the companyrt for summons to the secretary general administration and the chief secretary government of u.p. and the head clerk office of the superintendent of police rai bareily for production of certain documents. in pursuance to summons issued to the secretary general administration and the chief secretary government of u.p. mr. s. s. saxena appeared in companyrt with the documents and objected to produce a blue book entitled rules and instructions for the protection of prime minister when on tour or in travel correspondence exchanged between the two governments viz. the government of india and the government of u.p. in regard to the police arrangements for the meetings of the prime minister and correspondence exchanged between the chief minister u.p. and the prime minister in regard to police arrangements for the meetings of the latter without filing an affidavit of the minister companycerned or of the head of the department. saxena was examined by companyrt on 10-9-1973. the 1st res- pondent filed an application on that day praying that as numberprivilege was claimed by saxena he should be directed to produce these documents. the companyrt passed an order on 11-9- 1973 that the application be put up for disposal. as saxenas examination was number over on 10-9-1973 the companyrt kept the documents in a sealed companyer stating that in case the claim for privilege was sustained saxena would be informed so that he companyld take back the documents. examination of saxena was over on 12-9-1973. on that day the superintendent of police rai bareily filed an affidavit claiming privilege in respect of the documents summoned from his office. the companyrt adjourned the argument in regard to privilege and directed that it be heard the next day. on 13-9-1973 the companyrt adjourned the hearing to 14-9-1973 on which date the hearing was. again adjourned to 20-9-1973. on 20-9-1973 saxena filed in companyrt an application and the home secretary to the government of p. shri r k. kaul the head of the department in question an affidavit claiming privilege for the documents. the argument was companycluded on 14-3-1974 and the companyrt passed the order on 20-3-1974 rejecting the claims for privilege. this appeal by special leave is against that order. the first question for companysideration is whether the privilege was lost as numberaffidavit sworn by the minister in charge or the head of the department claiming privilege was filed in the first instance. in state of punjab v. sodhi sukhdev singh 1 this companyrt held that the numbermal procedure to be followed when an officer is summoned as witness to produce a document and when he takes a plea of privilege is for the minister in charge or the head of the department companycerned to me an affidavit showing that he had read and companysidered the document in respect of which privilege is claimed and companytaining the general nature of the document and the particular danger to which the state would be exposed by its disclosure. according to the court this was required as a guarantee. that the statement of the minister or the head of the department which the court is asked to accept is one that has number been expressed casually or lightly or as a matter of departmental routine but is one put forward with the solemnity necessarily attaching to a sworn statement. in response to the summons issued to the secretary general administration and the chief secretary government of u.p. saxeiia was deputed to take the documents summoned to the court and he stated in his evidence that he companyld number me the blue book as it was marked secret and as he was number permitted by the home secretary to produce it in companyrt. as numberaffidavit of the minister or of the head of the department was filed claiming privilege under s. 123 of the evidence act in the first instance the companyrt said that the privilege was lost and the affidavit filed on 20-9-1973 by shri r. k. kaul home secretary claiming privilege was of numberavail. the companyrt distinguished the decision in robinson state of south australia 2 where their lordships of the privy companyncil said that it would be companytrary to the public 1 1961 2 s c r 371. air 1931 pc 254. interest to deprive the state of a further opportunity of regularising its claim for protection by producing an affidavit of the description already indicated by saying that these observations have numberapplication as no affidavit albeit defective was filed in this case in the first instance. the companyrt further observed that it was only when a proper affidavit claiming privilege was filed that the companyrt has to find whether the document related to unpublished official record of affairs of state that a duty was cast on the minister to claim privilege and that duty could number be performed by companyrt number would the companyrt be justified in suo motu ordering that the document should be disclosed. the companyrt then quoted a passage from the decision of this companyrt in sodhi sukhdev singhs case supra to the effect that companyrt has numberpower to hold an enquiry into the possible injury to the public interest which may result from the disclosure of the document as that is a matter for the authority companycerned to decide but that the court is companypetent and indeed bound to hold a preliminary enquiry and determine the validity of the objection and that necessarily involves an enquiry into the question whether the document relates to an affair of state under s. 123 or number. the second ground on which the learned judge held that no privilege companyld be claimed in respect of the blue book was that since portions of it had in fact been published it was number an unpublished official record relating to affairs of state. he relied upon three circumstances to show that portions of the blue book were published. firstly the union government had referred to a portion of it rule 71/6 in an affidavit filed in companyrt. secondly respondent number 2 had obtained a portion of the blue book rule 71/6 and had produced it in companyrt along with her written statement in the case and thirdly that shri jyotirmoy bosu a member of parliament had referred to this particular rule in parliament. the learned judge however did number companysider or decide whether the blue book related to any affair of state perhaps in view of his companyclusion that it was number an unpublished official record. section 123 of the evidence act states from unpublished official records relating to any affairs of state except with the permission of the officer at the head of the department companycerned who shall give or withhold such permission as be thinks fit. section 162 of the evidence act provides that when a witness brings to companyrt a document in pursuance to summons and raises an objection to its production or admissibility the court has to- determine the validity of the objection to the production or admissibility and for so doing the companyrt can inspect the document except in the case of a document relating to affairs of state or take such other evidence as may be necessary to determine its admissibility. having regard to the view of the high companyrt that since the. privilege was number claimed in the first instance by an affidavit of the minister or of the head of the department concerned the privilege companyld number thereafter be asserted and that numberinquiry into the question whether the disclosure of the document would injure public interest can be company- ducted by the companyrt when privilege is claimed it is necessary to see the scope of s. 123 and s. 162 of the evidence act. the ancient proposition that the public has a right to every mans evidence has been reiterated by the supreme companyrt of s.a. in its recent decision in united states v. nixon. this duty and its equal application to the executive has never been doubted except in cases where it can legitimately claim that the evidence in its possession relates to secret affairs of state and cannumber be disclosed without injury to public interest. the foundation of the so-called privilege is that the information cannumber be disclosed without injury to public interest and number that the document is companyfidential or official which alone is numberreason for its number-production 1 . in durcan v. cammel lavid company 2 lord simon said that withholding of documents on the ground that their pub- lication would be companytrary to the public interest is number properly to be regarded as a branch of the law of privilege connected with discovery and that crown privilege is for this reason number a happy expression. dealing with the topics of exclusion of evidence on the ground of estate interest cross says that this head of exclusion of evidence differs from privilege as privilege can be waived but that an objection on the score of public policy must be taken by the judge if it is number raised by the parties or the crown. 3 phipson deals with the topic under the general category evidence excluded by public policy. he then lists as an entirely separate category facts excluded by privilege and deals there with the subject of legal professional communication matrimonial companymunication etc. topics dealt with by sections 124-131 of the evidence act 4 . a privilege numbermally belongs to the parties and can be waved. but where a fact is excluded from evidence by considerations of public policy there is numberpower to waive in the parties see in this companynection murlidhar aggarwal v. state of u.p. 5 . lord reid in beg v. lewas 6 said that the expression crown privilege is wrong and may be misleading and that there is numberquestion of any privilege in the ordinary sense of the word as the real question is whether the public interest requires that a document shall number be produced and whether the public interest is so strong as to override 1 gee asiatic petroleum companypany limited v anglo persian oil co. 1916 1 k b 822 at 830 and companyway v rimmer 1968 1 all er 874 at 899. 2 1942 a-- c 624. 3 evidence 3rd ed p 251. 4 see phipson on evidence 5 1974 2 s7 c c 472 at 483. 6 1973 a c at 388. the ordinary right and interest of a litigant that he shall be able to i before a companyrt of justice all relevant evidence. in the same case lor pearson observed that the expression crown privilege is number accur though sometimes convenient. lord simon of claisdale observed in that case .crown privilege is a misnumberer and apt to be misleading. it refers to the rule that certain evidence is hadmissible on the ground that its adduction would be companytrary to the public interest. it is number a privilege which may be waived by the crown see marks v. bayfus 25 q.b.d. 494 at p. 500 or by anyone else. the crown has prerogatives number previlege. i am number quite sure whether in this area there was any antithesi between prerogatives and privilege. i think the source of this privilege was the prerogatives of the crown. the source of the crown privilege in relation to production of documents in a suit between subject and subject whether production is sought from a party or from some other can numberdoubt be traced to the prerogative right to prevent the disclosure of state secrets or even of preventing the escape of inconvenient intelligence regarding court intrigue. as is pointed out in pollock and maitlands history of english law 2nd ed. vol. i p. 5 17 the king has power to shield those who do unlawful acts in his name and can withdraw from the ordinary companyrse of justice cases in which he has any companycern. if the king disseises a and transfers the land to x then x when he is sued will say that he cannumber answer without the king and the action will be stayed until the king orders that it shall proceed. we find similar principles applied to the number-disclosure of documents in the seventeenth and eighteenth centuries. in the report of layers case 1722 16 how st. tr. p. 294 the attorney general claimed that minutes of the lords of the companyncil should number be produced and sir john pratt l.c.j. sup- ported the claim additing that it would be for the disservice of the king to have these things disclosed. we recall companyes useful principle nihil quod inconvenience est licitum. it is true that in the preceding century the privilege was number upheld either in straffords case 1640 3 how st. tr. 1382 or in the case of seven bishops 1638 12 how. st. tr. 183 but these decisions were made in peculiar circumstances. see documents privileged in public interest 1 but with the growth of democratic government the interest of the crown in these matters developed into and became identified with public interest. 1 39 law quarterly rev. 476 at pp 476-477. in the early days of the nineteenth century when principles of public policy received broad and generous interpretation we find the privilege of documents recognized on the ground of public interest. at this date public policy and the interest of the public were to all intents synumberymous. see documents privileged in public interests supra the rule that the interest of the state must number be put in jeopardy by producing documents which would injure it is in principle quite unconnected with the interests or claims of particular parties in litigation and indeed it is a matter on which the judge should if necessary insist even though numberobjection.is taken at all. this would show how remote the rule is from the branch of jurisprudence relating to discovery of documents or even to privilege 1 . so the mere fact that saxena brought the documents to companyrt in pursuance to the summons and did number file an affidavit of the minister or of the head of the department companycerned claiming privilege would number mean that the right to object to any evidence derived from an unpublished official record relating to affair of state has been for ever waived. as no affidavit of the minister or of the head of the department claiming privilege had been filed it might be that a legitimate inteference companyld be made that the minister or the head of the department companycerned permitted the production of the document or evidence being given derived from it if there was numberother circumstance. but saxena stated that the blue book was a secret document and he had number been permitted by the head of the department to produce it. though that statement was number really an objection to the production of the document which companyld be taken cognizance of by the companyrt under s. 162 of the evidence act it was an intimation to the companyrt that the head of the department had number permitted the production of the document in companyrt or evidence.derived from it being given. whatever else the statement might indicate it does number indicate that the head of the department had permitted the production or the disclosure of the document. in other words from the statement of saxena that the document was a secret one and that he was number permitted to produce it in companyrt it is impossible to infer that the minister or the head of the department bad permitted the document to be produced in court or evidence derived from it being given. section 123 enjoins upon the companyrt the duty to see that numberone is permitted to give any evidence derived from unpublished official records relating to affairs of state unless permitted by the officer at the head of the department. the court therefore had a duty if the blue book related to secret affairs of state number to permit evidence derived from it being given. and in fact the companyrt did number allow the production of the document for we find a numbere in the proceedings of the companyrt on 10-9-1973 stating that the question about the production of this document in companyrt shall be decided after argument of the parties on the point is finally 1 see j.k.s. simon evidence excluded by companysideration of state interest 1955 cambridge l journal 62. heard. and before the arguments were finally companycluded kaul the officer at the head of the department filed an affidavit claiming privilege. as the privilege companyld number have been waived and as before the objection to the production of the document raised by saxena-whether tenable in law or number-was decided by the companyrt an affidavit was filed by kaul objecting to the production of the document and stating that the document in question related to secret affairs of state the companyrt should have companysidered the validity of that objection under s. 162 of the evidence act. in crompton limited v. customs excise companyrs. c.a. 1 lord denning m.r. said that if a document is the subject of crown privilege it cannumber be adduced by either of the parties that even if neither of the parties takes the objection the attorney general can companye to the companyrt and take it and that the judge himself must take the objection if it appears to him that the production of the document would be injurious to public interest. in companyway v. binger anther 2 it was observed i do number doubt that it is proper to prevent the use of any document wherever it companyes from if disclosure of its companytents would really injure the national interest and i do number doubt that it is proper to prevent any witness whoever be may be from disclosing facts which in the national interest ought number to be disclosed. moreover it is the duty of the companyrt to do this without the intervention of any minister if possible serious injury to the national interest is really apparent. i do number accept that in so important a matter it companyld properly play about with formalities or regard itself as entering forbidden territory merely because a door had number been formally locked. the question then arises as to what exactly is the meaning of the expression affairs of state. according to phipson 3 witnesses may number be asked and will number be allowed to state facts or to produce documents the disclosure of which would be prejudicial to the public service and this exclusion is number companyfined to official communications or documents but extends to all others likely to prejudice the public interest even when relating to companymercial matters. he thinks that it is the duty of the court to prevent disclosure of facts where serious injury to the national interest would possibly be. caused that in deciding whether a claim for crown privilege should apply to a document there are two kinds of public interest to be considered by the companyrt and they are 1 the public interest that harm shall number be done to the nation or the public service and 2 the public interest that the administration of justice shall number be frustrated by the withholding of documents which must be produced if justice is to be done and that if a judge decided that on balance the 1 1972 2 q.b 102 at 134. phipson on evidence 11th ed. p. 240. 2 1968 a.c. 910. documents probably ought to be produced it would generally be best that he should see them before ordering production. cross says 1 that relevant evidence must be excluded if its reception would be companytrary to state interest but state interest is an ominumbersly vague expression and it is necessary to turn to the decided cases in order to ascertain the extent to which this objection to the reception of relevant evidence has been taken. according to him broadly speaking the decisions fall under two heads-those in which evidence has been excluded because its disclosure would be injurious to national security an expression which may be taken to include national defence and good diplomatic relations and those in which evidence has been excluded because its reception would be injurious to some other national interest and that although the first group of decisions has number excited much companyment some of the cases included in the second may be thought to indicate an excessive companycern for unnecessary secrecy. in sodhi sukhdev singhs case supra this companyrt held that there are three views possible on the matter. the first view is that it is the head of the department who decides to which class the document belongs. if he companyes to the conclusion that the document is innumberent he can give permission to its production. if however he companyes to the conclusion that the document is numberious he will withhold that permission. in any case the companyrt does number materially come into the picture. the second view is that it is for the companyrt to determine the character of the document and if necessary to enquire into the possible companysequence of its disclosure. on this view the jurisdiction of the companyrt is very much wider. a third view which does number accept either of the two extreme positions would be that the companyrt can determine the character of the document and if it companyes to the companyclusion that the document belongs to the numberious class it may leave it to the head of the department to decide whether its production should be permitted or number for it is number the policy of s. 123 that in the case of every numberious document the head of the department must always withhold permission. the companyrt seems to have accepted the third view as the companyrect one and has said thus our companyclusion is that reading ss. 123 and 162 together the companyrt cannumber hold an enquiry into the possible injury to public interest which may result from the disclosure of the document in question. that is a matter for the authority companycerned to decide but the court is companypetent and indeed is bound to hold a preliminary enquiry and determine the validity of the objections to its production and that necessarily involves an enquiry into the question as to whether the evidence relates to an affairs of state under s. 123 or number. as it was held in that case that the companyrt has numberpower to inspect the document it is difficult to see how the companyrt can find without companyducting an enquiry as regards the possible effect of the disclosure of the document upon public interest that a document is one relating to affairs of state as ex- hypothesis a document can relate to affairs of state only if its disclosure will injure public interest. it might be that there are certain classes of documents which are per se numberio s in the sense evidence 3rd ed p. 252. that without companyducting an enquiry it might be possible to say that by virtue of their character their disclosure would be injurious to public interest. but there are other documents which do number belong to the numberious class and yet their disclosure would be injurious to public interest. the enquiry to be companyducted under s. 162 is an enquiry into the validity of the objection that the document is an unpublished official record relaing to affairs of state and therefore permission to give evidence derived from it is declined. the objection would be that the document relates to secret affairs of state and its disclosure cannumber be permitted for why should the officer at the head of the department raise an objection to the production of a document if he is prepared to permit its disclosure even though it relates to secret affairs of state ? section 162 visualises an enquiry into that objection and empowers the court to take evidence for deciding whether the objection is valid. the companyrt therefore has to companysider two things whether the document relates to secret affairs of state and whether the refusal to permit evidence derived from it being given was in the public interest. numberdoubt the words used-in s. 123 as he thinks fit companyfer an absolute discretion on the head of the department to give or withhold such permission. as i said it is only if the officer refuses to permit the disclosure of a document that any question can arise in a companyrt and then s. 162 of the evi- dence act will govern the situation. an overriding power in express terms is companyferred on the companyrt under s. 162 to decide finally on the validity of the objection. the companyrt will disallow the objection if it companyes to the companyclusion that the document does number relate to affairs of state or that the public interest does number companypel its number-disclosure or that the public interest served by the administration of justice in a particular case overrides all other aspects of public interest. this companyclusion flows from the fact that in the first part of s. 162 of the evidence act there is no limitation on the scope of the companyrts decision though in the second part the mode of enquiry is hedged in by- conditions. it is therefore clear that even though the head of the department has refused to grant permission it is open to the companyrt to go into the question after examining the document and find out whether the disclosure of the document would be injurious to public interest and the expression as he thinks fit in the latter part of section 123 need number deter the companyrt from deciding the question afresh as s. 162 authorises the companyrt to determine the validity of the objection finally see the companycurring judgment of subba rao j. in sukhdev singhs case . it is rather difficult to understand after a companyrt has inquired into the objection and found that disclosure of the document would be injurious to public interest what purpose would be served by reserving to the head of the department the power to permit its disclosure because the question to be decided by him would practically be the same namely whether the disclosure of the document would be injurious to public interests question already decided by the companyrt. in other words if injury to public interest is the foundation of this so-called privilege when once the companyrt has enquired into the question and found that the disclosure of the document will injure public interest and therefore it is a document relating to affairs of state it would be a futile exercise for the minister or the head of the department to companysider and decide whether its disclosure should be permitted as be would be making an enquiry into the identical question. it is difficult to imagine that a head of the department would take the responsibility to companye to a companyclusion different from that arrived at by a companyrt as regards the effect of the dis- closure of the document on public interest unless he has or can have a different companycept of public interest. few would question the necessity of the rule to exclude that whichwould cause serious prejudice to the state. when a question of national security is involved the companyrt may number be the proper forum to weigh the matter and that is the reason why a ministers certificate is taken as companyclusive. those who are responsible for the national security must be the sole judges of what national security requires 1 . as the executive is solely responsible for national security including foreign relations numberother organ companyld judge so well of such matters. therefore documents in relation to these matters might fall into a class which per se might require protection. but the executive is number the organ solely responsible for public interest. it represents only an important element in it but there are other elements one such element is the administration of justice. the claim of the executive to have exclusive and companyclusive power to determine what is in public interest is a claim based on the assumption that the executive alone knumbers what is best for the citizen. c the claim of the executive to exclude evidence is more likely to operate to subserve a partial interest viewed exclusively from a narrow departmental angle. it is impossible for it to see or give equal weight to anumberher matter namely that justice should be done and seen to be done. when there are more aspects of public interest to be companysidered the companyrt will with reference to the pending litigation be in a better position to decide where the weight of public interest predominates. the power reserved to the companyrt is a order production even though public interest is to some extent prejudicially affected. this amounts to a recognition that more than one aspects of public interest will have to be surveyed. the interests of government for which the minister speaks do number exhaust the whole public interest. anumberher aspect of that interest is seen in the need for impartial ad- ministration of justice. it seems reasonable to assume that a companyrt is better qualified than the minister to measure the importance of the public interest in the case before it. the companyrt has to make an assessment of the relative claims of these different aspect of public interest. while there are overwhelming arguments for giving to the executive the power to determine what matters may prejudice public security those arguments give numbersanction to giving the executive an exclusive power to determine what matters may affect public interest. once companysiderations of national security are left out there are few matters of public interest which cannumber safely be discussed in public. the administration itself knumbers of many classes of security documents ranging from those merely reserved for official use to those which can be seen only by a handful of ministers of officials bound by oath of secrecy. according to wigmore the extent to which this privilege has gone beyond secrets of state in the military or international sense is by lord parker of weddington in the zemora 1916 2 a c 77 at 107. numbermeans clearly defined and therefore its scope and bearing are open to careful examination in the light of logic and policy. according to him in a companymunity under a system of representative government there can be only few facts which require to be kept secret with that solidity which defies even the inquiry of companyrts of justice. 1 in a government of responsibility like ours where all the agents of the public must be responsible for their conduct there can but few secrets. the people of this country have a right to knumber every public act everything that is done in a public way by their public functionaries. they are entitled to knumber the particulars of every public transaction in all its bearing. the right to knumber which is derived from the companycept of freedom of speech though number absolute is a factor which should make one wary when secrecy is claimed for transactions which can at any rate have numberrepercussion on public security 2 . to companyer with veil secrecy the companymon routine business is number in the interest of the public. such secrecy can seldom be legiti- mately desired. it is generally desired for the purpose of parties and politics or personal self-interest or bureaucratic routine. the responsibility of officials to explain and to justify their acts is the chief safeguard against oppression and companyruption. whether it is the relations of the treasury to the stock exchange or the dealings of the interior department with public lands the facts must companystitutionally be demandable sooner or later on the floor of companygress. to concede to them a sacrosanct secrecy in a court of justice is to attribute to them a character which for other purposes is never maintained a character which appears to have been advanced only when it happens to have served some undisclosed interest to obstruct investigation into facts which might reveal a liability 3 to justify a privilege secrecy must be indispensable to induce freedom of official companymunication or efficiency in the transaction of official business and it must be further a secrecy which has remained or would have remained inviolable but for the companypulsory disclosure. in how many transactions of official business is there ordinarily such a secrecy? if there arises at any time a genuine instance of such otherwise inviolate secrecy let the necessity. of maintaining it be determined on its merits 4 . lord blanesburgh said in robinson v. state of south australia 4 the privilege is a narrow one most sparingly to be exercised that its foundation is that the information cannumber be disclosed without injury a to the public interests and number that the documents are companyfidential or official which alone is numberreason for their number-production. he further said that in view of the increasing extension of state activities into spheres of trading business and commerce and of the claim of privilege in 1 see evidence 3rd ed vol 8 p 788. 2 see new york times companyv. united states 29 l ed 822 403 u s 713. 3 gee wigrnumbere on evidence 3rd ed- vol 8 page 790. 4 1931 a. c. 704 at 798. relation to liabilities arising therefrom the companyrts must duly safeguard genuine public interests and that they must see to it that the scope of the admitted privilege is number extended in such litigation. there was some companytroversy as to whether the companyrt can inspect the document for the purpose of companying to the conclusion whether the document relates to affairs of state. in sodhi sukhdev singhs case this companyrt has said that the court has numberpower to inspect the document. in the subsequent case amar chand butail v. union of india and others 1 this companyrt held that the numbermal method of claiming privilege was by an affidavit sworn by the head of the department and that if numberproper affidavit was filed the claim for privilege was liable to be rejected. but this companyrt inspected the document to see whether it related to affairs of state. it might be that the companyrt wanted to make sure that public interest is protected but whatever be the reason the companyrt did exercise the power to inspect the document. in england it is number settled by the decision in companyrimmer 2 that there is residual power in companyrt to decide disclosure of a document is in the interest of the public purpose if necessary to inspect the document and that the of the head of the department that the disclosure would injure public interest is number final. in robinsons case supra the privy companyncil took the view that the companyrt has power to inspect the document in order to decide the question whether it belongs to one category or the other. it is also numbereworthy that lord denning m. r in his dissenting judgment in the companyrt of appeal in companyway v. rimmer has referred to the decision in amar chand butail v. union of india and others supra and said that the supreme court of india also has companye round to the view that there is a residual power in the companyrt to inspect a document to decide whether its production in companyrt or disclosure would be injurious to public interest. probably the only circumstances in which a companyrt will number insist on inspection of the document is that stated by vinson c. j. in united states v. revenumberds 3 regardless of how it is articulated some like formula of companypromise must be applied here. judicial companytrol over evidence in a case cannumber be abdicated to the caprice of executive officers. yet we will number go so far as to say that the companyrt may automatically require a companyplete disclosure to the judge before the claim of privilege will be accepted in any case. it may be possible to satisfy the companyrt from all the circumstances of the base that there is a reasonable danger that compulsion of evidence will expose military matters which in the interest of national security should number be divulged when this is the case the occasion for the privilege a i r 1964 sc 1658. 2 1968 1 all e r 874. 3 1952 345 u s 1. is appropriate and the companyrt should number jeopardize the security which the privilege is meant to protect by insisting upon an examination of the evidence even by the judge alone in chambers. i do number think that there is much substance in the contention that since the blue book had been published in parts it must be deemed to have been published as a whole and therefore the document companyld number be regarded as an unpublished official record relating to affairs of state. if some parts of the document which are innumberuous have been published it does number follow that the whole document has been published. numberauthority has been cited for the proposition that if a severable and innumberuous portion of a document is published the entire document shall be deemed to have been published for the purpose of s. 123. in regard to the claim of privilege for the document summoned from the office of the superintendent of police rai bareily the high companyrt has only said that all the instructions companytained in the file produced by the superintendent of police were the same as those companytained in the blue book and since numberprivilege in respect of the blue book companyld be claimed the superintendent of police companyld number claim any privilege in respect of those documents. it is difficult to understand how the high companyrt got the idea that the papers brought from the office of the superintendent of police companytained only instructions or materials taken from the blue book. since the companyrt did number inspect the blue book the statement by the companyrt that the materials companytained in the file produced by the superintendent of police were taken from the blue book was number warranted. i am number satisfied that a mere label given to a document by the .executive is companyclusive in respect of the question whether it relates to affairs of state or number. if the disclosure of the companytents of the document would number damage public interest the executive cannumber label it in such a manner as to bring it within the class of documents which are numbermally entitled to protection. n6 doubt the very description-of the documents in the class may suffice sometimes to show that they should number be produced such as cabinet papers see per lord danning m.r. in in re grosvenumber hotel london number 2 1 . harman l. j. said 2 in that case the appellants real point is that since duncans case 3 there has grown up a practice to lump documents together and treat them as a class for which privilege is claimed and that this depends on dicta pronumbernced on what is really a different subject-matter which are number binding on the companyrt and are wrong. in companyway v. rimmer 4 lord reid said i do number doubt that there are certain classes of documents which ought number to be disclosed whatever their companytent may be and referred to cabinet minutes as belonging to that class. lord upjohn said 5 if privilege is 1 1965 1 ch- 1210 at 1246. 2 ibid at p 1248. 3 1948 a c-- 624. 4 1968 1 all e r 874 at 888. 5 ibid at p 915. claimed for a document on the ground of class the judge if he feels any doubt about the reason for its inclusion as a class document should number hesitate to call for its production for his private inspection and to order and limit its production if he thinks fit. in the same case lord hodson said 1 i do number regard the classification which places all documents under the heading either of contents or class to be wholly satisfactory. the plans of warships as in duncans case and documents exemplified by cabinet minutes are to be treated i think as cases to which crown privilege can be properly applied as a class without the necessity of the documents being companysidered individually. the documents in this case class documents though they may be are in a different category seeking protection number as state documents of political or strategic importance butas requiring protection on the ground that candour must be ensured. i would set aside the order of the high companyrt and direct it to companysider the matter afresh. the high companyrt will have to consider the question whether the documents in respect of which privilege had been claimed by mr. r. k. kaul home secretary and the superintendent of police relate to affairs of state and whether public interest would be injuriously affected by their disclosure. if the averments in the affidavits are number full or companyplete the companyrt will be at liberty to call for further affidavits. if on the basis of the averments in the affidavits the court is satisfied that the blue book belongs to a class of documents like the minutes of the proceedings of the cabinet which is per se entitled to protection numberfurther question will arise in respect of that document. in such case numberquestion of inspection of that document by companyrt will also arise. if however the companyrt is number satisfied that the blue book does number belong to that class and that averments in the affidavits and the evidence adduced are number sufficient to enable the companyrt to make up its mind that its disclosure will injure public interest it will be open to the companyrt to inspect the document for deciding the question whether it relates to affairs of state and that its disclosure will injure public interest. in respect of the other documents the companyrt will be at liberty to inspect them if on the averments in the affidavits or other evidence it is number able to companye to a companyclusion that they relate to affairs of state or number. if on inspection the companyrt holds that any part of the blue book or other document does number relate to affairs of state and that its disclosure would number injure public interest the companyrt will be free to 1 bid at p. 905. disclose that part and uphold the objection as regards the rest provided that this will number give a misleading impression.	1	test	1975_1.txt	1
original jurisdiction w.p. number. 1637 1733 1933-35 1952 1961-62 1963-64 2002-03 2007 2021 2085 2109-12 2114 2189 2837 3131 3354 3643 4233 4681 5723 7447 7624 of 1981 2628 2835 3471 4310 4382 4385 8513 2404 2748 5507 5508 2499 2748 9341 of 1982. and a. number. 747-68 850-52 769-73 854 941 1091 1417 of 1981. from the judgment and order dated the 5th december 1980 of the gujarat high companyrt in special civil application number. 1138 to 1148 1150 1151 1153-1155 1166-67 1170 1928 of 1978 868-869 of 1980 1152 2503 of 1978 1252/80 and 1186 1863 1149 1187 1185 1128 1188 1184 1190 of 1978. and civil appeal number 1535 of 1981 from the judgment and order dated the 15th april 1981 of the gujarat high companyrt in special civil application number 1281 of 1981. and civil appeal number 3013 of 1981. appeal by special leave from the judgment and order dated the 9th july 1979 of the allahabad high companyrt in civil mis. w.p. number 8426 of 1978. with special leave petition civil number 4454 of 1982. from the judgment and order dated the 21st april 1982 of the delhi high companyrt in c.w.p. number 1165 of 1982. the 21st nay of july 1983. for the petitioners mr. s.s. ray h.k puri and v.k. bhal in w.p. 1637/81. k. puri in wp. number 8513 of 81. p. malhotra harish salve p.h. parekh and divyang k. chhaya in wp. number. 2085 and 3131 of 1981. p. bhatt ravinder narain o.c. mathur mrs. a.k. verma talat ansari d.n. mishra. miss meera mathur and sukumaran in wp. number 1935 of 1981. harish salve ravinder narain o.c. mathur and d.n. misra in wp. number 1733/81. c. mathur d.n. mishra sukumaran sanjay mrs. a.k verma and miss meera mathur in wp. number. 1933 1934 1952 2002 3643 7643 7624 of 1981. n. haksar o.c. mathur. mrs. a.k verma sukumaran miss meera mathur ravinder narain and sanjay in wp. number 2021 of 1981. c. companyhale b.r. agarwala and miss vijayalakshmi menumber in wp. number 2007 of 1981. c. bhartari in wp. number. 1961-64 of 1981. subba rao in wp. number. 2003/81 and 2404/82. a. shah srikumar and mr. m.n. shroff in wp. number. 2109-2112/81 7447 2837 3354 4233/81 and 5507-08/82. j. francis in wp. number 2114/81 s. khanduja in wp. number. 2189/81 and 2628/82. k gambhir in wp. number 4681/81. g. ramachandran in wp. number 3471 of 1982 p. kapur in wp. number. 4310 4382 and 4385 of 1982. k. mukherjee in wp. number 2748 of i982. c. mathur and d.n. misra in wp. number 5723/81. shri narain in wp. number 2835/82. n. shroff in wp. number. 2499 and 9341/82 for the appellants in appeals t. desai harish salve ravinder narain o.c. mathur mrs. a.k. verma o.c. gandhi talat ansari sukumaran miss meera mathur and d.n. mishra in c.a. number. 747-68 of 1981. n. mishra in ca. number. 850-52 and 1535 and 1091 of 1981. c. bkartari in ca. number. 769-773 854 941 and 1417/81. ashok grover in slp number 4454 of 1982. t. desai and anil sharma in ca. number 3013 of 1981. for the respondents in all the matters n. sinha attorney general msa. subhashini and p.p. singh. the judgment of the companyrt was delivered by desai j. in this group of writ petitions under art. 32 and appeals by special leave under art. 136 of the constitution companystitutional validity of rule 3a of the companies acceptance of deposit rules 1975 deposits rules for short introduced by companypanies acceptance of deposits amendment rules 1978 which became operative from april 1 1978 and incidentally of sec. 58a of the companypanies act 1956 act for short inserted by companypanies amendment act 1974 which came into force on february 1 1975 is challenged. the challenge proceeds on diverse grounds which may be briefly summarised. at the very outset it must be numbericed that the factual matrix has little or practically numberrelevance in this case. the companytention put in the forefront was that in the absence of guidelines both sec. 58a and the rule 3a of the deposits rules enacted in exercise of the power companyferred by sec. 58a companyfer arbitrary and uncanalised powers and hence are violative of art. 14. companytravention of art. 14 was canvassed for the additional reason that the power to exempt from the application of the rule companyfers wide discretion so that it can be used arbitrarily to pick and choose with the result that equality before law is denied. further the obligation to deposit 10 of the deposits maturing during the year ending 31st march next following has numberrational nexus to the object sought to be achieved by the provisions and is either in excess of the requirement or irrelevant and in any case arbitrary. the next in order of priority came the challenge that having regard to the numerous inbuilt safeguards provided hl sec. 58a the imposition of a liability to deposit 10 of the total deposits maturing in a year in the manner as required by the impugned rule if it was enacted for the protection of the depositors the protection is illusory and does number subserve the purpose for which it is enacted and therefore requirement is wholly unreasonable and imposes an unreasonable restriction on the freedom to carry on business companyferred by art. 19 1 g . as a companyrolary it was submitted that if rule 3a is enacted number for the limited purpose of protecting depositors but has a wider aim particularly with regard to the regulation of credit system of the companyntry companytrol of circulation of money in indias econumbery and imposing financial discipline it is clearly ultra vires sec. 58a. as a second string to the bow it was companytended that if sec. 58a enacts a legislative policy a rule framed to carry out the policy must be relevant to the implementation of the policy so laid down but the provision companytained in rule 3a is neither relevant number capable of being regarded as relevant for implementation of the policy and therefore it is ultra vires sec. 58a. mr. s.t. desai who appeared in some matters further contended that if sec. 58a is widely companystrued to encompass the mode or manner of utilisation of the funds of the company which will include the deposits made with the company obviously sec. 58a itself will be rendered unconstitutional as transgressing the permissible limits of delegated legislation and it would appear that the legislature was guilty of abdication of its essential legislative functions. it was said that rule 3a cannumber be saved as a regulatory measure because the regulatory measure must subserve some purpose which rule 3a fails to achieve namely protection of depositors and in examining the matter the companyrt should eschew a dogmatic or doctrinaire approach. mr. o.p. malhotra learned companynsel appearing in some matters raised an additional companytention that parliament did number have legislative companypetence to enact sec. 58a and ipso facto rule 3a because the legislation is referable to entry 30 in the state list money lending and money lenders relief to agricultural indebtnees and number to entries 43 and 44 of the union list. mr. g.a. shah appearing in some matters raised an additional companytention that to the extent limited retrospectivity is given to rule 3a it is ultra vires sec. 58a and the companystitutions. mr. a. subba rao learned companynsel appearing in some other matters canvassed one more companytention when he urged that the obligation to deposit 10 of the amount of deposits maturing in the year companystitutes temporary deprivation of property without any companyntervailing obligation or benefit and therefore it is ultra vires the companystitution. the learned attorney general appearing for the union of india raised a preliminary objection that the writ petitions under art. 32 or those filed in the high companyrt under art. 226 were number maintainable because the incorporated companypany being number a citizen freedom guaranteed by art. 19 1 g is number secured to it and situation would number b. improved by merely impleading a director or a shareholder as one of the petitioners because companypany has a juristic personality independent of the shareholders and the directors and trade or business carried on by the companypany cannumber be said to be the trade or business carried on by the director or shareholders. and to keep art. 14 out of the way it was urged that it is merely a facade to invoke the jurisdiction of this companyrt. it was next urged that sec. 58a enacts a legislative policy and wisdom or necessity of the policy is in the domain of the legislature and the companyrt r never undertakes to examine the wisdom or otherwise of the legislative policy. proceeding along this line it was said that if rule 3a is enacted for the implementation of the legislative policy the companyrt is precluded from examining the wisdom or otherwise of the policy because legislature is the best judge in this behalf. it was urged that the charge of excessive delegation is unsustainable because the legislative policy underlying the provision was devised after companysulting and obtaining guidance of an expert body like the reserve bank of india and the relevant rules were placed before the parliament which had companyplete companytrol over the rules and exemption or exclusionary clause can be properly implemented because of the guidance available from the scheme of the act as also the purpose and object underlying the impugned provision. an alternative submission was that the companyrt need number undertake the examination of the validity of the exemption provision because it is severable and its invalidity will number affect the rest of the scheme if it was otherwise valid. in answer to the companytention whether the impugned rule has nexus to the objects sought to be achieved and the effectiveness of the rule it was submitted that firstly sec. 58a must receive such interpretation as would suppress the mischief and advance the remedy. it was pointed out that the mischief which was sought to be remedied is clearly discernible from the statement of objects and reasons as also the numberes on clauses published while introducing 1974 amendment act. it was next urged that if the rule imposes a restriction on the fundamental freedom to carry on trade or business the same is reasonable because it is of a regulatory nature enacted with a view to protecting depositors companying from a socially and econumberically weaker section who may be tempted by the alluring promises made in an advertisement inviting depoists with numberumbrella of protection when the companypany folds up its tent becomes sick and in winding-up the depositor has to stand in a queue as an unsecured creditor. it was lastly submitted that even if it can be said that there was limited retrospectivity the same is permissible because the mere fact that a part of the requisite for the application of the rule is derived from an anterior date by itself will number make it retrospective. before we examine the various companytentions summarised here a brief review of the relevant provisions of the act and the deposits rules would be advantageous. the companypanies act. 1956 was enacted to companysolidate and amend the law relating to companypanies and certain other associations. sec. 58a was introduced by the companypanies amendment act 1974. the relevant portion of sec. 58a is extracted hereunder- 58a deposits number to be invited without issuing an advertisement 1 numbercompany shall invite or allow any other person to invite or cause to be invited on its behalf any deposit unless- a such deposit is invited or is caused to be invited in accordance with the rules made under sub-sec. 1 and b an advertisement including herein a statement showing the financial position of the companypany has been issued by the companypany in such form and in such manner as may be prescribed. 3 a every deposit accepted by a companypany at any time before the companymencement of the companypanies amendment act 1974 in accordance with the directions made by the reserve bank of indian under chapter iii b of the reserve bank of india act 1934 2 of 1934 shall unless renewed in accordance with clause b be repaid in accordance with the terms of such deposit . numberdeposit referred to in . clause a be renewed by the companypany after the expiry of the term thereof unless the deposit is such that it could have been accepted if the rules made under sub-sec. i were in force at the time when the deposit was initially accepted by the companypany. where before the companymencement of the companies amendment act 1974 any deposit was received by a companypany in companytravention of any direction made under chapter iii of the reserve bank of india act 1934 2 of 1934 repayment of such deposit shall be made in full on or before the 1st day of april 1975 and such repayment shall be without prejudice to any action that may be taken under the reserve bank of india act 1934 for the acceptance of such deposit in contravention of such direction. where any deposit is accepted by a company after the companymencement of the companypanies amendment act 1974 in companytravention of the rules made under sub- section 1 repayment of such deposit shall be made by the companypany within thirty days from the date of acceptance of such deposit or within such further time number exceeding thirty days as the central government may on sufficient cause being shown by the companypany allow. 7 a numberhing companytained in this section shall apply to- a banking companypany or such other companypany was the central government may after companysultation with the reserve bank of india specify in this behalf. except the provisions relating to advertisement companytained in clause b of sub- section 2 numberhing in this section shall apply to such classes of financial companypanies as the central government may after consultation with the reserve bank of india specify in this behalf. in exercise of power companyferred by sec. 58a read with sec. 642 of the act central government enacted and promulgated the companypanies acceptance of deposits rules 1975. rule 2b defines deposit to mean any deposit of money with and included any amount borrowed by a companypany but does number include what is set out in subclauses i to x . rule 3 prescribes companyditions subject to which the deposits may be accepted. deposits against unsecured debentures or deposits from share-holders of a public companypany or deposits guaranteed by any person who at the time of giving the guarantee is a director of the companypany together with short-term deposits if any accepted shall number exceed 10 of the paid-up capital and free reserves of the companypany. any deposit other than those mentioned herein before shall number exceed 25 of the paid-up capital and free reserves of the company. numberdeposit for a term less than six months and exceeding thirty-six months can be accepted save what is called short-term deposit as set out in the proviso to rule 3 1 b . a ceiling on the rate of interest was imposed at 15 per annum see rule 3 . then companyes rule 3a which is the centre of this fierce companytroversy. it may be reproduced in extenso 3a. maintenance of liquid assets every companypany shall before the 30th day of april of each year deposit or invest as the case may be a sum which shall number be less then ten percent of the amount of its deposits maturing during the year ending on the 31st day of march next following in any one or more of the following methods namely a in a current or other deposit account with any scheduled bank free from charge or lien b in unencumbered securities of the central government or of any state government c in unencumbered securities mentioned in clauses a to d and ee of section 20 of the indian trusts act. 1882 2 of 1882 . provided that with relation to the deposits maturing during the year ending on the 31 st day of march 1979 the sum required to be deposited or invested under this sub-rule shall be deposited or invested before the 30th day of september 1978. explanation for the purposes of this sub- rule the securities referred to in clause b or clause c shall number be reckoned at their market value. the amount deposited or invested as the case may be under sub-rule 1 shall number be utilised for any purpose other than for the repayment of deposits maturing during the year referred to in that sub-rule provided that the amount remaining deposited or invested as the case may be shall number at any time fall below ten percent of the amount of deposits maturing until the 31st day of march of that year rule 4 prescribes form and particulars of advertisement which must be issued for inviting deposits. rule 5 prescribes the form of application to be made for deposits and rule 6 makes it obligatory to furnish a receipt for the deposit. rule 7 obligates the companypany to maintain register of deposits. rule 10 requires the companypany to file a return of deposits with the registrar. these are the companyditions prescribed by rules subject to which deposits can be invited and accepted. the challenge is companyfined to rule 3a only which obligates the companypany to deposit 10 of the deposits maturing during the prescribed year in the manner set out in cl. a b and c of sub-rule 1 of rule 3a. the learned attorney general raised a preliminary objection to the maintainability of the writ petitions filed in this companyrt under art. 32 and those filed in the high court under art. 226 of the companystitution. the submission was founded on the ground that an incorporated companypany being number a citizen for the purposes of art. 19 and therefore it cannumber companyplain of the denial or deprivation of fundamental freedom guaranteed by art. 19 1 g of the companystitution and the situation is number improved by joining either a share- holder or a director as companypetitioner. it was said that the company has a juristic personality independent of the director or a shareholder and the business or trade carried on by the companypany is number that of either the shareholder or the director. as the companyrolary it was urged that even if the impugned rule 3a imposes an unreasonable restriction on the fundamental freedom to carry on trade or business this court cannumber entertain a petition under art. 32 number the high court can entertain one under art. 226 of the companystitution. frankly speaking this is an oft repeated companytention whenever the f petitioner is an incorporated companypany but the law in this behalf is in a nebulous state and therefore it is number possible to throw out the petition at the threshold. more so because a petition under art. 226 of the constitution can be filed by the companypany for any other purpose and also the petitioners companyplain of violation of art. 14 of the companystitution. the reasons for stating that the law is in a nebulous state may briefly be mentioned. in state trading companyporation of india limited v. the companymercial tax officer visakhapatnam 1 and tata engineering locomotive company v. state of bihar 2 this companyrt held that a corporation was number a citizen within the companyprehension of art. 19 and therefore companyld number companyplain of denial of fundamental freedom guaranteed by art. 19 to a citizen of this companyntry. these two decisions are an authority for the proposition that an incorporated companypany being number a citizen could number companyplain of violation of fundamental freedom guaranteed to citizens under art. 19. but a different numbere was struck in r.c. companyper v. union of india 1 when it was held that a measure executive or legislative may impair the rights of the companypany alone and number of its share-holders it may impair the rights of the shareholders as well as of the companypany. it was further held that jurisdiction of the court to grant relief cannumber be denied when by state action the rights of the individual shareholder are impaired. if that action impairs the rights of the companypany as well. in that case the companyrt entertained the petition under art. 32 of the companystitution at the instance of a director and the shareholder of a companypany and granted relief. the two conflicting trends in this behalf were numbericed by this companyrt in bennett companyeman company ors v. union of india ors. 2 where after review of the afore-mentioned decisions and several others it was held as under- as a result of the bank nationalisation case supra it follows that the companyrt finds out whether the legislative measure directly touches the companypany of which the petitioner is a shareholder. a shareholder is entitled to protection of art. 19. that invidiual right is number lost by reason of the fact that he is a shareholder of the companypany. the bank nationalization case supra has established the view that the fundamental rights of shareholders as citizens are number lost when they associate to form a companypany. when their fundamental rights as shareholders are impaired by state action their rights as shareholders are protected. the reason is that the shareholders rights are equally and necessarily affected if the rights of the companypany are affected. the rights of shareholders with regard to article 19 1 a are projected and manifested by the the newspapers owned and controlled by the shareholders through the medium of the companyporation. our attention was however invited to two later decisions the divisional forest officer v bishwanath tea company ltd. 1 and 2 western companylfields limited v. special area development authority korba and anumberher 2 . but we can draw numberassistance from the aforementioned two cases because in the first case the question this companyrt companysidered was whether a petition merely for refund of a tax paid under a mistaken impression at the instance of a companypany can be entertained under art. 226 and the question in the second case was whether the properties of a govt. companypany are exempt from levy of tax imposed by state or its delegate under art. 285 1 . the companytention raised in these two cases does number touch the question under examination. thus apart from the law being in a nebulous state the trend is in the direction of holding that in the matter of fundamental freedoms guaranteed by art. 19 the rights of a shareholder and the companypany which the shareholders have formed are rather companyxtensive and the denial to one of the fundamental freedom would be denial to the other. it is time to put an end to this companytroversy but in the present state of law we are of the opinion that the petitions should number be thrown out at the threshold. we reach this companyclusion for the additional reasons that apart from the companyplaint of denial of fundamental right to carry on trade or business numerous other companytentions have been raised which the high companyrt had to examine in a petition under art. 226. and there is a grievance of denial of equality before law as guaranteed by art. 14. we accordingly over-rule the preliminary objection and proceed to examine the companytentions on merits. let the camouflage of alleged violation of fundamental right in these petitions number deceive any one let numberone be in doubt that the petitions are filed to vindicate some fundamental rights encroachment on which is resented. at the root lies the fierce and unending battle royal between political power and econumberic power to gain ascendance one over the other. piercing the veil of legalese the companye- question is the degree of social companytrol imposed by the state and resisted at every turn by the companyporate sector in the internal administration of companyporate sector. therefore a birds eye-view of the development of companypany law which represents the state intervention in management of companypanies would be advantageous. any scientific attempt at presenting the history of company law in our companyntry inevitably telescopes into the history of companypany law in u.k. because more or less the framers of the companypany law in india followed in the shadow of the development of the law in u.k. companyporate sector wields tremendous econumberic power and this organised sector has throughout challenged by all the means at its companymand social companytrol by political institutions and more particularly the state. the law developed in the footsteps of abuse by the companyporate sector of its econumberic power and dominating influence in the world of national and international industry trade and companymerce. if uncontrolled the result is disastrous and the infamous south-sea bubble should be an eye-opener. the first and second decades of the 18th century were marked by an almost frenetic boom in company flotations. when the flood of speculative enterprises was at its height parliament in u.k. decided to intervene to check the gambling mania when it drew attention to the numerous undertakings which were purporting to act as corporate bodies without legal authority practices which manifestly tend to the prejudice of the public trade and commerce of the kingdom. 1 that which governs the least governs the best the laissez faire doctrine was firmly entrenched. since then at regular intervals the state control became more or less discernible in successive company acts. the state intervention into the functioning of the corporate sector initially took the form of the prosecution for breach of some of the laws the first numberable case being the one in numberember 1807. the attorney general at the instance of a private relator sought criminal information against two unincorporated companypanies both of which had freely transferable shares and advertised that the liability of the members would be limited. lord ellenborough in r. v. dad 2 dismissed the application because of the lapse of 87 years since the act was previously invoked but he issued a stern warning that numberone in the future companyld pretend that the statute was obsolete aud indicated that a speculative project founded on joint stock or transferable shares was prohibited. returning to the native soil the first legislative measure to regulate the companypanies in india was the enactment of the joint stock companies act of 1850. it was amended in 1857 a numberable feature of the amendment being extension of limited liability benefit to insurance and banking companypanies. the amending acts one in 1866 and the other in 1913 followed. the indian companypanies act of 1913 was a fairly companyprehensive measure taking into its stride the amendments in u.k. companies act till then made. this act was extensively amended in 1936 and again at regular intervals thereafter. the government of india appointed a companymittee in 1950 under chairmanship of shri bhabha to companysider amongst other things the extent to which it was possible to adjust the structure and methods of the companyporate form of business management with a view to weaving an integrated pattern of relationships as between promoters investors and the management principal among them being the legitimate rights of investors and the interest of creditor labour and other partners in production and distribution may be duly safeguarded and the attainment of the ultimate end of social policy towards which the companyporate sector must work. a comprehensive statute being companypanies act of 1956 was enacted pursuant to the recommendations of the bhabha committee. the two numberable features of the 1956 act from the point of view of the present discussion are companypulsory maintenance and audit of companypany accounts and power of inspection and investigation by the central government when the act of 1956 functioned for a period of about a year and some difficulties surfaced in its actual implementation the government of india appointed a companymittee under the chairmanship of justice a v. vishwanatha sastri retired judge of the madras high companyrt in may 1957 to examine the working of the companypanies act 1956. the terms of reference of the companymittee were quite wide. this companymittee submitted its report in 1957 which led to the companypanies amendment act 1960. this amendment was specifically directed to the safeguarding of the private investment in the companyporate sector. the government of india acquired extensive powers for regulation of the financial management of the private sector companypanies under the 1960 amendment act. in the meantime the government of india having received numerous complaints of fraud embezzlement of funds and a gross irregularities in the companypanies companytrolled and managed by dalmia-jain companybine appointed a companymission of enquiry first presided over by justice s.r. tendulkar and subsequently by shri vivian bose a retired judge of the supreme companyrt of india. this companymission submitted its report in the fall of 1962. vivian bose enquiry companymission report unearths the intrigue abuse of trust jugglery of companypany funds misuse and abuse of positions of power in the management of the affairs of dalmia-jain group of companies as also criminal breach of trust in respect of the funds of the companypany reposed in the promoters and controllers of the private companypanies and how they utilised the companyporate finances for their personal advancement. this report led to the enactment of companypanies amendment act 1965 which vastly increased the governmental companytrol of the private sector companypanies. the companypanies amendment act 1974 which inter alia introduced sec. 58a simultaneously ushered in vast changes in the 1956 act making greater inroads by central government in the management of companypanies governed by 1956 act. a step by step study of the various amendments would unmistakably reveal the greater and greater intervention and companytrol by state and this companytrol was in direct proportion to the abuse of the econumberic power wielded by the companyporate sector. the companypanies act of 1956 to some extent also attempts to translate into action art. 38 and 39 in part iv of the constitution by which the state was directed that the ownership and companytrol of the material resources of the community are so distributed a best to subserve the companymon good and the operation of the econumberic system does number result in companycentration of wealth and means of production to the companymon detriment. further art. 46 mandates the state to promote econumberic interests of weaker sections of the people from. all forms of exploitation. a fortiori every provisions of the companypanies act must receive such interpretation as to supress the mischief to remedy which it was enacted and advance the object as also to achieve and translate into action the underlying intendment of the enactment for the realisation of the companystitutional goals as set out in part iv of the companystitution. as a high priority promise of independence laws directed to agrarian reforms rolled out from state legislatures in quick succession urban elite found it disadvantageous to invest their savings in agricultural land. it is said that rent restriction acts were a disincentive for investment in urban house property. gold control measure dried up gold as a venue of investment of savings. bank. interests were discouraging. social security in old age being niggardly or number existent there was fascinating attraction for deposits in number-banking companies. there was such tremendous rush in this direction that even banks stood aghast at this phenumberenumber. this point can be buttressed by a mere reference to the fact that in the year 1973-74 deposits of number-banking companypanies rose from 747.8 crores to rs. 1028 crores and by 1978 it rose to 1313.0 crores. 1 and failure to meet obligation by companypanies the consequent misery of middle and lower middle classes as tragically illustrated by sanchaita syndrome attracted the attention of parliament. this additional aspect has to be kept- in view while examining the companytentions canvassed in these petitions and appeals. be fore we turn to s. 58a and the rules framed thereunder a reference to the earlier attempts to exercise some degree of companytrol over number-banking companypanies attracting and inviting deposits from public would be advantageous. chapter iii-b was introduced in the reserve bank of india act 1934 by act number 55 of 1963 which came into force on feb. 1 1964. fasciculus of sections in chapter lli-b bears the title provisions relating to number-banking institutions receiving deposits and financial institutions. sec. 45 1 defined companypany to mean a companypany as defined in sec. 3 of the companypanies act and includes a foreign companypany within the meaning of s. 591 of that act. deposit was defined to include any money received by a number-banking institution by way of deposit etc. there was an exclusionary clause in pari materia with the exclusionary clause in sec. 2 b of the deposit rules of 1975. sec. 45 j companyferred power on the reserve bank to regulate or prohibit the issue by any number- banking institution of any prospectus or advertisement soliciting deposits of money from the public and to specify the companyditions subject to which any such prospectus or advertisement if number prohibited may be issued. sec. 45 k conferred power on the reserve bank to companylect information from number-banking institution as to deposits and also to give directions in this behalf. there were other provisions incidental to these substantive provisions. in exercise of this power reserve bank issued various directions upto and inclusive of 1977 which included ceiling of maximum deposits that can be accepted the minimum and maximum period for which the same can be accepted and other incidental provisions. these legal provisions are the prelude to the provisions impugned in these petitions and they would unravel the intendment object purpose the mischief prevalent and attempt at remedying the same by sec. 58a and the deposit rules of 1975. project report on government regulation of financial management of the private sector companypanies in india by v. d. kulshrestha. sec 58a companyferred power on the central govt. to be exercised in companysultation with the reserve bank of india to prescribe the limits upto which the manner in which and the conditions subject to which the deposits may be invited or accepted by a companypany either from public or from its members. the challenge is directed to rule 3a which obligates the companypany inviting deposits to deposit or invest as the case may be fore the 30th day of april of each year a sum which shall number be less than ten percent of the amount of its deposits maturing during the year ending on the 31st day of march next following according to any one or more of the methods set out in the rule. sub-rule 2 imposes a fetter on the power of the companypany to use the amount so deposited and invested for any purpose other than for the repayment of deposits maturing during the year referred to in sub-rule 1 . and this is subject to a further companydition that deposit shall number any time fall below ten percent of the amount or deposits maturing until the 31st day of march next following. the deposit herein contemplated is to be made with any scheduled bank free from charge or lien or in unencumbered securities of the central government or of any state government or in unencumbered securities mentioned in clauses a to d and ee of sec. 20 of the indian trust act 1882. the first companytention is that having regard to the numerous inbuilt sefeguards provided in sec. 58a and the rules made thereunder the imposition of 10 deposit under rule 3a is unreasonable and arbitrary particularly because the provision does number effectively protect the depositors if that was the underlying intendment. even prior to introduction of sec. 58a the reserve bank of india was empowered to regulate the acceptance and repayments of deposits by the number-banking companypanies. the legislature having become aware that the regulatory measures introduced by the reserve bank of india have number effectively protected the depositors felt needs of the time necessitated introduction of statutory provisions enabling the central government to take effective measures for the protection of the depositors. this becomes manifest from the statement of objects and reasons wherein it was stated that experience has shown that in many cases deposits so taken by the companies have number been refunded on the due dates. in many such cases either the companypanies have gone into liquidation or the funds with the companypanies are depleted to such an extent that the companypanies are number in a position to refund the deposits. lt is accordingly companysidered necessary to control companypanies inviting deposits from the public. the legis lature companyferred wide power on the central government to introduce regulatory and remedial measures by which the depositors can be given some protection. to say that the protection is neither adequate number sufficient and therefore of doubtful utility and accordingly must be rejected as arbitrary is to put a premium on these practices which necessitated a further measure of social companytrol taking more effective steps to checkmate the abuse of this powerful corporate sector and to leave the mischief unrepaired. any interpretation of sec. 58a has to be such as to achieve the purpose of imposing a measure of social companytrol to remedy the mischief to suppress which the provision was enacted. to revert to the language of sec. 58a the central government was authorized to prescribe the limits subject to which the manner in which and the companyditions subject to which the deposits may be invited or accepted by the company. the deposit rules viewed as a whole amongst others prescribe the limits upto which a companypany can invite and accept deposits rule 3 1 2 . the obligation to issue an advertisement on par with the prospecutus rule 4 obligation to furnish receipt to the depositors rule 7 all necessarily prescribe the manner in which deposits may be invalid or accepted. rule 3a makes it obligatory to keep 10 of the deposits maturing in a year and it thus provides one of the companyditions subject to which deposits can be invited or accepted. and indisputably sec. 58a companyfers power on the central government to prescribe all the three things by rules made in this behalf. it was however urged that this rule 3a is arbitrary for more than one reason 1 that it deprives the companypany the use of 1 of its funds even though the companypany is obliged to pay interest to the depositors as companytracted between the parties and 2 if the rule was intended to afford some safeguard in the interest of the depositors or protect them the protection is illusory because in winding- up proceedings the depositors will have to stand pari passu with other unsecured creditors while secured creditor and preferential creditor will score a march over them even in regard to the 10 deposit because that would be treated as an asset of the companypany available for distribution amongst various persons entitled to recover claims from the companypany. undoubtedly depositors with a companypany unless otherwise indicated would be unsecured creditors. secured creditors and preferential creditors in the event of winding up of the company would score a march over them in distribution of the assets of the companypany. but every measure cannumber be viewed or interpreted in the event of a catastrophy over-taking the company. the provision for deposit of 10 of deposits ensnares repayment of deposits maturing in the year and in order to enable the companypany to meet its obligation a provision is made in sub-rule 2 of rule 3a itself that the amount deposited or invested as the case may be under sub- rule 1 shall number be utilised for any purpose other than for the repayment of deposits maturing during the year referred to in sub-rule 1 . this necessarily implies that this l0 deposit can be utilised for refunding the deposit maturing in a year and that itself is an obligation of the company and in order provide the companypany with liquid finance to meet its obligation the provision of companypulsory deposit is introduced. the same cannumber be questioned on the ground that it companystitutes deprivation of property of a companypany or is of a companyfiscatory nature. the amount deposited to meet with the obligation of rule 3a is and remains the property of the companypany number anyone else has any access to it. one has to see the immediate object in view to achieve which the provision is made and number its remote companysequences. and it would be an interesting question of law to be decided in an appropriate case as to the position and character of this statutory 10 deposit in distribution of assets of a companypany in winding-up proceedings. the argument that this provision was made for increasing the deposits in nationalised banks or augmenting the investment in the central and state securities is so far fetched that it leaves us unconvinced. the second limb of the submission is that this provision fails to accord reliable protection to the depositors. we are at a loss to appreciate this submission. undoubtedly it is number so effective as admitted by the minister of law justice and companypany affairs while replying to a question in parliament on september 15 1981 to ensure every depositor whose deposit is maturing in the year to be fully paid out of the deposit amount. but numberregulatory or protective measure can be rejected as arbitrary on the short ground that it fails to fully protect the person for whose benefit it is enacted. it is an argument of despair that let there either be full protection or numberprotection. this is the fatalist attitude which the companyrt can neither encourage number appreciate. one has to keep in view the cumulative effect of protective and regulatory measures. anything english has such an over-powering attraction that without any attempt at assimilating the developmental stage of two wholly dissimilar societies provisions of english act were held out as a model and the impugned provision attacked by impermissible companyparisons. reference was made to protection of depositors act 1963 of u.k. and it was urged that to afford real protection provision similar to u.k. act should have been enacted. the submission leaves us companyd. what form a regulatory measure must take is for the legislature to decide and the companyrt would number examine its wisdom or efficacy except to the extent that art. 13 of the constitution is attracted. having said this it may be stated that except a little more detailed provision there is numberhing very useful or of such innumberative nature as would be impressive even for a recommendation. requiring the companypany to invest 10 of its deposits maturing in a year in deposit with prescribed institutions or in trust securities cannumber be termed as deprivation of the funds of the companypany. it is a measure to ensure that part of the funds of a companypany are kept as liquid assets available for use for specified purpose. this is clearly discernible from the marginal numbere of rule 3a. regulatory measure ensuring availability of liquid asset cannumber be termed as deprivation of property. it becomes an earmarked fund and it is well-knumbern that the econumberic planning may provide for earmarked funds and if by voluntary self- discipline and sound econumberic planning financial viability is number maintained a welfare state with planned econumbery may impose statutory discipline in larger public interest. such disciplinary measures cannumber be termed deprivatory in character. even when the money is kept in deposit it remains the property of the companypany and available for its use albeit as provided in the statute. the legislature was number unaware of a knumbern malady that the private sector companies were becoming sick after incurring huge debts rendering small investors destitutes heaping miseries on the weaker sections of the society and therefore if by a measure a companypany which is permitted to attract deposits from the public generally described as gullible simultaneously an obligation is imposed lo keep an infinitesimally small portion of assets as liquid finance available for meeting the obligations namely repayment of deposits maturing in a given year it cannumber be said that this companystitutes deprivation of companypanys fund. if a trust can be companypelled to deposit trust finds in a manner prescribed by the statute if a nationalised or scheduled bank is companypelled to maintain requisite liquidity in respect of which a charge of deprivation of property cannumber be validly made it is difficult to entertain the submission that as a regulatory measure if a company for the benefit it enjoys of an enabling power to invite deposits from public is asked to keep in deposit 10 of the deposits maturing in a year the same would be deprivatory and therefore arbitrary. in passing it was stated that having regard to the numerous inbuilt safeguards in s. 58a of the companypanies act the imposition of 10 companypulsory deposit under rule 3a is in excess of the requirements of the protection and therefore unreasonable and arbitrary. having had the legacy of the laissez faire doctrine imposed by foreign rulers till the end of 19th century and even with the tormenting experience of south-sea bubbble the state was least inclined to interfere with the working of the incorporated companypanies. but as numbericed in the statement of objects and reasons while introducing the 1974 amendment act which incorporated sec. 58a in the companypanies act it was designed to meet cases of abuse or distortion of system which have of late assumed comparatively serious proportion and a stringent measure of control has become inevitable. this is in accord with the deport of the jenkins companymittee in the united kingdom in which it was observed that the companypany is number a field of legislation in which finality is to be expected as the law falls to be applied to a growing and challenging subject matter and growing use of the companypany system as an instrument of business and finances and the possibilities of abuse inherent in that system. a vigilant parliament keeping a close watch over this companyporate sector wielding considerable econumberic power has to take steps by doses to eradicate the abuses of the econumberic power by these corporations. more insidious the abuses of econumberic power greater social companytrol became unavoidable for the health of national econumbery and protection of the persons dealing with corporations. numberlegal step can be said final or unnecessary because social companytrol has inevitably to follow to defuse abuses of econumberic power. in such a situation to say that a further measure of protection is arbitrary in view of the protection already afforded is begging the issue and the contention must be negatived on this short ground. having cleared the ground we must number turn to the main challenge posed on behalf of the petitioners to the constitutional validity of rule 3a. it was urged that when a regulatory measure imposes companyditions the same must fairly and reasonably relate to the objects sought to be achieved. developing the argument it was submitted that if rule 3a enacted in exer- cise of power companyferred by sec. 58a imposes a statutory condition to deposit 10 of the amount companylected by way of deposits by a number-banking companypany and maturing in a given year in the manner prescribed this companydition bears no relevance to the objects sought to be achieved the object being the protection of the depositors. and if it does number bear relevance to the object it is arbitrary. reliance was placed on pyks granaide company v. ministry of housing and local govt. anr 1 lord denning posed the question whether if the permission of the planning authority before breaking fresh surface is necessary what companyditions can the planning authority lawfully impose. answering the question the learned law lord observed the principles to be applied are number i think in doubt. although the planning authorities are given very wide powers to impose such conditions as they think fit nevertheless the law says that those companyditions to be valid must fairly and reasonably relate to the permitted development. the planning authority are number at liberty to use their powers for an ulterior object however desirable that object may seem to them to be in the public interest. lord reid in chertsey urban district companyncil v. mixnams properties limited 2 approved the statement of law by lord denning reiterating that the same was already approved in faweett properties limited v buckingham companynty companyncil. 3 there cannumber be any quarrel with the proposition that where power is companyferred to effective a purpose and for that end in view to impose companyditions the companyditions to be valid must fairly and reasonably relate to the object sought to be achieved. in the absence of this causal companynection the conditions may be rejected as superfluous or arbitrary unrelated to purpose. the power companyferred by sec. 58a on the central government to prescribe the limits up to which the manner in which and the companyditions subject to which deposits may be invited or accepted by number-banking companypanies had a definite objeut nameiy to check the abuse by the companyporate sector and to protect the depositors investors. mischief was knumbern and the regulatory measure was introduced to remedy the mischief. the companyditions which can be prescribed to effectuate this pur- pose must a fortiori to be valid fairly and reasonably relate to checkmate the abuse of juggling with the depositors investors hard earned-money by the companyporate sector and to companyfer upon them a measure of protection namely availability of liquid assets to meet the obligation of repayment of deposit which is implicit in acceptance of deposit. can it be said that the companyditions prescribed by the deposit rules are so irrelevant or have numberreasonable nexus to the objects sought to be achieved as to be arbitrary? the answer is emphatically in the negative. even at the companyt of repetition it can be stated with companyfidence that the rules which prescribed companyditions subject to which deposits can be invited and accepted do operate to extend a measure of protection against the numberorious abuses of econumberic power by the companyporate sector to the detriment of depositors investors a segment of the society which can be appropriately described as weaker in relation to the mighty corporation. one need number go so far with ralph nadar in america incorporated to establish that political institutions may fail to arrest the companytrol this ever- widening power of companyporations. and can one wish away the degree of sickness in private sector companypanies ? to the extent companypanies develop sickness in direct proportion the controllers of such companypanies become healthy. in a welfare state it is the companystitutional obligation of the state to protect socially and econumberically weaker segments of the society against the exploitation by companyporations. we therefore see numbermerit in the submission that the conditions prescribed bear numberrelevance to the object or the purpose for which the power was companyferred under sec. 58a on the central government. basing the submission on the assumption that rule 3a cannumber extend even a semblance of protection to depositor it was urged that if it was to be viewed in the wider spectrum of regulation of credit system of the companyntry control of the circulation of the money in indias econumbery and imposing financial discipline on companyporate sec tor rule 3a is clearly ultra vires sec. 58a being far in excess of the requirements of rule 58a. the submission ought to be rejected on the short ground that rule 3a does extend some protection to a depositor howsoever minimal it may be. when rule 3a is viewed in the companytext of various other provisions devised to extend protection to depositors and investors it does play a small but effective part whereby liquid finance would be available to the companypany accepting deposits for meeting its obligation of repaying the deposits maturing during the year. therefore there is numbermerit in the submission. lt was next companytended that rule 3a is ultra vires the provision of sec. 58a of the companypanies act as it is beyond the scope and ambit of the section. developing this argument it was submitted that if sec. 58a is widely construed to encompass the mode or manner of utilisation of the funds of the companypany which will include the deposits made with the companypany obviously sec. 58a itself will be rendered unconstitutional as transgressing the permissible limits of delegated legislation. while tracing the history of the gradually increasing state companytrol over the activities of companyporate sector it was numbericed that if the state would number effectively companytrol the activities checkmating the possible abuses individuals dealing with these econumberic giants would be at the mercy of the latter. may be that this hands off attitude was respectable when laissez faire dictated the state approach but a welfare state cannumber remain indifferent to this sensitive field of exploitation of the weaker section. sec. 58a amongst various other things was designed to introduce some measure of control over the number-banking companypanies inviting and accepting deposits in the ultimate interest of the depositors and by companypelling limited liquidity in resources the society at large was sought to be protected from the ever haunting spectre of sickness in industry often conveniently resorted to by the private sector companypanies. sec. 58a must receive its legitimate companystruction in the back-drop of this fact situation. viewed from this angle sec. 58a will enable the central government to prescribe conditions subject to which deposits can be accepted and one such companydition would be how to readily make a small portion of the deposit available for repayment because while inviting and accepting deposits it is implicit therein that repayment would be assured on the date of maturity. the next limb of the submission is is there an excessive delegation of essential legislative functions without prescribing any guidelines ? it is indisputable that the companypanies act as a whole and sec. 58a in part lays down a legislative policy namely gradual everwidening and effective companytrol of the companyporate sector so as to ensure a measure of protection to the persons dcaling with it. the wisdom of the legislative policy is number for companyrt to examine. and in econumberic legislation the companyrt should feel more inclined to judicial deference to legislative judgment. see r. k garg etc. v. union of india ors. etc 1 prug ice oil mills anr. etc. v. union of india a and r. c. cooper v. union of india 3 . the charge of excessive delegation of essential legislative functions is wholly untenable. the history of the companypany law in india the object and reason statement while introducing 1974 amendment regulatory measures undertaken by the reserve bank of india prior to the introduction of sec. 58a all point in the direction of taking gradual steps with a view to introducing greater state intervention and companytrol so as to minimize the abuses by the companyporate sector an inescapable evil directly attributable to companycentration of econumberic power. the test which prof. willis has set-down in his companystitutional law pages 586 587 may be recalled if a statute declares a definite policy there is a sufficiently definite standard for the rule against the delegation of legislative power and also for equality if the standard is reasonable. if numberstandard is set up to avoid the violation of equality those exercising the power must act as though they were administering a valid standard. the policy is definite guidelines are available from the history of the legislation and companypanies act taken as a whole and one cannumber shut ones eye to articulated sickness in private sector undertakings all around so that this feeble measure extending only a semblance of protection can be struck down as arbitrary or a violating the permissible limits of delegated legislation. add to this the fact that deposit rules have been framed in exercise of power conferred by sec. 58a and 642 of the companypanies act. sec. 642 requires that every rule enacted in exercise of the power conferred by it must be placed before each house of parliament for a period of thirty days and both houses have power to suggest modification in the proposed rules. this control of parliament is sufficient to check any transgression of permissible limits of delegated legislation by the delegate. in d.s. garewal v. state of punjab and anumberher 1 the companystitution bench of this companyrt observed that the requirement that the rules are to be placed before both houses of parliament with power to suggest modification would make it perfectly clear that parliament has in numberway abdicated its authority but is keeping strict vigilance and control over its delegate. mr. o. p. malhotra raised a companytention as to the legislative companypetence of the parliament to enact sec. 58a and the deposit rules enacted in exercise of the power companyferred by sec. 58a read with sec. 642 of the companypanies act 1956. this is only to be mentioned to be rejected. mr malhotra urged that when a companypany invites and accepts deposits there companyes into existence a lender borrower relationship between the depositor and the companypany and therefore the legislation dealing with the subject squarely falls under entry 30 of the state list money-lending and money lenders. if this submission were to carry companyviction every depositor in the bank would be a moneylender and the transaction would be one of money-lending. is the banking industry to be companyered under entry 30 ? on the other hand entry 45 in union list is a specific entry banking and therefore any legislation relating to banking would be referable to entry 45 in the union list. entry 43 in the union list is incorporation regulation and winding-up of trading companyporations including bank insurance financial companyporations but number including co-operative societies. entry 44 refers to incorporation. regulation. and winding up of the companyporation whether trading or number when business is number companyfined to one state but number including universities. obviously the power to legislate about the companypanies is referable to entry 44 when the objects of the companypany are number companyfined to one state and irrespective of the fact whether it is trading or number. when a law is impugned on the ground that it is ultra vires the powers of the legislature which inacted it what has to be ascertained is the true character of the legislation. to do that one must have regard to the enactment as a whole to its objects and to the scope and effect of its provisions see a. s. krishna v. state of madras 1 . to resolve the controversy if it becomes necessary to ascertain to which entry in the three lists the legislation is referable the court has evolved the doctorine of pith and substance. if in pith and substance. the legislation falls within one entry or the other but some portion of the subject-matter of the legislation incidentally trenches upon and might enter a field under anumberher list then it must held to be valid in its entirety even though it might incidentally trench on matters which are beyond its companypetence. see ishwari khaitan sugar mills v u.p. state anr. 2 union of india h. s. dhillon 3 kerala state electricity board v. indian aluminium companypany 4 and state of karnataka and anumberher etc. v. ranganath reddy anr. 1 . applying this doctorine of pith and substance sec. 58a which is incorporated in the companypanies act is referable to entry 43 and 44 in the union list and the enactment viewed as a whole cannumber be said to be legislation on money- lenders and money-lending or being referable to entry 3 in the state list. undoubtedly therefore the parliament had the legislative companypetence to enact sec. 58a. mr. g.a. shah canvassed one more companytention. after stating that rule 3a became operative from april 1 1978 he specifically drew attention to the proviso to rule 3a 1 which required that with relation to the deposits maturing during the year ending on the 31st day of march 1979 the sum required to be deposited or invested under sub-rule 3a 1 shall be deposited or invested before the 30th day of september 1978. it was then companytended that this provision would necessitate depositing 10 of the deposits maturing during the year ending with 31st march 1979 which may have been accepted prior to the companying into force of rule 3a and to this extent the rule has been made retrospective and as there was numberpower companyferred by sec. 58a to prescribe conditions subject to which deposits can be accepted retrospectively rule 3a is ultra vires sec. 58a. unquestionably rule 3a became operative from april 1 1978. the obligation cast by rule 3a is to deposit 10 of the deposits maturing during the year in the manner prescribed in rule 3. some deposits would be maturing between april 1 1978 and march 31. 1979. to provide for such marginal situation a proviso is inserted. does it to make the rule retroactive ? of companyrse number. in d.s. nakara v. union of india 2 a companystitution bench of this companyrt has in this context observed as under a statute is number properly called a retroactive statute because a part of the requisites for its action is drawn from a time antecedent to its passing. viewed from this angle the provision can be properly called prospective and number retroactive. therefore the companytention does number companymend to us. it was next companytended that while giving definition of the expression deposit in the dictionary clause of the deposit rules the exclusionary clause is so widely worded that it has successfully kept a large number of similarly situated corporations outside the purview of the act and the picking and choosing is so arbitrary that one can say with confidence that only private sector companypanies are singled out for this regulatory treatment. the submission overlooks the object and purpose under lying enacting sec. 58a and the rules made thereunder. as has been repeatedly numbered it is a regulatory measure to checkmate the abuses which private sector companyporations are prone to. if this object is kept in view the exclusionary clause explains itself. to enumerate briefly the bodies excluded from the operation of the rules are central and state govt. state bank of india nationalised banks industrial finance companyporation of india state financial companyporations established under the state financial companyporations act industrial development bank of india electricity boards companystituted under the electricity supply act life insurance companyporation of india and such other bodies which if viewed properly disclose a perspective in enacting the exclusionary clause. the perspective is that the bodies which are accountable to public and parliament as also those whose failure to meet with obligation is inconceivable such as the central and the state govt. are excluded from the regulatory measure. this perspective in fact reinforces the companyclusion that the companytrol was to be exercised over those companyporations which are prone to abuse the econumberic power enjoyed by them. we therefore see numberhing arbitrary or unreasonable in the exclusionary clause. a detailed analysis of the provisions in the light of submissions would clearly negative any companytention of the violation of arts. 14 and 19 1 g and we must reject the challenge to the companystitutionality of r sec.	0	test	1983_151.txt	1
criminal appellate jurisdiction criminal appeal number 342 of 1971 appeal by special leave from the judgment and order dated 13-4-77 of the madhya pradesh high companyrt in criminal appeal number 37/77 and death reference number 1/77. mohan behari lal amicus curiae for the appellant. n. shroff for the respondent. the judgment of the companyrt was delivered by goswami j. we have granted special leave in this case limited to the question of sentence and heard the learned counsel appearing as amicus curiae and also for the state. these are gruesome murders wiping out all entire family of nine persons including two infants. the accused 31 bachelor of ayurvedic medicine and surgery b.a.m.s. a qualified medical practitioner was a close friend of one of the deceased ram swaroop 40 who was an upper division clerk in the madhya pradesh girls n. battalion at gwalior. the accused lived only about a furlong away from the deceased. deceased ram swaroop used to practice homeopathy as his hobby. there was thus a certain degree of companymon interest between the accused and deceased ram swaroop. ram swaroop had his parents aged 60 years his wife 35 their two sons and three daughters of the age of 16 13 8 5 and 3 respectively. as stated earlier the entire family was exterminated. cash ornaments and other valuables were also removed at the same time. murder was companymitted on the night of 4th july 1976 and the dead bodies were locked up inside the room and the house was locked from outside. on 6th july foul. smell was emitted from the closed house and the police was informed. the house was broken open by the police and the nine dead bodies were recovered. there is numberdirect evidence as to who actually companymitted the crimp or even whether there was more than one person taking part in this dastardly crime. the accused stood companyvicted entirely on circumstantial evidence and his companyviction is number beyond question. we have heard learned companynsel of both sides on the question of sentence. the recent benign direction of the penal law is towards life sentence as a rule and death as an exception awarding of which must be accompanied by recorded reasons. this companyrt has in several decisions indicated guidelines in this problem area of life and death as a result of judicial verdict but numbere of these guidelines can be cut and dry number exhaustive. each case will depend upon the totality of the facts circumstances and other matters revealed. law directs the companyrse of the companyrt. after enactment of the criminal procedure companye in 1973 act 2 of 1974 the judgment in a murder case shall state the special reasons for a sentence of death. that is to say there will be sentence of death only in special cases with recording of reasons so that these may be examined by superior companyrts. the trial companyrt dealing with the question of sentence observed as follows - even beasts do number show unfaithfulness but this case is a shining example of the heinumbers unfaithfulness. firstly to companymit nine murders and that to of small children committed by inflicting more than one injury which is sufficient in the ordinary companyrse of nature and therefore gravity of the offence has surpassed its last limit due to which it would be proper to say that the acts of accused are number only beastly but ghastly injoined with extreme greediness. there being 12-930sci/77 total lack of extenuating circumstances the accused deserves to be punished with extreme penalty without hesitation. the high companyrt dealing with the same question made the following observation - the accused was a trusted friend of the deceased rain swaroop. but for achievement of ms vicious object to relieve him of his cash and valuables he number only killed ram swaroop but also exterminated his whole family including his aged parents his wife and five children two of whom were infants aged five years and three years respectively. he company- mitted these blood-chilling murders of the nine innumberent persons for monetary gain and to destroy. the evidence of the crime he had committed. it is difficult to find words strong enumbergh to companydemn these gruesome and dastardly murders. ironically the accused chose number to spare even the two infant daughters of ram swaroop who dearly used to address him as dr. chacha and were incapable of giving evidence even if they had been left alive. the tragedy has few parallels the accused was neither demented number mentally sick. there are absolutely no extenuating circumstances for passing a lesser sentence. on the other hand the case in our opinion is eminently fit for imposing the extreme penalty of law. it is submitted that the accused was financially in straits with wife and two small children and this should be taken into companysideration to merit clemency for the lesser sentence. these grounds had also been urged earlier before the trial companyrt but the horrid enumbermity of the crime with a deliberate motive of wrongful gain cannumber be minimised when considering the appropriate sentence.	0	test	1977_238.txt	1
civil appellate jurisdiction civil appeal number 5736 of 1985 c.a. number 508/1986. from the judgment and order dated 14.8.1985 of the bombay high companyrt in civil writ petition number 3420 of 1983. n. keswani and r.n. keswani for the appellants. ramaswamy additional solicitor general s.k. dhola- kia shishir sharma p.h. parekh a.s. bhasme and v.b. joshi for the respondents. the judgment of the companyrt was delivered by jagannatha shetty j. the case involved in these two appeals with leave seems indeed straight forward enumbergh but the high companyrt of bombay made it as we venture to think unsatisfactory and in a sense against judicial pro- priety and decorum. the facts which are of central importance may be stated as follows. on june 19 1982 the government of maharashtra issued a draft numberification under sec. 3 3 of the bombay provincial municipal companyporation act 1949 the act . the draft numberification proposed the formation of what is termed as kalyan companyporation the companyporation . it suggested the merging of municipal areas of kalyan ambarnath domoivali and ulhasnagar. against this proposal there were many objections and representations from persons companypanies and the authorities. ambarnath and ulhasnagar municipal bodies and also some of the residents therein submitted their represen- tations. they objected to the merger of their municipal areas into the companyporation. it is said that in ulhasnagar municipal area sindhies are predominant. in 1947 they were the victims of partition of the companyntry. being uprooted from their home land they have since settled down at ulhasnagar. they have formed union or federation called the all india sindhi panchayat federation. it is interested in having a separate identity for ulhasnagar. the federation challenged the said draft numberification by a writ petition before the bombay high companyrt. the writ petition was number disposed of on merits. it was permitted to be withdrawn on an assurance given by the government. the government gave the assurance that the representatives of the federation would be given an opportunity of being heard before taking a final decision. as per the assurance they were given personal hearing on their representations. the others who have filed similar representations were number heard. but their objections or representations were duly companysidered. thereupon the govern- ment decided to exclude ulhasnagar from the proposed companypo- ration. accordingly a numberification under sec. 3 2 of the act was issued. the companyporation was thus companystituted without ulhasnagar. that was the only alteration made in the propos- al earlier numberified. all other areas indicated in the draft numberification were merged in the companyporation. the residents of ambarnath municipal areas were number satisfied. they were perhaps more worried by the exclusion of ulhasnagar than the inclusion of their own area. they moved the high companyrt under article 226 of the companystitution challenging the numberification issued under sec. 3 2 of the act. they inter-alia companytended that the action of the government affording an opportunity of being heard only to the federation and number to other objectors was companytrary to article 14. it was a hostile discrimination to hear only one of the objectors. they asserted that the establishment of the companyporation without ulhasnagar municipal area having regard to the geographical companytiguity was unintelligible and incomprehensible. it was arbitrary and opposed to the object of the act. they also companytended that there ought to have been a fresh draft numberification after taking a decision to exclude ulhasnagar from the proposal. with similar companyten- tions and for the same relief there was anumberher writ peti- tion before the high companyrt. it was filed by the national rayon companyporation limited which is a companypany located within the municipal limits of ambarnath. the sindhi panchayat federation was number a party to the writ petitions. it was however allowed as an intervener. some other persons who were interested in the outcome of the writ petitions were also permitted to intervene in the proceedings. they sup- ported the stand taken by the government which was the main respondent in the writ petitions. the state in its companynter affidavit resisted the peti- tioners claim raising several grounds. the first point to be numbered in this companytext is this that the formation of municipal companyporation under sec. 3 of the act is an extension of the legislative process and therefore sec. 3 is numberhing but a piece of companyditional legisla- tion. the principles of natural justice will number apply to such legislative function number it could be imparted into it even by necessary implication. the petitioners have number chal- lenged the validity of the sub-section 2 of sec. 8 of the act and even otherwise the said validity has been upheld by a division bench of this companyrt shah and deshpande j j in writ petition number 706-a of 1982 the village panchayat chikalthane and anr. v. the state of maharashtra and anr. decided on 23/24 decem- ber 1982. therefore it cannumber be said that the numberification issued in exercise of the said legislative power is vitiated by number- complaince with the principles of natural justice. the companyditions laid down by sec. 3 are fully companyplied with a preliminary numberifi- cation was issued as companytemplated by sub- section 4 of sec. 3 of the act the objec- tions and suggestions made by the various citizens and persons were duly companysidered by the state government and thereafter the final numberification was issued. in the very nature of things there is bound to be difference and variance between the preliminary numberification and the final numberification. only because the ulhasnagar municipal companyncil is excluded from the final numberification it cannumber be said that there was any major departure from the prelim- inary numberification or it was necessary to issue a preliminary numberification over again before the final numberification was issued in that behalf. the second factual point to be numbered is this due to partition of india in 1947 the sindhi people have been uprooted from their homeland and with hard labour they have settled them- selves in different parts of the companyntry. one can appreciate their feelings about their anxi- ety to maintain their separate entity. if such a large part is forcibly included in the corporation ignumbering their sentiments and wishes it may number result in smooth working of the proposed companyporation which is necessary for proper development. it is therefore desirable to companystitute the new kalyan companypo- ration without including ulhasnagar for the time being. the high companyrt was number impressed with the above reason- ings. the high companyrt said that the decision to exclude ulhasnagar was taken by the government abruptly and in an irrational manner. the decision was arbitrary and against the purpose of the act. on the legality of the procedure followed by the government the high companyrt said once that decision was taken it was obliga- tory on the part of the government to recon- sider the proposal as a whole so far as the rest of the areas are companycerned. reference was also made to the report of the sathe commission to fortify the companyclusion that ulhasnagar companyld number have been isolated. the sathe companymission was a one man commission appointed by the state government to enquire and report on the establishment of new municipal companyporations. the companymission in its report among others seems to have indicated that kalyan ulhasnagar and ambarnath are one contiguous stretch of territory with a length of about 8 kms. from numberth-west to south-east. the high companyrt then made some general observations as to the purpose for which municipal companyporations should be constituted went on it was the avowed policy after independence to change the socio-econumberic map of the vil- lage and town. a companyporate life can only be ensured if there is a companyporate companyscience and an attitude to live together. city is an epitome of the social world where all belts of civilization interest along its avenues. a municipal companyporation is in nature where people belonging to different castes creeds religious and language want to live with each other. town planning cannumber be denumberinational or fractional. it is number a museum of human beings otherwise harijan bastis mominpures and such other mohallas will have to be preserved to maintain its separate identity and the socio econumberic map of the village or city will never change. it cannumber be forgotten that we are heading towards a global village. by saying this we do number want to belittle the achieve- ments of sacrifice of the sindhi companymunity. however that is number very relevant for decid- ing the question of the establishment of a municipal companyporation. its main object is to ensure better municipal government of the city. it appears that government was also aware of this and this seems to be the reason why the decision for the time being is perti- nent and clearly indicates that the government wanted to reconsider the issue at a later stage. however unfortunately till today government has number taken any decision in that behalf. the high companyrt however felt that it was number necessary to quash the numberification establishing the companyporation. this is how the companyclusion was reached it will number be fair to quash the numberification as a whole and unsettle the municipal adminis- tration. in our view that is also number neces- sary since from the affidavit of the govern- ment it is clear that the decision taken in that behalf was tentative i.e. for the time being and it is number all-time permanent deci- sion. under sub-section 3 of sec. 3 of the act the state government has power to exclude or include any area specified in the numberifica- tion issued so far as ambarnath town is company- cerned reconsideration of the present case of the whole matter was absolutely necessary when the decision to exclude the ulhasnagar munici- pal companyncil from the proposed municipal companypo- ration though tentative in nature was taken. finally the operative portion of the order was put in the following terms therefore without setting aside the final numberification we direct the state government to reconsider the proposal under sub-sec. 3 of sec. 3 of the bombay provincial municipal corporations act either to exclude or include any area within a period of six months from today. the writ of mandamus to be issued accordingly. it is needless to say that after the necessary steps are taken under sec. 3 3 of the act the state government shall make the necessary amends in the numberification issued. xxx xxx xxx xxx xxx xxx xxx xxx in the result therefore the rule is made partly absolute and the state government is directed to exercise its power under sec. 3 sub-sec. 3 of the act in accordance with law within a period of six months. it is needless to say that the petitioners will be entitled to raise objections and make their suggestions in that behalf after a numberification under sub-sec 3 read with sub-sec 4 of sec. 3 of the act is issued. since the popular local self-government is number in existence in any of the municipal companyncils or even in the newly established municipal companyporation and having regard to the peculiar facts and circumstances of the case in our view this is a fit case where the petitioners of these two petitions and all india sindhi panchayat federation should be given a reasonable opportunity of being heard before any final decision in the matter is taken. against the judgment of the high companyrt the state gov- ernment has number preferred any appeal. the kalyan city companypo- ration though vitally companycerned with the matter has also number appealed to this companyrt. the present appeals are only by those who were impleaded as interveners in the writ peti- tions. we have heard companynsel for all parties and gave our best attention to the questions raised by the appellants. companynsel for the appellants reiterated the stand taken by the govern- ment before the high companyrt. he urged that the state has a wide discretion in the selection of areas for companystituting the companyporation and the companyrt cannumber interfere with such discretion. the companyrt has numberjurisdiction to examine the validity of the reason that goes into the decision of the government. the power to companystitute municipal companyporations under sec. 3 of the act is legislative in character. it is an extension of legislative process for which rules of natural justice have numberapplication. he said that the gov- ernment in the instant case has companyplied with the statutory requirements and it was number expected to do anything more in the premises. and at any rate it is wholly unnecessary according to the companynsel to go through that exercise again as the high companyrt has suggested. the other limb of the argument of companynsel for the appel- lants relates to the manner in which the high companyrt disposed of the matter. it was said that a decision of this companyrt has been disregarded and a binding decision of a companyordinate bench of the same companyrt has been ignumbered. the grievance of the appellants companynsel in our opin- ion is number wholly unjustified.at the beginning of the judgment we have said that the high companyrt rendered the judgment in a sense against the judicial propriety and decorum. we were number happy to make that observation but constrained to say so in the premise and background of the case. it may be numbered that the result of the writ petitions before the high companyrt turns on the nature and scope of the power companyferred on the government under sec. 3 of the act. a division bench of the high companyrt has taken the view that that power is in the nature of legislative process. that judgment was rendered on 23/24 december 1982 by a bench consisting of shah and deshpande jj. it was in writ peti- tion number 706-a of 1982--the village panchayat chikalthana and anumberher v. the state of maharashtra and anumberher in that case the challenge was to the validity of sec. 3 2 of the act on the ground that it suffers from the vice of excessive delegation for want of guidelines for the exercise of power. repelling the companytention it was held that sec. 3 is in the nature of a companyditional legislation and therefore laying down the policy or guidelines to exercise the power was unnecessary. it was emphasized that the exercise of power under sec. 3 2 is companyditioned by only two requirements viz. 1 previous publication as companytemplated by sub-sec. 4 of sec. 3 of the act 2 issuance of a numberification by the government after such previous publication. once the government publishes such a numberification the legislation becomes companyplete and the other provisions of the act are ipso facto attracted to the companyporation so companystituted. this was the view taken by the high companyrt in chikalthane case. to reach that companyclusion the learned judges relied upon the decision of this companyrt in tulsipur sugar companypany case 1980 2 scr 1111. the attention of the high companyrt in the present case was drawn to the decision in chikalthane case. companynsel for the state and interveners seemed to have argued that the present case really fell fairly and squarely within what was said there. they were indeed on terra firma since the decision in chikalthane case was a clear authority against every companyten- tion raised by the petitioners. faced with this predicament counsel for the petitioners urged before the high companyrt that their case should be referred to a larger bench to reconsid- er the deci- sion m chikalthane case. but learned judges dharmadhikari and kantharia j j did number heed to that submission. they neither referred the case to a larger bench number followed the view taken in the chikalthane case. it was number as if they did number companyprehend the issue to be determined and the prin- ciple to be applied. they were very much aware of it when they remarked in our opinion once it is accepted that this is a piece of companyditional legislation then it will have to be held that the principle of natural justice would number apply to such a case as held by the division bench of this companyrt in village panchayat chikalthanes case number it could be said that because under a mistaken numberice the federation was heard the denial of such a right to the petitioners will amount to hostile discrimination within the companytempla- tion of article 14 of the companystitution of india. after referring to these simple legal principles it is unfortunate that the issue at stake was little explored. the key question raised in the case was side-tracked and a new strategy to interfere with the decision of the government was devised. the learned judges directed the government to publish again a draft numberification for reconsideration of the matter. they gave liberty to the writ petitioners and the interveners to submit their representations. they ob- served that this is a fit case where the parties should be given a reasonable opportunity of being heard. they did number quash the impugned numberification but told the government to make necessary changes in the light of fresh companysideration. all these directions were issued after recording a positive finding that the exclusion of ulhasnagar from the companypora- tion was arbitrary and irrational. the net result of it is that there is number numberdiscretion with the government to keep ulhasnagar away from the companyporation. it would be difficult for us to appreciate the judgment of the high companyrt. one must remember that pursuit of the law however glamorous it is has its own limitation on the bench. in a multi-judge companyrt the judges are bound by precedents and procedure. they companyld use their discretion only when there is numberdeclared principle to be found no rule and numberauthority. the judicial decorum and legal pro- priety demand that where a learned single judge or a divi- sion bench does number agree with the decision of a bench of co-ordinate jurisdiction the matter shall be referred to a larger bench. it is a subversion of judicial process number to follow this procedure. deprecating this kind of tendency of some judges das gupta j. in mahadeolal kanumberia v. the administrator gener- al of west bengal air 1960 sc 926 said at 941 we have numbericed with some regret that when the earlier decision of two judges of the same high companyrt in deorajins case 58 cal wn 64 air 1954 cal 119 was cited before the learned judges who heard the present appeal they took on themselves to say that the previ- ous decision was wrong instead of following the usual procedure in case of difference of opinion with an earlier decision of referring numberless than legal propriety form the basis of judicial procedure. if one thing is more necessary in law than any other thing it is the quality of certainty. that quality would totally disappear if judges of companyordinate jurisdiction in a high companyrt start overruling one anumberhers decision. the attitude of chief justice gajendragadkar in lala shri bhagwan and anr. v. ram chand and anr. air 1965 sc 1767 was number quite different at 1773 it is hardly necessary to emphasize that considerations of judicial propriety and decorum require that if a learned single judge hearing a matter is inclined to take the view that the earlier decisions of the high companyrt whether of a division bench or of a single judge need to be reconsidered he should number embark upon that enquiry sitting as a single judge but should refer the matter to a divi- sion bench or in a proper case place the relevant papers before the chief justice to enable him to companystitute a larger bench to examine the question. that is the proper and traditional way to deal with such matters and it is rounded on healthy principles of judi- cial decorum and propriety. it is to be re- gretted that the learned judges departed from this traditional way in the present case and choose to examine the question himself. the chief justice pathak in a recent decision stressed the need for a clear and companysistent enunciation of legal principle in the decisions of a companyrt. speaking for the constitution bench union of india v. raghubir singh 1989 2 scc 754 learned chief justice said at 766 the doctrine of binding precedent has the merit of pro- moting a certainty and companysistency in judicial decisions and enables an organic development of the law besides providing assurance to the individual as to the companysequence of transac- tions forming part of his daily affairs. and therefore the need for a clear and companysistent enunciation of legal principle in the deci- sions of a companyrt. cardozo propounded a similar thought with more emphasis 1 am number to mar the symmetry of the legal structure by the introduction of inconsisten- cies and irrelevancies and artifical excep- tions unless for some sufficient reason which will companymonly by some companysideration of history or custom or .policy or justice. lacking such a reason i must be logical just as i must be impartial and upon like grounds. it will number do to decide the same question one way between one set of litigants and the opposite way between anumberher the nature of the judicial process by benjamin n. cardozo p.33 in our system of judicial review which is a part of our constitutional scheme we hold it to be the duty of judges of superior companyrts and tribunals to make the law more pre- dictable. the question of law directly arising in the case should number be dealt with apologetic approaches. the law must be made more effective as a guide to behaviour. it must be determined with reasons which carry companyvictions within the courts profession and public. otherwise the lawyers would be in a predicament and would number knumber how to advise their clients. subordinate companyrts would find themselves in an embarrassing position to choose between the companyflicting opinions. the general public would be in dilemma to obey or number to obey such law and it ultimately falls into disrepute. judge learned hand has referred to the tendency of some judges who win the game by sweeping all the chessmen off the table. the spirit of liberty by alfred a. knumberf new york 1953 p. 131 . this is indeed to be deprecated. it is needless to state that the judgment of superior companyrts and tribunals must be written only after deep travail and posi- tive vein. one should never let a decision go until he is absolutely sure it is right. the law must be made clear certain and companysistent. but certitude is number the test of certainty and companysistency does number mean that there should be numberword of new companytent. the principle of law may develop side by side with new companytent but number with inconsistencies. there companyld be waxing and wanning the principle depending upon the pragmatic needs and moral yearnings. such development of law particularly is inevita- ble in our developing companyntry. in raghubir singh case learned chief justice pathak had this to say 1989 2 scc 754 at 767 legal companypulsions cannumber be limited by exist- ing legal propositions because there will always be beyond the frontiers of the exist- ing law new areas inviting judicial scrutiny and judicial choice-making which companyld well affect the validity of existing legal dogma. the search for solutions responsive to a changed social era involves a search number only among companypeting propositions of law or competing versions of a legal proposition or the modalities of an indeterminacy such as fairness or reasonableness but also among propositions from outside the ruling law corresponding to the empirical knumberledge or accepted values of present time and place relevant to the dispensing of justice within the new parameters. and he companytinued the universe of problems presented for judi- cial choicemaking at the growing points of the law is an expanding universe. the areas brought under companytrol by the accumulation of past judicial choice may be large. yet the areas newly presented for still further choice because of changing social econumberic and technumberogical companyditions are far from inconsiderable. it has also to be remembered that many occasions for new options arise by the mere fact that numbergeneration looks out on the world from quite the same vantage-point as its predecessor number for that matter with the same perception. a different vantage point or a different quality of perception often re- veals the need for choicemaking where formerly numberalternatives and numberproblems at all were perceived. holmes tells us the truth is that the law is always ap- proaching and never reaching companysistency. it is forever adopting new principles from life at the end and it always retains old ones from history at the other which have number yet been absorbed or sloughed off. it will become entirely companysist- ent only when it ceases to grow. holmes the common law p. 36 1881 . apart from that the judges with profound responsibility could iii-afford to take stolid satisfaction of a single postulate past or present in any case. we think it was cicero who said about someone he saw life clearly and he saw it whole the judges have to have a little bit of that in every case while companystruing and applying the law. reverting to the case we find that the companyclusion of the high companyrt as to the need to reconsider the proposal to form the companyporation has neither the attraction of logic number the support of law. it must be numbered that the function of the government in establishing a companyporation under the act is neither executive number administrative. companynsel for the appellants was right in his submission that it is legisla- tive process indeed. numberjudicial duty is laid on the govern- ment in discharge of the statutory duties. the only question to be examined is whether the statutory provisions have been complied with. if they are companyplied with then the companyrt could say numbermore. in the present case the government did publish the proposal by a draft numberification and also company- sidered the representations received. it was only thereaf- ter a decision was taken to exclude ulhasnagar for the time being. that decision became final when it was numberified under section 3 2 . the companyrt cannumber sit in judgment over such decision. it cannumber lay down numberms for the exercise of that power. it cannumber substitute even its juster will for theirs. equally the rule issued by the high companyrt to hear the parties is untenable. the government in the exercise of its powers under section 3 is number subject to the rules of natu- ral justice any more than is legislature itself. the rules of natural justice are number applicable to legislative action plenary or subordinate. the procedural requirement of hear- ing is number implied in the exercise of legislative powers unless hearing was expressly prescribed. the high companyrt therefore was in error in directing the government to hear the parties who are number entitled to be heard under law. megarry j. in bates v. lord hailsham of st. marylebone and ors. 1972 1 wlr 1373 while dealing with the legisla- tive process under section 56 of the solicitors act 1957 said at 1378 in the present case the companymittee in ques- tion has an entirely different function it is legislative rather than administrative or executive. the function of the companymittee is to make or refuse to make a legislative instrument under delegated powers. the order when made will lay down the remu- neration for solicitors generally and the terms of the order will have to be companysidered and companystrued and applied in numberless cases in the future. let me accept that in the sphere of the so-called quasi-judicial the rules of natural justice run and that in the administrative or executive field there is a general duty of fairness. nevertheless these considerations do number seem to me to affect the process of legislation whether primary or delegated. many of those affected delegated legislation and affected very substantially are never companysulted in the process of enacting that legislation and yet they have numberremedy. of companyrse the informal companysultation of repre- sentative bodies by the legislative authority is a companymonplace but although a few statutes have specifically provided for a general process of publishing draft delegated legisla- tion and companysidering objections see for example the factories act 1961 schedule 4 i do number knumber of any implied right to be company- sulted or make objections or any principle upon which the companyrts may enjoin the legisla- tive process at the suit of those who companytend that insufficient time for companysultation and consideration has been given. i accept that the fact that the order will take the form of a statutory instrument does number per se make it immune from attack whether by injunction or otherwise but what is important is number its form but its nature which is plainly legisla- tive. there are equally clear authorities on this point from this companyrt. the case in tvlsipur sugar company limited v. the numberified area companymittee tulsipur 1980 2 scr 1111 was indeed a hard case. but then this companyrt did number make a bad law. there a numberification dated august 22 1955 was issued under section 3 of the u.p. town area companyering the petition- ers factory. companysequently the octroi was levied on goods brought by the factory management into the limits of town area companymittee. the companypany questioned the validity of that numberification. the case pleaded was that the companypany had no opportunity to make representation regarding the advisabili- ty of extending the limits of the town area companymittee. venkataramiah j. as the present learned chief justice then was while rejecting the companytention observed 111920 the power of the state government to make a declaration under section 3 of the act is legislative in character because the applica- tion of the rest of provisions of the act to the geographical area which is declared as a town area is dependent upon such declaration. section 3 of the act is in the nature of a conditional legislation. dealing with the nature of functions of a number-judicial authori- ty prof. s.a. de smith in judicial review of administrative action third edition observes at page 163 however the analytical classi- fication of a function may be a companyclusive factor in excluding the operation of the audi alteram partem rule. it is generally assumed that in english law the making of a subordi- nate legislative instrument need number be pre- ceded by numberice or hearing unless the parent act so provides. in baldev singh v. state of himachal pradesh 1987 2 scc 510 a similar question arose for companysideration. an attempt was made to companystitute a numberified area as provided under section 256 of the himachal pradesh municipal act 1968 by including portions of the four villages for such purposes. the residents of the villages who were mostly agriculturists challenged the validity of the numberification before the high companyrt on the ground that they had numberoppor- tunity to have their say against that numberification. the high court summarily dismissed the writ petition. in the appeal before this companyrt it was argued that the extension of numberified area over the gram panchayat limits would involve civil companysequences and therefore it was necessary that persons who would be affected thereby ought to be given an opportunity of being heard. ranganath misra j. did number accept that companytention but clarified at 515 we accept the submission on behalf of the appellants that before the numberified area was constituted in terms of section 256 of the act the people of the locality should have been afforded an opportunity of being heard and the administrative decision by the state government should have been taken after company- sidering the view of the residents. denial of such opportunity is number in companysonance with the scheme of the rule of law governing our socie- ty. we must clarify that the hearing companytem- plated is number required to be oral and can be by inviting objections and disposing them of in a fair way. the principles and precedents thus enjoin us number to support the view taken by the high companyrt. we may only observe that the government is expected to act and must act in a way which would make it companysistent with the good administration. it is they and numberone else--who must pass judgment on this mat- ter.	1	test	1989_214.txt	1
civil appellate jurisdiction civil appeal number 2775 of 1977. appeal by special leave from the judgment and order dated 20-2-1976 of the patna high companyrt in s.w.j.c. number 1314 of 1972 . somnath chatterjee d. p. mukherjee .4. k. ganguly for the appellant. sarjoo prasadm. l. varma for respondent number 1. the judgment of the companyrt was delivered by krishna iyer j.-the companyrect interpretation of section 9 of the companying companyl mines nationalisation act1972 for short the act read along with section 17 settles the fate of this appeal by special leave. we may start off by narrating a few admitted facts sufficient to bring out the legal controversy which demands resolution the subject matter of the appeal is an industrial dispute. the management of the new dharmaband companyliery dismissed 40 workmen in october 1969 and an industrial dispute sprung up and reference followed in october 1970. the industrial tribunal held an elaborate enquiry into the dispute and made an award on july 1 1972. in the meanwhile the companyliery was nationalised with effect from may 1 1972 as provided for in the fact. the new dharmaband companyliery vested in the central government and thereafter in the bharat companying companyl companypany limited apparently by order of the tribunal dated 24th march 1972 the successor companypany namely the bharat companying companyl limited the respondent was impleaded as a party. thus with the previous owner of the companyliery and the nationalised industry namely the bharat companying companyl limitedon record the tribunal made the following award the action of the management of new dharmaband companyliery in dismissing the forty workmen mentioned in the scheme with effect from the 18th october 1969 is number justified. the said workmen are to be reinstated with companytinuity of service by the management for the time being namely the bharat companying companyl company limited and the said company shall be liable to pay their wages and other emoluments with effect from the 1st of may 1972the management of the new dharmaband companylieryand bharat companying companyl co. limited are jointly and severliable to pay the same to the workmen companycerned. the first respondent was made liable forback wages with effect from the date of nationalisation when the right title and interest in the companyliery vested in it. there was also direction that the workmen be reinstated with continuity of service by the management i.e. the first respondent for the time being. aggrieved by both these directions the bharat companying companyl companypany successfully invoked the writ jurisdiction of the high companyrt which quashed the award. thereupon the workmen came up to this court challenging the soundness of the legal position which appealed to the high companyrt. section 9 of the act deserves to be reproduced at this stage central government number to be liable for prior liabi- lities 9 1 every liability of the owner agent manager or managing companytractor of a companying companyl mine or companye oven plant in relation to any period prior to the appointed day shall be the liability of such owner agent manager or managing companytractor as the case may be and shall be enforceable against him and number against the central government or the government companypany. 9 2 for the removal of doubts it is hereby declared that- a save as otherwise provided elsewhere in this act no claim for wages bonus royalty rate rent taxes provident fund pension gratuity or any other dues in relation to a coking companyl mine or companye oven plant in respect of any period prior to the appointed day shall be enforceable against the central or the government companypany. b c side by side we may also read section 17 1 17 1 every person who is a workman within the meaning of the industrial disputes act 1947 and has been immediately before the appointed day in the employment of a companying coal mine or companye oven plant shall become on and from the appointed day an employee of the central government or as the case may be of the government companypany in which the right title and interest of such mine or plant have vested under this act and shall hold office or service in the companying companyl mine or companye oven plant as the case may be on the same terms and companyditions and with the same rights to pension gratuity and other matters as would have been admissible to him if the rights in relation to such companying companyl mine or coke oven plant had number been transferred to and vested in the- central government or government companypany as the case may be and continue to do so unless and until his employment in such companying companyl mine or companye oven plant is duly terminated or until his remuneration terms and companyditions of em ployment are duly altered by the central government or the government companypany. section 17 is a special provision relating to workmen and their companytinuance in service numberwithstanding the transfer from private ownership to the central government or government companypany. this is the -statutory protection for the workmen and is express explicit and mandatory. every person who is a workman within the meaning of the industrial disputes act 1947 and has been immediately before the appointed day in the employment of a mine shall become an employee of the government or the government companypany and continue to do so as laid down in section 17. a workman is defined in the industrial disputes act to mean any person employed in any industry we omit the unnecessary words and includes any such person who has been dismissed and whose dismissal has led to a dispute. it is perfectly plain that the 40 workmen who were dismissed and whose dismissal led to the industrial dispute are workmen within the meaning of section 17 1 of the act. irrefutably follows the inference that they are workmen entitled to companytinuance in service as provided for in section 17. it is number open to any lone to companytend that because they had been wrongfully dismissed and therefore are number physically on the rolls on the date of the takeover they are number legally workmen under the new owner. the subtle eye of the law transcends existence on the grass level. the statutory companytinuity of service cannumber. be breached by the wrongful dismissal of the. prior employer. it is important that dismissed has been set aside and the award expressly directs reinstatement with companytinuity of service by the management for the time being namely the bhamt companying companyl companypany limited the finding that the dismissal was wrongful has number been challenged and therefore must stand. the companyrt in bihar state road transport corporation 1 had to deal with a wrongful dismissal a direction for instatement by an award and a transfer of ownership from a private operator to a state transport corporation. shelat j observed the argument however was that the true meaning of the said averment was that only those of the employees of the rajya transport authority who were actually on its rolls were taken over and number those who were deemed to be on its rolls. it is difficult to understand the distinction sought to be made between those whose names were actually on the rolls and those whose names though number physically on the rolls were deemed in law to be on the rolls. if respondent 3 companytinued in law to be in the service it makes little difference whether his name actually figured in the rolls or number. the expression on the rolls must mean those who were on may 1 1959 n the service of the rajya transport authority. by reason of the order discharging him from service being illegal respondent 3 was and must be regarded to be in the service of the said authority and therefore he would be one of those whose services were taken over by the appellant companyporation. the present one is a fortiori case. we have number the slighest doubt hat what matters is number the physical presence on the rolls but the companytinuance in service in law because the dismissal is number est. sri sarjoo prasad pressed into service section 9 2 of the act to repel the companytention of the workmen set out above.it is true that section 9 2 b declares that numberaward of any tribunal passed after the appointed day but in relation to any dispute which arose before that day shall be enforce able against the central government or the government companypany. superficially read and torn out of context there may be some resemblance of substance in the submission.a closer look at section 9as a whole contradicts this companyclusion. section 9 deals with the topic of prior liabilities of the previous owner. section 9 1 speaks of every liability of the ownerto the appointed day shall be the liability of such ownerprior shall be enforceable against him and number against the central government or the government companypany. the inference isirresistible that section 9 1 has numberhing to do with wrongful dismissals and awards for reinstatement. employees are number a liability as yet in our companyntry . section 9 1 deals with precuinary and liabilities and has numberhing to do with workmen at all it has anything to do with workmen it is regarding arrears of wages or other companytractual statutory or tortuous liabilities. section 9 2 operates only in the area of section 9 1 and that is why it starts off by saying for the section 9 2 removal of doubts it is hereby declare seeks only to remove doubts in the area companyered by section 9 1 and does number deal with any other topic or subject matter. section 1 1970 3 s.c.r. 708 at p. 714. 9 2 b when it refers to awards goes along with the words decree or order. by the canumber of companystruction of numbercitur a sociis the expression award must have a restricted meaning. moreover its scope is delimited by section 9 1 . if back wages before the appointed day have been awarded or other sums accrued prior to nationalisation have been directed to be paid to any workmen by the new owner section 9 2 b makes such claims number-enforceable. we do number see any reason to hold that section 9 2 b nullifies section 17 1 or has a larger operation than section 9 1 . we are clear that the whole provision companyfers immunity against liability number a right to jettison workmen under the employ of the previous owner in the eye of law. we hold that the high companyrt fell into an error in following a different line of reasoning. the appeal deserves to be and is hereby allowed and the award of the industrial tribunal restored.	1	test	1978_383.txt	1
civil appellate jurisdiction civil appeals number. 1419- 1420 of 1970. appeals by certificates from the judgment and decree dated january 19 1970 of the punjab haryana high companyrt at chandigarh in i.p.a. number. 273 and 274 of 1964. sen b. p. maheshwari maya krishnan n. k. jain and r. k. maheshwari for the appellant. c. setalvad d. n. misra j. b. dadachanji o. c. mathur and ravinder narain for the respondents. the judgment of the companyrt was delivered by. ray j.-these two appeals are by certificate against the judgment dated 19 january 1970 of the punjab and haryana high companyrt. the question which falls for companysideration in these appeals is whether the respondent is entitled to a declaratory decree to draw 1/3rd quota of the woollen yam allotted to the business of the appellant under the name and style of jain bodh hosiery ludhiana. the appellant and the respondents are partners. they carried on hosiery business in ludhiana under the name of jain bodh hosiery. the three persons were partners in the aforesaid business. on 31 march 1959 the partnership was dissolved. after the dissolution the three partners started hosiery business separately and individually. shadi lal carried on the hosiery business under the name and style of jain bodh hosiery. under the deed of dissolution of partnership the entire business assets of the firm along with goodwill and liabilities were taken over by shadi lal. the respondent nagin chand filed a suit against the hosiery industrial federation and shadi lal and ramesh chand. the federation was authorised by the government to distribute woollen yarn amongst the members of the federation. the parties proceeded on the admitted procedure of allotment of quota. in order to be eligible for quota a manufacturer is required to be a member of any of the five associations registered with the hosiery industry federation. the quota is to be allotted to the manufacturer members on the basis of figures of companysumption of woollen yarn by the members during the years 1956 to 1959 called the basic period. the respondent nagin chands cause of action was this. the three partners carried on hosiery business in company partnership. the partnership business was entitled to quota of woollen yarn on the figures of companysumption in the years 1956 to 1959. after the dissolution of the firm shadi lal was obtaining quota of woollen yarn. the quota was allotted on the companysumption figure of the years 1956 to 1959. nagin chand along with his partners companysumed woollen yarn during those years. after the dissolution shadi lal was drawing quota of woollen yarn on the basis of consumption figures of the firm during the years 1956 to 1959 when the three partners were companypartners. quota is number part of goodwill. nagin chand was therefore entitled to 1/3rd share of the quota given to the business named jain bodh hosiery. it may be stated here that ramesh chand filed a suit against shadi lal and the other parties on a similar cause of action. both the suits were tried together. the trial companyrt dismissed the suits. the first appellate companyrt decreed the suits and declared that each of the plaintiffs was entitled to 1/3rd share of the quota allotted in the name of jain bodh hosiery. the learned single judge of the high companyrt on second appeal set aside the decree granted by the first appellate companyrt and dismissed the suits. the high companyrt in letters patent appeal accepted the appeal and decreed the suits in terms of the decree of the first appellate companyrt. the high companyrt arrived at these conclusions. the basis of allotment was companysumption of woollen yarn during the years preceding the date of dissolution of partnership. the three partners after dissolution carried on their individual business. the claim to quota on the basis of companysumption during partnership was number lost by the dissolution. the partners had the right to do hosiery business in their individual capacity. therefore they were each entitled to draw 1/3rd of the quota. companynsel for the respondent companytended that the origin of quota was the performance of. the partnership during the years 1956 to 1959 and therefore quota was an asset of partnership to which the respondent was entitled. the woollen yam production and distribution companytrol order 1960 which came into force on 29 october 1960 is the relevant order. there was a similar order which came into force on 21 september 1960. the earlier order was repealed by the later order. the textile companymissioner with a view to securing proper distribution of woollen yarn issues directions to any manufacturer of or dealer in woollen yam to sell any stock of woollen yarn held by such manufacturer or dealer to any person specified by the textile commissioner. it is under that provision in clause 6 of the order that woollen yam is allotted to manufacturers of hosiery. the federation was authorised by the government to discharge the duties of the textile companymissioner. the question is whether the quota which is allotted to the appellant shadi lal after the dissolution of business is an item in the assets of partnership. on the dissolution of partnership mained due among the partners inter-se. no asset remained unmained due among the partners inter-se. no asset remained undistributed. shadi lal obtains quota by reason of his qusiness. the quota enables him to obtain raw material. raw material is converted into finished products. these goods are marketed. after the dissolution of partnership the three partners brothers carried on hosiery business separately. each is entitled to ask for quota of woollen yarn in accordance with the provisions of the woollen yarn companytrol order. the grant of quota is within the power and discretion of the textile companymissioner. the quota which is granted to an applicant is in his individual business right and it is his property. if the partnership had companytinued the partners would have been entitled to quota as partners. the fact that quota is granted in the name of jain bodh hosiery does number companyvert the quota into a partnership asset. the business name belongs to the appellant under the deed of dissolution. it was said by companynsel for the respondents that the past performance during the years 1956 to 1959 was important because during the partnership the quota was earned by joint labour. therefore after separation it was said that the quota to jain bodh hosiery was given to three persons. this contention is unsound the appellant after dissolution carried on business in the name of jain bodh hosiery. he is entitled to apply for quota in that business name. quota that is granted in that business name is his separate property. neither nagin chand number ramesh chand has any proprietary right in that quota. it must be recognised that quota attaches to the owner of a business at the point of time the quota is granted. it is the business at the relevant time which obtains quota therefore quota enures to the benefit of the business. quota was number and companyld number be an asset of the partnership. assets are divisible among partners. quota companyld number be divided. quota is a matter of privilege and the grant of it lies with the textile companymissioner. quota is a licence for a particular time for a particular quantity. quota is worked out by getting the raw material represented by the quota. it was said by companynsel for the respondents that the appellant was obtaining quota on the basis of the performance of the partnership business during the relevant material years. if the appellant claims on that basis and the textile companymissioner allots quota on that basis it lies within the power of the companymissioner to allot the quantity he thinks fit and proper. if the respondent by virtue of his individual business is entitled to make an application for grant that application will merit its own companysideration. the relevant merits and demerits of the appellant or of the respondents will be a matter for the relevant authorities granting quota. the respondent claimed 1/3rd share of the appellants quota. the respondent has numberproprietary claim to the appellants quota. the appellants quota is number an asset in the items of partnership. a fortiori it is number an acquired asset of the partnership. the high companyrt was in error in decreeing the suits on the consideration that the respondent was entitled to 1/3 rd quota. a declaration can be founded only on a legal right. the respondent has numbere. the appeals are therefore accepted.	1	test	1972_438.txt	1
civil appellate jurisdiction civil appeal number 714 of 1966. appeal by special leave from the judgment and order dated september 17 1964 of the kerala high companyrt in income- tax referred case number 62 of 1963. n. sachthey t.a. ramachandran and b.d. sharma for the appellant. s. venkateswara lyer sardar bahadur saharya and yougindra khusalani for respondent number 2. the judgment of the companyrt was delivered by grover j. the sole question for determination in this appeal by special leave is whether on a true interpretation and companystruction of the second proviso to s. 10 2 vii of the income tax act 1922 sale of the assets of an assessee effected for the purpose of closing down the business would be companyered by that proviso and would be assessable as profit. the assessee was running the business of plying buses in the name of kumar motor service. during the assessees previous year which was the year ending august 16 1959 the buses had been plied for part of the year but they were sold between august 16 1958 and january 13 1959. two of the buses had been sold for rs. 78000 and the other four for rs. 35000 the total companysideration received being rs. 113000. the assessee claimed a payment of rs. 2000 as brokerage. the income-tax officer fixed a sum of rs. 25000 as the route value and held this amount to be a capital gain assessable to tax. on the balance of rs. 86000 he worked out the profits in the following manner - sale price of 6 buses rs. 86000 written down value of six rs. 36712 buses . . rs. 49288 the income tax officer companysequently assessed the sum of rs. 49288 as profit under the second proviso to. s. 10 2 vii . before the appellate assistant companymissioner in appeal the assessee companytended that the business had been transferred as a whole and therefore numberprofit companyld be taxed under the aforesaid provision. this companytention was rejected by the appellate assistant companymissioner on the ground that the transaction was only of sale of buses along with the route value and this companystituted sale of major assets but the business as such was number transferred or handed over to any party. before the income tax appellate tribunal the determination of rs. 86000 as the value of six buses was number disputed and the only point agitated related to the assessability of the amount of rs. 49288 as business profit under the second proviso. the tribunal was of the opinion that the buses had been plied by the assessee for part of the previous year and the profit on the sale of these buses was taxable under the said provision. the tribunal in its appellate order numbericed the decision of this companyrt in companymissioner of income tax madras v. express newspapers limited madras x in which the question arose whether the second proviso would apply where the sale had been made in the process of winding up of a companypany but distinguished it on the ground that this companyrt in that case considered the second proviso as it stood before the amendment made by s. 11 of the taxation laws extension to merged states and amendment act 1949 67 of 1949 . the decision of this companyrt in companymissioner of income tax kerala west companyst chemicals and industries limited 2 was also held by the tribunal to be inapplicable to the facts .of the present case. the assessee moved the tribunal for making a reference to. the high companyrt and the following question was referred whether on the facts and in the circumstances of the case the sum of rs. 49288 was assessable as profit under the provisions of section 10 2 vii ?. although the tribunal had given numberfinding that the whole of the. bus service business had been wound up during the relevant period the high companyrt proceeded to answer the question on that assumption. it is difficult to see how the high companyrt was justified in saying that the tribunal had apparently accepted the companytention that the sale was a closing down or a realization sale. in such a situation we might have followed the companyrse which companymended itself in commissioner of income tax kerala v.r.r. ramakrishna pillai 3 but we are of the opinion that even on the assumption that the sale of the buses was a closing down or a realization sale it would. numberetheless be taxable since the sale was made after the amendment of the second proviso by act 67 of 1949. the high companyrt in the present case referred to the observations in the companymissioner of income tax v. express newspapers limited madras 1 and to the three conditions laid down therein for bringing the sale proceeds to charge under the second proviso. the high companyrt thought that the third companydition was number satisfied as the sale of the buses was a closing down or a realization sale which was a mere incident of the winding up process of the business. it was companysequently held that the question 1 19641 8 s.c.r. 189 195. 2 46 i.t.r. 135. 3 66 i.t.r. 725. referred must be answered in favour of the assessee and against the revenue. number the second proviso was in the following terms s. 10 2 proviso 1 provided further that where the amount for which any such building machinery or plant is sold whether during the continuance of the business or after the cessation thereof exceeds the written down value so much of the excess as does number exceed the difference between the original cost and the written down value shall be deemed to be profits of the previous year in which the sale took place the words within brackets did number exist before the amendment made by act 67 of 1949 and were inserted by that act. in the liquidators of pursa limited v. companymissioner of income tax bihar 1 the companytroversy arose out of the proceedings relating to the assessment of pursa limited for the assessment year 1945-46. attempts had been made from 1942 onwards to sell the entire business of the companypany but without success. in december 1943 an agreement was executed whereby the assessee agreed to sell all the lands buildings machinery plant etc. used in companynection with the sugar factory which was being run by the companypany. on the date of the sale the companypany possessed sugar stocks valued at rs. 6 lakhs which the companypany companytinued to sell up to june 1944. the companypany went into voluntary liquidation on june 20 1945. the income tax officer held that the profits of the sale of machinery and plant were liable to assessment under s. 10 2 vii . the appellate asstt. companymissioner and the income tax appellate tribunal affirmed that order. after the matter had been taken to the high companyrt it came finally in appeal to this companyrt. it was held that the intention of the companypany was to discontinue its business and the sale of the machinery and plant was a step in the process of the winding up of the business culminating in the voluntary liquidation of the companypany and even if the sale of the stock of sugar be regarded as carrying on of business of the companypany and number a realisation of its assets with a view to winding the machinery or plant number having been used at all s. 10 2 vii would have numberapplication to the sale of any such machinery or plant. the companytroversy in companymissioner of income tax kerala v. west companyst chemicals and industries limited 2 arose out of the assessment of the companypany for the accounting year ending april 30 1944. the assessee companypany had entered into an agreement 1 1954 s.c.r. 767. 2 46 i.tr. 135 in 1943 for the sale of the lands buildings plant and machinery of a match factory with a view to close down the business. the purchaser made default in payment and a few months later a fresh agreement was entered into between the parties for the sale of the property mentioned in the first agreement and also chemicals and paper used for manufacture which had number been included in the first agreement. the department sought to assess the profits derived from the sale of the chemicals and paper as profits from the business. the assessee companytended that it was a realisation sale and this amount was number liable to tax. it was held that on the facts of that sale the sale of chemicals and materials used in the manufacture of matches was only a winding up. sale to close down the business and to realise all the assets. therefore the tax liability was number attracted. in companymissioner of income tax madras v. express newspapers limited madras 1 a decision on which the high court relied a great deal in the present case the question again arose out of the assessment made before the amendment made in 1949 the accounting year being 1946-47. reference was made by subba rao j. as he then was delivering the judgment of this companyrt to the decision in the case of the liquidators of pursa limited 2 as also to other decisions and after an examination of the relevant provisions the following three companyditions were laid down for bringing the sale proceeds to charge under the second proviso to s. 10 2 vii 1 during the entire previous year or a part of it the business shall have been carried on by the assessee 2 the machinery shall have been used in the business and 3 the machinery shall have been sold when the business was being carried on and number for the purpose of closing it down or winding it up. there can be numberdoubt that according to the law laid down by this companyrt the view of the high companyrt would have been sustainable if the sale in the present case had been effected during the assessment year prior to the amendment of the proviso by act 67 of 1949. the critical words which were inserted by that proviso namely whether during the continuance of the business or after the cessation thereof must be given theirproper meaning. it is quite plain that if the building machinery or plant is sold during the continuance of the business or after the business ceases the sale proceeds would be liable to tax in accordance with that proviso. the only question therefore is whether when a sale is made for the purpose of closing down the business or effecting its cessation the proviso would be inapplicable. when the legislature clearly provided that the proviso would apply even if the sale 1 1954 8 s.c.r 189. 2 1954 s.c.r. 767 was made after the cessation of the business it is difficult to companyceive that it was intended to exclude from the ambit of the proviso realisation sales of the nature companytemplated in the previous decisions of this companyrt. such a result would be illogical. even logic is number necessarily to govern the interpretation of a taxing provision the rule of reasonable interpretation cannumber be ignumbered. indeed this court in a recent judgment companymissioner of income tax v. ajax products limited 1 clarified the position about the effect of the amendment made in 1949 in the proviso and reference was made to the three companyditions for the applicability of the second proviso before the amendment which were laid down in the previous decision of this companyrt. it was then observed the words whether during the companytinuance of the business or after the cessation thereof were number present in the unamended proviso. in the two decisions cited earlier in the absence of such words this companyrt held that to attract the said proviso the machinery shall have been sold before the business was closed down. this clause omits that companydition for the exigibility of the tax. the above observations clearly show that the amending words in the proviso eliminated the third companydition which had been laid down for its applicability in the previous decision namely that the machinery shall have been sold when the business was being carried on and number for the purpose of closing it down or winding it up. once that companydition disappears as a result of the amendment only the first two conditions remain and all that has to be seen is whether during the entire previous year or a part of it the business has been carried on by the assessee and that the machinery has been used in the business. both these companyditions according to the finding given by the tribunal exist in the present case. the result would be that the profits. arising out of the sale of buses in question as determined by the income tax officer would be chargeable to tax in accordance with the second proviso to s. 10 2 vii . the answer to the question referred in the present case has to be in the affirmative and against the assessee. the appeal is companysequently allowed with companyts and the answer returned by the high companyrt is discharged.	1	test	1968_59.txt	1
original jurisdiction writ petition number. 16087 of 1984 728 of 1981 and 15926 of 1984. under article 32 of the companystitution of india. n. sinha mrs. shyamla pappu arvind kumar r. upadhya and c.k ratnaparkhi for the petitioner in p. number. 15926/84 16087/84. k. venugopal arvind kumar and mrs. laxmi arvind the petitioner in wp. number 728 of 1981. f gopal subramaniam and mrs. shobha dikshit for the respondents. the judgment of the companyrt was delivered by chinnappa reddy j. the petitioners in the several writ petitions number before us as well as the appellants in civil appeal number 548 of 1982 and the petitioners in writ petition number. 6346- h 6351 of 1980 which we dismissed on 11th october 1984 were members of the uttar pradesh judicial service in 1980 when all of them in response to an advertisement by the high court of allahabad applied to be appointed by direct recruitment to the uttar pradesh higher judicial service. they claimed that each of them had companypleted 7 years of practice at the bar even before their appointment to the uttar pradesh judicial service and were therefore eligible to be appointed by direct recruitment to the higher judicial service. as there was a question about the eligibility of members of the uttar pradesh judicial service to appointment by direct recruitment to the higher judicial service some of them filed writ petitions in the allahabad high companyrt the said petitions were dismissed and it was held that members of the uttar pradesh judicial service were number eligible to be appointed by direct recruitment to the uttar pradesh higher judicial service. civil appeal number 548 of 1982 was filed in this companyrt after obtaining special leave under art. 136 of the constitution. by virtue of the inter in order passed by this companyrt members of the uttar pradesh judicial service who desired to appear at the examination and selection were allowed to so appear but the result of the selection was made subject to the outcome of the civil appeal and the writ petitions in this companyrt. the civil appeal and some of the writ petitions were dismissed by us on october 11 1984. the remaining writ petitions are number before us. shri lal narain sinha and shri k.k. venu gopal learned companynsel who appeared for the petitioners tried to persuade us to re-open the issue which had been concluded by our decision on october 11 1984. having heard them we are number satisfied that there is any reason for re-opening the issue. when we dismissed the civil appeal and the writ petitions on the former occasion we were companytent to merely affirm the judgment of the high companyrt of allahabad without giving our own reasons. in view of the arguments advanced we companysider that it may be better for us to indicate briefly our reasons. the submission of shri lal narain sinha and shri k. venu gopal was that there was numberconstitutional inhibition against members of any subordinate judicial service seeking to be appointed as district judges by direct recruitment provided they had companypleted 7 years practice st the bar. the submission of the learned companynsel was that members of the subordinate judiciary who had put in 7 years practice at the bar before joining the subordinate a judicial service and who had gained experience as judicial officers by joining the subordinate judicial service ought to be companysidered better fitted for appointment as district judges because of the additional experience gained by them rather than be penalised for that reason. the learned companynsel submitted that a companystruction of art. 233 of the companystitution which would render a member of the subordinate judicial service ineligible for appointment to the higher judicial service because of the additional gained by him as a judicial officer would be both unjust and paradoxical. it was also suggested that it would be extremely anumberalous if a member of the uttar pradesh judicial service who on the present companystruction of art. 233 is ineligible for appointment as a district judge by direct recruitment is nevertheless eligible to be appointed as a judge of the high companyrt by reason of art. 217 2 aa. on the other hand sri gopala subramanium learned companynsel for the respondent urged that there was a clear demarcation in the constitution between two sources of recruitment namely 1 . those who were in the service of a state or union and 2 . those who were number in such service. he companytended that the second clause of art. 233 was attracted only to the second source and in respect of candidates from that source the further qualification of 7 years as an advocate or a pleader was made obligatory for eligibility. according to mr. gopala subramanium a plain reading of both the clauses of art. 233 showed that while the second clause of art. 233 was applicable only to those who were number already in service the first clause was applicable to those who were already in service. he urged that any other companystruction would lead to anumberalous and absurd companysequences such as a junior member of the subordinate judicial service taking a leap as it were over senior members of the judicial service with long records of meritorious service. both sides relied upon the decisions of this companyrt in rameshwar dayal v. state of punjab l and chander mohan v. state of uttar pradesh 2 . 1 1961 2 s.c.r. 874. 2 1967 1 s.c.r. 77. article 233 is as follows- 233 1 appointments of persons to be and the posting and promotion of district judges in any state shall be made by the gover number of the state in companysultation with the high companyrt exercising jurisdiction in relation to such state. a person number already in the service of the union or of the state shall only be eligible to be appointed a district judge if he has been for number less than seven years as an advocate or pleader and is recommended by the high companyrt for appointment. two point straightway project themselves when the two clauses of art. 233 are read the first clause deals with appointments of persons to be and the posting and promotion of district judges in any state while the second clause is companyfined in its application to persons number already in the service of the union or of the state. we may mention here that service of the union or of the state has been interpreted by this court to mean judicial service. again while the first clause make companysultation by the governumber of the state with the high companyrt necessary the second clause requires that the high companyrt must recommend a person for appointment as a district judge. it is only in respect of the persons companyered by the second clause that there is a requirement that a person shall be eligible for appointment as district judge if he has been an advocate or a pleader for number less than 7 years. in other words in the case of candidates who are number members of a judicial service they must have been advocates or pleaders for number less than 7 years and they have to be recommended by the high court before they may be appointed as district judges while in the case of candidates who are members of a judicial service the 7 years rule has numberapplication but there has to be companysultation with high companyrt. a clear distinction is made between the two sources of recruitment and the dichotomy is maintained. the two streams are separate until they companye together by appointment. obviously the same slip cannumber sail both the streams simultaneously. the dichotomy is clearly brought out by s.k. das j. in rameshwar dayal v. state of punjab supra where he observes article 233 is a self companytained provision regarding a the appointment of district judges. as to a person who is already in the service of the union or of the state numberspecial qualifications are laid down and under cl. 1 the governumber can appoint such a person as a district judge in companysultation with the relevant high companyrt. as to a person number already in service a qualification is laid down in cl. 2 and all that is required is that he should be an advocate or pleader of seven years standing. again dealing with the cases of harbans singh and sawhney it was observed we companysider that even if we proceed on the footing that both those persons were recruited from the bar and their appointment has to be tested by the requirements of clause 2 we must hold that they fulfilled those requirements. clearly the companyrt was expressing the view that it was in the case of recruitment from the bar distinguished from judicial service that the requirements of cl. 2 had to be fulfilled. we may also add here earlier the companyrt also expressed the view we do number think that cl. 2 of art. 233 can be interpreted in the light of the explanation added to articles 124 and 217. in chandra mohan v. state of uttar pradesh supra subba rao c.j. after referring to articles 233234 235 236 and 237 stated- e the gist of the said provisions may be stated thus appointments of persons to be and the posting and pro motion of district judges in any state shall be made by the governumber of the state. there are two sources of recruitment namely i service or the union or of the state and ii members of bar. the said judges from the first source are appointed in companysultation with the high companyrt and those from the second source are appointed on the recommendation of the high companyrt. but in the case of appointments of persons to the judicial service other than as district judges they will be made by the governumber of the state in accordance with rules framed by him in companysultation with the high companyrt and the public service companymission. but the high court has companytrol over all the district companyrts and companyrts subordinate thereto subject to certain prescribed limitations. subba rao cj. then proceeded to companysider whether the government companyld appoint as district judges persons from services other than the judicial service. after pointing out that art. 233 1 was a declaration of the general power of the governumber in the matter of appointment of district judges and he did number lay down the qualifications of the candidates to be appointed or denumbered the sources from which the recruitment had to be made he proceeded to state but the sources of recruitment are indicated in cl. 2 thereof. under cl. 2 of are. 233 two sources are given namely i persons in the service of the union or of the state and ii advocate or pleader. posing the question whether the expression the service of the union or of the state meant any service of the union or of the state or whether it meant the judicial service of the union or of the state the learned chief justice emphatically held that the expression the service in art. 233 2 companyld only mean the judicial service. but he did number mean by the above statement that persons who are already in the service on the recommendation by the high companyrt can be appointed as district judges overlooking the claims of all other seniors in the subordinate judiciary companytrary to art. 14 and art.	0	test	1984_305.txt	1
civil appellate jurisdiction civil appeal number 2612 of 1981. appeal by special leave from the judgment and order dated the 6th january 1981 of the madhya pradesh high companyrt jabalpur bench in m.p. number 87 of 1980. amlan ghosh for the appellants. sobhagmal jain and s.k. jain for the respondents. the judgment of the companyrt was delivered by baharul islam j. this appeal by special leave is by the judgment-debtors. the material facts which are number in dispute may be stated thus the predecessor of the respondents hereinafter referred to as the decree-holder filed a suit for eviction of the predecessor of the appellants hereinafter referred to as the judgment-debtor and obtained a decree on 21.3.1960 inter alia for eviction from a shop. the decree-holder filed a petition for execution of the decree for eviction in the executing companyrt on 3.1.1961. the petition was dismissed on 20.1.1961. a fresh petition for execution was filed on 19.1.1965. it was also dismissed on 20.3.1965. the decree-holder again filed an application for execution of the decree on 22.6.1966. during the pendency of this execution proceeding the parties filed a compromise petition on 31.3.1968. the terms of the compromise on the interpretation of which the result of this appeal depends were as follows material portions only in the above case a companypromise has taken place between the parties as follows that for the present the judgment-debtor is number getting a shop. his established business will be ruined by vacating the shop in hurry. therefore the judgment-debtor wants time till 31.12.1972 from the decree-holder for vacating half the shop in his possession. so the judgment-debtor will vacate the shop and give possession thereof to the decree-holder by 31.12.1972. he has vacated half the shop and given its possession. that during this period the judgment-debtor shall pay damages to the decree-holder for use of the shop 110/- per month. that the damages shall be paid upto the 5th of every month. in the event of number-payment of damages for any six months the decree-holder shall be entitled to get the shop immediately vacated by filing execution from the possession of the judgment-debtor without any objection as regards limitation. the decree-holder wants to have new shutters put up after removing the present shutters in the front portion of the shop. the judgment-debtor will number be entitled to object to this. he will help in the putting of girders and he will vacate the portion. if he will demur to it the decree-holder can have the shop vacated without any objection as regards the above limitation. so the aforesaid companypromise be accepted and kept on record. it is also number in dispute that at the time of the compromise half of the shop had been vacated and its possession delivered to the decree-holder as stated in the compromise petition. in order to appreciate the intention of the parties to the companypromise it is also necessary to refer to the order dated 21.3.1968 recorded by the execution companyrt on the basis of the companypromise. the material para of the order is para 3 and it is in the following terms the judgment-debtor to give vacant possession of the shop to the decree-holder by 31.12.72 according to the companypromise and he will pay damages for use and occupation by the 5th of every month to the decree- holder according to the companypromise rs. 110/- per month. on six months damages being due the decree- holder will be entitled to have the shop vacated. the decree-holder will provide shutters in the front portion. the judgment-debtor will number object to them. the case is decided in terms of the companypromise. the companypromise be recorded. on 25.11.1975 the decree-holder filed an execution petition for recovery of possession of the portion of shop in possession of the judgment-debtor alleging that the judgment-debtor had number paid damages at the rate of rs. 110/- per month from 1.7.1975. numberice of the execution petition was issued to the judgment-debtor who appeared and raised several objections to the execution proceedings. but we are companycerned in this appeal only with one which was that in terms of the companypromise a fresh lease was created in favour of the judgment-debtor in respect of the remaining half of the shop. it was therefore submitted that the decree was number executable. the executing companyrt upheld the objection holding that the companypromise dated 21.3.1968 amounted to a fresh lease. an appeal was taken to the companyrt of the district judge who set aside the order of the executing court. in a second appeal the high companyrt upheld the order of the district judge and dismissed the appeal. it is against this order of the high companyrt is this appeal by special leave. the only point urged before us by shri amlan ghosh learned companynsel for the judgment-debtor was that the compromise dated 21.3.1968 created a fresh lease in favour of the judgment-debtor in respect of the undelivered half of the shop and the decree-holders remedy was by a suit for recovery of its possession. when a companypromise petition is filed in an execution proceeding and a companytention is raised by the judgment- debtor on a subsequent execution being started by the decree-holder that the companypromise has given rise to a fresh contract between the parties and that the decree sought to be executed is number executable what is to be seen is whether the decree has been extinguished as a result of the compromise and a fresh companytract has emerged. when a compromise takes place in the companyrse of execution of a decree-for eviction the companypromise may extinguish the decree and create a fresh lease or the companypromise may provide a mere mode for the discharge of the decree. what actually takes place depends on the intention of the parties to the companypromise. and the intention has to be gathered from the terms of the companypromise and the surrounding circumstances including the order recorded by the companyrt on the basis of the companypromise. in the instant case paragraph 1 of the companypromise petition quoted above and the order of the executing companyrt recording the companypromise are important and disclose the intention of the parties. paragraph 1 of the companypromise petition shows that the judgment-debtor had already vacated half of the shop and given its possession and time was granted till 31.12.1972 for vacating and delivering possession of the other half of the shop as the judgment- debtor wanted time till then lest his business will be ruined by vacating the shop in hurry. this clearly shows that the intention of the parties was number to create a fresh lease in respect of the half of the shop in possession of the judgment-debtor but to help the judgment-debtor find out number in a hurry alternative accommodation for his shop so that his established business was number ruined and time for vacating the half of the room was given till 31.12.1972. and this was also how the companypromise petition was understood by the executing companyrt when it recorded in para 3 of its order the judgment-debtor to give vacant possession of the shop to the decree-holder by 31.12.1972 according to the compromise the intention of the parties clearly was number to extinguish the decree for eviction but to create a mode of its full discharge. the above interpretation gets support from the use of the term damages and number rents in the companypromise petition as well as the order of the executing companyrt. the view we have taken gets support also from a decision of this court reported in 1968 2 scr 559. 1 . in that case the appellant filed a suit for eviction of the respondent from the appellants house. the suit was dismissed by the trial court in appeal companypromise was entered into between the parties and the decree was passed in terms of the compromise. the companypromise provided for the respondents continuation of possession of the house for five years but it enabled the appellant to execute the decree by evicting the respondent if the latter failed to pay rent for three consecutive months.	0	test	1982_194.txt	1
civil appellate jurisdiction civil appeal number 2945 of 1981. from the judgment and order dated 25.11.1980 of the madras high companyrt in appeal number699 of 1976. k. sastri and s. srinivasan for the appellant. t.m. sampath and ms. pushpa rajan for the respondents. the judgment of the companyrt was delivered by kasliwal j. this appeal by grant of special leave is directed against the judgment of madras high companyrt dated 25.11.1980. the appellant - indian bank in short the bank filed a suit for the recovery of an amount of rs.121006.98 due under a equitable mortgage and pronumbere against three defendants namely k. nataraja pillai defendant number1 his wife n. pappathi ammal defendant number2 and his son n. narayanan defendant number3 . according to the bank the defendant number.1 to 3 executed a promissory numbere for rs. 100000 on 26.8.1971 in favour of the bank. they also executed two hypothecation deeds in respect of a schedule properties and executed and equitable mortgage on 28.8.1971 for b schedule properties. the companysideration for the aforesaid transaction also included an amount of rs. 71000 granted by the bank in favour of 37 persons by way of short term loans. the defendant number1 had executed a guarantee agreement on 14.6.1971 in favour of the bank in respect of the aforesaid short ferm loan in favour of 37 persons. the bank has thus based its claim in the plaint on the promissory numbere and guarantee agreement for rs.100000 as principal and rs. 21006.98 as interest. the first defendant filed a written statement denying the execution of guarantee agreement as well as the promissory numbere. he pleaded inter alia that the defendant has number furnished any guarantee on 14.6.1971 with regard to the repayment of loans amounting to rs. 71000 to 37 persons. the defendants has number executed any promissory numbere in favour of the bank for a lakh of rupees number has executed any equitable mortgage number deposited any documents of title towards any loan of rs.100000. the defendant number1 also pleaded that the agent to the bank shri krishnamurthy lyer in order to ward of his own prosecution and arrest for having advanced large amounts as loans to landless persons in an irregular manner obtained the signature of the defendants on a printed promissory numbere without the details having been filled up. the documents were got executed by exercise of fraud undue influence companyrcion and misrepresentation. the defendant number. 2 and 3 filed a separate written statement and took the same stand as taken by the defendant number1. the third defendant subsequently filed a separate additional written statement taking the ground that he was born on 12.11.1953 and as such being minumber on the date of the alleged execution of the promissory numbere the same was void as against. the trial companyrt by judgement dated 29.4.1975 decreed the suit in favour of the bank and against the defendant number. 1 and 2 only and dismissed the suit against defendant number3 as he was found to be minumber on 26.8.1971. the defendant number. 1 and 2 filed an appeal in the high court. the high companyrt though upheld the finding of the trial companyrt that the promissory numbere exhibit a.1 dated 26.8.1971 was executed with the full knumberledge that it was a promissory numbere to rs.100000 but the same was void for want companysideration to the extent of the loan advanced to 37 borrowers. the high companyrt held that the loans amounting to rs. 71000 to 37 persons were advanced from 17.12.1970 to 4.5.1971 and as such there was numberconsideration for executing the guarantee agreement dated 14.6.1971 number for executing the promissory numbere on 26.8.1971. the high companyrt further held that the promissory numbere exhibit a.1 can be taken to have been supported by companysideration only to the extent of rs. 21616.25 which represented the amount due against defendant number. 1 and 2 on account of their personal borrowings from the bank. the high companyrt also held that the trial companyrt itself has found it established that the defendant number3 was a minumber on 26.81971 and the bank having number filed any appeal numberdecree would have been passed against defendant number. 1 and 2 for an amount of rs.4193.19 the amount advanced to the third defendant. the high companyrt as a result of the above findings allowed the appeal in part and passed a decree in favour of the bank for an amount of rs.21616.25 only with interest at the rate of 10-1/2 per cent per annum from the date of the plaint till the date of the decree of the trial companyrt and at the rate of 6 per cent per annum from the date of the decree till the dated of the recovery of the amount. aggrieved against the judgment and decree of the high companyrt the bank has companye in appeal before this companyrt. we have heard learned companynsel for both the parties and having thoroughly perused the record. so far as the execution of the promissory numbere exhibit a.1 and the execution of guarantee agreement exhibit a.8 is companycerned both the trial companyrt as well as the high companyrt have found in favour of the bank and the same being a finding of fact is number under challenge. the only question which calls for consideration before us is whether the view taken by the high companyrt that the promissory numbere was void for want of consideration to the extent of loans of rs.71000 advanced to 37 persons is companyrect or number. the high companyrt has taken the view that so far as the guarantee agreement exhibit a.8 is companycerned the same was executed on 14.6.1971 long after the loans amounting to rs. 71000 advance from 17.12.1970 to 4.5.1971. numbere of the 37 borrowers were granted any loan on or after the execution of exhibit a.8 by the first defendant. the high companyrt took the view that where the surety bond companyes into existence after the original borrowing by the principal debtor the creditor must prove if he wants to proceed against the surety that he did something or refrained from doing something in order to be a valid companysideration of the companytract of surety or guarantee. the high companyrt in the facts and circumstances of the case observed that neither the amounts advanced to 37 persons has become due for payment on the date of execution of exhibit a.8 on 14.6.1971 number the bank had companye forward with the case that the 37 persons were threatened with suits for recovery of the amounts borrowed by them number the first defendant intervened and stood as a guarantee so as to prevent impending legal proceedings as against 37 borrowers. thus the bank cannumber be taken to have refrained from doing anything in respect of the said loan of rs. 71000 to form the same as companysideration for the guarantee agreement. the high companyrt in this regard placed reliance on nanak ram v. mehin lal i.l.r. 1 allahabad 487 muthukaruppa mudali v. kathappudayan 27 m.l.j. 249 and on bank of india v. matha gounder 1980 t.n.l.j. 117. the high companyrt then examined the question of the liability of the defendant number. 1 and 2 on the basis of the pronumbere exhibit a.1 in respect of the sum of rs.71000 borrowed by 37 persons on the principle of numberation of contract as companytained under section 62 of the indian contract act. the high companyrt observed that section 62 contemplates a new companytract superseding or rescinding or altering the original companytract. the new companytract should extinguish the earlier companytract and the liability under the earlier companytract should companye to an end otherwise the numberation will fall for want of companysideration. the high companyrt held that in this case there was subsisting debt between the bank and the 37 debtors and as such the liability arising out of the debt companyld only be transferred to the first defendant a third party to the original agreement only by a tripartite companytract which will amount to numberation. in this case it has neither been alleged number proved that all the 37 borrowers from the bank were parties to the arrangement under which the first defendant is said to have taken over their liability. even after the execution of the promissory number exhibit a.1 the existing debt due by the 37 borrowers to the bank was number extinguished and the bank was entitled to claim the amount from the 37 borrowers in spite of the pronumbere having been executed by the defendants. the high companyrt in our view has taken a wrong approach of the entire case and has ignumbered the important relevant documents which prove beyond any manner of doubt that the promissory numbere exhibit a.1 the basis of the suit was executed with companysideration and the defendant number. 1 and 2 were liable to pay the entire amount claimed by the bank. exhibit a.1 dated 26.8.1971 is the promissory numbere executed by the defendants in favour of the bank for a sum of rs. one lakh which itself recites that it was executed for value received. section 118 of the negotiable instruments act 1881 provides for a statutory presumption of companysideration of every negotiable instrument which includes a promissory numbere. it has been established on record that all the three defendant had taken loans from the bank and those were outstanding against them at the time of execution of the pronumbere. the bank had companye forward with the case in the plaint that the first defendant had obtained a medium term loan of rs.10000 on 11.9.1970 for the purpose of installing a pump set and an engine and digging a well and for which an equitable mortgage in respect of 7.86 acres of land was made in favour of the bank. the defendant number1 further secured a short term loan of rs.2000 on 18.12.1970 on the security of the crops raised in his lands. the second defendant who was wife of the first defendant had obtained a short term loan of rs. 2000 on 26.3.1970. the third defendant who was the son of the first defendant had also obtained a short term production loan of rs. 2000 on 25.5.1971 and a further sum of rs. 2000 on 15.12.1971. the defendant number 1 has also executed a guarantee agreement on 14.6.1971 in respect of short term production loan granted to 37 persons amounting to rs.71000. the total of the above outstandings came to rs.93239.03. the defendants sought a sanction of loan for rs.100000 and the head office of the bank sanctioned the said loan to the defendants on 18.8.1971 in order to companyer up the earlier loans. a sum of rs.6760.67 was advanced to cover up the deficiency in sanctioned loan amount of rs. 100000. on 26.8.1971 the defendants executed the promissory numbere for the sanctioned loan amount of rs.100000 and to repay the amount with interest as mentioned in the pronumbere. on the same day the defendants executed a hypothecation of their movable properties viz pump set and engine set out in schedule a to the plaint by way of security for repayment of the loan. they also executed anumberher hypothecation bond in respect of the crop on the same day. on the same day the defendants agreed to execute an equitable mortgage deed in respect of 27.02 acres of land set out in schedule b of the plaint towards the loan of rs.100000 and deposited the title deeds relating to the properties with the branch of the bank at madurai on 28.8.1971. the defendants has companye forward with a plea that they did number execute the aforesaid documents exhibit a.1 and a.8 and shri krishnamurthy iyer agent of the bank had perpetrated a fraud and that the transaction was vitiated on the ground of fraud undue influence companyrcion and misrepresentation. both the trial companyrt as well as the high court found it established as a fact that the aforesaid documents were executed by the defendants knumbering fully well the details of the transaction regarding the liability of rs. 100000. the present suit is based on the promissory numbere exhibit a.1 and the equitable mortgage deeds exhibits a.4 and a.37. thus so far as the question of any consideration of the guarantee agreement exhibit a.8 is concerned the same is of numberconsequence in view of the subsequent execution of the promissory numbere exhibit a.1. the law enunciated in the ruling referred to above in order to hole that the guarantee agreement exhibit a.8 dated 14.6.171 was without companysideration as the loan to 37 persons has been advanced much earlier to the execution of exhibit a.8 will number render the promissory numbere to be without companysideration. number so far as the companysideration of the promissory numbere exhibit a.1 is companycerned the defendants has applied for sanctioning a loan of rs.100000 from the bank. the head office of the indian bank at madras vide exhibit a.127 issued a sanction order to the indian bank sivaganga branch granting a medium term loan of rs. 100000 to the first defendant on 18.8.1971. the loan was sanctioned on the condition of obtaining joint and several demand promissory numberes and an equitable mortgage deed in respect of 27.02 acres of land and hypothecation bond of 2 electric pump sets from the defendants. it further stated that the liability of a sum of rs. 89000 with interest upto date should be got adjusted out of the loan of lakh of rupees. the agent of the indian bank sivaganga branch sent a companymunication to the first defendant on 21.8.1971 informing him of the sanction of the loan. exhibit a.36 was the office companyy of the letter whereby the first defendant had been informed of the sanction of the medium term loan of rs. 100000 subject to the execution promissory numbere and other documents as directed by the head office. exhibit of the agent indian bank sivaganga branch agreeing to create an equitable mortgage in favour of the bank towards the loan of a lakh of rupees in respect of 27.02 acres of land. exhibit a.38 is the registered letter sent by the first defendant to the custodian of the indian bank head office madras intimating that the balance amount that will be paid to him after adjustment of all his liabilities as disclosed by him under the letter marked exhibit a.37 may number be sufficient for him to carry on his agricultural operations and as such requesting to sanction a medium short term loan of number less than rs.20000 and also requested to direct the agent indian bank sivaganga branch to return the promissory numberes and other companynected documents to enable him to companylect the amounts from the companycerned parties. apart from the aforesaid documents exhibits a.39 is the office companyy of the letter sent by the agent indian bank sivaganga branch to the first defendant asking him to take delivery of the promissory numberes relating to 37 persons after passing a receipt for the same on 13.9.1971. it may be further numbered that out of the amount of rs. 6760.97 credited in the account of defendants a sum of rs.6200 was withdrawn by the first defendant on 7.10.1971 through exhibit a.52 a cheque drawn in favour of self. this proved beyond any manner of doubt that the defendants has accepted the sanctioning of loan of rs.100000 on the terms and companyditions laid down by the head office of the bank and as such sanctioning of loan clearly companytained the adjustment of the liability of the 37 persons. exhibit a.126 is a true companyy of the loan amount of the defendants as per ledger folio 4/168 of the indian bank sivaganga branch which view a liability of rs. 121006.98. the trial companyrt had relied on all the aforesaid documents and had recorded a finding that the suit promissory numbere was fully supported by companysideration and the equitable mortgage deed created by the defendants were also true and valid documents. the high companyrt in our view was wrong in arriving at the companyclusion that exhibit a.1 failed for want of consideration to the extent of rs.74190.56 and also for the amount advanced to the third defendant the liability in respect of which came to rs.4193.19. we agree with the finding of the trial companyrt that the pronumbere exhibit a.1 dated 26.8.1971 was executed with full consideration.	1	test	1992_706.txt	1
civil appellate jurisdiction civil appeal number 24 of 1954. appeal under article 132 read with article 147 and article 133 1 c of the companystitution of india from the judgment and order dated july 17 1952 of the punjab high companyrt in first appeal from order number 9 of 1949 against the judgment and decree of the sub-judge 1st class ferozepur dated february 9 1949 in civil sui number 134 of 1949. porus a. mehta r. gopalakrishnan and r.h. dhebar for the appellant. hardayal hardy for the respondents. 1957. april 30. the judgment of the companyrt was delivered by k. das j.-this is an appeal on the strength of a certificate granted by the high companyrt of punjab at simla. the appellant is the union-of india and the respondent messrs. chaman lal loona and companypany military companytractors at muktsar in the district of ferozepur number in the indian state of punjab. the relevant facts are these. in the companyrt of the senior subordinate judge at ferozepur in august 1948 the respondent companypany made an application purporting to be an application under s. 8 2 and s. 20 of the arbitration act 10 of 1940 wherein the respondent alleged that in 1945 the respondent had entered into a companytract for the supply of bhoosa fodder to the military department of the then undivided india through the manager military farms lahore cantonment. the companytract it was alleged was signed by the assistant director military farms on behalf of the then government of india. the agreement between the parties was that the said manager would also supply on payment of price wire companyls in companynection with the supply of bhoosa presumably for the purpose of tying the bundles of fodder and on the supply being made and on return of the wire coils the military department would give credit for the price of the companyls already paid by the respondent. in numberember 1945 the respondent supplied fodder and returned 152 bundles of wire companyls. the manager military farms lahore informed the respondent however that out of 152 bundles of wire companyls said to have been sent 24 bundles had number been received though numbernumbere of such number-delivery was made at the time the companysignment was received. the respondent had also deposited rs. 11026 by way of security with the military department in companynection with the contract. the agreement companytained an 1042 arbitration clause to the effect that if a dispute arose between the parties it should be decided by the arbitrator named therein viz. the district companymander companycerned. the respondent said that he had a claim against the appellant for rs. 720 the price of 24 bundles of wire companyls at rs. 30 per bundle and for refund of rs. 11026 and prayed in terms of s. 20 of the arbitration act that the appellant be directed to ale the agreement and other relevant documents and that the companyrt do refer the dispute to the arbitrator named for the purpose of filing an award. as required by sub-s. 2 of s. 20 of the arbitration act the application was registered as a suit and a numberice was issued to the appellant to show cause. the appellant showed cause by a written statement filed on numberember 4 1948 in which the two substantial pleas taken were- 1 that by reason of the provisions of the indian independence rights property and liabilities order 1947 hereinafter referred to as the independence order 1947 the dominion of india and later the union of india had numberliability in respect of the companytract in question the purposes of which companytract as from august 15 1947 were purposes exclusively for the dominion of pakistan and 2 the companyrt at ferozepore had no jurisdiction to try the suit as the cause of action did number arise within its territorial jurisdiction. the two issues which were tried by the learned subordinate judge were the aforesaid issues of liability and jurisdiction. on jurisdiction he found in favour of the respondent on the ground that the respondent was a displaced person living in muktsar which is in ferozepore and therefore the companyrt at ferozepore had jurisdiction to try the suit. the high companyrt affirmed this finding and as numberhing number turns upon this issue we are number called upon to make any pronumberncement thereon. the issue as to the liability of the appellant on the basis of the companytract in question is however very much a live issue. the learned subordinate judge found in favour of the appellant on this issue and dismissed the application. the high companyrt reversed that finding and allowed the appeal. in reversing the finding of the learned subordinate judge the high 1043 court relied on the provisions of the joint defence companyncil order 1947 to be referred to hereinafter as the defence order 1947. the precise ground on which the high companyrt proceeded may best be put in the words of khosla j. who gave the leading judgment. khosla j. said in the present case the lahore military farm is situated at lahore and whether the fodder was supplied in 1945 or after the 15th of august 1947 the purpose will be deemed. to be a purpose of the dominion of pakistan on account of the territorial situation of lahore. but in the present case the fodder was to be supplied to a military farm and the fodder therefore companystituted military stores. military stores were kept joint and under the exclusive control of the joint defence companyncil who had the power of allocating these stores among the two dominions and for transferring them from one place to anumberher. therefore fodder lying in the military farm lahore was number on 15th august 1947 the exclusive property of the dominion of pakistan but was under the exclusive companytrol of the joint defence companyncil. this fodder companyld be transferred to a farm in india and thus companyld become the property of the dominion of india. in the circumstances it cannumber be said that the contract for supply of fodder to the military farm lahore was a companytract exclusively for the purposes of the dominion of pakistan if the companytract were viewed on the 15th of august 1947 and that being so it must be held that the contract was number a companytract exclusively for the purposes of the dominion of pakistan. the decision of the learned trial judge on this point must therefore be set aside. the principal question in this appeal is whether the high court is right in its view as to the true scope and effect of the relevant provisions of the independence order 1947 and the defence order 1947. learned companynsel for the appellant has challenged the companyrectness of that view and has submitted- 1 that on a true companystruction of art. 8 of the independence order 1947 the companytract under consideration in this case was as from the appointed day i.e. august 15 1947 a companytract exclusively for the purposes of the dominion of 1044 pakistan and shall be deemed to have been made on behalf of that dominion and all rights and liabilities which have accrued or may accrue under such companytract shall be the rights and liabilities of the dominion of pakistan 2 that the defence order 1947 which set up a joint defence council and provides for the exercise of certain powers of control by the said companyncil under art. 8 of that order did number in any way affect the rights and liabilities arising out of the companytract which rights and liabilities were governed by the relevant provisions of the independence order 1947 and 3 that in any view the claim in the present case did number relate to military stores as the high companyrt wrongly assumed and the defence order 1947 had numberapplication at all to the facts of this case. on behalf of the respondent the companyrectness of each of the above submissions has been seriously companytested and learned counsel for the respondent has strongly companytended that the view of the high companyrt as to the relevant articles of the independence order 1947 and the defence order 1947 is correct. learned companynsel also raised a preliminary point of objection to the effect that on an application under s. 20 arbitration act the only point for decision was if there was an arbitration agreement and the question of liability was one for the arbitrator and number for the companyrt to decide. ordinarily that would be so. when however we pointed out to learned companynsel that the union of india as such was admittedly number a party to the arbitration agreement and could number be dragged therefore to an arbitration proceeding on the strength of an agreement to which it was number a party unless by operation of law it was deemed to be a party to the agreement learned companynsel gave up his preliminary objection and companyceded that the question of liability must be decided in this case with reference to the provisions of the independence order 1947 and the defence order 1947. it is companyvenient at this stage to set out the relevant provisions of the two orders. the defence order 1947 was made in exercise of the powers companyferred by sub-s. 1 of s. 9 and in pursuance of sub-s. 1 of s. ii of the indian independence act 1947 and was published 1045 on august 11 1947. the independence order 1947 was made in exercise of the powers companyferred by s. 9 of the indian independence act 1947 and was published on august 14 1947. both came into force at once. article 3 of the defence order 1947 states as from the 15th day of august 1947 there shall be set up a companyncil to be knumbern as the joint defence companyncil for india and pakistan. the said companyncil hereinafter referred to as the joint defence companyncil shall companysist of- the governumber-general of india ii the defence minister of india iii the defence minister of pakistan and iv the supreme companymander of his majestys forces in india and pakistan hereinafter referred to as the supreme companymander . article 8 so far as it is relevant is in these terms the joint defence companyncil shall be in exclusive companytrol of- a the division of the indian forces between the dominions and their reconstitution as two separate dominion forces b the allocation transfer and movement of officers and men belonging to the indian forces for the purposes of such re- constitution c the allocation transfer and movement for the purposes of such reconstitution of plant machinery equipment and stores held by the governumber-general in companyncil immediately before the 15th day of august 1947 for the purposes of the indian forces etc. the independence order 1947 states in art. 2 that the appointed day means the fifteenth august 1947. article 3 so far as it is relevant for our purpose states the provisions of this order relate to the initial distribution of rights property and liabilities consequential on the setting up of the dominions of india and pakistan and shall have effect subject to any agreement between the two dominions or the provinces companycerned and to any award that may be made by the arbitral tribunal. numberhing in this order affects the powers of companytrol over military plant machinery equipment 1046 and stores companyferred on the joint defence companyncil by the joint defence companyncil order 1947. article 8 1 which is very important for our purpose is in these terms any companytract made on behalf of the governumber-general in council before the appointed day shall as from that day- a if the companytract is for purposes which as from that day are exclusively purposes of the dominion of pakistan be deemed to have been made on behalf of the dominion of pakistan instead of the governumber-general in companyncil and b in any other case be deemed to have been made on behalf of the dominion of india instead of the governumber-general in council and all rights and liabilities which have accrued or may accrue under any such companytract shall to the extent to which they would have been rights or liabilities of the governumber- general in companyncil be rights or liabilities of the dominion of pakistan or the dominion of india as the case may be. the first question is what is the true scope and effect of art. 8 1 of the independence order 1947? does it apply to the companytract in question and if so does the companytract fall within the purview of cl. a or cl. b ? at one stage of the argument learned companynsel for the respondent companytended that art. 8 1 did number apply to what is sometimes described as executed companytracts this point was also urged before kapur j. of the punjab high companyrt as he then was and one of the reasons given by him for a reference of the case to a larger bench was the difficulty he felt if the companytract in question which has been performed and executed long before august 15 1947 so far as the respondent was companycerned attracted the operation of cl. a of art. 8 1 . it is necessary to appreciate clearly the distinction between the two classes of companytracts where the companysideration is either executed or executory. an executed companysideration companysists of an act for a promise. it is the act which forms the consideration numbercontract is formed unless and until the act 1047 is performed e.g. the payment for a railway ticket but the act stipulated for exhausts the companysideration so that any subsequent promise without further companysideration is merely a nudum pactum in an executed companysideration the liability is outstanding on one side only it is a present as opposed to a future companysideration. in an executory consideration the liability is outstanding on both sides. it is in fact a promise for a promise one promise is bought by the other the companytract is companycluded as soon as the promises are exchanged. in mercantile companytracts this is by far the most companymon variety. in other words a companytract becomes binding on the exchange of valid promises one being the companysideration for the other. it is clear therefore that there is numberhing to prevent one of the parties from carrying out his promise at once i.e. performing his part of the companytract whereas the other party who provides the consideration for the act of or detriment to the first may number carry out his part of the bargain simultaneously with the first party. chitty on companytracts vol. i 21st edn. pp. 43-44 . on a plain reading of art. 8 1 of the independence order 1947 it is clear that it applies to both classes of cases it says in its companycluding part that all rights and liabilities which have accrued or may accrue under any such companytract shall be rights or liabilities of the dominion of pakistan or the dominion of india as the case may be. if the companytract has been fully and companypletely performed on both sides numberquestion of any further rights and liabilities under the companytract is likely to arise. if however the companytract is one in which the consideration is executed on one side there will be a right on one side and an outstanding liability on the other. if the companysideration is executory on both sides there will be outstanding rights and liabilities on both sides. in talking of all rights and liabilities which have accrued or may accrue under the companytract the article clearly contemplates both classes of cases. on this question we approve of the view taken in elahi bux v. union of india 1 and krishna ranjan v. a.i.r. 1952 cal. 471. 1048 union of india 1 and disapprove of the view expressed by roxburgh j. in union of india v. loke nath 2 . it is further clear that the first part of art. 8 1 creates a legal fiction. the companytract is actually made before august 15 1947 the appointed day but as from that date the companytract shall be deemed to have been made on behalf of the dominion of pakistan if the companytract is for purposes which as from that day are exclusively purposes of the dominion of pakistan and in any other case it shall be deemed to have been made on behalf of the dominion of india. what is the proper meaning of the expression a companytract for the exclusive purposes of the dominion of pakistan? we assent to the view expressed by chagla c.j. in union of india v. chinu bhai jeshingbhai 3 . said the learned chief justice- it is clear from the language used in art. 8 that the test to be applied with regard to this companytract is number whether the companytract was for the purposes of the dominion of pakistan at the date when it was made. ex hypothesi that test is clearly inapplicable. all companytracts companytemplated by art. 8 must be companytracts which when made were made by undivided india by the governumber-general in companyncil. the test that must be applied is an artificial test and the test may be either if the companytract had been entered into on august 15 1947 whether it would have been a companytract for the purposes of the dominion of pakistan or if the dominion of pakistan had been in existence when the companytract was entered into whether it would have been a companytract for the purposes of pakistan. this we think is the companyrect test to apply for determining the true scope and effect of art. 8 1 of the independence order 1947 and applying this test there is numberdoubt that the companytract in question companyes under cl. a of the said article. the purpose of the companytract was to supply fodder to the manager military farms lahore cantonment which farms were in pakistan on the appointed day. the companytract was therefore a.t.r. 1954 cal. 623. a.i.r. 1952 cal. 140. i.l.r. 1953 bom. 117 130. 1049 exclusively for the purposes of the dominion of pakistan as from the appointed day. the second question is-do the provisions of the defence order 1947 make any difference in the legal position ? the high companyrt thought erroneously in our opinion that they did. it is true that cl. 2 of art. 3 of the independence order 1947 says that numberhing in that order affects the powers of companytrol over military plant machinery equipment and stores companyferred on the joint defence companyncil by the defence order 1947. clause 3 of art. 3 of the independence order 1947 states that the powers of companytrol over property companyferred upon each dominion by the order shall include all powers of use companysumption management etc. this however is subject to such powers of companytrol as are given to the joint defence companyncil. those powers of control are laid down in art. 8 of the defence order 1947 el. c of which relates to the allocation transfer and movement for the purposes of such reconstitution of plant machinery equipment and stores held by the governumber- general in companyncil immediately before the 15th day of august 1947 for the purposes of the indian forces. the point which is to be emphasised is that what is saved by cl. 2 of art. 3 of the independence order 1947 is powers of control of the joint defence companyncil with regard to certain essential military equipment etc. includingstores. there is numberprovision in the defence order 1947 which affects the rights and liabilities of any of the two dominions aris. ing out of a companytract and those rights and liabilities are dealt with by the independence order 1947. the learned judges of the high companyrt thought that the defence order 1947 made a difference in the legal position in so far as the purpose of the companytract was companycerned. they realised and said that ordinarily the purpose of supplying fodder to the military farms at lahore was a purpose exclusively for the dominion of pakistan but they thought that on the assumption that bhoosa was military store the joint defence companyncil had powers of companytrol over it and companyld send it wherever they wanted it to be sent therefore they 1050 said that the purpose of the companytract was number a purpose exclusively for the dominion of pakistan. we say this with great respect but this line of reasoning appears to us to be due to a lack of proper appreciation of the distinction between the purpose of the companytract and the ultimate disposal of the goods supplied under the contract. the purpose of the companytract is number determined number modified by the ultimate disposal of the goods supplied under the companytract number even by the powers of companytrol exercised over the goods after the companytract had been performed by the respondent. wherever the goods might be ultimately sent the purpose of the companytract remained what it was that is to supply fodder to the manager military farms lahore which on the test laid down by us was clearly a purpose exclusively for the dominion of pakistan. the independence order 1947 determines the respective rights and liabilities under companytracts. if under the defence order 1947 some goods the liability for the price of which under the independence order 1947 falls on say india are allotted to pakistan then the value thereof will have to be adjusted in accounts. such allotment does number alter the rights or liabilities determined under the independence order 1947. we are therefore of the view that the high companyrt of punjab was in error in inferring that on the strength of certain provisons of the defence order 1947 the companytract in question came within el. b of art. 8 1 and number cl. a . we think that the learned subordinate judge companyrectly held that cl. a applied and the union of india had numberliability under the companytract. only a few words are necessary to dispose of the third contention urged before us. the claim in the present case was a claim for a refund of the price paid for 24 bundles of wire companyls and of the security deposit. such a claim did number relate to military stores and the defence order 1947 had numberdirect application to such a claim. it was only for examining the purpose of the companytract that the question of bhoosa being military store arose. the high companyrt assumed that bhoosa was military store. without deciding whether bhoosa is military store or number we have also proceeded on the 1051 same assumption but even on that assumption there is no difference in the legal position. the purpose of the contract was still a purpose which as from the appointed day was a purpose exclusively for the dominion of pakistan. it is worthy of numbere that el. c of art. 8 of the defence order 1947 relates inter alia to stores held by the governumber-general in companyncil immediately before august 15 1947 for the purposes of the indian forces. there was numberhing in the record to show that the bhoosa supplied by the respondent in 1945 was held by the governumber-general in council immediately before august 15 1947 so as to vest the power of companytrol in the joint defence companyncil and thereby affect the purpose of the companytract assuming though we do number so decide that such power of companytrol can affect the purpose of the companytract. the original companytract was number produced in this case as it was number available in the appropriate office in india. the respondent did number even produce a companyy thereof but gave oral evidence as to the purpose of the companytract.	1	test	1957_11.txt	1
civil appellate jurisdiction civil appeal number 165 of 1962. appeal by special leave from the judgment and order dated march 11 1959 of th e bombay high companyrt in appeal number 60 of 1958. d.karkhanis and r. n. sachthey for the appellants. j. kolah j. b. dadachanji o c. hatkw and ravinder narain for the respondent. 1962. numberember 15. the judgment of the companyrt was delivered by sarkar j. this appeal is entirely without substance. it arises out of an application under art. 226 of the constitution mack by the respondent assessee for a writ quashing an order of assessment made under s. 34 of the income-tax act 1922. the respondent made advance payment of tax under s. 18 a 1 of the income-tax act for the assessment year 1952-53. on august 30 1952 regular assessment for this year was made and a part of the tax paid in advance was thereupon found refundable to the respondent. under the provisions of sub- s. 5 of s. 18a as it then stood interest at a certain rate was payable on the amount paid in advance by an assessee under this section. rupees 14720-14-0 were found payable to the respondent under this provision arid this sum was paid sometime in september 1962. on may 24 1953 subs. 5 of s. 18a was amended with effect from april 1 1952 it is number necessary to refer to this amendment in detail and it is enumbergh to state that under it the government was to have paid to the respondent rs. 9404-5-0 instead of rs. 14720-14-10. on march 18 1957 a numberice was issued under s. 34 1 b stating that as the income tax officer had reason to believe that the respondents income for the assessment year ending march 31 1953 had been under-assessed and had been the subject of excessive relief he proposed to re-assess the said income. the respondent protested but numberwithstanding the protest the re-assessment under s.34 was made on july 30 1957. the order of reassessment stated as per the amended provisions of section 18a 5 the assessee was entitled to interest pr a much smaller amount than what has been allowed to him during the original assessment. as excessive relief has been allowed to the assessee in the original assessment u s. 23 3 and in order to enable me to recover the excess interest allowed action under section 34 was taken hence 1 will proceed to recover the excess interest allowed to the assessee during the original assessment. on the application of the respondent under art. 226. of the-constitution this order was set aside by the high companyrt of bombay. hence this appeal. section 34 of the act under which the impugned order was made so far as material for ourpurposes is in these terms s. 34. 1 if- a b the income-tax officer has reason to believe that income profits or gains chargeable to income- tax have escaped assessment for any year or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this act or that excessive loss or depreciation allowance has been companyputed he may proceed to assess or re-asses s such income profits or gains or recompute the loss or depreciation allowance the assessment reassessment or recomputation under this section is to be made according to the provisions of the act as if it was pursuant to a numberice under s. 22 of the act. under this section therefore an assessment earlier made can be re-opened if income profits or gains have escaped assessment or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief or excessive loss or depreciation has been companyputed. it does number seem to us that any of these companyditions can be said to have been fulfilled in the present case. the numberice under s. 34 stated all these grounds but only two of them have been mentioned in the numberice which has been earlier set out by us because companynsel for the appellants has number relied on any other ground. with the other grounds we are number therefore companycerned in this case. the two that have been relied on are cases where income has been under- assessed or has been made the subject of excessive relief. it may be numbericed here that the order of july 30 1957 was based only on the ground that excessive relief had been allowed. it did number hold that the income had been under assessed. it does number seem to us that it is a case where the respondents income was under-assessed or where excessive relief was granted in companyputing that income. it is a case where tax had been paid in advance and upon subsequent regular assessment for the period for which the tax had seen paid it was found that what had been paid was in excess of what was actually due. this is really a case of over- assessment though only provisional and number of under- assessment at all. the payment of interest was in numbersense a relief granted in companyputing income it was paid at the rate calculated according to the law then in force. no doubt in view of the subsequent amendment of the law and in view of this amended provision being given retrospective operation companyering the date. when the original assessment had been made if the interest has to be companyputed according to the amended law then a smaller-sum might have been payable as interest. but when it was computed the new law was number in fact there and therefore the companyputation had been according to the law then in force. that companyputation cannumber be re-opened under s. 34 because it cannumber be said that it is a case either of under assessment or of excessive relief having been granted. it is really a case where the statutory liability of the state to pay interest was reduced from a higher figure to a lower one. therefore quite clearly it was number a case within s. 34. we were referred to the form of the numberice of demand for the tax. it was companytended that the form showed that in computing the tax interest under s. 18a had to be taken into account. therefore it was said interest was a part of the tax and when more interest had been paid to the assessee than was due it had been given excessive relief. as was rightly pointed out by mr. kolah appearing for the respondent this is a wrong reading of the form. the form specified the net amount of the tax payable and thereafter provided for deduction of certain interest to show the amount of the demand. therefore the interest which had to be deducted in accordance with it in arriving at the demand is number a part of the tax. at least it is number so treated in the form. that is enumbergh to dispose of this argument. we were then referred to sub-ss. 8 and 11 of s. 18a. sub-section 8 provides for payment of certain interest by an assessee and sub-s. ii says that any sum other than a penalty or interest paid by an assessee under the provisions of s. 18a shall be treated as a payment of tax. it was contended that. the provisions of these two sub-sections show that the interest with which we are companycerned is a part of the tax and therefore when more interest was allowed to an assessee than was due he was given encessive relief. this is obviously fallacious the sub-sections deal with interest payable by an assessee and we are companycerned. in this case with interest payable by the government. lastly our attention was drawn to m. chockalingam v the commissioner of income tax madras 1 in which referring to the proviso to s. 35 of the income-tax act this companyrt observed the learned companynsel for the departrnent raised the forlorn argument that the addition of penal interest is number enhancement of assrssment as stated in the proviso. we do number see what else it companyld be. itwas companytended that this showed that the penal interest was part of the tax. we do number think so. in any event we are number companycerned with a case of penal interest here. it cannumber obviously be suggested that the interest payable by the government to the assessee for amounts paid by the assessee as tax in.	0	test	1962_167.txt	1
criminal appellate jurisdiction criminal appeal number 365 of 1975. appeal by special leave from the judgment and order dated 26-6-1973 of the bombay high companyrt in criminal appeal number 504/72. s. desai and m. n. shroff for the appellant. anil kumar gupta for the respondent. the judgment of the companyrt was delivered by koshal j.-the respondent in this case was companyvicted by the additional chief presidency magistrate 19th companyrt esplanade bombay for an offence under clause a read with clause i of section 135 of the customs act anumberher under clause b read with clause i of that section and still anumberher under rule 126 h ia read with rule 126-p ii of the defence of india rules. he was sentenced to rigorous imprisonment for two years and a fine of rs. 20000/- and in default of payment of fine to rigorous imprisonment for 4-1/2 months on each of the first two counts and to rigorous imprisonment for six months and a fine of rs. 10000/- on the third companynt the sentence in default of payment of fine being rigorous imprisonment for 3 months. the companyviction recorded against and the sentence imposed upon the respondent were challenged by him right upto this companyrt which remanded the case to the bombay high court for a fresh decision. before the high companyrt no challenge was made after remand to the companyviction and the only prayer made was that the respondent be given the benefit of section 4 of the probation of offenders act hereinafter referred to as the act . that prayer was accepted by the high companyrt on the following five grounds - the companytraband gold recovered from the respondent which amounted to 2015 tolas has been companyfiscated by the customs authorities. by the time the high companyrt pronumbernced its judgment after remand the respondent had been facing criminal litigation for a period of 7 years which resulted in a lot of monetary expense and mental agony on his part. the respondent had already been behind the bars for a period of 5 months. numberother case on the criminal side was pending against the respondent. the respondent was number in a position to pay any fine. it has been vehemently argued on behalf of the state by mr. desai that in giving the benefit of section 4 of the act to the respondent the high companyrt did number exercise its discretion properly and we find ourselves in agreement with him in spite of the learned arguments advanced by mr. gupta appearing as amicus curiae in support of the impugned judgment. we may mention at the very outset that under section 4 of the act the nature of the offence is one of the major criteria for determining whether benefit of its provisions is to be given to the companycerned offender or number. his age would be anumberher relevant factor. the circumstances in which the offence was companymitted may be a third important consideration. numbere of these factors as appearing in the present case goes to help the respondent. the respondent was number an immature youth at the time of the companymission of the 3 offences brought home to him being numberless than 24 years of age. the offence companymitted by him as already pointed out involved possession of numberless than 2015 tolas of companytraband gold and it may well be that the respondent was a regular smuggler for had that number been the case there is numberreason why he should have been found in possession of such a large quantity of gold with foreign markings and a number of empty jackets meant for storage of the precious metal. from one point of view the offence may number be companysidered heinumbers as it merely companytravenes a law prohibiting illegal gain simpliciter there being numberelement of detriment to the life and liberty of others but then the fact that such offences have become rampant and have already endangered the econumbery of the nation is part of current history and this companyrt cannumber look upon the present state of affairs with equanimity and deal with the companymission of such offences leniently. number do we find that there was any material whatsoever on the record to justify the observation by the high companyrt that the respondent was number in a position to pay any fine. in this view of the matter we think that recourse to section 4 of the act was number at all called for the time-lag between the companymencement of the trial and the pronumberncement of the impugned judgment numberwithstanding.	1	test	1981_351.txt	1
criminal appellate jurisdiction criminal appeal number 16. of 1971. appeal from the judgment and order dated 15th december 1970 of the kerala high companyrt in crl. a.number 256 of 1970. r. kunhirama and a. s. nambiar for the appellants. t. harindernath and a. g. puddssery for the respondent. the judgment of the companyrt was delivered by khanna j. sethu madhavan nair and 12 others were tried in the companyrt of the learned sessions judge palghat for offences under sections 148 and 302 or in the alternative under section 302 read with section 149 indian penal companye and were acquitted. on appeal by .the state the kerala high companyrt reversed the judgment of acquittal and companyvicted the accused tinder section 302 read with section 149 indian penal companye and sentenced each of them to undergo imprisonment for life. the 13 accused thereafter filed the present appeal against the judgment of the high companyrt. ananthakrishnan deceased was a landowner of village thanni- sseri. he was also secretary of the karshaka samajani an organization of landowners. the accused are workers of the local marxist companymunist party. about one or two months before the present occurrence an agitation had been started by karshaka thozhilali union which was affiliated to the marxist companymunist party for the enhancement of wages payable to agricultural labourers. as a result of that agitation the landowners found difficulty in companyducting their agricultural operations. the relations between the landowners and the marxist companymunist party companysequently became strained. on march 12 1969 it is stated four of the accused along with some others obstructed the workers of ananthakrishnan deceased when those workers were transporting manure in a cart to his field. the deceased filed a companyplaint under sections 148 and 341 indian penal code before the district magistrate against those persons. as there was strike and picketing by the marxist workers ananthakrishnan deceased and his brother velunni pw 1 addressed an application to the district companylector on april 11 1969 requesting that police protection might be given to willing workers and others whom they might employ from neighbouring areas for agricultural work. a writ petition was also filed in the high companyrt by the deceased for directing the authorities to provide protection to him and his workmen in carrying on agricultural work. on. april 18 1969 sub inspector damodara menumber pw 12 went to the village of the parties to settle a dispute between the deceased and the members of the marxist companymunist party. the sub inspector on that occasion recovered an unlicensed revolver which ananthakrishnan deceased had thrown into a field. a case was thereupon registered against the deceased. ananthakrishnan deceased according further to the prosecution case sold 50 palmyrah trees for rs. 3000 to pw krishnan of village parli. krishnan deputed his agent chokkunny ezhuthassan pw 6 to cut and remove those trees. on. april 18 1969 chokkunny ezhuthassan accompanied by some wood cutters went to cut and remove the aforesaid trees but they were prevented from doing so by the harijans as according to those harijans a bund had been declared on that day in companynection with the agitation started by the karshaka thozhilali union. chokkunny was also told to companye after two days for cutting the trees. on the morning of april 20 1969 ananthakrishnan deceased accompanied by his elder brother velunni pw went to the house of joy pw 5 as a function had been arranged at that house in companynection with the sending of joys wife for delivery. after the tea party was over ananthakrishnan left joys house at about 10 a.m. saying that he wanted to see whether the person to whom palmyrah trees had been sold had companye to cut those trees. velunni continued to stay in joys house. shortly thereafter krishnan pw 2 came near joys house asking for ananthakrishnan. velunni and krishnan then proceeded towards the palm house to which ananthakrishnan had gone earlier. at a distance of about 200 yards from the palm house near the eastern gale. velunni and krishnan saw a large number of persons holding sticks. on seeing those persons velunni and krishnan went to the western side of the palm house on arrival there velunni and krishnan saw the 13 accused who were all armed with bamboo sticks resembling police lathis beating ananthakrishnan with their sticks. sethu madhavan nair accused at that time was saying to the deceased how many persons would you kill with a revolver ? would you number withdraw the case when. asked ?. velunni and krishnan saw the occurrence while hiding themselves behind a fence at a distance of about 35 feet towards the west of the place of occurrence. after the beating had companytinued for six or seven minutes sethu madhavan nair accused cried a halt saying that anan- thakrishnan was dead. the accused then left that place. after the departure of the accused velunni and krishnan pws went to the spot where annanthakrishnan was lying and found that he was dead. volunni and krishnan then went to menankolambu at a distance of four or five furlongs from the place of occurrence. krishnan stayed there while velunni went from that place to koduvayur. hiring a taxi in koduvayur velunni went to police station kasaba at a distance of 8 kilometres from the place of occurrence and lodged there report p-1 at 2 p.m. after the registration of the case. inspector karunakarn pw 13 went to the place of occurrence and reached there at 3 30 p. m. the inspector prepared the inquest report. the dead body was thereafter sent to palghat where post mortem examination. was performed by dr. v. s. chandran at 9-20 a. m. on april 21.1969. the accused were arrested on april 24 and 25 1969 and were thereafter sent up for trial. the accused in their statements under section 342 of the code of criminal procedure denied the prosecution allegations against them regarding their participation in the present occurrence. numberevidence was produced in defence. the learned sessions judge as mentioned earlier acquitted the accused on. the ground that there was numberreliable and covincing evidence against them. on appeal the high companyrt disagreed with the- sessions judge and came to the conclusion that the 13 accused were guilty of the offence under section 302 read with section 149 indian penal companye. in appeal before us mr. k r. kunhirama menumber on behalf of the appellants has assailed the evidence adduced by the prosecution and h has companytended that it is of a most unsatisfactory character for founding thereon the companyviction of the accused. it has been further urged by mr. menumber that the high companyrt was in error in. reversing the finding of acquittal recorded by the sessions judge. as against that. mr. k. t. harindra nath has canvassed for the correctness of the judgment of the high companyrt. it cannumber be disputed that a large number of injuries were caused to ananthakrishnan decreased on april 20 1969 near the palni house as a result of which he died. dr. chandran who performed post mortem examination on the body of ananthakrishnan found five incised wounds besides 8 contusions two lacerated wounds and one abrasion over the different parts of the body of the deceased. the five incised wounds were as under an incised wound 3 cm x 5 cm x .25 cm oblique over the right parietal region. an incised gapping wound 2 cm x 2 cm x 1 cm over the parieto occipital suture on the right. an incised wound 4 cm x 1/2 cm anterio posterior over the posterior part over the right parietal region. an incised wound 1 cm x 1/2 cm x 5 cm just in front of the pinna of the right ear directed downwards and forwards. an incised gapping wound 2 cm x 1 cm x 1 cm oblique over the right malar eminence. on dissection the doctor found that there was a transverse fracture of the right zygomatic bone a depressed stellate fracture of the ala of-the right temporal bone and a depressed fracture of the posterior part of the right parietal bone. there was also a fracture of the right humerus. the injuries according to the doctor were sufficient to cause death in the ordinary companyrse of nature. the case of the prosecution is that the injuries to ananthakrishnan deceased were caused by the 13 accused. in order to substantiate the above allegation the prosecution has examined velunni pw 1 and krishnan pw 2 as eye witnesses of the occurrence and they have supported the prosecution case as given above. it is upon the evidence of these two eye witnesses that the high companyrt has based the conviction of the accused. after having been taken through the evidence of these two witnesses we find the same to be far from companyvincing. we are further of the view that the learned sessions judge gave companyent grounds for rejecting the testimony of these witnesses. the high companyrt in the circumstances should number have reversed the well reasoned judgment of the trial companyrt. according to the two eye witnesses each one of the accused at the time of the occurrence was armed with bamboo sticks resembling police lathis and they caused injuries. to the deceased with those sticks. dr. chandran who performed post mortem examination on the dead body of the deceased however found five incised wounds on the body. it is in the testimony of the doctor that it were these five incised wounds which proved fatal and resulted in the death of the deceased. although dr. chandran has added that those incised wounds could have been caused with sticks he admits in cross- examination that all the five were clean pucca incised wounds. dr. chandran expressed his disagreement with the view that an injury caused on the bony part of the body with blunt type weapon companyld number cause a clean pucca incised wound. the learned sessions judge who was of the view that the five incised wounds had been caused by sharpened weapon rejected this part of the statement of the doctor and relied upon the following observations on page 225 of modis medical jurisprudence and toxicology seventeenth edition occasionally on wounds produced by a blunt weapon or by a fall the skin splits and may look like incised wounds when inflicted on tense structures companyering the bones such as the scalp eyebrow illiac crest shin perineum etc. or by a fall on the knee or elbow when the limb is flexed. but the edges of such wounds will be found irregular with a certain amount of bruising and small strands of tissue may be seen at the bottom bridging across the margins if examined with a hand lens. in the case of wounds of the scalp the hairbulbs will be found crushed if they are inflicted with a blunt weapon but will be found cut if produced by a cutting weapon. in the high of the above observation we find numberinfirmity in the finding of the learned sessions judge that the five clean pucca incised injuries which were found on the body of the deceased had been caused by sharpedged weapon and number by sticks. dr. chandran admits that in case the above mentioned injuries were caused by a sharp-edged weapon the same must have been a heavy weapon like a chopper as the injuries had resulted in the fracture of the underlying bones. as regards the identity of the culprits velunni pw has stated that he identified the culprits by looking at their faces during the companyrse of the occurrence. before the committing magistrate however the version of velunni pw was that he identified the culprits by looking at the back of each one of them. velunni also added in his statement before the companymitting magistrate that he companyld only see the back of each one of the accused at the time of the occurrence. so for as krishnan p w2 is companycerned he deposed that he had knumbern only two of the accused for five or six years before the present occurrence but did number knumber the remaining 11 accused. krishnan added that he had seen those 11 accused once before the present occurrence when he called at the office of the companymunist party. krishnan was then companyfronted with his statement made before the police. according to that statement krishan had numberacquaintance with the persons who caused injuries to the deceased. no identification parade was also held in which krishnan was asked to identify any of the accused. the learned sessions judge in view of the above came to the companyclusion that the evidence regarding the identity of the culprits was number satisfactory. we find numberhing unreasonable in the above view. the learned sessions judge also expressed the opinion that the assault on the deceased took place number at 1 1 a.m. as stated by velunni 11--m185 sup. ci/75 and krisnan pws but before 9-30 or in any case before 10 a. reliance in this companytext was placed upon the evidence of chokkuny pw 6 . chokkunny had been deputed by krishnan to take labourers and get cut palmyrah trees which had been purchased by krishnan from ananthakrishnan. chokkunny has deposed that at about 10 a.m. on that day he was told by the wood cutters that ananthakrishnan had been beaten to death. chokkunny was also companyfronted with his statement made before the police. the learned sessions judge companycluded from that statement that chokkunny had learnt about the death of the deceased from others at about 9.30 a.m. the high companyrt took the view that the above mentioned time did number relate to the moment when chokkunny received information of the death of the deceased but to the time when the deceased had gone alone towards the place of occurrence. the police statement of chokkunny in this respect is number very clear. be that as it may the fact remians that chokkunny in his deposition in court has deposed that it was at about 10 a.m. that the learnt of the death of ananthakrishnan deceased. the learned sessions judge made a pointed reference to this part of the statement of chokkunny. the high companyrt in the companyrse of its judgment however did number deal with this aspect of the matter. the learned sessions judge also sought support for the companyclusion that the occurrence had taken place before 9-30 or 10 a.m. from the evidence of dr. chandran. according to the doctor the time which elapsed between the death of the deceased and the post mortem examination was 24 to 36 hours. the post mortem examination was performed at 9 20 a.m. on april 21 1969. in companying to that opinion the doctor referred to the fact that he numbericed blisters and peeling all over the back off the trunk. the doctor also numbericed signs of decomposition. in view of the testimony of chokkunny and dr. chandran pws we are of the opinion that the learned sessions judge had reasonable ground for arriving at the companyclusion that the assault on the deceased took place number at 11 a.m but earlier than 10 a.m. and that velunni and krishnan did number witness the occurrence when they arrived near the palm house at about 1 1 a.m. in declining to place much reliance upon the evidence of velunni pw the trial judge also referred to the fact that the aforesaid witness had enmity with a large number of the accused. anumberher circumstance which also affected the veracity of the statement of velunny pw was that though he disclosed in companyrt that only the 13 accused had caused injuries to the deceased the version given by him in the first information report was that the injuries had been caused by others besides the 13 accused. in an appeal under section 417 of the companye of criminal procedure against an order of acquittal the high companyrt has full power to review at large the evidence on which the order of acquittal was founded and to reach the companyclusion that upon the evidence the order of acquittal should be reversed. numberlimitation should be placed upon that power unless it be found expressly stated in the companye but in exercising the power companyferred by the companye and before reaching its companyclusion upon fact the high companyrt should give proper weight and companysideration to such matters as 1 the view of the trial judge as to the credibility of the witness 2 the presumption of innumberence in favour of the accused a presumption certainly number weakened by the fact that he has been acquitted at his trial 3 the right of the accused to the benefit of any real and reasonable doubt and 4 the slowness of an appellate companyrt disturbing a finding of fact arrived at by a judge who had the advantage of seeing the witnesses. the high companyrt should also take into account the reasons given by the companyrt below in support of its order of acquittal and must express its reasons in the judgment which lead it to hold that the acquittal is number justified. further if two companyclusions can be based upon the evidence on record the high companyrt should number disturb the finding of acquittal recorded by the trial court. it would follow as a companyollary from that that if the view taken by the trial companyrt in acquitting the accused is number unreasonable the occasion for the reversal of that view would number arise. keeping in mind the principles enunciated above we are of the opinion that there was numbersufficient ground for the high court to reverse the judgment of the trial companyrt whereby it acquitted the 13 accused. learned sessions judge had given convincing and companyent reasons in support of the companyclusions at which he arrived. the view taken by him can by numbermeans be described as unreasonable.	1	test	1974_207.txt	1
civil appellate jurisdiction civil appeal number 503 of 1971. from the judgment and order dated 22.5.1969 of the punjab haryana high companyrt in l.p.a. number 384 of 1966. m. abdul khader and ms. a. subhashini for the appellants. p. rao for the respondent number 1 and r.s. bindra and harbans singh for respondent number 2. the judgment of the companyrt was delivered by desai j. avtar singh and dr. kartar singh two sons of harnam singh filed civil write number 1242 of 1965 against their father s. harnam singh respondent number 2 and union of india and tehsildar cum managing officer respondents number. 1 and 3 res- pectively questioning the companyrectness and validity of an order dated march 15 1965 annexure g to the petition. harnam singh was the owner of agricultural land comprised in deh number 100 as also a portion of the land included in deh number 99 situated in district nawab shah in erstwhile sind province number forming part of pakistan. harnam singh had three sons avtar singh dr. kartar singh and harbans singh. smt. tej kaur was the wife of harnam singh. it was alleged that in the year 1946 harnam singh effected a partition of agricultural land between himself his three sons and his wife smt. tej kaur each being given an almost equal share. it was alleged that intimation of the alleged partition was sent to the revenue authorities of sind province with a request to effect necessary mutation in the revenue records showing land as having been given in the partition to the particular person. after the partition of the companyntry s. harnam singh his three sons and his wife migrated to india and they claim to be displaced persons. harnam singh lodged a claim on march 15 1948 in respect of the entire land including the land belonging to the heirs of ch. attar singh who was his father-in-law. later on on april 21 1948 harnam singh intimated to the rehabilitation authorities that out of a total claim of 300 acres of land lodged by him about 75 acres of land was of the ownership of ch. attar singh and companyfined his claim to the total area of 225 acres of land. it may be mentioned that in the claim lodged on march 15 1948 there was numberreference to the partition effected by harnam singh between himself his sons and his wife. on the introduction of the punjab refugees registration of land claims act 1948 act for short on april 3 1948 harnam singh and his sons as also smt. tej kaur filed separate claims on the basis of the partition of the land which originally belonged to s. harnam singh. it was alleged that these claims were verified and allotments of land were made to the extent of 21-8 standard acres in favour of each claimant on temporary basis. on october 5 1953 harnam singh and his sons approached the authorities in the rehabilitation department to companyvert temporary allotment into quasi-permanent allotment. deputy registrar land claims accepted the request of harnam singh and his sons both with regard to the ownership of the land as well as partition thereof amongst various members of the family. however it was recommended that on the basis of the revised calculations each claimant would be entitled to 19-11 1/2 a. of land instead of 21-8 s.a. and the excess allotment should be cancelled this recommendation was approved by the competent authority vide its order dated october 28 1953 as also by the deputy custodian of evacuee property as per its order dated numberember 11 1953. consequently excess allotment of 8-14 1/2 standard acres in respect of five claimants was cancelled and the remaining allotment was ordered to be made on quasi-permanent basis. it was alleged that later on proprietary rights were conferred on each claimant in respect of the land allotted to him by the managing officer. some time in 1960 a numberice was received by the allottees from the chief settlement commissioner punjab calling upon them to show cause why their allotment should number be cancelled. in view of the numberice it became necessary for the allottees to establish number only the ownership of land in sind but the partition thereof amongst themselves. the allottees claimed that they offered the necessary proof which satisfied the chief settlement companymissioner who had issued numberice on the basis of jamabandi entries received from pakistan. accordingly the chief settlement companymissioner by his order dated august 21 1961 companyfirmed the allotment directed companyferment of quasi- permanent status and rejected the departmental reference. somewhere in october 1961 harnam singh apprehended that the claim to ownership of land in sind and the partition between himself his sons and his wife and the allotment of land was being re-examined whereupon on march 13 1962 he submitted a representation to the government of india for issuing a direction under section 33 of the act that the matter be treated as finally settled. it is alleged that on this representation the government of india sent for the record of the whole case called for the companyments of the punjab rehabilitation department which led land claims officer to forward his numbere dated october 27 1961 to the government of india alongwith the whole record of the case. it is alleged that the case was examined and the joint secretary to the government of india ministry of rehabilitation one shri dube companyveyed the decision of the government of india to the deputy secretary to the government of punjab rehabilitation department jullundur vide his d.o. letter number 13 66 l ro-62 dated may 31 1963 with certain observations which it is alleged tend to show that the power of revision under sec. 33 was exercised and both the holding of the land in sind partition thereof between harnam singh his sons and his wife and the allotment of land to them as displaced persons in india were companysidered as valid and finally settled. it appears that the managing officer of the rehabilitation department punjab government submitted a numbere dated numberember 5 1963 to move the central government under sec. 33 of the act for cancellation of the order of the chief settlement companymissioner dated august 21 1961. thereupon the chief settlement companymissioner issued a numberice dated may 21 1964 to the allottees calling upon them to show cause why allotment in favour of each of them should number be cancelled. the allottees appeared and submitted their objections to the re-opening of the case inter alia companytending that the power of revision companyferred by sec. 33 of the act cannumber be repeatedly exercise and it having been earlier exercised and the allotment having been held to be valid as per the letter of shri dube dated may 31 1963 the central government had numberjurisdiction either to revise or review its previous decision more particularly when numberfresh material against the allottees is produced after the earlier decision. ultimately the joint secretary of the government of india exercising power of revision conferred by sec. 33 by his order dated march 15 1965 annex. g to the writ petition quashed and set aside the order of the chief settlement companymissioner dated august 21 1961 and further directed that the allotment of land in favour of harnam singh his sons and his wife be cancelled and that a fresh allotment be made on the footing that harnam singh alone was the owner of the land situated in sind. in other words the claim that each sons of harnam singh had acquired land on partition was rejected as untenable. thereupon two sons of harnam singh shri avtar singh and dr. kartar singh filed civil writ petition in the high companyrt of punjab at chandigarh. an affidavit in opposition was filed on behalf of respondent number. 1 and 3 by one a. g. vaswani settlement commissioner a ex-officio under secretary to the government of india ministry of labour employment rehabilitation inter alia companytending that in april 1948 when for the first time shri harnam singh lodged his claim as displaced person against the loss of his land and property in pakistan he had categorically stated that 225 acres of land situated in sind belonged to him and there was no express or implied overt or companyert reference or even a whisper of a partition between himself and his sons and wife before he migrated to india. it was also companytended that the claim lodged by harnam singh in april 1948 was attested by shri harnam singh then deputy custodian of evacuee property east punjab and at the relevant time judge of the punjab high companyrt. it is alleged that on the basis of the alleged partition separate claims were lodged for the first time in june 1948 each claiming 48 acres of land which was reduced to 32 acres. it was specifically companytended that the separate claims on the basis of alleged oral partition were an after thought and were submitted to escape a higher graded cut under the quasi-permanent allotment scheme. other averments in the affidavit are hardly relevant. with respect to the d. o. letter of shri dube it was stated that the opinion expressed in it was number a judicial decision in exercise of the revisional jurisdiction under sec. 33 of the act number companyld it constitute an exercise of power under sec. 33 of the act. it was submitted that the revisional power was exercised for the first time when the allotment was cancelled and a direction was given for fresh allotment on the basis that harman singh alone was the owner of the land situated in sind. the writ petition came up before a learned single judge of the high companyrt. the learned judge by his judgment and order dated october 4 1966 made the rule absolute and quashed the order dated march 15 1965. the union of india preferred letters patent appeal number 384 of 1966 which was heard by a division bench of the punjab and haryana high companyrt. the division bench broadly agreed with the view taken by the learned single judge that the d. o. letter of shri dube dated may 31 1963 companyveyed the decision of the government of india in exercise of powers under sec. 33 and therefore the power of revision against the order of the chief settlement companymissioner was exhausted because a quasi-judicial tribunal has numberpower to revise or review its earlier decision on merits even if the earlier decision is wrong on facts or law. accordingly while dismissing the l.p. appeal the high companyrt held that the impugned order of the government of india dated march 15 1965 was without jurisdiction and was invalid and of no legal efficacy. hence this appeal by special leave by the union of india. mr. abdul khader learned companynsel for the appellant urged that the high companyrt was in error in treating d. o. letter number 33 66 l ro-62 of shri n. p. dube dated may 31 1963 as a decision reached or recorded in exercise of the power companyferred by section 33 so as to exhaust the power of revision. companysequently it was urged that the high companyrt was in error in holding that the decision of the central government dated march 15 1965 was without jurisdiction. chronumberogy of events and the assertion and companynter assertion would reveal that companytroversy centres round the nature and character of the letter dated may 31 1963 of shri n. p. dube joint secretary to shri j. m. tandon deputy secretary to the government of punjab rehabilitation department jullundur. more specifically the question is whether it was an inter- departmental companymunication or it was the decision recorded in exercise of the power companyferred by sec. 33 of the act? if it was number a decision recorded by the central government in exercise of the power companyferred under sec. 33 the judgment of the high companyrt would be unsustainable. the act as its long title shows was enacted to provide for the payment of companypensation and rehabilitation grants to displaced persons and for matters companynected therewith. companysequent upon the partition of the companyntry there was migration of population both the ways. large number of residents of area number forming part of pakistan migrated to india and there was also a flow in the reverse direction. those who migrated under those tragic traumatic and compulsive circumstances were forced to leave their properties at the place they were settled for generations. both india and pakistan were faced with a huge problem of settling persons thus displaced. in order to companypensate such displaced persons who were uprooted out of their abodes the act was enacted. sec 2 b defines displaced person to mean any person who on account of the setting up of the dominions of india and pakistan or on account of civil disturbances or the fear of such disturbances in any area number forming part of west pakistan has after the first day of march 1947 left or been displaced from his place of residence in such area and who has been subsequently residing in india and includes any person who is resident in any place number forming part of india and who for that reason is unable or has been tendered unable to manage supervise or companytrol any immovable property belonging to him in west pakistan and also includes the successors-in-interest of any such person. evacuee property has been defined in sec. 2 c to mean any property which has been declared or is deemed to have been declared as evacuee property under the administration of evacuee property act 1950. sec 14 of the act envisages companystitution of a companypensation pool which shall companysist of evacuee property both in cash and kind. sec. 4 requires all displaced persons having a verified claim to make applications for the payment of companypensation. sec. 7 casts a duty on the settlement companymissioner to make an enquiry in such manner as may be prescribed and having due regard to the prescribed scales of companypensation the nature of the verified claim and other circumstances of the case to ascertain the amount of companypensation to which the applicant is entitled. after following the procedure prescribed in several sub- sections of sec. 7 the settlement companymissioner has to make an order determining net amount of companypensation if any payable to the applicant. sec. 8 prescribes the form and manner of payment of companypensation. companypensation can be paid in cash in government bonds by sale to the displaced person of any property from the companypensation pool and setting off the purchase money against the companypensation payable to him etc. sec. 22 provides for appeal against the order of the settlement officer or a managing officer to the settlement companymissioner as the case may be in such form and manner as may be prescribed. sec. 23 provides for an appeal against the orders of the settlement companymissioner or the additional settlement companymissioner or an assistant settlement companymissioner to the chief settlement companymissioner in such form and manner as may be prescribed with this proviso that numberappeal shall lie from any order passed in appeal under sec. 22. the next important section material for the present appeal in sec. 33 which reads as under- 33 the central government may at any time call for the record of any proceeding under the act and may pass such order in relation thereto as in its opinion the circumstances of the case require and as is number inconsistent with any of the provisions companytained in the act or the rules made thereunder. having numbericed the relevant provisions certain facts may be reiterated. harnam singh a displaced person submitted a land claim on march 15 1948 at delhi for an area of 300 acres said to have been abandoned by him in nasrat tehsil district nawabshah in sind. he filed anumberher claim at jullundur on april 1 1948 reducing his claim to 225 acres. on july 13 1948 harnam singh and his three sons kartar singh avtar singh and harbans singh and his wife smt. tej kaur lodged separate claims each for 48 acres of land in lieu of land alleged to have been abandoned by each one of them in pakistan. there was a modified claim submitted on february 22 1949. the difference between the first and the second claim arises from the altered stand adopted by the claimants. initially harnam singh claimed to be the exclusive owner of 225 acres of land but when separate claims were submitted by his three sons and his wife it was alleged that there was orapl artition of the property belonging to harnam singh between himself his wife and his three sons. each one of the five claimants verified his own claim whereupon each was allotted 21-8 s. a. of land. upon their request to companyvert temporary allotment into quasi-permanent allotment their cases were examined by the managing officer who found that there was an excess allotment of 1-12 1/2 standard acres in case of each of the claimants and with their companysent the excess area of 8-14 1/2 standard areas was cancelled. a little while after the officer in-charge land claims jullundur examined the case of each of the claimants and made a reference to the chief settlement companymissioner on september 2 1960 recommending that 48-14 standard acres was in excess of the entitlement of the five claimants in view of the entries in jamabandi and the excess allotment be cancelled. a further enquiry revealed that the claim of harnam singh that there was partition between himself and his sons was untenable and that except harnam singh the other claimants did number have any land of their ownership and therefore the entire allotment deserved to be cancelled. the chief settlement companymissioner rejected the reference by his order dated august 21 1961. it is this order which has been revised by the central government in exercise of the power conferred by sec. 33 by the impugned order dated march 15 1965. it would appear from the mere recital of the facts that the chief settlement companymissioner who rejected the reference as per its order dated august 21 1961 held the allotment in favour of the five claimants to be valid legal and companyrect. if the decision of the chief settlement companymissioner dated august 21 1961 is wholly in favour of harnam singh and his sons and wife they companyld by numberstretch of imagination be said to be persons aggrieved by the decision of the chief settlement companymissioner. harnam singh and his sons companytended that the allotment was valid and that the reference made by the officer-in-charge land claims department must be rejected. the chief settlement commissioner accepted this submission of harnam singh and his sons and rejected the reference. can it ever be said that a decision wholly in favour of harnam singh and his sons is one adverse to them or that they are aggrieved by the decision ? it is number necessary to turn to an intervening event. it appears that the chief settlement companymissioner while rejecting the reference and accepting the allotment in favour of harnam singh and his sons on the basis of holding and oral partition as legal and valid observed in para 12 of the order as under further in the terms of the proprietary rights sanad if any evidence companyes to the numberice of the department which establishes any of the facts mentioned in the clause below the central govt. can at any time resume whole or any part of the property. after companyverting temporary allotment into quasi-permanent allotment a sanad was issued to each claimant. one companydition in the sanad was that if it appears at any time that the grant or allotment of land described in the sanad is obtained by fraud false representation or companycealment of any material fact it shall be lawful for the president to resume the whole or any part of the said property so allotted. in view of the aforementioned observations and in absence of any document evidencing partition of the property as claimed by harnam singh the punjab government made a reference to the pakistan authorities for the necessary verification of entries in the government record. a similar request was also addressed to the central government which led to a query being addressed to the high companymissioner for india in pakistan to obtain documentary evidence if any in this behalf. numberhing companycrete emerged from these queries. in the meantime harnam singh submitted a representation annexure b to the petition dated march 13 1962 to the government of india for issuing a direction under sec. 33 of the act that the matter be treated as finally settled. some correspondence ensued between the union government and the government of punjab which ultimately led to shri n.p. dube joint secretary ministry of rehabilitation sending a letter dated may 31 1963 to the deputy secretary to the government of punjab rehabilitation department jullundur which reads as under p. dube regd. a.d. joint secretary. d.o. number 13 66 lr/62 h. r. department of rehabilitation 31st may 1963 my dear tandon please refer to balmukand sharmas d.o. letter number 422/singh dated the 29th august 1962 in companynection with the representation filed by shri harnam singh p.c.s retd . the high companymissioner for india in pakistan was also addressed by secretary in august 1962 to get the required information but the pakistan government have number been able to supply it so far. the matter has therefor been considered in this office and it is felt that there is no point in waiting any more and the matter should be finalised on the basis of the judicial findings arrived at in the case. we also feel that there are numberreasons to differ from those judicial pronumberncements at this stage. the record received from the punjab government is therefore returned with the request that the case may be finalised as mentioned above. yours sincerely sd - p. dube 1.6.63 shri j.m. tandon deputy secretary to the government of punjab rehabilitation department jullundur. on numberember 5 1963 the managing officer rehabilitation department government of punjab submitted a numbere inter alia pointing out that the story of partition alleged by harnam singh and his sons is a myth and consequently except harnam singh numberother claimant was entitled to any allotment and therefore the decision of the chief settlement companymissioner dated august 21 1961 requires to be reopened under sec 33 and allotment upheld by him should be cancelled. upon this numbere a reference was made to the central government. thereupon a numberice dated may 21 1964 was issued to harnam singh and his sons his wife smt. tej kaur having died in the meantime calling upon them to show why the order of the chief settlement companymissioner dated august 21 1961 should number be set aside and the allotment in favour of each allottee be number cancelled. ultimately the impugned order was passed. undoubtedly the impugned order is made under sec. 33 which companyfers a wide power of revision on the central government. the power of widest amplitude for revising and reopening any proceeding under the act and to pass any order in relation thereto as in the opinion of the central government the circumstances of the case require and is number inconsistent with any of the provisions companytained in the act or the rules made thereunder is companyferred on the central government. this is undoubtedly a power of revision. it is number even hedged in by any companycept of limitation. such power of wide plenitude had to be companyferred on the central government to set right any illegal unfair unjust or plainly untenable order because the proceedings under the act were number adversary in form and character which may lead to the one or the other party approaching the central government to set right the matter. if a displaced person obtains allotment from the companypensation pool to which he was number entitled certainly the central government would hardly companye to knumber in the absence of any opposite party or adversary drawing attention of the central government to such unjust enrichment. therefore parliament companyferred a very wide power of revision on the central government to reopen any proceeding or order under the act. this was hardly disputed. it was however companytended that a power of revision cannumber be repeatedly exercised and there must be attached finality to the orders. this submission would necessitate an examination in depth of the nature and extent of power conferred by sec. 33. but in the facts of the present case we companysider it unnecessary to undertake this exercise. we would proceed on the assumption that sec. 33 does number provide a reservoir of power from which revisional jurisdiction can be exercised more than once in respect of the same order or the same proceeding. in this view of the matter the decision in everest apartments companyoperative housing society limited v. state of maharashtra and ors. 1 is hardly of any assistance. the question that would squarely arise is whether on an earlier occasion had the central government exercised any revisional power companyferred by sec. 33 in respect of the order dated august 21 1961 by the chief settlement commissioner by which the departmental reference was rejected and the chief settlement companymissioner had upheld the allotment of land in favour of harnam singh and his sons. mr. p.p. rao learned companynsel for the respondents strenuously urged that the letter of shri n.p. dube dated may 31 1963 is a decision recorded by the central government in exercise of the power companyferred by sec. 33 in respect of the proceeding in which allotment made in favour of harnam singh and his sons was upheld by the chief settlement companymissioner and therefore the order of the chief settlement companymissioner dated august 21 1961 became final and companyld number be the subject matter of a revision second time under sec. 33 of the act. there is numbersubstance in this companytention. it needs to be recalled that the decision of the chief settlement companymissioner dated august 21 1961 was wholly in favour of harnam singh and his sons. atleast harnam singh and his sons companyld number be said to be persons aggrieved by the order so as to move the central government invoking its revisional power under sec. 33. mr. rao however companytended that the representation annexure d dated march 13 of harnam singh reveals that he apprehended that the case may be reopened and therefore by his representation he moved the central government to affirm or companyfirm the decision of the chief settlement companymissioner dated august 21 1961. we remain unimpressed. if every litigant in whose favour a competent authority has made an order can still approach the higher authority for the affirmance of the order without any rhyme of reason the whole gamut of power of revisional jurisdiction would become a play thing for already successful party who may foreclose the decision and when needed can successfully urge that the power of revision is exhausted. further assuming harnam singh made the representation apprehending danger to his allotment the letter of mr. dube dated may 31 1963 does number record any decision of the central government. it merely says that it is number necessary to wait any more for response to the queries addressed to authorities in pakistan and the matter should be finalized on the basis of finding arrived at in the case. it further proceeds to aver that there is a feeling that there is numberreason to differ from those judicial pronumberncements at this stage. such expression of feeling companyld hardly tentamount to a decision of the central government under sec. 33. it is number for a moment suggested that the decision of the central government has to be recorded in any particular form. in d.n. roy and s.k. bannerjee ors. v. state of bihar ors. 1 a letter addressed by under-secretary to the government of india to a particular person stating therein that with reference to the application of the addressee on the subject numbered he was directed to say that after careful companysideration the central government by the letter rejects the revision application as being time- barred was treated as a decision of the central government. this calls for numbercomments because the letter is self- explanatory. there is numberhing in shri dubes letter remotely comparable with the letter in the aforementioned case. on the companytrary the central government informed the government of punjab that the record is returned with the request that the case may be finalised as indicated in the letter. the revisional power is the power of the central government and number of the punjab government. the decision was left to the punjab government. there was numberhing pending with the punjab government for finalisation. therefore the high companyrt was clearly in error in treating the letter of shri dube dated may 31 1963 as a decision of the central government in exercise of the power companyferred by sec. 33. there was no reason for decision number any occasion for the central government to exercise power under sec. 33 and therefore it is number possible to agree with the high companyrt that the letter records the decision of the central government under sec. if the letter of shri dube is number a decision of the central government under sec. 33 of the act as a necessary corollary the impugned decision must be treated as one rendered for the first time in exercise of the revisional power under sec. 33 and therefore it cannumber be said to be one without jurisdiction. in this view of the matter the appeal will have to be allowed. mr. bindra learned companynsel who appeared for some of the respondents made a strenuous effort to persuade us to look into the equities of the case. in fact we are wholly disinclined to undertake this exercise of evaluating facts or evidence in a petition for a writ of certiorari. further in the impugned decision the facts as appearing from the record and submissions made by the learned companynsel for claimants are exhaustively dealt with and numbercase for interference is made out. only two aspects however may be referred to. harnam singh claimed to be the owner of 225 acres of land situated in erstwhile sind province. in the first claim lodged by him he clearly stated that he was the owner of 300 acres. he then modified it to 225 acres. in neither of the two claims he ever suggested that there was a partition between him and his sons also giving a share to his wife. the story of partition clearly appears to be an after thought because it is helpful in obtaining higher allotment. numberdocumentary evidence has been placed on record to support the case of partition which clearly appears to have been an after thought. earlier jamabandi entries from pakistan permitted a negative inference that there was numberpartition. the central governments while setting aside the order of the chief settlement companymissioner dated august 21 1961 recorded the finding that i there is numberwriting or deed of partition ii revenue records show the name of shri harnam singh alone on the basis of the sale deed in his exclusive name iii there are no receipts indicating separate payment of land revenue by any one of the respondents after alleged partition iv no objection was taken by the sons at the time of the filing of the claim by the father v there is numbermention of individuals share in the claim filed by the father these are relevant companysiderations which would certainly throw doubt on the claim of oral partition alleged to have been effected by harnam singh. once the allegation of oral partition is rejected the respondents are number entitled to any companysideration even on equitable grounds. in the companycluding stages of the arguments the respondents companytended that harnam singh has died and his heirs having number been substituted the appeal has abated. there is numbermerit in this companytention. harnam singh was number the petitioner before the high companyrt. he was respondent number numberrelief was claimed against him. further harnam singh was number asked to surrender the land. petitioners before the high companyrt were adversely affected by the impugned decision. death of harnam singh would therefore have numberimpact on this appeal.	1	test	1984_104.txt	1
criminal appellate jurisdiction criminal appeal number 17 of 1951. appeal against a judgment and. order dated 22nd january 1951 of the high companyrt of judicature at patna imam j. in criminal revision number 1533 of 1950 p. sinha p.s. safeer and k.n. aggarwal with him for the appellants. the respondent did number appear. 1951. may 24. the judgment of the companyrt was delivered by patanjali sastri j.--this is an appeal by special leave from an order of the high companyrt of judicature at patna setting aside an order of acquittal of the appellants by the sessions judge purnea and directing their retrial. the appellants were prosecuted for alleged offences under sections 147 148 323 324 326 302 and 302/149 of the indian penal companye at the instance of one polai lal biswas who lodged a companyplaint against them before the po- lice. the prosecution case was that while the companyplainant was harvesting the paddy crop on his field at about 10 a.m. on 29th numberember 1949 a mob of about fifty persons came on to the field armed with ballams lathis and other weapons and that the first appellant logendranath jha who was leading the mob demanded a settlement of all outstanding disputes with the companyplainant and said he would number allow the paddy to be removed unless the disputes were settled. an altercation followed as a result of which logendra or- dered an assault by his men. then logendra and one of his men harihar gave ballam blows to one of the labourers kangali who fell down and died on the spot. information was given to the police who investigated the case and submitted the charge-sheet. the companymitting magistrate found that a prima facie case was made out and companymitted the appellants to the companyrt of sessions for trial. the appellants pleaded number guilty alleging inter alia that mohender and debender the brothers of logendra appel- lants 2 and 3 were number present in the village of dandkhora with which they had numberconcern as all the lands in that village had been allotted to logendra at a previous parti- tion that logendra himself was number in the village at the time of the occurrence but arrived soon after and was dragged to the place at the instance of his enemies in the village and was placed under arrest by the assistant sub-inspector of police who had arrived there previously. it was also alleged that there were two factions in the village one of which was led by one harimohan a relation of the companyplainant and the other by logendra and there had been numerous revenue and criminal proceedings and long-standing enmity between the families of these leaders as a result of which this false case was foisted upon the appellants. the learned sessions judge examined the evidence in great detail and found that the existence of factions as alleged by the appellants was true. he found however that the appellants plea of alibi was number satisfactorily made out but the truth of the prosecution he proceeded to observe cannumber be judged by the falsehood of the defence number can the prosecution derive its strength from the weak- ness of the defence. prosecution must stand on its own legs and must prove the story told by it at the very first stage. the manner of occurrence alleged by the prosecution must be established beyond doubt before the accused persons can be convicted. approaching the case in this manner and seeing that the basis of the prosecution case was that polai had batai settlement of the disputed land and had raised the paddy crop which he was harvesting when the occurrence took place the learned sessions judge examined the evidence of the prosecution witnesses who belonged to the opposite faction critically and found that the story of the prosecu- tion was number acceptable. polai who was alleged to have taken the land on batai settlement from his own maternal grandmother parasmani who brought him up from his childhood was only 19 years old and unmarried and was still living with his grandmother. he did number claim to be a bataidar of any other person. in these circumstances said the learned judge it does number appear to me to be probable that polai would have been allowed to maintain himself by running adhi cultivation of his mamus land in the lifetime of his nani who has brought him up from his infancy like her own child. number does it appeal to me that the unmarried boy polai would have undertaken upon himself the task of run- ning batai cultivation of the lands of his mamu where he has been living since his childhood without any trouble more particularly in view of the heavy expenses of cultivation brought out by the evidence of tirthanand p.w. 14 . he therefore disbelieved the whole story that polai had taken the lands of his grandmother or his uncles as bataidar for cultivation and that he was engaged in harvesting the paddy crop on the lands at the time of the occurrence. this false story in his opinion vitally affected the prosecution case regarding the alleged manner of the occurrence. he also found a number of discrepancies and companytradictions in the evidence of the prosecution witnesses which in his view tended to show that the prosecution was guilty of concealment of the real facts. in view of such companyceal- ment of real facts the learned judge companycluded it does number appear to me to be possible to apportion liability and to decide which of the two parties companymenced the fight and which acted in self-defence. such being the position it is number possible at all to hold either party responsible for what took place. in such a view of the matter companypled with the fact that the manner of occurrence alleged by the prose- cution has number been established to be true beyond doubt i think that the accused persons cannumber be safely companyvicted of any of the offences for which they have been charged. the learned judge accordingly acquitted the appellants of all the charges framed against them. against that order the companyplainant polai preferred a revision petition to the high companyrt under section 439 of the criminal procedure companye. the learned judge who heard the petition reviewed the evidence at some length and came to the companyclusion that the judgment of the learned sessions judge companyld number be allowed to stand as the acquittal of the appellants was perverse . in his opinion the entire judgment displays a lack of true perspective in a case of this kind. the sessions judge had companypletely misdirected himself in looking to the minumber discrepancies in the case and ignumbering the essential matters so far as the case is companycerned and there was no justifiable ground for rejecting the prosecution evidence regarding the cultivation and harvesting by polai. and he concluded with the warning i would however make it per- fectly clear that when the case is re-tried which i am number going to order the judge proceeding with the trial will number be in the least influenced by any expression of opinion which i may have given in this judgment. on behalf of the appellants mr. sinha raised two companyten- tions. in the first place he submitted that having regard to section 417 of the criminal procedure companye which provides for an appeal to the high companyrt from an order of acquittal only at the instance of the government a revision petition under section 439 at the instance of a private party was incompetent and secondly that sub-section 4 of section 439 clearly showed that the high companyrt exceeded its powers of revision in the present case in upsetting the findings of fact of the trial judge. we think it is unnecessary to express any opinion on the first companytention of mr. sinha especially as the respondent is unrepresented as we are of opinion that his second and alternative companytention must prevail. it will be seen from the judgment summarised above that the learned judge in the high companyrt re-appraised the evi- dence in the case and disagreed with the sessions judges findings of fact on the ground that they were perverse and displayed a lack of true perspective. he went further and by way of expressing in very clear terms as to how perverse the judgment of the companyrt below is he indicated that the discrepancies in the prosecution evidence and the circum- stances of the case which led the sessions judge to discred- it the prosecution story afforded numberjustifiable ground for the companyclusion that the prosecution failed to establish their case. we are of opinion that the learned judge in the high companyrt did number properly appreciate the scope of inquiry in revision against an order of acquittal. though sub-section 1 of section 439 authorises the high court to exercise in its discretion any of the powers conferred on a companyrt of appeal by section 423 sub-section 4 specifically excludes the power to companyvert a finding of acquittal into one. of companyviction. this does number mean that in dealing with a revision petition by a private party against an order of acquittal the high companyrt companyld in the absence of any error on a point of law re-appraise the evidence and reverse the findings of facts on which the acquittal was based provided only it stopped short of finding the accused guilty and passing sentence on him. by merely characterising the judgment of the trial companyrt as perverse and lacking in perspective the high companyrt cannumber reverse pure findings of fact based on the trial courts appreciation of the evidence in the case.	1	test	1951_30.txt	1
civil appellate jurisdiction civil appeal number237 of 1958. appeal from the judgment and decree dated january 27 1955 of the allahabad high companyrt in execution first appeal number 137 of 1954. v. viswanatha sastri e. udayarathnam and s. s. shukla for the appellant. vidya sagar for respondent. 1961. may 4. the judgment of the companyrt was delivered by sinha c. j.-this appeal. on a certificate by the high companyrt of judicature at allahabad arises in execution proceedings taken by the decree holder-respondent in the following circumstances. the appellant wished to acquire shares in certain mills popularly knumbern as john mills at agra. he engaged the services of the respondent to negotiate the deal on certain terms. the bargain was companycluded and the appellant together with anumberher person purchased the entire interest of one major a. u. john by an indenture of sale dated july 10 1946. the respondent instituted a suit being suit number 3718 of 1947 on the original side of the high companyrt of judicature at bombay for recovery of his commission amounting to one lakh of rupees in respect of the transaction aforesaid. the suit was eventually referred to the arbitration of one mr. w. e. pereira administrator of the estate of the aforesaid major a.u. john deceased. one of the defences taken by the appellant as defendant in the action was that the suit filed in the bombay high companyrt as aforesaid after obtaining leave of that companyrt under cl. 12 of the letters patent was outside the territorial jurisdiction of the bombay high companyrt on the original side in as much as the entire cause of action if any bad arisen at agra. the arbitrator gave an award in favour of the respondent to the extent of decreeing his claim for only seventy five thousand rupees as companymission with interest at 6 per annum pendente lite. proceedings were taken in the high companyrt of bombay for setting aside the award on certain grounds number necessary to be stated here. the bombay high companyrt found that there was numberdefect in the award and that there was numberlegal misconduct on the part of the arbitrator. the high companyrt further held that the petition was frivolous and dismissed it with companyts. the appellant preferred an appeal which was dismissed by a division bench of the high companyrt of bombay on january 21 1952. the award was thus incorporated in a decree of the high companyrt. that decree was transferred to the companyrt of the district judge agra for execution. on february 5 1952 the execution proceedings were instituted by the decree holder in the companyrt of the civil judge agra to realise the sum of one lakh ten thousand rupees approximately on the basis of the decree passed as aforesaid by the bombay high companyrt. the appellant as judgment-debtor put in an objection under ss. 47 and 151 of the companye of civil procedure objecting to the execution of the decree on a number of grounds of which it is only necessary to numberice the one challenging the jurisdiction of the high companyrt to entertain the suit and to make the award a decree of companyrt. it was companytended the bombay high companyrt had numberjurisdiction to entertain the suit as numberpart of the cause of action ever arose within the territorial jurisdiction of that companyrt and that therefore all the proceedings the effect of rendering the companyrt entirely lacking in jurisdiction in of the subject matter of the suit or over the parties to it. but in the instant case there was no such inherent lack of jurisdiction. the decision of the privy companyncil in the case of ledgard vs. bull 1 is an authority for the proposition that companysent or waiver can cure defect of jurisdiction but cannumber cure inherent lack of jurisdiction. in that case the suit had been instituted in the companyrt of the subordinate judge who was incompetent to try it. by companysent of the parties the case was transferred to the companyrt of the district judge for convenience of trial. it was laid down by the privy companyncil that as the companyrt in the suit had been originally instituted was entirely lacking in jurisdiction in the sense that it was incompetent to try it whatever happened subsequently was null and void because companysent of parties companyld number operate to companyfer jurisdiction on a companyrt which was incompetent to try the suit. that decision has numberrelevance to a case like the present where there companyld be numberquestion of inherent lack of jurisdiction in the sense that the bombay high companyrt was incompetent to try a suit of that kind. the objection to its territorial jurisdiction is one which does number go to the companypetence of the companyrt and can therefore be waived. in the instant case when the plaintiff obtained the leave of the bombay high companyrt on the original side under el. 12 of the letters patent the correctness of the procedure or of the order granting the leave companyld be. questioned by the defendant or the objection could be waived by him. when he agreed to refer the matter to arbitration through companyrt he would be deemed to have waived his objection to the territorial jurisdiction of the court raised by him in his written statement. it is wel settled that the objection as to local jurisdiction of a court does number stand on the same footing as an objection to the companypetence of a companyrt to try a case. companypetence of a court to try a case goes to the very 1 1886 l.r. 13a. 134. root of the jurisdiction and where it is lacking it is a case of inherent lack of jurisdiction. on the other hand an objection as to the local jurisdiction of a companyrt can be waived and this principle has been given a statutory recognition by enactments like s. 21 of the companye of civil procedure. having companysented to have the companytroversy between the parties resolved by reference to arbitration through court the. defendant deprived himself of the right to question the authority of the companyrt to refer the matter to arbitration or of the arbitrator to render the award. it is clear therefore that the defendant is estopped from challenging the jurisdiction of the bombay high companyrt to entertain the suit and to make the reference to the arbitrator.	0	test	1961_139.txt	1
civil appellate jurisdiction civil appeal number 3356 of 1979. appeal by special leave from the judgment and order dated the 12th october 1979 of the madhya pradesh high court indore bench in second appeal number 148 of 1976. k. garg s.k. gambhir mrs. ashok mahajan and mrs. sunita kirplani for the appellant. k. jain b.p. singh and anjeet kumar for the respondent. the judgment of the companyrt was delivered by pathak j. this is a tenants appeal by special leave against a decree of the high companyrt of madhya pradesh allowing the landlords second appeal in a suit for eviction. the respondent as landlord filed a suit for the eviction of the appellant tenant on the ground that the appellant had neither paid number tendered the arrears of rent legally recoverable from him. the plaint a recited that the appellant had taken a portion of a shop and a verandah on the ground floor on rent at rs. l so per month for the purpose of his cloth business that the appellant had number paid the arrears of rent totaling rs. 2550 for the period june 26 1968 to october 11 1969 and that he was therefore liable to eviction on the ground set forth in section 12 1 a of the madhya pradesh accommodation companytrol act 1961. in his written statement the appellant pleaded that the respondent had described the tenanted premises incorrectly that in fact the premises companysisted of an entire shop a kotha behind the shop and a verandah in front of the shop that the expenditure on repairs to the premises undertaken by the appellant had to be adjusted against the arrears of rent and that the numberice dated october 211969 terminating the tenancy was invalid. on receiving the writ of summons in the suit the appellant deposited the arrears of rent in companypliance with s. 13 1 of the act but further companypliance with s. 13 1 was number effected in as much as the rent which should have been deposited regularly from month to month was number deposited for several months. the trial companyrt found that the expenditure claimed by the appellant on repairing the premises had number been proved. it found further that the appellant was number entitled to the benefit of s. 13 1 of the act as he had failed to deposit the monthly rent regularly during the pendency of the suit. but it agreed with the appellant that the respondent had number correctly described the extent of the premises in the numberice terminating the tenancy and holding that the tenancy had number been validly terminated it dismissed the suit. the respondent filed an appeal and that appeal was dismissed. the respondent then preferred a second appeal and during the pendency of the appeal the high companyrt permitted the respondent to amend the plaint so that references to the tenanted premises number included the entire accommodation claimed by the appellant in companysequence the suit number related to that accommodation. thereafter the high companyrt by its judgment and decree dated october 12 1979 allowed the second appeal. it held that numbernumberice under section 106 of the transfer of property act terminating the tenancy was required in view of the decision of this companyrt in v. dhanapal chettiar v. yeshodai ammal l and it affirmed the finding of the subordinate companyrts that the appellant had failed to prove payment for repairing the premises. 1 1980 1 s.c.r. 334 on a companyspectus of the entire proceeding it would appear that the only ground on which the subordinate companyrts dismissed the suit is that the numberice dated october 21 1969 did number validly terminate the tenancy as it referred to a part only of the tenanted premises while the high companyrt in second appeal proceeded on the view that numbernumberice terminating the tenancy was required at all and therefore after permitting the respondent to amend his plaint in order to bring the entire tenanted premises within the purview of the suit it decreed the suit. s. 12 1 a of the madhya pradesh accommodation companytrol act 1961 provides restriction on eviction of tenants- l number with standing anything to the companytrary companytained in any other law or companytract numbersuit shall be filed in any civil companyrt against a tenant for his eviction from any accommodation except on one or more of the following grounds only namely a that the tenant has neither paid number tendered the whole of the arrears of the rent legally recoverable from him within two months of the date on which a numberice of demand for the arrears of rent has been served on him by the landlord in the prescribed manner. s. 12 3 prohibits the companyrt from making an order of eviction on the ground specified in s. 12 1 a if the tenant makes payment or deposit as required by s. 13. and s. 13 provides when tenant can get benefit of protection against eviction- 1 on a suit or proceeding being instituted by the landlord on any of the grounds referred to in section 12 the tenant shall within one month of the service of writ of summons on him or within such further time as the companyrt may on an application made to it allow in this behalf deposit in the companyrt or pay to the landlord an amount calculated at the rate of rent at which it was paid for the period for which the tenant may have made default including the period subsequent thereto up to the end of the month previous to that in which the deposit or payment is . made and shall thereafter companytinue to deposit or pay month by month by the 15th of each succeeding month a sum equivalent to the rent at that rate. it is urged by the appellant that an essential condition of the a maintainability of the suit is number- compliance by the tenant with a valid numberice demanding the rental arrears and the numberice to be valid must inter alia relate to the accommodation rented to the tenant and number any other accommodation. t is pointed out that in the present case the numberice dated october 21 1969 did number relate to the entire accommodation let to the appellant but only to a lesser part of it. there is substance in the companytention. the numberice dated october 21 b 1969 is a numberice demanding the arrears of rent in respect of accommodation which according to the respondent companysisted of a portion of a shop and a verandah. the appellant on the other hand pleaded that he had been let the entire shop the verandah and also a kotha. the subordinate companyrts held on the evidence that the appellant was right. it is apparent therefore that there is a substantial difference between the accommodation mentioned in the numberice and the accommodation actually let to the appellant. it must be taken that the numberice relates to accommodation which cannumber be electively identified with the accommodation companystituting the tenancy. l his is number a case of a mere misdescriptlon of the accommodation where both parties knew perfectly well that the numberice referred to accommodation let to the tenant. number is it a case where the discrepancy between the accommodation alleged by the landlord and that actually let to the tenant is marginal or insubstantial. the proceedings show that there was a serious dispute between the parties as to the material extent of the accommodation let by the one to the other. numbercongruency between the two versions was possible. number at least until the respondent was companypelled to seek an amendment of his plaint in the high companyrt at the stage of second appeal. learned companynsel for the respondent points out that there was numberdispute that the rent for the accommodation was rs. 150 per month and urges that is the amount of the arrears of rent is admitted between the parties that is all that matters. to our mind that is number sufficient. the numberice referred to in s. 12 1 a must be a numberice demanding the rental arrears in respect of accommodation actually let to the tenant. it must be a numberice a demanding the arrears of rent in respect of the accommodation let to the tenant and b the arrears of rent must be legally recoverable from the tenant. there can be numberadmission by a tenant that arrears of rent are due unless they relate to the accommodation let to him. a valid numberice demanding arrears of rent relatable to the accommodation let to the tenant from which he is sought to be evicted is a vital ingredient of the companyditions which govern the maintainability of the suit for unless a valid demand is made numbercomplaint can be laid of number- compliance with it. and companysequently numbersuit for ejectment of the tenant in respect of the accommodation will lie on that ground. it is companytended by learned companynsel for the respondent that the plaint in the suit was amended in order to relate to the accommodation asserted by the appellant and that the amendment relates back to the institution of the suit. the submission can be of numberassistance to the respondent. we are concerned here number with the subject matter of the suit but with the validity of the numberice which is a prior companydition of the maintainability of the suit. the numberice of demand is an act independent of the institution of the suit. the numberice and the plaint are two distinct matters different by nature designed for different purposes and located in two different points of time. they operate in two different planes and are related insofar only that one is a companydition for maintaining the other. accordingly we hold that the numberice of demand dated october 21 1969 served by the respondent on the appellant was invalid and therefore the suit was number maintainable. in the circumstances we companysider it unnecessary to enter upon the other points raised before us on behalf of the appellant.	1	test	1984_306.txt	1
civil appellate jurisdiction civil appeal number 1070 of 1977. appeal by special leave from the judgment and order dt. 18- 4-77 of the allahabad high companyrt in civil misc. writ number 3561 of 1975 n. kacker sol. general o. p. rana for the appellant. n. misra e. c. agrawala m. m. l. srivastava u. s. prasad for the respondent. the judgment of the companyrt was delivered by chandrachud j.-respondent 1 batuk deo pati tripathi joined the judicial service of the state of uttar pradesh as a munsif in 1943 and after intervening promotions he was appointed as a district judge on april 13 1969. under numbere 1 to article 465-a of the civil service regulations as adopted for application in uttar pradesh the state government may at any time without assigning any reason require any officer to retire on three months numberice or pay in lieu of whole or part thereof after he has attained the age of 50 years. such decision is required to be taken by the government in its administrative department and only if it appears to it to be in public interest to do so. some time in 1969 the state government requested the high companyrt of allahabad respondent 2 to this appeal to screen cases of judicial officers in order to determine which of them should be retired companypulsorily under the aforesaid provision. in one of the meetings of the administrative committee of the high companyrt which was held on january 9 1974 it was resolved by the companymittee that respondent 1 should be retired companypulsorily from service. the registrar of the high companyrt companymunicated the decision of the administrative companymittee to the state government appellant herein and thereafter he circulated to all the judges of the high companyrt for their intimation the decision taken by the administrative committee. the governumber of u.p. accepted the recommendation of the administrative companymittee and retired respondent 1 companypulsorily by an order dated february 27 1975. respondent 1 filed a writ petition under article 226 of the constitution against the state of uttar pradesh and the allahabad high companyrt challenging the validity of the aforesaid order on the following grounds the order is illegal since numbersalary was paid to respondent 1 at the time when the order was passed the order is really in the nature of punishment since it casts a stigma and is therefore companytrary to article 311 of the constitution article 465-a of the civil service regulations in so far it purports to empower the government to companysult the administrative head of the department before passing an order thereunder companytravenes article 233 of the constitution the order was passed on irrelevant considerations since the high companyrt had taken into account the character roll entries of respondent 1 prior to the date when he was allowed to cross the efficiency bar the order is arbitrary capricious and perverse and the satisfaction that it was in public interest to retire respondent 1 compulsorily was based on numbermaterial the order was passed by the governumber without any application of mind since it was passed in pursuance of a general policy agreed upon between the governumber and the chief justice of the high companyrt that recommendations of the high companyrt for retirement of judicial officers should be accepted without scrutiny and the order is illegal inasmuch as it was passed on the recommendation of the administrative companymittee while article 233 of the companystitution requires companysultation by the governumber with the entire high companyrt and number with a companymittee companysisting of a few judges of the companyrt. a division bench of the high companyrt companysisting of gulati and s. p. singh jj. rejected the first six companytentions by their judgment dated december 5 1975. on the 7th contention they were inclined to the view that article 233 of the companystitution postulates companysultation with the entire high companyrt and therefore the high companyrt in the exercise of its rule-making power cannumber delegate its function to a smaller body. but companysidering that such a view was likely to upset the settled practice of the companyrt and that it was likely to be in companyflict with the decision in civil misc. writ number 1254 of 1968 dated february 23 1970 they directed that the papers of the case be placed before the learned mel justice for companystituting a full bench to companysider the question whether in view of article 233 of the companystitution companysultation with the entire high companyrt is necessary before making an order of compulsory retirement against the district judge. the writ petition was then placed for hearing before a fun bench of the high companyrt companysisting of five learned judges. the division bench and initially the full bench heard arguments on the supposition that the power to retire a district judge companypulsorily is an incident of the power of appointment companytained in article 233 1 of the companystitution which provides that appointments of persons to be and the posting and promotion of district judges in any state shall be made by the governumber of the state in companysultation with the high companyrt exercising jurisdiction in relation to such state. after the full bench reserved its judgment this court held in high companyrt of punjab and haryana v. state of haryana ors. 1 that the initial appointment and initial promotion of district judges rested with the governumber but once they were appointed or promoted to be district judges the entire companytrol over them was vested in the high companyrt. the power of the governumber in the matter of appointment included the power of dismissal removal and reduction in rank but since companypulsory retirement is neither dismissal removal number reduction in rank the power in that behalf vest- in the high companyrt and number in the governumber. in view of the judgment of this companyrt referred to above and certain other judgments it is clear that companypulsory retirement of a district judge is number an incident of the powers of appointment companyferred by article 233 of the companystitution but is an incident of the companytrol vested in the high companyrt by article 235. companysequently the full bench reframed the question referred to it as follows whether a district judge can be companypulsorily retired from service on the opinion recorded by the administrative companymittee companystituted under rule 1 of chapter itt of the rules of the companyrt. the full bench also framed an additional question whether circulation of a statement to all the judges of the companyrt showing what matters were laid before the administrative companymittee and the manner in which those matter.- were disposed of amounts to companysultati on with the full companyrt. asthana c.j. who presided over the full bench answered both the questions in the negative k. n. singh and c. s. p. singh jj. agreed by a separate judgment with the learned chief justice. m. n. shukla and h. n. seth jj. took a contrary view and held that a district judge can be compulsorily retired from service on the opinion recorded by the administrative companymittee. they did number companysider it necessary to express any opinion on the second question. a.i.r. 1975 s.c. 613 1975 3 s.c.r. 365. the writ petition then went back to a division bench for disposal which in accordance with the majority view set aside the order by which respondent 1 was companypulsorily retired and allowed the petition. a companysequential declaration was granted by the bench that respondent 1 should be treated as companytinuing in service and was entitled to all the privileges pay and allowances which were permissible and payable to him under the law. being aggrieved by the judgment the state of uttar pradesh has filed this appeal by special leave. since the high companyrt of allahabad which was impleaded as respondent 2 to the writ petition had numbereffective companytentions to make in the matter we will for the sake of companyvenience refer to respondent 1 as the respondent. the main question for companysideration is whether a district judge can be companypulsorily retired from service on the basis of the opinion recorded by the administrative companymittee constituted under rule 1 of chapter iii of the rules of the court. it is necessary for a determination of this question to refer to the relevant rules of the allahabad high companyrt. the high companyrt to the exercise of the powers companyferred upon it by article 225 of the companystitution and all other powers enabling it in that behalf has framed rules knumbern as the rules-of companyrt 1952. the relevant rules companytained in chapter iii of the rules are these chapter iii executive and administrative business of the court subject to these rules a companymittee of judges companyposed of the chief justice the judge in the administrative department and five other judges to be appointed by the chief justice referred to in these rules as the administrative companymittee shall act for the court. the chief justice shall have the charge of and may act for the companyrt in the administrative department and the executive and administrative business pertaining to the companyrt except that the judge in the administrative department shall have charge of and may act for the companyrt in the administrative department and the executive and administrative business pertaining to the courts subordinate to the companyrt. as far as possible the judge in the administrative department shall discharge his duties and functions in companysultation with the inspection judges companycerned who shall be appointed by the chief justice from time to time. the membership of the companymittee shall be for two years except in the case of the chief justice and the judge in the administrative department. from time to time and as occasion arises the chief justice shall numberinate one of the judges to act as the judge in the administrative department whose terms of office shall be three years unless renumberinated. 10-211 sci/78 all executive and administrative business and all business in the administrative department requiring orders shall be submitted by the registrar to the chief justice or the judge in the administrative department as the case may be together with his companyments thereon if any and may subject to these rules be disposed of by that judge. the judge in the administrative department shall before passing final orders cause to be circulated for the information of the judges of the administrative companymittee then present in allahabad his recommendations as to the appointment promotion or suspension of judical officers. should any judge dissent from such recommendations he shall signify his dissent and his reasons therefor in writing. 5. 1 in regard to the following matters the judge in the administrative department shall companysult the administrative companymittee either by circulating the papers companynected with the matter together with his own opinion or recommendation thereon to the members of the companymittee then present in allahabad or by laying it before a metting of the adminis- trative companymittee namely- a the issue of general letters to subordinate companyrts b the issue of directions regarding the preparation of returns and statements c all matters of importance upon which the government desires the opinion of the companyrt d appointment of the u.p. higher judicial service and e any other matter which the chief justice or the judge in the administrative department may companysider fit to be laid before it for companysideration. companyies of all general letters issued to subordinate companyrts shall be circulated to all judges for information as soon as may be after issue. as soon as the administrative companymittee has disposed of any business a statement showing what matters were laid before the committee and the manner in which they were disposed of shall be circulated for information to all judges except such judges as may be on leave. on the following matters all judges shall be companysulted namely- a proposals as to legislation or changes in the law b proposals as to changes in or the issue of new rules of companyrt c proposals as to changes in or the issue of new rules for the guidance of subordinate courts d withholding of promotion supersession or reduction of judicial officers number occasioned by the selection of officers for appointment to the u.p. higher judicial service e important questions of policy or those affecting the powers and status of the companyrt f matters companynected with the supreme companyrt g annual administration report due for submission to government before it is adopted by the administrative companymittee h deleted. any other matter which the chief justice of the administrative companymittee may companysider fit to be laid before them for companysideration. so far as companyvenient papers for circulation shall be sent by the registrar to the judges at allahabad and at lucknumber in their order of seniority companymencing with the junior judge. the registrar shall so far as practicable obtain from each judge such papers within three days from the date when the same are sent to him. the registrar shall endorse on the papers the date when they are sent to and the date when they are received back from each judge. it shall number be necessary to send papers to any judge who is- number for the time being in allahabad or lucknumber. when a judge does number write his opinion within three days from the date when he receives any urgent paper sent to him for opinion he shall be deemed to have declined to express any opinion on the matter. after any papers have been circulated for opinion they shall be submitted again according to the subject-matter thereof to the chief justice or the judge in the administrative department and he may either direct that the opinion of the majority of the judges including his own be given effect to or lay the matter for companysideration before a judges meeting or a meeting of the administrative committee as the case may be. the chief justice may call a judges meeting or a meeting of the administrative companymittee whenever there is business to be disposed of provided i that a judges meeting shall be called once every three months excluding the summer vacation further that if a request is made to the chief justice by number less than 5 judges to call a meeting such meeting shall be called within a week of the request. the quorum necessary for the transaction of business shall be three in the case of a meeting of the administrative companymittee and seven in the case of a judges meeting in case of a difference of opinion at a judges meeting or a meeting of the administrative companymittee the decision shall be in accordance with the opinion of the majority of the judges present and in case the judges present be equally divided the chief justice or in his absence the senior judge present shall have a casting vote. a question was mooted as regards the power of the high court to frame rules under article 225 of the companystitution authorising a. judge or a companymittee of judges of the high court to act on behalf of the whole companyrt. article 225 provides in. so far as material that the jurisdiction of any existing high companyrt and the respective powers of the judges thereof in relation to the administration of justice in the court including any power to make rules of companyrt shall be the same as immediately before the companymencement of the constitution. it is urged that article 225 merely saves the pre-constitution powers of high companyrts in certain matters and since under the letters patent of the high companyrt of judicature at allahabad the government of india acts of 1919 and 1935 and the u.p. high companyrt amalgamation order 1948 the high companyrt of allahabad did number possess the power to frame rules authorising either a judge or an administrative companymittee of judges to act on behalf of the whole companyrt the rules of companyrt framed by the high companyrt in 1952 are beyond its companypetence in so far as they authorise the administrative judge or the administrative companymittee to act on behalf of the companyrt. article 225 it is true preserves inter alia the pre- constitution. powers of existing high companyrts to frame rules and it may be assumed for purposes of argument an assumption which is largely borne out by provisions of the laws mentioned in the preceding paragraph that the high court of allahabad did number prior to the enactment of the constitution possess the power to frame rules authorising a judge or a companymittee of judges of the high companyrt to act on behalf of the companyrt. but article 225 is number the sole repository of the high companyrts power to frame rules. the relevant part of article 235 of the companystitution provides that the companytrol over district companyrts and companyrts subordinate thereto shall be vested in the high companyrt. since article 216 provides that every high companyrt shall companysist of a chief justice and such other judges as the president may from rime to time deem it necessary to appoint article 235 has to be companystrued to mean that the companytrol over district courts and companyrts subordinate thereto is vested in the entire body of judges who together companystitute the high companyrt and number in the chief justice as representing the high companyrt or an administrative judge or a smaller body of judges acting as an administrative companymittee. but though the control over subordinate companyrts is vested institutionally in the high companyrts by article 235 it does number follow that the high companyrts have numberpower to prescribe the manner in which that companytrol may in practice be exercised in fact the very circumstance that the power of companytrol which companyprehends matters of a wide-ranging variety vests in the entire body of judges makes it imperative that rules must be framed to make the exercise of companytrol feasible convenient and effective. the seeds of the jurisdiction to frame rules regulating the manner in which the companytrol over subordinate companyrts is to be exercised are thus to be found in the very nature of the power and in the fact that the power vests in the entire body of judges. the high companyrt has therefore the power under article 235 itself to frame rules for regulating the manner in which the companytrol vested in it may be exercised. the power to do a thing necessarily carries with it the power to regulate the manner in which the thing may be done. it is in incident of the power itself and indeed without it the exercise of the power may in practice be fraught with difficulties which will frustrate rather than further the object of the power. it is undoubtedly true that the rules framed for prescribing the manner in which a power may be exercised have to be truly regulatory in character. the reason is that under the guise of framing rules the essence of the power cannumber be permitted to be diluted. but that is a separate matter which we will companysider later. the limited object of the present discussion is to show that high companyrts possess the power under article 235 to prescribe the manner in which the companytrol over subordinate companyrts vested in them by that article may be exercised. that explains why the allahabad high companyrt framed rules of 1952 number only in the exercise of power possessed by it under article 225 but in the exercise of all other powers enabling it in that behalf. one of such powers is to be found in article 236 itself and therefore the abstract power of the high companyrt to frame the impugned rules cannumber be doubted and must be companyceded. we call such a power abstract in order to prepare the ground for companysideration of the main point involved in the appeal. the high companyrt may possess the power to frame rules under article 235 and yet the rules framed by it may be bad because they are derogatory to the terms of that article. in other words if by article 235 the companytrol over subordinate companyrts is vested in the high companyrt as a whole is it permissible to the high companyrt to provide by framing a rule that a matter falling within the area of companytrol may be decided number by the whole companyrt but by a judge or a committee of judges acting on behalf of the companyrt? that is the first question which the full bench of the high companyrt formulated for its companysideration. companypulsory retirement of judges of the district companyrt and subordinate companyrts is a matter which falls squarely within the power of companytrol vested in the high companyrts by article 235 of the companystitution. that is clear from the decisions of this companyrt in high companyrt of punjab and haryana v. state of haryana and ors. 1 shamyher singh v. state of punjab 2 state of haryana v. indre prakash 3 a.i.r. 1975 s.c. 613--1975 3 s.c.r. 365. 2 1975 1 s.c.r. 814. a.i.r. 1976 s.c. 1841. and b. misra v. orissa high companyrt 1 . the respondent was compulsorily retired from service as a district judge on the recommendation of the administrative companymittee of the high companyrt and it is clear from the facts and sequence of events that the other judges of the high companyrt had no effective opportunity to companysider the pro. priety or correctness of the decision of the administrative companymittee recommending to the state government that the respondent be retired companypulsorily. the resolution of the administrative committee is dated january 9 1974. the registrar of the high companyrt companymunicated the decision of that companymittee to the state government on january 15 1974. the registrar circulated the minutes of the administrative companymittees meeting of january 9 to the other judges of the high companyrt on january 17 1974. we were shown the minutes and the registraes letter of january 17 from which it is clear that the judges to whom the minutes word circulated made their initials or signatures. thereon in token only of the fact that they were informed of the decision of the administrative companymittee. they have neither expressed their concurrence number their dissent which indeed goes to show that rule 7 merely companytemplates what it says that as soon as the administrative companymittee has disposed of any business a statement showing what matters were laid before the companymittee and the manner in which they were disposed of shall be circulated for information to all the judges. but the language of rule 7 and the shape of events leave un- answered the first question whether a power vested in the court as such can with the companysidered companysent of the companyrt itself be exercised on its behalf by a judge or a companymittee of judges of that very companyrt. the reason for referring to rule 7 and the formal treatment which the other judges gave to the registrars circular informing them of the decision taken by the administrative companymittee is to emphasize that the first question framed by the full bench has to be answered on the basis that the other judges of the high court were number companysulted upon and had numberoccasion or opportunity to companysider the justness propriety or necessity of the decision taken by the administrative companymittee that the respondent be retired companypulsorily. having given our close and anxious companysideration to that question we regret that we are unable to share the view of the majority of the high companyrt full bench that by leaving the decision of the question of the respondents companypulsory retirement to the administrative companymittee the companyrt had abdicated its companystitutional function. according to the view of the majority the act of the companyrt in allowing the administrative companymittee to decide that question under rule 1 of chapter iii of the 1952 rules is an act of self- abnegations and therefore void. this approach betrays with respect a misunderstanding of the object of article the ideal which inspired the provision that the control over district companyrts and companyrts subordinate thereto shall vest in the high companyrt is that those wings of the judiciary a.i.r. 1976 s.c. 1899. 14 3 should be independent of the executive. tracing the history of that companycept hidayatullah j. in west bengal v. nripendra nath baghchi 1 has highlighted the meaning and purpose of article 235. it is in order to effectuate that high purpose that article 235 as companystrued by this companyrt in various decisions requires that all matters relating to the subordinate judiciary including companypulsory retirement and disciplinary proceedings but excluding the imposition of punishments falling within the scope of article 311 and the first appointments and promotions should be dealt-with and decided upon by the high companyrts in the exercise of the control vested in them. a proper understanding and appreciation of this position will be companyducive to a companyrect assessment of the situation under examination in the instant case. for knumbering that the object of article 235 is to ensure the independence of an important wing of the judiciary the inquiry which assumes relevance is whether the procedure sanctified by the rules of the high companyrt is in any manner calculated to interfere with or undermine that independence. does that procedure involve self- abnegation by companyceding the right of companytrol to any outside authority ? it is pertinent while we are on this question to knumber the companytext in which the expression self- abnegation was used by this companyrt. in shamher singh v. state of punjab supra the action of the high companyrt in asking the state government to depute the director of vigilance to hold an inquiry against a judicial officer was deprecated by this companyrt as an act of self-abnegation. the high companyrt abdicated its companytrol over the subordinate judiciary which includes the power to hold a disciplinary inquiry against a defaulting judge by surrendering that power to the executive that truly was an act of self- abnegation there is numberparallel between what the high companyrt did in shamsher singh and what has beer done in the instant case. here the decision to companypulsory retire the respondent was taken by the judges of the high companyrt itself though number by all. if some but number all judges of the high court participate in a decision relating to a matter which falls within the high companyrts companytrolling jurisdiction over subordinate companyrts the high companyrt does number efface itself by surrendering its power to an extraneous authority the procedure adopted by the high companyrt under its rules is number sub versive of the independence of the subordinate judiciarywhich is wha article 235 recognised and seeks to achieve. the true question then for decision is number the one by which the majority of the full bench fell oppressed but simply whether the procedure prescribed by the high companyrt rules is in any other manner inconsistent with the terms of article 235 of the companystitution. yet anumberher misconception may number be cleared. it is urged o behalf of the respondent by his learned companynsel shri misra that under article 216 high companyrt means the entire body of judges appointed to the companyrt and therefore the companytrol over the subordinate judiciary which is vested by article 235 in the high companyrt must be exercised by the whole body of judges. the thrust of the argument is that the high companyrt cannumber delegate its functions or power to a judge or a smaller body of judges of the companyrt. this argument requires consideration the question whether any delegation as such is involved in the processes a.i.r. 1966 s.c. 447. whereby a judge or a companymittee of judges of the companyrt like the administrative companymittee in the instant case is authorised by the whole companyrt to act on behalf of the companyrt. for answering this question it is necessary in the first place to bear in mind that the power of companytrol over the subordinate companyrts which is vested in the high companyrt comprises such numerous matters often involving consideration of details of the minutest nature that if the whole high companyrt is required to companysider every one of those matters the exercise of companytrol instead of becoming effective will tend to cause delay and companyfusion in the administration of justice in the state. a companystruction which will frustrate the very object of the salient provi- sions companytained in art. 235 ought as far as possible to be avoided. the companytrol vested in the high companyrts by that article companyprehends according to our decisions a large variety of matters like transfers subsequent postings leave promotions other than initial promotions imposition of minumber penalties which do number fall within art. 311 decisions regarding companypulsory retirements recommendations for imposition of major penalties which fall within art. 31 1 entries in character rolls and so forth. if every judge is to be associated personally and directly with the decision on every one of these matters several important matters pertaining to the high companyrts administrative affairs will pile into arrears like companyrt arrears. in fact it is numberexaggeration to say that the companytrol will be better and more effective exercised if a smaller companymittee of judges has the authority of the companyrt to companysider the mani- fold matters falling within the purview of art. 235. bearing in mind therefore the nature of the power which that article companyfers on the high companyrts we are of the opinion that it is wrong to characterise as delegation the process whereby the entire high companyrt authorises a judge or some of the judges of the companyrt to act on behalf of the whole court.such an authorisation effectuates the purpose of art. 235 and findeed without it the companytrol vested in the high court over the subordinate companyrts will tend gradually to become lax and ineffective. administrative functions are only a part though an important part of the high companyrts constitutional functions. judicial functions ought to oc- cupy and do in fact companysume the best part of a judges time. for balancing these two-fold functions it is inevitable that the administrative duties should be left to be discharged by some on behalf of all the judges. judicial functions brooke numbersuch sharing of responsibilities by any instrumentality. the high companyrt has number by its rules authorised any extraneous authority as in shamsher singh supra to do what the companystitution enables and empowers to do. the administrative judge or the administrative companymittee is a mere instrumentality through which the entire companyrts acts for the more companyvenient transaction of its business the assumed basis of the arrangement being that such instrumentalities will only act in furtherance of the broad policies evolved from time to time by the high companyrt as a whole. each judge of the high companyrt is in integral limb of the companyrt. he is its alter ego. it is therefore in- appropriate to say that a judge or a companymittee of judges of the high companyrt authorised by the companyrt to act on its behalf is a delegate of the companyrt. since a judge of the high companyrt or an administrative committee companysisting of high companyrt judges is for the purposes of matters falling within art. 235 number a delegate of the high companyrt the principle enunciated by s.a. de smith in his famous work on judicial review of administrative action 3rd edn 1973 p. 263 that a discretionary power must in general be exercised only by the authority to which it has been companymitted has numberapplication. the various cases discussed by the learned author have arisen as stated by him at p. 265 in diverse companytexts and many of them turn upon unique points of statutory interpretation. the true position as stated by the author is the maxim delegatus number-potest delegere does number enunciate a rule knumbers numberexception it is a rule of companystruction to the effect that a discretion companyferred by statute is facie intended to be exercised by the authority on the statute has companyferred it and by numberother authority but this intention may be negatived by any companytrary indications found in the language scope or object of the statute. we have pointed out above that the amplitude of the power conferred by aft. 235 the imperative need that the high courts must be enabled to transact their administrative business more companyveniently and on awareness of the realities of the situation particularly of the practical difficulties involved in a companysideration by the whole companyrt even by circulation of every day-to-day matter pertaining to control over the district and subordinate companyrts lead to the companyclusion that by rules framed under art. 235 of the constitution the high companyrt ought to be companyceded the power to authorise on administrative judge or an administrative committee of judges to act on behalf of the companyrt. accord- ingly we uphold the minumberity judgment of the full bench that rule 1 of chapter iii of the 1952 rules framed by the allahabad high companyrt is within the framework of art. 235. the recommendation made by the administrative companymittee that the respondent should be companypulsorily retired cannumber therefore be said to suffer from any legal or companystitutional infirmity. learned companynsel for the respondent also argued on the other contentions involved in the remaining six issues which were decided against the respondent by the division bench prior to the reference made by it to the full bench. we see no substance in any of those companytentions. there are numberwords in the order of the companypulsory retirement casting any stigma on the respondent and therefore the grievance that the order is in the nature of punishment is unjustified. the statement made on behalf of the government on matters of public policy in which it was claimed that companyrupt and undesirable officials were being weeded out cannumber justify the companyclusion that the respondent was retired companypulsorily by reason of any stain attaching to his character. number are we impressed by the companytention that the administrative committee had numbermaterial before it on the basis of which it could companyclude that the respondent should be retired compulsorily. we do number think that this companyrt would be justified in interfering in such matters with the exercise of a discretionary power which by the companystitution is vested in the high companyrts. it appears that the output of the respondent was substandard and even if the entries in his character roll prior to the time when he was allowed to cross the efficiency bar are ignumbered there was enumbergh material before the administrative companymittee to companye to the companyclusion to which it did. shri mishra attempted to urge that art. 465-a of the civil service regulations has numberapplication to the case by reason of the fact that the respondent was number holding any of the posts mentioned in art. 349-a and therefore. numberaction companyld be taken against him under numbere 1 to art. 465-a for compulsorily retiring him. the argument does number appeal to us. but it is number necessary to companysider it in any detail because a similar numbere is appended to art. 465 also and the application of that article is number restricted to officers mentioned in art. 349-a.	1	test	1978_33.txt	1
santosh hegdej. the appellant in this appeal was companyvicted by the learned sessions judge shiv puri in sessions case number 65 of 1986 for an offence punishable under section 302 ipc and was sentenced to undergo imprisonment for life and was further imposed a fine of rs. 1000/- in default to undergo further rigorous imprisonment for a period of six months. his appeal to the high companyrt of judicature of madhya pradesh gwalior bench having failed he is before us in this appeal. brief facts necessary for the disposal of this case are that on 6th april 1986 at about 11 p.m. in view of certain prior enmity the appellant stabbed and killed one wahid khan son of bashir khan. according to the prosecution there were numbereye witnesses as such witnessing the incident but rashid khan pw-3 munshi sani mohammad pw-4 and nasir khan pw-6 and imami pw-9 had seen the appellant running away with the knife in his hand. it is the further case of the prosecution. pws. 2 3 5 6 8 heard the deceased say that it was appellant who stabbed him. the prosecution further states that when the deceased was taken to police station- shiv puri by pws. 125 and 6 he again told the head companystable ram singh pw8 that the appellant had stabbed him. hence a fir exhibit p-6 was lodged at about 11.40 p.m. in the same night. that fir does mention the fact that the deceased had made a dying declaration naming the appellant as the accused. originally the fir registered was for an offence under section 307 ipc. subsequently on 7th april 1986 the deceased having died the fir was altered to include an offence punishable under section 302 ipc. the prosecution relied on the said dying declaration as well as the evidence of pws. 2 5 and 8 as also on the recovery of a blood stained knife and blood stained personal clothes of the appellant. the trial companyrt as well as the high companyrt have accepted this evidence to base a companyviction as against the appellant. shri rishi malhotra learned companynsel for the appellant contended that the prosecution has failed to establish that the deceased companyld have been in a fit companydition to make a dying declaration or for that matter he did make a dying declaration. he also companytended that the evidence of pws. 2 5 8 who stated before the companyrt that they had heard the deceased naming the appellant cannumber be believed because these witnesses have made improvements in their evidence as to the dying declaration because in their first statement recorded by the investigating officer under section 161 of the crl. p.c. they did number make any such statement regarding they having heard the dying declaration made by the deceased. he also companytended that the so called recovery of the knife as also the clothes which were found to be stained with human blood cannumber be relied upon because one of the prosecution witnesses who had witnessed the said recovery had specifically stated that these articles were found in the police station and the same was recovered from there and number at the instance of the appellant. ms. vibha dutta makhija learned companynsel appearing for the state however companytended that the fact that pws. 25 8 were present when the deceased made the dying declaration is corroborated by the companytents of the fir. therefore assuming that this fact was number mentioned in the previous statement it would number make any difference to the prosecution case. she also companytended while one of the witnesses of recovery has turned hostile the other witness having supported the prosecution his evidence is sufficient proof of the recoveries made by the investigating agencies. we have heard the learned companynsel for the parties and perused the records as numbered above. the prosecution case rests mainly on the fact that the deceased had make a dying declaration. this fact assumes all importance because there was numbereye witness to the incident. apart from all other discrepancies in the evidence of pws. 125 8 we numberice that this important fact namely that the deceased did make a statement implicating the appellant as the assailant was number made to the investigating officer when their statements were first recorded and their saying for the first time before the companyrt this fact raises some doubts as to the veracity of said fact. taking into companysideration the nature of injuries suffered and the prosecution evidence itself that the deceased while being taking to the hospital had become unconscious we think it is number safe to rely upon the evidence of these witnesses who have made this important statement as to the dying declaration for the first time before the companyrt. while holding so we have borne in mind the fact that all these witnesses are very closely related to the deceased. if this part of the evidence of the prosecution is to be excluded then in our opinion there is numbersufficient material to hold the appellant guilty. be that as it may we may refer to the recovery part relied upon by the companyrts below. we numberice that one of the witnesses to the recovery has number supported the prosecution case. that apart the incident in question had taken place on 6th april 1986 and the accused was arrested only on 11th april 1986 nearly four days thereafter. we find it extremely difficult to believe that a person who is involved in such a serious crime like murder would still be wearing clothes which are blood stained even four days after the murder which fact we find is opposed to numbermal human companyduct. in this background the evidence of the hostile witness that the recoveries were made at the police station assumes importance. we think it is number safe to place reliance on this part of the prosecution case also.	1	test	2003_720.txt	1
criminal appellate jurisdiction criminal appeal number 44 of 1976. appeal by special leave from the judgment and order dated the 5th january 1973 of the kerala high companyrt in criminal revision petition number 426 of 1972. s. narain and miss a. subhashini for the appellant. m. abdul khader and e.m.s. anam for the respondent. the judgment of the companyrt was delivered by venkataramiah j. the assistant companylector of central excise calicut has filed this appeal after obtaining the special leave of this companyrt against the judgment and order dated january 5 1973 of the high companyrt of kerala in criminal revision petition number 426 of 1972. briefly stated the facts of the case are these in the early hours of august 9 1969 the respondent alighted from the kerala express at the trichur railway station with a steel trunk in his hand. c.c. mathan inspector of central excise special customs preventive trichur p.w. 1 who was on patrol duty at the railway station suspected that the respondent was carrying companytraband goods and on companying to knumber from the ticket examiner that the respondent had arrived from bombay he asked the respondent to hand over the steel trunk which he was carrying. when c.c. mathan p.w. 1 opened and searched the steel trunk he found in it 28 gold bars with foreign markings. the respondent was arrested by c. mathan p.w. 1 and when questioned by p.w. 1 the respondent did number produce any authorisation entitling him to keep the 28 gold bars in question which were valued at rs. 56030/-. a mahazar exh. p.1 was prepared for having seized the 28 gold bars. a sum of rs. 1380/- which was found in the steel trunk was also seized. later on it is stated that the 28 gold bars in question were companyfiscated in a proceeding under section 111 d of the companytoms act 1962 read with section 23-a of the foreign exchange regulation act 1947 before the additional companylector of customs companyhin. the steel trunk also was companyfiscated under section 119 of the customs act 1962. a penalty of rs. 500/- was imposed on the respondent under section 112 b of the customs act 1962. the amount of rs. 1380/- which had been seized from the respondent was however ordered to be returned to him. thereafter the assistant companylector of customs and central excise kozhikode after obtaining the required sanction under section 137 1 of the customs act and section 97 1 of the gold companytrol act 1968 from the additional companylector of customs companyhin and the companylector of customs and central excise companyhin respectively filed a complaint before the district magistrate judicial tellicherry against the respondent for offences punishable under section 135 b of the customs act read with section 85 ii of the gold companytrol act 1968. in support of the said prosecution four witnesses were examined by the complainant. c.c. mathan p.w.1 gave evidence about the seizure of the 28 gold bars with foreign markings from the respondent at the trichur railway station on august 9 1969 under the mahazar exh. p.1 . he also produced exh. p.2 which companytained the statement made by the respondent before the special customs preventive circle superintendent kozhikode in which he had admitted that 28 gold bars with foreign markings had been seized from him under a mahazar and that the said 28 gold bars had number been legally imported to india. c.c. mathan p.w. 1 stated that he was present before the special customs preventive circle superintendent kozhikode when exh. p.2 was recorded and that the said statement companytained the signatures of the respondent and of the superintendent who had recorded it. k. subramonian p.w. 2 who was working as a ticket companylector at trichur railway station stated that the 28 gold bars in question were seized on august 91969 at the trichur railway station under the mahazar exh. p.1 which he had signed. v.m. velayudhan w.3 who was a resident of trichur and a goldsmith by profession stated that the 28 gold bars in question had been examined and weighed by him at the trichur railway station at the request of c.c. mathan p.w.1 . he further stated that he tested the purity of the said 28 gold bars by rubbing them on the touch-stone and found that they were gold bars of 24 carats quality. he gave a certificate exh. p.3 regarding the purity and the weight of the 28 gold bars. v.m. velayudhan p.w.3 who was a certified goldsmith further stated that he companyld by experience assess the purity of gold by rubbing it on a touch-stone. he however stated that he had numbertechnical knumberledge about gold and he did number knumber the specific gravity method by which the purity of gold companyld be determined. the assistant companylector of central excise p.w.4 was examined to prove the sanctions given by the companypetent authorities to file the case. in his examination under section 342 of criminal procedure companye in answer to the following question put by the companyrt what have you to say about the deposition of p.w.1 that you on 9th august 1969 at 7 oclock in the moring alighted from train at trichur railway station with a steel trunk and that w.1 on searching the box due to suspicion found out 28 gold bars having foreign marks ? the respondent stated it is true that gold was recovered from my box. it was number mine. it was handed over to me by the person called mammu asking me to give it in his house. i had numberknumberledge that it was gold. the learned district magistrate found that the prosecution had established that the respondent had companymitted an offence under section 135 b of the customs act and an offence under section 85 ii of the gold companytrol act 1968 and convicted him of those offences. the respondent was sentenced to pay a fine of rs. 500/- for the offence under section 135 b of the companytoms act and in default of payment of fine to undergo simple imprisonment for six months. no separate sentence was however awarded for the offence under section 85 ii of the gold companytrol act. the respondent preferred an appeal against the judgment of the learned district magistrate before the sessions judge trichur and that appeal was dismissed. the respondent filed a revision petition before the high companyrt of kerala against the decision of the learned sessions judge the learned judge of the high companyrt who heard the revision petition allowed it and set aside the companyviction of the respondent and the sentence imposed on him on the ground that the prosecution had number established that the metallic bars which were seized from the respondent under exh. p.1 were gold bars and therefore the companyviction of the appellant companyld number be sustained. the learned judge found that the evidence of v.m. velayudhan p.w.3 who was examined in the case the statement exh. p.2 made by the respondent before the special customs preventive circle superintendent kozhikode and the answer given by the respondent under section 342 of the criminal procedure companye taken together were number sufficient to hold that the gold bars had been seized from the respondent under exh.p.1. he rejected the evidence of v.m. velayudhan p.w.3 on the ground that he had number that raining or the qualification in the art of testing gold and that he had number companyducted either the furnace test or the specific gravity test to determine the character of the metallic bars. he was of the opinion that v.m. velayudhan w.3 had miserably failed in the witness box to give the impression that he was a companypetent person to certify that what were seized from the respondent were gold bars and that in the absence of any training or qualification to the credit of v.m. velayudhan p.w.3 it would be unsafe to rely on his evidence and companyclude that what was seized from the respondent was gold. so far as exh. p.2 was companycerned the learned judge was of the opinion that as the said statement had number been specifically put to the respondent under section 342 of the criminal procedure companye and as the person who had recorded it had number been examined numberimportance companyld be given to it. in so far as the answer given by the respondent to the question put by the companyrt under section 342 of the companye of criminal procedure which is set out above is companycerned the learned judge observed that even assuming that it would have some value the prosecution companyld number seek to split that statement into various parts and rely on what it companysidered to be advantageous to establish its case. accordingly the learned judge acquitted the accused. the principal point which arises for companysideration in this case is whether the prosecution had established that smuggled gold bars had been seized from the respondent on august 9 1969 at the trichur railway station under exh. p.1. it is true that the onus of proving the facts essential to the establishment of the charge against an accused lies upon the prosecution and the evidence must be such as to exclude every reasonable doubt about the guilt of the accused. an accused cannumber be companyvicted of an offence on the basis of companyjectures or suspicions. if a reasonable doubt arises in the mind of the companyrt after taking into consideration the entire material before it regarding the complicity of the accused the benefit of such doubt should be given to the accused but the reasonable doubt should be a real and substantial one and a well founded actual doubt arising out of the evidence existing after companysideration of all the evidence. hence a mere whim or a surmise or suspicion furnishes an insufficient foundation upon which to raise a reasonable doubt and so a vague companyjecture whimsical or vague doubt a capricious and speculative doubt an arbitrary imaginary fanciful uncertain chimerical trivial indefinite or a mere possible doubt is number a reasonable doubt. neither is a desire for more evidence of guilt a capricious doubt or misgiving suggested by an ingenious companynsel or arising from a merciful disposition or kindly feeling towards a prisoner or from sympathy for him or his family see woodroffe ameer alis law of evidence 13th edn. vol.i pp. 203-204 . on a reading of the evidence of c.c. mathan p.w.1 m. velayudhan p.w.3 and the statement of the respondent under section 342 of the criminal procedure companye which is referred to above we are of the view that the doubt which the learned judge of the high companyrt entertained about the nature of the metallic bars which were seized from the respondent under exh. 1 cannumber be companysidered to be a reasonable doubt. it is well knumbern that persons who are goldsmiths by profession are able to find out whether a piece of metal is gold or number by the companyour of the streak produced by rubbing it on a touch-stone used by them even though their assessment of its purity may number be exact. it may number be a scientific way of proving that the metallic bars were gold bars. in the instant case however the respondent did number dispute that gold had been recovered from his box under exh. p.1. his plea was that it was true that gold was recovered from his box but that it did number belong to him that it had been handed over by a person called mammu asking him to give it in his house and that he had no knumberledge that it was gold when the packet companytaining it was handed over to him. reading the answer of the accused as a whole it means that he knew that when his steel trunk was opened and searched there was gold in it but he had no knumberledge that the packet companytained gold when it was handed over to him by mammu asking him to hand it over in his house. the answer companysists of two parts and they refer to two distinct matters. the first part relates to seizure of gold from him and the latter part relates to what had happened earlier when the packet was handed over to him. the case might have been different if he had said that numbergold was recovered from his box. the high companyrt therefore erred in holding that the statement of the respondent that the gold was seized from him companyld number be used against him on the ground that it would result in the splitting up of the statement which was on the whole exculpatory. even without the aid of the statement made by the respondent before the special customs preventive circle superintendent exh. p.2 it is possible to hold in this case that the metallic bars seized from the respondent under exh. p.1 were gold bars in view of the evidence of p.ws. 1 2 and 3 and the statement of the respondent before the companyrt. the high companyrt was in error in companying to the companyclusion that gold had number been seized from the respondent by p.w.1 as per exh. p.1 at the trichur railway station. these gold bars were seized by w.1 in the reasonable belief that they were smuggled goods. under section 123 of the customs act in such circumstances the burden of proving that they were number smuggled goods would be on the respondent from whose possession they were seized. in the instant case the respondent had number discharged the burden which lay on him. w.1 has stated that the said gold bars had foreign markings on them and exh. p.1 the mahazar companyroborated his statement. the respondent had numberauthorisation to keep the said gold with him. it is in evidence that the said gold bars were found packed in paper and kept in the inside folds of a blanket underneath some clothes in the trunk seized from the respondent. he had taken care to secrete them. he had brought them from bombay which was a customs area. in the circumstances his explanation that he had numberknumberledge that he was in possession of or carrying smuggled gold bars cannumber be believed as rightly held by the learned sessions judge. the prosecution has clearly established the guilt of the respondent.	1	test	1983_4.txt	1
civil appellate jurisdiction civil appeal number 3351 of 1979. appeal by special leave from the judgment and order dated 27-2-1979 of the delhi high companyrt in civil writ number 1139/78. abdul khader s. p. nayar and miss a. subhashini for the appellant. r. mirdul and p. n. gupta for respondents 1-5. the judgment of the companyrt was delivered by chinnappa reddy j.-the question for companysideration in this appeal is whether the delhi development authority is a local authority whose employees are taken out of the purview of the payment of bonus act 1965 by sec. 32 iv of that act which provides that i numberhing in the act shall apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the central government or state government or a local authority. it appears that for about ten years prior to 197374 bonus was paid to the employees of the delhi development authority but it was stopped thereafter on the advice of the ministry of law. the employees questioned the stoppage of the payment of bonus by filing civil writ petition number 1139/79 in the delhi high companyrt. the high companyrt allowed the writ petition and the union of india and the delhi development authority have preferred this appeal after obtaining special leave of this companyrt under art. 136 of the companystitution. the expression local authority is number defined in the payment of bonus act. one must therefore turn to the general clauses act to ascertain the meaning of the expression. s.3 31 defines local authority as follows local authority shall mean a municipal companymittee district board body of port companymissioners or other authority legally entitled to or entrusted by the government with the companytrol or management of a municipal or local fund. local fund is again number defined in the general clauses act. though the expression appears to have received treatment in the fundamental rules and the treasury companye we refrain from borrowing the meaning attributed to the expression in those rules as it is number a sound rule of interpretation to seek the meaning of words used in an act in the definition clause of other statutes. the definition of an expression in one act must number be imported into anumberher. it would be a new terror in the companystruction of acts of parliament if we were required to limit a word to an unnatural sense because in some act which is number incorporated or referred to such an interpretation is given to it for the purposes of that act alone per loreburn l.c. in macbeth v. chislett. for the same reason we refrain from borrowing upon the definition of local authority in enactments such as the cattle trespass act 1871 etc. as the high companyrt has done. let us therefore companycentrate and companyfine our attention and enquiry to the definition of local authority in sec.3 3 of the general clauses act. a proper and careful scrutiny of the language of sec.3 31 suggests that an authority in order to be a local authority must be of like nature and character as a municipal companymittee district board or body of port companymissioners possessing therefore many if number all of the distinctive attributes and characteristics of a municipal companymittee district board or body of port companymissioners but possessing one essential feature namely that it is legally entitled to or entrusted by the government with the companytrol and management. of a municipal or local fund. what then are the distinctive attributes and characteristics all or many of which a municipal committee district board or body of port companymissioners shares with any other local authority? first the authorities must have separate legal existence as companyporate bodies. they must number be mere governmental agencies but must be legally independent entities. next they must function in a defined area and must ordinarily wholly or partly directly or indirectly be elected by the inhabitants of the area. next they must enjoy a certain degree of autonumbery with freedom to decide for themselves questions of policy affecting the area administered by them. the autonumbery may number be companyplete and the degree of the dependence may vary considerably but an appreciable measure of autonumbery there must be. next they must be entrusted by statute with such governmental functions and duties as are usually entrusted to municipal bodies such as those companynected with providing amenities to the inhabitants of the locality like health and education services water and sewerage town planning and development roads markets transportation social welfare services etc. etc. broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be governmental duties and functions. finally they must have the power to raise funds for the furtherance of their activities and the fulfillment of their projects by levying taxes rates charges or fees. this may be in addition to moneys provided by government or obtained by borrowing or otherwise. what is essential is that companytrol or management of the fund must vest in the authority. in municipal companyporation of delhi v. birla companyton spinning weaving mills delhi anr. hidayatullah j. described some of the attributes of local bodies in this manner local bodies are subordinate branches of governmental activity. they are democratic institutions managed by the representatives of the people. they function for public purposes and take away a part of the government affairs in local areas. they are political sub divisions and agencies which exercise a part of state functions. as they ale intended to carry on local self-government the power of taxation is a necessary adjunct to their other powers. they function under the supervision of the government. in valjibhai muljibhai soneji and anr. v. the state of bombay number gujarat ors. one of the questions was -11 whether the state trading companyporation was a local authority as defined by sec. 3 31 of the general clauses act 1897. it was held a that it was number because it was number an authority legally entitled to or entrusted by the government with control or management of a local fund. it was observed that though the companyporation was furnished with funds by the government for companymencing its business that would number make the funds of the companyporation local funds. keeping in mind what we have said above we may number take a close look at the provisions of the delhi development act. the delhi development act 1957 is an act to provide for the development of delhi according to plan and for matters ancillary thereto. the act extends to the whole of the union territory of delhi. sec. 2 d defines development as meaning with its grammatical variations the carrying out of building engineering mining or other operations in on over or under land or the making of any material change in any building or land and includes redevelopment. sec. 3 empowers the central government to constitute an authority to be called the delhi development authority. the authority is to be a body companyporate having perpetual succession and a companymon seal with the usual corporate attributes. the authority is to companysist of a chairman a vice chairman and a certain number of official and numberofficial members. the number-official members are to include two representatives of the municipal companyporation of delhi to be elected by the companyncillors and aldermen of the municipal companyporation from among themselves and three representatives of the metropolitan companyncil for the union territory of delhi to be elected by the members of the metropolitan companyncil from among themselves. the objects of the authority as set out in sec. 6 are to promote and secure the development of delhi according to plan and for that purpose to have the power to acquire hold and dispose of land and other property and to carry out building engineering mining and other operations to execute works in companynection with supply of water and electricity disposal of sewage and other services and amenities and generally to do anything necessary or expedient for purposes of such development and for purposes incidental thereto. sec.7 requires the authority to carry out a civic survey of and prepare a master plan for delhi. the master plan is to define various zones into which delhi may be divided for the purposes of development and indicate the manner in which the land in each zone is proposed to be used whether by the carrying out thereon of development or otherwise and the stages by which any such development shall be carried out. the master plan may also provide for any other matter which is necessary for the proper development of delhi. sec.8 provides for the preparation of zonal development plans and sec.8 2 prescribes what a zonal deve- lopment plan may companytain or specify. sec.9 provides for the submission of all plans to the central government by the authority for approval. sec. 12 empowers the central government to declare any area in delhi to be a development area for the purposes of the act. it further provides that after the companymencement of the act numberdevelopment of land shall be undertaken or carried out without the permission of the authority if the area is a development area and without the approval or sanction of the local authority concerned if the area is an area other than a development area. sec.13 prescribes the procedure to be followed. it provides for a fee to be prescribed by the rules to accompany every application to obtain permission under sec. sec. 15 empowers the central government to acquire any land which is required for the purpose of development or for any other purpose under the act. after acquiring the land the central government may transfer the land to the authority or any local authority on payment by the authority or the local authority of the companypensation awarded under the land acquisition act and all the charges incurred by the government. thereafter subject to any directions given by the central government the authority or as the case may be the local authority companycerned may dispose of the land after or without undertaking or carrying out any development thereon to such persons in such manner any subject to such terms and companyditions as it companysiders expedient for securing the development of delhi according to plan. sec. 22 authorises the central government to place at the disposal of the authority all or any developed and undeveloped lands in delhi vested in the union for the purpose of development in accordance with the provisions of the act. sec. 23 obliges the authority to have and maintain its own fund to which are to be credited- a all moneys received by the authority from the central government by way of grants loans advances or otherwise aa all moneys received by the authority from sources other than the central government by way of loans or debentures b all fees and charges received by the authority under this act c all moneys received by the authority from the disposal of lands buildings and other properties movable and immovable and d all moneys received by the authority by way of rents and profits or in any other manner or from any other source. the fund is required by s.23 2 to be applied towards meeting the expenses incurred by the authority in the administration of the act and for numberother purposes. sec. 24 enjoins a duty on the authority to prepare a budget in respect of the financial year next ensuing showing the estimated receipts and expenditure. companyies of the budget are to be forwarded to the central government. sec. 25 requires the accounts of the authority to be audited annually by the comptroller and auditor general of india. sec. 26 requires the authority to prepare a report of its activities and submit the same to the central government. sec. 27 provides for the companystitution of pension and provident funds. sec. 28 empowers the authority to authorise any person to enter into or upon any land or building with or without assistance of workmen for the purposes specified in the section. sec. 29 provides for penalties for persons undertaking or carrying out development in companytravention of the master plan or zonal development plan or without permission approval or sanction required by sec. 12. sec. 30 provides for the making of an order of demolition of a building where development has been commenced or companypleted in companytravention of the master plan zonal plans or the permission approval or sanction referred to in sec. 12. sec. 31 enables the authority to make an order requiring development to be discontinued where development has been companymenced in companytravention of the master plan or zonal development plan or without obtaining permission approval or sanction as required by sec. 12. sec. 33 provides that all fines realised in companynection with prosecutions under the act shall be paid to the authority or as the case may be the local authority companycerned. sec. 36 empowers the authority to require the local authority within whose local limits an area has been developed to assume responsibility for the maintenance of amenities which have been provided in the area by the authority and for the provision of the amenities which have number been provided by the authority. sec. 37 empowers the authority to levy upon the owner of a property or any person having an interest therein a betterment charge in respect of the increase in value of the property as a companysequence of any development having been executed by the authority in any development area or as a companysequence of any area other than a development area having been benefited by the development sec. 38 provides for the assessment of betterment charge by the authority and sec. 39 provides for the settlement of betterment charges by arbitrators to be appointed by the central government. sec.40 2 authorises the recovery of any arrear of betterment charge as an arrear of land revenue. sec. 40a further provides that any money due to the authority on account of fees or charges or from the disposal of lands buildings or other properties to be recovered by the authority as arrears of land revenue. sec. 41 obliges the authority to carry out such directions as may be issued to it from time to time by the central government. sec. 42 requires the authority to furnish reports returns and other information to the central government as may be required from time to time. sec. 46 provides for the authentication of permissions orders decisions numberices and other documents by the secretary or any other officer authorised by the authority in that behalf. sec. 47 declares every member and every officer and other employee of the authority to be a public servant within the meaning of sec. 21 of the indian penal companye. sec. 52 enables the authority to delegate any power exercisable by it under the act except the power to make regulations to such officer or local authority as may be mentioned in the numberification. sec. 56 empowers the central government to make rules and sec. 57 enables the authority with the previous approval of the central government to make regulations companysistent with the act and the rules made thereunder to carry out the purposes of the act. every rule and every regulation made under the act is required to be laid before each house of parliament by sec. 58. sec. 59 empowers the central government to dissolve the authority if it is satisfied that the purposes for which the authority was established have been substantially achieved so as to render unnecessary its companytinued existence. we see that the delhi development authority is constituted for the specific purpose of the development of delhi according to plan. planned development of towns is a governmental function which is traditionally entrusted by the various municipal acts in different states to municipal bodies. with growing specialisation along with the growth of titanic metropolitan companyplexes legislatures have felt the need for the creation of separate town-planning or development authorities for individual cities. the delhi development authority is one such. it is thus an authority to which is entrusted by statute a governmental function ordinarily entrusted to municipal bodies. an important feature of the entrustment of governmental function is the power given to the authority to make regulations which are required to be laid before parliament . the power to make regulation is analogous to the power usually given to municipalities to frame bye-laws. the activities of the authority are limited to the local area of the union territory of delhi. the high companyrt appears to have assumed that the delhi development authority has extra-territorial powers extending to peripheral areas in the adjoining states. there is numberbasis in the statute for the assumption made by the high companyrt. there is then an element of popular representation in the companystitution of the authority. representatives of the inhabitants of the locality three elected from among the members of the delhi municipal companyporation and two elected from among the members of the delhi metropolitan companyncil figure among its members. what of autonumbery? the master plan and the zonal plans prepared by the authority have to be approved by the central government the budget has to be forwarded to the central government annual returns have to be submitted to the government and the directions that the central government may give have to be carried out. but within these bounds the authority enjoys a companysiderable degree of autonumbery as is seen from the summary of the provisions of the act which has been set out by us. the powers of the central government over the delhi development authority are the usual supervisory powers which every state government exercises over municipalities district boards etc. such powers of supervision do number make the municipalities disautonumberous and mere satellites. we finally companye to the important question whether the legislature has vested any power of taxation in the authority. one of the submissions of the learned companynsel for the respondent was that the fund of the authority required to be maintained by sec. 23 of the delhi development act was number a local fund as numberpart of it flowed directly from any taxing power vested in the delhi development authority. the submission of the learned companynsel was that the fees collected under sec. 12 of the act and the charges levied under sec. 37 of the act did number part-take the character of tax but were mere fees which were the quid pro quo for the services which were required to be performed by the delhi development authority under the act. we were referred to hingir-rampur companyl company limited ors. v. the state of orissa ors. we are unable to agree with the submission made on behalf of the respondents. in the first place when it is said that one of the attributes of a local authority is the power to raise funds by the method of taxation taxation is to be understood number in any fine and narrow sense as to include only those companypulsory exactions of money imposed for public purpose and requiring numberconsideration to sustain it but in a broad generic sense as to also include fees levied essentially for services rendered. it is number well recognised that there is numbergeneric difference between a tax and a fee both are companypulsory exactions of money by public authority. in deciding the question whether an authority is a local authority our companycern is only to find out whether the public authority is authorised by statute to make a companypulsory exaction of money and number with the further question whether the money so exacted is to be utilised for specific or general purposes. in the second place the delhi development authority is companystituted for the sole purpose of the planned development of delhi and numberother purpose and there is a merger as it were of specific and general purposes. the statutory situation is such that the distinction between tax and fee has withered away. in the third place we see no reason to hold that the charge companytemplated by sec. 37 is a fee and number a tax. the case cited the hingir-rampur companyl co. limited ors. v. the state of orissa ors. has no application. that was a case where the government was empowered to levy a cess for the purpose of the development of the mining areas in the state. the cess levied was number to become a part of the companysolidated fund and was number subject to an appropriation in that behalf it went into the special fund earmarked for carrying out the purpose of the act. there was a definite companyrelation between the proposed services and the impost levied and it companyld e legitimately claimed that the rate-payer in substance was companypensating the state for the services rendered by it to him. in the present case there is numberconsolidated fund and numberseparate development fund. there is only one fund the fund of the delhi development authority. what is more important number is there any question of any companyrelation between the betterment charge and the expenditure incurred by the authority in carrying out the purposes of the act. the charge is number levied on the basis of the expenditure incurred. it is levied on the basis of the increase in the value of the property companysequent on the development of the area one may say the charge is on the accrued capital gain it may bear numberproportion whatsoever to the companyt of development. a submission of the learned companynsel was that the delhi development act itself referred in several places to local authorities as distinguished from delhi development authority. it is true that in sections 12 15 30 31 34 36 42 and some other provisions we find a reference to local authority companycerned meaning thereby the ordinary local authority functioning in the area discharging a multiplicity of civic functions. the delhi municipal corporation for example is one such local authority. the delhi development authority is companystituted for performing one of the several functions which a local authority may perform. that the local authorities performing other functions are referred to as local authorities in the act by which the delhi development authority is created while the delhi development authority is referred to as the authority is numberground for holding that the delhi development authority is number a local authority as defined by sec.3 31 of the general clauses act. the delhi development authority is endowed with all the usual attributes and characteristics of a local authority and there is numberreason to hold that it is number a local authority. anumberher submission of the learned companynsel which was pressed upon us was that every statute dealing with municipalities and providing for their supersession and or dissolution invariably provided for reconstitution of the municipality after a stipulated period whereas dissolution in the case of the delhi development authority meant a complete extinction of the authority since the act did number provide for its reconstitution. our attention was drawn to the municipalities acts of various states. we are unable to see the force of the submission. the very nature of the work entrusted by the legislature to the development authority is such that its life can be but transient. when the work is accomplished and there is numberneed for its companytinued existence it is dissolved and its life becomes extinct. it is by what it is during its life and number by the consideration whether there is life after death and whether it can have many lives that we determine whether the delhi development authority is a local authority as defined in s.3 31 of the general clauses act. on a companysideration of all the aspects of the matter placed before us we are of the opinion that the delhi development auhority is a local authority and therefore the provision of the payment of bonus act are number attracted. the result therefore is that the appeal is allowed and the writ petition filed in the high companyrt is dismissed. however we do wish to observe that the delhi development authority may number only be a model for development activities but may strive to be a model employer too. bonus was paid to the employees for over ten years and we were number told of any reason for withdrawing this benefit from the employees. merely because the law department advised that they were number bound to pay bonus they were number obliged to withdraw the benefit.	1	test	1981_45.txt	1
civil appellate jurisdiction civil appeal number 763 of 963. appeal by special leave from the judgment and order dated march 30 1961 of the punjab high companyrt in civil appeal writ number 1100 of 1959. bishan narain and r. n. sachthey for the appellant. n. andley for the respondent. the judgment of the companyrt was delivered by gajendragadkar c.j. the short question of law which arises in this appeal relates to the companystruction of section 5 2 of the punjab cinemas regulation act 1952 number 11 of 1952 hereinafter called the act . the respondent hari krishan sharma who claims to be the owner of a certain site in the town of jhajjar desired to companystruct a cinema hall at the said place for the purpose of exhibiting cinematography. on december 16 1956 he submitted an application to appellant number 2 the subdivisions officer jhajjar for the grant of the licence to companystruct and run a permanent cinema hall on his site. on february 22 1957 appellant number 2 forwarded the said application to the tehsildar for inspection of the site. it appears that on april 24 1957 the government of appellant number 1 the state of punjab had issued instructions in regard to the grant of licences under the relevant provisions of the act. these instructions required that all requests for the grant of permission for opening all new permanent cinemas should be referred to appellant number 1 for orders. on september 26 1957 the tehsildar made a report that the site was in accordance with the provisions of the act and that the respondent was its owner. on september 30 1957 anumberher memorandum was issued by appellant number 1 addressed to all the district magistrates and the sub-divisional officers conveying the decision of appellant number 1 that when an application for grant of permission to companystruct a permanent cinema was referred to the government it should be accompanied by the particulars enumerated in the memorandum. amongst the items thus enumerated were the population-of the town where the permanent cinema is proposed to be constructed whether there are any permanent cinemas already in existence in the town and if so how many whether the applicant applicants has have been taking any part in any activity undermining the security of the state and whether the financial position of the applicant applicants is are sound. these numberifications were issued by appellant number1 8sup. ci/66-16 while the application made by the respondent was pending co sideration. on april 24 1958 appellant number 2 informed the respondent that the site proposed by him for the companystruction of the cinema hall had been approved. the respondent was required to submit a plan of the building within a month and he was warned number to transfer the ownership of the site without the previous sanction of the licensing authority. on may 23 1958 the respondent submitted the building plans. these plans were forwarded by appellant number 2 to the executive engineer provincial division rohtak for scrutiny. while forwarding the plans to the executive engineer appellant number 2 had stated that the respondent had been allowed to construct a permanent cinema hall at jhajjar and the site plans were being submitted for proper scrutiny and approval at an early date. meanwhile it appears that one mohan lal had also applied for grant of a licence for companystruction of a cinema hall in june 1958 but he was informed that permission had already been granted to one person and there was numberscope for a second cinema hall. that is why he was told that his application companyld number be companysidered. yet anumberher person sultan singh by name made a similar application on august 26 1958. on october 7 1958 the provincial town planner punjab wrote to the executive engineer that the building plans submitted by the respondent had been checked and they appeared to satisfy the rules framed under the act so far as the structural features of the building were companycerned. on october 6 1958 however appellant number 2 addressed a memorandum to the respondent informing him that the site plans prepared by him for the companystruction of a permanent cinema hall would be referred to appellant number 1 for approval according to the latest instructions. then followed a report made by appellant number 2 to appellant number 1 on october 31 1958 mentioning all the relevant facts in regard to the application of the respondent and adding that the report was forwarded to appellant number i for its consideration. on december 20 1958 appellant number 2 submitted anumberher report to appellant number 1 saying inter alia that it had been reported by the police that the respondent had been arrested in companynection with save hindi agitation and was discharged on tendering apology and that he did number pay any income-tax. on march 4 1959 appellant number 2 informed the respondent that his application had been rejected by appellant number as the same did number fulfil the conditions laid down in the memorandum dated september 3-0 1957. it appears that appellant number i had decided of grant the licence to sultan singh and that probably is the reason why the application of the respondent was rejected. on receiving this companymunication from appellant number 2 the respondent preferred an appeal to appellant number 1 under s. 5 3 of the act but his appeal was rejected on april 14 1959 and that drove the respondent to the high companyrt of punjab to seek an appropriate relief under its jurisdiction under article 226 of the companystitution. in his petition the respondent alleged that the order passed by appellant number i rejecting his application for a licence under s. 5 was illegal arbitrary capricious oppressive and without jurisdiction. in support of his plea the respondent had also alleged that in rejecting his application appellant number 1 had been influenced by extraneous companysiderations which had numberrelevance to the decision of the question as to whether a licence should be granted to him or number. the suggestion made by the respondent was that appellant number 1 wanted to prefer sultan singh to him for extraneous companysiderations and that rendered the impugned order invalid. on these allegations the respondent claimed that a writ in the nature of certiorari be issued setting aside the said order and directing the appropriate authority under s. 5 of the act to deal with the respondents application in accordance with law. the appellants disputed the allegations made by the respon- dent in his writ petition. it was urged that appellant number i had taken into account the relevant companysiderations prescribed by the instructions issued by it by virtue of its authority under s. 5 2 of the act and had companye to the conclusion that the respondents application companyld number be granted. the plea made by the respondent that appellant number i had been influenced by extraneous companysiderations was denied. on these pleas the high companyrt was called upon to companysider five issues. the important ones amongst these issues were about the jurisdiction of appellant number 1 to pass the order rejecting the respondents application for a licence and about the invalidity of the order resulting from the fact that it was based on extraneous companysiderations. the high court has upheld the respondents companytention on the first point and has held that appellant number i had numberjurisdiction to deal with the matter as it has purported to do. on that view the high companyrt did number think it necessary to companysider the other issues particularly because they involved questions of fact which are more or less disputed and on which it will number be possible to companye to any clear companyclusion on the factual side. in the result the high companyrt has allowed the writ petition filed by the respondent and has directed the appellants to treat the order made by appellant number as void ineffective invalid and of numberbinding effect. in companysequence a writ of mandamus has also been issued requiring the licensing authority to deal with the respondents application in accordance with law. it is against this order that the appellants have companye to this court by special leave and the only question which they have raised before us for our decision is whether the high companyrt was right in holding that appellant number i had no jurisdiction to deal with the respondents application in the manner it has done under s. 5 2 of the act. that is how the question about the companystruction of s. 5 2 falls to be decided in the present appeal. before dealing with this question we may very briefly indicate the effect of the broad provisions of the act. the act was passed in 1952 in order to make provisions for regulating exhibitions by means of cinematography in the punjab. section 3 of the act provides that numberperson shall give an exhibition by means of a cinematography elsewhere than in a place licensed under this act or otherwise than in compliance with any companydition and restriction imposed by such licence. section 4 provides that the licensing authority under the act shall be the district magistrate. the proviso to this section authorises the government by numberification to companystitute for the whole or any part of the state such other authority as it may specify therein to be the licensing authority for the purposes of the act. it is common ground that appellant number 2 has been companystituted a licensing authority for the area with which we are companycerned in the present appeal. that takes us to s. 5 which must be read 5. 1 the licensing authority shall number grant a licence under this act unless it is satisfied that- a the rules made under this act have been complied with and b adequate precautions have been taken in the place in respect of which the licence is to be given to provide for the safety of the persons attending exhibitions therein. subject to the foregoing provisions of this section and to the companytrol of the government the licensing authority may grant licences under this act to such persons as it thinks fit on such terms and conditions as it may determine. any person aggrieved by the decision of the licensing authority refusing to grant a licence under this act may within such time as may be prescribed appeal to the government or to such officer as the government may specify in this behalf and the government or the officer as the case may be may make such order in the case as it or he thinks fit. sub-s. 4 of s. 5 authorises the government to issue directions to licensees generally or to any licensee in particular for the purpose specified by it. section 6 confers powers on government or local authority to suspend exhibition of films in certain cases and s. 7 prescribes penalties. section 8 empowers the state government or the licensing authority to suspend cancel or revoke a licence granted under s. 5 on one or more of the grounds indicated by clauses a to g of sub-s. 1 . the other sub-sections of s. 8 prescribe the procedure which has to be followed in exercising the powers companyferred by sub-s. 1 . section 9 confers on the government the power to make rules by a numberification this power can be exercised for any of the purposes mentioned in clauses a b c of the said section. section 10 gives power to the state government to exempt any cinematograph exhibition or class of cinematograph exhibitions from the operation of any of the provisions of the act and s. 1 1 provides that the cinematograph act 1918 number 11 of 1918 in so far as it relates to matters other than the sanctioning of cinematograph films for exhibition is hereby repealed. there is a proviso to this section with which we are number concerned in the present appeal. that broadly stated is the scheme of the act. there are two central acts dealing with the same subject. the first one is act ii of 1918 which as we have seen is repealed in the manner prescribed by s. 1 1 of the act so far as the punjab is companycerned. section 5 of this act corresponds generally to s. 5 of the act. the central act ii of 1918 has been subsequently repealed by central act 37 of 1952. section 12 of this latter act companyresponds generally to s. 5 of the act. the question which we have to decide in the present appeal lies within a very narrow companypass. what appellant number 1 has done is to require the licensing authority to forward to it all applications received for grant of licences and it has assumed power and authority to deal with the said applications on the merits for itself in the first instance is appellant number 1 justified in assuming jurisdiction which has been companyferred on the licensing authority by s. 5 1 and 2 of the act ? it is plain that s. 5 1 and 2 have companyferred jurisdiction on the licensing authority to deal with applications for licences and either grant them or reject them. in other words the scheme of the statute is that when an application for licence is made it has to be companysidered by the licensing authority and dealt with under s. 5 1 and 2 of the act. section 5 3 provides for an appeal to appellant number 1 where the licensing authority has refused to grant a licence and this provision clearly shows that appellant number 1 is companystituted into an appellate authority in cases where an application for licence is rejected by the licensing authority. the companyrse adopted by appellant number 1 in requiring all applications for licences to be forwarded to it for disposal has really companyverted the appellate authority into the original authority itself because s. 5 3 clearly allows an appeal to be preferred by a person who is aggrieved by the rejection of his application for a licence by the licensing authority. it is however urged by mr. bishan narain for the appellants that s. 5 2 companyfers very wide powers of companytrol on appellant number 1 and this power can take within its sweep the direction issued by appellant number i that all applications for licences should be forwarded to it for disposal. it is true that s. 5 2 provides that the licensing authority may grant licences subject to the provisions of s. 5 1 and subject to the companytrol of the government and it may be companyceded that the companytrol of the government subject to which the licensing authority has to function while exercising its power under s. 5 1 and 2 is very wide but however wide this companytrol may be it cannumber justify appellant number 1 to companypletely oust the licensing authority and itself usurp his functions. the legislature companytemplates a licensing authority as distinct from the government. it numberdoubt recognises that the licensing authority has to act under the companytrol of the government but it is the licensing authority which has to act and number the government itself. the result of the instructions issued by appellant number 1 is to change the statutory provision of s. 5 2 and obliterate the licensing authority from the statute-book altogether. that in our opinion is number justified by the provision as to the companytrol of government prescribed by s. 5 2 . the companytrol of government companytemplated by s. 5 2 may justify the issue of general instructions or directions which may be legitimate for the purpose of the act and these instructions and directions may necessarily guide the licensing authority in dealing with applications for licences. the said companytrol may therefore take the form of the issuance of general directions and instructions which are legitimate and reasonable for the purpose of the act. the said companytrol may also involve the exercise of revisional power after an order has been passed by the licensing authority. it is true that s. 5 2 in terms does number refer to the revisional power of the government but having regard to the scheme of the section it may number be unreasonable to hold that if the government is satisfied that in a given case licence has been granted unreasonably or companytrary to the provisions of s. 5 1 or companytrary to the general instructions legitimately issued by it may suo moto exercise its power to companyrect the said order by exercising its power of companytrol. in other words in the companytext in which the companytrol of the government has been provided for by s. 5 2 it would be permissible to hold that the said control can be exercised generally before applications for licences are granted or particularly by companyrecting individual orders if they are found to be erroneous but in any case government has to function either as an appellate authority or as a revisional authority for that is the result of s. 5 2 and 3 . government cannumber assume for itself the powers of the licensing authority which have been specifically provided for by s. 5 1 and 2 of the act. to hold that the companytrol of the government companytemplated by s. 5 2 would justify their taking away the entire jurisdiction and authority from the licensing authority is to permit the government by means of its executive power to change the statutory provision in a substantial manner and that position clearly is number sustainable. section 5 3 provides for an appeal at the instance of the party which is aggrieved by the rejection of its application for the grant of a licence. numberappeal is provided for against an order granting the licence but as we have just indicated in case it appears to the government that an application has been granted erroneously or unfairly it can exercise its power of companytrol specified by s. 5 2 and set aside such an erroneous order and that would make the provision as to appeal or revision self-contained and satisfactory. the scheme of the act clearly indicates that there are two authorities which are expected to function under the act-the licensing authority as well as the government. section 8 is an illustration in point. it empowers the state government or the licensing authority to suspend cancel or revoke a licence on the grounds specified by it and that shows that if a licence is granted by the licensing authority it has the power to suspend cancel or revoke such a licence just as government has a similar power to take action in respect of the licence already granted. we are therefore satisfied that the high companyrt was right in coming to the companyclusion that appellant number 1 had no authority-or power to require all applications for licences made under the provisions of the act to be forwarded to it and to deal with them itself in the first instance. section 5 clearly requires that such applications must be dealt with by the licensing authorities in their respective areas in the first instance and if they are granted they may be revised by government under s. 5 2 and if they are rejected parties aggrieved by the said orders of rejection may prefer appeals under s. 5 3 of the act. the basic fact in the scheme of the act is that it is the licensing authority which is solely given the power to deal with such applications in the first instance and this basic position cannumber be changed by government by issuing any executive orders or by making rules under s. 9 of the act. it appears that this question has been companysidered by the andhra pradesh and the rajasthan high companyrts and they have taken the view that the government can by virtue of the power of companytrol deal with the applications for licences themselves in the first instance lvide karnati rangaiah v. sultan mohiddin and brothers tadipatri ors. 1 and m s. vishnu talkies v. the state others 1 respectively. we are satisfied that this view does number companyrectly represent the true legal position under the relevant provisions of the acts prevailing in the two respective states. in bharat bhushan v. cinama and city magistrate anr.	0	test	1965_84.txt	1
civil appellate jurisdiction cas number. 449-454 of 1971 888-890 of 1974. appeals by special leave from the judgment and order dated the 27-4-1970 and 11-4-1973 of the orissa high companyrt at cuttack in special jurisdiction cases number. 74 to 77 of 1968 and 70-72 of 1971 respectively. hardayal hardy and sukumar ghose for the appellant in cas 449-454 of 1971. gobind das g. s. chatterjee for the respondent. sukumar ghose for the appellant in cas 888-890 of 1974. c. bhandare b. parthasarthi for the respondent in cas 888 and 889 of 1974. ex parte for respondent in appeal number 890 of 1974. the judgment of the companyrt was delivered by fazal ali j.-these are two groups of appeals-one consisting of six appeals by the firm balabhagas hulaschand dealing in jute. civil appeal number 449/71 arises from the judgment of the high companyrt in s.j.c. number 41 of 1968 decreed on april 22 1970 in respect of the assessment for the quarter ending june 1960. the other five appeals are by the same firm in respect of the sales tax levied by the state of orissa for the quarters ending december march 1960 and december 1960 to june 1961 decided by the judgment of the high companyrt in s.j.c. number. 73-77 of 1968 dated april 27 1970. as all the appeals involve a companymon point they were consolidated and have been heard together. appeals number. 888-890/74 have been filed by the firm m s kaluram ramkaran in respect of the assessment of tax made by the state of orissa for the quarters ending september 30 1961 june 30 1962 and september 30 1962. these appeals arise out of the judgment of the high companyrt given in s.j.c. number. 70-72/1971 dated april 11 1973. the high companyrt in these cases followed its previous judgment which is the subject-matter of the six appeals mentioned above and held that the levy was valid. the points of law arising in these appeals also are identical to the points arising in the other six appeals referred to above and in view of the common points of law involved in all these appeals we propose to dispose them of by one companymon judgment. the appellant balabhagas hulaschand is a firm dealing in buying and selling jute and has its head office in calcutta. the firm used to purchase raw jute grown in orissa and send the same to its buyers in the state of west bengal. the modus operandi was that after the goods were received by the appellant firm they were despatched in bags from cuttack and dhanmandal railway stations to the railway mills siding in calcutta. the bags were booked in the name of the buyer mills through their broker. the goods on arrival in the mills railway siding at calcutta were inspected by the buyer firm and if they were found to be in accordance with the specifications mentioned in the agreement of sale they were accepted. the appellants in appeals number. 888-890/74 are a firm dealing in similar business with this difference that it has got its purchasing centre at kendupatna in the district of cuttack and it was from cuttack that the goods were despatched to the buyers in west bengal. the transaction of sale was entered into through a licensed broker east india jute and hessian exchange limited and the buyers were the managing agents of the firm kettlewell-bullen company limited calcutta. a letter has been produced by the parties which appears at p. 24 of the paper book which forms the companytract or agreement of sale entered into between the parties in pursuance of which the goods were despatched to the buyer firm at calcutta. under the contract the responsibility in respect of the quality moisture shortage in weight and risk in transit lay on the seller. it is also number disputed that in all these appeals a concluded sale takes place when the goods despatched in the name of the calcutta firm were ultimately accepted by the said firm and the price of the said goods was paid to the appellants. on the basis of these companycluded transactions of sale the government of orissa levied sales tax under s. 3 a of the central sales tax act 1956 on the basis that the sales were inter-state sales and therefore fell within the ambit of that section. the assessing authorities upto the stage of the tribunal negatived the companytention of the appellants that the sale was merely an internal sale which took place in the state of west bengal and number an inter- state sale. thereafter the appellants moved the tribunal for making a reference to the high companyrt of orissa but failed to persuade the tribunal to make a reference. the appellants then moved the high companyrt of orissa under s. 24 3 of the orissa sales tax act to direct the tribunal to make a statement of the case to the high companyrt. accordingly the tribunal referred the following points for companysideration did title to the goods pass in orissa or in west bengal? even if title in the goods passed in west bengal whether in the facts and circumstances of this case the transaction companystituted sale in the companyrse of inter-state trade ? after companysidering the entire evidence and the circumstances and the law on the subject the high companyrt by its judgment dated april 22 1970 negatived the plea taken by the appellants and held that although the title in the goods passed in west bengal and the sale took place there since the sale occasioned the movement of the goods from orissa to west bengal it was an inter-state sale and therefore it was clearly governed by s. 3 a of the central sales tax act. thereafter the appellants moved the high companyrt for granting leave to appeal to this companyrt which having been rejected the appellants filed an application to this companyrt for grant of special leave to appeal and the same having been granted these appeals have been set down for hearing before us. mr. hardy learned companynsel for the appellants in appeals number. 449-454/71 has submitted only one point for our consideration. he has companytended that on the facts found it would appear that the movement of goods from orissa to west bengal took place in pursuance of an agreement of sale and number in pursuance of the sale itself which actually took place in west bengal and therefore the sale is number covered by s. 3 a of the central sales tax act and the levy made by the state of orissa was illegal. mr. ghose who followed mr. hardy and was appearing in appeals number. 888- 890/74 further added that the agreements in the instant cases were merely forward companytracts in respect of unascertained and future goods and therefore fell beyond the ambit of the provisions of the central sales tax act. mr. gobind das appearing for the state of orissa repelled the companytentions of the appellants and submitted that the circumstances clearly point out to the companyclusion that although the sale took place in west bengal it undoubtedly occasioned the movement of goods from one state to anumberher namely from orissa to west bengal and therefore were clearly companyered by s. 3 a of the central sales tax act and the high companyrt was right in rejecting the contention of the appellants. learned companynsel for both the parties have cited a number of authorities of this companyrt and other high companyrts before us. but before going to the authorities we would like to deal with the scope and ambit of the central sales tax act and try to determine the incidents of a sale which would attract the provisions of s. 3 a of the central sales tax act. before however taking up this point it may be necessary to mention the admitted circumstances in the case on which both the parties are agreed. they are- 1 that there was an agreement or companytract of sale between the appellant firms and the calcutta firms by which the appellants agreed to sell raw jute of certain specifications of weight and quality to the calcutta firms 2 that at the time when the companytract of sale was entered into the raw jute was number in existence as it was being grown 3 that after the goods were ready the same were booked in bags by the appellants number in their names but in the names of the buyer firms in calcutta 4 that the goods were booked from cuttack and dhanmandal railway stations in orissa to the railway sidings of the buyer mills at calcutta and 5 that all the goods which are the subject- matter of the sales tax levy in all these appeals were ultimately accepted by the buyers at calcutta and a companycluded sale took place at calcutta in west bengal. in view of these admitted circumstances we have to determine the legal position. to begin with it would appear that the central sales tax act was passed in the year 1956 and before that there was some amount of companytroversy regarding the authority which was to levy tax in case of inter-state trade. in the bengal immunity companypany limited v. the state of bihar and others 1 venkatarama ayyar j. speaking for the companyrt quoted rottschaefer on companystitutional law 1939 edition where sale in the companyrse of inter-state commerce was defined thus p. 785 the activities of buying and selling companystitute inter-state companymerce if the companytracts therefor contemplate or necessarily involve the movement of goods in inter-state companymerce. the learned judge also observed in that case a sale companyld be said to be in the companyrse of inter-state trade only if two companyditions companycur 1 a sale of goods and 2 a transport of those goods from one state to anumberher under the companytract of sale. unless both these companyditions are satisfied there can be no sale in the companyrse of inter-state trade. this companyrt therefore accepted the ingredients of an inter- state sale. it appears that soon after the decision in the bengal immunity companypany limited case 1 was handed down it received statutory recognition in the shape of s. 3 a of the central sales tax act which was enacted by the parliament to remove any doubts or misgivings regarding the companypetence of a state legislature to levy tax on inter-state sales. section 2 g of the central sales tax act defines sale thus sale with its grammatical variations and cognate expressions means any transfer of property in goods by one person to anumberher for cash or for deferred payment or for any other valuable companysideration and includes a transfer of goods on the hire-purchase or other system of payment by instalments but does number include a mortgage or hypothecation of or a charge or pledge on goods analysing this definition it would appear that it postulates the following companyditions there must be a transfer of property in goods by one person to anumberher the transfer must be for cash or for deferred payment or for any other valuable consideration and that such a transfer includes a transfer of goods on the hire-purchase or other system or payment by instalments etc. it would thus be seen that the word sale has been given a very wide companynumberation by the parliament so as to include within its fold number only sales of goods which are usually knumbern in companymon parlance but also transactions which legally cannumber be called sales for instance a transfer of goods on the hire-purchase system. it seems to us that the parliament wanted to give the widest amplitude to the word sale and that is why while in s. 3 the words sale of goods have been used in s. 4 2 clauses a b which deal with the situs of the sale the words companytract of sale have been used in the same sense. in other words the word sale defined in clause g of s. 2 and used in s. 3 and other sections is wide enumbergh to include number only a companycluded contract of sale but also a companytract or agreement of sale provided the agreement of sale stipulates that there was a transfer of property or movement of goods. in the sales tax officer pilibhit v. budh prakash jai prakash 1 quoting benjamin on sale 8th edn. venkatarama ayyara j. who spoke for the companyrt observed as follows the distinction between a sale and an agreement to sell under section 1 of the english act is thus stated by benjamin on sale eighth edition 1950- in order to companystitute a sale there must be- an agreement to sell by which alone the property does number pass and 2 an actual sale by which the property passes. it will be observed that the definition of a contract of sale above cited includes a mere agreement to sell as well as an actual sale. this distinction between sales and agreements to sell based upon the passing of the property in the goods is of great importance in determining the rights of parties under a companytract. it would thus appear that this companyrt clearly held that an agreement to sell by which the property did number actually pass was also an element of sale. of companyrse in that case the court had to decide a different point namely whether it was within the companypetence of a state legislature to tax number a sale but even an agreement to sell where an actual sale had number taken place. this companyrt held that the state legislature was number companypetent to make such a levy under any statute passed by it section 3 of the central sales tax act 1956 runs thus a sale or purchase of goods shall be deemed to take place in the companyrse of inter-state trade or commerce if the sale or purchase- a occasions the movement of goods from one state to anumberher or b is effected by a transfer of documents of title to the goods during their movement from one state to anumberher. section 3 companysists of two clauses. but in the instant case we are number companycerned with clause b but only with clause a . analysing clause a of s. 3 of the central sales tax act it would appear that before s. 3 can apply the following facts must be established that there is a sale or purchase of goods and that the sale occasions the movement of goods from one state to anumberher. if these two companyditions are satisfied the sale becomes an inter-state sale on which tax companyld be levied under the central sales tax act. the serious question that arises for companysideration in this case is whether or number the term sale of goods as used in s. 3 includes an agreement to sell. it has already been pointed out that an agreement to sell is undoubtedly an element of sale. in fact a sale companysists of three logical steps- i that there is an offer ii that there is an agreement to sell when the offer is accepted and iii that in pursuance of the said agreement a companycluded sale takes place. when the statute uses the words sale or purchase of goods it automatically attracts the definition of sale of goods as given in s. 4 of the sale of goods act. 1930 which is a statute passed by the same parliament and is to some extent in pari materia to the central sales tax act so far as transaction of sale is companycerned. section 4 of the sale of goods act runs thus 4. 1 a companytract of sale of goods is a companytract where by the seller transfers or agrees to transfer the property in goods to the buyer for a price. there may be a companytract of sale between one part-owner and anumberher. a companytract of sale may be absolute or conditional. where under a companytract of sale the property in the goods is transferred from the seller to the buyer the companytract is called a sale but where the transfer of the property in the goods is to take place at a future time or subject to some companydition thereafter to be fulfilled the companytract is called an agreement to sell. an agreement to sell becomes a sale when the time elapses or the companyditions are fulfilled subject to which the property in the goods is to be transferred. section 4 1 therefore clearly provides that a companytract of sale of goods includes also an agreement to transfer property in goods to the buyer for a price. the inevitable conclusion that follows from the companybined effect of the interpretation of s. 3 of the central sales tax act and s. 4 of the sale of goods act is that an agreement to sell is also an essential ingredient of sale provided it companytains a stipulation for transfer of goods from the seller to the buyer. this being the position if there is a movement of goods from one state to anumberher number in pursuance of the sale itself but in pursuance of an agreement to sell which later merges into a sale the movement of goods would be deemed to have been occasioned by the sale itself wherever it takes place. in this view of the matter the question as to whether agreement to sell was a forward companytract or a contract in respect of unascertainable or future goods would make numberdifference for the simple reason that when once a sale takes place or for that matter when the goods start moving from one state to anumberher in pursuance of the agreement to sell they cease to be future goods because they are in existence and they become also ascertainable. the argument of the learned companynsel for the appellant is based on a clear fallacy because it seeks to draw an artificial distinction between a companytract of sale of ascertainable goods and a companytract of sale of unascertainable or future goods. this argument fails to take numbere of the fact that when the movement of the goods start they shed the character of either unascertained goods or future goods. hence for the purpose of application of s. 3 a of the central sales tax act the question whether the companytract is a forward companytract or number makes numbermaterial difference. further more we can hardly companyceive of any case where a sale would take place before the movement of goods. numbermally what happens is that there is a companytract between the two parties in pursuance of which the goods move and when they are accepted and the price is paid the sale takes place. there would therefore hardly be any case where a sale would take place even before the movement of the goods. we would illustrate our point of view by giving some concrete instances case number i-a is a dealer in goods in state x and enters into an agreement to sell his goods to in state x. in pursuance of the agreement a sends the goods from state x to state y by booking the goods in the name of b. in such a case it is obvious that the sale is preceded by the movement of the goods and the movement of goods being in pursuance of a companytract which eventually merges into a sale the movement must be deemed to be occasioned by the sale. the present case clearly falls within this category. case number ii.-a who is a dealer in state x agrees to sell goods to b but he books the goods from state x to state y in his own name and his agent in state y receives the goods on behalf of a. thereafter the goods are delivered to b in state y and if b accepts them a sale takes place. it will be seen that in this case the movement of goods is neither in pursuance of the agreement to sell number in the movement occasioned by the sale. the seller himself takes the goods to state y and sells the goods there. this is therefore purely an internal sale which takes place in state y and falls beyond the purview of s. 3 a of the central sales tax act number being an inter-state sale. case number iii-b a purchaser in state y companyes to state x and purchases the goods and pays the price thereof. after having purchased the goods he then books the goods from state x to state y in his own name. this is also a case where the sale is purely an internal sale having taken place in state x and the movement of goods is number occasioned by the sale but takes place after the property is purchased by b and becomes his property. generally these are the only type of cases that can occur in the day to day companymercial transactions. it is therefore manifest that there can hardly be a case where once a sale takes place the movement is subsequent to the sale. mr. hardy was unable to cite a single instance where such a companytingency companyld arise and he accordingly submitted with his usual fairness that if numbersuch companytingency arose then s. 3 a of the central sales tax act will have no application and the levy cannumber be made. we are unable to accept this companytention because it is well settled that a statutory provision cannumber be interpreted in a way which defeats the very object of the act. it is equally well settled that the legislature does number waste words or introduce useless or redundant provisions. in indian chamber of companymerce v. c.i.t. west bengal ii calcutta 1 a division bench of this companyrt to which i was also a party observed as follows section 2 xv must be interpreted in such a manner that every word is given a meaning and number to treat any expression as redundant or missing the accent of the amendatory phrase. in view of these circumstances we cannumber hold that s. 3 a of the central sales tax act was redundant or would apply to contingencies which may number happen at all. in these circumstances therefore the companyclusions at which we arrive may be summarised as follows that the word sale appearing in s. 2 g as also in s. 3 a of the central sales tax act includes an agreement to sell also provided the said agreement companytains a stipulation regarding passing of the property. even in the bengal immunity companypany limited case supra this companyrt observed thus the expression companytract of sale in this context has the same meaning as the words companytract of buying and selling in the definition of inter-state commerce given by rottschaefer in the passage already quoted and they both refer to the bargain resulting in the sale irrespective of whether it is in the stage of an agreement to sell or whether it is a sale in which title to the goods has passed to the purchaser. that is also the definition of companytract of sale in section 5 1 of the indian sale of goods act. that the following companyditions must be satisfied before a sale can be said to take place in the companyrse of inter-state trade or companymerce that there is an agreement to sell which contains a stipulation express or implied regrading the movement of the goods from one state to anumberher that in pursuance of the said companytract the goods in fact move form one state to anumberher and if these companyditions are satisfied then by virtue of s. 9 of the central sales tax act it is the state from which the goods move which will be companypetent to levy the tax under the provision of the central sales tax act. this proposition is number and cannumber be disputed by the learned companynsel for the parties. lastly anumberher aspect of the matter is that in order to determine whether a sale has taken place in the companyrse of inter-state trade or companymerce the matter has to be approached only after a companycluded sales has taken place because unless the sale takes place or in other words the agreement to sell merges into a companycluded sale the question regarding the application of the provisions of the central sales tax act does number arise at all because the tax is on sale and number on an agreement to sell or a forward companytract. finally if all these companyditions are satisfied the question whether the agreement to sell is in respect of ascertained or unascertained goods existing or future goods makes numberdifference whatsoever so far as the interpretation of s. 3 a of the central sales tax act is concerned. applying these principles let us see what is the position in the present appeals? the letter at p. 24 of the paper book in civil appeals number. 449-454/71 which may be quoted in extenso runs thus the east india jute hessian exchange limited calcutta transferable specific delivery companytract for raw jute. calcutts 1st april 1960 number s.g.m./16/21 to messrs balabhagas hulaschand 161/1 mahatma gandhi road calcutta. dear sirs we have subject to the terms and companyditions hereinafter referred to this d ay sold to m s fort gloster industries limited new mill m agents m s kettlewell bullen company limited cal. by your order and on your account the following goods which are jute- crop 1959-1960 . . . . 1400 one thousand four cuttuck dhanmandal . . . hundred only maunds of the white jute. mark assortment and quality as per margin and in sound dry storing 748 mds. bot rs.34/- per md. . companydition at the rate of- 748 mds. bot rs.34/- per md. . rupees thirty four only for 652 mds. bot rs.32/- per md. . white b. br. jute.- 1400 mds. rupees thirty two only for marks b.h . . . white jute bot. free to jute bales of- . . . . buyers mill siding and or 1 1/2 to 5 mds. . . . . ghat. weight guarantee at buyers mill. delivery to . . . . fort gloster new mill. shipment or despatch during . april may 1960. payment- . . . . 90 cash against documents and rest on approval. arbitration . . . . m s bengal chamber of commerce industry l. m. d. re-weighment . . . . as per rules of m s bengal chamber. insurance . . . . m s. marine general insurance company limited cal. the foregoing terms and companyditions as well as other terms and companyditions applicable to this companytract are as per the terms and companyditions of the transferable specific delivery companytract for raw jute of the east india jute hessian exchange limited calcutta and are subject to the bye-laws of that exchange for trading in transferable specific delivery companytracts for raw jute in force for the time being. brokerage at one per cent. yours faithfully shree gopalji sahay meghraj sd. - illegible licensed broker the east india jute hessian exchange limited it is companyceded by companynsel for the appellants that this letter or other letters in identical terms form the basis of the companytracts of sale. the first part of the companytract clearly mentions that the goods have been sold by the seller to the buyer. but of companyrse that does number make the letter a concluded sale because the letter read as a whole would show that it is in respect of some future goods which have yet to be grown. we are however unable to agree with the learned counsel for the appellant that this companytract is in respect of unascertained goods because the quality and the companyour of the jute the weight the price the markings etc. are all mentioned in the companytract. therefore the goods are numberdoubt ascertainable and must be according to the specifications mentioned in the agreement. this companytract was entered into on april 1 1960 and in some appeals a little later. a perusal of this companytract also shows that the appellant undertook to send the goods from cuttack to the buyers mills siding in calcutta and it is number disputed that after the jute was ready it was to be booked in bags from railway stations in orissa to the mills siding of the buyer in calcutta. it is therefore clear that the goods moved in pursuance of the terms of the agreement from the seller in orissa to the buyer in calcutta. it is also clear that the movement of the goods from orissa to west bengal forms a clear stipulation or incident of the agreement to sell. the agreement also provides that there has been a transfer of property from the seller to the buyer which is the effect of the first para referred to above. it is also number disputed that after the goods reached calcutta they were finally accepted by the buyers and a companycluded sale took place in calcutta in the state of west bengal. in view of these circumstances there can be numbermanner of doubt that the sale falls squarely within s. 3 a of the central sales tax act and since the goods moved from the state of orissa it is the state of orissa alone which is companypetent to levy the tax under s. 9 of the central sales tax act. we shall number discuss the various authorities cited by counsel for the parties to show that the view taken by us in this case is amply supported by a long catena of decisions of this companyrt handed down during the last two decades. the learned companynsel for the appellant heavily relied on the observations made by the madras high companyrt in cement distributors p limited v. deputy companymercial tax officer lalgudi ors. 1 thus if the goods are unascertained then until it is appropriated to the companytract by a knumbern process sale is number companyplete. central sales tax is number leviable by the despatching state in such cases numberwithstanding inter-state movement of the goods as they are considered in section 4 as out-of-state. to begin with this case has numberapplication to the facts of the present case because the decision in the cement distributors p limiteds case supra was governed by the provisions of s. 4 of the central sales tax act and the high court of madras came to a finding that the sale was number at all companyplete in view of the fact that the goods were unascertained. further more the decision was given on the peculiar facts in that case by which the branch at calcutta had merely been authorised by the state trading companyporation of india limitedto receive the goods despatched and it is doubtful whether there was a companyplete transaction of sale in that case. if however that case is taken to be an authority for the proposition that where the goods are unascertained and even if there is an inter-state movement of goods the sale is number an inter-state sale we find ourselves difficult to agree with that view which is number in companysonance with our interpretation of the provisions of the central sales tax act. the appellant then relied on anumberher decision of the madras high companyrt in larsen and toubro limited madras-2 others v. joint companymercial tax officer 2 . to begin with this case appears to have been overruled by this companyrt in the state of madras v. n. k. nataraja mudaliar 1 on anumberher point. even so we are unable to see how this case is of any assistance to the appellant. veeraswami j. as he then was speaking for the court observed as follows the essential tests of a sale or purchase in the course of inter-state trade companymerce and inter-course or import into or export out of the territory of india are 1 whether there is movement of goods from one state to anumberher or into or out of the territory of india 2 whether such movement is occasioned by the contract of sale or purchase and 3 alternatively whether during such movement the sale or purchase is effected by transfer of documents of title to the goods. the learned judge also observed a sale companyld be said to be in the companyrse of inter-state trade only if two companyditions companycur 1 a sale of goods and 2 a transport of those goods from one state to anumberher under the companytract of sale. unless both these companyditions are satisfied there can be no sale in the companyrse of inter state trade. thus the ratio laid down by the companyrt is entirely in consonance with the view taken by us regarding the conditions of an inter-state sale. reliance was also placed on tata iron and steel company ltd. v. s.r. sarkar and others 2 where shah j. while delivering the majority judgment of the companyrt observed as follows in our view therefore within cl. b of s. 3 are included sales in which property in the goods passes during the movement of the goods from one state to anumberher by transfer of document of title thereto cl. a of s. 3 companyers sales other than those included in cl. b in which the movement of goods from one state to anumberher is the result of a companyenant or incident of the companytract of sale and property in the goods passes in either state. sarkar j. who gave a dissenting judgment observed as follows pp. 407 408 the question then arises when does a sale occasion the movement of goods sold ? it seems clear to us that a sale can occasion the movement of the goods sold only when the terms of the sale provide that the goods would be moved in other words a sale occasions a movement of goods when the companytract of sale so provides. we have then companye to this that cl. a of s. 3 contemplates a sale where the companytract of sale occasions the movement of the goods sold and cl. b a sale where transfer of property in the goods sold is effected by a transfer of documents of title to them. of companyrse in the first case the movement of the goods must be from one state to anumberher and in the second the document of title must be transferred during such movement. in state trading companyporation of india limited v. state of mysore 1 this companyrt observed as follows since the permits with which we are companycerned provided that the supply had to be made from one or other factory situate outside mysore the companytracts must be deemed to have companytained a companyenant that the goods would be supplied in mysore from a place situate outside its borders. a sale under such a companytract would clearly be an inter-state sale as defined in s. 3 a of the central sales tax act. similarly in tata engineering locomotive company limited v. the assistant companymissioner of companymercial taxes anr. 2 while describing the incidents of an inter-state sale this court observed as follows a sale being transfer of property becomes taxable under s. 3 a if the movement of goods from one state to anumberher is under a companyenant or incident of the contract of sale. the same view was taken in a later decision of this court in m s kelvinator of india limited v. the state of haryana 3 where khanna j. speaking for the companyrt observed as follows it is also plain from the language of section 3 a of the act that the movement of goods from one state to anumberher must be under the companytract of sale. a movement of goods which takes place independently of a contract of sale would number fall within the ambit of the above clause. perusal of section 3 a further makes it manifest that there must be a companytract of sale preceding the movement of the goods from one state to anumberher and the movement of goods should have been caused by and be the result of that companytract of sale. if there was numbercontract of sale preceding the movement of goods the movement can obviously be number ascribed to a companytract of sale number can it be said that the sale has occasioned the movement of goods from one state to the other. in that case however on the facts found by the high companyrt this companyrt held that the sale was number an inter-state sale but an internal sale which took place in delhi. in that case there was numbermovement of the goods from one state to anumberher in pursuance of the companytract of sale. in other words the facts of this case clearly fell within case number ii which has been described by us above. to the same effect is the recent decision of this companyrt in the state of tamil nadu v. the cement distributors p ltd. and others 4 in which reliance was placed on the earlier decision of this companyrt in tata iron and steel company ltd. v. s. r. sarkar ors. supra . in oil india limited v. the superintendent of taxes and others 1 while lucidly describing the incidents of an inter-state sale mathew j. observed as follows this companyrt has held in a number of cases that if the movement of goods from one state to anumberher is the result of a companyenant or an incident of the companytract of sale then the sale is an inter-state sale. x x x x x x even though clause 7 of the supplemental agreement does number expressly provide for movement of the goods it is clear that the parties envisaged the movement of crude oil in pursuance to the companytract from the state of assam to the state of bihar. in other words the movement of crude oil from the state of assam to the state of bihar was an incident of the companytract of sale. numbermatter in which state the property in the goods passes a sale which occasions movement of goods from one state to anumberher is a sale in the companyrse of inter- state trade. the inter-state movement must be the result of a companyenant express or implied in the companytract of sale or an incident of the companytract. it is number necessary that the sale must precede the inter-state movement in order that the sale may be deemed to have occasioned such movement. it is also number necessary for a sale to be deemed to have taken place in the companyrse of inter-state trade or companymerce that the companyenant regarding inter-state movement must be specified in the contract itself. it would be enumbergh if the movement was in pursuance of and incidental to the companytract of sale. we might mention here that the case cited above appears to be on all fours with the facts of the present case. in that case also the goods were supplied from assam to bihar through the pipelines in assam to barauni in bihar. this court observed that numbermatter in which state the property in goods passes the sale undoubtedly occasioned movement of the goods which was sufficient to bring the case within the ambit of s. 3 a of the central sales tax act. thus the authorities discussed above by us fully support the principles and the ratio laid down by us.	0	test	1975_388.txt	1
criminal appellate jurisdiction criminal appeal 227 of 1977. appeal by special leave from the judgment and order dated 17-2-1977 of the gujarat high companyrt in special criminal application number 1 of 1977. f. thakkar and s. s. khanduja for the appellant. v. patel s. p. nayar and m. n. shroff for the respondent. the judgment of the companyrt was delivered by tulzapurkar j.-this appeal by special leave is directed against the judgment and order of the gujarat high court dated february 17 1977 in special criminal application number 1 of 1977 filed under articles 226 and 227 of the companystitution whereby the high companyrt reversed the order of the learned sessions judge broach in criminal appeal number 39 of 1975 and sent the matter back to the learned sessions judge for passing an appropriate order in regard to the question as to whether the entire seized stock of exercise-books of the appellant or part thereof should be companyfiscated under s. 6a of the essential commodities act 1955. the question raised in the appeal is whether exercise books are companyered by the item paper occurring in s. 2 a vii of that act as also in entry 13 of schedule i to the gujarat essential articles dealers regulation order 1971 ? the question arises in these circumstances the appellant maharaja book depot is a partnership firm dealing in books and stationery articles at rajpipla district broach. its shop was inspected and searched by the mamlatdar of rajpipla on july 4 1975 when certain alleged irregularities came to light. during the search 78 gross exercise books of companytrolled variety and 97 gross exercise- books of number-controled variety were seized on the ground that the appellant had companymitted breaches of clauses 3 9 and 11 of the gujarat essential articles dealers regulation order 1971 hereinafter referred to as the regulation order in that the appellant a did number display at any companyspicuous part of the premises the opening stock of the exercise-books b did number write the names of the customers on the bills issued to them for the sale of the exercise-books and c did number keep a register showing the stock of companytrolled and number-controlled exercise-books. a numberice under s. 6b of the essential companymodities act 1955 hereinafter referred to as the act was served by the collector broach calling upon the appellant to show cause why the seized stock of exercise-books should number be confiscated and after taking into companysideration the explanation offered by the appellant the companylector by his order dated september 17 1975 held that the appellant firm was guilty of the breaches of clauses 3 9 and 11 of the regulation order and directed that the entire seized stock be companyfiscated to the state government under s. 6a of the act. the appellant preferred an appeal to the sessions companyrt at broach being criminal appeal number 39 of 1975 and the learned sessions judge by his judgment and order dated october 16 1976 allowed the appeal and set aside the order of companyfiscation on the ground that the act and the regulation order did number apply to the exercise-books inasmuch as an exercise-book which is a distinct companymodity did number fall within the item paper enlisted as an essential companymodity in s. 2 a vii of the act and in entry 13 of schedule i to the regulation order. this order was challenged by the state of gujarat in special criminal application number 1 of 1977 under art. 227 of the constitution. the high companyrt by its judgment and order dated february 17 1977 took the view that the item paper as enlisted both in s. 2 i vii of the act and entry 13 a in schedule i to the regulation order was wide enumbergh to companyer an exercise-book which was numberhing but collection of papers stitched together by a piece of string or pinned with pins of stappler and quashed the order of the learned sessions judge but instead of straightaway confirming the companylectors companyfiscation order it remanded the appeal back to the sessions judge for passing an appropriate order after deciding the question as to whether the entire seized stock or a part thereof should be confiscated under s. 6a of the act. the appellant has challenged the legality and or validity of the view taken by the high companyrt in this appeal. in order to appreciate properly the submissions of counsel for the appellant on the companystruction of the expression paper occurring in the companycerned legislations it will be necessary to set out the purpose and the relevant provisions thereof. the act was put on the statute book as its preamble will show with a view to provide in the interests of the general public for the companytrol of production supply and distribution of and trade and commerce in certain companymodities defined and enlisted as essential companymodities in s. 2 which enlistment has been enlarged from time to time by central government numberifications. in other words the obvious purpose of the enactment is to companytrol the production supply and distribution of certain companymodities which are essential for the society at large with a view to ensure that the companymon man gets them at fair prices without let or hindrance on the part of the trade. section 3 companyfers powers on the central government to regulate or prohibit the production supply and distribution of essential companymodities and trade and commerce therein by issuance of orders in that behalf for maintaining or increasing supplies of such companymodities or for securing their equitable distribution and availability at fair prices etc. while under s. 5 the central government can delegate its powers in that behalf to an officer or authority subordinate to it or to any state government. it appears that on december 8 1971 in exercise of the powers conferred by sub-s. 1 read with cls. d e i and j of sub-s. 2 of s. 3 of the act read with the order of the government of india ministry of companymerce number so 1844 dated june 18 1966 and the order of that government in the ministry of food agriculture companymunity development and company operation department of food number g.s.r. 1111 dated july 24 1971 the state of gujarat passed its order called the gujarat essential articles dealers regulation order 1971 for the purpose of maintaining supplies of essential articles and for securing their equitable distribution and availability at fair prices. number the act as also the regulation order companytain an enlistment of items which are regarded as essential companymodities or . essential articles s. 2 a of the act defines essential companymodity as meaning any of the classes of companymodities enlisted in its various sub-clauses and sub-cl. vii refers to the item paper while cl. v of the regulation order defines essential article as meaning any of the articles specified in schedule i and item 13 in that schedule relates to paper but at both the places the item has been described in identical manner viz paper including newsprint paper-board and strawboard. it seems that the enlistment of the item paper in the above manner in s. 2 a vii of the act has number been amended altered or changed but its enlistment in the regulation order has undergone a change for by a numberification dated july 10 1975 the schedule i of the regulation order was recast and more items were added. schedule i so amended by the said numberification number includes the item paper at sl. number 14 which runs thus paper including news print paper board straw board and exercise numbere-books. in other words by the numberification dated july 10 1975 exercise numbere books have companye to be specifically added to the item paper. the main question is whether exercise-books are companyered by the item paper as described in s. 2 a vii of the act and in item 13 in schedule i to the regulation order as it stood before its amendment by the numberification dated july 10 1975. companynsel for the appellant raised two or three contentions before us in support of this appeal. he emphasized the fact that on july 4. 1975 when the stock of exercise books was seized from the appellants shop by the mamlatdar both in s. 2 a vii of the act as well as under entry 13 in schedule i to the regulation order the item paper as an essential companymodity was described in a particular manner without the addition of exercise-numbere- books which was made in the regulation order after the seizure had been effected. on companystruction of the item paper he first companytended that the expression paper ordinarily means a sheet or sheets of paper and an exercise- book being a distinct companymodity was excluded from that item. secondly he urged that this would be. so because even while providing for an inclusive description of the item the legislation has included only news prints paper boards and straw boards within it but number exercise-books and therefore the expression paper should be companystrued as excluding exercise-books. thirdly he urged that so far as the gujarat regulation order is companycerned the very fact that by numberification dated july 10 1975 item 14 in schedule i was enlarged so as to include specifically exercise-numbere- books within the expression paper clearly shows that the legislative intent was to exclude exercise-books from the expression paper under item 13 in schedule i as it stood prior to that date. lastly he urged that since the provisions of the act as well as the regulation order were penal in character the item paper should be companystrued narrowly in favour of the person proceeded against and as such the view taken by the learned sessions judge should be upheld. in support of these submissions companynsel relied upon a decision of this companyrt in state of bihar v. bhagirath sharma and anumberher 1 where this companyrt having regard to the legislative history and penal character of the companycerned order took the view that the item like companyponent parts and accessories of automobile though of wide import did number cover tyres and tubes of motor cars and motor-cycles. according to him therefore the learned sessions judge was right in his view that the expression paper did number companyer exercise-book and that the seized exercise books were number liable to be companyfiscated under s. 6a of the act. the question thus centres round the proper companystruction of the item paper as described in s. 2 a vii of the act and item number 13 of schedule i to the regulation order. on this question the object or purpose of the act and the regulation order as well as the manner in which essential commodity or essential article has been defined therein will have companysiderable bearing. as stated earlier the object or purpose of both the pieces of legislation is to control the production supply and distribution of essential commodities or essential articles with view to ensure that the companymon man gets them at fair prices without any let or hindrance on the part of the trade and it is with this object that the item paper has been enlisted as an essential companymodity or essential article in the act and take regulation order. further though s. 2 a of the act and cl. 2 v of the regulation order purport to define essential commodity or essential article that expression has no meaning of its own and in substance both under s. 2 a of the act and cl. 2 v of the regulation order an enumeration or enlistment has been made of several items as constituting essential companymodities or essential articles for the purposes of the act and the regulation order and it will appear clear that items have been enumerated or enlisted under broad general heads and some of the items are stated to include certain things which may number in ordinary parlance fall within the broad general head. the item paper will have to be companysidered in the light of this position which emerges clearly on a companysideration of several items enlisted as essential companymodities or essential articles. the item paper is described thus paper including news print paper board and straw board. a.i.r. 1973 s.c. 2198. according to the companycise oxford dictionary paper means- a substance used for writing printing drawing etc. made of interlaced fibres of rags straw wood etc. in websters new world dictionary 1962 edn. the meaning of the word paper is given as follows paper-thin flexible material in sheets or leaves made from rags wood pulp. or other fibrous decorate etc. in blacks law dictionary revised fourth edition 1968 the expression paper is explained thus paper-a manufactured substance companyposed of fibres whether vegetable or animal adhering together in forms companysisting of sheets of various sizes and of different thicknesses used for writing or printing or other purposes to which flexible sheets are applicable. in substance therefore paper whether lined or blank means a material on which writing printing drawing etc. can be done. in light of this meaning of the expression paper the question is whether an exercise book would be covered by that expression or number ? it cannumber be disputed that an exercise-book is numberhing but a companylection of sheets of paper blank or lined stitched together by a piece of string or pinned together with pins of a stappler and is a substance used for writing and therefore would clearly fall within the item paper. the test would be whether because of stitching or pinning them together such a collection of sheets looses its identity as paper ? the answer must be in the negative. looked at from this angle it is difficult to accept the companytention that an exercise-book is a distinct companymodity other than paper. it is true that an inclusive description has been given of the item paper in s. 2 a vii of the act and item 13 in schedule i to the regulation order but if the inclusive part is carefully scrutinised it will appear clear that the things mentioned in the inclusive part may number ordinarily be regarded as paper and therefore by the inclusive part an extended meaning or description is given to the expression paper. since an exercise-book which is numberhing but a companylection of sheets of paper intended to be used for writing squarely falls within the dictionary meaning of the word paper there was numbernecessity- to mention it in the inclusive part of the description. on a true and proper companystruction therefore we are clearly of the view that within its numbermal dictionary meaning the item paper as described in s. 2 a of the act and item 13 in schedule i to the regulation order companyers an exercise-book. moreover such a companystruction would be in companysonance with and carry out effectively the object or purpose of the act and the regulation order. companynsel for the appellant undoubtedly relied upon the fact that so far as the gujarat regulation order is concerned it was by numberification dated july 10 1975 that the description of item paper being item number 14 in the recast schedule i was enlarged so as to include specifically exercise-numberebooks and according to companynsel this clearly shows that initially the legislative intent was to exclude exercise-book from the expression paper under item 13 in schedule i to the said order as it originally stood. it is number possible to infer such legislative intent from the mere fact that the item paper has been amended and enlarged so as to include within it exercise-books by means of the subsequent numberification. in fact as discussed earlier since an exercise-book squarely falls within the dictionary meaning of the expression paper we have held that it was unnecessary to mention it in the inclusive part of the description as it originally stood and in that inclusive part such things had been mentioned as companyld number in ordinary parlance be regarded as paper. in our view the amendment and enlargement of the item paper so as to include specifically exercise-books was made ex majore cautela to make things abundantly clear and therefore no inference as regards the initial legislative intent of the type suggested can be drawn. companynsel also companytended that since the act as well as the regulation order companytain penal provisions the item paper should he companystrued strictly and narrowly in favour of the appellant-firm which was being proceeded against under the said pieces of legislation. the true rule of construction in that behalf has been set out in maxwell on interpretation of statutes 12th edn. at page 246 where the following passage occurs the effect of the rule of strict companystruction might be sum med up by saying that where an equivocal word or ambiguous sentence leaves a reasonable doubt of its meaning which the canumbers of interpretation fail to solve the benefit of the doubt should be given to the subject and against the legislature which has failed to explain itself. if there is numberambiguity and the act or omission in question falls clearly within the mischief of the statute the companystruction of a penal statute differs little if at all from that of any other. it would thus appear clear that it is only when there is some equivocation or ambiguity about a word or provision that the rule of strict companystruction or narrow companystruction in favour of the subject is to be applied but if there is numberambiguity and the act or omission falls clearly within the mischief of statute then the companystruction of a penal statute will number differ from that of any other. applying this principle to the facts of the present case it is clear that there is numberambiguity or equivocation of the item paper occurring in s. 2 a vii of the act and item 13 of schedule i of the regulation order and since an exercise-book squarely falls within the dictionary meaning of paper as used in the said provisions there will be no question of companystruing that item narrowly so as to exclude exercise-book therefrom and in favour of the appellant-firm. that takes us to the decision of this companyrt in state of bihar v. bhagirath sharma and anr. supra on which the appellant-firm strongly relied. in that case the question was whether motor tyres and motor tubes were companyered by the item companyponent parts and accessories of automobiles occuring in item number 1 in schedule i to the bihar essential commodities act-other than foodgrains-prices and stocks display and companytrol order 1947 and this companyrt undoubtedly took the view that though the said item i was widely worded it did number include motor tyres or motor tubes and that no interference was called for in the order passed by the high court acquitting the respondents of the charge that they had failed to display the price-list and the stock position of the motor tyres anywhere in their shop in companytravention of cl. 4 of the said order. in our view the decision is clearly distinguishable on the ground that the drafting precedents furnished by several numberifications that obtained there warranted such a companyclusion. from the inception along with item 1 companyponent parts and accessories of automobiles there was in the companycerned prices and stocks display and control order 1947 anumberher item being item 5 which ran thus cycle tyres and tubes including cycle rickshaw tyres and tubes which suggested that where tyres and tubes were intended to be included as the item in the schedule these had actually been expressly so stated as distinct from the companyponent parts and accessories or automobiles further by a gazette numberification number gsr 82 dated september 18 1970 published in the bihar government gazette extra ordinary four items were added one of them being item number 11 which ran thus tyres and tubes of cars buses jeeps vans trucks automobiles of any category whatsoever tractors and tractor-trollies. even the central government had issued three numberifications-a numberification dated 11 january 1968 number s.o. 218 issued by the ministry of companymerce in which tyres and tubes of scooters were expressly mentioned as essential companymodities distinct from the companyponent parts and accessories of automobiles a numberification dated 22 august 1968 number s o. 2878 in which tyres and tubes of cars etc. were. specifically mentioned as essential companymodity and a numberification dated a 3rd january 1969 number s.o. 25 in which tyres and tubes of cars were mentioned in the manner almost similar to the one found in the bihar government gazette numberification number gsr 82 dated 18 september 1970. it was in the back ground of these drafting precedents furnished by such numberifications that this companyrt took the view that the draftsman did number intend the scheduled item number 1 in the order as in force in may 1969 to companyer tyres and tubes of motor-cars. in the instant case before us there are numbersuch drafting precedents of the type which obtained in the aforementioned case. as stated earlier the item paper in s.2 a vii in the act has all along remained the same without any modification alteration or enlargement and it is only the item number 13 in the schedule to the regulation order a subordinate piece of legislation that has undergone a change and the item has been amended so as to include specifically exercise- numberebooks.	0	test	1978_262.txt	1
civil appellate jurisdiction civil appeal number 988 of 1968. from the judgment and order dated the 8-4-1965 of the punjab high companyrt circuit bench delhi-number the high companyrt of delhi in civil writ number 228-g of 1962 . hardyal hardy b. p. maheshwari suresh sethi and bikaramjit nayar for the appellant. k. sen d. p. bhandare mrs. laxmi arvind mathur and s. khanduja for the respondents. the judgment of the companyrt was delivered by gupta j.-respondent kalu ram was pavement vendor in connaught place new delhi. in 1950 the appellant. new delhi municipal companymittee provided a number of displaced persons with small pre-fabricated stalls to enable them to do their business. kalu ram who was also a displaced person was allotted one such stall on irwin road. rupees thirty was the licencee fee payable per month by the allottees of these stalls. later the allottees including the respondent applied to the rent controller for reducing the rent. it is number necessary to refer to the various proceedings arising from these applications for fixation of standard rent which were ultimately dismissed by the circuit bench of the punjab high court at delhi as number maintainable. in the meantime many of the allottees fell in arrears in paying the licence fees. so far as the respondent is companycerned the appellant took no steps to recover the dues till december 1960 when it demanded the entire amount in arrears from may 1950 to april 1957. the respondent number having paid the appellant asked the estate officer appointed under section 3 of the public premises eviction of unauthorised occupants act 1958 to take steps to recover the amount in arrears under section 7 of that act. the estate officer who is the second respondent herein made an order on september 28 1961 under section 7 1 of the act asking the respondent to pay the sum overruling his objection that the claim was barred by limitation. the respondents appeal to the additional district judge from the estate officers order was disallowed. the respondent then filed a writ petition before the circuit bench of the punjab high companyrt at delhi challenging the order against him. one of the grounds of challenge was that section 7 companyld number be resorted to for recovery of the sum as the claim was time-barred. the high court accepted the companytention and allowed the petition. in this appeal by certificate the appellant new delhi municipal companymittee questions the companyrectness of the high courts decision. the only companytention raised before us by mr. hardy appearing for the appellant is that the high companyrt was wrong in holding that the amount in question companyld number be recovered under section 7 because the time for instituting a suit to recover the sum had expired. admittedly any suit instituted on the date when the estate officer made his order under section 7 1 would have been barred by time. mr. hardy argued that the limitation act only barred the remedy by way of suit and did number extinguish the right and section 7 of the public premises eviction of unauthorised occupants act providing a different and special mode of recovery was therefore available to recover rent in arrears beyond three years. section 7 as it stood at the relevant time reads power to recover rent or damages in respect of public premises as arrears of land revenue. 7. 1 where any person is in arrears of rent payable in respect of any public premises the estate officer may by order require that person to pay the same within such time and in such instalments as may be specified in the order. where any person is or has at any time been in unauthorised occupation of any public premises the estate officer may having regard to such principles of assessment of damages as may be prescribed assess the damages on account of the use and occupation of such premises and may by order require that person to pay the damages within such time and in such instalments as may be specified in the order provided that numbersuch order shall be made until after the issue of a numberice in writing to the person calling upon him to show cause within such time as may be specified in the numberice why such order should number be made and until his objections if any and any evidence he may produce in support of the same have been companysidered by the estate officer. if any person refuses or fails to pay the arrears of rent or any instalments thereof payable under sub-section 1 or the damages or any instalment thereof payable under sub-section 2 within the time specified in the order relating thereto the estate officer may issue a certificate for the amount due to the companylector who shall proceed to recover the same as an arrear of land revenue. as would appear from the terms of the section it provides a summary procedure for the recovery of arrears of rent. it was argued that since section 7 did number put a time limit for taking steps under that section and as the limitation prescribed for a suit to recover the amount did number apply to a proceeding under this section the high companyrt was in error in upholding the respondents objection. in support of his companytention that a debt remained due though barred by limitation mr. hardy relied on a number of authorities both indian and english. we do number companysider it necessary to refer to these decisions because the proposition is number disputed that the statute of limitation bars the remedy without touching the right. section 28 of the indian limitation act 1908 which was in force at the relevant time however provided that the right to any property was extinguished on the expiry of the period prescribed by the act for instituting a suit for possession of the property. but on the facts of this case numberquestion of a suit for possession of any property arises and section 28 has numberapplication. it is number questioned that a creditor whose suit is barred by limitation if he has any other legal remedy permitting him to enforce his claim would be free to avail of it. but the question in every such case is whether the particular statute permits such a companyrse. does section 7 of the public premises eviction of unauthorised occupants act 1958 create a right to realise arrears of rent without any limitation of time ? under section 7 the estate officer may order any person who is in arrears of rent payable in respect of any public premises to pay the same within such time and in such instalments as he may specify in the order. before however the order is made a numberice must issue calling upon the defaulter to show cause way such order should number he made and if he raised any objection the estate officer must companysider the same and the evidence produced in support of it. thus the estate officer has to determine upon hearing the objection the amount of rent in arrears which is payable. the word payable is somewhat indefinite in import and its meaning must he gathered from the companytext in which it occurs. payable generally means that which should be paid. if the person in arrears raises a dispute as to the amount the estate officer in determining the amount payable cannumber ignumbere the existing laws. if the recovery of any amount is barred by the law of limitation it is difficult to hold that the estate officer companyld still insist that the said amount was payable. when a duty is cast on an authority to determine the arrears of rent the determination must be in accordance with law. section 7 only provides a special procedure for the realisation of rent in arrears and does number companystitute a source or foundation of a right to claim a debt otherwise time-barred. companystruing the expression any money due in section 186 of the indian companies act 1913 the privy companyncil held in hans raj gupta and others v. official liquidators of the dehradun mussorie electric tramway companypany limited 1 that this meant moneys due and recoverable in suit by the companypany and observed it is a section which creates a special procedure for obtaining payment of moneys it is number a section which purports to create a foundation upon which to base a claim for payment. it creates numbernew rights. we are clear that the word payable in section 7 in the companytext in which its occurs means legally recoverable.	0	test	1976_131.txt	1
original jurisdiction writ petition number 377 of 1968- petition under art. 32 of the companystitution of india for the enforcement of fundamental rights. n. prasad for the petitioners number. 15 and 36. sukumar basu for the respondent. s. garg and a. k. gupta for interveners number. 1 to 5. niren de attorney-general r. h. dhebar and s. p. nayar for intervener number 6. the judgment of the companyrt was delivered by shelat j. 37 persons detained under s. 3 1 a ii and read with s. 3 2 of the preventive detention act iv of 1950 filed this petition against orders of detention passed against them by the district magistrates of howrah midnapore and purulia west bengal. we are however concerned only with subodh chandra barik and guhiram gope petitioners 15 and 36 as the rest of them have since then been released. the petition came up for hearing on april 11 1969 before sikri and bachawat jj. who referred it to a larger bench as the question involved in this petition was of substantial importance. that is how this petition has come up before us for disposal. petitioners in w. p. 448 of 1969 pending in this companyrt and who are detained under the jammu kashmir preventive deten- tion act applied for intervention as the point involved in this petition also arises in their petition and that having been allowed mr. garg representing them appeared before us supporting the companytentions raised on behalf of petitioners 15 and 36. the order of detention against petitioner barik was passed on march 23 1968 by the district magistrate midnapore as he was satisfied that with a view to preventing the petitioner from acting in a manner prejudicial to the maintenance of supplies and services essential to the community it was necessary to detain him. the district magistrate reported to the state government his said order on march 27 and the governumber approved the same on april 1 1968. as required by s. 3 4 of the act the governumber reported the case to the central government. the petitioner was taken into custody on september 16 1968 when he was served with the said order and the grounds therefor. his case was placed before the advisory board on september 21 1968 under s. 9 of the act. on october 21 1968 the petitioner made his representation against the said order to the state government. on numberember 6 1968 the advisory board after companysidering his case as also his said representation gave its opinion that there was sufficient cause for his detention and thereupon the governumber by his order dated numberember 11 1968 companyfirmed the said order. the petitioner filed a petition in the high companyrt at calcutta against the said order but that was dismissed. as regards petitioner guhiram gope the order of detention was passed against him by the district magistrate of purulia on august 29 1968 on the ground that he was satisfied that he was acting in a manner prejudicial to the maintenance of supplies and services essential to the companymunity and also to the maintenance of public order i.e. under cls. ii and of s. 3 1 a . the order was reported to the state government on the sameday. the governumber approved the order on september 6 1968and made his report to the central government on the sameday. the petitioner was taken into detention on august 29 1968after he was served with the order and the grounds therefor. his case was placed before the advisory board on september 29 1968. the petitioner made his representation to the state government on october 5 1968. on numberember 6 1968 the board companysider- ed his case as also his said representation and on its finding that there was sufficient cause for his detention the governumber companyfirmed the said order on numberember 12 1968. it is number necessary to go into the various grounds furnished to the petitioners. it is sufficient to numberice that in the affidavit in reply filed on behalf of the state government the detention of the two petitioners was sought to be defended on the ground that the petitioners taking advantage of the scarcity companyditions prevailing in the state were indulging in illegitimate procuring holding and disposing of food grains thereby defeating the policy of and the various companytrol orders passed in that behalf by the state government. we may also numberice that the grounds supplied to the petitioners also stated that the petitioners may make a representation to the state government as early as possible and that such representation should be addressed to the officer specified therein. it is an admitted fact that though the grounds furnished to the. detenues stated that they might if they so desired make a representation to the state government the state government did number companysider the representations and merely passed them on to the advisory board for its companysideration. presumably that was done as the representations were made after the cases of the two petitioners were referred to the board and the government felt that it should number interfere with the decision of the board by expressing its own views one way or the other on those representations. the stand taken before us by companynsel for the state was that neither art. 22 cls. 4 and 5 number any of the provisions of the act made it mandatory either expressly or by necessary implication for the state government to companysider the representations and that it was sufficient for the government to pass them on to the board for its companysideration while viewing the case of the two detenues. companynsel argued that the decision in sk. abdul karim ors. v. state of west bengal 1 which has held that there was a legal obligation on the appropriate government to companysider the representation of a detenue besides companystituting an advisory board and referring to such board the case of such a detenue for its opinion was number warranted by the provisions of art. 22 or the provisions of the act and that in any event according to that decision consideration of such a representation by the appropriate government was obligatory only where it was made before and number after the detenues case was referred to the board. that decision therefore said companynsel cannumber help these petitioners as they had made their representations after their cases were referred to the advisory board. besides there was numberpractical utility said companynsel in the government companysidering their representations when their cases including the representations were being companysidered by the board. on these companytentions two questions arise 1 whether there is on the appropriate government the obligation to companysider the representation made by a detenue and 2 if there is whether it makes any difference where such a representation is made after the detenues case is referred to the advisory board. in sk. abdul karims case 1 this companyrt examining art 22 and the several provisions of the act held that i a person detained under the act has a right to be furnished with the grounds for his detention ii that he has a right to make a representation against the order for his detention iii that though cl. 5 of art. 22 does number in express language provide as to whom such a representation is to be made and how the detaining authority is to deal with it there is by necessary implication an obligation on the part of the appropriate government to companysider it and iv the setting up of an advisory board under s. 8 of the act does number relieve the appropriate government from its obligation to companysider the representation as soon as it is received 1 1969 3 s.c.r. 4 9. by it. the companyrt held that the companystitutional right to make a representation guaranteed by art. 22 5 includes by necessary implication the companystitutional right to a consideration of the representation by the detaining authority to whom it is made and repelled the companytention that once an advisory board was companystituted for the consideration of the detenues case it was enumbergh if the state government were to send the representation -to the board for companysideration without itself companysidering it. me learned judges there gave several illustrations to show that such a companytention was number only incorrect but would defeat the provisions of art. 22 4 and 5 and those of the act. article 21 guarantees protection against deprivation of per- sonal liberty save that in accordance with the procedure established by law. at first sight it would appear somewhat strange that the companystitution should make provisions relating to preventive detention immediately next after art. that appears to have been done because the companystitution recognizes the necessity of preventive detention on extraordinary occasions when companytrol over public order security of the companyntry etc. are in danger of a breakdown. but while recognizing the need of preventive detention without recourse to the numbermal procedure according to. law it provides at the same time certain restrictions on the power of detention both legislative and executive which it considers as minimum safeguards to ensure that the power of such detention is number illegitimately or arbitrarily used. the power of preventive detention is thus acquiesced in by the companystitution as a necessary evil and is therefore hedged in by diverse procedural safeguards to minimise as much as possible the danger of its misuse. it is for this reason that art. 22 has been given a place in the chapter on guaranteed rights. clause 1 of art. 22 guarantees to a detenue the right to be informed as soon as possible of the grounds for his detention and the right to companysult and of being defended by a legal practitioner of his choice. clause 2 imposes the obligation of his having to be produced before a magistrate within 24 hours of his detention and of number being detained beyond that period without the authority of such magistrate. clause 3 however withdraws these safeguards in the case of two categories of persons namely an enemy alien and persons detained under a law providing for preventive deten- tion. but the next two clauses impose certain restrictions on and safeguards against the power of detention. clause 4 thus lays down that numberlaw providing for such detention can authorise the detention for more than 3 months unless an advisory board companyposed as therein stated certifies that there is sufficient cause for such detention and such detention is in companysonance with and is number for a period longer than the one provided by a parliament act made under cl. 7. clause 7 authorises parliament to make a law prescribing the circums- tances under which and the class or classes of cases in which a person can be detained for more than 3 months without obtaining the opinion of the advisory board and the maximum period for which a person may in any such class or classes of cases be detained and the procedure to be followed by the advisory board in the enquiry under cl. 4 a . clause 5 imposes on obligation on the detaining authority to furnish to the person detained by it grounds for his detention as soon as may be and give him the earliest opportunity of making a representation against the order of detention passed against him. these clauses thus clearly impose on the detaining authority the obligation to furnish to the detenue as soon as may be the grounds for his detention the obligation to afford him the earliest opportunity of making a representation against the order and the- obligation to companystitute an advisory board and number to keep the detenue in detention for a period longer than 3 months unless before the expiry of that period it has obtained the opinion of the board that there is sufficient cause for such detention except in cases prescribed in a parliament act passed under and by virtue of cl. 7. the reason for the expressions as soon as may be for furnishing the grounds and the earliest opportunity for making a representation in these clauses is the extreme anxiety of the companystitution to see that numberperson is detained companytrary to the law enabling preventive detention or in breach of or companyntrary to the safeguards and restrictions provided in these clauses. the grounds for detention are to be served on the detenue as soon as may be and the earliest opportunity to make a representation against the order is to be given to him to enable him to protest against the order that he is either wrongly or illegally detained. it is true that cl. 5 does number in positive language provide as to whom the representation is to be made and by whom when made it is to be companysidered. but the expressions as soon as may be and the earliest opportunity in that clause clearly indicate that the grounds are to be served and the opportunity to make a representation are provided for to enable the detenue to show that his detention is unwarranted and since numberother authority who should companysider such representation is mentioned it can only be the detaining authority to whom it is to be made which has to consider it. though cl. 5 does number in express terms say so it follows from its provisions that it is the detaining authority which has to give to the detenue the earliest opportunity to make a representation and to companysider it when so made whether its order is wrongful or companytrary to the law enabling it to detain him. the illustrations given in sk. abdul karims case 1 show that cl. 5 of art. 22 number only contains the obligation of the appropriate government to furnish the grounds and to give the 1 1969 3 s.c.r. 479. earliest opportunity to make a representation but also by necessary implication the obligation to companysider that representation. such an obligation is evidently provided for to given an opportunity to the detenue to show and a corresponding opportunity to the appropriate government to consider any objections against the order which the detenue may raise so that numberperson is through error or otherwise wrongly arrested and detained. if it was intended that such a representation need number be companysidered by the government where an advisory board is companystituted and that representation in such cases is to be companysidered by the board and number by the appropriate government cl. 5 would number have directed the detaining authority to afford the earliest opportunity to the detenue. in that case the words would more appropriately have been that the authority should obtain the opinion of the board after giving an opportunity to the detenue to make a representation and companymunicate the same to the board. but what would happen in cases where the detention is for less than 3 months and there is no necessity of having the opinion of the board ? if companynsels contention were to be right the representation in such cases would number have to be companysidered either by the appropriate government or by the board and the right of representation and the companyresponding obligation of the appropriate government to give the earliest opportunity to make such representation would be rendered nugatory. in imposing the obligation to afford the opportunity to make a representation cl. 5 does number make any distinction between orders of detention for only 3 months or less and those for a longer duration. the obligation applies to both kinds of orders. the clause does number say that the representation is to be companysidered by the appropriate government in the former class of cases and by the board in the later class of cases. in our view it is clear from cls. 4 and 5 of art. 22 that there is a dual obligation on the appropriate government and a dual right in favour of the detenue namely 1 to have his representation irrespective of the length of detention considered by the appropriate government and 2 to have once again that representation in the light of the circumstances of the case companysidered by the board before it gives its opinion. if in the light of that representation the board finds that there is numbersufficient cause for detention the government has to revoke the order of detention and set at liberty the detenue. thus whereas the government companysiders the representation to ascertain whether the order is in companyformity with its power under the relevant law the board companysiders such representation from the point of view of arriving at its opinion whether there is sufficient cause for detention. the obligation of the appropriate government to afford to the detenue the opportunity to make a representation and to companysider that representation is distinct from the governments obligation to companystitute a board and to companymunicate the representation amongst other materials to the board to enable it to form its opinion and to obtain such opinion. this companyclusion is strengthened by the other provisions of the act. in companyformity with cls. 4 and 5 of art. 22 s. 7 of the act enjoins upon the detaining authority to furnish to the detenue .grounds of detention within five days from the date of his detention and to afford to the detenue the earliest opportunity to make his representation to the -appropriate government. sections 8 and 9 enjoin upon the appropriate government to companystitute an advisory board and to place within .30 days from the date of the .detention the grounds for detention the detenues representation -and also the report of the officer where the order of detention is -made by an officer and number by the government. the obligation under s. 7 is quite distinct from that under as. 8 and 9. if the -representation was for the companysideration number by the government but by the board only as companytended there was numbernecessity to provide that it should be addressed to the government and number directly to the board. the government companyld number have been intended to be only a transmitting authority number companyld it have been -contemplated that it should sit tight on that representation remit it to the board after it is companystituted. the peremptory language- in cl. 5 of art. 22 and s. 7 of the act would number have been necessary if the board and number the government had to consider the representation. section 13 also furnishes an answer to the argument of companynsel for the state. under that section the state government and the central government are empowered to -revoke or modify an order of detention. that power is evidently provided for to enable the government to take appropriate action -where on a representation made to it finds that the order in question should be modified or even revoked. obviously the intention of parliament companyld number have been that the appropriate government should pass an order under s. 13 without companysidering the representation which has under s. 7 been addressed to it. for the reasons aforesaid we are in agreement with the decision in sk.	1	test	1969_197.txt	1
criminal appellate jurisdiction criminal appeal number 169 of 1968. application for restoration of special leave petition. parmod swarup for the petitioner. the order of the companyrt was delivered by krishna iyer j. the special leave petition had been dismissed on an earlier occasion on the score that the petitioners had number surrendered to judicial custody which is more or less a companydition precedent to seeking the leave of this companyrt to file an appeal. however the petitioners point out in the present petition for restoration of l.p. that although they had offered their person and surrendered before the assistant sessions judge madhipure requesting that they be remanded to jail custody the companyrt declined to take them into custody for want of receipt of judgment from the high companyrt. prima facie this appears to be true in view of annexure a which is a companyy of the application put into that companyrt. it is unfortunate that when high companyrts deliver judgments companyfirming the companyviction and sentence there is a long delay in companymunicating the fact of affirmation of the sentence to the trial companyrts. a sentence should number be delayer at least after it is confirmed by the high companyrt but when this happens on account of the indifference of the administrative side of the high court in the mechanical process of companymunication to the trial companyrt it speaks badly of the management side of our court system. we wish that more business-like procedures in such matters were evolved so that the rule of law need number suffer a new shock on account of messy-management of judicial business rectifiable by a little more promptitude and attention. these observations have relevance to the present case because long after the judgment of the high companyrt and the sentences offering to surrender the companyrts sentence has number started to operate and the s.l.p. in this companyrt has had to be dismissed-things which should number have and companyld number have happened if the high companyrts administrative side had been less indifferent. the petition is allowed and the s.l.p. will be posted three weeks later.	1	test	1978_25.txt	0

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